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Queen Rania Center for Entrepreneurship (QRCE)
The Fourth Annual Conference on Technology Commercialization
Amman, November 12-13, 2008
Dr. Amir H. Khourywww.amirkhoury.com
“Creating a New Intellectual Property Policy Regarding Access to Medicines &
Technology Relating Thereto”
The Intellectual Property System
• Regulatory Tool.
• Commercial Ends.
• Incentives for Innovation.
Questions!
• What about? Wellbeing? Life? Public Health?
• Is there a way to secure Access to Patented Medicines (Consumers & follow-on innovators)?
• Can this be balance with needs of IP system?
IP Regulative Framework
Conventional International
Patent Régime (CIPR)
TRIPS
)WTO)
TRIPS+
)FTAs; OECD)
Unilateral
)USTR; 301)
TRIPS• “New World Order” for IP protection )+PCT etc.).
• Worldwide protection; WTO member obligated )phase-in; DSU).
• Allows for patenting “active ingredients”.
• )Min.) patent term: 20 years )all inventions); right to sole use over patent; Determine price/to whom sold.
TRIPS+• Bilateral )"free trade") agreements )US; EU).
• Elevated/stringent IP standards )OECD).
• Bans use of test data )“data exclusivity”).
• Extend patent term )adjustment).
• Limits compulsory licenses )pharmaceuticals).
• Prohibit export of drugs produced under compulsory licenses.
Unilateral Retaliation
• Influential c. )US Trade Act 301 ;EU).
• WTO: DSU; DSB.
• Watch list + Priority watch list
CIPR )Benefits!(• Combats free-riders; Right of sole use; Patentee
determines utilization/sale.
• Innovators can protect pharmaceutical patents globally.
• Enforce their patent rights in national courts.
• Catalyst for pharmaceutical conglomerates.
• Facilitate R&D.
• Produced 1000s of ethical medicines.
CIPR )Setbacks!(• Public Health/)“APM”).
• High prices creates hurdle to APM )poor/developing countries).
• Pharmaceutical companies over capitalize.
• Market dominance: Full discretion re sale/price.
• More difficult for poor countries to secure supply of medicines at affordable prices.
Assessing: CIPR )TRIPS et al(• Part of debate as to effect on poor/developing countries.
• Precondition for int’l trade; “grand norm” )Kelsen); development theory.
• “Limited domain”: max. wealth, overlooks need for cheap/accessible meds.
• Product of developed countries’ self interst; Locke’s )egoistic self); not a product of national sovereignty; trade-off between WTO obligations & gains.
• Serves Western commercial interests; not shaped in accordance with national interests of south; wider context of globalization.
• Developing countries “victims” of globalization; delegated powers of economic decision-making to North; threatens economy & physical survival.
• Created/cemented unfair balance of costs & benefits; needs structural reform; Developing countries in “zero sum game”; detrimental results.
APM )Implications(Personal: • “WHO”: Annually, infectious diseases kill 14 million
people around globe )90% from developing countries); )HIV; TB, Mal).
National: • Purchasing medicines for citizens/reduce other health-
related )e.g., hospitals, machines; labs); Medicines account for 80% of health expenditures in developing c.
• Lack financial/research capabilities to independently
produce generic drugs; Rely on importation of generic medicines.
World Health Organization )WHO( Report on APM
• Need for ensuring access to medicines/vaccines in developing countries.
• Outbreaks of Emerging & epidemic-prone diseases among greatest threats to int’l health.
• Over 50% of poorest countries in Africa & Asia do not have APM )due to prohibitive pricing).
Normatively Driven Questions About CIPR & Access to Patented Medicines )APM(?
• Limiting pharmaceutical patent rights to allow APM?
• Should APM right trump patent considerations/benefits?
• Should CIPR address/alleviate suffering of sick/dying?
• Patent rights offset by moral/social obligations?
• Can CIPR incompliance be justified based on “survival”?
APM )Theory(
• Social obligations?
• Allocation of public goods!
• Purpose of intellectual property!
APM as a Microcosm of CIPR• TRIPS negotiations )Brazil, Thailand, India opposed
linkage between IP protection & int’l trade) -- silenced! • Developing countries do not reap equal benefits from
CIPR --harmed by stringent system of IP protection.
• Developing countries viewed as consumers not partners.
• Esp. in pharmaceutical industry )multinational pharmaceutical corporations spring up almost exclusively in developed countries).
