[A2k] Statement of the United States to WTO TRIPS Council on the Paragraph 6 System

Thiru Balasubramaniam thiru at keionline.org
Thu Nov 4 00:06:54 PDT 2010


http://keionline.org/node/1007

Statement of the United States to WTO TRIPS Council on the Paragraph 6  
System

The following statement was delivered by USTR at the WTO Council for  
TRIPS Annual Review of the Paragraph 6 System on Wednesday, 27 October  
2010.

------------------------------------------

Statement of the United States
Agenda item F, Annual Review of the Paragraph 6 System
Topic 5
Mr. Chairman

We are pleased to be here today to participate in the annual review on  
the implementation of paragraph 6 of the Doha Declaration.

The TRIPS Agreement provides an important balance between providing  
incentives to research and develop new medicines and promoting access  
to existing patented medicines. According to the Doha Declaration on  
TRIPS and Public Health of 2001, the TRIPS Agreement “does not and   
should not prevent members from taking measures to protect public  
health.”

The United States is a global leader on improving public health. U.S.  
funding for global health has increased significantly over time,  
particularly in the last decade; funding more than doubled in fact  
between FY 2004 and FY 2008, reaching $9.6 billion in FY 2008. In  
2009, the United States was the largest donor in the world for the  
global response to HIV/AIDS, accounting for more than half of  
disbursements by governments. In fact, without U.S. funding,  
international AIDS assistance from donor governments would have  
significantly declined between 2008 and 2009.

As part of the U.S. Government’s global health programming, we are  
committed to promoting equitable access to safe and effective  
medicines of assured quality around the world. We are also fully  
committed to helping countries that are experiencing public health  
crises find real and comprehensive solutions to these situations.

As one element of these efforts, the United States strongly supported  
the General Council’s decision of August 2003, to implement the Doha  
Declaration on TRIPS and Public Health to allow drugs to be exported  
under a compulsory license under the terms set out in that decision  
and the accompanying Chairman’s Statement. The United States also lent  
strong support to the General Council’s Decision of December 6, 2005,  
to amend the TRIPS Agreement and make permanent the system and  
appropriately preserve reference to the Chairman’s Statement. Now, it  
should be recalled that the Doha Paragraph 6 Solution was the result  
of robust discussions and attracted the consensus of the Members;  
other prior proposals were left behind. In fact the United States was  
the first Member to notify its acceptance of the amendment.

Mr. Chairman, the paragraph 6 system is intended to be one tool to  
assist in promoting access to medicines and provides an important  
failsafe in our work to improve access to medicines. This safety  
valve, however, can be only one tool.

In the past, some delegations have shared their view that the  
paragraph 6 system has been used sub-optimally and that an analysis of  
this possibility is needed. As we have affirmed at previous meetings  
of this Council, this annual review was precisely the place that WTO  
Members intended reviews of the operation of the paragraph 6 system to  
be conducted, and this is the place where Members – who are the users  
of this inter-governmental system – should share their experiences  
regarding any concerns arising out of the operation of the paragraph 6  
system.

In that connection, the United States is pleased to participate in  
this discussion today. We have listened with great interest to the  
presentations provided by other Members on the topics that have  
previously been discussed.

As in the past, we have taken note of the importance that some  
delegations have attached to the fact that the paragraph 6 system has  
been used as such in one instance.

Concerning the number of actual uses of the paragraph 6 system, we  
submit that this number is not the right metric to measure the  
effectiveness. We must evaluate the results that matter – i.e., we  
need to look at the extent to which medicines are reaching the  
affected populations. In that connection, the number of times that  
Members have relied on this safety valve mechanism does not simply  
provide the right focus.

Instead, the paragraph 6 system should be viewed in its proper, larger  
prism. This principle is reflected in paragraph 2 of the Doha  
Declaration, and that wider national and international action is where  
we would like to build today.

As an initial matter, as mentioned by our colleagues at the WHO  
Secretariat, we should not lose sight of the fact that the majority of  
the drugs on the World Health Organization’s Model List of Essential  
Medicines are off-patent.

Additionally, it is also important to recall that the paragraph 6  
system’s development was one element of a larger international  
exchange of ideas that WTO Member governments, the donor community,  
companies, and other stakeholders have had – and are having – in order  
to improve access to medicines.

