[Ip-health] News: WTO- Little-used 'Par.6' system will have its day, WHO tells intellectual property and health review

Marine Avrillon Marine at haieurope.org
Thu Nov 4 03:14:17 PDT 2010

26 and 27 October 2010




Little-used 'Par.6' system will have its day, WHO tells intellectual
property and health review


The 26-27 October 2010 meeting of the WTO intellectual property council
featured the first in-depth look at a system designed to help poorer
countries to acquire generic versions of patented medicines, but with
little change in countries' positions. Members similarly held on to
their positions on how to deal with biopiracy and on developments
outside the WTO on intellectual property enforcement.


Par.6. The Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Council reviews the so-called Paragraph 6 system annually, but for the
first time since the system was agreed in 2003, a whole day was set
aside for WTO members to discuss this agenda item in a more structured
way, the length of the debate on this and other topics taking the
meeting late into the evening of 27 October.


The "Par.6" system (nicknamed after the sixth paragraph of the Doha
Declaration on TRIPS and Health) was designed to tackle a specific legal
issue, unblocking a provision of the TRIPS Agreement that prevented
governments from licensing the production of generic versions of
patented drugs exclusively for export to countries unable to make the


The World Health Organization (WHO), an observer in the TRIPS Council,
added a new angle to the on-going debate about whether the fact that the
system has been used only once shows that it is too cumbersome.


The WHO said that the "Par.6" system will become more important as newer
HIV/AIDS medicines are needed in the future. Prices of "first line"
treatments have fallen drastically because of competition from generics
(with suppliers such as India not having patent protection until 2005),
allowing a 12-fold increase in poor patients receiving treatment.
However, since India had introduced full patent protection in the
pharmaceutical sector in 2005, newer treatments for HIV/AIDS,
tuberculosis and cancer may need the system in the future to increase
competition from generics, the WHO said. (More below.)


Enforcement. The discussion on enforcement echoed the debate in the
previous meeting in June, this time with the focus on the latest version
of the draft Anti-Counterfeiting Trade Agreement (ACTA), which some WTO
members are negotiating amongst themselves and is said to be near
completion after 11 rounds of negotiation.


Critics said ACTA threatens the negotiated balance of the TRIPS
Agreement and could lead to countries put under pressure to adopt
standards that are stricter than TRIPS ("TRIPS-plus") against their
interests. They argue that the negotiation is untransparent and
undermines multilateralism.


ACTA participants said that their negotiations do not affect or
undermine rights and obligations under TRIPS and that clearer standards
are needed to tackle the real dangers arising from counterfeit products
such as medicines and spare parts; they point to public interest
safeguards built into the negotiating text.


Biodiversity. The discussion on biopiracy and related issues included a
proposal for the Secretariat of the Convention on Biological Diversity
to brief the TRIPS Council on the CBD negotiations on access and benefit
sharing which were concluded that same week in Nagoya, Japan. There was
no consensus on this. (More below.)


Technical assistance. The specific needs and interests of least
developed countries (LDCs) were given particular attention, with a
review of measures to promote more tailored technical assistance,
incentives for technology transfer, and least developed countries'
priority needs to implement TRIPS, with Rwanda and Tanzania the latest
to supply their assessments.


Non-violation. The TRIPS Council also discussed briefly "non-violation"
cases, where positions remain unchanged. The present "moratorium" (ie,
the agreement not to bring TRIPS non-violation cases to the formal WTO
dispute settlement procedure) has been extended from one ministerial
conference to the next. The focus is now on what to do at the next
conference in 2011, which the General Council recently agreed will be on
15-17 December 2011 in Geneva.



Some detail


TRIPS and public health: the Par.6 system and the annual review

See explanation


Background: The 2003 "waiver" (and the 2005 pending TRIPS amendment)
removes a requirement that generics produced under compulsory licence
should be mainly for the domestic market. This constrained exporting to
countries that could not make the medicines, because the major (or
"predominant") part of production had to go to the domestic market -
only what was left could be exported. A compulsory licence exclusively
for export was not possible. The new system is sometimes called the
"Paragraph 6" system after the provision in the 2001 Doha Declaration on
TRIPS and Public Health that led to its creation.

The TRIPS Council reviews how well the system is working every year, a
requirement for any waiver under Art.IX.4 (9.4) of the WTO Agreement.
This usually takes place in October, but so far with little depth or
detail. Members sought a more structured and detailed review for 2010
and therefore the whole day of 27 October was allocated for this agenda

Chairperson Martin Glass organized the discussion into topics to give it
more focus, and encouraged members to report in detail on their national
experiences. The topics covered actual experiences in using the system
and any obstacles confronted, various legal aspects such as any domestic
legislation needed and the international treaty process of accepting the
TRIPS Agreement amendment, capacity building, alternative ways of
achieving access to medicines, and what to do next.



The debate


Some developing countries continued to argue that the "Par.6" system
must be too cumbersome since it has only been used once.

India said an application for compulsory licences under its Patent Act
for three medicines to be exported to Nepal was withdrawn in an early
stage. It said the Indian generics manufacturer concerned withdrew the
request because the potential importing country had not granted a
compulsory license to import the medicines, nor had it notified the
TRIPS Council of its intention to do so.

This, India said, shows that the system's notification requirements and
built-in safeguards are too costly and burdensome and represent a
disincentive for the generic supplier to produce.

