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The HIV PandemicLocal and Global Implications$

Eduard J. Beck, Nicholas Mays, Alan W. Whiteside, and José M. Zuniga

Print publication date: 2007

Print ISBN-13: 9780199237401

Published to Oxford Scholarship Online: September 2009

DOI: 10.1093/acprof:oso/9780199237401.001.0001

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Trade, intellectual property and access to affordable HIV medicines

Trade, intellectual property and access to affordable HIV medicines

(p.660) Chapter 44 Trade, intellectual property and access to affordable HIV medicines
The HIV Pandemic

Julian Fleet

Béchir N’Daw

Oxford University Press

Abstract and Keywords

This chapter situates intellectual property issues within the context of efforts to expand on a vast scale access to HIV medicines. Secondly, it summarizes recent developments regarding the affordability of HIV medicines in general. Thirdly, the chapter surveys the major international trade and intellectual property agreements that affect the ability of governments, non-governmental organizations (NGOs), and international organizations to procure HIV medicines at affordable prices. Fourthly, it presents a few concrete examples of the ways in which these agreements are or are not being used by governments to expand access to HIV treatment. Lastly, it traces some of the more important recent regional, bilateral, and national developments in international trade and intellectual rules.

Keywords:   intellectual property rights, affordability, HIV medicines, international trade, regional, bilateral, national developments


The relationship between international trade and intellectual property rules and access to HIV medicines has been the subject of considerable attention and controversy in recent years. Issues concerning the relationship between trade rules and intellectual property rights on the one hand, and public health and access to medicines on the other, are not limited to HIV and AIDS. However, it is fair to say that the threat to human security posed by AIDS, and the social movement surrounding the epidemic, have greatly heightened attention to intellectual property issues not only in the context of HIV and AIDS, but also in relation to other major diseases and public health in general.

The United Nations Security Council, whose primary responsibility under the United Nations Charter is the maintenance of international peace and security, has considered AIDS on its public agenda four times since January 2000. The concern of the Security Council, which had never before focused its agenda on a health or even a social and economic development issue, underscores the exceptional threat created by HIV to human societies in many hard-hit countries. Exceptional threats beg for exceptional responses. This dictum applies not least with regard to trade and intellectual property rights and the response to AIDS.

The purpose of this chapter is fivefold. First, this chapter situates intellectual property issues within the context of efforts to expand on a vast scale access to HIV medicines. Secondly, it summarizes recent developments regarding the affordability of HIV medicines generally. Thirdly, the chapter surveys the major international trade and intellectual property agreements that affect the ability of governments, non-governmental organizations (NGOs) and international organizations to procure HIV medicines at affordable prices. Fourthly, we present a few concrete examples of the ways in which these agreements are or are not being utilized by governments to expand access to HIV treatment. Lastly, we trace some of the more important recent regional, bilateral and national developments in international trade and intellectual property rules.

Background and context

By the end of 2004, UNAIDS and the World Health Organization (WHO) estimated that about 40 million people were living with HIV [1]. More than 20 million people have died of AIDS since the beginning of the epidemic. Most of this HIV-related disease and death, and (p.661) the ensuing social and economic crises in high-prevalence countries, can be delayed, and in many cases averted, through antiretroviral treatment (ART). Although this treatment does not eliminate HIV, and thus does not provide a permanent cure for HIV infection, the combining of three or more antiretroviral drugs, which has been routinely done since 1996, has dramatically reduced HIV-related morbidity and mortality and greatly prolonged and improved quality of life for those people living with HIV (PLHIV) who can afford or otherwise gain access to them.

Governments and their country’s civil society partners have made important progress in recent years in expanding access to HIV treatment. The international community is succeeding in mobilizing far greater commitment to treatment among donor and developing country governments alike. Among the most important initiatives has been the establishment of new sources of international financing for treatment, such as the World Bank’s Multi-Country HIV AIDS Program (MAP) and Treatment Acceleration Project (TAP), The Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund), and initiatives such as the WHO/UNAIDS ‘3 by 5’. The latter had an ambitious target. The campaign was launched on World AIDS Day 2003 by WHO and UNAIDS to promote access to ART to at least 3 million people in developing and transitional countries by the end of 2005.

