VOL 21 NO 316 REGD NO DA 1589 | Dhaka, Thursday, October 02 2014

http://www.thefinancialexpress-bd.com/2014/10/02/59335
Extending patent exemption on medicines for LDCs
M S Siddiqui

LDCs have received another extension of waiver as the meeting on TRIPS in June 2013 extended
the deadline for LDCs to enforce WTO IP rules to July 01, 2021. It temporarily waives the
obligation of LDCs to apply the provisions of the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), except for articles 3 (national treatment), 4 (most-favoured-
nation treatment), and 5 (multilateral agreements on acquisition or maintenance of protection)
(IPW, WTO/TRIPS, 12 June 2013). Since the newly passed extension is for the full TRIPS
agreement, it could be considered to apply to all products, including pharmaceutical products.
The World Health Organisation (WHO) estimates that nearly a third of the world's population
lacks access to the most basic essential medicines, while in the poorest parts of Africa and Asia
this figure climbs to a half. Total health expenditures range from 1.9 per cent of gross domestic
product (GDP) in Equatorial Guinea to 15.2 per cent of GDP in the United States. On average,
low-income countries spend 5.4 per cent of GDP on financing healthcare systems whereas high-
income countries spend more than 11 per cent of GDP on health.

On average, 30 per cent of the world population lacks access to life-saving medicines. In some
countries in Asia and Africa, the number may be as high as 50 per cent (Roger Bate, 2008).
Many developing countries, including some member countries of the Organisation of Islamic
Cooperation (OIC), have insufficient or no manufacturing capacities in the pharmaceutical
industry. Local industry covers a tiny fraction of domestic pharmaceutical demand and they rely
heavily on import and medicinal aid.

The disparities are also significant in terms of healthcare workers. There are 2.8 physicians per
10,000 inhabitants in low-income countries compared with 28.6 in high-income countries.
Likewise, low-income countries have about 13 hospital beds per 10,000 inhabitants whereas the
average for high-income countries is 59.52.

Other challenges include world-wide shortages of trained health professionals, inability to obtain
access to any health care or medicines, infrastructure problems impeding delivery of health care,
lack of clean water, lack of obstetric and neo-natal care, corruption causing diversion of health
funding, and other fundamental issues.

The expenses on medicines accounts for a major proportion of health costs in developing
countries. This means that access to treatment is heavily dependent on the availability of
affordable medicines. The trade in medicines takes place between wealthy countries, with
developing countries accounting for just 17 per cent of imports and 6.0 per cent of exports. It is
estimated that one-third of the developing world's people are unable to receive or purchase
essential medicines on a regular basis.

Global pharmaceutical market, both in terms of production and consumption, is highly
concentrated in the developed regions. In 2010, North America (38 per cent), Europe (29 per
cent) and Japan (12 per cent) accounted for nearly 79 per cent of global market. On the other
hand, developing regions with a share of nearly 85 per cent of world population, accounted for
only 21 per cent of global pharmaceutical consumption in 2010. The share of developing
countries in global pharmaceutical trade remained very low and they accounted for only 7.0 per
cent of exports and 18 per cent of pharmaceutical imports in 2010.

Patent protection is an incentive for the research and development of new drugs. But there is also
concern that the TRIPS (The Agreement on Trade-Related Aspects of Intellectual Property
Rights) agreement, which grants extensive patent rights to pharmaceutical companies, will
prevent developing countries from producing or buying generic drugs that usually cost much less
than brand name drugs. The United Nations Development Programme (UNDP) has questioned
the compatibility of the TRIPS agreement with human rights law because of its impact on access
to essential drugs in low-income countries. The World Health Organisation (WHO) has recently
added several antiretrovirals to the Model List of Essential Drugs, advancing arguments that they
should be available at reduced price.

It is estimated that the industrialised countries hold 97 per cent of all patents, and global
corporations own 90 per cent of all technology and product patents. The developing countries
have very poor manufacturing and consumption and the least developed countries (LDCs) are
not at all a threat to pharmaceutical trade of the developed countries. The LDCs command less
than 1.0 per cent of global drug market.

