1

15th Annual IGPA Conference Kyoto, Japan, 5 December 2012

The Interface Between Public

Health, Trade & TRIPS:

Current Work at the WTO and How

it Relates to the Generic Industry

Roger Kampf, WTO Secretariat

The views expressed are personal and cannot be attributed to the WTO, its Secretariat, or any of its

Member governments.

I.

Introduction:

The Interface Between IPRs and

Public Health

Where Do We Come From: the Interface

between IPRs and Public Health • Since last decade:

– Impact of IPRs on innovation of and access to medicines moved to centre of cross-cutting debate between separate policies

• TRIPS-related issues (as confirmed by Doha Declaration): – IPR as an important factor for development of new

medicines, but: concerns expressed about effect on prices

→ How best to reconcile the need for incentives to invest in R&D and access to medicines?

– Importance of flexibilities recognized, but: need to preserve balance of rights and obligations

→ How is optimal balance between IPRs and public health best achieved?

– TRIPS as part of wider national and international action to address health problems, but: cannot solve issues on its own

→ How to ensure capacity to deal with innovation-access cycle in a holistic manner?

From Boundaries to Synergies:

Bringing Together Distinct Policies

Access to Medical Technologies

Innovation &

public

research

policies

International

Trade &

Domestic

Economic

Settings

IP Law,

Management

and

Administration

Human Rights

Quality,

Safety,

Efficacy

Regulation

Public Health

Framework

An Issue Addressed at Various Levels &

By Different Actors

Multilateral

Framework:

• WHO

• WIPO

• WTO

Free Trade

Agreements

Regional

Framework:

• ARIPO

• OAPI

• others

Domestically:

•IP policy &

strategy

•Legislation

•Courts

Key actors:

•IGOs

•Regional

Organizations

•Governments

•Private Sector

•Civil Society

6

Key Provisions Affecting Pharmaceutical

Sector in Selected FTAs Notified to WTO

FTA

P

rov

isio

n o

n

Pate

nta

bilit

y

Pate

nt

term

exte

nsio

n

Co

mp

uls

ory

lic

en

sin

g

Exh

au

sti

on

Test

data

exclu

siv

ity

Pate

nt

lin

kag

e

En

forc

em

en

t

Sid

e lett

er

or

/reaff

irm

ati

on

of

Do

ha

Decla

rati

on

EFTA - Albania, Chile, Colombia,

Egypt, Korea, Peru, Serbia,

Singapore, Tunisia, Ukraine (10 in

total)

Mandatory (7)

Optional (2)

5 to 8 years (7)

Reasonable period

(normally five years)

(2)

Adequate number of

years or financial

compensation

(1)

4 2

EFTA - Jordan, Morocco Protection of patents on a level similar to that prevailing in the European Patent

Convention

EC – Turkey, Stabilisation and

Association Agreements with

FYROM, Albania, Croatia,

Montenegro

Level of protection similar to common body of EU legislation and jurisprudence

EC – Chile, Mexico, South Africa and

Association Agreements with Algeria,

Israel, Jordan, Morocco, Tunisia,

Lebanon (Interim Agreement)

Protection in accordance with highest international standards

EC – Cariforum (pending as of

8/2012)

√ √

EC – Korea (provisional application) √ 5 years √ √

US - Australia, Bahrain, CAFTA/DR,

Chile, Colombia, Jordan, Korea,

Morocco, Oman, Panama, Peru,

Singapore (12 in total)

8 Mandatory (11)

Optional (1)

3 2 Five years (8)

Reasonable period

(normally 5 years) (3)

12 11 8

The Generic Industry:

An Active User of the IP System

• As IP rightholder - for example: – Trademarks for branded generic products

– Enforcement of trademarks and other IPRs

• As voluntary licensee – Increased number of voluntary licensing programmes

(new / pipeline products, broader range of countries)

– Different types of partnerships: • Extended partnership, including acquisition of shares,

right to distribute partner products, acquisition of manufacturing facility by generic partner (ex: GSK/Aspen)

• One licence agreement to manufacture a single product

• Reliance on generic companies as distributors (ex: Gilead)

– Medicines Patent Pool and WIPO Re:Search

• As compulsory licensee

• As user of litigation procedures

• As stakeholder in policy-making process

→ Interest in balanced and well-functioning IP system

II.

