WORLD TRADE - docsonline.wto.orgdocsonline.wto.org/Dol2FE/Pages/FormerScriptedSearch/… · Web viewWorld Trade. Organization RESTRICTED IP/C/M/36. 18 July 2002 (02-3979) Council

WORLD TRADE

ORGANIZATION

RESTRICTED

IP/C/M/3618 July 2002

(02-3979)

Council for Trade-Related Aspectsof Intellectual Property Rights

MINUTES OF MEETING

Held in the Centre William Rappardon 25-27 June 2002

Chairperson: Ambassador Eduardo Pérez Motta (Mexico)

The present document contains the record of the discussion which took place on agenda items C(i) and (ii) during the TRIPS Council meeting held on 25-27 June 2002. The discussion on the remainder of the agenda items (contained in WTO/AIR/1818) will be recorded and circulated as an addendum to this document.

Subjects discussed Page Nos

C. THE TRIPS AGREEMENT AND PUBLIC HEALTH

(i) Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health

(ii) Extension of the transition period provided for in paragraph 7 of the Doha Declaration on the TRIPS Agreement and Public Health

1-47

48-53

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B. THE TRIPS AGREEMENT AND PUBLIC HEALTH

(i) Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health

1. The Chairman recalled that paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (hereinafter the Declaration) recognized that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement and that the Ministers had instructed the Council to find an expeditious solution to the problem and to report to the General Council before the end of 2002. He reminded delegates that his predecessor had already proposed at the TRIPS Council's meeting in March 2002 that the TRIPS Council should plan to be in a position to make recommendations to the General Council about how this matter should be dealt with by the end of 2002 and had invited Members to submit proposals for concrete solutions to the problems by the present meeting, without this being a rigid deadline. Furthermore, the Secretariat had been requested to prepare notes providing available background information on, first, the extent to which patents exist in regard to the diseases referred to in the Declaration and, second, manufacturing capacity for medicines in different countries. The Chairman recalled that the first of the notes requested from the

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Secretariat, namely a note on "Available information on the Existence of Patents in Regard to Diseases Referred to in the Declaration on the TRIPS Agreement and Public Health" had been circulated in document IP/C/W/348. The second Secretariat note on "Available Information on Manufacturing Capacity for Medicines" had been circulated in document IP/C/W/345.

2. The Chairman reported that the Council had received the following communications containing proposals on paragraph 6 of the Declaration from Members: a communication from Kenya on behalf of the African group (IP/C/W/351); a communication from the European Communities and their Member States (IP/C/W/352); a communication from the United Arab Emirates on its understanding of the Doha Declaration on the TRIPS Agreement and Public Health (IP/C/W/354); a communication from Brazil on behalf of Bolivia, Brazil, Cuba, China, Dominican Republic, Ecuador, India, Indonesia, Pakistan, Peru, Sri Lanka, Thailand and Venezuela (IP/C/W/355); and a communication from the United States (IP/C/W/358).

3. Introducing the submission on behalf of the African group as contained in document IP/C/W/351, the representative from Kenya said that the document outlined possible elements of an expeditious solution to the problem that Ministers had identified in paragraph 6 of the Declaration. While drawing up this document, the African group had given careful consideration to other Members' suggestions in order to accommodate to the fullest extent their interests and concerns and that the solution should be broad and reflect the objectives and principles of the TRIPS Agreement as they were set up in Articles 7 and 8 and as clarified in the Declaration.

4. She said that the African group was of the view that, in trying to find an expeditious solution to paragraph 6 of the Declaration, all relevant provisions and flexibilities of the TRIPS Agreement must be fully utilized. The African group wished to see the term "pharmaceutical products", as used in the proposal of the group, to be understood to include medicines, related technical processes and related technical equipment. This understanding was implied by the expression "pharmaceutical sector" as used in paragraph 6 and was important because building domestic manufacturing capacity and a sound base in medical technology were the only concrete, as well as sustainable, solutions to the problems identified in paragraph 6.

5. Outlining the main components of the proposal, she said that the African group reiterated Members' right to import pharmaceutical products from the most affordable sources. This included the right to adopt nationally a doctrine of exhaustion of intellectual property rights, as well as the possibility of compulsory licensing and other use without the authorization of the patent-holder. As a consequence, Members should have the right to export or import pharmaceutical products on the basis of compulsory licensing. It was the understanding of the members of the African group that Members had the right to use compulsory licensing as one of the means for building domestic manufacturing capacities. In the view of the African group, Members might take measures, including compulsory licensing, parallel and other importation and exportation, to address public health concerns, whether or not there were patents in force on the pharmaceutical products concerned. The proposal supported domestic measures, such as the adoption of all necessary administrative orders or legal instruments, the formation of joint ventures between governments and the private sector and the establishment of appropriate sourcing or supply arrangements for pharmaceutical products at regional and other levels. In the proposal the word "domestic" should be interpreted in the same way as in footnote 1 to Article 2 of the Agreement on Safeguards, where "domestic industry" was interpreted to include the combination of the industries at the regional level. A positive outcome of this exercise in the TRIPS Council would be a clear understanding that the term "domestic market", as used in Article 31(f) should, under certain circumstances, mean the combined markets of the Members that had formed or were in the process of forming a customs union or a free trade area or that had co-operated in the procurement of medicines. She said that this would assist in dealing with domestic markets, that were too small to support viable production, or to utilize production capacity at the desired levels. She added that this would also promote regional supply centres for pharmaceutical products which was a critical issue for poor Member countries.

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6. She proposed, as an alternative, the deletion of Article 31(f), or a clear exception to it, provided that there was an assurance and undertaking that all procedures for amendment would be completed by June 2003 and be binding on all Members. She pointed out that WTO Members might adopt laws and measures that address the need for technology transfer for innovation and production of pharmaceuticals to build sound technological bases in less-developed countries. The establishment and location of production facilities in countries with insufficient or no manufacturing capacities to meet the public health needs of these countries would be one practical outcome of such efforts. The African group had also proposed that the transition period be extended to allow for maximum utilization of measures intended to address public health concerns. Further, there was a need for a comprehensive moratorium on disputes related to measures taken to address global health problems. In her view such a moratorium should be related to the duration of the health concerns or problems, as for instance the duration of the HIV/AIDS crisis or the prevalence of tuberculosis and malaria. She expected that the moratorium would operate until the disease was combated and that such a determination could be sought from the authority in this area, the World Health Organization.

7. She concluded that the African group believed that all the options, taken as a package, would provide essential elements for the solution required under paragraph 6 of the Declaration and that the various elements would address the various stages or aspects of the process of ensuring access to life-saving pharmaceutical products. Members with sufficient manufacturing capacity would be able to export to Members needing support in addressing public health concerns. Producers would be able to look at production facilities in Members with insufficient manufacturing capacity, assured that they will be able to serve the entire regional market and to some extent other Members outside the regional markets. Developing and least-developed country Members that had unexpired or extended transition periods on pharmaceutical products would benefit from the exceptions to protecting patent rights on pharmaceutical products. Conditions and pressures arising under bilateral and regional arrangements should not prevent measures to protect public health ensuring access to medicines and that Members should also refrain from putting pressure under bilateral or plurilateral arrangements on any other Member to implement the TRIPS Agreement in a manner that would compromise the flexibility inherent in the Agreement and the transition period allowed therein. Finally, the moratorium would be used in the event that any dispute threaten laws and measures covered by this solution.

8. The representative of the European Communities said it was the view of the European Communities and their member States that finding "an expeditious solution" to the problem as defined in paragraph 6 of the Declaration meant that one should be found before the end of 2002. However, the European Communities had reservations about the introduction of new issues in this debate that had no direct link with the subject-matter. Doing so risked being counter-productive and could seriously delay the process leading to the adoption of the solution. From the European Communities' point of view, the spirit of the Declaration rested upon two important principles: first, it recognized the important role of intellectual property in fostering innovation, research and development for new medicines and second, it acknowledged that intellectual property protection had a bearing on the prices of medicines and could therefore, under certain circumstances, have an impact on access to medicines. A synthesis of these principles was expressed in paragraph 5 of the Declaration and this was a confirmation that the interplay between intellectual property protection and access to medicines should not be considered in terms of a conflict between intellectual property and public health, or between right holders and consumers, but in terms of mutual supportiveness and cooperation. He stressed that TRIPS could and should be part of the solution.

9. He urged the TRIPS Council to concentrate on the issues that fell under its competence and to make all possible efforts to find an effective solution by the end of 2002. It was a fact, as had already been argued at length, that patents and the price of medicines were not the only elements that determined the availability of health care in general and medicines in particular. It was well known that elements such as health infrastructure, research and development in neglected diseases or financing mechanisms played a key role too. However, this should not be a pretext to escape from the TRIPS Council's responsibilities. He pointed out that, at the same time, the TRIPS Council had to

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keep what it did in proper perspective since, if no measures were taken in other areas by other bodies, the TRIPS Council's work would be useless. It was only if every stakeholder, including the TRIPS Council, tackled the issues that fall under its responsibility, that the Members would come to a global solution.

10. With regard to the legal mechanism for a possible solution, he said that the March 2002 TRIPS Council had proven to be very useful in outlining possible solutions as it had allowed Members to present their preliminary views on the possible solutions to the problem and had brought four basic options to the table: (i) an authoritative interpretation based on Article 30; (ii) an amendment to Article 31(f); (iii) a dispute settlement moratorium; and (iv) a waiver with regard to Article 31(f). The European Communities had taken careful note of all positions and arguments and had examined the pros and cons of the different options. At the March TRIPS Council meeting, most developing countries had pointed out that the problem – which he considered to be of particular importance – mainly stemmed from the restriction contained in Article 31(f) of the TRIPS Agreement. He noted that Article 31(f) limited the possibility to export goods manufactured under a compulsory licence as the "predominant" part of that production must remain on the domestic market. He believed that an amendment to this particular paragraph went to the root of the problem and that was why the European Communities had proposed a solution along these lines. He particularly emphasized that the European Communities did not propose a deletion of Article 31(f) because, in the European Communities's view, the basic principle remained valid and there were good reasons why Article 31(f) existed. However, the European Communities saw clear merits in adding a new paragraph to Article 31 that would carve out a clearly circumscribed exception to the restriction embedded in Article 31(f). This would facilitate the use of a patent under a compulsory licence on a pharmaceutical product which was needed to address public health problems in another Member and would allow Members in need of a given pharmaceutical product to deal with public health problems, for which they had no or insufficient production capacity, to rely on another WTO Member to ensure supply under a compulsory licence. He added that the advantage of inserting a textual provision into the TRIPS Agreement itself was that it would provide a straightforward, clear, legally secure, effective and permanent solution within an existing legal framework, namely, within the framework of Article 31 of the TRIPS Agreement as this would put in place a clear ground in the TRIPS Agreement to export needed pharmaceutical products to a country without manufacturing capacities. He added that the EC's proposed solution would apply to exports to countries with or without patents on the particular products as Article 31(f) allowed for exports under compulsory licence without distinction of the patent status of the product concerned in the country of destination. He said the European Communities were convinced that this amendment would strike the right balance between the call for overcoming the restriction imposed by Article 31(f) to exports of pharmaceutical products manufactured under compulsory licences, on the one hand, and the underlying rationale of Article 31(f) on the other. He pointed out that the objective was to ensure speedy and affordable supplies of pharmaceutical products to those in need, while maintaining a proper legal environment to encourage research and development into new products, so that it fully conformed to the spirit of the Declaration and to the mandate contained in its paragraph 6. He wanted to make it very clear that the European Communities remained open to consider any alternative solution that might solve the problem identified under paragraph 6 in a timely and adequate manner and, in this regard, appreciated the communications made by other delegations that contained different approaches as these all contributed significantly to the debate.

11. Turning to the scope of the solution he said that, whatever solution the TRIPS Council considered, one would have to determine under which conditions the exception could be triggered and applied as this was normal when dealing with exceptions to legal principles. As the TRIPS Council dealt with this complex technical and legal issue, the delegations would have to clearly spell out the scope and conditions in order to ensure legal security for all. As regards the product scope, he urged Members to stick to the scope of the Declaration as set out in its paragraph 6, namely pharmaceutical products that were needed to deal with public health problems, afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other

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epidemics. It was unwise to reopen that debate and that paragraph 6 should indeed be read in the light of the entire Declaration. As for countries that would qualify for importing these products, he called upon delegations, in the first place, to concentrate on those developing or least-developed countries where the needs were the highest and where production capacity was non-existent or clearly insufficient. It was clear in the EC's view from paragraph 6 of the Declaration that those countries that already disposed of significant manufacturing capacity in the pharmaceutical sector should not qualify.

12. Turning to the issue of conditions and safeguards, the representative of the European Communities said that adequate safeguards must be put in place in order to (i) avoid trade diversion and abuse; (ii) create sufficient transparency; and (iii) ensure cooperation with right holders, while ensuring that the solution remained effective. There was nothing new about these principles and that this was what the existing conditions of Article 31, such as its paragraphs (b) and (f), were all about. However, if the Council created an exception that would allow situations not yet possible under Article 31, the conditions needed to be adapted to that specific situation. Further, any abuse could open the door to illicit trade diversion of the goods to consumers others than those for which they were intended or even to massive circumvention of intellectual property rules or to illicit trade which would be detrimental to the interests of those in need of essential medicines. Therefore, he proposed that if one were to consider the exception to Article 31(f) one would have to specify that trade should not be diverted. In particular, products manufactured on the basis of the authorization given pursuant to the new paragraph to Article 31 should not be put into circulation on the market of the country of production but should in their entirety be exported to the Member or Members designated by the authorization and not to any other country. In addition, the product would be sold or distributed solely in the Member(s) designated by the authorization and not be re-exported from that Member. In his delegation's view, each of the Members concerned, including the importing Member, would have to take the necessary measures to prevent this diversion. The obligation on the exporting Member would be to ensure that all the products were exported effectively to the Member in need while that on the importing Member would be to ensure that no further re-export took place. However, it would be up to these Members themselves to determine the measures that would have to be taken to that effect. He expressed understanding for the concerns that had been raised as to the additional burden such obligations could impose on the Members concerned and said that it was not the EC's intention to propose unreasonable restrictions that would not correspond to the spirit of the Declaration. The European Communities believed that it was crucial that the measures to be taken remained reasonable and proportional, both with regard to the risk of trade diversion and with regard to the institutional and administrative capacities of the Member concerned. He, however, considered it to be only fair that all WTO Members should take their responsibility in preventing the importation of the products concerned into other markets.

13. Turning to the issues of transparency and cooperation with the right holder, he said that the EC proposal on these issues stemmed mainly from two considerations: first, the application of the proposed exception would lead to the specific situation where a product that had been sold in one country would have been produced in another country under a compulsory licence for the specific purpose of export; second, that the best way to expedite the delivery of medicines to the populations in need at strongly reduced prices was through reduced-pricing offers by the right holders. Therefore it was crucial to enable the patent holder to make a proposal to rapidly solve the problem by offering sustainable voluntary licences and strongly reduced pricing offers, without unduly delaying the procedure leading to the possible granting of a compulsory licence. To ensure full transparency of the process the European Communities proposed that both Members involved should, in any event, promptly notify the right holder of their intention to issue a compulsory licence. In case the product in question was not patented in the country without manufacturing capacity, the intention to request another Member to issue a licence to supply the product should be notified to the WTO. A significant advantage of this procedure would be that Members interested in manufacturing and delivering the goods could make themselves known to the Member without manufacturing capacities. The right holder of the patent at stake should be given the opportunity, within a reasonably short timeframe

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after notification, to make an offer to supply the relevant products at strongly reduced prices. This did not mean that prior negotiation with a view to obtaining a voluntary licence, as prescribed by Article 31(b), should take place under all circumstances. What was being proposed was that before a compulsory licence was granted the right holder should be given an opportunity to offer the product at strongly reduced prices. Prior negotiation, as prescribed by Article 31(b), should only take place in the absence of a situation of extreme urgency or emergency. It would be appropriate to ensure that if the use of the product was intended to address a case of a national emergency or other circumstances of extreme urgency in the importing Member, the Member authorizing the production would not be obliged to first try and obtain a voluntary licence. However, the right holder should be notified and left a short period of time to make an offer to the importing country. Once this short period was over, a licence could be granted, unless the offer from the right holder was deemed satisfactory by the country in need. This proposal, far from being a delaying tactic, was a mechanism to give the right holder a last chance to propose a rapid solution to the problem. If such an offer was deemed sufficient by the importing Member without manufacturing capacity, there should be no reason for the exporting Member to resort to a compulsory licence under the proposed exception. It would be up to the importing Member to judge whether the offer by the original manufacturer was sufficient to meet its needs. The representative wanted to make very clear that the conditions outlined above would only apply with regard to the new exception that would be inserted in Article 31 and that they would not encroach on the flexibilities existing under the current Article 31 nor on the future interpretation of these flexibilities. He concluded that, in the view of the European Communities, these proposals were reasonable and fully matched the objective of the Declaration to ensure access to affordable medicines and, where appropriate, to make available the means, by the end of 2002, to overcome the obstacles that might be created by the existence of patents.

14. The representative of the United Arab Emirates recalled that the Declaration, which had been one of the most successful decisions of the fourth Ministerial Conference, could and should be interpreted in a manner supportive of WTO Members' right to protect public health and in particular to promote access to medicines for all. Many options had been explored by Members' during the last session of the TRIPS Council and that his delegation had taken note of the presentations by Kenya and by the European Communities, which reflected a positive approach to dealing with this issue. In this respect the focus on Articles 30 and 31 of the TRIPS Agreement had been very important to reach an expeditious solution as envisaged under paragraph 6 of the Declaration. However, there were other articles not less important and relevant to the discussion, namely Articles 6, 7, 8, 27 and 39 which would help to see the big picture of the issue being discussed and which, in turn, would help in finding a broader and long-term solution. He suggested that paragraph 6 of Declaration should be read in the context and spirit of the entire Declaration as a narrow approach would not help the TRIPS Council in reaching a sustainable solution.

15. He said that the transfer of technology was crucial for developing countries to build a better manufacturing capacity in the pharmaceutical sector with the aim to ensuring sustainable access to medicines and other public health-related products. Transfer of technology being one of the main objectives of the TRIPS Agreement, he proposed that the Council take fully into account these objectives in exploring solutions and flexibilities decided by Ministers in Doha. Any solution under paragraph 6 of the Declaration should be sought to be available to all developing countries while recognizing the specific problems and difficulties of the poorest among them. The Declaration did not indicate directly or indirectly that the envisaged solution should be restricted to a category of countries nor that some countries should be excluded from the solution since any developing country could face inadequate access to medicines. It was worth noting that developing countries faced various challenges depending on their own situations. There were developing countries that faced a total absence of manufacturing capacities, while others, that were at the early stages of development, faced difficulties in using fully the TRIPS provisions because of their insufficient industrial and technological capacities. This was why a broad and sustainable solution should be envisaged to take into account the concerns of all developing countries. Referring to the proposal of the United Arab Emirates contained in IP/C/W/345 he said that certain elements would contribute to exploring

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balanced and sustainable solutions to the problem, in particular paragraphs 16 and 18, which focus on Article 30 and 31 of the TRIPS Agreement.

16. The representative of Brazil said that his delegation was one of the co-sponsors of the proposal contained in document IP/C/W/355 together with a group of other developing countries that included Bolivia, Cuba, China, Dominican Republic, Ecuador, India, Indonesia, Pakistan, Peru, Sri Lanka, Thailand and Venezuela. The initiative to circulate this proposal reflected the commitment of these countries to find an "expeditious solution" to the problem identified in paragraph 6 of the Declaration. He recalled that the mandate of this paragraph obliged the TRIPS Council to find a solution before the end of 2002 and expressed the wish of his country to see this timeframe complied with. He indicated that his delegation would comment later on the other proposals that had been submitted and that there was some overlap between IP/C/W/355 and the proposal of the African group and that of the United Arab Emirates, while the EC proposal also contained some positive elements.

17. He said that the proposal was based on a thorough discussion among the group and had benefited from occasional inputs from academic experts. He added that, as far as he could ascertain, it had found support in important sectors of civil society and among NGOs within and outside the co-sponsoring countries. The proposal was based on the view that paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health should be read in the light of the entire context of the Declaration as well as of the flexibilities contained in the TRIPS Agreement itself. Solutions based on paragraph 6 should not be detrimental to the fulfilment of the objectives of the TRIPS Agreement in terms of transfer of technology, which was critical to improving manufacturing capacity in the pharmaceutical sector and therefore to ensuring sustainable access to affordable medicines.

18. Concerning the potential beneficiaries of the solution envisaged under paragraph 6, he said the group had stressed that any WTO Member could face difficulties in making effective use of compulsory licences due to insufficient or no manufacturing capacities in the pharmaceutical sector. The solutions envisaged by the TRIPS Council should therefore not exclude specific categories of countries. Developing countries and least-developed countries should, in any event, be among the main beneficiaries of possible expeditious solutions. He welcomed the fact that Members appeared to recognize that difficulties of access to public health-related products were not limited to countries with no or insufficient manufacturing capacities where these products were protected by patents. He believed that the expeditious solutions being contemplated by the TRIPS Council should also envisage situations where no patents existed in the countries in need of access to public health-related products.