The LDCs have time until the January 01, 2016 deadline to bring their patent regimes into
compliance with TRIPS. These countries are now allowed manufacturing and exporting generic
medicine without payment of any royalty. Bangladesh has the capacity to produce finished
pharmaceuticals, it does not have the infrastructure necessary to produce therapeuic ingredients,
i.e. the raw materials for finished products. Also, the local industry does not invest in innovation
or reverse engineering to create generic drugs or develop new drugs.

A UN study reports, for example, that 150 mg of the HIV drug fluconazole costs $55 in India,
where it is unlicensed, compared to $697 in Malaysia and $817 in the Philippines, where it is
patented. The developing countries and LDCs are under great political and economic pressure to
accept terms that do not adequately take into account their specific interests. A coalition of non-
governmental organisations (NGOs) and developing nations has raised objections in a number of
international organisations to strong intellectual property protection. The issue of patents and
access to essential medicines - particularly antiretroviral drugs needed to combat the HIV virus -
has been particularly contentious, spurring urgent calls for action to help the developing world.

In the Declaration on the TRIPS Agreement and Public Health (Doha Declaration) in 2001,
World Trade Organisation (WTO) members themselves raised the issue of policy-driven
interpretation of the major multilateral intellectual property (IP) treaty. The Doha Declaration
paragraph 4 provides that the TRIPS Agreement does not and should not prevent Members from
taking measures to protect public health. It says the Agreement can and should be interpreted and
implemented in a manner supportive of WTO Members' right to protect public health and, in
particular, to promote access to medicines for all. The Doha Declaration called on the World
Trade Organisation (WTO) to adopt a "pro-development" interpretive posture that provides
flexibility for developing countries when construing TRIPS provisions relating to access to
medicines and public health.

LDCs have received another extension of waiver as the meeting on TRIPS in June 2013
extended the deadline for LDCs to enforce WTO IP rules to July 01, 2021. It temporarily waives
the obligation of LDCs to apply the provisions of the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS), except for articles 3 (national treatment), 4
(most-favoured-nation treatment), and 5 (multilateral agreements on acquisition or maintenance
of protection) (IPW, WTO/TRIPS, 12 June 2013). Since the newly passed extension is for the
full TRIPS agreement, it could be considered to apply to all products, including pharmaceutical
products.

It is argued that the June 11, 2013 decision allows LDCs to roll back existing levels of protection
and they can elect to reduce existing levels of patent protection until July 01, 2021, including for
pharmaceutical subject-matter. Law and rules should be revised to avail the opportunity. There
is, however, a debate on whether this decision to extend is a plenary one, and applies equally to
pharmaceutical patents. Professor Frederick Abbott, Edward Ball Eminent Scholar Professor of
International Law at Florida State University College of Law, argues in favour of its generality
and says that the decision of 2013 includes pharmaceutical patents.

If this argument sustains, then Bangladesh will be able to take the benefit of the TRIPS transition
period in not patenting pharmaceuticals. In doing so, the major argument for Bangladesh will
come from the fact that it is not bound to provide patent in pharmaceuticals until July 01, 2021,
or whenever it ceases to be in the least developed category if that happens before 2021.

Bangladesh is in a better position among the LDCs since it can produce most of its requirements
of medicine from imported unpatented raw materials. TRIPS Agreement also has some
transitional rules that include a moratorium on non-violation complaints, technology transfer and
technical assistance from the developed countries to the least developed countries in order to
enable a sound and viable technological capacity building.

The LDCs should work together to ensure that the extension is for the entire TRIPS agreement
covering all products, including pharmaceutical products. If not, they should seek extension of
the transition period for pharmaceutical products up to July 01, 2021 at the Ministerial
Conference to be held during December 1-4, 2015. The LDCs should unitedly drum up their
demands.
The writer is a Legal Economist. shah@banglachemical.com