[Ip-health] Bridges Weekly: Canadian Access to Medicines Bill Under Threat

Thiru Balasubramaniam thiru at keionline.org
Wed Mar 23 15:06:29 PDT 2011


Bridges Weekly Trade News Digest • Volume 15 • Number 10 • 23rd March  

Canadian Access to Medicines Bill Under Threat

The fate of legislation seeking to make it easier for Canada to export  
affordable generic copies of patented drugs to poor nations hangs in  
the balance, as the ruling Conservative party leadership in the  
country’s unelected Senate stalls debate on it only days before  
parliament may be dissolved for an election.

The bill, C-393, was approved by a majority of lawmakers in the  
elected House of Commons earlier this month. It would amend Canada’s  
2004 law implementing WTO decisions aimed at making it possible for  
developing countries lacking the ability to manufacture drugs to  
import cut-price generic versions of essential medicines. That law,  
which defined Canada’s ‘access to medicines regime’, has been widely  
criticised by health and humanitarian activists as well as opposition  
parliamentarians who claim that its multiple procedural requirements  
render it nearly impossible to use. In their view, the Canadian law  
went beyond the already onerous requirements of the WTO’s so-called  
‘30 August 2003 decision’, the multilateral agreement on intellectual  
property and access to medicine that the 2004 legislation was supposed  
to implement.

In nearly seven years, the Canadian law has been used precisely once:  
to cover two shipments to Rwanda of an HIV/AIDS drug made by Canadian  
generics manufacturer Apotex. That case remains the only instance in  
which the 30 August decision has been used (although the existence of  
the decision may have strengthened governments’ hand in price  
negotiations with brand-name producers). Passing bill C-393, critics  
say, would make it easier for drugs to get from would-be Canadian  
generics exporters to the poor countries that need them.

Apotex has complained that the time and costs involved in using the  
existing system were high, and said that it would be reluctant to  
repeat the process unless it were streamlined. Canada’s brand-name  
drug industry, on the other hand, argues that the status quo  
represents a more appropriate “balance between broadening access to  
affordable drugs and protecting intellectual property rights which are  
the cornerstone of innovation.” In a statement, Russell Williams,  
president of Canada’s Research Based Pharmaceutical Companies (Rx&D),  
warned that Bill C-393 “opens the doors to diversion which raises the  
risk of counterfeit and black market profiteering.”

Sponsored by a member of a parliament from the opposition New  
Democratic Party, bill C-393 was passed in the House of Commons two  
weeks ago, backed principally by opposition lawmakers. In order to  
become law, it must be approved by the appointed members of the Senate  
(analogous to the British House of Lords), which is controlled by the  
ruling Conservative party.

The Senate started a second reading of the bill on Monday, but the  
Conservative leadership in the Senate moved to adjourn discussions to  
the following day. It adjourned discussions again on Tuesday, in the  
face of impassioned appeals for the bill’s passage from individual  
Conservative and Liberal senators citing humanitarian and cost- 
effectiveness concerns. At time of writing on Wednesday, Senators were  
set to resume deliberations on the bill. The Senate has considered  
nearly identical legislation in the past, and in theory could have  
passed it in no more than two or three days.

It is extremely rare for the Senate, traditionally mindful of its lack  
of a popular mandate, to reject legislation passed by the House of  
Commons. It is not, however, without precedent: Conservative senators  
in 2010 controversially overturned a climate change bill passed by the  
House. On the other hand, access to medicine is an issue that divides,  
rather than unites, Canada’s ruling party: over two dozen backbench  
Conservative MPs supported Bill C-393 in defiance of the government’s  
opposition to it; individual Conservative senators have been among  
those leading the charge for Senate approval.

The uncertainty surrounding the fate of the legislation is compounded  
by the fact that the government could be defeated this week on a  
budgetary vote in the House of Commons, where it does not command a  
majority. This would trigger an election and require the access to  
medicine bill to start from scratch in a new parliament.

C-393: A ‘one-license solution’

While WTO intellectual property rules allow governments to issue  
‘compulsory licences’ - effectively suspending patent protections - to  
authorise the generic production of medicines without the consent of  
patent holders, they stipulate that drugs thus produced should be  
“predominantly” for the domestic market. This stipulation means that  
compulsory licensing flexibilities have been of little to help  
countries that have little or no pharmaceutical manufacturing  
capacity. WTO members formally recognised the challenges faced by such  
countries in 2001. In 2003, the 30 August decision spelled out rules  
under which the domestic consumption requirement would be waived to  
allow poor countries to import drugs produced under compulsory licence  
elsewhere. These rules included requirements for both the importing  
and exporting countries to notify the WTO about intent to use the  
scheme along with the drugs and quantities in question, in addition to  
packaging requirements aimed at preventing diversion to third markets.  
(WTO members have in principle approved turning the 30 August decision  
into a permanent amendment to the TRIPS agreement, but not enough have  
ratified the changes for them to enter into force.)