WTO’s Mandate and Role

in the Pharmaceutical Sector

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General Overview

• Trade (rules) intersect with public health objectives in many ways: – Positive link: trade - higher living standards – improved

public health conditions

– Defensive link: right to take trade-restricting measures to protect public health recognized in all WTO agreements

• The WTO’s role is to: – Offer a forum for discussion of the interface between

trade rules and public health

– Settle disputes: • Few cases challenged appropriateness of measure chosen to

achieve public health objectives, not the right to protect public health

– Raise awareness and build capacity

• The WTO’s mandate is NOT to interpret TRIPS provisions or to assess use of TRIPS flexibilities

10

WTO Is Not “Just” About TRIPS ! (1):

Tariffs

• Growing importance of international trade for supply of public health goods: – +12%/year, from 92 bn. USD (1995) to 500 bn. USD

(2010)

– Amounts to 4.2% of global merchandise trade

• Applied tariffs on health-related products: – Affect both access and domestic production

– Pharmaceutical Sector Initiative (1994) – selected WTO Members liberalize markets for >6500 products and ingredients (= estimated 79% of global trade)

– Sectoral initiative for open access to enhanced health care (2006)

• For detailed study see WTO Staff Working Paper: More Trade for Better Health ? International Trade and Tariffs on Health Products (October 2012)

Imports of Health-Related Products: in bn. USD for 2010

Average Annual Growth 1995-2010

11

9,775 +9.6%

26,910 +6.4%

72,052 +7.9%

86,933 +11.9%

97,545 +11.3%

202,703 +16.0%

A2 - Bulk medicines

A3 - Specific inputs

B - General inputs

C1 - Hospital inputs

C2 - Medical equipment

A1 - Dosified medicines

Bound vs. Applied Tariffs

on Health-Related Products

12

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WTO Is Not “Just” About TRIPS ! (2):

Public Procurement

• Procurement policies and practices: – Maximize competition in procurement process

– Helps to achieve “best value for money”

• The WTO’s plurilateral GPA (42 Members): – Ensures non-discrimination and transparency

– Magnitude of health-related procurement:

• US statistical report (2008): 40 bn. USD for hospitals, 50 bn. USD for health sector in general, 30 bn. USD for goods/services procured by Department of Health

• EU statistical report (2007): 11 bn. EUR for medical technologies covered by GPA

• Japan statistical report (2010): 1.8 bn. USD for contracts awarded by MoH

– Revised agreement signed in 2012

Health Sector Coverage

by Selected GPA Parties

Party

Coverage of health-related entities at the

central government level

Coverage of health-related

entities at the sub-central

government level

Coverage of goods Coverage of

health-related services

Canada √ √ √ X

European Union √ √ √ X

Hong Kong, China √ N/A √ X

Israel √ X √ X

Japan √ X √ X

Korea √ X √ X

Norway √ √ X

Singapore √ N/A √ X

Switzerland √ √ √ X

Chinese Taipei √ √ √ X

United States √ √ √ √

14

15

WTO Is Not “Just” About TRIPS ! (3):

SPS and TBT Agreements

• Avoid unnecessary barriers to international trade – Human health or safety recognized as legitimate

objective

• Use internationally-established health and safety standards

• Almost half of the issues raised in TBT Committee relate to human health and safety

• Directly affects the pharmaceutical sector: – Health products, including herbal medicines (regulation

and inspection)

– Medical devices

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Examples from TBT Committee

Brazil (2009) European Union (2009)

Measure: GMP certificate

required when applying for

registration of certain health

products at ANVISA

Measure: imported products,

including APIs, required to be

produced according to GMP

equivalent to those of the EU,

confirmed by written declaration

of competent authority in

exporting country

Objective: Protection of human

health and prevention of

deceptive practices

Objective: Prevention of entry

into supply chain of falsified

medical products

Concerns (selection): •Acceptance of ISO certification as evidence of compliance? •Availability of sufficient inspection resources at ANVISA?

Concerns (selection): •Unjustifiable burden for competent body in exporting country •Acceptance of WHO API GMP certificate?

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WTO Is Not “Just” About TRIPS ! (4):

Competition Law and Policy

• No multilateral framework at WTO, but:

– Art. 40, 31, 8 TRIPS (anti-competitive practices/ IPR abuse)

– Article 10bis Paris Convention (unfair competition)

• Relevant for:

– innovation and access

– generic companies (e.g. patent settlement agreements, agreements between generic companies, mergers)

• Objective:

– inform regulatory and other policy choices

– Corrective tool where needed to ensure competition from innovation to delivery

• Country experiences:

– South Africa: cases at Competition Authority

– EU: Commission pharmaceutical sector inquiry

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WTO Is Not “Just” About TRIPS ! (5):

Conclusion

• Many of the other WTO disciplines directly affect the generic pharmaceutical industry, in particular: – Bound and applied tariffs

– Government procurement

– TBT and SPS

– etc.

