The aim of this document is to inform people in the health sector with no particular legal background about the impact of globalization on access to drugs, and especially about the WTO agreement on intellectual property (TRIPS Agreement) that may have repercussions in the pharmaceutical field. Therefore, the paper is meant to be non-technical in nature and does not deal with all aspects of patents nor of the TRIPS Agreement, but examines the Agreement only from the perspective of public health and access to drugs. The first part gives an introduction to the international trade system from the GATT to the WTO. The second part analyses the section on patents of the TRIPS Agreement in relation to access to essential drugs.
The Uruguay Round and the TRIPS Agreement
In 1994, the Uruguay Round negotiations culminated in the signature of an agreement instituting the World Trade Organization (WTO). The Organization came into being on 1 January 1995 and had 132 Members in October 1997. In deciding to become Members of WTO, States also undertake to abide by its rules. A certain number of treaties on trade in goods and services are annexed to the WTO convention and are therefore binding on all Members. Among these “multilateral” agreements, the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights) will probably have the greatest impact on the pharmaceutical sector.
The TRIPS Agreement establishes minimum standards in the field of intellectual property. All Member States have to comply with these standards by modifying, where necessary, their national regulations to accord with the rules of the Agreement. The main change with respect to pharmaceuticals, compared to the pre-existing multilateral conventions, is the obligation to grant patent protection to pharmaceutical product and process inventions.
The question of drug patents
Previously, the GATT did not address the issue of the level of protection that should be accorded to intellectual property, and Member States had adopted various approaches towards drug patents. While some used to grant patents for pharmaceutical product and process inventions, some others allowed patent protection only for process inventions, thus not preventing local companies from developing different manufacturing processes for drugs that were not patent protected as a product. Other countries did not grant any form of protection for inventions in the pharmaceutical sector. Moreover, the term of protection conferred by a patent varied greatly between countries.
Under the TRIPS Agreement, Member States have to grant patents, for a minimum of 20 years, to any inventions of a pharmaceutical product or process that fulfils the established criteria of novelty, inventiveness and usefulness. As soon as the Agreement applies in a Member State, the patent holder should therefore have the legal means to defend against copies of patented drugs. If a country fails to bring its legislation in conformity with the TRIPS Agreement as such, it can be the subject of a complaint under the WTO dispute settlement system, and if, after an adverse ruling against it, it still fails to comply, it then may incur trade sanctions authorized by the WTO.
When must the Agreement’s rules be applied?
The TRIPS Agreement allows developing countries a general transition period of five years (up to 2000) to amend their patent legislation in accordance with these new rules, whereas a term of ten years (up to 2005) is available for developing countries which have not yet provided product patent protection for pharmaceuticals, in order to make that change. Least-developed countries are given 11 years, with a possible extension, to harmonize their regulations with the new international obligations. For those countries which did not provide product patent protection for pharmaceuticals already as of January 1995, the Agreement will apply only to new drugs for which a patent application has been made after the entry into force of the WTO Agreement. These applications for pharmaceutical product patents are stored until modified national patent laws are adopted. As of the end of the transition period, the examination of the application has to begin, according to the conditions laid down by the Agreement. If the application is accepted, a patent will be granted for the remainder of the 20-year patent term counted from the date of filing the application. In case the invention obtains a marketing authorization before the entry into force of the new patent regulations, and if another Member State has already allowed such a patent protection for the same invention, the invention’s owner may be given exclusive marketing rights for up to five years until the decision to grant or reject the patent application is made.
Public health needs and drug patents
The Agreement requires all WTO Member States to grant patents for pharmaceutical products or process inventions for a minimum of 20 years. Although social benefits may arise from patent protection through the discovery of new drugs, the TRIPS standards derive from those of industrialized countries and are not necessarily appropriate for all countries’ level of development. Public health concerns should therefore be considered when implementing the Agreement.
The Agreement leaves Member States a certain amount of freedom in modifying their regulations. The terms invention and discovery are not defined in the Agreement, yet how they are defined could have important implications in the biotechnological field. The Agreement says that Member States may provide limited exceptions to the patent holder’s exclusive rights in their laws. National public authorities may be allowed, within the conditions laid down in the Agreement, to issue compulsory licences against the patent owner’s will when justified by the public interest. The Agreement does not prohibit parallel imports. These restore price competition for patented products by allowing the importation (without the holder’s consent) of identical patented products which have been manufactured for a lower price in another country.
Member States must be aware of these possibilities when they amend their legislation. Each country’s strategy in regard to globalization of drug production and distribution will have to be incorporated into its national pharmaceutical policy, a component of national health policy. It is essential that all involved in this sector should understand what is at stake and play an active part in the reforms of intellectual property regulations now under way.
Therefore, health providers and managers should keep in mind that:
• The TRIPS Agreement establishes minimum standards in the field of intellectual property
• All WTO Members have to comply with these standards by modifying their national regulations
• Public health concerns should be highly considered when implementing the TRIPS Agreement.