19. He said the co-sponsors believed that, in reporting to the General Council, the TRIPS Council should recommend an authoritative interpretation of Article 30 of the TRIPS Agreement that would recognize the right of WTO Members to authorize third parties to make, sell and export patented public health-related products without the consent of the patent holder to address public health needs in another country. Members might also consider the possibility of establishing appropriate safeguards as long as these did not have the effect of undermining the interpretation proposed or prejudicing the existing right of countries to make use of Article 30 in other circumstances. Referring to Article 30 of the TRIPS Agreement, he said that the group of developing countries, on behalf of which he was speaking, was convinced that an interpretation such as the one that had been proposed would not unreasonably conflict with the normal exploitation of the patent and would not unreasonably prejudice the legitimate interests of the patent owner as the limited exceptions addressed specific public health problems outside the territory of the Member and therefore did not conflict with the normal exploitation of the patent. The acts of making, selling and exporting of the products by third parties without the consent of the patent holder to countries with insufficient or no manufacturing capacities did not unreasonably detract from the returns ordinarily earned by the patent owner in the exporting country. The act of exporting was not enumerated among the exclusive rights conferred by the patent in Article 28 of the TRIPS Agreement.

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20. This proposal, he said, was without prejudice to the possibility of Members looking at other expeditious solutions to the problem identified in paragraph 6 or to the discussion of other proposals. He nevertheless underlined that it was the group's conviction that its proposal represented the simplest and most efficient solution to the serious problem that had been identified in paragraph 6. The group remained ready to continue to contribute to efforts in the TRIPS Council which were aimed at fulfilling the Council's mandate to find an expeditious solution before the end of 2002.

21. The representative of the United States said that, in efforts to harness international trade rules to help countries gain access to life-saving drugs and successfully fight pandemics such as HIV/AIDS, the Bush Administration had stated in February 2001 the commitment of the United States to a flexible approach that was sensitive to health crises and also protective of intellectual property rights. Under this policy the US Administration had informed WTO Members that as they took steps to address major health crises, such as the HIV/AIDS crisis in sub-Saharan Africa and elsewhere, the United States supported steps by Members to avail themselves of the flexibility afforded by the WTO TRIPS Agreement. She recalled that in Doha in November 2001, the United States had provided critical leadership along with other Members in developing support for a separate, landmark political declaration on public health and international trade rules. This Declaration had helped pave the way for a successful conclusion of the Ministerial. She further recalled that the United States remained the largest bilateral donor of HIV/AIDS assistance, providing 45 per cent of all international spending on AIDS. In the fiscal year 2003, President George Bush had requested United States$1.1 billion to combat HIV/AIDS internationally and had pledged United States$500 million to the Global Fund to combat the international scourge of HIV/AIDS, malaria and tuberculosis.

22. Introducing the US paper, she explained that it set forth the fundamental aspects of a workable, transparent, sustainable and legally certain solution that would fulfil the Declaration. The US proposal called for meeting the mandate WTO Ministers gave the TRIPS Council in Doha by ensuring that all poor countries could obtain needed pharmaceuticals for public health crises, even those with insufficient pharmaceutical manufacturing capabilities; ensuring that other developing nations with pharmaceutical production capacity could help supply these poor countries without the risk of running afoul of WTO rules, which should help develop capacity in these developing countries; encouraging Members to establish measures to prevent the diversion of such medicines away from intended recipients in poor countries back to higher-income developed markets, which would undermine the special flexibilities afforded to poor countries; being part of the growing WTO consensus in favour of using the existing compulsory licensing flexibility under TRIPS Article 31 as the most appropriate solution rather than by modifying other sections of the TRIPS Agreement; and continuing examination with other Members to determine the most expeditious mechanism for implementing this solution.

23. She said that the United States was encouraged by the substantive contributions of other Members toward this common goal and appreciated the communication and cooperation from WTO Members in the development of the US proposal. In reviewing the proposals tabled by other Members, she said that there were areas of commonality with respect to certain key issues such as the scope of the solution, the need for safeguard against diversion, and the desire to have an expeditious and legally certain solution. She concluded that the US delegation looked forward to ongoing cooperation in the TRIPS Council towards meeting this important objective.

24. The representative of Zimbabwe expressed his delegation's full support for the statement made by Kenya on behalf of the African group and for the proposal submitted by the African group. The African group had suggested a broad-based solution that sought to take advantage of every possible flexibility to enable Members to make effective use of compulsory licences. The Declaration had initiated the process of putting positive interpretations to provisions of the TRIPS Agreement which the Council should ensure continues. It was critical for every country to have the opportunity to improve its manufacturing capacity where inadequate and to establish capacity where none existed. Africa did not see itself, and others should not see Africa, as only a market for their products. Thus,

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the African group did not feel it was enough to say that the only workable solutions under paragraph 6 were the authoritative interpretation of Article 30 of the TRIPS Agreement or the amendment of Article 31 to allow exports to other countries which issue compulsory licences or the observance of a moratorium. His view was that the possible solution was broader and included helping countries with no manufacturing capacity to set up that capacity. This necessitated the adoption of every possible option, a fact the African group had stressed many times previously.

25. He said that Zimbabwe fully supported the paper introduced by Brazil, on behalf of a group of developing countries, which explored the elements for an Article 30 solution. His delegation considered the elements in this paper and similar elements in the Africa group proposal to be mutually supportive and complementary. The proposed elements in the African group paper could help focus the Council's dialogue so that Members did not continue talking past each other. All processes that the Council sought to put in place should be supportive and be an integrally part of, rather than detracting from, the setting up and implementation of an expeditious, comprehensive and enduring solution to enable countries with insufficient or no manufacturing capacity in the pharmaceutical sector to not only be able to make efficient use of compulsory licences but to realise the necessary capacity as well. In his view, the TRIPS Agreement had entered a new stage of being better understood, interpreted and implemented. This process deserved the greatest and most earnest effort on the part of all Members. The process affected important public policy issues of development and the social economic welfare of the majority of humankind, indeed of entire countries and peoples. The African group did not wish to see the paragraph 6 process to be as drawn out as other processes that had long subsisted in the Council. They did not wish to keep going around in circles or repeating the same thing with no tangible forward movement. The Council had a mandate to discharge and a deadline to meet. The African group awaited Members' comments and concrete suggestions on their proposal to move the process along.

26. The representative of Canada said that her delegation believed that for the solution to be expeditious, sustainable, workable, transparent and to have legal certainty, it had to be clear as to the scope of solution covered, the countries involved and countries which could qualify, among other factors. Measures to prevent abuse, such as diversion of medicines produced under the solution would also be required. The solution would also have to respect the other safeguards prescribed by Article 31 including notification of the rights holder and compensation. Canada shared the view that paragraphs 1 and 6 of the Declaration clearly defined the scope of the products and countries which should benefit from the solution. The solution should only apply to developing and least-developed countries which had insufficient or no manufacturing capacity in the pharmaceutical sector, and which were faced public health crises such as HIV/AIDS, tuberculosis, malaria, and other epidemics. She shared the concerns expressed by many countries that the solution should not be onerous or burdensome but believed that there should be a transparent procedure and a mechanism to monitor and address any problems of abuse. She agreed with the idea behind both the EC proposal to first provide the right holder with an opportunity to supply the medicines and the US proposal for transparency. Suppliers should also be encouraged to make medicines available on the basis of as close-to-cost-recovery as possible.

27. She recalled that at the March meeting a number of delegations raised the possibility of using an Article IX waiver as the basis for an expeditious solution. Canada believed that this approach, the modalities of which were clearly set out in Article IX of the Marrakesh Agreement, offered great promise. The waiver could be formulated for an extensive period of time with the annual review requirement being essentially a pro forma assessment of any associated conditions such as transparency, efforts to prevent diversion, and application of provisions in Article 31. She observed that while individual countries had mostly made requests for waivers under the WTO, there was also a precedence for collective waivers. The waiver approach also provided considerable legal certainty as it was an established mechanism which could clearly delineate some of the provisions that the Council needed to consider. Canada did not believe that the annual review requirement should be seen as

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burdensome since it was a recognized compromise between the need to be minimally intrusive and the need for transparency and to monitor the process.

28. She recalled that another proposed solution was for Members to agree to a moratorium on dispute settlement. The delegations of the United States and Kenya, on behalf of the African group, had outlined some of the obvious benefits. A Member supplying medicines to others faced with the challenge set out in paragraph 6 would not be subject to the WTO dispute settlement understanding. Encouraging or permitting the diversion of medicines supplied under this approach would clearly be outside the scope of the moratorium. However, a moratorium would also enable an expeditious solution and if specifically tied to the safeguards outlined in Article 31, would also have less of a risk of an unintended effect on non-pharmaceutical sectors.

29. She further recalled that some Members had proposed two solutions involving an amendment to Article 31: one was deleting Article 31(f) and the other was creating an exception to Article 31(f) for situations raised by paragraph 6. The modalities for amending WTO agreements were clearly set out in Article X of the Marrakesh Agreement. With respect to the deletion proposal, she reminded Members that TRIPS Article 31(f) applied to all patents and not just pharmaceuticals which might be needed to address public health crises. She shared the views of the European Communities that it was worthwhile to maintain the basic principle contained in Article 31(f). There was a sound policy rationale in respect of the territorial application of intellectual property law, national sovereignty and the need to avoid the circumvention of patent rules. The European Communities had proposed the addition of a new paragraph to Article 31 and she believed that this approach also had merit, provided that the exception was carefully drafted. Recalling that since the Council's discussions began over a year ago, a number of Members had proposed an approach relying on Article 30, she said that her initial reading of the paper introduced by Brazil suggested that it called for a solution that would entail interpreting Article 30 in a way that would allow a Member to introduce a specific exception in its law to allow it to supply a Member facing a public health crisis that had granted a compulsory licence but was unable to supply its own domestic market due to lack of manufacturing capabilities. She reiterated that Canada did not favour an Article 30 interpretation because it would ultimately undermine existing patent provisions in the agreement and said that other delegations had expressed similar concerns.

30. Canada acknowledged the African group's and the United Arab Emirates' call for technology transfer. She shared the view that increased foreign investment and transfer of technology across all sectors was critical to improve the general well-being and economy of African nations. Reactions to the NEPAD proposal submitted to the G8 leaders summit in Canada would be very important. In conclusion, she reiterated the importance of ongoing dialogue and cooperation between Members in a variety of international fora such as the WHO, UNGASS and UNAIDS.

31. The representative from Egypt said that, in his view, neither of the Secretariat papers (IP/C/W/348 and IP/C/W/345) were complete or updated and hence should not be taken as authoritative guides to carrying out the Doha mandate. The paper on available information on the existence of patents seemed to suggest that the scope of the Declaration be confined to diseases specifically referred to in the Declaration such as HIV/AIDS, tuberculosis and malaria whereas prior Council discussions and the scope of Declaration had covered other epidemics as well. The typology in annex 4 of the paper on manufacturing capacity for medicines truly reflected the different categories in the pharmaceutical industries. But having a manufacturing capacity did not automatically mean innovative or production capabilities. A distinction had to be drawn between the industrial capacity or the hardware on the one hand, and the technological capacity or the software on the other. Furthermore, capacity to produce differed from one case to another in the same country. Accordingly, it was difficult to perceive a solution based on a clear-cut, rigid classification of countries. Information on capacity was, however, useful in the Council's deliberations under items such as implementation of Article 66.2, technical cooperation and capacity building.

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32. He said that the solution envisaged under paragraph 6 of the Declaration was one which addressed flexibility in the interpretation of the TRIPS Agreement itself, without which the problem highlighted in that paragraph would be extremely difficult to resolve and that the solution should reflect the overall objectives and spirit of the entire Declaration. No attempt was being made to renegotiate the Agreement or to amend it under Article 71.1 and that there should be no attempt to take away existing flexibilities. In this context the simultaneous consideration of several Articles of the TRIPS Agreement of horizontal nature and effect, such as Articles 6, 7, 8, 28.1 (including the footnote), 30, 31, 65.4, 66 and 67, was required even if the TRIPS provisions directly related to the problem at hand were those embodied in Articles 30 and 31(f).

33. He said that the Council could envisage three scenarios in order to test possible solutions. The first scenario involved a source country "S" which had sufficient manufacturing capacities and technological capabilities in the pharmaceutical field, and a target country "T" with insufficient or no manufacturing capacities or technological capabilities in such field. Country "S" could legitimately export a portion of its surplus of the pharmaceutical product to "T", if the latter was afflicted with the same public health crisis that was treated by the same pharmaceutical product. The legitimacy of this action derived from Articles 6, 28.1 and a flexible interpretation of 31(f), enforced by paragraph 5(a) and paragraph 5(d) of the Declaration. In a second scenario, the target country afflicted by a public health crisis, could issue a compulsory licence authorizing the importation of a patented pharmaceutical from the source country "S", where a competent pharmaceutical firm was permitted to manufacture the requisite pharmaceutical in sufficient quantities, under a limited exception allowed by a flexible interpretation of Article 30 for the sole purpose of supply to the target country. This situation could be served either by an authoritative interpretation of Article 31(f), which might be difficult to pursue without an amendment, or an authoritative interpretation to Article 30 in a manner that allows pharmaceutical products manufactured under a compulsory licence in a source country to be exported to address a public health crisis in a target country. The European Communities in their submission (IP/C/W/339) last March elaborated on this point also calling for safeguards to prevent diversion of trade from its destination, an element Egypt could support and was ready to discuss its modalities in the future. But these safeguards should not be a tool for restriction beyond what was already in the Agreement or the Declaration. A third scenario would involve both countries being members of the same regional market or bound by a free trade area, a customs union, or an economic cooperation treaty. When one or more target countries of the same regional trade arrangement, along with the source country, were afflicted by a public health crisis requiring the use of a particular pharmaceutical product protected by local patents, it could request the issuance of a compulsory licence by the source country "S" to enable the production, in its own territory, of the required quantities of the needed pharmaceutical for the sole purpose of exporting to one or several target countries. This scenario clearly required a more complex level of flexibility in the application of the TRIPS Agreement which could be served by agreeing to the adoption of an objective-bound moratorium on dispute settlement measures against WTO Members who might be involved in such a situation. For such moratorium to be effective and useful, it should last for a duration that covered at least the entire period of the public health crisis that strikes the country or countries of the region. This scenario needed to engage the relevant international and regional organizations (e.g. WHO and the ECA, in the case of Africa) during the period of application, for the purpose of monitoring its operation and assessing the health situation in the country or countries in question, as a reasonable and effective safeguard measure.

34. The representative of Egypt cited a distinct parallelism, if not coincidence, between two situations where commercial interests and humanitarian considerations were involved. Commercial interests were well recognized where anti-competitive practices were concerned, as depicted in Article 31(k) which offered a legitimate case for waiving the Agreement's limitation imposed under Article 31(f) on the export of a pharmaceutical produced through a compulsory licence. Humanitarian considerations, which arose when a public health crisis afflicted a poor country lacking manufacturing capacity, offered sufficient cause for a similar waiver, thereby enabling the export of a pharmaceutical produced under a compulsory licence to a destination where it was critically needed. In the first case,

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the Council was faced with a situation where the waiver was punitive and offered correction or remedy through an explicit TRIPS provision. In the second, the Council faced a more serious situation where the waiver, which remained to be instituted, could be a life-saver for millions of human lives.

35. He said that in implementation of the envisaged solution under paragraph 6, there was a need to ensure that such solution would bring the fullest range of health benefits to the poor countries afflicted by serious public health crisis without causing avoidable damage to the pharmaceutical patent right-holder. This required that effective measures be taken to prevent the misappropriation and misuse of the pharmaceuticals produced under a compulsory licence and imported into a poor country afflicted by a health crises in order to avoid trade diversion to countries which face no such crisis or to countries which should not enjoy the privileges resulting from a solution in question. A fair and useful implementation of the envisaged solution should involve measures of transparency to notify Members about relevant implementation steps, which could also accommodate safeguard conditions. The African group and developing group papers provided a number of practical, yet expeditious, solutions for the Council to take up.

36. The representative of Mauritania said that paragraph 6 was clearly the most important paragraph and was the focus of the public health issue. There was an urgent need for the Council to tackle this problem as this was a matter of life and death for millions of people and was the very spirit and meaning of the Declaration. The problem identified in paragraph 6 concerned two main points: first, in the case of countries with lower production capacities in the pharmaceutical sector there was a problem of lack of medicines as well as of procedures and infrastructures and second, the scope of application of compulsory licences was central to the problem, particularly in the light of Article 31(f) that limited, the scope of action by referring mainly to domestic markets. Various options were viable but emphasized the submission of the African group which proposed very practical solutions that could be quickly implemented. The first would be to draft a decision that would simply delete Article 31(f). The European Communities had raised a procedural problem that this solution could only be applied following the 5th Ministerial Conference. If this interpretation was correct the Council should be able to apply an authoritative interpretation of Article 30 to extend the scope of the exceptions. He believed that it was essential that the Council considered both these solutions and that a precise and clear legal method was brought forward. The appropriate legal mechanism should be proposed as was done for paragraph 7 where a proposal was submitted to the Council. The Council also needed to separate the conditions of application of the solution from the principle of the solution. Concerning conditions of application such as countries of low capacity, safeguard measures, the possibility of diversion of these provisions, the Council had WTO rules that applied in these cases as well as domestic legislation, particularly regarding the exhaustion of rights. These were common principles and should be separated from the principle of needing to find a solution in the light of the instructions given to the Council by its Ministers as stated in the Declaration. The submitted papers, particularly that of the African group, presented very clear proposals and that the Council should be able to adopt a practical, legal solution which could be quickly implemented to solve the public health problems that were in need of an urgent solution.

37. The representative of Brazil said that his country was proud to be one of the co-sponsors of the proposal by developing countries on paragraph 6 as it reflected its national public health objective of ensuring access to pharmaceutical products. It was his view that sustainability of access to these products was one of the most important elements related to the solution and to this end Brazil had carried out a number of initiatives to ensure access to medications, both generic and patented, for the treatment of a number of diseases. One of the most notable examples of these initiatives was the Brazilian Programme on Universal Access to AIDS Medications which had become a reference of a successful initiative among developing countries in light of its positive results in reducing by half the number of deaths and infections caused by HIV/AIDS in Brazil. He emphasized the importance of the local manufacturing of anti-retroviral drugs as a means of ensuring sustainable access and the success of the Brazilian Programme and said that Brazil did not necessarily have full local

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manufacturing capacity as the active substance for their manufacturing was most often imported from other countries, including Members availing themselves of the transitional period provided by the TRIPS Agreement until 2005. At the end of that transitional period access to affordable, off-patent pharmaceutical products, including their active substances, would become more limited and that the sustainability of the Brazilian public health policies could be put into question in Brazil and in many other countries.

38. He said that discussions on paragraph 6 were relevant for Brazil not because of its export interests, but given its limited domestic manufacturing capacity. The sustainability of access to pharmaceuticals would largely depend on complementary objectives between countries seeking access to pharmaceutical products and countries interested in supplying affordable medicines. As a potential beneficiary of the solution envisaged under paragraph 6, Brazil fully subscribed to the view expressed in the developing countries' paper that any WTO Member could face difficulties in making effective use of compulsory licences due to insufficient or no manufacturing capacity in the pharmaceutical sector and that the solutions envisaged by the TRIPS Council should not exclude specific categories of countries.

39. He said that the proposal on an authoritative interpretation of Article 30 of the TRIPS Agreement represented the shortest line between the problem and the solution. He disagreed with Members who had argued that the scope of Article 30 could not incorporate the interpretation proposed by developing countries as nothing in the letter and spirit of Article 30 of TRIPS prevented Members from authorizing producers (not having the consent of the patent holder) to make, sell and export public health-related products, to address health needs in other countries with insufficient or no manufacturing capacities as a limited exception. He recalled that in its intervention in the last session of the TRIPS Council, the United States had argued that Article 30 authorized limited exceptions to patent rights for such things as research exemptions, prior users' rights, pre-expiration testing. He endorsed the view that these are non-exhaustive examples of the acts that could be included in Article 30 but believed that the provision did not preclude an interpretation along the lines suggested by developing countries. Limited exceptions to rights were deviations from rules that were constrained within boundaries and the suggested authoritative interpretation would clearly delineate boundaries as it would apply to the specific context identified in paragraph 6. In this sense, this limited exception could not be extrapolated to intellectual property rights other than patents. Members would not be able to reasonably invoke it in situations other than those arising out of insufficient or no manufacturing capacities in the pharmaceutical sector and that it would not be able to apply to sectors other than pharmaceuticals. He reiterated Brazil's readiness to discuss such safeguards provided that they did not have the effect of undermining the practical use of, or to prejudice the existing right of countries to use, Article 30 of TRIPS in other circumstances. He referred to the proposal by developing countries regarding the possibility of establishing appropriate safeguards that would ensure legal predictability in this particular use of the provision. While Brazil was open to other possibilities including ones that might eventually result in amendments to the TRIPS Agreement, an interpretation of Article 30 would not require modifications in the text of the Agreement, thus permitting the General Council to adopt such a solution rather than requiring approval by the Ministerial Conference. One important feature of the authoritative interpretation was that the decision on whether or not it was reasonable to authorize an Article 30 exception necessarily resided in the country from which exports could be undertaken. If a Member considered that authorization of this limited exception would undermine its own interests, it might refuse to grant such an authorization.

