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Dear Friends,

Please find below the latest news on negotiations taking place in the World Trade Organization in Geneva on TRIPS (Trade Related Aspects of Intellectual Property Rights) and Public Health, in relation to supply of medicines to countries with insufficient or no manufacturing capacity.

Background Note:

[For those not familiar with Paragraph 6 Negotiations (also known as the 30 August Decision)]

In November 2001, Trade Ministers in Doha agreed on a special declaration recognizing the right of countries to take measures to protect public health and promote access to medicines. This Declaration came to be known as the Doha Declaration on the TRIPS Agreement and Public Health (available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.doc .

The Doha Declaration as it is commonly known, confirmed among others the right of developing countries to use compulsory licenses (for purposes of import, manufacture and export of generic medicines without the consent of the patent holder but subject to certain conditions), parallel importation etc.

It was expressly recognized by Paragraph 6 of the Doha Declaration that a solution has to be found about supplying essential medicines to countries with insufficient or no manufacturing capacity.

This concern arose largely from the fact that once countries that are major producers and exporters of generic products such as India put in place laws that grant patents on pharmaceutical products, these countries will face legal obstacles to produce and export cheap generic copies of patented medicines. This will be detrimental to the supply of medicines to countries with insufficient or no manufacturing capacity.

India has beginning of this year allowed patents for pharmaceuticals products.

Essentially if there a patent on a pharmaceutical product, production for export can only take place under a compulsory license. However the TRIPS Agreement establishes that a compulsory license must be “predominantly for the supply of the domestic market”. For more information on the procedures relating to compulsory license please refer to the TWN Manual at http://www.twnside.org.sg/title2/manual.htm

Example:

If a pharmaceutical product is patented in India, it cannot simply manufacture and export. The Indian government will have to issue a compulsory license to manufacture and the manufacturing must be “predominantly” to supply the Indian domestic market. Only the balance (the non-predominant portion) can be exported.

In recognition of this problem paragraph 6 of the Doha Declaration directed that a solution be found. After months of debates, a temporary agreement to address the problem was finally reached on 30 August 2003 (the Decision). The Decision outlines various procedures that importing and exporting countries have to follow. Many have criticized this Decision as cumbersome and difficult to use. A Statement was also read by the Chair that presided over the meeting that came up with the Decision (Chairman’s Statement). The Chairman’s statement further requires more cumbersome procedures to be followed. Both the August Decision and the Chairman’s statement came about following intense pressure from the multinational pharmaceutical companies in the developed countries particularly the US.

The 30 August Decision can be found at - http://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm

The Chairman’s Statement can be found at - http://www.wto.org/english/news_e/news03_e/trips_stat_28aug03_e.htm

The Africa Group submitted early this year a proposal to make the temporary agreement, permanent by amending the TRIPS Agreement as well as proposed the removal of the many procedures found in the August Decision. The Africa Group does not want to make any reference to the Chairman’s statement. Brazil and India have found the Africa Group proposal to be a good basis for discussion on how to amend the TRIPS Agreement. Brazil and India are not happy with the way the consultations on this matter have taken place.

The US and European Community (EC) are not in agreement with the Africa Group proposal. They do not want to change any aspect of the August Decision and the Chairman’s statement. Of particular concern is to the developed countries is the legal status of the Chairman’s statement.

For now (pending a permanent resolution of this matter), countries that wish to import a product that is patented in the manufacturing country (e.g. in India), there may be a need to use the 30 August Decision. To learn about when the 30 August Decision is triggered and the procedures that are required to be complied to produce, export and import generic medicines, please refer to the WHO publication to be found at

http://www.who.int/medicines/areas/policy/WTO_DOHA_DecisionPara6final.pdf

Further Resources:

For More information on the history and current Paragraph 6 Negotiations please click - http://www.cptech.org/ip/wto/p6/

Please do not hesitate to contact us should you wish to have further information.

Best Wishes

Sangeeta Shashikant

Third World Network

36 Rue de Lausanne

2^nd Floor

1201 Geneva

Tel (O): 41 (0) 22 908 3550

Fax: (O): 41 (0) 22 908 3551

Impasse on talks on TRIPS and Health “permanent solution”

An impasse became evident on negotiations on the major remaining issue relating to the TRIPS Agreement and Public Health when some key WTO members appeared far apart on a solution, and disagreed even on how the process of consultations is going on, during a meeting of the TRIPS Council on 25 October.

Some developing countries, particularly Brazil and India, complained that they had been left out of consultations taking place between a few countries. They also reiterated their support for the proposal by the African Group as a good basis for negotiations towards a solution.

African countries indicated that they were prepared to engage with others, and quoted a declaration by the African Health Ministers for the need to find a permanent solution that removes all constraints and procedural requirements to the export and import of generic medicines.

The US was adamant that a solution must include the statement of the Chair of the General Council before the adoption of a decision on 30 August 2003. However, India, Brazil and other developing countries did not want a solution in which the Chairman’s statement is upgraded to a higher legal status than what it now has.