Despite this progress, many people continue to die unnecessarily. In 2004 alone, 3 million died of AIDS [1], the same as in the two previous years. Of the estimated 6.5 million people in developing and transitional countries urgently needing HIV ART, just under 1 million—only 15% of those in need—had access to it by June 2005 [2]. As early as September 2003, the Director-General of the WHO, the Executive Director of UNAIDS and the Executive Director of the Global Fund declared the lack of HIV treatment in developing countries to be a global public health emergency [3]. Such dire circumstances call for exceptional measures to expand access to HIV prevention and care services on a vast scale [4].

Achieving, or coming close to, the WHO/UNAIDS target of 3 million people on ART by the end of 2005, not to mention the ultimate goal of universal access, requires exceptional efforts in a number of areas. These include technical public health interventions to promote rational selection and use of HIV medicines; sustained international and domestic financing for treatment; adequate human resources and infrastructure in the health and social services sectors; and, not least, affordable HIV medicines and diagnostics [5].

Affordability of HIV medicines

While the affordability of medicines and diagnostics is only one of several factors affecting access to HIV treatment in developing countries, it is an important one. Medicines of importance to PLHIV include antiretrovirals, antibiotics, antifungal agents and other pharmaceuticals used to treat opportunistic infections. Diagnostics include HIV antibody tests, CD4 tests and HIV viral load tests [6]. For resource-constrained governments in poor countries, the purchase price of these products directly affects the number of patients that can be treated [7]. Countries such as Cameroon and South Africa are using local funds to support HIV treatment services: savings in the use of hospital services and procurement of medicines can be reallocated to support training of desperately needed health workers, strengthening of health system infrastructure or to address other pressing development needs.

The price of HIV medicines is also of concern to multilateral and bilateral donors. The World Bank, the Global Fund and the US President’s Emergency Plan for AIDS Relief (PEPFAR) are providing unprecedented amounts of international donor funds for HIV treatment (p.662) in developing countries. Over half of the monies in the Global Fund’s approved AIDS grants are for procurement of medicines and commodities [8]. Thus, for example, it is not surprising that the procurement policy of the Global Fund encourages its beneficiaries to procure at the ‘lowest possible price’ and to utilize the flexibilities in the multilateral trade and intellectual property rules to obtain lower prices. The Global Fund’s procurement policy states that ‘The Fund encourages Recipients to comply with national laws and applicable international obligations in the field of intellectual property, including the flexibilities provided in the TRIPS agreement and referred to in the Doha Declaration, in a manner that achieves the lowest possible price for products of assured quality’ [9].

Although a few originator ‘brand name’ drugs are priced lower than their generic counterparts, a recent study by the US Government Accountability Office found that, on the whole, price differences between brand name and generic antiretrovirals ‘could translate into hundreds of millions of dollars of additional expense when considered on the scale of…(the PEPFAR)… goal of treating two million people by the end of 2008’ [10]. PEPFAR’s procurement of generic antiretrovirals has been limited by its decision to require quality assessment and approval by its own US Food and Drug Administration for medicines purchased with its funds [10].

A number of factors contribute to the price of antiretrovirals and other essential medicines, and several strategies may be employed to promote the affordability of these products. These include:

  • differential pricing by pharmaceutical companies through which they may offer lower prices for lower- and middle-income country markets [11];

  • generic competition and local production, including from major manufacturers of generic HIV medicines located in developing countries such as Brazil and India;

  • voluntary licensing arrangements between originator pharmaceutical companies holding; patent rights to the product and generic manufacturers in countries such as India, Kenya and South Africa;

  • reduction and elimination of tariffs and taxes.

These strategies, aided by effective and relentless activism of PLHIV and their allies in civil society, resulted in dramatic decreases in the prices of antiretrovirals in the year 2000, and significant, but more marginal, reductions thereafter. The least expensive WHO-recommended first-line triple antiretroviral combination on offer to low-income countries announced by research-based industry is currently priced at approximately US$460 per person per year. The least expensive price for a generic combination, announced by the Clinton Foundation, is approximately US$140–US$150 per person per year. The Global Fund’s Purchase Price Report, which made public a significant amount of actual transaction data based primarily on procurement by UNICEF and the International Dispensary Association, has reported transactions as low as US$168 per patient-year for the purchase of antiretrovirals [12].