40. Regarding other possible solutions, he said that the Brazilian delegation had raised, at a prior meeting, the possibility of amending Article 31 so as to eliminate its paragraph (f) but that Article 31-based proposals raised a number of issues that might eventually impose restrictions on a solution under paragraph 6, particularly in situations where a patent existed in the importing country. Those issues, he continued, included the need to issue compulsory licences in both the importing and the exporting countries, a step which could be administratively burdensome and difficult to coordinate.

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The issue of determination of remuneration was another point of concern as the patent holder should not, in any case, be entitled to double remuneration, as both compulsory licences would be issued to address essentially the same problem. It might be more reasonable to determine compensation in the country where the product was consumed, since the amount of compensation should maintain some relationship with the ability of patients to afford the product. The proposal by the European Communities failed to address these points which were most important when addressing workable solutions although, in principle, there seemed to be a common ground between the European Communities and the developing countries' proposals regarding the general recognition that solutions based on moratoria or waivers would to be too narrow in nature and might not be sustainable or provide the necessary legal predictability.

41. The representative of Peru said that her delegation supported the statement made by Brazil on behalf of many developing countries including her own. Many Members with insufficient or non-existent manufacturing capacities might face serious difficulties in efficiently applying a compulsory licensing regime provided for in the TRIPS Agreement. These difficulties were greater in the least-developed countries and in developing countries that did not have economies of scale or did not have the appropriate infrastructure and technology. These Members were unable to exercise, in practice, the rights recognized in Article 31 of the TRIPS Agreement because there were no domestic manufacturers to whom such compulsory licences could be granted. Consequently, these countries did not enjoy the degree of flexibility nor did they have the room for manoeuvre that compulsory licensing should give them and hence they could also encounter serious difficulties when negotiating substantial reductions on prices for patent medicines. She felt that the preferred solution to overcome this problem was the adoption of an authoritative interpretation of Article 30 of the TRIPS Agreement. The proposal of such an interpretation was solely intended to find an expeditious solution to the problem described above without prejudice to the legitimate interests of the right holders. She recognized that there were other possibilities in dealing with this problem, such a modification of Article 31(f) or the addition of a new sub-paragraph in Article 31 as proposed by the European Communities but considered that an authoritative interpretation of Article 30 would be the easiest and most expeditious solution. Any other solution could be a complement, but should not be an exclusive solution. She agreed with the United Arab Emirates that the Council should look at solutions for the medium and long-term and that what was required was the promotion of transfer of technology in order to increase and improve the capacity of Members to produce pharmaceuticals.

42. The representative from Hong Kong, China said that any Member could potentially find itself in the position of being unable to manufacture a particular treatment of sufficient quality and of having to seek supplies abroad and that the solution identified should not, a priori, be restricted to certain categories of Members, particularly as there was no such distinction made in the Declaration. He expected developing country Members, in particular least-developed country Members, to be among the main beneficiaries of the eventual solution. Regarding the legal vehicle to effect the eventual solution, he said he had an open mind and considered that all the four options identified so far could provide the eventual solution. An authoritative interpretation of Article 30 he felt would offer an expeditious route with less procedural requirements. On the other hand, he noted the concern expressed by some Members over whether the limited exceptions under Article 30 offered sufficient scope to cover the present scenario. Seen in this light, his delegation was prepared to consider favourably the option of amending Article 31, provided that a satisfactory temporary arrangement would be put in place to operationalize the flexibility, pending the entry into force of the amendment. He concurred with the European Communities that the opportunity should first be afforded to the right holder, within a short timeframe after notification, to make an offer to supply the relevant products at strongly reduced prices. Finally, his delegation agreed that whatever option the Council chose, it needed to put in place sufficient and yet reasonable and proportionate safeguards to ensure that the TRIPS Agreement was not undermined and to prevent abuses. In this regard, he sought a clarification from the European Communities on whether, in view of the proposal in paragraph 14 of its paper that asked all WTO Members to take the responsibility in preventing the importation of the products

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concerned into other markets, any new obligation would be imposed on third countries to prevent the re-importation of medicines manufactured on the basis of the authorization.

43. The representative from Indonesia associated itself with the paper of a group of developing countries (IP/C/W/355) introduced by Brazil. She said that the proposals submitted suggested an Article 30 approach, Article 31(f) approach, a moratorium, a waiver, and an Article 31(k) approach. These proposals merited discussion and full exploration in the TRIPS Council, in order to find an agreed solution. She recalled that the Declaration was not just about finding an expeditious solution to the problem of Members as recognized in paragraph 6, but equally about ensuring that there was an effective and comprehensive solution to protect public health and in particular to promote access to medicines for all. She emphasized that for the majority of the world's governments spending on medicines was far from adequate. The pressing issue for this majority was how to have access to needed pharmaceutical products as cheaply as possible and that it was important for the Council to look at the Declaration in its entirety. Any agreed solution must be available to all Members in need, without exemption, as public health problems and epidemics are not exclusively the problem of a certain group of countries or region. In addition, the solution must not be administratively or financially burdensome for Members to implement and must not compromise the sovereignty of Members in its implementation. The solution must also provide a clear framework and adequate incentives to enable the development of manufacturing capacities of pharmaceutical products in countries where it was economically viable to do so. Any agreed solution must support and be in line with Article 7 and 8 of the TRIPS Agreement, particularly to provide access to medicines needed for public health.

44. She said that, without prejudice to the possibility of other non-exhaustive expeditious solutions, Indonesia believed that an authoritative interpretation of Article 30 of the TRIPS Agreement was needed. This authoritative interpretation would aim to authorize third parties to make, sell and export public health-related products without the consent of the patent holder to address public health needs in another country and was the most feasible and effective solution. This proposed solution, submitted by a number of developing countries, could fulfil the conditions and criteria mentioned above, as well as provide the necessary legal predictability not available in a moratorium or waiver. More importantly, authoritative interpretation of Article 30 did not need to refine or amend the TRIPS Agreement and so could provide an expeditious solution.

45. She said that the EC proposal to amend Article 31(f), while having some positive elements, did not fully fulfil the criteria mentioned above. She was concerned that the various conditions proposed by the European Communities would not ensure the protection of public health objectives set out in the Declaration. For instance, the EC proposal to limit the product scope would prejudge the future need of health products to protect public health and any emergencies that might arise and limit the availability of the solution to selected countries and would not be in line with the Declaration.

46. Turning to the issue of safeguards, she said that while safeguards might be necessary to prevent abuses, they should not impose an unnecessary burden on Members and in this regard, she stood ready to work together with Members in finding appropriate safeguard provisions. In the interests of finding an expeditious solution and to ensuring that Members used the flexibility provided by the TRIPS Agreement as confirmed by the Declaration, she strongly encouraged the TRIPS Council to continue its collaboration with other international organizations such as the WHO and WIPO.

47. The representative of Sri Lanka supporting the statement made by Brazil on behalf of a group of developing countries including her own said that she was encouraged that almost all countries had reiterated their commitment to continue efforts to find an expeditious solution before end of 2002. She reiterated the ideas she had presented at the March meeting and said the effective use of compulsory licences involved strategies to access essential medicines generally and in cases of national emergencies, and to encourage the development of domestic capacities for the manufacture

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of pharmaceuticals. The solution should therefore not aim at getting medicines from countries with capacity to those without capacity but should ensure that capacity was built up in the long-term.

48. She felt that the Council should avoid taking a narrow approach in considering expeditious solutions to the problem as the Ministerial direction gave Members the option to look at a solution within the strict confines of the existing Agreement or to look at broader solutions that would entail an amendment to the Agreement. The need to consider different scenarios under which the problem could occur meant that the solution ultimately had to be an integrated one as paragraph 6 related to both problems in the exporting countries with capacity as well as in importing countries without capacity. The latest EC and US proposals had tried to identify varying country situations on the basis of whether the patents for pharmaceutical products were available in the importing and exporting countries but she believed that more deliberations were needed on this point.

49. She said that the product coverage should not be narrowly construed in a manner that would restrict it to only limited components of treatment or medicines. She supported the suggested product coverage contained in the African proposal that pharmaceutical products be understood to include medicines, related technical processes and related technical equipment. She questioned whether the Council should limit coverage to only least-developed countries and some selected developing countries or use the criteria of purchasing power or income levels to minimise the list of countries. Before the Council got into the process of identifying countries, it was important to clarify and agree upon what "insufficient or no manufacturing capacities in the pharmaceutical sector" was understood to mean. She questioned whether the Council should only consider the formulation of dosage forms or whether the production of intermediaries, such as chemical intermediaries, raw materials or bulk drugs, should be taken into account. According to the papers prepared by the Secretariat, based on the UNIDO studies, there were several stages in the production process in the pharmaceutical industry. The process started with research and development to discover and develop new drugs called new chemical entities. The second stage consisted of the production of chemical intermediaries from basic chemicals and required innovative capabilities. According to UNIDO statistics there were only six developing and 12 industrial countries that had such innovative capabilities. The third stage involved the production of raw materials or bulk drugs from chemical intermediates, fermentation and plant sources and the fourth included the formulation of dosage forms or finished products from imported raw materials or bulk drugs. It would be important for the Council to take into account the different stages of the process and to draw a line as to the meaning of the production limitation. UNIDO had classified countries into five groups based on the degree of development of pharmaceuticals technology and industrial production and that IP/C/W/345 in annex 4 outlined these five categories. The Secretariat had apparently tried to categorize countries based on the criteria provided by UNIDO but that this could give wrong signals because the definition of a finished product could be potentially overly broad, for example formulating the dosage form might be considered to be finished products. Her delegation instead proposed the following categorization, depending on the stage of development: the Council could identify first countries without pharmaceutical industry at all; second, countries that have capacity to formulate dosage forms from imported raw materials; third, countries that have the ability to produce therapeutic ingredients or raw materials from chemical intermediaries; fourth, countries with full innovation capacity, namely, the ability to copy new chemical entities through reverse engineering and finally countries with a sophisticated, vertically integrated pharmaceutical industry with a significant research base.

50. She said that the solution that Members were committed to identify should be comprehensive and the procedures to operationalize the solution should be effective without being burdensome. The proposals of the developing countries and of the African group suggested an array of solutions that deserved careful analysis by the Council. The proposal submitted by the group of developing countries, including her own, had made six relevant suggestions: first, an authoritative interpretation of Article 30 was the best solution with the advantage that it avoided burdensome procedures related to granting compulsory licences in the exporting country as it did not require a counterpart compulsory licence in the exporting country and circumvented the difficulties of the quantitative

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restriction on exports from a compulsory licence under Article 31(f); second, the solutions based on Article 31(f) were of limited value since they would need compulsory licences both in the importing and exporting country, which would be administratively burdensome and would create difficulties relating to remuneration and would require more implementation steps; third, the determination of whether or not a Member had insufficient or no manufacturing capacity should be made by each Member on its own; fourth, the solution adopted by the Council should be grounded on economic feasibility, especially questions of economies of scale; fifth, the solution must be all encompassing and cover Members without a patent system or without patents on the particular products and finally, with respect to safeguards and in order to ensure that the actions taken under Article 30 were limited, safeguards to provide legal predictability might be part of the solution, provided they did not prejudice the rights of Members under Article 30 and did not limit the actual existing flexibilities in the TRIPS Agreement, as read with the Declaration considering that the burden of enforcement with respect to safeguards rested on the parties interested in the safeguards such as patent holders.

51. She said that both the US and EC papers presented in the March and June meetings emphasized the need for conditions to avoid abuses and trade diversion of pharmaceutical products exported to countries that needed them. The current attempts were to address an unbalanced situation and that the Council should be careful not to create more imbalances by complicating any envisaged solution with terms and conditions that might turn out to be more burdensome that what was currently in the TRIPS Agreement. Both the EC and US papers highlighted the fact that the objective of any solution was the need to take care of "serious health problems" arising in small economies. However, her delegation saw the objective of a solution as the need to enable Members with insufficient or no manufacturing capacities to make effective use of compulsory licences, as set out in paragraphs 6 of the Declaration. She stressed that paragraph 6 referred to any compulsory licence and not just to those that related to serious health problems and that paragraph 5 recognized that countries were free to determine the grounds upon which they could grant compulsory licences.

52. The representative of Australia was pleased that a number of the papers from delegations had emphasized flexibility and had ventured a number of ideas which were practical and realistic and could form part of a final package. In his opinion, it appeared that on certain key issues such as scope, safeguards, transparency and the need for an expeditious solution, there was considerable convergence in the thinking of the Council. Australia's focus was on a practical outcome to this problem, one that could be found in a way that maintains the integrity of the TRIPS Agreement. He highlighted two key elements that he considered the TRIPS Council should take into account in crafting the details of the solution: first, the scope should be to address the public health problems afflicting developing countries and particularly least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics and pandemics; second, while safeguards to prevent diversion were necessary for the credibility of the solution, they must be reasonable and effective. He highlighted existing TRIPS provisions, such as Article 44.1 on injunctions to prevent imports, as a fundamental element of these safeguards. Australia was attracted to this approach as it would impose no new burden on the third countries, often developing countries, to which low cost drugs could be diverted. Technology transfer had been raised by some delegations and that there was no doubt that further work needed to be done on this aspect and that Australia looked forward to the discussions, based on Article 66.2 of TRIPS, later in the week.

53. He said that his delegation was looking carefully at all the proposals on the table but was attracted to a solution based on Article 31(f). Australia also saw the benefits of a waiver or a similar approach, rather than an amendment, as this targeted the anomaly which gave rise to the problem, namely, the wording of Article 31(f). A waiver, or some form of flexible instrument like a waiver, would provide legal certainty and had the added advantage of being able to be put in place quickly. He added that it could also be adjusted quickly in light of experience with the new system. While consideration of the most effective legal mechanism was important, it would not be helpful to get bogged down in a detailed discussion of these finer legal points when the real focus of the discussion, at this time,

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should be on fleshing out the overall elements of a solution such as the scope of the problem and appropriate safeguards.

54. The representative of Pakistan noted that the Declaration made a significant contribution towards making the TRIPS Agreement more responsive to the needs of the developing countries by, inter alia, reaffirming that its provisions shall be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and in particular, to promote access to medicines for all. It clarified the provisions in the Agreement providing for a certain degree of flexibility to countries in application of the rules they prescribe, particularly those relating to the grant of compulsory licences and the right to determine national emergencies. The Declaration further clarified that each Member had the right to grant compulsory licences and the freedom to determine the grounds upon which such licences and the should be granted. Likewise, it reaffirmed that each Member had the right to determine what constituted a national emergency or other circumstances of extreme urgency. By clarifying and reaffirming these provisions the Declaration had effectively ensured that the flexibility and freedom available under these provisions to the developing countries to require patent holders to grant compulsory licences was not restricted in the future through narrow judicial interpretations. Although compulsory licences and parallel imports were measures to improve access to essential drugs, these were not permanent sustainable solutions completely under the control of the individual countries. Strengthening the technological, economic and commercial development of the pharmaceutical sector would, in his view, enable developing countries to build and strengthen their pharmaceutical manufacturing capacities that were of vital national interest for all sovereign nations. He recalled that Pakistan, along with a group of Members, had co-sponsored a paper, as presented by Brazil, proposing a possible expeditious solution to the problem and discussing at some length the various options available to WTO Members. While the paper proposed an authoritative interpretation of Article 30 as an expeditious solution, it did not preclude or prejudice the possibility of Members seeking an additional expeditious solution to the problem. He acknowledged that the African group and UAE papers had complementary elements and commonality in relation to the developing group paper and that the EC proposal had positive elements to it. He would make more substantive comments on these and the US paper at a later date. Finally, he said that the key word was expeditious and that any solution should be simple, without any onerous obligation of operationalization, have legal certainty and, above all, encourage technology transfer to developing and least-developed countries. He assured the membership of Pakistan's commitment to engaging in discussions for finding an expeditious solution to this problem within the timeframe provided at Doha.

55. The representative of Japan recognized that with respect to the paragraph 6, four proposals were now being considered. In his view it was quite natural to explore the solution in the context of Article 31 in the TRIPS Agreement because the issue at hand was closely related to this provision. Whichever of these Article 31 approaches were taken, the solution must be explored on a case-by-case basis in deference to the principle of compulsory licensing stipulated in Article 31(a). To that end, he called for the conduct a fact-finding survey in order to determine which countries were facing difficulties, which diseases caused these difficulties and how serious they were. This survey should also gather information on the patent system of those Members, including the legal status of pharmaceutical patents relating to those diseases and the manufacturing capacities with respect to those pharmaceuticals. He felt that through the analysis based on those facts it should be finally decided what mechanism of Article 31 would be the most appropriate. This process should be combined with case studies and an analysis of merits and demerits from both the substantial and procedural viewpoints, while taking into account the repercussions of the solution.

56. He elaborated that the proposed amendment of Article 31(f) that would add an exceptions clause to it or delete it altogether would be most appropriate if the problem needed a permanent solution. However, very careful consideration would be necessary, even if the Council found the facts suitable for this approach, in order to determine whether it was appropriate to amend the provision when there

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were still many countries that did not have the obligation to introduce a product patent system until 1 January 2006.

57. He said that the mechanism of a moratorium could benefit Members that envisaged the granting of compulsory licences for the purpose of predominantly exporting the medicines to Members with insufficient or no manufacturing capacities in the pharmaceutical sector. This would enable issues such as the participating Members or the terms and conditions to be decided on a case-by-case basis and decisions could be invalidated when the Council found that they are no longer applicable. A moratorium approach would thus be most appropriate if Members with insufficient or no manufacturing capacities in the pharmaceutical sector were in a localized area and a sufficient amount of pharmaceuticals could be provided in a relatively short time period.

58. He regarded the mechanism of waiver, which also permitted the Members or the terms and conditions to be decided on a case-by-case basis subject to an annual review, as a valid approach similar to that of the moratorium. One key difference, he felt, was in terms of the strict procedures that needed a Ministerial decision as laid down in the WTO Agreement. He insisted that a fact-finding process was important to decide which mechanism was the most appropriate solution and asked the Secretariat to provide more organized information, making full use of the documents IP/C/W/345 and 348, in order to make such process smooth and effective.

59. He said that whichever mechanism was finally adopted establishing common key elements was essential in order to have a substantial framework that defined the scope of diseases, the meaning of manufacturing capacities in the pharmaceutical sector, the qualification of importing or exporting countries, how to avoid diversion, the review system and so on. In this regard, first the scope of diseases should be limited to the ones in the Declaration; second, the meaning of manufacturing capacities in the pharmaceutical sector should be limited in correspondence to the scope of the diseases above-mentioned; third, it was necessary to discuss the cases which depended on the existence of the related product patent, taking account of the fact that some of developing countries actually have manufacturing capacities in the pharmaceutical sector; fourth, it was necessary to discuss the cases which depend on the existence of obligations to introduce a product patent system; fifth, it was important to establish a system to monitor and review issues of diversion and transparency; sixth, the work of establishing common key elements should be done in a manner consistent with the above-mentioned fact-finding process since both were closely related. He concluded by saying that since all these six elements have been pointed out and covered by the US paper, his delegation basically supported the statement of the United States.

60. The representative of India associated his delegation with the statement made by Brazil, on behalf of the co-sponsors of the paper which included his own. He viewed the many commonalities in the proposals submitted as an encouraging sign. He shared the views of Kenya and Zimbabwe that, in considering solutions to the problem described in paragraph 6, Members should bear in mind the need to fulfil and operationalize the objectives and principles in the TRIPS Agreement. The envisaged solution under paragraph 6 should in no way be detrimental to the fulfilment of the objectives of the TRIPS Agreement on transfer of technology and that the development of local manufacturing capacities for public health-related products was critical in ensuring the development of sustainable health policies and access to affordable medicines in developing countries. Difficulties in accessing public health-related products were not limited to countries which, at one point in time, can be categorized as having insufficient manufacturing capacity because the ability to manufacture pharmaceutical products was a dynamic concept. He elaborated that a country could be construed to have manufacturing capacity currently and yet might not in the future have the same effective manufacturing capacity for various reasons such as a paradigm shift to the next generation of technologies. Thus any country, including developed ones, could find themselves in a situation of temporarily not being able to manufacture medicines and that therefore, the proposed solution should be far-sighted and address such situations as well.

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61. Regarding the mechanism for giving effect to the proposed solution, he said that while India was open to further discussion about the most appropriate method, it clearly preferred a solution based on Article 30. He believed that an authoritative interpretation of Article 30 would have the major advantage of avoiding burdensome procedures related to granting compulsory licences in the exporting country. For the importing country, such a solution would leave the freedom to decide on the need to issue or not a compulsory licence for their imports. It would also avoid a dependency of the country in need on the exporting country. Other points such as double compensation, raised by Brazil, were also extremely relevant.

62. Regarding safeguards, he wanted more time to analyse the specific suggestions that have been made by the paper presented by the European Communities. He requested the United States to provide more details about their proposal on safeguards. He added that, in general, solutions should not be bound by such conditionalities as would make the effective use of the instrument difficult and that the existing flexibility of the TRIPS Agreement should in no way be compromised.

63. The representative of Senegal said that the two documents prepared by the Secretariat, including the paper giving information on manufacturing capacity for medicines, showed that there was a great shortfall in manufacturing capacity in some countries. There were common elements in the proposals tabled by the European Communities, the United States and the United Arab Emirates that could serve as a basis for a future decision on the matter.