The issue at hand is the TRIPS Council’s search for a “permanent solution” to ensuring access to medicines for countries that have no or inadequate drug manufacturing capacity.

Below is a report of the issue and the TRIPS Council meeting.

With best wishes

Martin Khor

TWN

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Impasse on talks on TRIPS and Health “permanent solution”

By Martin Khor (TWN) Geneva, 26 Oct 2005

An impasse became evident on negotiations on the major remaining issue relating to the TRIPS Agreement and Public Health when some key members appeared far apart on a solution, and disagreed even on how the process of consultations is going on, during a meeting of the TRIPS Council on 25 October.

Some developing countries, particularly Brazil and India, complained that they had been left out of consultations taking place between a few countries, indicating that they are parties interested in the issue and would have to be involved if an agreement is to be reached.

They also reiterated their support for the proposal by the African Group as a good basis for negotiations towards a solution.

The issue at hand is the TRIPS Council’s search for a “permanent solution” to ensuring access to medicines for countries that have no or inadequate drug manufacturing capacity.

The Doha Declaration on TRIPS and Public Health in its paragraph 6 had recognised that these countries face difficulties in making effective use of compulsory licensing and mandated the TRIPS Council to find a solution to this problem and report to the General Council.

Under Article 31(f) of the TRIPS Agreement, production of generic drugs under compulsory license has to be predominantly for the supply of the domestic market, thus limiting exports and constraining the supply of medicines to countries that are unable to produce.

The General Council on 30 August 2003 adopted a decision enabling the producing countries to have a waiver from the constraint of producing under compulsory license predominantly for the domestic market. However, the decision included several procedures, and a Chairman’s statement read out before the decision’s adoption added several more procedural constraints. The members however agreed that the decision was only a temporary solution and mandated the TRIPS Council to find a “permanent solution”, that would involve an amendment to the TRIPS Agreement.

The African Group submitted a detailed proposal involving some changes to the decision, and this was supported by several other developing countries as a good basis for negotiations. The African Group as well as others also did not want to give a legal status to the Chairman’s statement that is higher than what it now has, as this statement obliges the importers and exporters of the generic drugs to undertake more cumbersome procedures that hinder the use of the Decision and thus affect access to medicines.

However, the US has insisted that the “permanent solution” be a technical exercise of transposing the 30 August decision and the Chairman’s statement into the TRIPS Agreement as the amendment.

Some diplomats and legal experts point out that there are two articles on treaty interpretation in the Vienna Convention Law of Treaties that are relevant to the discussion. Article 31 is on the General rule of interpretation while Article 32 is on supplementary means of interpretation. Article 31 has a higher level than Article 32 in the hierarchy of importance as an instrument of interpretation of a treaty.

Documents that fall under the criteria listed under Article 31 are used first when a treaty needs to be interpreted, and documents under Article 32 are referred to only when further clarification is required.

Article 31 says a treaty shall be interpreted in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

On the other hand, Article 32 says recourse may be had to supplementary means of interpretation, including preparatory work of the treaty and the circumstances of its conclusion to confirm or determine the meaning.

According to the diplomats and experts, the manner in which the amendment to the TRIPS is drafted, and the language used, could determine whether the Chairman’s statement is taken to be a treaty interpretation instrument under Article 31 or Article 32.

Concerns of developing countries that the legal status of the Chairman’s statement may be “upgraded” are thus really concerns on whether the text of the TRIPS amendment would result in the Statement shifting from falling under the criteria of Article 32 and moving to meet the criteria of Article 31. The choice of terms such as “context” and “in the light of” could have an implication in this regard.

The previous and present Chairs of the TRIPS Council have been holding consultations, but so far failed to come up with an agreed permanent solution, despite the passing of several deadlines.

During previous meetings, Brazil, India and the African Group had also complained that an asterisk with a note had been added to the front page of the Secretariat document (WT/L/540) containing the 30 August decision. The asterisked note had not been agreed to by members. The note said the decision was adopted by the General Council “in the light of a statement read out by the Chairman.”

The developing countries expressed concerns that this note may raise the legal status of the Chairman’s statement, and asked for its removal from the document containing the Decision.

Up to now the asterisk with note has not been removed. However, a Corrigendum was issued by the Secretariat on 29 July 2005, by adding to the note that this is a “secretariat note for information purposes only and without prejudice to Members’ legal rights and obligations.”

The developing countries are concerned that the developed countries are attempting to raise the legal status of the Chairman’s statement. In recent weeks, consultations have also been held among the US, EU and some African countries.

According to some diplomats, the developed countries have broadly advocated the acceptance of the whole 30 August decision as the amendment, together with what they consider an appropriate reference to the Chairman’s statement, and some may even want a reproduction of that Statement in the amended TRIPS agreement.

