[Ip-health] SCP25: South Africa’s Experience Related to the Topic of Access to Medicines

Thiru Balasubramaniam thiru at keionline.org
Wed Dec 14 06:56:29 PST 2016


SCP25: South Africa’s Experience Related to the Topic of Access to Medicines


Submitted by thiru <http://keionline.org/user/6> on 14. December 2016 -

On Wednesday, 14 December 2016, the delegation of South Africa delivered a
comprehensive, moving account of South Africa's "journey in the quest to
provide access to essential medicines" at WIPO's Standing Committee on the
Law of Patents.

South Africa Access to Medicines: South Africa’s Experience Related to the
Topic of Access to Medicines at the Standing Committee on the Laws of


Madam Vice Chair,

South Africa is pleased to be afforded the opportunity to share its journey
in the quest to provide access to essential medicines through the patent

As some of you would be aware, South Africa has a proud history of robustly
engaging with issues that concern intersection between Intellectual
Property (IP) rights and public health. Indeed the South African
government’s stance in the case between the Pharmaceutical Manufacturers
Association versus the President of South Africa (the late President Nelson
Mandela) in 1998, was a key factor leading to global dialogue around the
potential negative impacts of intellectual property rights on public
health, culminating in the Doha declaration on TRIPS and Public Health.

South Africa has been a key player in the global recognition that the duty
owed by States to safeguard public health is not inconsistent with the
responsibility to honor international treaty obligations.

In the late nineties, for countries such as South Africa, the affordability
of antiretroviral medicines was the main barrier to them being listed as
essential medicines, and provided to patients. In 1998 the National
Essential Medicines Lists Committee recommended to the Minister of Health
that antiretroviral therapy (ART) be approved for provision to persons
living with HIV/AIDS, provided that the price of the medicine could be
reduced. It was within this context that the interpretation of TRIPS and IP
protection and their impact on pricing and affordability of medicines
became salient.

Measures to ensure affordability in South Africa

To address some of the challenges associated with patent-related pricing
monopoly, South Africa amended its Medicines and Related Substances Control
Act, (Act 101 1965) introducing Section 15C, titled "Measures to ensure
supply of more affordable medicines." This section was introduced to
provide for parallel importation and compulsory licensing.

The pharmaceutical industry, backed by some governments, vigorously opposed
the enactment of Section 15C, arguing that it was tantamount to a complete
annulment of patent rights and that it violated the TRIPS agreement. In
spite of vociferous opposition, Section 15C was signed into law by the late
President Nelson Mandela on 12 December 1997.

In an attempt to block the implementation of Section 15C, over 40 of the
World’s largest and most powerful pharmaceutical companies initiated a
court action, challenging the constitutionality of Section 15C before the
High Court of South Africa in February 1998. Section 15C was also put on
the agenda for high-level bilateral trade discussions between South Africa
and some countries which resulted in South Africa being placed on a special
'watch list' in 1998 and 1999 relating to international trade relations.

These tensions escalated, and ultimately created significant public
awareness and controversy regarding the conflict between the pharmaceutical
industry and developing countries. As this pressure increased the narrative
emerged that pharmaceutical companies were putting 'profit before the
people'. The lawsuit against the South African government was ultimately
withdrawn unconditionally in May of 2001, with costs. Civil society
treatment access activists cite the successful media campaigns as central
to achieving this victory.

Doha Declaration & TRIPS flexibilities

As the global narrative in favor of access to medicines continued to
strengthen, in 2001 developing countries raised concerns about the possible
negative impact that a narrow interpretation of TRIPS could have on certain
policy objectives, particularly public health outcomes relating to access
to medicines. These concerns culminated in the Doha Declaration on 14
November 2001, which clarifies that the TRIPS agreement should be
interpreted in a way that support public health objectives, by stimulating
the creation of new medicines whilst also promoting access to existing
medicines. Thus, the TRIPS agreement “should not prevent Members from
taking measures to protect public health...and should be interpreted in a
manner supportive of WTO Members’ right to protect public health and, in
particular, to promote access to medicine for all.”

This declaration clarifies TRIPS flexibilities, including compulsory and
voluntary licensing, the Bolar exception, non-commercial use and the
parallel importation of medicines. These mechanisms have been incorporated
into our law through the amendment of our Patents Act of 1979, the
Medicines and Related Substances Control Act and other relevant
legislation, to circumvent limited access to medicines due to market
exclusivity. However, providing access to essential medicines still remains
a challenge because of the delicate exercise of balancing interests of both
innovators i.e. (pharmaceutical companies) and the public at large.