Of course, even at these dramatically lower prices, antiretrovirals remain unaffordable for the vast majority of individuals living with HIV in developing countries. With price levels approaching the average annual per capita income of many resource-poor countries, international donor support remains crucial. Notwithstanding the increased affordability of antiretroviral medicines, prices for middle-income developing countries, second-line antiretroviral regimens and next-generation products remain a major preoccupation to donors, (p.663) developing countries, PLHIV and most other stakeholders. Data from the Global Fund’s Purchase Price Report suggest that prices in low-income countries were broadly consistent with ‘access’ prices publicized by the pharmaceutical companies. However, in middle-income countries, prices varied considerably and were often very high, higher than what would seem reasonable given the income levels of those countries. Similarly, with regard to molecules in second-line regimens, prices offered by the same company to neighbouring countries were highly variable. For instance, didanosine (ddI) was priced between US$146 and US$1577 per patient-year in Benin, Cambodia, the Central African Republic and Serbia [Ashwin Vasan, personal communication (2005); and 13].

Intellectual property and access to HIV medicines

Much of the public discourse about patents, prices and access to HIV treatment has been filled with obfuscation and even disinformation by both sides of a polarized debate. Those whose economic interests or ideologies are served by strong intellectual property protection often unduly diminish the relationship between patents on HIV medicines and affordable access to HIV treatment, or even conjure up their own unduly narrow definition of generic medicines. Attaran and Gillespie-White, using a methodology of adding the total number of possible product patents that could have been issued in Africa, erroneously concluded that because many antiretrovirals are not patented in many African countries, patents have little to no impact on access, despite the fact that a greater number of patents have been applied for and issued in strategic countries with manufacturing capacity such as South Africa [14]. In a recent paper from the Hudson Institute, Adelman et al. erroneously claimed that certain HIV medicines are not ‘really generics’ because they are ‘made in India and Thailand…(and) are copied and manufactured for developing countries’ [15]. Conversely, some anti-globalization campaigners seem to oppose intellectual property protection as a matter of economic ideology. At the same time, many of those working in government, international organizations, academia, civil society and the private sector are simply striving for a more balanced intellectual property system that, while stimulating innovation, serves the overriding concern of the public interest and public health, and especially the needs of the poor to have access to affordable essential medicines.

The term ‘intellectual property’ broadly refers to the legal rights afforded to inventors, writers and other artists, and other creators to control the use of their scientific, literary, artistic and other creative inventions and works. Fields of intellectual property include patents, copyright and trademarks. The most important field relating to access to pharmaceuticals is patents.

A patent is a document issued following an application by a national patent office or other competent government authority that describes an invention and creates a legal right to exclusive control over the use of the invention for a specified period of time. Patents are national in scope and must be requested separately in each country where the right is sought, except where regional patent bodies have been established, for example, the African Regional Intellectual Property Organization (ARIPO) based in Harare, Zimbabwe, and the Organisation Africaine de la Propriété Intellectuelle based in Yaoundé, Cameroon. Patents are often referred to as creating a ‘negative right’ because, rather than giving the owner a ‘positive right’ to make or use the patented product, it allows the patent holder to exclude all others from manufacturing, selling or otherwise using the protected product.

(p.664) The requirements for patentability include the stipulation that the product or process: (i) be new; (ii) involve an inventive step; and (iii) be capable of industrial application. Member States, however, may exclude inventions from patent protection in order to protect public safety, including the protection of human, animal or plant life or health, and may further exclude diagnostic, therapeutic and surgical methods for the treatment of humans and other forms of life.

Although patents and other forms of intellectual property [16] are only one factor affecting the purchase price of pharmaceuticals, it cannot be denied that patent rights, and the trade laws and intellectual property agreements in which they are enshrined, play an important role in pricing and overall access to HIV-related pharmaceuticals.

