2 July 2001

INTELLECTUAL PROPERTY AND ACCESS TO MEDICINES

Attached is a copy of the intervention of the delegation of India under item N (Intellectual Property and Access to Medicines) of the agenda of the Council for TRIPS meeting of 18-22 June 2001.

Mr. Chairman,

At the outset, I would like to express my delegation's deep sense of gratitude for your leadership role in organizing today's meeting.

India is particularly pleased that the WTO Council for TRIPS is discussing today one of the most important issues facing all our countries, i.e. the issue of public health and access to medicines. The international community has focused recently on a number of possible implications that the TRIPS Agreement might have for adverse impact on access to medicines and thus, on protection of public health. It may be useful to recall here that as many as 11 million people die every year of infectious diseases, the great majority of them women and children living in the third world. Out of these, AIDS claims an estimated 3 million lives, tuberculosis 2 million and malaria 1 million. Affordable access to medicines for what are life-threatening diseases for people in developing countries is a fundamental human right. The governments in these countries therefore have a duty to ensure both availability and affordable prices for medicines.

As was stated, India is a co-sponsor of the joint communication submitted by about 50 countries on the subject. So, it is not for me to repeat all the points made therein, to which of course India fully subscribes. In this intervention, India would like to make some observations and raise some questions for further reflection by the TRIPS Council.

We wholeheartedly endorse the statement made by the distinguished delegate of Zimbabwe on behalf of the African Group; we also wholeheartedly endorse the recommendations made on behalf of the African Group. I would also like to associate myself with the statement made by the distinguished Ambassador of Brazil.

First of all, we need to be clear about the mandate and the objective of this exercise. It goes without saying that the TRIPS Council should be discussing all issues relating to public health and access to medicines as they pertain to the various provisions of the TRIPS Agreement. So, while it is perfectly legitimate to talk about patents and compulsory licencing, for example, and their impact on public health and access to medicines, it is not within the mandate of this Council to talk of the infrastructure available in different countries in terms of hospitals, availability of doctors, nurses etc. Equally, it may not be useful for this Council to discuss the global funds being set up in various forums for acquiring medicines and distribution in various countries. The purpose of today's meeting is therefore to examine the relationship between the various provisions of the TRIPS Agreement and issues of public health and access to medicines. I am not trying to underestimate the relevance of elements like availability of medical personnel, infrastructure etc. What all I am trying to say is that the job of this Council is to look at the TRIPS Agreement from the perspective of public health.

At the outset, it needs to be stated that protection and enforcement of intellectual property rights contribute to creative and inventive activity and thus welfare to the society. In the field of pharmaceuticals, intellectual property rights have contributed to large private investments resulting in the development of newer and often better medicines. The exclusive rights conferred by patents provide incentive for further investment in research and development of new and effective medicines.

However, a distinction needs to be made between the exclusive rights of the patent holder for example in the case of medicines for life-threatening diseases on the one hand, and say beauty-enhancing and cosmetic drugs on the other hand. Two observations may be pertinent here. One, not enough research and development would appear to be targeted at tackling diseases afflicting people in poor countries. Two, due to price inelasticity in the pharmaceutical sector, particularly for essential drugs, manufacturers pricing decisions are unrelated to the market. Add to this the market exclusivity that is granted by patents and you have a situation where access to medicines becomes difficult if not altogether impossible for the vast majority of the population. It is therefore this aspect of the TRIPS Agreement, insofar as it impacts on the access to medicines, that needs to be examined in detail by us in today's meeting and in future meetings on this important subject.

Protection of public health and nutrition is a fundamental principle governing the TRIPS Agreement and is reflected in Article 8. The TRIPS Agreement grants WTO Members the right to adopt measures necessary to protect public health and nutrition. But it does add that such measures would have to be consistent with the provisions of the TRIPS Agreement. This is a rather curious formulation. There is no need for a provision in the Agreement to say that you are OK as long as you are consistent with the Agreement. Besides, a principle which, inter alia, incorporates an element of exception as well, cannot be tested against the yardstick of consistency with other provisions of the Agreement. Second, in areas like protection of environment (protection of plant and animal life), Article XX of the GATT gives Members the right to deviate from fundamental principles such as MFN and National Treatment, provided the requirements in the Chapeau of Article XX which relate to avoidance of arbitrary or unjustifiable discrimination or disguised restriction on international trade are met by the Member. If this is so in the case of environment, it seems strange that for protection of human life which is perhaps equally, if not more, important, the TRIPS Agreement appears to suggest that Members can protect public health only if the measures taken by them are consistent with the TRIPS Agreement. The implication is that, if by any chance the measures taken by a Member are deemed inconsistent with the TRIPS Agreement, then it would not be possible for that Member to have resort to those measures to protect public health. The most vehement criticism against the TRIPS Agreement is by those who perceive it to be placing protection of public health on a lower level of priority and giving utmost pre-eminence to protection of the rights of the right holders. This needs to be remedied. Both protection of the rights of the right holders and protection of public health are important objectives in themselves and one cannot be espoused at the expense of the other.