64. Regarding the regional approach under Article 31, his delegation believed the Council did not need an overly legalistic interpretation of the concept of Member states and should not link it to interpretation of Articles XI and XII of the Marrakesh Agreement. In the TRIPS Agreement there was no equivalent to Article XXIV of GATT or Article V of GATS and so his delegation saw no legal or de facto constraint. He pointed out that if the Council considered the experience of OAPI, which was the intellectual property body for sixteen French-speaking African countries and its English-speaking equivalent, ARIPO, with its fourteen members, most African countries south of the Sahara were part of regional integration schemes relating to intellectual property in which WIPO and WTO were involved. Such regional agreements should be used since they had been useful in the past when looking for a solution to paragraph 6. He referred to the African group document which indicated in paragraph 16 that a footnote to Article 2 in the Agreement on Safeguards mentioned the concept of a regional approach in the context of domestic markets. This should be used as the inspiration for the regional approach when considering solutions under paragraph 6. It would be premature, at this point, to reject this approach or not consider it at all especially since, in his view, the regional approach was the only viable basis, at least for Africa, for equitable and lasting access for our countries to medicines. As Canada had reminded the Council earlier, Africa was trying to build a relationship with the G8 countries and there had been a regional conference which could be used as a context and framework for the transfer of technology. He agreed with Zimbabwe that Africa should not be viewed just as a market for others' products because there were many other possibilities. All solutions in the framework of paragraph 6, particularly for least-developed countries, should be based on a holistic, comprehensive approach that included aspects such as the transfer of technology, an increase in public assistance for development, an increase in assistance in other areas and greater market access for African countries. Finally, he reiterated that the key word was 'expeditious' and that the Council should not look at the principles first and then the modalities in order to see whether safeguards or other measures would be needed. Within this framework Senegal expressed its willingness to enter into consultations in order to make progress.

65. The representative of Hungary said that it was the objective of his delegation to fulfil the mandate in paragraph 6 of the Declaration by working out and adopting a solution by the end of this year. The mandate in paragraph 6 recognized that the right to use the flexibilities provided in Article 31 with respect to patented pharmaceuticals was of no practical use to WTO Members that possessed no or insufficient manufacturing capacities. This created a clearly unbalanced situation, not only with regard to the flexibility to actually use compulsory licences, but also with regard to the leverage that

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the possibility of using compulsory licences provided in price negotiations with manufacturers of pharmaceuticals. Redressing this imbalance was at the heart of the mandate although compulsory licences should not be the norm and should only be issued in exceptional circumstances and in strict adherence to the extensive safeguards laid down in Article 31 of the TRIPS Agreement.

66. He expressed agreement with those delegations who said that a narrow approach should be avoided when seeking a solution to the problem cited in paragraph 6, which should be read in the context of the whole Declaration. Accordingly, the solution sought should not be confined to any particular disease or group of diseases nor the scope of beneficiaries limited by the specific exclusion of any particular group of WTO Members as stated in the paper by Brazil and co-sponsors (IP/C/W/355). He also failed to see any reason why particular groups of WTO Members should be excluded from the possibility of supplying third Members that did not possess sufficient manufacturing capacities with needed pharmaceuticals under the solution. He said that such a limitation could narrow the options available to Members in need of medicines and could adversely impact the price of the products in question, thereby at least partially defeating the very purpose of the solution. He recalled that the wording for paragraph 6 was originally suggested by his delegation before Doha and that, to their great satisfaction, it found consensus in the end without substantive changes. When proposing the text it was never their intention to narrow the mandate to any particular disease or group of diseases or limit the scope of the solution a priori, on the import or export side, to any particular group of WTO Members. Hungary had always expressed the view that paragraph 6 addressed a genuine and general problem and was convinced that the mandate as adopted by the Ministers reflected this approach. Therefore he urged delegations not to seek to limit the scope of the mandate set out in the Declaration and not to redraft the mandate that all Members had agreed to.

67. He said that any solution should create the legal possibility for third Members to respond to requests made by Members facing public health problems and not possessing sufficient manufacturing capacities to produce and export under compulsory licences pharmaceutical products that were under patent protection in their territory. Hungary believed that situations where no patents existed in a country that possessed no or insufficient manufacturing capacities should also be covered by the solution sought. A solution should, naturally, include adequate safeguards against abuse, in particular to avoid trade diversion, and the conditions of application should also contain adequate elements of transparency. However, when drawing up these conditions and safeguards the creation of new imbalances should be avoided and the Council should not set stricter conditions for Members not possessing sufficient manufacturing capacity in the pharmaceutical sector than those set in Article 31 for Members that have such an industrial base. His delegation agreed with the communication from the European Communities that the safeguards should contain obligations both for the importing and the exporting Members.

68. Considering the form and characteristics of the solution, the representative of Hungary said that the solution to redress the imbalances created by Article 31(f) should be permanent, balanced, legally secure, efficient, and not overly burdensome. In considering the four basic options listed in paragraph 2 of the EC paper, only the first two, namely, an authoritative interpretation based on Article 30 and an amendment of Article 31, could ensure such a solution. His delegation failed to see how a dispute settlement moratorium or a waiver procedure could offer a genuine permanent and workable solution. He then referred to the US papers IP/C/W/340 and IP/C/W/358 and questioned how a moratorium could work in practice. He asked if the United States was referring to the WTO dispute settlement procedures and if so whether the United States believed that individual cases in relation to granting of individual compulsory licences could be brought under the Dispute Settlement Understanding (DSU), a situation he expressed his doubts over. He further questioned what would happen at the level of the national legal system and whether the moratorium would affect the ability of companies to start legal proceedings at the national level to protect their patents. If that was the case, he questioned whether WTO Members could ensure that such a moratorium was respected by companies and whether the United States thought that Members should change their patent laws for the period while the solution under Article 31 was being considered to make sure that they were legally covered.

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69. He continued by saying that the form of the solution was absolutely secondary to its content, the speed of its development and the time necessary for its entry into force. Hungary was ready to work on the basis of both the Article 30 and the Article 31 approaches, both of which could lead to the same desired effect of redressing the imbalance. His delegation shared the view of those that suggested that in the coming formal meetings and informal consultations the content of the solution should be concentrated on and that once the Council had a clearer picture of what was desirable and acceptable for the membership, the form could more easily be decided on.

70. He pointed out issues that should be further discussed in the Council such as the proposal in paragraph 16 of the EC paper that suggests procedures for the involvement of the right holder and that in paragraph 18 of IP/CW/355 that raised the issue of determination of remuneration in cases that involve two compulsory licences. He agreed that the patent holder should not be entitled to double remuneration and that this concern should be addressed if the Council chose the Article 31 way. Finally, he referred to paragraph 12 of IP/C/W/355 on the need to consider how economies of scale can be ensured under a solution. His delegation had repeatedly raised this issue in the debate because the majority of WTO Members not having sufficient manufacturing capacities in the pharmaceutical sector were generally countries with relatively small markets and, in this context, he welcomed that the wording of paragraph 14 of the EC communication.

71. The representative of Thailand expressed his concern over public health crises in Thailand as well as world-wide and said that the mandate from the Declaration was to find an expeditious solution to this problem. Epidemic victims and their families around the world, particularly those with HIV/AIDS, were anxiously and desperately waiting for the TRIPS Council to come up with an acceptable solution that could help heal their pain and loss. This was a situation that Thailand wanted to bring to the Council's immediate attention and Thailand urged other Members to give priority to the problem to ensure that these unfortunate people would soon be provided access to affordable pharmaceutical products.

72. He said that among the many possible approaches already tabled, Thailand would be pleased to accept an approach that was convenient, quick, sustainable and legally predictable. After discussions in previous weeks, his delegation had decided to co-sponsor IP/C/W/355 because it contained an appropriate approach according to Thailand's needs and priorities. In his view, Article 30 should be interpreted to cover authorization to third parties to make, sell and export patented public health-related products without the consent of the patent holder to address public health needs in another country as limited exception to the rights of the patent holder. It was also important to note that each Member should have the right to determine whether or not it was in a situation of insufficient or no manufacturing capacities in the pharmaceutical sector and to provide limited exceptions as stated in Article 30. Exceptions provided under the Agreement should be given broad interpretation for the developing countries and least-developed countries, whether or not they had insufficient or no capacities in the pharmaceutical sector, as foreseen by the Declaration, to ensure access to medicines for all. Thailand supported the interpretation of Article 30 approach and was ready to participate actively in finding an acceptable and possible solution.

73. Referring to the document prepared by the Secretariat, providing information on manufacturing capacity for medicines, he agreed with the representative of Sri Lanka that it did not reflect or even detracted from the real manufacturing capacity of each Member. When considering capacity, different kinds of medicines and active pharmaceutical ingredients should be taken into account. He suggested that the Secretariat cooperate with the WHO to obtain reliable information on the manufacturing capacity for medicines, as this was vital to the discussion.

74. The representative of the Czech Republic said that her delegation attached a great importance to the process of finding an expeditious solution to the problem, which some developing countries faced in the field of fight against HIV/AIDS, malaria, tuberculosis and other epidemics and which were identified in the paragraph 6 of the Declaration. All basic options that had been suggested by

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Members merited detailed analysis. In her view, the solution should be easy and quick to implement, sustainable and should meet the interests of developing countries without manufacturing capacity that face the health problems specified in the Declaration, without putting in question the TRIPS Agreement the validity of which the Ministers in Doha confirmed in its entirety.

75. She said that she would not attempt to summarize her analysis of the options suggested because the list of their positive and negative points was long but said that it confirmed that no one solution could be adopted without a clear and exhaustive definition of circumstances and conditions, under which such an arrangement could ensure full implementation of paragraph 6 of the Declaration. These conditions should be defined with the aim of ensuring the balance between the need to overcome the provision of TRIPS Agreement that made it difficult to use compulsory licensing in developing and least-developed countries without manufacturing capacities and with public health problems, and the need to maintain a legal environment encouraging research and development of new medicines, and could be used for all solutions.

76. It was necessary to define at least three groups of conditions: general conditions, legal conditions and economic conditions and that in defining the general conditions the Council should fully respect the Declaration which stated clearly that the solution was sought for developing and least-developed countries (paragraph 1) with insufficient or no manufacturing capacities in the pharmaceutical sector (paragraph 6). It was evident to her that the solution should benefit only countries that face difficulties in making effective use of compulsory licensing because of the lack of manufacturing capacities generally and not because of the lack of special kind of manufacturing pharmaceutical capacity. Among general conditions, the supplier-countries should be also defined and that while, in the spirit of the Declaration, her delegation sought to ensure better access to medicines for the largest group of affected people, developing countries should also benefit as primary suppliers as this could have a beneficial effect on the development of their pharmaceutical industry. At least developing countries should become suppliers in cases where money from the Global Fund aiming to fight epidemics was used.

77. The legal conditions should ensure, by regulatory and administrative measures taken by importer and supplier, that the product exported as a result of a solution implemented under paragraph 6 of the Declaration was not diverted to another than the beneficiary country. Also obligations, with the aim of preventing re-export, should be imposed on the importing country. A further important legal condition to be defined was the transparency of the process which should be ensured by full and timely notification of all compulsory licences granted. Her delegation felt that the Article 63.1 of the TRIPS Agreement provided a sufficient basis for this notification since it also stated that judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of the Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of IPRs) must be published, or where such publication was not practicable made publicly available, in a national language, in such manner as to enable governments and right holders to become acquainted with them.

78. From the economic point of view, she pointed out, it would be highly desirable if, before delivering the compulsory licences both for import and production, the producer confirmed that it was able to produce exactly the demanded quantity and quality of pharmaceutical product and which price of the product was offered under clearly expressed delivery conditions. As an economic tool this binding confirmation could, to certain degree, discourage another destination for the product or re-export based on over-production or on insolvency of importer due to unexpected elevation of price. In the course of studying this issue her delegation had come to the conclusion that it would be desirable and important to discuss and clarify all conditions under which any solution to paragraph 6 would be adopted and to base the process of finding the final solution on these clearly stated conditions.

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79. The representative of Malaysia noted that in recognizing that Members faced difficulties in making use of compulsory licensing under the TRIPS Agreement there was an acknowledgement that many Members were unable to avail themselves of the recourse to compulsory licensing, which was one of the flexibilities allowed under TRIPS Agreement to protect public health. In finding an expeditious solution to the effective use of compulsory licensing, the Council would be removing an anomaly or discrimination in the Agreement that meant only very few Members could utilize this flexibility. Any agreed solution should make available this flexibility to all Members and effectively restore the rights available under the TRIPS Agreement.

80. She noted that the Secretariat's note (IP/CW/345) on manufacturing capacity for medicines mentioned that only 10 countries in the world had a sophisticated pharmaceutical industry and a strong research base while another 17 had innovative capabilities. The report stated that a number of other countries had some capacity for producing finished or therapeutic products but was unclear as to the extent of the manufacturing capacity of these Members and the level of competency. Some countries possessed some level of ability or capability but there was no indication whether these countries possessed sufficient capacity. Manufacturing capacity should also not be viewed solely in terms of technological capability but should take into account economic feasibility and economies of scale.

81. In seeking an expeditious solution, Malaysia, like many other Members, looked for a broad-based solution involving at least all developing countries; an agreement by the end of this year in accordance with the deadline set by Ministers; and a solution that would result in effective utilization by ensuring a low price and speedy supply of medicines whenever the need arose. In this context, her delegation saw merit in the proposal by Brazil, on behalf of a group of developing countries, and supported by the African and UAE submissions, for an authoritative interpretation of an Article 30 exception. This proposal recognized the right of WTO Members to authorize third parties to make, sell and export patented-public health products to address public health needs in accordance with the procedures laid out in Article 31 of the TRIPS Agreement.

82. She said that the EC proposal to carve out an exception to the restriction under Article 31(f) could achieve the same result. However, there were a number of concerns related to this proposal, namely: the need to issue two compulsory licences, by the importing and the exporting countries, which could lead to delays; possible double compensation payments; and cumbersome administrative procedures. Her delegation agreed with the European Communities that other options, such as the waiver or a moratorium, did not provide a sustainable or secure legal solution to the issue at hand.

83. The representative of Korea said that all of the tabled proposals and views deserved the Council's sincere consideration and greatly helped the Council's work in finding an expeditious solution to the problem described in the paragraph 6 of the Declaration. There had been four options put on the table for the Council's consideration and it appeared that the solution the Council sought lay within this range of options. The Council's work would be a reflection on how those approaches could properly serve the mandate under paragraph 6.

84. Turning to an authoritative interpretation of Article 30, he said that Article 30 permitted Members to provide limited exceptions to patent rights under certain conditions. In view of the intention of the provision, which he believed dealt with situations such as non-commercial experimental use and prior user rights, an interpretation of Article 30 in a way that exempts the exporting country from the obligations in Article 31(f) might go further than the intended scope of the provision. He expressed a concern that the Council's reliance on Article 30 might erode the raison d'être of Article 31 by rendering hollow all its provisions which are designed to balance the rights and obligations of the Members concerned.

85. With regard to an amendment to Article 31 in order to overcome the restriction under Article 31(f), he said that his delegation shared the EC's objective of producing a clear, legally secure,

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effective and permanent solution within the existing legal framework and considered the approach capable of achieving this objective. However, his delegation was not fully convinced as to whether the amendment of Article 31 was the only alternative to achieve the objective. It was necessary for the Council to engage in more study to get the answer to that question. Given that the Council aimed to address situations that were quite extraordinary and rare, Korea was not convinced of the desirability of the option of an amendment, particularly in view of preserving the integrity of the TRIPS Agreement.

86. Turning to the moratorium or the waiver approach, the representative of Korea considered these options to have the merit of providing a solution without having to amend the TRIPS Agreement. His delegation was particularly supportive of the waiver option since the waiver was an existing mechanism built into the GATT/WTO regime to allow Members an exemption from obligations under existing WTO rules in exceptional circumstances. He stressed that the waiver option harnessed the flexibility of the WTO legal system and could be properly utilized in the endeavour to find a solution under paragraph 6. Indeed, the Council had witnessed many incidents where this mechanism had been invoked successfully. In the interest of enhanced legal certainty, the modality of granting waivers should be conceived on a long-term basis.

87. He concluded by noting that any solution should make the most of the flexibility within the TRIPS Agreement and the WTO rules as a whole and that his delegation considered it crucial to find options that boosted the Council's confidence in the TRIPS Agreement and sustained the legal stability of the TRIPS Agreement as a framework for providing incentives for the development of future inventions. He therefore recommended the waiver approach on a long-term basis as a viable mechanism to meet the call of paragraph 6 for an expeditious and transparent solution.

88. The representative of New Zealand expressed her hope that significant progress could be made at the present meeting in identifying common elements for a simple, but effective and economically viable solution to the problem posed in paragraph 6. She recalled that at the last meeting the Council had had a good discussion on a number of possible approaches floated by Members and that further proposals had been tabled at the current meeting. Her delegation had listened carefully to that debate and, upon reflection, found the scope for a solution based around Article 31 of the TRIPS Agreement the most convincing. She suggested that the Council should take a pragmatic approach to problem-solving and that she believed that a targeted approach to the specific problem at hand would give rise to the most effective solution. Therefore, her delegation would support an effort made by the Council to design a mechanism to remove the problem caused by Article 31(f) for exports of compulsory licensed products to those Members with insufficient capacity.

89. She recalled that there were a number of new papers on the table which explored possible mechanisms or solutions and that it seemed that an acknowledgement of the 31(f) problem and a willingness to address it were common to all the papers in varying degrees. Her delegation wished to focus its comments on areas of commonality between some of the proposals and areas of particular interest to New Zealand as a delegation supporting an Article 31(f) approach. The scope of the solution should reflect the scope of the problem, as identified in the Declaration, as public health problems, especially those resulting from HIV/AIDS, malaria, tuberculosis and other epidemics. She expressed interest in the idea that the solution be available only to developing countries and least-developed countries, on both the importing and exporting side of the equation, if it could be shown that such an approach might have positive effect on the improvement of capacity in these countries.

90. She said that an important aspect of any solution should be transparency and that making information available in the context of a country applying the eventual solution, including to the WTO, had a number of benefits. Her delegation would not see such transparency as grounds for challenging a country taking action in conformity with the solution and only as an aid to the Council in understanding whether in practice the solution was working and being used by those who needed it. She agreed with the rationale that transparency should help to encourage competition and improve the

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price and product quality options available to those with insufficient manufacturing capacity of their own. Such transparency could also allow original right holders, working outside of any solution envisaged in paragraph 6, to consider putting forward a competitive tender or offer alongside those producers operating under compulsory licence. New Zealand's own national experience in government purchasing of pharmaceuticals had shown that mechanisms that provoke such competition deliver better outcomes for purchasers.

91. With respect to the impact of any Article 31(f)-based solution on other provisions of Article 31, the representative of New Zealand expressed a preference for the remaining provisions to be respected. However, she agreed with the European Communities that, since the context was one of national emergency, there could be an exception to requiring to seek the right holder's authorization even where the compulsory licence was issued in a Member other than the Member facing a national emergency on that capacity-constrained Member's request. In a similar vein, the representative noted that, when considering the issue of remuneration to the patent holder, New Zealand would not want to see a doubling up of remuneration.

92. She recalled that the papers of the European Communities and the United States clearly identified the need to avoid trade diversion to those countries not in need, which New Zealand supported as a means to keep the benefits of the solution limited to those that need the access. She proposed that the use of provisions already in the TRIPS Agreement regarding enforcement might provide the appropriate vehicle with which to explore the actions that could be taken by third countries, such as New Zealand, to avoid diverted products reaching their markets.

93. She pointed out that clearly more work needed to be done to find the best mechanism, or tool in which the solution could be embodied and at that stage her delegation would not want to preclude options. With respect to some of the Article 31(f)-related options currently on the table she noted that a dispute settlement moratorium did not provide the sort of tangible solution needed. She pointed out that if the Membership agreed that Article 31(f) was a problem in the context of access to medicines then it should more honestly reflect this in any solution. She recalled that the option of an amendment had also been proposed and that her delegation had some reservations and was not sure how soon the changes stemming from an amendment would be available to Members. Given the urgent and special nature of the problem, if such a solution could be shown to be effective and self-contained from a systemic perspective then it should not be beyond consideration.

94. She felt that the concept of a waiver was potentially a well-targeted and legally secure, fast approach. With a view to avoiding onerous conditions and processes for waiver applications, New Zealand felt that the minimum level of specificity for granting any waiver should be on a country basis. Broader options could be considered, but not more restrictive ones such as compulsory licence-by-compulsory licence or product-by-product. Her delegation also expected commitments from all Members that unrelated conditionalities would not be attached to the granting of any waivers and that a strictly objective and permissive approach, based on clear criteria, such as lack of, or insufficiency of, local manufacturing capacity in the pharmaceuticals sector would be used.