The government of Brazil, for example, has released data showing a reduction during the period 1996–2002/3 in the prices of antiretrovirals that the government was producing locally by an average of 87%, compared with a reduction of only 47% during the same time period for antiretrovirals that were patented in Brazil and were being imported [17]. More recently, it was reported that some 70% of the Brazilian government’s budget for purchasing antiretrovirals is being spent on four molecules patented in Brazil [18].

Patents feature heavily among the preoccupations of government officials and major multilateral procurement agencies. For example, at the annual WHO World Health Assembly meeting in May 2005, the delegate of the Government of the Bahamas, on behalf of all the Caribbean Community and Common Market (CARICOM) countries, described a ‘potential crisis’ in the Caribbean if countries are ‘held hostage to the prices of a single manufacturer’ in the procurement of antiretrovirals [19]. UNICEF, which purchases an increasingly large volume of antiretrovirals for developing countries, has identified the lack of readily available and reliable information about patent coverage as a major problem in its procurement work [20].

UNAIDS is not opposed to the granting of patent rights in industrialized countries. In a recent policy speech at the London School of Economics, the Executive Director of UNAIDS, Dr Peter Piot, cast the issue as follows:

An exceptional response to AIDS demands a new compact between the pharmaceutical industry and the world’s poor. A just compact involves two elements. One is to give the pharmaceutical industry patent monopoly and good profits in rich countries—this is essential because new antiretroviral drugs are desperately needed all the time. The second is allowing poorer countries to legally manufacture and sell generics…[4].

Patents in high-income countries provide important incentives for innovative research and development of new HIV medicines and, hopefully, the invention of HIV vaccines. In the absence of a vaccine or a cure, with serious problems of resistance and toxicity, and with the critical need for the development of simpler dosing forms for adults and more palatable and simpler antiretroviral formulations for children, innovation remains a crucial element in the response to AIDS. While patents are not the only conceivable incentive for innovation—and the problem of insufficient research for neglected diseases in developing countries has led to calls for alternative or complementary approaches such as a research treaty among governments [21]—patents today are an important incentive to promote research and development in the private pharmaceutical sector and, increasingly, in academic institutions.

It is essential, however, that intellectual property rights be considered in the context of other social interests, not least access to affordable medicines and the human rights concerning (p.665) health and scientific progress [22,23]. Access to medicines is now widely regarded as part and parcel of Article 12 of the International Covenant on Economic, Social and Cultural Rights, which recognizes the human right to ‘the enjoyment of the highest attainable standard of physical and mental health…’, and Article 15, recognizing the right of everyone to ‘enjoy the benefits of scientific progress and its applications…’ [24]. The United Nations Commission on Human Rights has issued a number of resolutions on intellectual property and access to HIV medicines [25].

The WTO intellectual property agreements: balancing innovation and access

The three main World Trade Organization (WTO) agreements relating to trade, intellectual property and access to HIV medicines and other essential pharmaceuticals are: (i) the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement); (ii) the Declaration on TRIPS and Public Health (the Doha Declaration); and (iii) the August 30, 2003 Decision.

These multilateral trade and intellectual property rules can, and are intended to, promote both innovation and access to pharmaceutical products. Recognizing this and referring expressly to ‘generic drugs’, ‘pharmaceutical policies and practices’ and ‘intellectual property regimes’, United Nations Member States in their 2001 Declaration of Commitment of the UN General Assembly Special Session on HIV/AIDS sought to ‘promote both innovation and the development of domestic pharmaceutical industries consistent with international law’ [26].

The TRIPS Agreement, a ‘founding component’ of the WTO and contained in an Annex to the overall WTO Agreement, was reached ‘against a backdrop of diplomatic efforts to upgrade global intellectual property protection’ [27]. TRIPS sets out minimum international norms for patent protection and other categories of intellectual property required of all WTO Member States, which numbered 148 in May 2005. Its standards concerning the availability and scope of patent rights provide that patents shall be available for products and processes in all fields of technology, including pharmaceuticals [28].

