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Exclusive Rights and Public Access – Flexibilities in International Agreements

and Development Objectives

The Public Health Example

21 September 2007Short Courses on Key Economic Issues

Geneva, Switzerland

Christoph Spennemann, Legal Expert, IP

Division on Investment, Technology and EnterpriseDevelopment, UNCTAD

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Overview of Presentation

• The interface between exclusive rights (IPRs) and public health/production of generic pharmaceuticals

• The TRIPS flexibilities for public access and local production

• Conclusions

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The interface between IPRs and public health/local production

(1)• Patents provide incentives for new

drugs development• Patents contribute to increased drugs

prices• Local pharmaceutical production as one

means to help ensure sustainable drugs supply & broad public access

• 2016 window of opportunity for LDCs• No need to grant or enforce pharmaceutical

patents (WTO waiver)

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The interface between IPRs and public health/local production

(2) • Pharmaceutical substances needed

for local production in DCs are often patented by foreign companies

• Under TRIPS governments are provided tools (« flexibilities ») to promote access by local producers to patented substances

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Transition periods for least-developed countries (LDCs)

• Until 1 July 2013 for all TRIPS obligations

• Until 1 January 2016 for patents & trade secrets protection of pharmaceuticals

• LDC-based producers may use patented substances for production

• LDC-based traders may import & sell patented substances

• Importance of domestic implementation of transition periods

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Licensing agreements

• Local producer pays for right to manufacture, distribute and use patented substances

• Foreign patent holder takes advantage of lower production costs and new markets

• Examples: GSK agreements with Aspen (South Africa) and Cosmos (Kenya)• Need for government or civil society involvement• TRIPS provides framework for control of abusive

terms to safeguard licensee’s interests

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Exceptions to granted patent rights (1)

The patented substance may be used• for marketing approval of generic products

• Approved by WTO jurisprudence

• for research & new drugs development • Used in developed country legislation• Main purpose must be research/promotion of

technological progress• Ultimate commercial consequences accepted

by developed country jurisprudence (Germany)

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Exceptions to granted patent rights (2)

• Swiss draft patent law: innovative concept of experimental use exception• Covers both scientific and commercial

activities• Provided research leads to new

knowledge about patented product• Protection limited to existing know-how,

but does not block follow-on innovation

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Parallel imports

• Permitted under TRIPS• Many local producers need to import substances

(active pharmaceutical ingredients/APIs) that are under domestic patent

• Often available at lower cost abroad (China, India)

• Domestic patent holder cannot invoke patent against imports if domestic law authorizes parallel imports

• No counterfeits, but produced by domestic right holder for sale on foreign market

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Compulsory licensing (1)

• Authorization by the government of a third party to use an invention without the consent of the right holder

• Powerful negotiating tool for government • To influence prices (Brazilian & Thai experience)• To involve generic producers at reasonable

licensing terms (South African & Thai experience)

• 2006/2007:Thai Government issues 3 CLs• 2007: Brazilian Government issues 1 CL

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Compulsory licensing (2)

• Governments free to determine grounds for CLs

• Problems of countries lacking domestic manufacturing capacities

• WTO decision to • Facilitate exports of drugs produced under

CL to needy Members• Waive compensation requirement in

importing country • Facilitate regional cooperation of LDC-

dominated trade agreements to attract foreign investment

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Limiting the scope of future patents

• Exclusions from patentability• Natural substances (new uses)• Methods of medical treatment (new uses)

• Strict patentability requirements• To avoid patenting of new uses of known

substances• To avoid patenting of minor changes of

existing drugs (« ever-greening »)• Trivial patents restricted by 2007 US

Supreme Court decision

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Protection of Pharmaceutical Test Data

• Data submitted to drug regulatory authorities (DRAs) for marketing approval purposes

• TRIPS authorizes different approaches:• Data exclusivity DRA may not rely on

original data for examination of subsequent submissions (USA; EU countries)

• Unfair competition approach no exclusivity reliance by DRA on original data speeds up market entry of generic competitors

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Overview: TRIPS flexibilities for local pharmaceutical production

• LDC transition periods• Licensing agreements• Patent exceptions• Parallel imports• Compulsory licensing• Limited scope of future patents• Non-exclusive rights in test data

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Importance of flexibilities for investment by generic

producers• Flexibilities help preserve the

public domain• Flexibilities help generic producers

access materials and enter the market

• Generic producers make investment in DCs dependent on implementation of flexibilities

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Conclusions

• TRIPS provides important tools/flexibilities to promote access to pharmaceutical substances & local production

• TRIPS flexibilities useless if not implemented in domestic legislation

• TRIPS flexibilities attract foreign generic firms

• Regional cooperation creates bigger markets & economies of scale for pharmaceutical production

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Contact

Christoph SpennemannLegal ExpertPolicy Implementation Section/Intellectual PropertyDivision on Investment, Technology and Enterprise Development (DITE)UNCTADE-mail: Christoph.Spennemann@unctad.orgTel: ++41 (0) 22 917 59 99Fax: ++41 (0) 22 917 01 94http://www.unctad.org/tot-ip