95. She noted that two of the papers had highlighted the issue of technology transfer. She hoped that any technology transfer proposal, explored in the context of a paragraph 6 solution, would not exclude those not currently applying patent protection. While solutions addressing the problem of access to compulsory licensing might not be immediately relevant to such countries, their lack of manufacturing capacity should still be considered when assessing technology transfer issues. At the same time she stressed that, from the perspective of a developed, but still net intellectual property importing country, capacity issues should also be kept in mind when considering provision of technology transfer. She emphasized New Zealand's commitment to finding an expeditious solution to report back to the General Council by the end of 2002. Like all deadlines emanating from Doha her delegation took this seriously and were ready and willing to work with the Chairman and others to

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ensure the Council could develop a simple, effective and economically viable solution by the end of the year.

96. The representative of Singapore said that the TRIPS Council should try and take an enlightened approach and match the breadth of vision which had come out of Doha and which had given rise to paragraph 6 of the Declaration. He recommended that the Council first look at the substantive elements of what was to be done under paragraph 6 as it would be easier then to work out an implementation solution within the terms of the TRIPS Agreement. He proposed that the solution should be simple and effective. The term "expeditious" for him was included in the end-of-the-year deadline. He had not used the term "comprehensive", although the final text would need to be comprehensive to avoid uncertainty, because one would not know how much could be achieved by the end of the year. He urged the TRIPS Council not to come up with a solution that might unintentionally change parts of the Agreement and undermine it.

97. Turning to the elements of the solution, the delegate stated that the TRIPS Council needed to come to an understanding about what exactly the scope of paragraph 6 was in terms of: (i) the scope of the products; (ii) who was intended to benefit; and (iii) which countries could participate in the scheme. An important issue, in his view, was the question of the category of countries that had insufficient or no manufacturing capacity.

98. He said that the process needed to be transparent to make sure that it was a viable and durable solution. Moreover, he pointed out, the issue of diversion needed to be looked at but this should not become a complicated exercise and, in this context, he supported the statements made by Australia and New Zealand on the use of the provisions of the TRIPS Agreement. He believed that importing and exporting countries should certainly be engaged in preventing diversion so as to safeguard the interest of right holders.

99. He suggested that after having reached agreement on these elements the TRIPS Council could move on to the provisions of TRIPS that would achieve these objectives, namely, Article 30, Article 31, a waiver, a moratorium on dispute settlement and so on. He agreed with Hungary that paragraph 6 was of broader application.

100. The representative of Switzerland recalled that Members had in the discussion focused so far on what mechanism and approach a solution should take. At this stage of the discussion it would be premature for his delegation to take a firm position in favour or against any of the different approaches that had been presented thus far. He joined the delegate of the European Communities in stressing that the introduction of new issues to the discussion which did not focus on achieving the goal of paragraph 6 but served pure economic interests, such as the fostering of domestic production, were counter-productive in the context of finding an expeditious solution to the problem raised in paragraph 6. His delegation was convinced that whatever approach the Members eventually agreed on, much of the success or failure of any solution recommended by the TRIPS Council to the General Council would depend, in practice, on the establishment of adequate terms and conditions to accompany such a solution. He told the Council that consensus on the necessary terms and conditions would most likely be the key to an agreement of an expeditious solution, independently from the approach that would eventually be chosen.

101. He stressed that responding to the mandate in paragraph 6 meant that the TRIPS Council should find the proper balance between, on the one hand, the interests of countries without or with insufficient manufacturing capacities in the pharmaceutical sector to make effective use of compulsory licensing under the TRIPS Agreement and, on the other hand, the interests of right holders to preserve the rights conferred by a patent according to Article 28 of the TRIPS Agreement. From his point of view, such a proper balance required a straightforward effective solution without burdensome procedures. At the same time, achieving a properly balanced approach meant including proper terms and conditions to avoid abuses and to guarantee maximum transparency.

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102. He pointed out that, when looking at the key terms, the TRIPS Council would first have to determine which Members should qualify as recipient countries under a paragraph 6 solution. This could be done first by a list of block-qualifying and block-exempted Members. Referring to the classification of the World Bank, he said that, on the one hand, so-called high income countries should not make use of a paragraph 6 solution. The reason for this was that the target countries of paragraph 1 of the Declaration explicitly were least-developed and many developing countries. On the other hand, he proposed that Members could decide that least-developed countries according to ECOSOC's annual list, of which 30 of the 49 countries were WTO Members, should qualify automatically as recipient countries without any further examination as to eligibility. As for the remaining countries, belonging to neither the high income countries nor to the least-developed countries, he considered a case-by-case examination to be appropriate in order to decide whether a Member had sufficient manufacturing capacity. A combination of different criteria could help determine, in a given case, if a Member was in a paragraph 6 situation. It was his view that document IP/C/W/345 provided by the Secretariat on "Available Information on Manufacturing Capacity" could provide helpful guidance to the TRIPS Council in defining these criteria.

103. He further noted that the product scope of paragraph 6 was a second key modality and that paragraph 6 used the term "pharmaceutical sector". He recalled that Members recognized in paragraph 1 of the Declaration the gravity of the public health problems afflicting many developing and least-developed countries. Hence, in his view, the scope of any solution should be pharmaceutical products needed to deal with public health problems, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

104. He added that agreement would have to be found on appropriate conditions to accompany any solution. In this regard he stressed the utmost importance of the prevention of diversion of medicines delivered to the recipient country. The exporting country would have to make sure that the entirety of the pharmaceutical products that would be produced under a compulsory licence would be exported to the recipient country or countries and that no diversion of such products would occur in national or other markets. He stressed that the supplier would have to pay adequate compensation to the right holder and that such adequacy might be easiest determined in the recipient country since the judicial authorities there would be in the best situation to assess the factual situation. Any compensation in the exporting country should then take into account the compensation already allocated in the recipient country.

105. He said that the transparency of any mechanism chosen was of crucial importance for all stakeholders and for the proper functioning of any paragraph 6 solution. Both export and recipient countries should therefore provide the WTO with relevant information when actually using a paragraph 6 mechanism. Such transparency was a prerequisite to any mechanism agreed upon. Moreover, transparency would enhance the response of potential suppliers to the request of the recipient country and would also enable the WTO and its Members to control and review the execution of the paragraph 6 mechanism to prevent abuse.

106. His delegation believed that the conditions which he had briefly outlined did in no way represent unreasonable obstacles to an effective solution under paragraph 6 and met, in that respect, the concerns that had been expressed by the representative of Brazil. He drew Members' attention to an instrument that his delegation was convinced could assist Members with insufficient manufacturing capacity in the pharmaceutical sector if they were in need of pharmaceutical products. This instrument, irrespective of whether it was used inside or outside a paragraph 6 mechanism, could indeed help to ensure that the Member in need would get the offer quickly and efficiently with enhanced transparency. Irrespective of the outcome of the TRIPS Council decision, a voluntary public tender procedure could be of great benefit for eligible recipient countries in such a situation. Not all eligible recipient countries might have the necessary expertise to find potential suppliers and the know-how to choose the best offer. In a voluntary public tender procedure the Member with insufficient manufacturing capacity could be assisted by another organization, for example, the WTO

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or the WHO, in the examination of the offers. He added that such a procedure should not be confused with the WTO public procurement rules. A voluntary public tender would ensure wide participation of potential suppliers in the process. The provision of such a public tender procedure should be voluntary and it would left to the choice of the Member with insufficient manufacturing capacity to take advantage of it or not. He added that the provision of such a public tender procedure could be an integral part of any paragraph 6 mechanism or it could simply complement it. He concluded by saying that Switzerland would be glad to discuss all these points further with Members of the TRIPS Council and that voluntary public tender procedures do work in many fields and that he did not see why they should not work in this field as well.

107. The representative of Norway said that in his country's view certain basic criteria should remain central when the TRIPS Council recommends to the General Council how to solve the important issue of paragraph 6. In his view, one important criterion was the necessity of a sufficient degree of legal clarity and security for all parties involved, Members as well as operators, and he suggested that the Council should work toward a permanent solution. He recalled that his delegation had focused at the last meeting on two possible avenues which could be pursued further: an interpretation of Article 30 and an amendment of Article 31. Although both solutions had their merits, in his view an amendment of Article 31 was preferable because it put aside several legal ambiguities and legal clarity would be achieved and that this was not the case under other solutions.

108. He stated that, irrespective of the type of instrument the Council would choose, it had to address certain central issues in more detail, one of which was which categories of Members would be allowed to benefit from having otherwise patented pharmaceutical products being made for exportation into recipient Members' markets. In his view paragraph 6 did not distinguish between categories of Members that should benefit from a solution nor did other operative paragraphs of the Declaration say anything. The mandate of paragraph 6 merely referred to Members with insufficient or no manufacturing capacities in the pharmaceutical sector and therefore, he believed that, from a legal point of view, it was incorrect to make distinctions. He stressed that, nevertheless, his delegation believed that voluntary licences, negotiated by means of regular commercial arrangements, should be the normal way by which patented medicines should become accessible to all Members. This certainly applied to industrialized countries, but should, as far as possible, be also achieved for developing countries, unless preferential pricing arrangements were made in favour of these countries. He recalled that Ministers had recognized in paragraph 6 that the negotiating strength of each individual Member vis-à-vis the producers in acquiring patented medicines at favourable conditions should not depend on whether the Member had manufacturing capacity or not.

109. He said that another important question was whether there should be limits to the scope of medicines which could be subject to a solution under paragraph 6. He did not think that paragraph 6 restricted the types of medicines covered and that although certain epidemics were mentioned both in paragraph 1 and in paragraph 5(c) of the Declaration, there was guidance given to narrow the scope of patented medicines which were to be covered by a solution under paragraph 6. In his view, therefore, the lack of any type of patented medicine should qualify for measures taken under paragraph 6.

110. He said that it must be ensured that products which were acquired under a paragraph 6 solution not end up in countries other than the country for whose benefit the authorization for production and export had been made. He argued that this obligation must be a common obligation falling on all Members concerned as well as on private parties involved in the production, distribution and administering of the medicine.

111. He further noted that the TRIPS Council had a commitment to find a solution to this question before the end of 2002. If the Council agreed on an amendment of the TRIPS Agreement, it would take some time for Members to implement the agreed solution due to the ratification procedures which had to be completed. In this case the Council must agree on a suitable interim solution until the amendment came into force. One such interim arrangement could be a waiver under WTO Article IX

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or an authoritative interpretation or a moratorium. He asked Members not to exclude any type of interim measure in the event that the Council opted for an amendment.

112. The representative of Colombia referred to the document prepared by the Secretariat on manufacturing capacities for pharmaceutical products and said that Colombia and some other developing countries could only be found on the list of countries that produced finished products. She recognized the seriousness of public health problems that affected a large proportion of the population of many developing countries and least-developed countries. She said that the life of many people was at stake and that, to the extent that innovation found new technical solutions to the serious public health problems, this debate meant life or death to many human beings.

113. She said that Colombia was moving towards the position of those that were suggesting a solution in the context of Article 30 of the TRIPS Agreement, as had been proposed by Brazil and many developing countries. An authoritative interpretation of Article 30 would make it possible to find an expeditious solution and this should be considered in greater detail in order to allow the necessary flexibility that was required by the solution of public health problems. The limited exception, as mentioned in Article 30, had so far been seen as a very narrow possibility that would only lead to a minor reduction in the rights of the patent holder. It was the view of the Colombian delegation that this possibility should be explored so as to determine the possible effect on the patent holder and, in particular, on any remuneration he might demand. A solution in the context of Article 30 would avoid making amendments to the TRIPS Agreement unlike the solutions in the context of Article 31. She drew the TRIPS Council's attention to two main points which in her view were determinant in considering these problems of public health: the scope of the flexibility and the cost of this flexibility. The first point was about the list of diseases that would be the subject of national emergency and the medicines to which these exceptions on compulsory licences would apply. The exceptions should be broadened to include those cases which the governments of the countries considered met accepted international criteria for describing a situation as being a national emergency. Otherwise countries lost the possibility of dealing not only with new diseases but also with old ones that one had thought were extinct but which had shown a notable capacity to survive and which went hand in hand with poverty, malnutrition and displacement.

114. She recalled that Article 31(h) assured the right holder adequate remuneration on a case-by-case basis, taking into consideration the economic value of the authorization. It was therefore up to governments to state in each case what constituted an adequate compensation. However, she considered it necessary for the TRIPS Council to establish some guidelines, taking as its reference whether or not the active ingredient was acquired by the patent holder, in which case remuneration should be low, or whether it was acquired by third parties, in which case remuneration should be higher.

115. She said that public health coverage in Colombia was low as 57 per cent of the population and that the prices of medicines, whether patented or not, had a dramatic effect on the costs of the national health system. Therefore she reiterated that it was crucial that this issue be discussed in the TRIPS Council because it might nullify any effort that had been directed at safeguarding public health, bearing in mind the natural tendency of the right holder to extract the maximum income permitted by the market.

116. The representative of Argentina stated that her delegation agreed with all those delegations that had said that the solution that the Council had to find, in relation to paragraph 6, should be effective, broad, and non-discriminatory. Argentina also agreed that the solution should not be limited to certain categories of countries or diseases. Referring to an earlier statement, she said that her delegation was concerned about the creation of new categories of countries within the framework of the WTO. The solution found should not increase the burden of obligations that existed in connection with the Agreement nor should it lead to the establishment of mechanisms of direct interference of the WTO in the trade of the different countries such as the proposal that had been

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made on the possible establishment of certain mechanisms for control purposes. A sustainable solution should be based on an effective transfer of technology.

117. With regard to the submissions on the table, she said that her delegation would need more time before commenting on them. Regarding the two Secretariat papers (IP/C/W/345 and 348), she inquired about the sources and the basis of research. She recalled that the Declaration did not limit its scope to HIV/AIDS, tuberculosis and malaria in contrast to what could be deduced from the Secretariat's paper. Her authorities had corroborated the data on Argentina contained in the document although no final check had been made and therefore she reserved the right to return to this subject.

118. The representative of the Philippines said that it appeared that the nature of the solution to be found under this mandate might have less to do with the procedural approach to be taken than with the substantive elements of the solution to be reported to the General Council. The Philippines wished to be added as a co-sponsor to the submission made by Brazil and a group of developing countries. He noted that, despite the varying approaches, all Members were imbued with the purpose of finding the most appropriate and expeditious solution to the problem at stake. Furthermore, the proposals, whether an authoritative interpretation of Article 30 or an amendment of Article 31(f), all provided sufficient margin to accommodate the substantive elements contained in the submissions by other Members. Proposals on substance had included, for instance, a reading of paragraph 6 in the context of the entire TRIPS Declaration on Public Health; coverage of countries without reference to exclusion of specific categories of countries; product coverage referring to those relating to the pharmaceutical sector, though this might need further definition; due regard for the parallel objective of developing domestic manufacturing capacities for pharmaceutical products through a real transfer of technology; provision for adequate remuneration which should ensure avoidance of double remuneration; and the need to ensure adequate regard for transparency, the avoidance of trade diversion and certainty of supply at sufficiently lower prices. He noted that, for instance, the European Communities had suggested an interesting mechanism for ensuring sufficiently lower prices while at the same time giving the patent holder a first opportunity to supply the relevant pharmaceutical product to the domestic market at substantially lower prices.

119. He continued by saying that, as the TRIPS Council embarked on the exercise of building a common framework for a solution, it should be mindful not to allow its due regard for defining conditionalities and safeguards to defeat the very purpose for which paragraph 6 was intended nor the spirit of Article 30. While it was right to aim for legal predictability, this should not be at the expense of eventually having a solution applicable only with stultifying narrowness. In this context, even the conceptual approach of a moratorium could be seen in a constructive light as maintaining a moratorium until such time as a permanent solution was agreed upon and operationalized. He re-emphasized that the foregoing elements were not fully dependent on nor exclusive to a particular procedural approach or legal vehicle. He agreed with Brazil which had earlier alluded to the developing countries' paper's overlaps with the other submissions. The task that faced Members was to work on the identification of all the relevant issues, on the basis of existing general commonality, and to seek further definition and refinement of the elements arising from these so as to find the solution to be reported to the General Council.

120. The representative of China said that her Government was extremely concerned about the grave public health problems afflicting developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemic diseases. China believed that the WTO, through the TRIPS Agreement, could make its contributions to alleviating these problems. She informed the Council that China had also joined in the submission which had been introduced by Brazil and, as a co-sponsor, supported the views contained in this paper. An authoritative interpretation of Article 30 seemed, in her view, to be the easiest, simplest and most expeditious and sustainable solution, though her delegation was open to other possible solutions, none of them should be exclusive. She reminded Members that, in addition to the legal solutions, Article 7, the objectives of the TRIPS Agreement, and Article 66.2 should not be forgotten. In many cases the problem of

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countries with insufficient or no manufacturing capacities stemmed from a lack of technology. Therefore developed Members should provide incentives to encourage their companies to transfer technology to those countries to enable them to build up their technological base and manufacturing capacity.

121. The representative of Cuba said that her country had made and continued to make enormous efforts to provide public health as one of the priorities of public health policy. This political determination, which could be seen in enormous efforts in spite of difficulties to provide infrastructure for the importation of medicines with technologies transferred to those countries requiring it was not, however, sufficient to get the necessary pharmaceutical products, not only to ensure human health but to prolong people's lives. To provide prompt access to medicines was therefore crucial and the interests of the holders of patents, although just, had to be balanced with the interests of the majority of the countries with insufficient manufacturing capacities, including Cuba.

122. As a co-sponsor of the submission of Brazil and without prejudice to that, the Cuban delegation recognized the viability of other proposals, particularly those by the African group. In spite of the fact that Article 30 provided an expeditious solution, other alternatives mentioned could be applicable and could be immediately applied, not only in situations of crisis, like Article 6 or Article 31 in order to implement policies for public health. The word "principle" did not exclude other possibilities for action and that situations could be different and so the solutions applicable to each situation would depend on the product involved. She welcomed any solution that did not undermine the rights of Members and was in accordance with the principles and objectives of the Agreement, without impairing the rights of Members to use other possibilities. A moratorium, in her view, was not justified.

123. The representative of Jamaica said that her delegation had taken full note of the communications which had been tabled concerning the Article 30 and the Article 31 approach to give effect to paragraph 6 of the Declaration. Her delegation supported the view that the solution found should not be burdensome or onerous. In this context, paragraph 14 of the final remarks of the proposal co-sponsored by a number of developing countries, and introduced by Brazil, was instructive. This paragraph stated, inter alia, that in the light of the importance of the possible solutions to alleviate public health problems, it would be unacceptable to consider safeguards or conditions that would in any way limit either the flexibilities under the TRIPS Agreement or the clarifications established in the Declaration.

124. The representative of UNAIDS recalled the impact of the AIDS epidemic in developing countries, and its catastrophic dimensions in Africa. The impact of the AIDS epidemic in undermining development and reversing hard-won gains was not abstract. Striking primarily adults in their most productive years, AIDS cut productivity, eroded human capital, hindered knowledge and expertise being passed to future generations, and deterred trade and investment. The annual per capita growth rate in half the countries of sub-Saharan Africa was falling by 0.5 – 1.2 per cent as a direct result of AIDS, and falling by up to 2 per cent in the high prevalence countries. AIDS was having a devastating impact on major sectors, such as agriculture and mining. The epidemic had killed some 7 million agricultural workers since 1985 in the 25 most affected African countries. Although Africa was the most affected, AIDS did not respect international or regional borders; all regions and all countries were affected.

125. He said that since 1996, the availability of medicines for HIV/AIDS had significantly reduced the impact of AIDS in industrialized countries, allowing many HIV-positive people to live a healthier life and to continue to contribute to their families and societies, in many cases turning HIV into a manageable chronic disease. He recalled that the vast majority of HIV-positive people in developing countries did not have access to HIV-related medicines. Of the 40 million people in the world living with HIV at the end of 2001, it was estimated that in developing countries some six million were in need of antiretroviral medicines. Only a fraction, some 235,000 people, had access in developing

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countries and half of these were in one country, Brazil, one of the very first countries to commit to universal access.

126. He explained that UNAIDS advocated working simultaneously on all aspects of the treatment gap: affordability, access to sustained financing, health and social service infrastructure and human resources. For this reason, UNAIDS was grateful for the work of the WTO, and this Council in particular, to clarify the flexibility that TRIPS afforded to governments to protect the public health of their peoples, as expressed in the Declaration. He welcomed the efforts of the Council to follow up on paragraph 6 of the Declaration and to identify a long-term, sustainable, workable and expeditious solution to allow countries with inadequate or without pharmaceutical manufacturing capacity to benefit from the flexibility otherwise provided under the TRIPS Agreement with regard to compulsory licensing.

127. He told Members that the vast majority of the countries hardest hit by AIDS did not have sufficient manufacturing capacity in the pharmaceutical sector to formulate and synthesize their own HIV antiretroviral medicines. For example, of the 15 countries with HIV prevalence above 10 per cent, only one had the capacity to manufacture these HIV medicines. In other words, 14 of the 15 hardest-hit countries would have to be able to find affordable sources of supply of generic medicines in exporting countries if they, the very countries in greatest need, were to benefit from the flexibility in Article 31. He recognized fully that the Council's deliberations were very relevant for other diseases and for public health in general, but its efforts to find a sustainable, simple and expeditious solution for countries with insufficient or no manufacturing capacity were certainly extremely important in the context of the AIDS epidemic. The magnitude of this epidemic and the glaring global inequity in access to HIV treatments called for a new way of doing business that must be based on the ethical imperative of ensuring that the fruits of science benefit all, including the poorest.