At Tuesday’s TRIPS Council meeting, Brazil spoke strongly on the manner in which consultations were taking place. It said that Brazil is an interested party in the issue, as medicines is a high budget item and access to drugs is an important public issue. The consultation process was not transparent as it was only with a few delegations, and the how countries were selected was not known.

Brazil added that the 30 August Decision agreed upon has no reference to the Chair’s text. It supported delegations that have asked the Secretariat to remove the asterisked note. The Corrigendum in the August Decision does not solve the problem. It requested that the Decision be brought back to its original condition.

Referring to the African Group proposal to amend the TRIPS, Brazil reiterated its position that the proposal provides a good basis for an amendment. It is the only proposal on the table and Brazil was happy with the approach taken by it, including the suggestion of removing some redundancies from the text.

Brazil was also unhappy with the way some countries referred to the Decision as a “package” which seems to suggest that it should include the Chairman’s statement.

Nigeria, on behalf of the African Group, said it would like to have a viable solution before Hong Kong, and that it would remain engaged in the process.

Kenya said it hoped for a solution before Hong Kong. However, the previous statements was a clear indication that “we are not yet at an agreement.” It quoted from the Declaration of the African Union’s Conference of Health Ministers (on 13-14 October), in which the Ministers “called upon the Ministers of Trade to seek a more appropriate permanent solution at the WTO that revises the TRIPS agreement and removes all constraints, including procedural requirements, relating to the export and import of generic medicines.”

India stated that the African Group proposal is the only proposal on the table and is a good basis for discussion. India has a two-fold interest in the issue, as a producer for domestic needs, and as a supplier of medicines to other countries. It added that the amendment should preserve flexibilities of the Doha Declaration and the TRIPS Agreement.

It also said the Chairman’s Statement is not part of the Decision and its status should not be changed. It supported Brazil on the need to remove the asterisked footnote.

India appreciated that any member may hold consultations with other members but had concerns if there is involvement of the Chair in consultations in which only a few members are involved. It had concerns with characterization of sets of members as “most interested” or “key” or just members. India is available for consultations that would be undertaken in whatever form.

Zambia said the issue of access to medicines was very important to African countries and supported the statements of Brazil, India and Kenya.

Argentina also said that the African Group’s proposal should be the basis for the amendments. The elements to be included require careful attention. Some elements of the Decision are not relevant for amending the text.

Argentina also had concerns relating to the Chair’s statement. The legal aspects and status of the Chairman’s statement should not be changed. It also did not agree that the statement of the Chair forms part of the Decision. The asterisked note should be removed and the text should stand as it was formulated.

It also said there is a need for a greater degree of transparency and inclusiveness in the consultation process.

The Philippines also agreed that the African Group proposal is an important basis for discussion, and it was ready to participate in any consultation. China hoped the TRIPS Council could push ahead with the work to amend TRIPS in order to provide legal certainty. Malaysia also did not want any upgrading of the Chairman’s statement and agreed it was better not to have a solution yet, if it was a bad solution.

Many developed countries indicated that they wanted the Decision in its entirety to constitute the content of the amendment, and several also stated the Chairman’s Statement should be an integral part of the amendment.

The US said the amendment needs to have express reference to the Decision and the Chairman’s Statement. It added that no further work on the asterisk is necessary by the Secretariat.

Japan said that without the Chair’s statement, there could not have been a Decision. The amendment should be a technical exercise.

The EC said that the Chair’s statement was read and the Decision adopted in August 2003, and it saw no reason why this cannot be done again. The amendment should remain technical and reflect what is in the August Decision. The status of the Chairman’s text should not be elevated and it should continue to be the context in interpreting the Decision.

Korea said the amendment is a technical exercise that does not change the legal status of the Chairman’s text. Singapore said the EC proposal is balanced and could be the basis to move forward and was one way of preserving the Chair’s text and the August Decision.

Switzerland said the Chair’s statement is an integral part of the solution and should consequently be reflected in the amendment. Australia considered that the amendment should be a technical exercise and wanted to preserve the agreement in its entirety. New Zealand said the amendment is a technical exercise. The statement should represent an understanding of members and a basis for amendment. It will provide “context” for amendment and interpretation. India responded that the Chairman’s statement should not be taken as “context” for interpretation, within the meaning of the Vienna Convention Law of Treaties.

Jamaica stressed that access to medicines is an important issue to it. The Chair’s statement is not an integral part of the solution. The Decision is the only basis for the amendment exercise.

Brazil expressed concern that references were being made to documents that have not been submitted. For example, the EC proposal is floating around and consultations taking place on it although it was not submitted to the WTO. It said consultations are taking place among only a few members, so how can it be expected that the outcome is agreed by others. It stressed that consultations should involve all interested parties. While it is urgent to find a solution, said Brazil, having no solution yet is better than having a bad solution.

The TRIPS Council Chair, Ambassador Choi Hyuck of Korea, said he would take note of all the statements and hoped that an agreement can be reached before Hong Kong.

(* With inputs from Sangeeta Shashikant.)