Among the key obligations of the TRIPS Agreement is the provision that the term of patent protection shall be at least 20 years from the filing date of the patent application [29]. At the time the TRIPS Agreement was reached, in 1994, the municipal law of many developing countries provided far shorter patent terms, 5 or 10 years, and many developing countries did not offer any patent protection whatsoever for pharmaceuticals or other fields of technology. Brazil, for example, the first developing country to guarantee free access to ART, did not provide for patent protection for medicines until 1996. This was an important factor in the ability of the government of Brazil to manufacture locally, in public and private sector pharmaceutical companies, numerous antiretrovirals for which patent protection may otherwise have been sought by innovator companies.

In addition to extending the coverage of patents and strengthening the scope of patent rights, however, the TRIPS Agreement provides important flexibilities—sometimes referred to as ‘public health safeguards’—that allow governments to authorize the use of patented products subject to certain conditions. This ‘use of the patented product’, commonly known as ‘compulsory licensing’, includes manufacturing, sale, import and, with some limitation, export. Compulsory licences may be issued for many reasons.

(p.666) While an application for a compulsory licence normally must be preceded by an attempt to negotiate a voluntary licence on reasonable commercial terms within a reasonable period of time, considerable latitude is available to states in deciding the circumstances under which they may be authorized [27]. Three circumstances are specified in the Agreement for which prior negotiation or notice with the patent-holder is not required: (i) national emergency; (ii) circumstances of extreme urgency; and (iii) non-commercial public use.

Few countries, however, have made use of the compulsory licensing flexibility in the TRIPS Agreement to achieve more affordable antiretroviral medicines. Indonesia, Malaysia, Mozambique, Zambia and Zimbabwe are some exceptions. In October 2004, Indonesia issued a compulsory licence for government use of lamivudine and nevirapine. Malaysia issued a compulsory licence in October 2003 for didanosine, zidovudine and a lamivudine/zidovudine combination, limited to imports for the public hospital sector. Mozambique has issued a compulsory licence for local production of a triple fixed-dose combination product consisting of lamivudine, stavudine and nevirapine. Based on reasons of ‘national emergency’, Zambia issued a compulsory licence for a triple fixed-dose combination of lamivudine, stavudine and nevirapine. In 2002, the Minister of Justice of Zimbabwe declared a ‘national emergency’ to enable the government to license the manufacture or use of ‘any patented drug, including any antiretroviral drug, used in the treatment of persons suffering from HIV/AIDS…’ or to import ‘any generic drug used in the treatment of persons suffering from HIV/AIDS or HIV/AIDS-related conditions’ during the period of emergency [30]. In South Africa, following a finding by the national Competition Commission that the multinational companies GlaxoSmithKline and Boehringer Ingelheim had contravened the national competition laws, a settlement agreement was reached that provided for additional and more extensive voluntary licensing of the products concerned both in South Africa and for export to other sub-Saharan African countries.

In negotiations with multinational pharmaceutical companies whose products are protected by patents in Brazil, the government of Brazil has threatened to issue compulsory licences if the companies refused to offer prices that the government considered affordable. The most recent example came in June 2005, when the President and Minister of Health announced that the antiretroviral lopinavir/ritonavir produced by Abbott Laboratories was ‘of public interest’ and that the government would produce this medicine in its public pharmaceutical manufacturing facilities if the company did not agree to negotiate a voluntary licence for local production. At the time of writing, however, the government had not issued a compulsory licence for the product concerned, and the terms of any agreement between the government and Abbott Laboratories had not been made public.

Nevertheless, although the WHO has declared that lack of HIV treatment in developing countries constitutes a ‘global public health emergency’ [31], with potential negative political and economic implications such as negative publicity for a country’s tourism industry, many countries have been reluctant to declare a ‘national emergency’ on account of AIDS or other public health problems, perhaps for reasons concerning stigma as well as for economic interests such as maintaining tourism industries.

The compulsory licensing grounds of public non-commercial use may thus prove more acceptable to governments in future. Under this prong of Article 31 of the TRIPS Agreement, governments in countries whose public health system or medical services provide HIV medicines free of change or with no commercial gain—countries such as Brazil, Ethiopia, Malawi, Senegal, South Africa, India and Thailand—can authorize a licensee to manufacture, sell or (p.667) import generic versions of the medicine, notwithstanding any valid patents that may have been issued in the country.