Activist pressure, competition law & use of voluntary licenses

Since 2001 many Generic manufactures have secured voluntary licenses to
produce medicines in South Africa, including over 20 licenses for medicines
in the antiretroviral category. The increase in voluntary licensing (VL)
agreements for ARV drugs was often a result of civil society pressure, and
the use of competition law. For example, in 2002 activist initiatives of
the Anti-Retroviral Therapy (ART) treatment campaign, resulted in some
multinational companies being found guilty of excessive pricing by the
South African Competition Commission. At this time the prices of patent
holders were between 3 and 10 times higher than the least expensive generic
version of the same medicines.

In 2004, the prices of ARV dropped to a level where the South African
department of health introduced them as essential medicines. However,
prices remained relatively high and there were concerns regarding financial
sustainability. Over time, however, often as a result of ongoing civil
society pressure, increasing numbers of voluntary licenses were issued,
resulting in steady price decreases. In one example, in 2006 a license for
the drug tenofovir (TDF), was granted to a generic manufacture and as a
result the price for the drug decreased by 64%.

Similarly in 2007, activist pressure resulted in complaints to the
Competition Commission regarding more multinational companies for excessive
pricing. As a result, these companies issued voluntary licenses, after
which competition increased and prices for the medicines concerned
decreased in state tendering processes. Licenses for generic manufacturing
of APIs in other parts of the world have also contributed to cheaper APIs,
and thus cheaper medicine formulation since APIs accounts for approximately
70% of the cost of manufacturing for ARVs.

The current activist initiative 'Fix the Patent Laws' has resulted in a
number of media battles and ongoing pressure towards multinational
pharmaceutical companies regarding pricing and affordability for patented
medicines. This activist campaign aims to strengthen Intellectual Property
laws in South Africa in the interests of stimulating medicine price
competition. This is an ongoing process with multiple stakeholder
involvement including the Department of Trade and Industry, the Department
of Health and the Department of Science and Technology.

Intellectual Property Law in South Africa

South Africa has never issued a compulsory license but those manufacturers
who have actively courted multinational pharmaceutical companies have
acquired lucrative voluntary license agreements where pressure exists to
improve generic manufacturing. These companies are careful to maintain IP
regulations and good relationships with pharmaceutical firms, in favour of
potential of local voluntary patent pools for innovation, rather than
supporting a compulsory licensing approach.

Way Forward

As a way forward, in July 2016, the South African cabinet approved a new IP
Policy Consultative Framework, which aims to promote competition and ensure
the levelling of the playing field in the area of public health and
intellectual property rights. The new IP policy framework takes a
consultative approach that seeks to include all relevant stakeholders,
which includes government, the pharmaceutical industry, NGOs and the
general public.

This framework will consider the amendment of current IP laws, to ensure
that a balance is struck between IP rights and the rights of every citizen
to access to medicines. It will also consider simplifying the processes of
providing access to medicines and fast-tracking the approval processes
required to access such medicines. In South Africa, the current process to
obtain a compulsory licence requires a judicial process which is a lengthy
process and because it involves litigation, it is an expensive process. The
policy will therefore consider a more streamlined and accessible
administrative process as opposed to a judicial process for obtaining a
compulsory licence.

As highlighted above, parallel importation of medicines in South Africa is
governed by section 15C of the Medicines and Related Substances Act and it
is also dealt with in the South African Patents Act of 1979 as amended,
which provides for exhaustion of rights. However there is some uncertainty
over whether Section 15C applies not withstanding any rights conferred in
terms of the South African Patents. The policy will also clarify maters on
exhaustion of rights where parallel importation is concerned.

The policy will also consider amendments to the Patent Act to provide for
substantive examination of patent applications and introduction of
opposition proceedings in the grants of patent rights. We have already
heard the story of Thobeka, who required a cancer drug in the treatment of
breast cancer. However, due to the high price of this drug, it was
inaccessible to most patients who have been diagnosed with breast cancer,
resulting in the unnecessary deaths of patients even though suitable
treatment was available. Interestingly, the patent had expired in most
countries where patent protection had been obtained. But because South
Africa has a depository system, this patent continued to remain in force on
the patent Register. In terms of South African law, it would have required
protracted and expensive litigation to challenge the validity of this
patent. Hence it is a policy position of the South African government to
introduce substantive search and examination and opposition proceedings to
ensure that only quality patents remain on our registers.

In conclusion, South Africa is embarking and consultative and inclusive
process to address issues of IP rights and access to essential medicines.
We recognize the importance of striking a balance between the needs of
indigent people who require access to medicines but because of their status
are unable to afford and access essential medicines and on the other hand,
the need to incentivize pharmaceutical companies to continue in investing
in research and development of new medicines to address future needs.

In all these efforts, we would want to be in a position to continue to call
on WIPO, to support us to craft IP policies that support our objectives of
balancing the rights of innovations and needs of the public.

I thank you Madam Chair

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