128. Referring to comments on the papers provided by the Secretariat (IP/C/W/345 and IP/C/W/348), a representative of the Secretariat explained that the sentence in paragraph 1 of document IP/C/W/348 stating the diseases specifically referred to in the Declaration were HIV/AIDS, tuberculosis and malaria, did not purport to be any kind of interpretation of the scope of the Declaration - which, of course, referred to HIV/AIDS, tuberculosis, malaria and other epidemics. The sentence was there to explain the approach that the Secretariat had taken, for reasons of making the task before it in preparing the document manageable, of focus on those three diseases - the ones explicitly referred to in the Declaration. On IP/C/W/345, Annex 4 which contained a typology of the world's pharmaceutical industries, he explained that this had been taken as a quote from a UNIDO study, as referred to on the first page of the document. The categories and countries under each category were just taken from the UNIDO study and not determined by the Secretariat. As was pointed out in the note, this study had become a little bit dated; a more modern listing might put some countries in different boxes.

129. The representative of the European Communities said that he had the impression that most delegations were of the opinion that the cause of the problem lay in the wording of Article 31(f) and that was there that a solution should be sought. His delegation believed that its proposal to tackle Article 31(f) through an amendment was the way forward. Responding to interventions by several delegations that had suggested that a formal amendment was too cumbersome and time-consuming a procedure, he referred to the written communication from the European Communities indicating that such concerns could be overcome. The TRIPS Council needed to find an expeditious solution, but that was only possible if Members also provided for an interim solution, preferably through a moratorium on dispute settlement or possibly even through a waiver for a short period of time until the procedural aspect of the formal amendment of Article 31 was sorted out.

130. With regard to the product scope, which was an important aspect of the discussion, and on the basis of the interventions of many delegations, his delegation believed that the description of product scope in its written communication, which referred to paragraph 1 of the Declaration, was probably

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the way forward. He had not heard of any delegation having a major difficulty with such an approach. He also referred to a suggestion made by some delegations that the TRIPS Council should define the meaning of "pharmaceutical sector" or pharmaceutical products. He was not convinced that Members should do so at this stage of the debate, although he remained open to suggestions by other delegations in this respect.

131. He added that there seemed to be common ground on the need for the TRIPS Council not only to find an expeditious solution, but also the need for safeguards, provided that such safeguards were workable and proportional, as indicated in European Communities written communication.

132. Further, he referred to another aspect mentioned by the representative of Brazil and dwelt upon by several delegations, namely that Members should have the right to determine whether or not they disposed of sufficient manufacturing capacity. His delegation agreed that it was up to each Member to make such an assessment as far as its own industry was concerned. Nevertheless, he emphasized, it was necessary that the TRIPS Council ensured that the assessment was done on the basis of objective criteria and not on an arbitrary basis. He suggested that the TRIPS Council discuss further possible objective criteria and referred to a suggestion made by one delegation that an indicative list could be prepared, saying his delegation was ready to look at such an approach.

133. With regard to the category of importing countries, he said that the entire process leading up to the Declaration was the result of a request made by developing and least-developed countries, as more than a year ago, the debate had been launched upon a request from the African group. The entire Declaration needed to be seen in that context and he thought that the issue was clearly highlighted by several paragraphs, not least by paragraph 1 of the Declaration. His delegation did not think that the solution should benefit developed countries as well, especially since they disposed of the necessary public resources to deal with public health. As regards the category of exporting or producing countries under a compulsory licence, the EC delegation had no fixed views.

134. The representative of the United States began by pointing out that one issue that had not been discussed much was the critical role played by intellectual property protection in the development of new medicines. Like all other Members, the United States was hopeful that research and development would eventually lead to a cure, or at least in the near term a vaccine, for the world's epidemics, not least of which was the pandemic of HIV/AIDS. He reiterated that it was important for Members, when devising a solution, to ensure that they did not undermine the incentives to develop such new medicines. He was concerned that this point had lost meaning for Members and had not being analysed in any detail. However, it was a fundamental point that Members had agreed to in the TRIPS Agreement that patent protection was the mechanism by which Member countries provided an incentive to develop new drugs. That fact was real and valuable and the TRIPS Council should not lose sight of it because should the Council do so, progress towards eradicating these diseases would be reduced. He emphasized that he did not want to be accused of creating disincentives to the work that was under way to improve the quality of life for all of WTO Members' citizens. While generic industries made a valuable contribution to bringing down prices for all consumers, such industries do not innovate and innovation was key to the development of new drugs. He noted that industry and government both had an important role to play in developing medicines and that there was an appropriate balance in this regard in the TRIPS Agreement, a balance that the Members had recognized at Doha. Nevertheless, the Council had been asked to address a particular issue identified in paragraph 6, which his delegation was prepared to do.

135. He recalled that Members did agree in Doha that least-developed countries would have an extension of their obligations with respect to pharmaceutical products until 2016. The US paper did not in any way seek to suggest that obligations would be imposed on those countries as result of the solution being developed. He clarified that the paper did not contain new obligations and that a transition had been agreed upon in Doha. He referred to the comments made by the representative of the European Communities that highlighted some of the key issues or elements on which Members

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had expressed some common views during the discussion. Paragraph 1 of the Doha Ministerial Declaration provided the appropriate context for defining the problems Ministers had asked the TRIPS Council to address, namely the health problems faced by developing and least-developed countries, especially HIV/AIDS, malaria, tuberculosis, and other epidemics. With regard to which countries with limited means needed cheap medicines in order to address public problems, many issues should be kept in mind, including infrastructure, financing, elimination of impediments such as tariffs and internal taxes, and training. However, recognizing that these issues should be addressed in other appropriate forums, his delegation did not put these issues in their proposal as elements of the solution, but did recognize that a solution to health problems must be comprehensive and include efforts that really were pursued outside the TRIPS Council.

136. He said that in order to ensure that medicines were produced for export to countries and that they actually reached the people for whom they were intended, all Members had to commit to take necessary steps to prevent diversion of these drugs from the intended beneficiary countries to higher income markets by those whose interest was not in relieving the sufferings of those Members most in need but in facilitating their own well-being. His delegation had included in its paper an obligation for all Members to guard against diversion and a request to exporting Members to direct all of their production to the Members in need. However, the TRIPS Agreement already provided obligations in this regard, under Articles 28 and 44.1, which were sufficient. The US paper therefore did not in any way suggest that Members should undertake new obligations to enforce the proposed measures.

137. With regard to the circumstances in which the proposed measures would apply, he said that the countries that would be potential suppliers of needed pharmaceuticals under a solution should be developing or least-developed countries that had the capacity to produce the needed pharmaceuticals. Many Members had expressed the importance of such a solution to contribute to technology transfer. A solution could only provide or facilitate technology transfer if developed country Members were not included as exporters. This did not mean, however, that developed country producers did not have a role in this process of alleviating suffering. Developed countries had in fact a very significant role to play as they could most effectively participate through partnerships, discounted pricing, arrangements with multilateral organizations and efforts such as the Global Fund. Nevertheless, if developed country producers were included in this solution, there would be no incentive for production capacity to shift to the developing and least-developed countries. In his view, focusing the solution on producers in developed and least-developed countries might create an opportunity for these countries to export to regions as was discussed in the African group paper. He added that such a possibility could be significantly eroded if the TRIPS Council did not keep the solution focused on developing and least-developed countries.

138. He raised another point relating to a section in the US paper on transparency, which could serve a number of useful functions. For Members to guard against diversion and help ensure that the product reached the intended beneficiary countries it was important to know what was transpiring, for instance in terms of who was exporting products. The transparency provisions included in the US proposal should by no means be burdensome, nor should they prevent governments from making use of this mechanism or frustrate the implementation of the solution. Instead the provisions should help ensure that patent holders themselves were, in the first instance, provided with information and thereby provided a significant incentive to respond. He also referred to suggestions made by a number of delegations regarding the need to notify the patent holder and was of the opinion that these were not suggestions to impose additional obligations under the TRIPS Agreement. He believed that it was made clear by one delegation that this was not the same as first seeking a voluntary licence from the patent holder. Transparency provisions and advice to industry would provide an opportunity for the patent holder to respond first and thus the mechanism would not need to be employed.

139. He said that paragraph 6 dealt with the pharmaceutical sector and therefore keeping the discussions of scope focussed on pharmaceutical products was, in his view, the best way for an expeditious solution. The Council should keep in mind that the focus was access to medicines and

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while he remained open to understanding better the concerns of Members who might consider such an approach overly narrow, he cautioned against any suggestion that expanded the proposed solution to all medical technologies, as this was a very broad concept that could easily and needlessly complicate Members' efforts to find a credible, workable, efficient and timely solution to concerns on access to medicines.

140. Turning to the discussions on the legal mechanism, he said that Members should first focus their attention on identifying the key elements of the solution. The actual implementation mechanism of any proposed solution should be left to other debates later in the year. He wished, nonetheless, to offer a few observations. A dispute settlement moratorium or waiver of Article 31(f) was, in specific circumstances, more easily and quickly achievable than an amendment of these provisions. The Council needed to have a better understanding of what each of the legal mechanisms might entail. For example, it might not be well understood that an amendment to the TRIPS Agreement would not become effective until two thirds of WTO Members had deposited instruments of acceptance and that it would be effective only for those Members that had accepted the amendment. Moreover, the process could take a considerable amount of time and, if an amendment proved ineffective or not responsive to the concerns Members were trying to address, it would have to be amended again through yet another lengthy process and consequently would not serve the TRIPS Council's objectives. He suggested that it would be beneficial if the Secretariat could lay out the basic issues associated with each legal mechanism so as to also allow Members to consult on them and to consider exactly how each would be implemented.

141. The representative of China reiterated that her delegation believed that an authoritative interpretation of Article 30 of the TRIPS Agreement was the best way forward. She also believed that intellectual property rights protection and enforcement should be mutually beneficial to both producers and users of technological knowledge, should be conducive to socio-economic welfare and result in a balance of rights and obligations as illustrated by Article 7 of the TRIPS Agreement. As reaffirmed in the Declaration, Members had the right to use to the full the flexibility provided in the TRIPS Agreement to protect public health and promote access to medicines. Article 30 exceptions to patent rights obligations, including the right of third parties to make, sell, import or export without the consent of right holders, was a built-in flexibility. China recognized the concerns of some delegations that interpreting Article 30 might result in unreasonable conflict with the normal exploitation of a patent or prejudice the legitimate interest of the patent owner. However, an authoritative interpretation of Article 30 could be made to apply only in the rare situation where a developing country or least-developed country Member encountered a public health crisis, which constituted a national emergency or in situations of extreme urgency as stated in paragraph 5(c) of the Declaration. Moreover, she said, the interpretation could include terms and conditions on expiration of a public health crisis in order to protect a patent right holder and to balance the rights and obligations of users and producers.

142. She said that while suggestions of a possible amendment, a dispute settlement moratorium or waiver of Article 31(f) had value, they constituted a narrow approach dealing only with possible rights of exportation. In addition, the proposed safeguard measures such as notifying the patent owner of any use, and any decision by the TRIPS Council to make voluntary licences a prerequisite would undermine Members' flexibility to address the grave public health crisis. With regard to the coverage of diseases, the public health problems affecting many developing and least-developed Members, especially those resulting from HIV/AIDS, malaria, tuberculosis, and other epidemics was not an exclusive or exhaustive list of illnesses that might cause public health crises.

143. With respect to country coverage, China believed that any developing country or least-developed country might in some circumstances have insufficient or no manufacturing capacities in certain pharmaceutical areas. Prejudging any country's manufacturing capacity might not help to address public health crises. China remained open, however, to any other possible solutions that might be expeditious.

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144. The representative of Argentina reiterated that, according to the Declaration, Members could take the measures they considered necessary to protect public health and to promote access to medicines. The Declaration clearly stated that Members had the right to use the flexibility contained in the TRIPS Agreement to meet public health requirements. Therefore, any proposed solution should not be limited to compulsory licensing of those pharmaceutical products required only to address HIV/AIDS, tuberculosis, and malaria as listed in the Declaration. These were only given as examples. The solution should be a permanent one which did not limit an individual country's capacity to deal with any public health problems that might arise. The Declaration had stated clearly that the TRIPS Agreement only referred to conditions that should be considered for the granting of compulsory licensing and not the causing factors, which should be determined domestically by each Member. The proposals already tabled attempted to find a solution in the short term, but any solution should also make it possible to ensure compliance with Articles 7 and 8 of the TRIPS Agreement by facilitating transfer of technology and development of a viable scientific and technological infrastructure in developing and least-developed countries. With regard to the statement made by the representative of the European Communities to exclude developed countries from the solution, she suggested that a work programme on the definition of elements be set up in the TRIPS Council to categorize importing and exporting countries.

145. The representative of Kenya, speaking on behalf of the African group, agreed in principle to the suggestions on the way forward outlined by the Chairman but did not see any need for two separate documents addressing the substantive elements and the legal structure. These issues were connected and inseparable and therefore should be dealt with in one document. With regard to domestic manufacturing capacities, this was an essential element of the solution to the problems identified in paragraph 6 of the Declaration. She noted that some Members regarded the issue of building capacity as not necessarily connected to the expeditious solution, a view that was surprising and incomprehensible. In her view, although building domestic manufacturing capacity in the pharmaceutical sector was a medium to long-term project, it could be established in many ways. It was also possible to engage in efforts to build domestic manufacturing capacity building in the short term. One practical measure would be the location or establishment of production facilities in Members with insufficient or no manufacturing capacity. Such a location would have to be made commercially viable, for instance by facilitating production at optimal scale and tapping economies of scale. In addition, limitations of small domestic markets could be addressed by providing sustainable and guaranteed access to wider markets, particularly the regional market. There should also be certainty that would permit long-term and large-scale investment in production facilities, without unexpected or untimely changes. This would require collective efforts of all actors on the domestic scene, including the public and private sectors.

146. Furthermore, it should be certain that the dispute settlement procedures of the WTO would not unduly interfere with the confidence and consistency required for the building and maintenance of production, marketing and supply infrastructure. Members, particularly the developing and least-developed country Members, would need the certainty that their programmes, measures or domestic laws would not be unravelled or interrupted in an untimely manner or lead to setbacks that would cost human lives and loss of resources. A mere waiver subject to review would thus not, in her view, serve as a positive solution. However, the African group was prepared to consider a moratorium which was (i) objectively related to the scale and duration of the health problems; (ii) not a stand-alone solution; and (iii) operated as part of the interim solution pending the acceptance and entry into force of any amendments by each Member. There should also be assurance that the solution agreed upon would be given time to grow and mature and would be readily available for use, without uncertainty.

147. She said that she was aware that the issue of capacity building was part of a broader approach within the WTO, but was convinced that there was scope to deal with the issue of establishing manufacturing capacity in the process of searching for a solution that would enable Members with insufficient or no manufacturing capacity to make effective use of compulsory licences. This specific

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public health problem was a specialized area, but should be viewed against the general background of building capacity to effectively address domestic public policy concerns and to promote mutually supportive competitiveness. It needed to be clearly acknowledged that the effective solution to insufficiency or lack of domestic manufacturing capacity was to build such domestic manufacturing capacity. The TRIPS Council could not be expected to find merely temporary solutions to a problem that was long-term in nature and therefore Members should come up with a solution that would not only effectively address the problem at hand, but one that also would take into consideration the specific needs and development concerns of developing and least-developed country Members. In this respect, the Council should provide an indicative timeframe within which a solution could be reached, possibly in the immediate future, and report to the General Council before the end of 2002. She believed that the aim of this exercise was not to arrive at a solution that only enabled Members to perpetually import the needed pharmaceutical products as this would clearly not be a desirable outcome.

148. She took note of the concern that the envisaged solution should not adversely affect patent rights and supported the proposal to safeguard against re-export. She shared the view of the US delegation that patent holders should be allowed to seek legal remedies in accordance with the TRIPS Agreement against re-exports. However, she was concerned by the continued suggestions of additional, unnecessary and overly cumbersome safeguards and said that any safeguards must be reasonable and proportional. She noted that the European Communities had taken the view that re-exports into the European Communities from poor developing countries was theoretical. It was understood that the figure would be negligible. Members should agree that any safeguard measures contained in the solution would still be subject to the general provisions of the TRIPS Agreement. They would also be subject to the commitments under the Doha Development Agenda on technical and financial assistance to developing and least-developed country Members. Furthermore, safeguards should not be costly, complicated, burdensome, or impose additional obligations on developing and least-developed country Members inconsistent with their resources and development needs and they must not, in effect, negate or undermine the full operation of the solution found.

149. She said that developed countries had made it clear that they did not see themselves as potential beneficiaries of any system that Members might come up with. The Declaration neither excluded any Member, nor was understood to have the basis to limit the scope of the sources of supplies of pharmaceutical products. A limitation would only infringe the flexibilities envisaged in the Declaration and, as such, was not acceptable. However, if developed countries insisted that they had no desire to be included as beneficiaries, that should be respected fully.

150. The representative of Zimbabwe agreed with the statement made by the Kenyan delegation on behalf of the African group. He also supported the suggestion of having one document rather than two on issues and legal elements. He said that the issue of domestic manufacturing capacity had to be viewed as part of a short, medium and long-term solution. A multifaceted approach was durable and would ensure that developing countries individually and as a region had the capacity to manufacture medicines for their people. He agreed that there was need for safeguards but said these should not result in additional obligations for Members or be burdensome. He shared the view expressed by the United States that the safeguard provisions of the TRIPS Agreement provided enough scope to prevent trade diversion or re-exportation of pharmaceutical products. He also shared the view that patent protection was important not just as an incentive to research and development, but as an obligation for all Members. However, there was need to strike a balance between providing incentives for research and development and resolving a pressing problem of public health. People were dying in large numbers and some countries, like Zimbabwe, were losing 200 people per week. There was therefore need to come up with a solution immediately.

151. With regard to a waiver or a moratorium, he reiterated the African group's position that the issue be dealt with as a package and in the context of meeting the immediate needs of people who were suffering rather than in its own right. A moratorium or waiver, on its own, would not be

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acceptable because it would only address short-term symptoms. With respect to potential exporters of pharmaceutical products, it was not stated in the Declaration that developed countries should be excluded. This should remain open to all countries as pandemic problems were not predictable and as restricting potential exporters to developing countries would narrow the options available to the people most in need of the medicines. Moreover, not many of the developing countries had sufficient capacity to export.

152. The representative of Brazil supported the two previous interventions. He referred to the point raised by the representative of the United States on the need to recognize a comprehensive solution and said that his delegation subscribed to the view that no Member would be naïve enough to expect that the solution would automatically result in medicines for all. However, Ministers in Doha had pointed out a specific problem in the spirit of the whole Declaration and the TRIPS Council had to find a solution to ensure that nothing in the TRIPS Agreement would prevent the TRIPS Council from solving the problem identified. In this regard, there were a number of initiatives that needed to be taken at both national and international level on several other areas regarding public health and no Member should expect that the TRIPS Council would actually solve the whole problem. He said that because Brazil was interested in a comprehensive solution, it fully subscribed to the views expressed by many countries on the issue of transfer of technology and on the need for improving domestic manufacturing capacities. This underlying issue in the debate was extremely important for Brazil. The problem focused on countries with limited or no manufacturing capacities and so it was critical that the TRIPS Council did not lose sight of the very objective of the TRIPS Agreement. Responding to the representative of the United States, he said that no one was against innovation of new drugs. As the representative of Zimbabwe had very eloquently expressed, the TRIPS Council was trying to seek an expeditious solution for an extremely serious problem. Therefore the TRIPS Council should be pragmatic and make sure that the TRIPS Agreement was not going to stand in the way of solutions, especially after the entry into force of the obligation to provide patents for pharmaceuticals after 2005.

153. With regard to the issue of scope, he fully agreed with Argentina that in no way should the TRIPS Council limit itself to only a specific number of diseases. It was clear from the whole discussion on the Declaration and from the result of the Declaration that the scope was not limited to two or three diseases, but that the diseases mentioned were extremely dramatic examples of possible diseases. The Declaration mentioned in paragraph 1 health problems, but did not limit the problems that countries might have to those diseases. These were examples and they were there because they were very important, but they were not exhaustive.

154. Regarding the countries involved in the solution, he also agreed with Kenya that it would be extremely unfortunate to see developed countries voluntarily exclude themselves from the solution. From the point of view of the countries that subscribed to the developing countries' joint proposal, specific categories should not be included or excluded in this kind of solution. Individual Members should decide to be part of the solution or not to be part of the solution. It would be disappointing if the solution did not necessarily include developed country Members as exporters since this would significantly restrict the potential supply of pharmaceutical products. However, that was something that developed countries, if they were speaking as a group, should judge for themselves. His delegation, however, agreed with Hungary that its very important contribution to the drafting process of the Declaration, paragraph 6, was never intended to be read narrowly. The Brazilian delegation certainly agreed that the purpose was not limited to specific categories of countries and that it would not be constructive to have an exclusionary approach.