Divergence between ex-ante promise & ex-post deficiencies!
Winds of Change!
Doha Round )2001(• Tension between developed & developing c.
• APM fueled tension/accentuated debate between TRIPS proponent & opponents.
• 2001 WTO Ministerial Conf. )Doha) adopted declaration )TRIPS Agreement & Public Health).
• South African HIV lawsuit & Anthrax scare 2001.
Doha )Ministerial( Declaration: New Strategy!
• TRIPS should not prevent members from taking measures to protect public health.
• TRIPS should be interpreted/implemented
in a manner supportive of WTO members’ right to protect public health )APM).
Following the Declaration…• List of specific diseases/ailments: make
medicines more accessible/less expensive.
• Excludes medicines for prevalent diseases )HIV/AIDS; pneumonias; diarrheal diseases; non-infectious diseases).
• Declaration not yet realized its full potential.
“Limited List” approach: Counter to Doha Declaration
• Each Member has right to grant compulsory licenses & freedom to determine grounds upon which such licenses are granted.
Unsatisfactory: • Countries cannot be expected to wait until a
certain ailment has become )"sufficiently") widespread.
• More logical/less costly if countries were to
respond to health threats in a timely fashion )reducing costs of treatment; loss of human life).
“TRIPS-Plus” Structure Undermines the Doha Declaration
• Industrialized countries must stop exercising protective trade pressures to defend interests of multinationals.
APM widely recognized:
• U.S. )2003) introduced Five-year President’s Emergency Plan for AIDS Relief )“PEPFAR” or “Emergency Plan”): Combat HIV/AIDS; provide funds to supply antiretroviral therapies; prevent new infections; establish support care.
Decision to Amend TRIPS )2005 Protocol)
• Effective if two thirds WTO members ratify )yet to happen).
• Allows exporting patented medicines to "Eligible Importing Members").
• Authorize circumvention of compulsory licensing rules TRIPS Art.
31. LDCs authorized to use model without prior notification to WTO.
• Other states required to notify WTO about intent to export/ import pharmaceutical drugs in compulsory licensing )Rwanda, Canada).
• Authorizing countries that could not produce medicines themselves to import pharmaceuticals made under compulsory licenses abroad.
• New status for certain states: In cases of extreme medical urgency, to utilize compulsory licensing system )amended TRIPS Art. 31bis).
What Doha Round teaches us?Presently• Data exclusivity. • Parallel imports.• APM.
…..cannot be suppressed indefinitely.
APM issue did not go quietly into the night…• Vigorously reemerged within 5 after TRIPS.
What is Needed?• Amicable solution to APM predicament )innovation/life-suffering).
• Recognize that: different states, different needs.
• TRIPS structure needs to be amended )rebalanced).
Options!
“Carpet” Adoption TRIPS & TRIPS-PLUS
)Status quo…)
“De-linking”Complete deviation from CIPR )esp. in public health domain; in APM context).
Incentive to Innovate
• Pharmaceutical related innovation should be treated as any other product/invention.
• Prices should be determined by patentee )supply & demand).
Delinking!?
“battle between public health & company wealth”?
• Oversimplification! Overlooks need to safeguard incentive to innovate.
• Prices rise b/c most pharmaceutical research projects do not culminate in patented medicines.
• Pharmaceutical companies: need to secure earnings that cover “R&D”; running costs; unsuccessful research.
• Likely to limit their research operations considerably reduce rate of medicinal innovation worldwide.
Polar Solutions rejected! ….Where to next?
Balanced Solution!
Incentive to Innovate
Moral & Social Justifications for
APM
Characteristics of Proposed Model
• Reject de-linking from CIPR: overlooks benefits of régime )i.e. securing incentives for further innovation; “foreign direct investment”.
• Quell APM concerns; recognize social responsibility of pharmaceutical patent holders.
• Aims to preserve CIPR framework, while creating viable checks & balances; flexible compulsory licensing.
Socio-humanitarian motives• Patent protection ends where saving lives/alleviating
suffering begins; social interests. • Returns on innovation at cost of reduced rates of diffusion
)higher prices; detrimental to local manufacturing of generic drugs).
• Raise prices of patented medicines for developing nations/curb access to newest drugs.
• TRIPS hampers generic )affordable) medicines.
• 1998, South African authorized generic HIV substitutes )Thailand, US trade retaliation; SA cited obligation: provide affordable medicines).
Benefit of APM• Crucial safety valve for venting North-South tensions re TRIPS.
