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Pharmaceutical Patents during a Pandemic: Exclusivity vs. Morality
IP serves to protect the processes through which ideas are brought to life
IP protects intangible assets
Rationale for IP Protection §
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Most market economies base IP protection on the Utilitarian/Incentive approach § Without protection, inventors/creators will make upfront investments but second comers will compete without incurring those costs § Ideas/information are non-rivalrous (one person’s use does not exclude others) § Low/zero marginal costs of reproduction/ dissemination Benefits of the Utilitarian Approach § Enjoyment of new products § Contribution of knowledge to the public domain immediately and after termination of IP protection Costs: Wealth effects (profits to monopolists), litigation costs, etc.
What are Patents? §
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Patents are documents granted by a Government via its Patent Office that describe/disclose (“open”) how a technical device, matter, or process is built and/or functions The drafting of a patent includes: § Specification § Abstract & Drawings § Claims The patent has to be “enabled”, i.e. describe the invention so as the ordinary person skilled in the art should be able to replicate it by reading the patent (“work around it”) Once granted, patent prevent the making, using, selling, etc. of any device literally the same or “equivalent” to the patent claims for 20 years from the date of application VERY STRONG RIGHT!
International Patent Protection ยง Paris Convention ยง TRIPs Agreement ยง Patent Law Treaty ยง Patent Cooperation Treaty
Paris Convention
Paris Convention on Patents § The Paris Convention on patents: § National treatment (Art. 2(1)): any country of the Union shall enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may hereafter grant, to nationals § Right of Priority (Art. 4) § Twelve months priority in any country of the Union starting from the original filing date § Independence of protection (Art. 4bis) § Invalidation in one country will not entail invalidation in other countries § Paternity of invention (Art. 4ter) § Compulsory licenses (Art. 5)
Article 5: Compulsory License A.— (2) Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses … (3) Forfeiture of the patent shall not be provided for except in cases where the grant of compulsory licenses would not have been sufficient to prevent the said abuses. No proceedings for the forfeiture or revocation of a patent may be instituted before the expiration of two years from the grant of the first compulsory license. (4) A compulsory license may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of the grant of the patent, whichever period expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons. Such a compulsory license shall be non–exclusive and shall not be transferable, even in the form of the grant of a sub–license, except with that part of the enterprise or goodwill which exploits such license.
Important Note on the Paris Convention § The Paris Convention does not define what is “patentable subject matter,” i.e. what is, or what is NOT, a patentable invention § Why?
§ Art. 4quater only states § “The grant of a patent shall not be refused and a patent shall not be invalidated on the ground that the sale of the patented product or of a product obtained by means of a patented process is subject to restrictions or limitations resulting from domestic law”
Example of Early National Exclusions § Food, beverages (Austria; Germany; Italy; Luxembourg; Sweden) § Pharmaceuticals (Argentine Republic; Austria; Finland; France; Germany; Italy; Luxembourg; Spain; Sweden; Turkey; Venezuela) § Substances produced by chemical processes (Germany; Luxembourg) § Financial schemes (Argentine Republic; France; Mauritius; Spain; Turkey; Venezuela) § Scientific principles or purely scientific theorems (Argentine Republic; Brazil; France; Italy; Turkey; Venezuela; Italy; Austria; Canada; Finland; Russia; Spain) § Use of natural products (Spain) § Contrary to morals (most countries) § Contrary to laws (most countries) § Contrary to public health or safety (Austria; Brazil; Colombia; Finland; France; Italy; Mexico; Portugal; Russia ; Turkey; Venezuela) § “Prejudicial or Inconvenient…” (British Guiana; Ceylon; India; Trinidad; GB; Mauritius; New Zealand)
