[Ip-health] PhRMA letter on Colombia Resolution 5246 | Knowledge Ecology International

James Love james.love at keionline.org
Wed Jan 17 04:47:19 PST 2018

​Drug companies are threatening to block Colombia​ accession to the OECD if
it uses compulsory licenses to deal with excessive drug prices.


On January 15, 2018, PhRMA provided comments on the Colombian Resolution
5246, a public interest declaration for several drugs for the hepatitis c
virus (HCV).

A copy of the PhRMA letter is attached below.

It is a combination of complaints about procedure and substance, and an
implicit threat that PhRMA will ask Trump to intervene.

One topic cited in the letter is the burden of disease. The fact that more
than one in a hundred persons in Colombia are infected is actually a huge
burden of  disease, perhaps not compared to some countries with super high
rates of infection, but certainly compared to any other serious disease,
and unless Colombia gets the drugs very cheaply, it will not treat everyone
that could be diagnosed.

PhRMA has a point when in the letter it notes the fact that Article 16.9 of
the IP Chapter is a problem, because it contains a 3-step test which can be
read as a barrier to the use of compulsory licensing.


Article 16.9: Patents

3. Each Party 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.

The TRIPS contains a three step test for patent exceptions in Article 30,
but does not require compulsory licenses to comply with the provisions in
Article 30, as there is an additional Article 31, for “Other Use Without
Authorization of the Right Holder,” which can be used to justify a
compulsory license, and the TRIPS also allows compulsory licenses to be
implemented as limitations on remedies for infringement, under Article 44
of the TRIPS.

The Colombia FTA does not specifically refer to the freedom to grant
compulsory licenses under a rules based regime like Article 31 of the
TRIPS, but there is an Article 16.13, relating to public health, which
PhRMA does not mention in its letter, and this strengthens the Colombia
government’s authority to act in the HCV case.


Article 16.13: Understandings Regarding Certain Public Health Measures

1. The Parties affirm their commitment to the Declaration on the TRIPS
Agreement and Public Health (WT/MIN(01)/DEC/2).

2. The Parties have reached the following understandings regarding this

(a) The obligations of this Chapter do not and should not prevent a Party
from taking measures to protect public health by promoting access to
medicines for all, in particular concerning cases such as HIV/AIDS,
tuberculosis, malaria, and other epidemics as well as circumstances of
extreme urgency or national emergency. Accordingly, while reiterating their
commitment to this Chapter, the Parties affirm that this Chapter can and
should be interpreted and implemented in a manner supportive of each
Party’s right to protect public health and, in particular, to promote
access to medicines for all.

(b) In recognition of the commitment to access to medicines that are
supplied in accordance with the Decision of the General Council of 30
August 2003 on the Implementation of Paragraph Six of the Doha Declaration
on the TRIPS Agreement and Public Health (WT/L/540) and the WTO General
Council Chairman’s statement accompanying the Decision (JOB(03)/177,
WT/GC/M/82) (collectively, the “TRIPS/health solution”), this Chapter does
not and should not prevent the effective utilization of the TRIPS/health

(c) With respect to the aforementioned matters, if an amendment of the
TRIPS Agreement enters into force with respect to the Parties and a Party’s
application of a measure in conformity with that amendment violates this
Chapter, the Parties shall immediately consult in order to adapt this
Chapter as appropriate in the light of the amendment.

The investment chapter in the US/Colombia FTA also provides a carve-out for
compulsory licenses that are consistent with the WTO TRIPS agreement (or
with Chapter 16, the Intellectual Property chapter of the FTA).


Article 10.7: Expropriation and Compensation/fn4/

1. No Party may expropriate or nationalize a covered investment either
directly or indirectly
through measures equivalent to expropriation or nationalization
(“expropriation”), except:
(a) for a public purpose/fn5/;

. . .

5. This Article does not apply to the issuance of compulsory licenses
granted in relation to
intellectual property rights in accordance with the TRIPS Agreement, or to
the revocation,
limitation, or creation of intellectual property rights, to the extent that
such issuance, revocation, limitation, or creation is consistent with
Chapter Sixteen (Intellectual Property Rights).

FN 4. Article 10.7 shall be interpreted in accordance with Annex 10-B.

FN 5. For greater certainty, for purposes of this article, the term “public
purpose” refers to a concept in customary international law. Domestic law
may express this or a similar concept using different terms, such as
“public necessity,” “public interest,” or “public use.”


Ed Silverman has written about the PhRMA letter for Stat+, here.

Silverman mentions the fact that an industry advisory committee at the OECD
is seeking a number of pre-accession conditions on Colombia, in connection
with its application to become a member of the OECD. Officials in Colombia
are concerned that pharmaceutical companies will use the OECD accession
process as leverage against the use of compulsory licenses on drugs with
excessive prices. It will be important for other OECD member states to
protect Colombia on this issue.

Silverman quoted Colombian Health Minister Alejandro Gaviria responding to
the PhRMA letter.

“We received the letter. They indeed ask the Colombian government to revoke
the resolution and suggest — not a very subtle message — that not doing so
could threaten the whole OECD process. . . . these kinds of threats are
disquieting. . . should Chile be ousted from OECD for doing something
similar? Are flexibilities (in the WTO agreement) not part of various
international agreements? Is PhRMA speaking on behalf of some specific
countries? Is PhRMA aware that undue pressure on governments for exercising
the flexibilities go against the Doha declaration?”

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