Whatever grounds may be used for the granting of a compulsory licence, Article 31 of the TRIPS Agreement requires that a number of conditions be met. These include, inter alia, the payment of ‘reasonable remuneration’ in the form of royalties to the patent-holder, and ensuring the availability of judicial or other independent review.

If there were any doubts concerning the rights of governments to utilize the compulsory licensing provisions of the TRIPS Agreement to protect the public health of their peoples and to promote access to affordable medicines for all, the WTO Declaration on the TRIPS Agreement and Public Health (the ‘Doha Declaration’) put these doubts to rest [33]. While the TRIPS Agreement itself provides in Article 8 that governments may ‘adopt measures necessary to protect public health…’ as long as these measures are consistent with TRIPS, the Doha Declaration reinforces the primacy of public health interests in the application of these multilateral trade and intellectual property rules. The Declaration emphasizes in Paragraph 4 that ‘the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health’ and that ‘the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ rights to protect public health and, in particular, to promote access to medicines for all’ [33].

Similarly, while TRIPS Article 31 had always permitted governments to grant compulsory licences and to determine the grounds for their granting, the Doha Declaration, in Paragraph 5, makes explicit that ‘public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency’ within the meaning of Article 31 of the TRIPS Agreement [33].

The Declaration also contributed to the resolution of a long-running issue concerning the legal principle known as ‘exhaustion’ underlying another flexibility that is inferred, or at least not prohibited, by the TRIPS Agreement, namely parallel importing. ‘Exhaustion’ of patent rights is considered to occur when the patent-holder sells the product for the first time. The patent rights end upon the first sale by the patent-holder, allowing the first buyer to resell the product elsewhere. If this first buyer resells the product to someone in another country, this is called ‘parallel importing’, also known as ‘grey market imports’. Parallel imports are thus goods brought into a country that were legitimately placed on the market in a different country. Although TRIPS states that the WTO dispute body cannot be used to resolve disputes about exhaustion, the Doha Declaration, in Paragraph 5, makes more explicit that exhaustion, or parallel importing, is a matter that WTO Members have the discretion to regulate at the national level.

In perhaps the only substantive change from the TRIPS Agreement, the Doha Declaration, in Paragraph 7, provides a blanket extension until the year 2016 of the transition period within which least-developed countries must offer patent protection for pharmaceuticals. Depending upon their income levels and the level of patent protection already available in the country, WTO Member States were given different periods of time to apply the TRIPS Agreement. While high-income countries were required to comply by January 1, 1996, certain developing countries were given until January 1, 2000 or January 1, 2006, and least-developed countries were given until January 1, 2016, with the possibility of exceptions on a case-by-case basis. With the extension of this transition period by the Doha Declaration by 10 years, least-developed countries are under no obligation to provide patent protection for HIV medicines and other pharmaceuticals until 2016. Thus, least-developed country (p.668) governments have the discretion, at least within the WTO multilateral trade rules, to ensure access to generic HIV medicines within their countries.

One important issue that was not resolved immediately by the Doha Declaration, however, concerned the ability of countries without adequate pharmaceutical manufacturing capacity to source generic medicines from manufacturers who would export to them under a compulsory licence. Article 31(f) of the TRIPS Agreement provides that products made or sold under a compulsory licence should be ‘predominantly’ for the supply of local domestic markets. This limitation is important because many developing countries do not have manufacturing capacities of their own and must rely on imports from low-priced generics producers in other countries if the compulsory licensing provision is to be meaningful for them. The ministers meeting in November 2002 at the Fourth WTO Ministerial Conference in Doha could not reach agreement on how to address this problem. Instead, in Paragraph 6 of the Declaration, the ministers instructed the WTO Council for TRIPS ‘to find an expeditious solution to this problem and to report to the General Council before the end of 2002’ [32]

WTO August 30, 2003 Decision

Although the ministers’ deadline of December 31, 2002 was not met, in August 2003 a multilateral consensus was finally forged among WTO Member States regarding access to affordable medicines for countries without sufficient manufacturing capacity in the pharmaceutical sector. This consensus, also known as Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, covered public health problems in addition to AIDS, which was particularly important for PLHIV, who are prone to a host of opportunistic infections and other diseases—cancers, fungal infections and other killers—that antiretrovirals do not specifically treat.