And as I will discuss shortly, it is that work that has led to real  
and measurable progress over the past decade in improving access to  
medicines. Further, it has led to partnerships – between governments,  
between governments and stakeholders, and between stakeholders  
themselves.

And today I would like to share information on some of those efforts  
as part of the annual paragraph 6 review. First, I will discuss some  
of the results that this exchange of ideas have resulted in, and  
second, I will also discuss some long-running problems that have  
hampered the  efforts to address the issues as well as solutions to  
these problems that are emerging.

In our discussions with stakeholders across the spectrum, we have  
consistently heard that access to medicines is in fact being improved  
through numerous means.

These means include developed country policies and programs that place  
greater emphasis on building sustainable capacity in the public  
sectors of our partners and at their national and community levels to  
provide basic services over the long term.

These means include efforts to expand research and development of  
innovative drugs and production capacity for both innovator and  
generic drugs in developing countries.

These means also include donations of health products by WTO Members,  
the private sector, and international bodies, and, finally, tiered  
pricing, bulk purchase mechanisms, innovative licensing models and  
other measures by innovative and generic companies and multilateral  
bodies.

In fact, as one example of such means, the United States through our  
National Institutes of Health (NIH) was the first patent holder to  
share its patents with the newly established Medicines Patent Pool  
Foundation. The initial contribution by the NIH and its co-patent  
owner the University of Illinois at Chicago embodies these commitments  
and takes an important step toward making affordable and appropriate  
HIV medicines available to patients around the world. It builds on our  
President’s previous commitment to support humanitarian licensing  
policies to ensure that medications developed with U.S. taxpayer  
dollars are available off-patent in developing countries.

Let me next address some of the measures undertaken by innovative and  
generic companies to meet the needs to LDCs and others.

First, in many cases, innovator companies simply do not apply for  
patent protection in many developing countries.

Second, there has been widespread tiered pricing of pharmaceuticals  
tied to individual and sub-regional developing country markets. Tiered  
pricing is linking the price of a pharmaceutical in a market to what  
the consumer or purchasing government can afford to pay. While tiered  
pricing is not a new strategy, its frequency of use has dramatically  
increased in the past decade.  For example, we understand that Bristol  
Myers Squibb, partnering with many Health Ministries, announced a  
number of years ago that it would make all of its HIV medicines  
available at no-profit prices in sub-Saharan Africa. We also  
understand that in 2005, the company announced that pediatric  
formulations would be priced below cost, in order to further reduce  
barriers to provide access to this treatment. We understand that other  
companies, such as GlaxoSmithKline have a similar offer, wherein  
certain antiretroviral drugs are offered at not-for-profit prices in  
64 different countries. Further, a number of other companies are  
reportedly working together to provide a “single tablet a day” product  
at significantly reduced prices.

These examples make clear that private actors are improving access to  
medicines in a manner that simply wasn’t present five to seven years  
ago.

Next, another action undertaken by patent owners are partnerships with  
generic manufacturers.  Many patent owners report that they have  
partnerships with generic manufacturers to make their products more  
generally available. And they rely upon these generic manufacturers,  
often in developing countries, to scale up their manufacturing.

One example of this type of partnership is that between Gilead, an  
innovative pharmaceutical company, and Indian and South African  
generic manufacturers which has increased the number of people  
receiving its various treatments from 100 people in 2003, the time of  
the Doha declaration, to 700,000 people in 2010. Gilead has entered  
into licensing agreements with these pharmaceutical companies to  
transfer its patented technology for the formulation of the medicine.  
These treatments address HIV infection and chronic Hepatitis B in  
adults.

With respect to its Indian partners, Gilead has entered into licensing  
agreements to produce and distribute a generic version of the drug to  
95 low-income countries much earlier than otherwise would be possible,  
due to India’s production capacity and capable generics industry.

The licensing revenue from these agreements is also reinvested to fund  
medical education, safety reporting, and product registration/ 
marketing approval in destination markets.