155. Referring to the coverage of products, it was important to note that paragraph 6 related to limited manufacturing capacity in the pharmaceutical industry. But the TRIPS Council should not necessarily limit the scope to medicines. From his delegation's initial intervention it was very clear that the scope should not be confined to medicines as final products and that active substances necessary for the manufacturing of the medicines ought not be excluded. Likewise test kits for HIV/AIDS should not be excluded. These were important products related to the pharmaceutical

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industry but not necessarily medicines as final products. At the very least the TRIPS Council could seek some constructive ambiguity rather than being too specific about the products included. However, he wanted to assure all Members that his delegation was not seeking to expand the coverage of the solution to other areas or products that were definitely unrelated, such as bicycles, golf clubs, or vacuum cleaners.

156. Concerning the Secretariat papers, his delegation would need to digest some of the elements of document IP/C/W/345 on manufacturing capacity for medicines containing data available from UNIDO. His initial impression on the information contained there was that it might not be the best reference given that this document was about horizontal manufacturing capacity. The solution that was being negotiated in the Council was going to refer to specific situations. It might be the case that, even for a country with horizontal manufacturing capacity, there was limited or no manufacturing capacity for a specific product and so it might be necessary to make use of this solution. Just because a country was included in Table A, B or C of the UNIDO list, it did not necessarily mean that this country had full manufacturing capacity for every product that could be potentially covered.

157. Referring to Secretariat document IP/C/W/348 on existence of patents in regard to diseases referred to in the Declaration, he reiterated that the reference to HIV/AIDS, tuberculosis and malaria was non-exhaustive. However, the document was very interesting and potentially useful for the TRIPS Council. He noted that it also made use of a study by Professor Amir Ataran, which might provide an interesting snapshot of the situation of HIV/AIDS and other diseases in many countries but, for the purposes of the work in the Council, he still wanted to look further to determine how useful this study would be since this snapshot might be too narrow to have the full understanding of this future use of the solution. The TRIPS Council might need to consider the solution also from the impact that it might have in the future.

158. He brought to the attention of the TRIPS Council a document issued by the WHO's Essential Drugs and Medicines Division, which had commissioned Professor Carlos Correa from the University of Buenos Aires to examine the public health implications of the Declaration. The resulting paper contained extremely useful references for the purpose of the Council's specific discussion. Professor Carlos Correa had pointed out that the solution should not only be expeditious but effective as well. Thus, while the proposal by the United States on a moratorium might not take that long, he questioned its effectiveness. The moratorium approach offered an expeditious response to the problem posed by paragraph 6, but not a solution since it would not be straightforward enough either to influence those potential exporting countries to change their legislation or to permit protection for export or to induce generic manufacturers to invest in creating or increasing export capacity. In addition, it was not clear what procedures would be applied in order to adopt a moratorium and whether formal changes to the TRIPS Agreement would be necessary.

159. Concerning the waiver possibility, Professor Correa had noted that a waiver was bureaucratic to administer since it required annual review by the Ministerial Conference if granted for a period of more than one year, as stated in Article IX:3 and IX:4 of the WTO Agreement. Thus it would still be subject to the possibility of extensive modifications and termination. Regarding the decision-making process, the problems would not actually be too different from the problems presented by the US delegation on the need for approval by three quarters of the membership.

160. He said that it was also interesting to note that the criticism on the limited exceptions proposed by developing countries regarding an interpretation of Article 30 did not apply to the actual reading of Article IX.3 of the WTO Agreement, given that Article IX.3 began with the expression "in exceptional circumstances", while the proposal on a waiver did not seem to be in exceptional circumstances but was rather a regular mechanism. His delegation was extremely pleased to see a comprehensive and flexible reading of the provisions that could apply to this solution but saw that, mutatis mutandis, the same could be applied to its own proposal on an interpretation of Article 30. His delegation also noted that in its comments on the proposal on Article 30, the United States had

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limited itself to repeat basically the same paragraph it had circulated in the TRIPS Council's session in March. In the absence of further comments, the Brazilian proposal should continue to be taken seriously.

161. With regard to safeguards, he wanted to seek further instructions from his capital, but noted that his delegation was very flexible. The issue of trade diversion was very important, and the Council had to ensure that the solution would be accessible to the countries that needed to access the solution. A solution to trade diversion based on existing obligations of TRIPS under which the burden would fall basically on the patent holder, as pointed out by the United States, sounded like a reasonable element for discussion, but his delegation wanted to elaborate on this later.

162. He said that transparency was an issue to which his delegation would give positive consideration as it might in fact be interesting from the point of view of ensuring that better competition would take place when using the solution and might even encourage the avoidance of a compulsory licence. In this case he signalled to all countries that Brazil was willing to discuss this issue in a very positive light. Finally, it might be useful to have some sort of a checklist prepared by the Secretariat containing the main elements of the proposals being considered and other issues related to the specific legal proposals. It might also be useful to consider the preparation of a paper containing the necessary procedures for approving each of the solutions under consideration.

163. The representative of Venezuela said his delegation supported the three preceeding interventions, most specifically that of Brazil, and that Venezuela had co-sponsored the proposal made by the developing countries. It was his view that the authoritative interpretation of Article 30 was an expeditious solution but his delegation was open to considering other solutions such as an amendment of Article 31(f).

164. With respect to paragraph 4 of the EC proposal, he said that it was true that those measures were part and parcel of the solution but they went beyond the competence of the WTO. In this particular case the Council could not resolve all problems by the creation of a fund alone. It was a question of development, technology transfer and the development of scientific and technological infrastructure. His delegation appreciated that the solution offered by the European Communities was very close to that of the developing countries as contained in the document which his country co-sponsored. However, the EC proposal was much more limited and imposed certain limitations with respect to abuse, special circumstances and safeguards to avoid diverting drugs. With respect to domestic circumstances, the EC paper suggested that the solution should refer only to a group of very small, poor countries but the TRIPS Council had to take into account the health situation in countries such as Venezuela. If a laboratory was not interested in producing a certain medication, the State in question might nevertheless be interested in ensuring that supply existed, so a compulsory licence should not be understood as a limitation of the rights of the right holder. He believed that there was a particular interest that the State ought to provide if there was a higher interest at stake.

165. Commenting on the document of the United States, he said that the idea of a moratorium or waiver was not a solution. The idea in the US proposal of seeking approval by the TRIPS Council of the circumstances of each case was a condition not required by the TRIPS Agreement and was unacceptable to Venezuela. Lastly the delegation of Venezuela was flexible with respect to the way in which the work was organised, provided that the TRIPS Council came up with an immediate solution that would resolve the problem.

166. The representative of Peru highlighted the fact that the solution for countries with limited or non-existent manufacturing capacity had to be sustainable, effective, lasting and appropriate. The Peruvian delegation felt that the proposal made by certain developed countries to afford a moratorium or a waiver was not conducive to such an end because it did not allow the necessary legal ability and would only be feasible in the short term. For this reason, she could not accept this proposal. She

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repeated the willingness of her delegation to continue working with the Chairman and other delegations in order to find an expeditious and appropriate solution to this problem.

167. The representative of India noted that the representative of Kenya had tried to put in perspective the safeguard issue, what kind of problems might arise and whether they were overly restrictive conditions. He observed that there were already different kinds of patent regimes or patent rights in different countries at present and there was manufacturing by generic producers of products that were patent protected in other territories. He questioned whether it was possible to determine the extent of diversion that was taking place at present from generic producers to those territories where patent rights were enjoyed. If such information was available it would give the TRIPS Council an idea of how to design targeted and very effective safeguards because without such information the Council would talk about diversion in a vacuum. He agreed with but did not intend to repeat the positions which had already been stated by Kenya, Zimbabwe, Brazil and other previous speakers.

168. The representative of Malaysia said her delegation's understanding of the paragraph 6 solution was that it was meant to address the anomaly in the TRIPS Agreement whereby the use of compulsory licensing was not currently made available to all Members. In her view the solution was meant to ensure that this flexibility was made available to Members, particularly at this time of the AIDS pandemic. It should not be seen as the grant of a new right and hence the issue of additional obligations would not arise. Therefore her delegation did not see it as an issue of diluting patent rights but how the existing flexibility could be utilized by all Members. She saw the need for a long-term and durable solution taking into account to a certain degree the need to improve the capacity of countries to promote technological innovation and to promote transfer of technology. Her delegation agreed that the rights of patent holders should be protected and noted that the Secretariat paper made clear that Malaysia provided patents to a large number of drugs.

169. Her delegation also believed that the solution should involve all Members, at least all developing country Members, whether in the provision of pharmaceutical products or in the import of drugs. Her delegation had difficulty in trying to catalogue countries into categories or in limiting the supply of medicines from only developing countries. She stressed that this would mean limiting the scope of the solution or even limiting access to the medicines themselves.

170. Turning to the issue of transparency, her delegation viewed the rationale behind the proposals as sound but noted that this certainly involved steps beyond the Article 31 procedures, which only considered efforts to obtain authorization from the patent holder. Her delegation agreed, however, that transparency issues should be viewed in light of the safeguards considered in any possible solution. Her country would support a long-term durable solution open to at least all developing countries and covering all possible public health problems.

171. The representative of Singapore welcomed the paper from the United States as part of the contribution to this very important debate, together with the contributions by other delegations. He reiterated that the TRIPS Council should look at the elements first before proceeding with a debate about legal instruments. He said that one factor that should be borne in mind in working out a solution to this problem was commercial viability. Potential investors would invest to supply medicines in response to commercial viability and any solution that did not consider commercial factors would result in the TRIPS Council having to deal with this problem again and again. In this connection, he drew attention to the intervention by Kenya which made, in his view, useful points on the question of commercial issues.

172. He recalled that paragraph 6 stated that countries with insufficient or no manufacturing capacity needed help because they would find it difficult to make use of compulsory licensing but did not refer to how these countries were to be helped. On the question of insufficient or no manufacturing capacities, the TRIPS Council's attention was drawn to paragraph 1 of the Declaration, which indicated the context. However, in his view, paragraph 6 indicated that it was possible for

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almost all countries to qualify because even countries with manufacturing capacity might not have capacity in every area of the pharmaceutical sector. To illustrate, he recalled the anthrax problem which suddenly faced the United States and Canada. In his view, both countries found themselves short of that particular medicine and while the United States apparently solved it through obtaining large amounts of the medicines at a reduced price, Canada had to resort to compulsory licensing. He emphasized that such problems could arise in many countries of the world in a variety of contexts and that the TRIPS Council should bear that in mind when searching for a solution to the problem.

173. The representative of Norway said that his delegation continued to believe that the preferable solution to the paragraph 6 question would be an amendment to Article 31. He underlined however that other solutions, including interim solutions, might be necessary. Irrespective of which solutions the TRIPS Council chose, the purpose of the TRIPS Council's exercise was to safeguard the interests of developing countries and particularly the poor ones. Nevertheless, a solution should be applicable to all Members. On the recipient side, the authorities in the respective Member countries, when an application for authorization was made, should merely make sure that the legal criteria mentioned in Article 31 were fulfilled. In addition they might verify whether a recipient Member had "insufficient or no manufacturing capacities in the pharmaceutical sector". The TRIPS Council should avoid establishing different categories of Members based, for instance, on tables like the one presented in the Secretariat document IP/C/W/345, because they gave a misleading impression as to the production capacities actually existing in a given country. These categories were of a general nature and did not sufficiently take into consideration that one had to make a concrete assessment of a given Member's capacity to produce a specific drug. For instance, even if a country had general production capacity, it still might not be able to adjust its production lines to produce the specific drug in sufficient time. Such a transformation process could be costly given that one would have to adjust the production line in order to take into consideration the production of goods which presently were not produced in that country.

174. As to the question of who should qualify as countries of production, the Norwegian delegation agreed that all Members in the WTO should qualify on the producing side. In this respect Members had to take into account the fact that the patented product might actually be under production only in very few countries because today's production systems were highly specialized. Big pharmaceutical companies often had only one place of production with several back-up plants. However, if all these plants were in industrialized countries it would be very difficult for recipient countries to access these products, at least in the short term. His delegation appreciated the argument put forward by the United States that developing countries should receive adequate technical assistance in order to be able to produce the necessary medicines themselves, but this often had to be seen in a long-term perspective. His view was that, if production capacity was simply not available in a developing country, a requesting country quite clearly would have to have its medicines supplied by an industrialized country and that the TRIPS Council's solution should not limit these options.

175. Finally, he observed that a recipient country should be able to seek authorization in more than one producing country at the same time if several countries were producing the medicines in question. After all, different countries' authorities might view an application for authorization under the same patent differently. He added that the recipient country should have the possibility to apply for authorizations for different products under different patents but for the same therapeutic effect. This would give the recipient country the possibility of choosing between possible producers once authorization was given for a product.

176. The representative of Mauritius stressed that the deadline was fast approaching on this item of work and that the fact that Members had made serious efforts in bringing contributions to the table demonstrated a willingness to work together. During this TRIPS meeting, four important proposals had been placed on the table: from a group of developing countries, the European Communities, the United States and the African group. His delegation had carefully analysed all these proposals and recognized that tremendous efforts had been made by the proponents. There were differences in these

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proposals, but his delegation was struck by the significant commonalities, which inspired his delegation to believe that there was great promise that the differences could be dealt with in a manner that would allow Members to reach common understanding and complete the task assigned to the TRIPS Council.

177. He highlighted briefly the salient points of each of the proposals so that the Members could appreciate the commonalities. First, thirteen developing countries had proposed an authoritative interpretation of Article 30 that would enable a country with manufacturing capacity to authorize the production and export of genetic drugs to a third country in order to meet public health needs in that third country without the consent of the patent holder. The African group's comprehensive proposal called for a decision on Article 31(f) and Article 30, as well as an extension of transition periods and moratorium on disputes. On Article 31, the African group proposal identified three options for addressing the problem, namely the deletion of paragraph (f) in Article 31, an amendment to exclude its application to public health or access to medicines measures, or an amendment to expand the definition of domestic market to include regional markets, free-trade areas or customs unions. Under Article 30, the African group proposed an exception to patent rights so as to enable a country to produce and export to another WTO Member to meet its public health needs. This would be along the lines of the 13 developing countries' proposal. The African proposal also called for an extension of transition periods for developing and least-developed countries that had insufficient or no manufacturing capacity to allow them to enhance their socio-economic development so they could meaningfully and sustainably protect public health on the basis of domestic capacity.

178. Regarding the proposal for a moratorium on disputes related to measures adopted to address public health concerns in countries with insufficient or no manufacturing capacity in the pharmaceutical sector, the European Communities proposed the introduction of a new paragraph in Article 31 that would exclude application of Article 31(f) to cases where a compulsory licence was granted in one country for the production export to another country to address its public health problems. The EC's proposal obliged both exporting and importing countries to take steps to prevent trade diversion and included further procedural steps which required exporting and importing countries to inform and provide the patent holder with the opportunity within a short time after notification to make an offer to supply the product at strongly reduced prices. The US proposal was in favour of either a moratorium on dispute settlement or a waiver of the obligations in Article 31(f). This proposal suggested that exporting countries could be exempted from the Article 31(f) obligation via a moratorium or a waiver. However, to qualify the US proposal required that exporting countries ensure that the entirety of the production was exported to the importing country. The proposal also asked that all WTO Members be obliged to take steps to prevent pharmaceuticals made available under the waiver/moratorium mechanism from being diverted from the markets for which they were intended.

179. The representative of Mauritius dwelt on the important issue of manufacturing capacity which he said was at the core of the Doha decision. His delegation sincerely believed that there was great need to support efforts in respect of building this capacity in developing countries and emphasized that while this required medium to long-term efforts, the TRIPS Council should also encourage efforts in the immediate and short term towards building the required domestic manufacturing capacity. The African group proposal referred to the location of production facilities by enterprises from Members within the Member countries with insufficient or no manufacturing capacity as one possible practical measure. Such location would have to be commercially viable, for instance through sustainable and guaranteed access to wider markets, particularly regional markets. It would need the certainty that permitted long-term and large-scale investment in such a critical operation for setting up production facilities. Thus, in his view, the solution should not, from the perspective of such investments, be subject to unexpected or untimely changes. It would also need the certainty that dispute settlement procedures at the WTO would not unduly interfere with the commitment and consistency required for the building and maintenance of production, marketing and supply infrastructure. It would need to support the collective effort of all actors on the domestic scene, including the public and private

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sectors. Members, especially from developing and least-developed countries, would need certainty that their programmes, their measures, or even domestic laws would not be ultimately unravelled or interrupted or lead to setbacks that would cost human lives and resources. In working on this aspect of the manufacturing sector, he had drawn heavily from the very useful WTO documents IP/C/W/345 and IP/C/W/348. He saluted the efforts of the Secretariat in providing such information which set out in clear terms the status of the manufacturing capacity in Member countries. The statistics on the African countries were quite revealing in that they showed the dire need for increasing manufacturing capacities in Africa. In conclusion, his delegation was very much encouraged by the commonalities of the proposals and the efforts of the Council. He was confident that the Council could work out the differences in approaches, for example waiver versus moratorium.

180. The representative of the United States said he wanted to provide some further clarity to the Members about its delegation's proposals in response to some of the comments that had been made. The representative from Hungary had asked some specific questions directed to the United States and these questions went to the issue of dispute settlement; how much legal certainty there was, how certain could Members be that they would not be faced with dispute settlement under one proposal or another and what was the effect on Members' domestic law under one proposal or another. In response to the latter point, he stated that it would be up to each and every individual Member to determine what they did with their domestic law under any of these procedures. Whether talking about a waiver, an amendment or any other proposal, Members were free to decide whether to change their laws or not. That was their decision and, of course, depending on what decision they took they might be open to dispute settlement or not.

181. With respect to dispute settlement itself, in his view there was an important difference between the various legal mechanisms with respect to providing certainty against dispute settlement. It was quite safe to assume that, if Members were granted a waiver by the TRIPS Council to act in a particular way, it was highly unlikely that, after that had been granted, some Members would come along later and file a dispute settlement case against them. On the other hand, some of the other proposals might not provide this certainty. For example, the language of Article 30 was quite vague. If the TRIPS Council relied only on the language of this Article, then he did not think that anybody had much certainty about their ability to avoid dispute settlement because the terms of that Article could be interpreted a million different ways. One of the reasons why his delegation did not think the Article 30 approach really served the Council's interest was because in order to provide Members the kind of legal certainty they wanted in this process, the Council would have to flesh out Article 30. There were no safeguards, there were no contracts, there was nothing for Members to rely on and the Council would have to embark on a negotiation to flesh that out, line by line. Whereas on the other hand, Article 31, which contained the compulsory licensing provisions that had already been negotiated in the Uruguay Round, already had the conditions outlined in paragraphs (a) through (l). These were built-in security for Members in knowing how they could operate and avoid dispute settlement and would not require renegotiation. So, in his view, if it was legal certainty that the TRIPS Council wanted, Article 31 provided a much better opportunity. In addition, the TRIPS Council had recognized that Article 31(f) contained the export restriction that was of primary concern. He asked Members why they did not go to the root of the problem and have a very clear focus on that problem, rather than trying to tackle Article 30, which was a much broader provision, and then trying to build in the safeguards.

182. Recalling that a number of delegations had referred to his suggestion that developed country producers be excluded, he re-emphasized that developed country producers were not excluded. There was opportunity for developed country producers to respond under this mechanism and that was the importance of the transparency provisions. In the first instance, the patent holders should be able to respond with offers of severely discounted prices to address the situation of the country in need. This certainly had been the case with the situation in Brazil which had not issued a compulsory licence ultimately because the patent holder had, when notified of the need, given a response. He believed that this was in fact the exact situation the TRIPS Council was trying to establish for all Members. So

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again he wanted to correct any impression that Members had that his delegation did not feel that developed country producers had an opportunity and a responsibility to be part of the solution.

183. Lastly he emphasized that the reason why the solution had always, in his view, focused on developing and least-developed countries was because of the fact that, prior to Doha, when Members were discussing this issue in Geneva, he had understood that the concern Members had was about what happened after 2005 when certain developing country Members, that had enormous pharmaceutical industries and were going to be required to provide patent protection, and about whether such Members could still be able to be low-cost suppliers. It was not a discussion about the situation in the developed world but about how Members could fix the problem that might be created in 2005 when there was patent protection in these countries. For Members to now claim that this was not the problem that concerned the TRIPS Council but that it was actually a much broader problem about the global availability of generic drugs was incorrect. Clearly, if the TRIPS Council provided Members an opportunity to seek pharmaceuticals from another developing country through a compulsory licensing system, the TRIPS Council would have addressed the problem about what would happen in 2005, when some governments had to provide pharmaceutical patent protection. It was not the case that the TRIPS Council needed to address the situation in the developed world in order to be responsive to the original concern.

184. There was no question, in his view, that it was perfectly consistent with the TRIPS Agreement to issue a compulsory licence to an importer in a country to bring a pharmaceutical in or any patented invention in from another Member. The only issue was whether or not there was a patent in the other Member so that it could export. If there was a patent, then there was the restriction of Article 31(f). However, there should be no question that under the TRIPS Agreement one could issue a compulsory licence to import. The representative from India had advocated Article 30 because of some uncertainty about being able to import under a compulsory licence and he hoped there was no question or confusion about that issue.