Secondly, in Article XX of the GATT, protection of human health is considered an exception and hence entitles the Members to be exempt, under some carefully defined circumstances, from the disciplines and obligations of GATT. If this is so in the case of GATT 1994, it seems odd that in the case of the TRIPS Agreement there is a requirement that in all circumstances the measures that a Member takes to protect human health have to be consistent with the TRIPS Agreement. It would appear that in the very same organization, that is WTO, the way in which protection of human health is dealt with in the two Agreements, namely GATT and TRIPS, are different.

Finally, is there a common understanding among all WTO Members as to what constitutes "consistency" with the TRIPS Agreement? Is it possible or conceivable that a measure taken by a WTO Member in good faith to protect public health within its territory is considered "not consistent" with the provisions of the TRIPS Agreement by either another Member or indeed by a dispute settlement panel? It is important that this meeting be considered the beginning of a process which will eventually come up with a common understanding among WTO Members as to what constitutes consistency with the TRIPS Agreement. In other words, the TRIPS Agreement should offer every Member a wide and broad range of measures for protecting public health. This issue is too important to be left either to chance or to future panels. This is why all of us here should collectively recognize and confirm the considerable degree of flexibility offered by the TRIPS Agreement in this regard.

Having set out the broad parameters within which this meeting and future meetings on the subject should dwell, let me spell out India's concern and position on some of the issues involved.

It is obvious to my delegation that every provision of the TRIPS Agreement must be read, understood and interpreted in the light of Articles 7 and 8 of the TRIPS Agreement. This is because the objectives and principles of the TRIPS Agreement are contained in these Articles and these are of overarching relevance and importance for the rest of the provisions. Apart from the fact that the Vienna Convention on the Law of Treaties would endorse such a point of view, the fact is that promotion of intellectual property rights is not an end in itself, and its effectiveness would have to be measured not just in terms of whether or not the rights of the right holder have been protected or not, but also in terms of whether or not public policy objectives based on Articles 7 and 8 have been adequately met or not. We welcome the EC's view on the overarching importance of Articles 7 and 8 as well. After all, this is what the TRIPS Agreement is about, i.e. a balance of rights and obligations, a balance between private rights and public policy objectives and mutual advantage for both producers and users of technological knowledge. The real concern both in the international civil society and in national jurisdictions is that the TRIPS Agreement in its current form may be misinterpreted as promoting one at the expense of the other. This concern must be taken seriously by the TRIPS Council.

Any discussion of the relationship between the TRIPS Agreement and public health and access to medicines has to begin by taking a look at the provisions relating to patents and the way in which the existing patent system operates.

As is known to all, patents confer exclusive rights on the owner by essentially preventing any third party not having the owner's consent from making, using or selling the product concerned. In the area of pharmaceutical products, it is widely believed that patents are necessary for rewarding invention, but also to ensure that there is incentive for further research and development for creating new drugs. This is true and no body is questioning this assumption. The problem, however, is that by conferring a patent on a drug, there are huge implications for its accessibility, especially for the most vulnerable sections of the population. For one thing, a patent generally ensures that there is no other substitute or alternative drug for the period for which patent protection is made available. For another, because generic competition is generally prevented by a patent, the price of a patented drug tends to be exorbitantly high. And there are any number of studies to prove this. In addition, it needs to be noted that the TRIPS Agreement provides a patent term of 20 years, much more than what used to be provided in national laws before. Moreover, the actual term of patents may even be longer than 20 years because of the practice of "selection patents" or "evergreen patents". All of the above have enormous implications for access to such medicines in poor countries where the per capita income is low and per capita expenditure on health is pitifully small.