This is only one example of an increased collaboration between  
innovative and generics companies, especially through non-exclusive  
voluntary agreements. A number of companies around the world have  
granted licenses to generic pharmaceutical companies to make generic  
versions of their drugs. We understand that licensing contracts are  
being explored by pharmaceutical companies in Bangladesh, Ethiopia,  
Kenya, Tanzania and Zimbabwe, as well as other countries.

Another example of a partnership between innovators and generics is  
the global Meningitis Vaccine Project (MVP). The MVP was established  
in 2001, using technology licensed by the U.S. National Institute of  
Health (NIH). In 2001 and 2002, the MVP approached various vaccine  
manufactures, seeking a manufacturer who could agree to manufacture  
the vaccine for 50 cents a dose, the price that NIH had been told by  
countries in Sub-Saharan Africa was necessary for the vaccine to be  
affordable in their marketplaces. The Serum Institute of India  
accepted the challenge, and after about eight years of work, began to  
ship the vaccine to Mali, Burkina Faso, and neighboring Niger last  
month.

This eight year lag does go to the larger point – the procurement of  
medicines is a long process, so that any measure of length of  
obtaining a license under the paragraph 6 solution should take this  
into account.

The results of this collaboration speak for themselves. With respect  
to this MVP project, over a recent 17-day period, over 1 million  
people were vaccinated. The target is to eventually distribute 40  
million doses.

The Gilead and MVP approaches are just two examples of partnership  
trends that are increasing and delivering real results. And once  
again, these approaches did not exist 10 or 15 years ago. There are  
many such cutting edge partnerships that are promoting access to  
medicines. Other similar partnership trends that have been reported to  
include:

	• An increase in the number of research collaborations targeting  
areas of need; and
	• Increased voluntary sharing of intellectual property, such as  
“compound libraries” for research purposes. For example, one company  
has launched a knowledge pool, now run independently by a third party,  
that places approximately 80 patent families in a pool to help others  
develop new medicines for neglected diseases.
In addition to collaboration with innovator companies, the generic  
drug industries have also had a significant role to play in improving  
access. For example, generic companies are engaging in more research  
activities for adapting existing products to the needs of developing  
countries as well as assisting in capacity advancement in poor  
countries.

Many of these partnerships also provide jobs, access to doctors and  
nurses, and training for medical staff, schools and hospitals.

We must underscore that the ability to patent the invention is a  
critical piece of ensuring that not only that there is an incentive  
for developing the medicine, but also that its benefits can be shared  
widely. The development of new, life-saving drugs is a risky and  
expensive process, and it is necessary to provide incentives for the  
private sector to undertake this effort. Intellectual property rights  
are essential to provide this incentive so that new drugs can be  
brought to the market.

Moreover, patent systems can provide important incentives to reward  
innovators who identify ways to adapt medicines to many different  
challenging circumstances, such as a lack of refrigeration or a need  
for more patient-friendly ways of administering a drug that may be  
particularly relevant in developing country markets.

As we have just discussed, there are many actors working to promote  
access to medicines. The intellectual property system plays a critical  
role in assisting this effort. But time has shown that intellectual  
property rights are often the determining factors in the larger issue  
of access to medicines, as has sometimes been asserted.

I would like to review for a few moments some of the more fundamental  
problems that hamper access. I would also like to highlight some  
solutions that have been found in various contexts.

Many complex factors hamper access to medicines in developing  
countries, including sub-optimal procurement systems and poor  
distribution networks for medicines, caused by lack of basic  
infrastructure, hospitals, clinics and healthcare professionals, among  
others.

The goal of equitable access to medicines is not achievable or  
sustainable without fostering improvements to the health systems  
themselves to ensure that patients can actually receive and be  
administered the drugs.

Additionally, systemic problems and taxes and tariffs on imported  
medicines, and a lack of cold-chain storage, are often overlooked  
problems in many multilateral discussions.

Let me elaborate; and some of these have already been touched upon by  
our colleagues in the WHO Secretariat.

Problems

In some cases, taxes or tariffs are levied on products being supplied  
at cost or on donated products, the cost of which is passed directly  
to patients.

Often health care is delivered far from the community being served.

Weak drug procurement and delivery systems are another barrier to  
access to medicines. Lack of transportation and infrastructure also  
make it difficult for a patient to go to the doctor as well as for the  
distribution of pharmaceutical products. Backlogs, regulatory  
redundancy, as well as other non-tariff barriers also hinder the  
distribution of both generic and innovative drugs where they are most  
needed.

