TRIPS flexibilities
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Crispin Hughes/Panos
Consequently, the TRIPS Agreement includes safeguard clauses allowing member states to assert specific needs in terms of public health in spite of the protection of patents currently in force. These clauses, grouped under the term of “TRIPS flexibilities” were confirmed and detailed in the official Doha Declaration on the TRIPS and public health, adopted in November 2001 during a heated WTO ministerial conference in Qatar. The Doha Declaration represented a major political breakthrough, as it granted member states the right to interpret the TRIPS Agreement in the light of their specific health problems and to make full use of the “TRIPS flexibilities” – at least in theory, because, in practice, it is a different matter.
These legal mechanisms are essential for ensuring access to medicines for all. They mainly take the following form:
compulsory licences, which allow a state to authorize the exploitation of a patent by a third party without the holder’s consent (but with remuneration provided);
parallel imports, the possibility for a country to import the same product sold more cheaply in another country by the patent holder, without the latter’s authorization;
exemption from obligations of the TRIPS Agreement for Least Developed Countries, as well as a specific exemption to issue patents on medicines for these countries (“LDC waiver”).
Furthermore, to compensate for the monopolies that patents attribute de facto to their holders, the TRIPS Agreement allows countries to determine themselves the definition of an invention, the criteria to be applied when judging their suitability for patenting, the rights accorded to holders of patents and authorized exceptions, as long as they remain within the general framework set by the agreement. This is what India decided for its law on patents, as did other low- and middle-income countries such as Brazil and Argentina.
Compulsory licences
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Atul Loke/Panos
Although progress has been observed in terms of anti-AIDS treatments coverage in the Global South, thanks to the TRIPS “flexibilities” and to the competition from generic medicines, this situation only rarely applies to non-infectious diseases (cancer, diabetes, cardio-vascular diseases, etc.), which are on the increase.
However, there is an instrument that can be used, both legal and legitimate, which allows reductions in the price of medicines: the compulsory licence.
Issuing a compulsory licence allows a government to authorize the commercialization of less expensive generic versions even if the concerned medicine is under patent, thereby guaranteeing access to the product. In fact, compulsory licences are an integral part of international patent rights, but they are still too seldom used, as governments wishing to resort to them are subjected to major commercial and political pressures.
Pharmaceutical companies are not the only ones to exert pressure on governments wishing to use compulsory licencing. The countries that are home to the pharma giants also threaten to impose political and economic sanctions, which often discourages economically weaker countries from using this legitimate option.
Most rich countries also stop short of using this instrument, for fear of going against the interests of their own pharmaceuticals industries, whose business model relies on patents. They therefore try to restrict the room for manoeuvre provided by TRIPS – which authorizes compulsory licencing in a very broad manner – by suggesting that the instrument can only be used in urgent or exceptional cases, or only for certain illnesses such as HIV/AIDS.
In 2018, in cooperation with the Swiss Cancer League, Public Eye launched a vast awareness-raising campaign, calling on the Federal Council to use in Switzerland the compulsory licence instrument and to stop pressurizing countries that wish to take this step. The report “Protect patients, not patents” explains in 45 pages everything you should know about the excessive prices of medicines, the problematic business model used by the pharmaceutical industry and about effective solutions to remedy this situation.
Myths surrounding compulsory licences
The governments of high-income countries are eager to discredit compulsory licences by spreading false truths. For example, they assert that a compulsory licence is equivalent to an expropriation of the patent, that it results in a reduction in investments or that it is only justified in urgent or extreme situations.
In reality, the compulsory licence is not a disproportionate instrument, as the patent(s) concerned remain in force. Moreover, financial compensation (in the form of royalties) is awarded to patent holders, who can also continue to market their product.
The pharmaceutical companies and the countries that host the biggest ones often assert that compulsory licences are a stumbling block to innovation and investment in R&D. However, this impact has not been demonstrated – no more than the assertion that patents stimulate innovation. On the contrary, the experience of several countries having often had recourse – and sometimes over long periods – to compulsory licences (such as Canada and the United States) does not show any weakening of innovation. This experience even sometimes reveals an increase in investment in R&D. Neither is there proof available to confirm that a compulsory licence endangers direct foreign investment.
More infos
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Myth No. 1: “Only in a national emergency or other circumstances of extreme urgency”
Reality...
... An urgent situation only has the potential to shorten the procedure. Each country can decide freely on the grounds for issuing a compulsory licence.
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Myth No. 2: “… limited to a given number of illnesses, such as HIV/AIDS or infectious diseases with epidemic potential”
Reality...
... The use of a compulsory licence is limited neither to a particular condition nor to any category of specific diseases.
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Myth No. 3: “… use limited to poor countries”
Reality...
... Each WTO member has the right to issue a compulsory licence.
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Myth No. 4: “An instrument of last resort…”
Reality...
... The expropriation of a patent is actually the instrument of last resort, not the compulsory licence.
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Myth No. 5: “The compulsory licence is equivalent to an expropriation…”
Reality...
... The patent developer remains its holder; they retain the right to exploit the invention and to receive adequate remuneration.
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Myth No. 6: “… have a deterrent effect on innovation and on investment in R&D”
Reality...
... There is no empirical evidence that compulsory licences reduce investment in R&D or that they have a potential negative impact on direct foreign investment.