• Need for generic industry to take a holistic, multi-dimensional approach, and not to focus exclusively on TRIPS matters

III.

IPRs and Public Health:

TRIPS and later instruments

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The Starting Point:

Key TRIPS Provisions (1)

• Objectives and principles – the “shoulds” under the TRIPS Agreement: – Promotion of technological innovation

– Transfer and dissemination of technology

– Balanced approach, adapted to domestic policy objectives

• Patents – a wide range of flexibilities: – Definition of patentability criteria

– Disclosure requirement

– Exclusions

– Exceptions, including compulsory licences

• Exhaustion – national vs. international:

– freedom to choose regime which best fits domestic

policy objectives

– Illustrates need to think holistically within and beyond IP

system

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The Starting Point:

Key TRIPS Provisions (2)

• Test data – mandatory protection against unfair

commercial use and disclosure:

– But: how to protect is not prescribed

– Application of pro-public health interpretation of TRIPS

provisions under the Doha Declaration

• Enforcement – important links to public health:

– Terminology: what is a counterfeit medicine

– Guided by objective to achieve a balance: preserve

legitimate trade, important safeguards

• Transition periods for LDCs:

– 2013 in general: further extension requested by LDCs

– 2016 in pharmaceutical sector

→ Need to address interface IPRs-public health

not new, already recognized by TRIPS 1995

The Turning Point:

What the Doha Declaration Achieved

The Doha

Declaration

2001

Guidance:

interplay

IPRs and

health

Extension

of LDC

transition

period to

2016

Adoption of

Paragraph

6 System

Landmark

in WTO

and

elsewhere

Framework

for

multilateral

cooperation

Vision of

TRIPS:

supportive

of balanced

framework

Clarifies

TRIPS

flexibilities:

CL and

exhaustion

Support of

countries

using

TRIPS

flexibilities

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An Additional Flexibility: Para. 6 System

• Designed to address difficulties of Members with insufficient or no manufacturing capacities in the pharmaceutical sector in effectively using CL: – Removes specific legal obstacles: waiver of certain TRIPS

conditions otherwise applicable to CL

• Makes an additional flexibility available: – Procedures are designed by national implementing legislation

– Only applies to narrowly defined circumstances

– Forms part of wider national/international action

– Requires further reflection on commercial incentives for generic manufacturers to engage in production

• First ever amendment proposed to a WTO agreement: – Reflects importance that Members attach to intersection

between IPRs and public health

• Has been endorsed by various other UN bodies: – e.g.: Element 5.2 of WHO’s GSPA-PHI

IV.

Relevant Work in the WTO

Discussing and Informing

• Making available a forum for debate of IP issues:

– Assessment of LDC priority needs

– Technology Transfer (to LDCs)

– Enforcement trends (in-transit generic medicines, ACTA)

– New directions:

• Early discussion of draft agreements/legislation: Australia’s Plain Packaging Bill for tobacco products

• Move towards a forum for policy debate - new agenda item on IP and innovation, introduced by Brazil and the US:

– Concept of innovation vs. invention

– Evidence for causal connection between IP & innovation

– Call for a balanced IP regime

– Recognition that IP policy must form part of wider national innovation strategy, is only one among many factors

– But not discussed in detail:

• Test data protection

• Counterfeit medicines

• Providing factual information and empirical data

Solving disputes (1)

• Regulatory review exception permitted as limited exception to patent rights (WT/DS114/R)

• Australia’s Plain Packaging Bill (DS434/435/441) raises interesting questions, including for the generic industry:

– Link with public health debate in general: priority for public health or industrial policy objectives ?

– Can pro-public health measures addressed in Art.8 TRIPS override substantive trademark provisions ?

– Is there a positive right to use a trademark ?

– Burden of proof: what does the defendant need to provide in order to show that use of trademark is not unjustifiably encumbered ?

– Repercussions on open question of application of non-violation and situation complaints to TRIPS ?

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Solving Disputes (2):

In-Transit Generic Medicines

• What happened ?