• Quell potential rebellion of South; )survival; Hobbes’ “self preservation”).
• Enhanced moral standing of CIPR )heeds needs of poor).
• Generate more popular support; advance other IP subject-matter.
• Contribute to creation of more balanced/moral régime.
• TRIPS non-universal; inapplicable to non-industrialized c.;)Dev. V. Dep.)
• TRIPS formulated by states not acting behind “veil of ignorance/self serving.
• Developing c. adopted TRIPS out of necessity/threat )WTO membership/foreign investment; economic sanctions).
On rights as responsibilities!• Patent rights carry “bundle of social responsibilities”.
• Particularly patented medicines; unique properties: alleviating pain/suffering; curing ailments; prolonging life .
• “Global ethics”? Increasingly rights-oriented world, little attention is placed on responsibility; All actors in global village must acknowledge/address responsibilities that necessarily correlate to existence of rights.
• Property rights not in vacuum )“balanced against claims of humanity.”
• “Public goods” nature of pharmaceuticals )sui-generis creatures).
• Medicines undisputedly commercial commodities, but a “common heritage of mankind.”
Against APM Initiative• Reduce reward/incentive of patentees. • Contravenes both IP theories )labor; utilitarian).
• Overlook fact that high prices of patented medicines stem from high R&D expenses; low success rates; long process – )in silica, in-vitro, in-vivo, human, population).
• High prices help prevent re-export to rich states.
• APM not a consequence of market domination by pharmaceutical corporations: symptomatic of lack of infrastructure/organization in poor/developing countries.
Development theory; Dependency theory
Development: Tackle economic & technological underdevelopment by adoption/ transplantation of norms of industrialized countries.
Dependency: • “Center” dominated “Periphery”; e.g. patented medicines; effectively
owned/ controlled by rich/industrialized countries )“Center”).
• “Periphery” prevented from attaining industrialization; remained consumer & supplier of raw materials )“passivity-dynamism”).
• Increased compliance with IP laws serves to widen economic rift between “North” and “South.”
• Throughout history, people/nations/countries have charted different paths of development; no single developmental path.
Despite apparent rift between CIPR & APM: Still possible to join two systems conceptually
• Refines 2005 WTO protocol.
• APM system would not stand counter to TRIPS: reflects “sprit” of Agreement )Art. 7):
Protection/enforcement of IPRs should contribute to promotion of technological innovation and to transfer & dissemination of technology, to mutual advantage of producers & users of technological knowledge and in a manner conducive to social & economic welfare, & to a balance of rights and obligations.
• A workable APM mechanism into CIPR: Clear safeguards for needs of developing countries from within )Aristotelian “distributive justice” among nations re patented medicines).
Reform NOT Revolution…
Reformulating Cost-Benefit Approach• IP helps maximize aggregate social wealth.
• Justifies burden placed on some member states/societies.
• Given CIPR deficiencies in APM context: “efficiency” does not hold water )Doha Round) -- Overlooks allocation of entitlements & obligations among member states.
• Art. 8 TRIPS: members formulating/amending their laws and regulations, may adopt measures necessary to protect public health.
• Appropriate measures; consistent with provisions of Agreement, may be needed to prevent abuse of IPRs by right holders or resort to practices which unreasonably restrain trade or adversely affect international transfer of technology.
• Art. 7 & 8 dormant! Tools for CIPR reformulation in APM context.
Counterbalancing WTO: WIPO Development Agenda
• WIPO Dev. Agenda: More sustainable IP régime addressing public health; biodiversity; human rights.
• WIPO entrusted with administration; allows for more effective rep. of developing countries )more democratic institution) )WIPO Art. 6).
“Silent (Silenced) Majority,"
• “Forum shifting” merger/cooperation -- between WTO & WIPO; complement each other )IP administration, protection, enforcement).
• Cooperation between WTO-WIPO already exists! Agreement aims to “establish a mutually supportive relationship”; “appropriate arrangements for cooperation” between them.
Empowering Local Industry through Accessibility of Research Data
• Governments to apply TRIPS -- conducive to national public health.
• Local pharmaceutical industry should be encouraged to expand its research activities, by relaxing prohibitions on using research data.
• Sharing of data: Prevent local industries from making same mistakes )dead ends) as counterparts.
• Data Exclusivity defense that has been advanced by TRIPS-Plus should be relaxed in order to accommodate needs of new pharmaceutical corporations in developing countries. Can be justified based TRIPS Article 39)3):
Members shall protect such data against disclosure, except where necessary to protect public, or unless steps are taken to ensure that data are protected against unfair commercial use.