185. Lastly, with respect to the US paper, he explained that there was a footnote on the kind of remuneration that was available under a compulsory licencing mechanism. This footnote was motivated by two purposes: first, to make sure Members knew that the paper was not in any way suggesting that a right holder be provided double remuneration, namely remuneration in the exporting and importing markets; and second, to clarify that the paper was also not trying to suggest how that remuneration was calculated. The paper did not suggest that because, in his view, the burden should fall on the exporting country and the level of remuneration should be calculated based on the value of the licence in that exporting country. He was suggesting that a country with insufficient capacity facing a tremendous health crisis and seeking drugs from somewhere else, that importing country should not also bear the burden of compensating the patent holder for this compulsory licence. It was the exporting country that clearly had more resources or it would not be an exporter. But in terms of the calculation, he thought it should be worked out based on the value of the licence, which clearly had to take into account that the licence was most likely being used to export to a least-developed or a poor developing country.

186. The representative of Indonesia said that her delegation was encouraged to see that Members were convinced of the need to arrive at a solution by the end of the year. Her delegation believed that this issue should not be addressed as a problem of a certain group of countries, but rather as a humanitarian issue in which could give all people the peace of mind that, when a public health concern arose, the TRIPS Agreement could ensure that all needed medicines would be easily accessible at affordable prices and at the time they were needed. The Indonesian delegation agreed with many others that the best way to move forward was to first agree on the criteria or elements which the TRIPS Council would like to have in the solution. She believed that once the Council fleshed out and agreed on criteria and elements, it would be easier for it to arrive at the most suitable solution. With regard to the proposals that had been tabled, and given some of the criteria that had been mentioned by Members, in her view there was no one solution that could resolve the problem

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identified in paragraph 6. The Council might have to consider using a combination of solutions and timeframes. To this end, her delegation was of the opinion that a combination of an authoritative interpretation of Article 30 and the Article 31(f) solution could be developed as a comprehensive package. Her delegation did not see the moratorium concept or waiver as a long-term or durable solution.

187. The representative of Brazil reacted to the earlier intervention by the United States by raising some points and asking some questions that could be answered in future meetings. If the United States was of the view that it was up to each Member to modify its national law, he questioned why the TRIPS Council would pre-empt this by excluding a category of countries. He expressed concern about the message the TRIPS Council would send if it talked about using a mechanism in which developed countries were not part of a solution. He asked whether, once a decision was made, say by a developing country, to resort to the envisaged mechanism, the beneficiary country could seek generics in a developed country Member.

188. He recalled that the US representative had mentioned that it was "unlikely" that after a waiver there would be use of dispute settlement procedures and said that the word "unlikely" did not offer Members any legal security. He recalled that the representative of the United States had mentioned that there would be a million different interpretations possible in the application of Article 30 and agreed with this statement. In this particular case and for this particular purpose, the TRIPS Council was about to pick one out of the million that would give it legal certainty on how to use this solution. His delegation absolutely agreed with the clarification made by the US representative that it was possible to make use of compulsory licences for importation. As a matter of fact, this possibility was in the Brazilian law. He further noted that the reference to the case of Brazil might or might not be an good example because in those cases a compulsory licences had never been issued. However, the proceedings relating to the two compulsory licences, which were not issued, had been very useful in persuading the patent holders to cooperate in exchange for not issuing those compulsory licences. The Brazilian Government was not entirely sure, because it had never happened, whether, for example, it had full manufacturing capacity to produce the active substance to produce the antiretrovirals in question. Thus these might or might not be a good examples of the problem on the table.

189. The Chairman said the discussion had been extremely valuable and important for all Members. It had been a rich and comprehensive debate in which approximately 50 delegations had participated. He suggested that the TRIPS Council in its next working phase should structure its discussions in a more systematic manner. To make this possible, he suggested that the Secretariat prepare a thematic compilation of the five written proposals that had been submitted. This document would identify various elements or components of these proposals and then set out how each of the papers addressed each of these elements. The note should also take into account the points raised in the discussion at the meeting. In addition, the note should also provide factual information regarding each of the different legal techniques that had been proposed, covering e.g. the procedural requirements relating to each one and information on GATT/WTO experience with the use of these techniques. As a deadline for the circulation of the document, he proposed mid-July, at least for its English version. The Council would then be in a position to plan for a more structured discussion in the September meeting. The Council would hold an informal meeting on the implementation of paragraph 6 of the Doha Declaration on TRIPS and Public Health with the help of this note on the afternoon of 24 July and the morning of 25 July.

190. The Council agreed to proceed as suggested by the Chairman.

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(ii) Extension of the transition period provided for in paragraph 7 of the Doha Declaration on the TRIPS Agreement and Public Health

191. The Chairman recalled that, in paragraph 7 of the Declaration on the TRIPS Agreement and Public Health, the Ministerial Conference had agreed that least-developed country Members would not be obliged, with respect to pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016, without prejudice to the right of least-developed country Members to seek other extensions of the transition periods as provided for in Article 66.1 of the TRIPS Agreement. In paragraph 7, the Ministerial Conference had instructed the Council for TRIPS to take the necessary action to give effect to this pursuant to Article 66.1 of the TRIPS Agreement.

192. At the Council's informal meeting in February, the Secretariat had been requested to prepare a draft Decision for the Council to consider in order to carry out that instruction given by the Ministerial Conference. This draft Decision had been circulated before the Council's meeting in March in document JOB(02)/12. At that meeting, the Chair had not pressed for a decision because he had been aware that some delegations had had some concerns and wanted to reflect on the matter further. The Council had agreed that the Chair would hold consultations on that draft Decision before the meeting in June.

193. The question that had come up in the Chairman's subsequent consultations had been whether the decision to be made under Article 66.1 of the TRIPS Agreement to extend the transition period could or should extend to Article 70.8 and 70.9 of the Agreement that contained, respectively, the so-called mailbox and exclusive marketing rights provisions. This question had been taken up at the Council's informal meeting of 17 May 2002. Views had been expressed that Article 66.1 did not authorize the Council to apply the extended transition period to the provisions of Article 70.8 and 70.9, but at the same time delegations had indicated a willingness to cover the obligations under the latter Article, or at least they had expressed flexibility in this regard. At that informal meeting, the Secretariat had been requested to prepare prior to the present meeting a draft waiver that could be applied to least-developed country Members that had obligations under Article 70.8 and 70.9. Accordingly, the Secretariat had circulated a draft waiver in document JOB(02)/57.

194. Turning to the procedures for the adoption of these two Decisions and their interrelationship, the Chairman said that the TRIPS Council had authority pursuant to Article 66.1 of the TRIPS Agreement to adopt the draft Decision on the extension of the transitional period for least-developed countries in respect of pharmaceutical products. The draft waiver was designed to supplement the decision on extension by waiving the obligations under Article 70.8 and 70.9 with respect to pharmaceutical products that some least-developed country Members might have. If the Council would approve the waiver, it would then forward it to the General Council for adoption in accordance with Article IX.3 of the WTO Agreement.

195. The representative of Switzerland said that he fully shared the view that obligations under Article 70.8 and 70.9 of the TRIPS Agreement, where applicable, should not prevent attainment of the objectives of paragraph 7 of the Declaration. Therefore his delegation understood the arguments in favour of a waiver of least-developed country Members' obligations under Article 70.9 with regard to exclusive marketing rights with respect to pharmaceutical products. However, he did not understand how Article 70.8, the mailbox system, could prevent attainment of the objectives of paragraph 7 of the Declaration. The mailbox system was a simple but effective means to allow least-developed country Members to adapt their legal systems gradually to the patent obligations under the TRIPS Agreement. Applying such a mechanism in time would put least-developed countries in a better position to avoid being overloaded with patent applications at the date of entry into force of their adapted laws. Moreover, the Council should give thought to the effects that a waiver on Article 70.8 could have on the Members' common efforts to increase the transfer of technology to these least-developed countries. Before being in a position to approve the draft waiver of the obligations under Article 70.8,

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he wished to have more information in order to understand its implications and whether it would be for the benefit of least-developed countries.

196. The representative of Senegal, speaking on behalf of least-developed countries, said that the issue of extension of the transition period for least-developed country Members to 1 January 2016 in respect of patents and undisclosed information in the area of pharmaceutical products was extremely important for the Members in question. Given that it affected their development prospects and their resources available for implementing and complying with the TRIPS Agreement, they needed some grace period to adjust to the TRIPS Agreement.

197. The Ministerial Declaration on the TRIPS Agreement and Public Health had provided least-developed country Members with an extension of the transition period, in respect of pharmaceutical products, until the year 2016. Paragraph 7 started with a reference to the commitment of developed country Members to give incentives to their enterprises and institutions for technology transfer to least-developed country Members. This was elaborated in more concrete terms in paragraph 11.2 of the Decision on Implementation Issues and Related Concerns. This was important for the least-developed country Members because the extension of the transition period should not be seen as an end in itself. Rather, it should be seen as the period for building institutional, administrative and other capabilities to enable least-developed countries both to fulfil their obligations and commitments as well as take advantage of their rights.

198. In various paragraphs of the Doha Ministerial Declaration, Members had agreed that special and positive measures would be undertaken by the WTO to assist least-developed country Members to benefit from and be equitably integrated into the multilateral trading system. It had been in this regard that Members had appreciated some unilateral initiatives some Members had taken in favour of least-developed country Members as well as the commitments under the Brussels Declaration, and had gone on to take specific measures in the area of public health with a view to ensure that the TRIPS Agreement was more responsive to the needs of least-developed country Members and was interpreted and implemented in a manner that supported Members' efforts to protect public health. The objectives and principles of the TRIPS Agreement, as stated in Articles 7 and 8 respectively, were designed to ensure an equitable balance between rights of the society to benefit from advances in science and technology and private rights relating to intellectual property as defined in the TRIPS Agreement, taking into account the special circumstances of developing and least-developed country Members.

199. He thanked the Secretariat for preparing a draft Decision for a waiver, and hoped that delegations in the TRIPS Council would have no objection to carrying out Ministers' instructions to the Council. He said that least-developed country Members would like to request that the extension of the transition period to 1 January 2016 under paragraph 7 of the Declaration on the TRIPS Agreement and Public Health be broadened to cover the requirement to grant exclusive marketing rights under Article 70.8(a) and 70.9 of the TRIPS Agreement, with the understanding that the enabling provisions for this purpose include Article IX.3 and IX.4 of the WTO Agreement relating to waivers of WTO obligations, and the provisions of the TRIPS Agreement on the objectives and principles of intellectual property protection and on exceptions to intellectual property rights. This was necessary to ensure that the requirement to grant exclusive marketing rights did not adversely affect least-developed country Members, undermine the objectives and principles of the TRIPS Agreement, and undermine the extended transition period agreed by Members at the Ministerial Conference.

200. Concluding, he said that, on the basis of the objectives and principles of the TRIPS Agreement and in line with the Declaration on the TRIPS Agreement and Public Health, least-developed country Members requested the TRIPS Council, in considering the action to take, to ensure that the action fully reflected Ministers' instructions to the TRIPS Council and, further, that the action

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fully reflected the positive and supportive approach required by the Doha Ministerial Declaration and the Declaration on the TRIPS Agreement and Public Health.

201. The representative of the European Communities said that his delegation was prepared to adopt the draft Decision which had been submitted by the Secretariat in March 2002. A number of least-developed country Members had meanwhile expressed concerns on the fact that they would still be required to comply with the mailbox and exclusive marketing rights requirements before 2016. He agreed that exclusive marketing rights were difficult to reconcile with the objectives of paragraph 7 of the Declaration. Although they applied for only five years, exclusive marketing rights arguably had effects similar to those of patents. They did not confer the same rights as patents, as they were limited to the right to offer for sale and to sell. However, their practical effect was that they created a situation of a market monopoly for a period of five years during the extended transition period. This did not match with the spirit of paragraph 7 because generic competition for pharmaceuticals in the beneficiary countries could be hindered even before 2016. On these grounds, he agreed that the exclusive marketing rights requirement could be waived along the lines of the text which had been prepared by the Secretariat.

202. On the other hand, he said that he failed to see how the mailbox provisions could be counter to the fulfilment of the objectives of the Declaration because the only obligation they entailed was to set up a procedure for prospective patent applicants to file a patent application. A mailbox application had to be taken up after the end of the transition period, in 2016 at the earliest. If a patent was then granted, its duration would be limited to the remaining term of protection. Therefore, it was unclear what use a waiver of this obligation would have, but he was open to discuss the subject further.

203. The representative of Brazil said that the statements made by Senegal and Zimbabwe reflected some very important and legitimate concerns, and that he was entirely flexible on this issue of a waiver. He said that the draft Decision to give effect to paragraph 7 of the Declaration should be approved without problems, and that he supported the draft waiver.

204. The representative of the United States said that he fully supported the Secretariat's draft decision on the extension of the transition period. He equally supported a waiver of obligations under Article 70.9 for the reasons that had already been laid out. He joined Switzerland and the European Communities in asking what the concern associated with Article 70.8 was, given that it merely required Members to provide an opportunity for patent applications to be filed and that those applications be assigned a filing date for patent grants after 2016. Further consideration should be given to whether or not it was necessary or even beneficial to waive the obligations under Article 70.8.

205. The representative of Argentina said that she supported the draft decision on the extension of the transitional period and the draft waiver of the obligations for the least-developed countries. She supported Senegal's statement that waivers should be granted in the spirit of the Doha Ministerial Declaration and of Article 66.1 of the TRIPS Agreement, with the objective of establishing a viable technological basis.

206. The representative of Canada said she looked forward to an early implementation of paragraph 7 of the Declaration and added that progress concerning the extensions of the transition period might serve as a useful model for the waiver approach to of paragraph 6.

207. The delegation of Senegal, speaking this time on behalf of his own delegation, said that he was seeking legal security for least-developed countries. Three points had to be cleared up: (i) whether the scope of the Decision covered both pharmaceutical products and processes; (ii) the applicability of the mailbox provisions; and (iii) exclusive marketing rights. He wished to have both pharmaceutical products and processes included in the coverage of the Decision. An argument from the African group in this regard was that "pharmaceutical products should be construed broadly in

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order to be meaningful, rather than narrowly in a manner that would restrict it to only limited components of treatment of medicines".1 The draft waiver should cover mailbox and exclusive marketing rights provisions under Article 70.8 and 70.9. The review mechanism envisaged in paragraph 2 of the draft waiver would need further consideration, given that least-developed countries were not even subject to a review of their legislation in the TRIPS Council until 2006. A review process would overburden least-developed countries with work, and would not be in line with the spirit or the letter of the Declaration. The Secretariat draft Decision on the extension of the transition period and draft waiver should be merged and paragraph 2 of the draft waiver should be deleted. He was hoping for a rapid decision on the matter.

208. The representative of Zambia said he supported the two statements made by Senegal. Speaking as the focal point for least-developed countries on TRIPS issues, he said that the decision to extend the transitional period for least-developed country Members was being made within a particular context. It was important that Members fully take into account this context to properly appreciate the suggestions and approach which had been taken by least-developed countries on this issue. Paragraph 7 should be read in the context of the entire Declaration and the objectives of the TRIPS Agreement. Apart from affirming that the TRIPS Agreement could and should be interpreted and implemented in a manner supportive of Members' rights to protect public health, the Declaration confirmed that the objectives of the Agreement provided an important context with respect to interpretation and implementation. In determining the scope and effect of the draft Decision under Article 66.1, the TRIPS Council must interpret paragraph 7 of the Declaration to ensure that the Decision fulfil the object and purpose of providing least-developed countries with maximum flexibility in the domestic implementation of laws and regulations in order to protect public health and also to enable them to create a sound and viable technological base.

209. The first part of paragraph 7 was being discussed in the context of the mandate under paragraph 11.2 of the Decision on Implementation Issues and Related Concerns as contained in document WT/MIN(01)/I7). He announced that a separate communication would be submitted by least-developed countries regarding the monitoring mechanism.2 It was the second part of paragraph 7 that the present draft Decision was meant to address. There were three main issues that had immediate relevance in regard to the implementation of paragraph 7 of the Declaration. These were: (i) the applicability of the Decision to pharmaceutical processes and other types of pharmaceutical patents; (ii) clarity that least-developed countries shall still have full rights under Article 66.1 to ask for further extensions not just in respect of the other parts or sections of the TRIPS Agreement not covered by this Decision but also further extensions with respect to the application and implementation of Sections 5 and 7 of Part II of the Agreement; and (iii) whether the obligations under Article 70.8(a) and 70.9 would still apply to least-developed country Members during the period of extension.

210. He further noted that the Declaration referred to "pharmaceutical products" and this was the language that had been used in the draft Decision. This wording might seem to suggest that the envisaged extension would not apply in respect of pharmaceutical process patents or other types of pharmaceutical patents such as use patents. This concern arose from the distinction under Article 27.1 where it was provided, inter alia, that "patents shall be available for any inventions, whether products or processes". Least-developed countries were prepared to accept paragraph 1 of the Decision as drafted by the Secretariat provided that there was a clear understanding that the use of the word "products" was understood to mean all types of processes under Article 27.1 of the TRIPS Agreement.

211. Regarding the entitlement to further extensions in respect of Sections 5 and 7 of Part II of the TRIPS Agreement, he stated that least-developed country Members appreciated that paragraph 2 of the draft Decision might already address this concern. However, for purposes of clarity, least-

1 See paragraph 6(b) of document IP/C/W/351.2 See document IP/C/W/357.

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developed countries wanted to bring to the notice of all Members their understanding of paragraph 2 of the draft Decision. The use of the word "other" should be read to mean extensions in respect of all other sections and parts of the TRIPS Agreement as applicable, as well as further extensions after 2016 in respect of Sections 5 and 7 of Part II of the TRIPS Agreement.

212. As regards the mailbox and exclusive marketing rights, the representative of Zambia said that the provisions of Article 70.8(a) and 70.9 of the TRIPS Agreement generally applied to Members that had patent protection for other products and processes but did not allow patents on pharmaceuticals and agricultural chemicals. The provisions would therefore not apply to least-developed countries that had had no patent systems at all at the time of entry into force of the TRIPS Agreement or those that had already provided patent protection for pharmaceuticals and agricultural chemicals by that time. With respect to least-developed countries that did not fall within the two categories above, if Article 70.8(a) and 70.9 continued to apply, they would erode the benefits of the extension. In particular, exclusive marketing rights had the effect of enforcing a foreign patent and for all intents and purposes had the same effect as the grant of a patent for five years. Least-developed countries considered it critical that an effective solution be found to ensure that the provisions of Article 70.8(a) and 70.9 would not apply during the period of extension. There should be an understanding that the "enforcement of patent rights" referred to in the Declaration included the provisional enforcement through the mailbox and exclusive marketing rights provisions.

213. He explained that the difficulty with addressing this concern through the Decision under Article 66.1 stemmed from the language of Article 70.8(a) and 70.9, which excluded the application of the transitional arrangements under Part VI, including those under Article 66.1, to the mailbox and exclusive marketing rights provisions under Article 70.8(a) and 70.9. The two paragraphs were drafted in the language of "notwithstanding the provisions of Part VI". In this context, it would appear that the powers of the TRIPS Council under Article 66.1 of the TRIPS Agreement did not include powers to suspend and/or postpone the application of the mailbox and the exclusive marketing rights provisions. The Secretariat had prepared a draft waiver to facilitate the suspension of the obligations under Article 70.8(a) and 70.9 for least-developed country Members where applicable until 2016. Having considered the draft waiver, least-developed countries were of the view that the TRIPS Council should approve the draft waiver Decision as it was and recommend that the General Council adopt it to facilitate this process.

214. The Chairman proposed that the Council revert to this matter later in the course of the present meeting and that, in the meantime, he consult with the delegations most involved in this issue.

215. Following these consultations, the Chairman proposed that the Council adopt the Decision on the "Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for Least-Developed Country Members for Certain Obligations with respect to Pharmaceutical Products" contained in document JOB(02)/123 and approve the revised draft waiver on "Least-Developed Country Members – Obligations under Article 70.9 of the TRIPS Agreement with respect to Pharmaceutical Products" contained in document JOB(02)/57/Rev.14 and agree to forward it to the General Council for adoption. In doing so, he stated that it was understood, in regard to the review foreseen in paragraph 2 of the draft waiver, that the exceptional circumstances justifying this waiver would continue to exist for least-developed country Members until its expiry date of 2016.

216. The Council so agreed.

217. The representative of Uganda, speaking on behalf of least-developed countries, thanked the Chairman and the Secretariat for their efforts and delegations for their understanding that had allowed the Council to reach a successful conclusion to the matter. While he would have preferred the waiver to cover also Article 70.8, he had not, in the spirit of compromise and cooperation, insisted on this.

3 Subsequently circulated in document IP/C/25.4 Subsequently circulated in document IP/C/W/359.

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However, he expressed his hope that this would not bring least-developed countries an overbearing pressure to grant patents based on applications that were filed before the expiry of the transition period. The waiver had been granted to be co-existing and last for the period of the extension of the transition period agreed in Doha, namely until 1 January 2016. He did not expect the waiver to be terminated before the expiration of this transition period. He added that the review process in paragraph 2 of the draft waiver should not be unduly cumbersome or burdensome or in any way inconsistent with the administrative and financial capacities of least-developed countries and, therefore, it was understood that it would be without prejudice to an automatic application until the year 2016.

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Documents

WORLD TRADE - docsonline.wto.orgdocsonline.wto.org/Dol2FE/Pages/FormerScriptedSearch/… · Web viewWorld Trade. Organization RESTRICTED IP/C/M/36. 18 July 2002 (02-3979) Council