According to Richard Elliott, executive director of the Canadian HIV/ 
AIDS Legal Network and a vocal supporter of passing C-393, the bill  
would make full use of flexibilities in the TRIPS Agreement and the 30  
August decision without contradicting either.

He said that the legislation would expand the definition of  
pharmaceutical products from the current specific list of drugs that  
requires a federal cabinet decision to be modified. The most important  
reform, he added, is the “one license” solution, which makes the  
progress of getting a compulsory license “much more straightforward  
and direct.”

Under the existing law, a would-be maker of a generic for export would  
have to first approach the patent-holders - there would be many in the  
case of a fixed-dose combination of different HIV/AIDS drugs - to see  
if the patent-holders would consent to license the drugs on a  
voluntary basis. After a 30-day period, if a voluntary license is not  
forthcoming, the generic manufacturer would be able to ask Canadian  
patent authorities to issue a compulsory license authorising it to   
produce the drug without the consent of the patent-holder. Currently,  
however, the 30-day period only starts once the generic manufacturer  
can tell the brand-name manufacturer the country and quantity of the  
drug in question. This means that before a Canadian generic  
manufacturer can start trying to get a license, a developing country  
government has to have notified the WTO of the names and quantities of  
the drugs it seeks to import. If the quantity were to change, or  
another country wanted to import the same drugs, the Canadian generic  
manufacturer would have to go back to the patent-holders and repeat  
the process.

Bill C-393’s ‘one-license process’ changes the sequence of the  
process, Elliott said, “so that you don’t run into this Catch -22  
where a generic manufacturer can’t get a license until it has a  
tentative agreement with a country, but a country really has no  
incentive to make an agreement with a manufacturer when there’s no  
guarantee that the manufacturer could get them the product.”

Under Bill C-393, a Canadian generic manufacturer could approach  
manufacturers for voluntary licenses without a target country or drug  
quantity in hand. There would still be a 30 day period before the  
company could seek a compulsory license, although it could be waived  
in circumstances outlined in TRIPS Article 31(b) - “in the case of a  
national emergency or other circumstances of extreme urgency or in  
cases of public non-commercial use.” If it received a compulsory  
license, the generic manufacturer would be able to export to all  
countries covered in Canada’s legislation, without any fixed limits on  
the drugs in question. (The importer would still need to notify the  
WTO before importing any drugs; anti-diversion rules such as  
differential packaging would still apply, as would disclosure  
requirements on an informational website.)

According to Elliott, once armed with more expansive compulsory  
license, Canadian generics manufacturers would be in a position to bid  
in developing country governments’ standard tenders for drug  
purchases. The increased competition among legal suppliers would push  
governments’ purchase prices downwards; meanwhile, the prospect of  
greater sales volumes would make it easier for the Canadian companies  
to offer competitive prices.

Elliott said that while the Canadian bill corrects the imperfections  
in Canada’s implementation of the 30 August decision that had proven  
to be stumbling blocks to using it, this did not mean that the WTO  
mechanism was ideal.

Echoing criticisms made by public health groups and backed at the time  
by the World Health Organization, he suggested that an approach based  
on TRIPS Article 30, which provides for “limited exceptions to the  
exclusive rights conferred by a patent” so long as they do not   
”unreasonably prejudice” the legitimate interests of the patent owner,  
would have been more straightforward. An ‘Article 30 approach’ would  
have amounted to a standing statutory compulsory license for the  
limited purpose of exporting drugs to poor countries unable to make  

An earlier version of Bill C-393 included a provision waiving the need  
for generic manufacturers to negotiation with patent-holders in  
circumstances not limited to national emergencies. This, said Elliott,  
went beyond TRIPS Article 31b, but could have been justified under  
Article 30. However, that clause was taken out over the course of  
parliamentary deliberations.

ICTSD reporting; “Access to medicines bill stalling in Senate,”  
VANCOUVER SUN, 22 March 2011.


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

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

More information about the Ip-health mailing list