International organizations such as WHO and UNAIDS urged that the arrangements under the August 30, 2003 Decision of the Council for TRIPS be implemented in the most flexible manner possible, so that developing countries could utilize the system easily and efficiently in their efforts to ensure greater access to HIV medicines for their peoples [J Fleet, Senior Adviser, UNAIDS Secretariat to the WTO TRIPS Council, June 25, 2002, Geneva. Unpublished; and 33]. In a statement to the TRIPS Council, the representative of the WHO emphasized as the central principle that ‘the people of a country which does not have the capacity for domestic production of a needed product should be no less protected by compulsory licensing provisions (or indeed other TRIPS safeguards), nor should they face any greater procedural hurdles, compared to people who happen to live in countries capable of producing the product’ [34]. Among the solutions being proposed at the time, WHO recommended that reference to the limited exception to patents under Article 30 be considered the one most consistent with this public health principle [35]. The WHO recommendation, however, was not adopted by the WTO.

According to the WTO in the August 30, 2003 Decision, ‘WTO member governments broke their deadlock over intellectual property protection and public health…. They agreed on legal changes that will make it easier for poorer countries to import cheaper generics made under compulsory licensing if they are unable to manufacture the medicines themselves’ [35].

(p.669) The August 30, 2003 Decision establishes a waiver of the obligations under TRIPS Article 31(f) and allows any member country to export pharmaceutical products made under compulsory licences to countries that do not have sufficient pharmaceutical manufacturing capacity. The problem of lack of pharmaceutical manufacturing is a real one for countries like those in Southern Africa that are hard-hit by AIDS. For example, of the 15 countries with adult HIV prevalence above 10% at the time the Decision was being negotiated, only South Africa was considered to have adequate capacity to manufacture antiretroviral medicines. In other words, 14 of these 15 hardest-hit countries would have to find sources of supply for generic medicines in exporting countries if they—the very countries in greatest need—were to benefit from compulsory licensing.

The waiver arrangement is designed to cover pharmaceuticals to address all public health problems identified by the Member States concerned. All WTO member countries are eligible to import under this Decision, but 23 developed countries are listed in the Decision as announcing voluntarily that they will not use the system to import, and others indicated they will use the system only to address emergencies. At the time of writing, however, some 2 years after the Decision was agreed on, and notwithstanding patent law reforms undertaken by Canada and Norway intended to allow their generic companies to utilize this arrangement, the WTO has not been notified of a single instance in which such a waiver would be utilized. Thus, the waiver arrangement under the August 30, 2003 Decision must be monitored and evaluated to ensure that it affords an efficient and effective mechanism to address the problems of concerned states. Lack of use of this temporary WTO waiver system by its intended beneficiaries only heightens the need to adopt a more definitive and lasting amendment to address the problem of Article 31(f) in this context. To date, however, talks within the WTO to amend Article 31(f) have been stalled.

Recent developments in national legislation, and regional and bilateral trade agreements

While the TRIPS Agreement sets out minimum international norms for intellectual property protection, it expressly states that ‘members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement’, sometimes referred to as ‘TRIPS-plus’ provisions [36]. In 2004 and 2005, both in national legislation and in regional and bilateral trade agreements between developing countries and the USA, developing countries have opted not to avail themselves of the full flexibilities afforded them under the multilateral WTO intellectual property rules. Indeed, a number of countries have adopted ‘more extensive’ protection than required under the TRIPS Agreement.

For example, in March 2005, the Indian Parliament passed a new law amending the Patent Act 1970 [37]. The amendments to the Patent Act were intended to address India’s obligations by bringing it into compliance with the TRIPS Agreement at the end of its transition period. In order to meet its WTO obligations to comply with TRIPS for patent protection in the pharmaceutical sector by January 1, 2005, the Indian government had passed a temporary ordinance at the end of December 2004.

