[Ip-health] Paragraph 6 system: Brazilian intervention at the WTO TRIPS Council

thiru at keionline.org thiru at keionline.org
Mon Nov 1 07:26:27 PDT 2010


On Wednesday, 27 October 2010, Brazil delivered the following  
intervention during the annual review of the Paragraph 6 system at the  
WTO TRIPS Council. The Brazilian intervention followed Canada's  
detailed explanation of her use of the Paragraph 6 system in the  
Apotex/Rwanda case. The Brazilian intervention voiced concern over the  
future prospects of access to competitively priced second and third  
line ARVs raising questions as to whether the Paragraph 6 system would  
be economically viable for generic producers.


Paragraph 6 system: Brazilian intervention at the WTO TRIPS Council

     a) Brazil has not yet tried to use the system either as an  
importer or exporter country. In 2007, following a case of abusive  
price, Brazil issued a compulsory license to an anti-retroviral  
medicine, Efavirenz, that is part of the cocktail of drugs freely  
distributed by the Ministry of Health to HIV/AIDS patients. For a  
number of reasons, including lack of sufficient disclosure in the  
patent description, it took two years for the Oswaldo Cruz Foundation,  
an international reference institution in medical research, to be able  
to produce the medicine in Brazil. During this time, Brazil imported  
the medicine from a supplier in India.

     b) According to the detailed explanation provided by the  
delegation of Canada, Apotex decided to produce the antiretroviral  
Apo-TriAvir before there was a request from any country. I believe  
Apotex is a private producer of generic medicines, right? To produce  
the medicines, Apotex would have to issue a compulsory license with no  
guarantee that it would be able to export the medicines. When Rwanda  
was identified as an possible importer, Apotex still had to go through  
a process of government procurement with other companies, including, I  
imagine, the patent holder that has the already developed the  
technology and has greater economies of scale. My question is was it  
economically worth to Apotex? If so, why has it not tried to duplicate  
this experience with other countries, since the process was initially  
driven by Apotex?

     c) We appreciate the answer provided to Canada regarding the  
economic returns to Apotex of the Rwanda experience. It was very  
important to know that there where no royalties and that Apotex most  
probably lost money when it had to reduce its price to 19,5 cents per  
dollar to be able to compete with the Indian Generic industry. It  
makes us question whether the paragraph 6 system is economically  
viable and if we are to see other examples of use of the system.

     However, with the end of the transition period for implementation  
of the TRIPS agreement to all countries in 2005, except LDCs,  
affordable generics from suppliers such as India will become more and  
more scarce.

     This is particular important to the fight against HIV/AIDS. In  
2008, the report by the Swedish National Board of Trade, 'The WTO  
Decision on Compulsory Licensing' already predicted that "HIV is a  
highly changeable virus and patients need to switch and update their  
medicines regularly. Some types of AIDS medicines were launched before  
the TRIPS rules on patent protection for medicines were introduced in  
developing countries, and they could therefore be freely copied and  
sold in these countries. This has resulted in vigorous price  
competition for many of the older medicines used as the standard  
'first line' treatment, even though most of them are still patented in  
high income countries. With many suppliers to choose from, there has  
been no need to use the Decision for these medicines."

     The report also explains that "The situation in regards to  
competition and price is different for the second or third line AIDS  
medicines, i.e. medicines that patients will need when they have  
developed resistance to the first line medicines. The same holds for  
new, more effective substitutes for first line medicines. All of these  
are patented in many countries and the prices are much higher than for  
older medicines. This is becoming a grave concern for the countries  
and international agencies that offer treatment. Patients need to  
switch to the second line medicines within a couple of years after  
starting treatment and these medicines may cost up to 12 times as much."

     Therefore, Brazil considers that the discussions we are having  
today will have a fundamental impact on the access to medicines at  
affordable prices in the near future. We should concentrate our  
efforts in the TRIPS Council and in other fora to analyze if the  
economic and political incentives provided by the paragraph 6 system  
are adequate to secure investment in the production of generic  
medicines at affordable prices to markets with no manufacturing  
capacity. We should also analyze TRIPS plus provisions that adversely  
affect the right to access to medicines, such as data exclusivity of  
clinical trials. Given that economies of scale are an essential  
element in what concerns incentives for investment in this area, it is  
also important to design ways to improve the utility of the system to  
small markets. These are only some elements we consider should be  
addressed so that the system will serve the needs it was designed for.

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