Several measures may be used to secure public interest in relation to WTO/TRIPS Agreement. These include:
A. parallel imports,
B. compulsory licensing, and
C. early submission of application for registration of patented drugs by generic manufacturers.
A. Parallel imports
If a manufacturer has patented a product in several countries, he may - for a number of reasons - decide to sell it at a different price in different countries. If the price in country A is substantially lower than that in country B, an importer in country B may buy the product at the cheaper price in country A, and sell it in country B at a price which is lower than the price set by the patent holder. This is called “parallel importation”. The TRIPS Agreement allows for such importation of products patented in countries other than the country of origin or the country to which the drug is imported. This mechanism may be used if the price of the product is cheaper in other countries than on the local market.
The TRIPS Agreement leaves Member States free to decide whether or not to apply parallel imports. If applied, the relevant legislation will have to provide for this possibility.
B. Compulsory licensing
Compulsory licensing means that the law allows the granting of a license without permission from the patent holder. In practical terms, this means that a Member State may allow the national authority to grant a third party the permission to manufacture or commercialize a drug which is still under patent. However, the TRIPS Agreement imposes specific conditions on Member States to admit compulsory licenses:
• authorization of such use will be considered on its individual merits;
• authorization will be granted in some cases only if the proposed user has made efforts to obtain the license on reasonable commercial terms;
• the scope and duration of the authorization must be limited;
• authorization is non-exclusive;
• the predominant objective of the authorization must be to supply the domestic market;
• the authorization may be suspended if the circumstances that led to it cease to exist, while protecting the interests of the authorized party; and
• the patent holder will be given adequate remuneration, taking into account the economic value of the authorization.
These are the minimum conditions stipulated by the Agreement, and Member States must fulfil them when they grant compulsory licenses. The conditions must, therefore, be included in the new national patent legislation.
C. Early submission of application for registration of patented drugs by generic manufacturers (Bolar provision)
A Bolar provision allows interested (generic) manufacturers to start producing test-batches of a product before patent expires, in order to collect necessary data for submission to regulatory authorities.
Manufacturers of generic drugs can submit an application for the registration of a drug which is still under patent. When the patent expires, the manufacturer may immediately start marketing the product if already approved for registration. This will reduce the delay for generic products to enter the market after the patent has expired, and thereby enhance competition.