It has been argued that not all existing essential drugs are on patents. Even assuming this is true, it seems clear that future inventions which are going to be ground-breaking, such as a vaccine for AIDS or indeed even new vaccines for old diseases like malaria, tuberculosis, etc. are going to be on patents. What happens then to countries which simply cannot afford to pay exorbitant prices for medicines which may well decide between life and death for its citizens. This then is the central issue facing the Council today.

In these circumstances, it is important that we explore all options currently available under the TRIPS Agreement to see how we can allow countries the maximum flexibility to take measures for protection of public health.

The most widely discussed provision on the subject is Article 31, which deals with "other use without authorization of the right holder". It is obvious that a broad and flexible interpretation of this provision is critical for allowing Members the fundamental right under the TRIPS Agreement to promote and protect public health. We are informed that there is some flexibility inherent in the TRIPS Agreement on this particular issue. Whether there is adequate flexibility or not will become apparent only when we clarify the existing flexibility to the fullest possible extent, so that Members are clear what they can do to protect public health. It is also important that there be absolute legal certainty in this regard. At this stage, I would like to note that this point was forcefully made by the distinguished Ambassador of Brazil. I would also like to thank the distinguished Ambassador of Norway for suggesting to developed countries that they should exercise due restraint till the required degree of legal certainty is achieved. Let me also say that this is important from a public relations exercise angle. After all, a number of NGOs like OXFAM, Médecins Sans Frontières have made valid criticism against the TRIPS Agreement. The Council must demonstrate that such criticism is taken seriously and that the Council is trying to find solutions to the problems and issues posed.

Against this backdrop, it is important that the TRIPS Council reaffirm that a Member can resort to Article 31 on any grounds whatsoever, including of course of protecting public health. Second, it is important that in the context of efforts to obtain authorization from the right holder, the expressions " reasonable commercial terms" and "within a reasonable period of time" are interpreted flexibly and in the light of the practice prevalent within the territory of the Member, taking into account the level of development and socio-economic priorities. Furthermore, the above requirement can be waived in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. A health crisis characterised by pandemics and epidemics of major diseases such as AIDS, malaria, tuberculosis, etc. (the list is obviously not exhaustive) should qualify for an emergency or circumstance of extreme urgency. Similarly, public non-commercial use should cover governmental health care for the poor.

It seems obvious that the TRIPS Agreement does not restrict the possibility that a compulsory licence be executed by means of importation of the patented product. Indeed, in countries where the size of the market does not justify a local drug industry or local manufacturing, this may be the only option.

A related question is the right of the compulsory licensee to import or export. In the case of the former, the compulsory licensee may import from a compulsory licensee in another country. Such importation must be deemed as legal parallel importation. Similarly, a compulsory licensee can export. However, the TRIPS Agreement does stipulate that the compulsory licensee supply "predominantly" for the domestic market. This needs to be interpreted flexibly and broadly. First of all, this limitation does not apply in some developed country markets when the compulsory licence has been granted to remedy anti-competitive behaviour. If that is so, why should the same yardstick not be applicable for compulsory licences issued on grounds of public health. This is something that needs further reflection. Secondly, the condition that compulsory licences should supply predominantly for domestic markets makes productions unviable in small countries with a very small domestic market and poor purchasing power. It is inconceivable that in small countries pharmaceutical companies would set up production facilities for catering exclusively for the domestic market. For such countries to benefit from flexibilities available in the TRIPS Agreement, various options have to be explored. One option is to licence import from the cheapest source. Another is to licence production which allows the right mix of domestic use and export that permits economies of scale. Still another is to encourage regional or global alliances for production by a manufacturer, licensed or otherwise. In this context, the European Communities, in paragraph 13 of their submission, have raised an important issue regarding a possible interpretation of the TRIPS Agreement that would allow a Member to issue a compulsory licence to a manufacturer in another country under certain circumstances. Our view is that this is a correct and legitimate interpretation and therefore cannot be characterized as merely a "possible interpretation". As to the EC's view that such an interpretation may or may not stand scrutiny of a panel or the Appellate Body, our view is that this issue is far too important and should be decided by Members and not through jurisprudence. We appreciate the readiness of the European Communities and their member States to discuss the issue further.