Some developed countries said detailed information supplied by Canada
shows that the system is not too cumbersome. They questioned whether
attempts to use the system that were subsequently withdrawn were because
of the system itself or because of other reasons such as prices and
competition from alternative suppliers.

They asked India for details of what exactly the Indian company found to
be too burdensome. They complained that too little information had been
provided on what exactly might be the problems with the system other
than the fact that it had only been used once, and that potential
importing countries had not described their experiences.

They argued that success should not be measured by the use of this one
tool, but the full range of issues affecting access to medicines -
including health infrastructure, taxes and import duties - and the array
of measures available to governments - such as new bulk procurement
methods. The fact that there are alternative ways of making medicines
affordable should not be taken as evidence that the "Par.6" system is a
failure, Australia said.

Some countries did not express a view either way. They simply asked
questions about operational details such as royalty payments (Canada and
Switzerland include the importing country's level of development in the
formula) and how the medicine's efficacy and safety would be ensured
when exporting countries use the system.

Chairperson Martin Glass described the review as a useful exchange of
information. He will consult members on what to do next. As an annual
review, the subject will be on the council's agenda again in October
2011. Some members would like a follow-up session in the next meeting in
March 2011.

Some, particularly developing countries, also want a workshop that would
allow pharmaceutical companies, non-governmental organizations and
others to participate. These countries argue that some questions could
not be answered in this review because companies and NGOs were not
present. Some other countries questioned whether members have discussed
the issue enough under their own responsibility to justify a workshop
with other participants.


Members' experience

Canada is the only country that has used the system as an exporter (with
Rwanda as the importer). In this meeting, Canada added considerable
detail to the information it supplied previously.

It described its <Access to Medicines Regime (CAMR), which came into
force in May 2005 and repeated its assessment that CAMR was not the main
cause of the length of time taken for the medicine (Apotex's generic
Apo-TriAvir) to be approved for production and exported under the system
to Rwanda in 2008 and 2009.

Among the reasons were the fact that Apotex did not have a buyer when it
first sought approval for its generic in 2006 and the procurement tender
in Rwanda after the compulsory licence had been issued in September
2007. (Rwanda did not contribute to the session.)

Canada said that the generic medicine was approved by Health Canada in
less than six months through a special review stream established by the
Health Ministry in order to speed up approval e approval process,
instead of the usual time of up to a year. The compulsory licence itself
was approved in only 15 days in September 2007, Canada said.

The requirement to negotiate a voluntary licence with the patent holders
first (GlaxoSmithKline, Boehringer Ingelheim and Shire BioChem Inc) was
handled swiftly and the three waived the royalty payment that was
eventually offered to them, Canada went on. It added that Apotex
eventually secured the deal to sell to Rwanda in the face of competition
from other generics suppliers in an open tender by selling at below cost
(19 cents per pill).

Canada rejected some members' arguments that anti-diversion conditions
(preventing the medicines going to the wrong markets) are burdensome
since the colouring and labelling requirements and the need to publish
information on a website are simple.

India's contribution included an account of an Indian company seeking
compulsory licences to export to Nepal in September 2007. The request
was dropped after the Indian company claimed that the importing country
had found the conditions for using the system too onerous to proceed,
India said.





The World Health Organization listed four factors affecting access to


rational selection of medicines, for example via the WHO model list of
essential medicines 


affordable prices


sustainable financing: "per capita expenditure on medicines in real
terms remains regrettably very low in poor countries," the WHO said.

 reliable medicine supply systems: forecasting needs, procurement,
storage, transportation, inventory and storage, which WHO said "will
remain a formidable challenge".


On prices, the WHO noted that 90% of medicines on its list of essential
medicines are not under patent protection but a majority of patients in
low income countries cannot acquire them because of lack of supply of


It said competition from generics has slashed prices of "first line
antiretroviral medicines" from over US$10,000 per patient per year in
2002 to $100 in 2010. The "Par.6" system will become more important when
newer medicines are needed, and should be used "once it becomes clear
that no other possibility exists" for acquiring the medicines at
affordable prices, the WHO said.


Legal issues

The WTO Secretariat explained the legal difference between countries
introducing laws to implement the system and their notifying the WTO
that they have accepted the amendment. The two are separate and do not
depend on each other. (Canada developed its CAMR in 2005, to implement
the 2003 WTO waiver, before the amendment was agreed; some countries
have accepted the amendment before or without introducing implementing

Acceptance: Under international treaty law, countries have to formally
state that they agree to be bound by a treaty, in this case the amended
TRIPS Agreement, which will take effect when two thirds of the WTO's
membership has accepted the amendment. The list of acceptances is here.
Since the last meeting, Uganda and Mongolia have accepted it.

When a country accepts the amendment, it effectively affirms that it
accepts an additional flexibility in the TRIPS agreement, and that other
countries have the legal right to use the system if they choose to do
so. Accepting the amendment does not mean that the country necessarily
wants to use the system itself. Nor does it mean the country has to
implement the system through its own laws or regulations.

Implementing law: These are changes to allow the system to be used by
the country either as an importer or exporter or both under their own
laws or regulations. Countries that have formally notified changes to
their domestic laws or regulations: Norway (to export), Canada (to
export), India (to export), the EU (to export), Hong Kong China (to
export, and to import in extreme urgency), Switzerland (to export), the
Philippines (to import and export), Singapore (to import in extreme
urgency), Albania (to export) and Croatia (to export).





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