WIPO Model Law for Developing Countries (1979) § Article 112 § (1) For the purposes of this Law, “invention” means an idea of an inventor which permits in practice the solution to a specific problem in the field of technology ... § (2) The following, even if they are inventions within the meaning of subsection (1), shall be excluded from patent protection: § discoveries, scientific theories and mathematical methods; § plant or animal varieties; § schemes, rules or methods for doing business, performing purely mental acts or playing games; § methods for treatment of the human or animal body by surgery or therapy, as well as diagnostic methods practised on the human or animal body; this provision shall not apply to products for use in any of those methods
WIPO Survey of Laws of 97 Paris Members (and 9 Non-Paris) Exclusions (1988) § Pharmaceutical products – in 49 countries § Pharmaceutical processes – in 10 countries § Animal species –in 45 countries § Methods of treatment –in 44 countries § Plant varieties – 44 countries § Biological process for production of animals/plants – in 42 countries § Food products – in 35 countries § Food processes – in 10 countries
WIPO Survey of laws of 97 Paris Members (and 9 non-Paris) Exclusions (1988) § Computer programs – in 32 countries § Chemical products -22 countries § Nuclear inventions -14 countries § Microorganisms – 9 countries § Cosmetics - 2 (Bulgaria, Republic of Korea) § Fertilizers – 2 (Mexico, Yugoslavia) § Agricultural machines – 1 (Thailand) § Methods of agriculture – 1 (India)
And then TRIPS Was Negotiated … § Straus, in F-K Beier & G. Schricker, From GATT to TRIPs (VCH, 1996) 178: “a veritable revolution in patent protection at a universal level.” § Correa, TRIPs: A Commentary (OUP, 2007) 271, “from the outset of the Round…the extension of patentability, particularly to pharmaceuticals…was a major objective of the proponents….The very existence of the TRIPs Agreement can probably be attributed to the active lobbying of the pharmaceutical industry…”
TRIPS on Patents §
TRIPs provisions for patents: § Confirms the principle of national treatment (Art. 3) § Establishes the most-favored-nation principle (Art. 4) § Members should allow patents for any inventions in all fields of technology without discrimination, subject to the requirements of novelty, inventiveness and industrial applicability (Art 27.1) § Patents must be available and patent rights enjoyable without discrimination as to the place of invention and whether products are imported or locally produced (Article 27.1) § Term of protection shall not be less than 20 years (Art. 33) § Patent disclosure should be sufficiently clear and complete for the invention to be carried out by a person skilled in the art and may require the applicant to indicate the best mode for carrying out the invention (Art. 29.1).
Article 27: Patentable Subject Matter TRIPs Article 27: § 1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. § Note: Members have (at least had before signing into TRIPs Plus standards with FTAs!) room to define “invention” within their legal systems
TRIPS, Novelty, and Pharmaceutical Patents ยง In some countries (with strong bio-tech/pharma industry), patents are usually granted to purified, isolated or crystallized products obtained from a natural source ยง I.e., patents are often granted to a natural substance (often found in DCs) in respect to its new (not known) therapeutic use ยง Some DCs tend to use all TRIPS flexibilities to limit patents related to living, pre-existing material (but this is only within their national territory, because of territoriality) ยง Free Trade Agreements (FTAs) with EU, EFTA, US, Japan often force DCs to grant TRIPS-plus patents on bio-material
Article 27: Exclusions TRIPs Article 27: ยง 2. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.
Article 27: Exclusions TRIPs Article 27: § 3. Members may also exclude from patentability: § (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; § (b) plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. …
Article 28: Exclusive Rights § TRIPs Article 28: § 1. A patent shall confer on its owner the following exclusive rights: § (a) where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product; § (b) where the subject matter of a patent is a process, to prevent third parties not having the owner’s consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process. § 2. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.
Article 30: Exceptions ยง TRIPs Article 30 ยง Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.
Article 31: Compulsory License § TRIPs Article 31: § Where the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government, the following provisions shall be respected: § (a) authorization of such use shall be considered on its individual merits; § (b) such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time [requirement may be waived in the case of a national emergency or other circumstances of extreme urgency or in cases of public noncommercial use but the right holder shall, nevertheless, be notified as soon as reasonably practicable] ….