Finally, if the healthcare system is flooded with counterfeit  
products, true access is not achieved.  Because of weak regulatory  
regimes and global criminal networks, counterfeit and substandard   
medicines, harm or kill sick people across the globe, with the  
developing world disproportionately affected. In fact, the WHO  
estimates that “in over 50% of cases, medicines purchased over the  
Internet from illegal websites that conceal their physical address  
have been found to be counterfeit.”

These are all problems that can be solved. Many of the issues will  
require action on the parts of both developed and developing  
countries. It is clear, however, that without accounting for the full  
range of problems that exist, we cannot make the improvements that  
will foster improved access.

Solutions

And now, I would like to discuss a few of the solutions with which the  
United States is involved

On September 22, President Obama announced a new U.S. global  
development policy – the first ever for a U.S. Administration. Through  
the policy, President Obama has made clear that sustainable  
development is a long-term proposition, and progress depends  
importantly on the choices of political leaders and the quality of  
institutions in developing countries. Where leaders govern  
responsibly, set in place good policies, and make investments  
conducive to development, sustainable outcomes can be achieved. Where  
those conditions are absent, it is difficult to engineer sustained  
progress, no matter how good our intentions or the extent of our  
engagement.

Significantly, the policy places greater emphasis on building  
sustainable capacity in the public sectors of our partners and at  
their national and community levels to provide basic services over the  
long-term. The United States will continue to provide medicine,  
emergency food aid, humanitarian relief and other assistance where it  
is desperately needed. But we will also strive to help increase the  
capacity of our partners to meet those needs by investing in systemic  
solutions for issues such as service delivery and public administration

President Obama’s six-year, $63 billion Global Health Initiative  
(GHI), focuses on sustainable service delivery where the needs are  
greatest and the conditions are right to build effective health  
service delivery systems.

As to shortages of skilled health care professionals, the U.S.  
Government, as well as many private companies, has undertaken  
significant efforts to improve healthcare systems in developing  
countries. In the President’s Emergency Plan for AIDS Relief (or  
PEPFAR) and the President’s Malaria Initiative, the U.S. is training a  
significant number of health workers in support of sustainable health  
systems. We are also a leader in the implementation of task-shifting  
initiatives in Africa.

The PEPFAR, the largest component of the GHI has, since its inception,  
promoted access to medicines and other products through many means,  
including by improving supply chain management. This approach is  
saving lives – through PEPFAR, 2.5 million people are being supported  
for life-saving anti-retroviral treatment.

Additionally, the PMI is working to improve access to malaria  
medicines through their procurement and distribution in the 15 PMI  
focus countries (Angola, Tanzania, Uganda, Malawi, Mozambique, Rwanda,  
Senegal, Benin, Ethiopia, Ghana, Kenya, Liberia, Madagascar, Mali, and  
Zambia), distributing over 80 million treatments.

With respect to government tariffs, as part of the WTO NAMA  
negotiations, Switzerland, Singapore, the United States, and Chinese  
Taipei have proposed an Enhanced Healthcare initiative for members to  
jointly reduce or eliminate tariffs on medicines and key medical  
equipment and supplies. We hope that other members will join in this  
effort, as it will result in lower medicine prices, and benefits to all.

Similarly, the use of transparent, competitive and non-discriminatory  
procurement procedures and practices in procurement of pharmaceuticals  
will provide governments with more choices from a broader array of  
suppliers that can mean lower prices and more effective use of limited  
taxpayer dollars.

In closing, access to medicines is a complex issue that requires a  
multifaceted approach and often multi-sectoral approach that works to  
address all aspects of the situation in a meaningful way. The  
paragraph 6 system must be located in this larger prism. Today, we  
have shared our experiences on approaches that are producing results.  
We hope that this helps inform Members’ consideration of this issue.  
These approaches are an illustration that we should not focus on the  
single reliance on paragraph 6 as a proper or meaningful gauge of the  
operation of the paragraph 6 system.

Thank you, Mr. Chairman.


------------------------------------------------------------


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru at keionline.org


Tel: +41 22 791 6727
Mobile: +41 76 508 0997








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