Poor countries now have better access to the most advanced drugs for treating epidemics such as AIDS, malaria and tuberculosis. A new World Trade Organization agreement allows companies to obtain a patent license to manufacture and export drugs to these poor countries. Prior to this agreement, these activities would be prohibited as patent infringement.
A research-based pharmaceutical company (the usual patent owner) spends huge amounts of money to invent and develop new drugs. Its patent prevents competition from generic copies of the drug. This market exclusivity allows the patent owner to recoup its costs and make a profit. Otherwise, a company could not recoup its costs in competition with a generic company that incurred nominal development costs.
A patent owner could negotiate a license with a generic company at any time, but this rarely happens. Therefore, when a drug is needed to treat an epidemic in a poor country, the onus typically falls on the patent owner, as the sole source of the drug, to help the drug reach those who need it. Companies typically will provide medicine to poor countries through donations or greatly reduced prices. For example, in 2000, Aventis Pasteur donated 50 million doses of polio vaccine to African countries. Pharmaceutical companies have also provided AIDS and malaria medicines on a low-cost or donation basis (eg. Pfizer's Diflucan; Novartis' Coartem; GlaxoSmithKline's Combivir, Epivir and Trizivir; Merck's Crixivan).
However, developing countries in some cases need more drugs than are available. They also would like to have the option to obtain drugs from generic manufacturers that may be able to sell more cheaply than the patent owners. This is mainly because the generic manufacturers do not have to recoup the costs of research and development or because they are in countries such as Brazil and India which have less overhead and pharmaceutical regulation.
Patents block developing countries from obtaining drugs from alternate manufacturers. Patent owners are reluctant to let others manufacture the drug because of concerns that some generic drug manufactures do not have humanitarian motives and are merely trying to boost their own profits at the expense of the patent owner. There is also a concern that generic drugs may be diverted back to Western markets. The latter concern is not unfounded because in a recent UK case, AIDS drugs which had been supplied at low prices for use in Africa were fraudulently diverted and sold to a UK hospital (Glaxo Group Limited v Dowelhurst Limited et al., July 31, 2003 (High Court)).
The World Trade Organization provided an initial compromise through its Trade-Related Aspects on Intellectual Property Rights (TRIPS) agreement. The amendment allowed member countries to grant licenses to produce drugs "predominantly for the supply of the domestic market" (Article 31(f) of TRIPS). The licenses are called "compulsory" licenses because they are issued by a government, without the need for consent from the patent owner. However, this was of little use to poor countries that had no pharmaceutical industry since it prevented them from importing generic drugs from countries where the drugs are patented. There was a critical need to amend the agreement to help these underdeveloped nations. According to the World Health Organization, over 30 million of the 42 million people worldwide with AIDS live in Africa. However, the 146 member countries of the WHO act by unanimous agreement, and achieving consensus was very difficult. In 2001, the WTO set a December 31, 2002 deadline to solve the problem. An agreement was almost reached, but a single country's veto kept the issue open and the deadline passed.
In the meantime, third world access to medicine has been a public relations nightmare for pharmaceutical companies, even where there are no import/export issues. A large number of companies took the South African government to court to try to block a proposed generic drug production law that the companies argued was unconstitutional and not in compliance with TRIPS. The companies ultimately withdrew the lawsuit. Several pharmaceutical companies have also been in a high profile disagreement with the Brazilian government. Brazil threatened to use a compulsory license to produce medicine for domestic use after drug companies refused to provide deeper drug discounts.
In August 2003, a solution was negotiated at the WTO to allow poor countries to import drugs. The principal countries negotiating the agreement were the US, Brazil, India, Kenya and South Africa.
The new agreement creates a waiver of the exportation prohibition (see Council for TRIPS; Decision of August 30, 2003; IP/C/W/405). It was accompanied by a WTO General Council Chairperson's statement stating the member countries' understanding of how the provisions would be implemented. These provide a 'quick fix' solution until the TRIPS agreement is formally amended.
Under the waiver, WTO members can allow export of drugs to poor countries that have insufficient pharmaceutical manufacturing capacity. Patent owners will receive a small payment. There are a number of controls to prevent harm to the patent owners from exportation of drugs to countries that are not poor or that do not have a public health emergency. Medicines must be produced in good faith and not to further commercial objectives. As well, the drugs must be related to public health problems (not 'less serious' concerns, such as acne or baldness). The drugs must also have different packaging, shape and color. Member countries must try to prevent diversion of the drugs to other markets. Many developed countries have either agreed not to use waiver to import drugs or use it only in case of emergency.
It remains to be seen whether the Canadian government will amend Canadian laws to allow Canada to act as an exporter to the poor countries (it is expected that irrespective of Canada's position, most exportation will be done from lower cost manufacturers in countries such as India or Brazil).
The WTO agreement was signed amidst much praise by governments. However, health care providers such as Doctors Without Borders and Oxfam were critical of the waiver. Doctors without Borders stated that while the WTO agreement permits compulsory licensing, it does nothing to ensure that generic production will actually happen in the future. It was also critical of what it considered as the red tape of the waiver and instead it called for allowing generic production for export as a limited exception to a patent right (ie. without need for any license). African governments were generally more positive about the agreement. Zambia, South Africa, Keyna, Botswana and others supported the agreement. These countries have a strong interest in making AIDS medicines affordable and available. For example, in Botswana, 39% of adults between 15-49 carry HIV and over 69,000 children have lost one or both parents to AIDS, according to UNAIDS.
In view of the difficulty in obtaining consensus about balancing IP rights with public health, the waiver provides an important and positive step in getting drugs into the hands of people that need them most desperately. From this point forward, WTO members and companies can work on further increasing drug access to treat health epidemics.
Noel Courage practices intellectual property law with Bereskin & Parr in Toronto.
To donate to the UNICEF Southern Africa Appeal to help children at risk from AIDS, drought and malnutrition, please go online at: http://www.unicef.ca and then select: "Donations" and "Southern Africa Appeal".