Article 31: Compulsory License TRIPs Article 31: (c) the scope and duration of such use shall be limited to the purpose for which it was authorized ‌ (d) such use shall be non-exclusive; (e) such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use; (f) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use; (g) authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. ‌ (h) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization; (i) & (j): judicial review
Article 31: Compulsory License TRIPs Article 31: …. (l) where such use is authorized to permit the exploitation of a patent (“the second patent”) which cannot be exploited without infringing another patent (“the first patent”), the following additional conditions shall apply: (i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent; (ii) the owner of the first patent shall be entitled to a cross-licence on reasonable terms to use the invention claimed in the second patent; and (iii) the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent.
Parallel Imports & Compulsory License ยง What is the relationship between parallel imports and pharmaceuticals produced under a compulsory license? ยง E.g., 2007 compulsory license in Thailand for Kaletra, HIV/AIDS medicine patented by Abbott; could the drugs made in Thailand under compulsory license be lawfully imported into SG?
Parallel Imports & Compulsory License ยง Abbott already distributes Kaletra in Singapore and thus cannot rely on S. 66(3) to stop imports of the same products (Thailand-made drugs), but
Yes?
ยง Did Abbott consent to the manufacture of the Thailand-made drugs under S. 66(2)? Or not? ยง NOTE: TRIPs Art. 31(f): compulsory licensed products are for the national markets and cannot/should not be exported/imported (but see WTO decision of 2005, Doha Declaration Para 6, Art. 31bis now creates an exception for LCD that cannot manufacture the drugs directly)
NO
The Access to Medicine/Health Debate § Patents are an incentive for pharmaceutical companies § Patents on pharmaceuticals are a cost for consumers/countries § Pharmaceutical Prices: § Decisive for access § The more (poor) people spend on healthcare, the less remains for other essentials § Drug prices affected by: § Purchasing power (of public health authorities) § Competition and market structure § Responsiveness of demand to price § Availability of price controls, other regulation § Import taxes, tariffs
Do Patents Limit Access to Medicine? § Does patent protection for pharmaceutical always translate in higher prices? § Patents may have strong impact on price if potential (generic) competitors may be in the country and be able to develop similar products § Impact of patents is likely to be strongest in big DCs with strong generic industries (India, etc.) § Impact in these countries will extend to all DCs which are relying on generic imports § Recent differential pricing policies of patent holders amount to price reductions in some DCs § This translates in opposition to parallel imports
The South Africa AIDS Drug Dispute Pharmaceutical Manufacturers' Association of South Africa and others(39 Pharmaceutical companies) v. Government of South Africa
1997 Medicines and Related Substances Control Amendment Act Section 15C The minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public: - Compulsory license - Parallel imports
The South Africa AIDS Drug Dispute
The South Africa AIDS Drug Dispute Pharmaceutical Manufacturers' Association of South Africa and others(39 Pharmaceutical companies) v. Government of South Africa
CASE DROPPED in 2001 § Amicus Curiae: § “the AIDS epidemic created an emergency in which the need for more affordable medicines was a matter of life and death for millions of people” § Success on NGOs campaigning in the US § ACT UP etc. § Ralph Nader, James Love
Brazil-US WTO Dispute
Article 68 of Brazil IP law, which obliges the holder of a patent in Brazil to ensure that the subject matter of a patent is "worked" in Brazil, either by producing the patented good in the country or allowing the patented process to be used in Brazil. If this requirement is not met within three years of the issuance of the patent, the government can issue a compulsory license allowing others to utilize the patent against the patent holder's wishes.