Granting of Compulsory Licenses• Remedy practices that have been deemed to be anticompetitive.
• Licenses subject to certain restrictions; slow & cumbersome )limited to cases where states failed to acquire a voluntary license based on “reasonable terms & conditions within a reasonable period of time.”
• License contingent on “requirement to pay adequate remuneration in each case, taking into account economic value of the license.”
• Require decisions relating to licenses to be “subject to judicial or other independent review by a distinct higher authority.”
• Problematic for pharmaceutical preparations & esp. life threatening illness )speed & accessibility are imperative).
• Core of proposal: Revised compulsory licensing model )beyond 2005 TRIPS protocol & new Art. 31bis on pharmaceuticals).
Compulsory Licensing: More Workable & Structured Mechanism, with Checks & Balances
• If “Medical Emergency” declared? State allowed to produce/seek assistance in producing patented medicines. No need to acquire license )compulsory/otherwise) from patentee or notify WTO.
• Proposed model: Retroactive )not prospective) licensing mechanism.
• Licensing process: Not slow down production of relevant medication.
• Patent owner entitled to retroactive compensation; would counterbalance his potential losses )contingent on showing by patentee that compulsory license was utilized without justification).
• Beneficiary state invoking compulsory licensing is held accountable for royalties in amount equivalent to actual profits collected from sale of medication within its jurisdiction )0 profit= 0 royalty).
• State unable to pay royalties? Seek assistance of funds )PEPFAR).
Sanctioning "Collective" Compulsory Licenses
• Inability of some countries to utilize compulsory licensing provisions.
• Most prevalent in pharmaceuticals; many countries lack industries capable of producing sophisticated medicines.
• More sophisticated model )more than 2005 Protocol)
• Enables developing c. to produce patented medicine in collaboration with “assisting” country )technical/scientific capabilities).
• Assisting country as proxy )prevented from using license as pretext to circumvent patent protection in jurisdiction).
Determining Cases that Justify Granting of Compulsory Licensing )NME(
• Impartial party )WHO): Possesses professional/technical tools to make determination; engaged in tracking/ mapping spread of infectious diseases, other illnesses, worldwide.
• WHO not limited to issuing NME determinations; to assist WTO in deciding/settling disputes that arise in such cases.
• WHO already attempted to compile a list of “essential medicines.”
• WIPO can be called upon to assist WHO in cases involving an NME )WIPO accumulated substantial experience in int’l IP disputes).
• WTO member states granted right to independently declare a medical emergency )cases of extreme urgency) )Anthrax; bird flu).
Scope of Coverage• Should APM be limited to epidemic ailments?;
include non life-threatening ailments?
• Prima-facie No moral basis for distinguishing between a medicine that prolongs one patient’s life & a medicine that alleviates another’s pain/suffering )chronic disease).
• More acceptable if initially limited to life-saving medicines.
• Ultimately, applied to medications for chronic diseases.
Setting Term of a Compulsory License• Safeguard to prevent abuse of APM model: limiting term; opened-
ended license likely to frustrate patentee’s rights.
• Time frame set WHO )severity of illness; scope of public exposure; time needed to curb/alleviate medical condition).
• License term: remains where declared medical emergency persists.
• Extensions not automatic; subject to review; contingent on conditions )i.e. effective use of license during initial term; continued existence of declared medical emergency).
• Incorporate new chapter within TRIPS )no need to amend Art. 31).
• WTO members must not circumvent/forfeit rights/obligations arising from model in future trade agreements.
• Revise existing trade agreements which negate proposed model.
Summary• Conventional International Patent Régime )CIPR)
hampers access to patent medicines.
• Despite impact on billions APM has yet to be resolved. • Important strides have been made )2005 Protocol).
Additional steps still warranted:• NGO's.
• “Parallel imports” )gray market; allow for importation of cheaper generic versions of patented medicines).
• Compulsory licensing )Section VIII to TRIPS).
Conclusions: INTERVENTION IS WARRENTED!
• Social responsibility placed on shoulders of innovators )captains of progress).
• New outlook on nature of patent rights in
pharmaceutical field; considering issue from wider perspective )takes "social" rights seriously).
• Pressing need to counterbalance “private goods” with “public goods” )sick/dying masses in South).
• More Just CIPR through viable APM mechanism.