The passage of the Indian Patent Bill by Parliament in March 2005 ushered in a new patent regime in India under which product patents for pharmaceutical products are now available under Indian law. Up to then, India had provided patent protection only for pharmaceutical processes, allowing its important generic pharmaceutical industry to formulate and (p.670) manufacture antiretrovirals and other medicines by alternative steps, otherwise known as ‘reverse engineering’.

During the legislative process, the Indian Parliament ultimately deleted some provisions in the temporary ordinance that would have resulted in more extensive patent protection than required under the TRIPS Agreement. However, the final law did include an important TRIPS-plus provision: a 3-year waiting period for the issuance of a compulsory licence. This waiting period is not required by the TRIPS Agreement. By failing to retain the full flexibilities permitted by the multilateral rules, the Indian legislative proposals unnecessarily undermine the ability of the Indian generic pharmaceutical industry to supply developing countries with affordable generics. At present, about half of the people on HIV treatment in developing countries are using generic antiretrovirals. The Indian generic industry is the source of most of these medicines in Africa and Asia. Thus, the impact of the Indian patent amendments on access to generic antiretrovirals will be profound.

Similarly, a number of developing countries have entered into regional and bilateral trade agreements with the USA that have intellectual property protection at their core and include provisions for more extensive patent protection than required by TRIPS. These include Guatemala, Honduras, Nicaragua, Costa Rica, El Salvador and the Dominican Republic through the Central American Free Trade Agreement (CAFTA), as well as separate agreements with Chile, Jordan and Morocco. Among the more extensive protection provided in these agreements are the use of national drug regulatory agencies to enforce patents, whereas previously this function was left to the judiciary; longer patent periods; new patents for ‘new uses’ limitations on compulsory licensing; and additional restrictions on pharmaceutical test data known as ‘data exclusivity’ [38]. The Andean states in South America (Columbia, Ecuador, Venezuela, Peru, Bolivia and Argentina), Thailand and even Member States of the Southern African Customs Union (South Africa, Botswana, Lesotho, Swaziland and Namibia), with the highest HIV prevalence rates in the world, are reportedly negotiating similar agreements.


The main messages of this chapter are:

  1. 1. Innovation of products for the prevention and treatment of HIV is crucial, and intellectual property rights can provide an important incentive for such innovation.

  2. 2. The HIV epidemic requires an exceptional response, including in the area of intellectual property: where intellectual property rights pose a barrier to access to affordable HIV-related medicines, intellectual property rights, which vest in individual persons or corporations, must be subordinate to the human rights concerning health and access to medicines for all [39].

Global trade and intellectual property rules—the WTO TRIPS Agreement, Doha Declaration and August 30, 2003 Decision—offer governments considerable flexibility to expand access to more affordable generic HIV medicines. These flexibilities include compulsory licensing, the absence of any requirement for least-developed countries to issue patents on pharmaceuticals until 2016, and some flexibility for countries with insufficient pharmaceutical manufacturing capacity to source lower-cost generic medicines through exports under a (p.671) compulsory licence. With few exceptions, however, these flexibilities are not being utilized by developing and transitional countries.

National governments are failing to incorporate the full flexibilities available into their national patent laws. Some, like India, a leading producer of generic HIV medicines, are including in their national laws more extensive patent protection than required by the WTO. Others, such as in Latin America, are entering bilateral or regional trade agreements with the USA that may undermine the flexibilities that are their right under the global rules, impede the ability of those countries to expand access to lower-cost generic medicines and, in turn, diminish the fulfilment of the human rights related to health and scientific progress to which their citizens are entitled.

The lack of access to HIV treatment in developing and transitional countries has been declared a national emergency. In some countries, more than one-third of the adult population is infected with HIV, a treatable but otherwise fatal virus. Faced with such a calamity, no responsible government leader of a high-income country in the Americas, Europe or Asia and the Pacific would tolerate an international property regime that makes it significantly more expensive, and thus more difficult, to get lifesaving medicines to their people. Imposing such a regime on the governments of poorer countries creates unnecessary obstacles to treatment, and only serves to tarnish legitimate intellectual property rights.


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