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Brazil pushed back: § 3 million people infected § The Brazilian Government started to provide ARVs for free to all people in 1997 § The budget for the program was US $ 34 million in 1996, and it went up to US $ 303 million in 1998 § Loans from the World Bank § The 1998 financial crisis and rising cost of AIDS drugs § 1999 presidential decree of a national emergency in regards to the AIDS epidemic amongst its citizens
The AIDS Pandemic
The AIDS Pandemic
Doha Declaration (Paragraph 6 Solution) § Doha Declaration on TRIPS and public health 14/11/2001 § LDCs in Africa require fast and easy access to medication to address Pandemics such as HIV/AIDS, Malaria or Tuberculosis. § Strong patent protection without flexibilities prevents such access § Paragraph 17 § Implementation and interpretation of the TRIPS in a manner supportive of public health, by promoting both access to existing medicines and research and development into new medicines § Paragraph 19 § the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension § Separate Declaration on the TRIPS Agreement and Public Health
WTO Declaration on the TRIPS Agreement and Public Health § Paragraph 1 § “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics” § Paragraph 3 § “We recognize that IP protection is important for the development of new medicines. We also recognize its effects on prices” § Paragraph 4 § “We agree that the TRIPS does not and should not prevent members from taking measures to protect public health, TRIPS should be interpreted and implemented in a manner supportive of public health and promote access to medicines”
WTO Declaration on the TRIPS Agreement and Public Health § Paragraph 5b § “Each member has the right to grant compulsory licences and the freedom to determine the grounds [for these] licences § Paragraph 5c § “Each member has the right to determine what constitutes a national emergency or other circumstance of extreme urgency” § Paragraph 5d § “Leave each member free to establish its own regime for exhaustion without challenge, subject to the MFN and national treatment” § Paragraph 6 § “We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem …”
Adoption of TRIPs 31bis § Article 31bis TRIPS: 6/12/2005 (first TRIPS amendment) § allowing countries with inadequate production facilities to import medicines produced under compulsory license in third countries (under certain cumbersome conditions) § Contentious points: § countries eligible to export the generic medicine § the limited scope of the diseases being allowed for CL § anti-diversion measures to prevent parallel import of medicines to other countries rather than the intended beneficiary
WTO Declaration on the TRIPS Agreement and Public Health § Paragraph 7: Transitions and Deadline Extension § “We reaffirm the commitment of developed-country Members to provide incentives to their enterprises and institutions to promote and encourage technology transfer to leastdeveloped country Members pursuant to Article 66.2. We also agree that the leastdeveloped country Members will not be obliged, with respect to pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016, without prejudice to the right of least-developed country Members to seek other extensions of the transition periods as provided for in Article 66.1 of the TRIPS Agreement. We instruct the Council for TRIPS to take the necessary action to give effect to this pursuant to Article 66.1 of the TRIPS Agreement.” [note that LDCs who have applied for extension now have until 31 December 2032 for the implementation of patents for medicines]
The MANY Faces of the Debate
Some Measures Taken § Section 3(d) of the Indian Patent Act (Brazil and Indonesia followed) § International Exhaustion for Patented Products (including Lexmark in US, but contractual restrictions still apply) § Penalties for abusive litigation and damages to Governments (Australia) § High Registration Fees (Ecuador) § Intervention of Health Authorities § Limitation to Divisional Application § Application of competition law (including US)
IP serves to protect the processes through which ideas are brought to life
IP protects intangible assets
Possible Solutions? BUT HOW?
IP Incentives v. IP Monopolies
Thank you Irene.Calboli@gmail.com
Pharmaceutical Patents during Pandemics: Exclusivity vs Morality
DR. Widyaretna Buenastuti SH., MM Director/Senior Consultant Inke Maris & Associates Presented at ASIA LAW FORUM 2020 03 August 2020
The Dilema
• Commercial Interest • Manufacturers • Investment • Exclusivity
• Public Health Interest • Government • Access to Medicines • Non-Exclusive
PHARMA PRODUCTS GROWTH OPPORTUNITIES IN SEA REGION 2020 ONWARDS
Access to Medicine • Normal Situation • Essential Medicines based on WHO EML • Hundred in numbers • Only 1.4% essential medicines are patented in developing countries
• Pandemic Situation • Critical Live Saving Medicines • May not exist • Identified one or two medicines only • High Demand over supply
“Settled Assumptions” Community Activists
Pharmaceutical Industry
Patents are “a barrier in many [developing countries] to accessing affordable medicines”
“Patents are necessary to protect intellectual property rights on a global scale” to assure future research and development activities and the industry’s commercial viability.