Article 39.3 of the TRIPS Agreement obliges Members to protect undisclosed test or other data against unfair commercial use. It is important to understand what the obligation is in Article 39.3. First of all, it is about protecting certain data against unfair commercial use and not about creating exclusive rights on such data. Second, it applies only to those pharmaceutical products which utilize new chemical entities. We are concerned that there have been suggestions to adopt standards of protection on confidential data that virtually amount to exclusive rights. The adoption of such standards may lead to a restriction of legitimate generic competition for products which are already in the public domain. Such an approach may also undermine the value of the compulsory licensing system, since the compulsory licensee may face unnecessary obstacles to registration. This issue needs further examination by Members.

Article 6 relating to Exhaustion in the TRIPS Agreement establishes that each Member has full freedom to incorporate the principle of international exhaustion of rights in its national legislation. Thus, it is clear that the TRIPS Agreement permits parallel imports, i.e. the import and resale in a country, without the consent of the patent holder, of a patented product which was put on the market of the exporting country by the right holder or in any other legitimate manner. It is clear, and the TRIPS Council needs to reaffirm this, that parallel imports is one of the most important measures that a Member can take to protect public health. Thus, it is quite possible that in the market of the exporting country, the product may well be in the public domain or under a compulsory licence. In all these circumstances, it is important to confirm that WTO Members have full freedom to resort to parallel imports, so that access to medicines is achieved in the country of importation.

Article 30 provides for limited exceptions to the exclusive rights conferred by a patent. The exceptions provided in Article 30 are those which do not unreasonably conflict with normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner. These uses could be private and non-commercial use, use for research, experimental or academic purposes and government use, etc. This would mean that the government, as part of public health policy, can use the flexibility under Article 30 for public non-commercial activity. While some jurisprudence in the WTO has already been developed on the issue, it would be the suggestion of my delegation that Article 30 be interpreted as an exception to patents and not read in conjunction with Article 27 as suggested by some. While we agree that the exception should be a narrow one, it is not legally correct to allow an exception to a rule to be trumped by the rule itself! We stand ready to discuss this issue further.

There is yet another issue related to Article 27.3(b) which, in our view, is also relevant for the subject being discussed today. And that is the issue of how biological/genetic resources are dealt with by the TRIPS Agreement. It is no secret that a vast majority of the new drugs and medicines are based on biological/genetic resources which are traditionally found in the South. Patenting of such resources results not only in misappropriation, but also might end up affecting access to medicines based on these biological/genetic resources. Accordingly, it has been suggested by us in a different context that, first, patent applications should reveal the country of origin of the biological/genetic resource; second, that there be prior informed consent of the country concerned; and, third, there be equitable benefit-sharing. Furthermore, the main issue would appear to be the tendency to grant patents on the basis of mere discovery and not invention as also the tendency not to take into account the knowledge of the traditional communities which may not always exist in written form. Since all these issues have to do with medicines and drugs and its access, it would be useful for the Council to look at these issues with a view to finding appropriate solutions.

Article 64.2 provides that the non-violation provisions shall not apply to the TRIPS Agreement for a period of five years from the date of entry into force of the WTO Agreement. Article 64.3 requires the TRIPS Council to examine the scope and modalities and application of non-violation complaints made pursuant to the TRIPS Agreement and submit its recommendations to the Ministerial Conference for approval. Since the scope of non-violation complaints made pursuant to the TRIPS Agreement is not yet clear to the membership and the TRIPS Council has still not made any recommendation, the non-violation clause is not applicable to the TRIPS Agreement. In these circumstances, it would be extraordinary for anyone to suggest that measures taken by Members for protection of public health should somehow be seen through the prism of non-violation!

Mr. Chairman, a number of questions and issues have been raised. This is as it should be. The subject is vital, if I may say so, a matter of life and death! While we may not today find all the answers to the questions raised, it is important that the Council begin the task of looking at the issues raised in right earnest. We know that this is not going to be the last meeting. Indeed, it marks the beginning of a collective effort to find solutions to some of the most burning problems of our times. I call upon our developed country trading partners to engage in all sincerity and seriousness to find ways and means to address the issues and concerns raised by us. By collectively confirming that the TRIPS Agreement does not, should not and need not come in the way of governments dealing effectively with public health concerns and by publicly committing to the position that, even in situations of perceived ambiguity, the TRIPS Agreement will not be allowed to come in the way of achieving public health objectives, our Ministers at the Doha Ministerial Conference can send a powerful message to the world that WTO cares for the people and it is not an organization, as is generally perceived, designed just to serve the business interests of big companies.

Thank you Mr. Chairman.