Finding flaws: the limitations of compulsory licensing for improving access to medicines - an international comparison.

1. Introduction

In August 2003, the General Council of the World Trade Organization (WTO) unanimously adopted a Decision (1) ("2003 WTO Decision") to allow compulsory licensing of patented medicines for the purpose of exporting the generic versions to those countries with little or no pharmaceutical manufacturing capacity. This interim decision was lauded by many as a breakthrough in the efforts to improve access to medicines in developing countries. (2) However, as of August 2008, only a handful of WTO Members (3) have adopted domestic legislation, regulations or other instruments that in some way implement the 2003 WTO Decision. More concerning, only one export licence has been granted under the General Council 2003 WTO Decision, (4) and as of the time of writing, only one shipment of anti-retroviral drugs has been exported to Rwanda. (5) It has been argued that the underutilization of the 2003 WTO Decision illustrates the flawed nature of the WTO mechanism. (6) This paper does not attempt to confirm nor refute the claim that the Decision is unworkable, but rather examines the different domestic legislative amendments made by WTO Members in order to illustrate some aspects that both facilitate and hinder utilization of the General Council Decision. In particular, we focus on Rwanda's attempt to import under Canada's implementation of the 2003 WTO Decision and compare it to an Indian generic company's ongoing application for the grant of a compulsory licence under India's implementation of the 2003 WTO Decision. This is the only other example outside of Canada of an attempt to export compulsory licensed medicines under the 2003 WTO Decision. Finally, we offer some conclusions based on lessons learnt from these experiences.

2. The WTO's response to the Doha Declaration on the TRIPS Agreement and Public Health

The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (7) requires all WTO Members to adopt minimum standards of intellectual property rights. In essence, TRIPS provides heightened standards for all member countries. Still, it does provide some flexibility for use of a patent without the patent holder's authorization, either through government use or through a compulsory licence issued to a third party, with payment of adequate remuneration to the patentee. (8) At the WTO's Fourth Ministerial Conference in Doha, Qatar in November 2001, WTO Members affirmed that the TRIPS Agreement should be interpreted in a "manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all." (9) It was envisioned that patent exception provisions such as the compulsory licensing provisions contained in the TRIPS Agreement could be used by governments to facilitate access to essential medicines in a time of public health crisis or circumstance of national emergency by allowing for production of cheaper generic drugs.

WTO Members further recognized in the Doha Declaration (paragraph 6) that the TRIPS Agreement limited the effective use of compulsory licensing in those countries with "insufficient or no manufacturing capacities in the pharmaceutical sector." Originally TRIPS Article 31(f) provided that compulsory licensing could only be used "predominantly" for the purposes of supply of the domestic market of the country in which the licence was issued. This posed a problem for those poorest countries which did not possess sufficient manufacturing capacity to produce their own generic pharmaceuticals and therefore needed to import medicines. In response, WTO Members committed to finding an "expeditious solution" to the "Doha paragraph 6 problem" by the end of 2002. (10) However, it was not until after much debate and almost two years later, in August 2003, that the WTO General Council finally reached a Decision on the Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and public health ("2003 WTO Decision").

The 2003 WTO Decision was the outcome of difficult negotiations in which several countries tried to limit the scope of the "solution" to the problem of importing and exporting compulsory licensed medicines. WTO Member countries home to research-based pharmaceutical companies--including the European Union (EU) states, Japan and Switzerland--joined with the United States in seeking to limit the solution to paragraph 6 in terms of scope of diseases, eligible countries, and the articles of the TRIPS Agreement to be addressed by the solution. (11) Health activists and developing countries argued for the use of TRIPS Article 30 (12) which allows for "limited exceptions" to patent protection as the basis for a solution to permit compulsory licensing predominantly for export. In the end, WTO Members focused their efforts on amending the source of the problem, Article 31 (f) itself. The 2003 WTO Decision took the form of an interim waiver that, among other things, waived the requirement in Article 31 (f) that compulsory licensing be used predominantly for the supply of the domestic market. The 2003 WTO Decision allowed for any least-developed country Member or Member with insufficient pharmaceutical manufacturing capacity to make use of the Decision to import any pharmaceutical product needed to address public health problems. (13) A "Chairperson's Statement," whose legal significance is unclear, was adopted in conjunction with the 2003 WTO Decision. The separate statement by the General Council chairperson sets out WTO Members' "shared understandings" of the Council decision and was designed to appease those who feared that the decision might be abused and used to undermine patent protection. (14)

The 2003 WTO Decision was intended only to be an interim measure and the TRIPS Council was mandated to find a more permanent solution. In December 2005, WTO Members adopted a Protocol to amend the TRIPS Agreement ("2005 WTO Agreement") by making permanent the provisions of the August 2003 WTO Decision. (15) The agreed text of the 2005 WTO Agreement is to be formally incorporated into the TRIPS Agreement when two-thirds of the WTO's Members have ratified the amendment. The original deadline of 1st December 2007 for implementing this permanent amendment was extended in October 2007 by another 2 years, to 31 December 2009, because only 11 WTO Members had ratified the amendment (7 other Members have signed up since, bringing the total to 18 WTO Members (16)). Tellingly, until the TRIPS amendment is adopted, the 2003 waiver remains in place.