(MédecinssansFrontières,OxfamCanada,CanadianHIVAIDSLegalNet – 31 December 2003)
(H.E. Bale, “The Conflicts Between Parallel Trade and Product Access and Innovation: The Case of Pharmaceuticals,” Journal of International Economic Law 1, no. 4 (1998): 637–653.)
Amir Attaran Study (2004) Countering Activists Statement • Patents cannot cause essential medicines to be inaccessible in “many” developing countries because they do not exist 98.6 % of the time
Countering Pharmaceutical Industry Statement • Patents cannot be a “global” necessity of pharmaceutical business because companies forgo them 69% of the time.
Study by Amir Attaran is a fellow in the Royal Institute of International Affairs, London; a principal with Idealith Research in Cambridge, Massachusetts; and a barrister and solicitor with the Law Society of British Columbia. HEALTH AFFAIRS ~ Volume 23, Number 3 DOI 10.1377/hlthaff.23.3.155 ©2004 Project HOPE–The People-to-People Health Foundation, Inc. pg155
Smallpox Virus (1500 – 1800)
• The Smallpox Virus arrived in the 15th century with the first European explorers. • Vaccine founded In the late 18thcentury, by a British doctor named Edward Jenner. • 1980 the World Health Organization announced that smallpox had been completely eradicated from the face of the Earth.
HIV/AIDS Pandemic (2005 – 2012) • Death Toll: 36 million • First identified in Democratic Republic of the Congo in 1976 • Between 2005 and 2012 the annual global deaths from HIV/AIDS dropped from 2.2 million to 1.6 million. • The rollout of antiretroviral therapy (ART) and in the period from 2001 to 2012, HIV incidence fell by >30% globally • December 2013 – “Tipping Point” • Vaccine is still in absence but more than 30 antiretroviral drugs or drug combinations are now licensed. (Non-Vaccine Combination Prevention)
What Avenue do we have? • Compulsory Licensing • Government Use • Voluntary Licensing
INDONESIA Compulsory Licensing Presidential Regulation No. 77/2020 Procedures of Patent Implementation by the Government, (July 8, 2020), (Implementing regulation of Patent Law No. 16/2016 (chapter 7, articles 109–120))
The urgent public need allowance relates to: • pharmaceutical and biotechnology products that are deemed expensive, or are necessary to overcome a disease that could cause a large number of deaths or significant disabilities in the short term and that constitutes a global public health emergency; • chemical and biotechnology products that are related to Compulsory Licensing Types agriculture and required for food security; The government may exercise compulsory licensing on • animal medicine that is required to overcome pests or a a patent for one of two broad reasons: contagious animal disease; and • national defense and security (in which case the • processes or products needed to deal with natural or patent can only be used by the government or its environmental disasters. appointed party), or • an urgent public need.
Pharmaceutical Patents shall not be the ONLY HOPE to overcome Pandemic • The HIV/AIDS Pandemic has been manageable with the ART therapy in the absence of Vaccine. • Even without Patent, in Pandemic, things are not Easy • Generic may not easily imitates • the complicated regulatory and licensing frameworks • Scale of Economy – demands exceeds supply
A Shift to Provide Access 1. 2. 3. 4.
Facilitate partnership with Governments and the Suprana8onal Bodies. Building up a good rapport as a companies interested in social outcomes A>rac8ng Talent – Having a compelling story for engagement with social outcomes. Alterna8ve Revenue Stream
• Gilead - voluntary licensing with Generic Manufacturers for HIV and Hepatitis C. • Novartis Access - 15 on and off-patent medicines targeting key non-communicable diseases; The medicines are priced at $1 per treatment a month (sub-Saharan African, Southeast Asia, Central America and Central and Eastern Europe.)
Thank you Wbuenastuti@gmail.com Widyaretna.Buenastuti@inkemaris.com 08118497650