• Principal measure at issue: EU Regulation concerning customs enforcement of IPRs – goes beyond TRIPS requirements, as applicable to

goods in transit and patent infringing goods

• Discussed in TRIPS Council, followed by DS consultations (India, DS408 & Brazil, DS409)

• Alleged violations include GATT (Art.V), TRIPS (Art.1.1, 7, 8, 31, 41, 42, 51) and Doha Declaration

• Mostly about cases of alleged patent (and not trademark) infringement in transit country

• State of play: • mutually agreed arrangement in summer 2011

• ECJ judgment in December 2011

• Commission Guidelines of February 2012

– What is the right approach ?

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Reviewing the Operation of Para.6 System

• TRIPS Council looks into narrow and broader aspects (see annual reviews 2010-11)

• Narrow aspects focus on operation of System as such, in particular whether it is delivering effective and expeditious results

• Broader aspects discussed include: – Funding

– Partnerships

– Pricing (including transparency mechanisms)

– procurement practices

– Competition policies

– Taxes, tariffs and mark-ups

– Quality, safety and efficacy

• Discussion contributes to better understanding of interplay between IPRs and public health

Intensifying Cooperation

• Essentially among WHO, WIPO, WTO, but also involving other IGOs

• “Traditional” fields of cooperation, in particular through capacity building activities: – Example: jointly designed workshops dedicated to the

interplay between IPRs and public health

• Series of joint technical symposia on: – Pricing and procurement policies (July 2010)

– Patent information and Freedom to operate (February 2011)

• WHO/WIPO/WTO study on “Promoting Access and Medical Innovation: Intersections Between Public Health, IP and Trade”

Trilateral Study (1): Purpose

• Aims at assisting decision-makers by providing information on: – legal and policy options (IPRs: particular focus on

options/practices regarding patents)

– interplay between trade, IP and health rules

– empirical data

• Illustrates the need to adopt a holistic approach: – from research and discovery to delivery: need to take

innovation and access equally into account

– encompassing health, trade and IP dimensions

• Forms an integral part of technical co-operation offered by WHO/WIPO/WTO – in response to growing and diversified demands

– strengthening policy coherence

Trilateral Study (2): Content

Policy Context (Chapter II) • Analyses key intersections between innovation & access • Provides data on global burden of disease • Discusses various dimensions: public health, trade and IP • Sets out the economics of innovation and access

Innovation Dimension

(Chapter III) •Describes historical pattern and current landscape of medical R&D •Looks at the role of IPRs in innovation cycle

Access Dimension

(Chapter IV) •Sets out WHO access framework for essential medicines •Analyses access determinants:

• Health systems • IP system • Other trade-related aspects

Introduction (Chapter I) • Need for international co-operation and policy coherence

• Overview of international key stakeholders

V.

Conclusions

Trends in the Pharmaceutical Sector

• Rethinking the business model: – How will stronger links between R&D companies and generic

manufacturers impact on IP regime ?

• New molecular entities: – How will generic industry be affected by significant decline

since late 1990s?

• Patent cliffs: – A changing perspective for generic companies ?

• Biologics: – Will more complex technologies and higher development

costs slow down entry of generics / limit price reductions ?

• Counterfeit medicines: – What can the generic industry contribute to minimize the risk,

in particular in view of strong reliance on API imports?

• Domestic IP legislation takes different directions: – Is diversity better for business than uniformity of rules? How

to handle diversity from the user’s perspective?

• FTAs and non-discrimination principles: – What are the implications of existing and future agreements

for generic companies?

Where Do We Stand ?

• According to progress indicators GSPA-PHI:

Coordination of IGO work

TRIPS flexibilities in national law

IPR application & management capacities

Access Policies

Techtransfer initiatives/strategies

Monitoring & reporting

Why WTO Matters to the Generic Industry

• Clarify TRIPS flexibilities through capacity building activities (example: what is required under Article 39.3 to protect clinical test data)

• Ensure that legitimate trade can take place (as stipulated in Article 41)

• Raise and settle sensitive issues (example in transit generic medicines – clarify that generics are not counterfeit products – warn against dilution of narrow meaning of counterfeiting under TRIPS Agreement)

• Provide information sources and empirical data to facilitate well-founded decisions and to promote holistic approach (example: trilateral study; notification of legislation, TPR reports)

• Ensure coherence, co-operation and dialogue at all levels

What the Generic Industry Can Do

• Make constructive contribution to ongoing debate on functioning of the Paragraph 6 System: – What is needed to make production under mechanism

commercially viable for generic manufacturer?

• Support the WTO’s efforts to promote a balanced IPR regime and a holistic approach, involving all relevant dimensions

• Actively participate in capacity building activities to share the generic industry’s perspective

• Offer a well-structured interlocutor that can represent the generic industry’s common interests at international level