[Ip-health] WTO TRIPS Council (October 2019): Statement of South Africa on the Transparency of R&D Costs and Pricing of Medicines and Health Technology

Thiru Balasubramaniam thiru at keionline.org
Tue Oct 29 07:14:19 PDT 2019


WTO TRIPS Council (October 2019): Statement of South Africa on the
Transparency of R&D Costs and Pricing of Medicines and Health Technology

Posted on October 29, 2019 by Thiru

On Friday, 18 October 2019, South Africa delivered the following statement
at the WTO TRIPS Council on transparency of R&D Costs and Pricing of
Medicines and Health Technology.

Intellectual Property and the Public Interest: R&D Costs and Pricing of
Medicines and Health Technology

Mr Chairman,

This topic is a continuation of a sustained debate regarding the
intersection between intellectual property and public interest. Public
interest is a central component of the of the TRIPS Agreement, which
recognizes underlying public policy objectives of national systems for the
protection of intellectual property. The protection and enforcement of
intellectual property rights is not an end in itself. Article 7 of the
TRIPS Agreement recognizes that intellectual property rights must
contribute to the promotion of technological innovation and the transfer
and dissemination of technology to the advantage of all stakeholders,
including the users of technological knowledge and in a manner conducive to
social and economic welfare.

In September 2015, 193 Member States of the United Nations adopted the 2030
Agenda for Sustainable Development (2030 Agenda). This agenda includes
Sustainable Development Goal (SDG) 3 that aims to ensure healthy lives and
promote the well-being of all people of all ages.

The WTO is central to achieving the 2030 Agenda for Sustainable Development
Goals (SDGs), which sets targets to be achieved by 2030 in areas such as
poverty reduction. Trade has proven to be an engine for development and
poverty reduction by boosting growth, particularly in developing countries.
Target 3.b underscores the importance of support for R&D of vaccines and
medicines for the communicable and non-communicable diseases that primarily
affect developing countries. The Doha Declaration on the TRIPS Agreement
and Public Health affirms the right of developing countries to use to the
full the provisions in the TRIPS Agreement regarding flexibilities to
protect public health and, in particular, provide access to affordable
medicines and medical technologies for all.

The Doha Declaration on the TRIPS Agreement and Public Health recognizes
both the importance of intellectual property for the development of new
medicines and concerns that intellectual property rights affect medicine
pricing. The UN Secretary General’s High-level Panel on Access to
Medicines1 observed the following: “The rules governing human rights, trade
and public health exist in separate but overlapping spheres; their
implementation rests at different levels. An important factor behind the
incoherence between trade, intellectual property laws, human rights and
public health lies in the different accountability mechanisms and uneven
levels of transparency.” It further observes that transparency is a core
component of good governance, especially where civil society and patient
groups rely on transparency of information. Transparency, as further
stated, can also ensure fairness during negotiations that take place
between biomedical companies and procurement organizations.

Mr. Chairman, I do not propose to read the entire paper, however I would
want to focus on or two further areas before I turn to the questions.
Pricing strategies are based on determinants such as, inter alia the cost
of R&D, costs of production or financial returns to incentivize future R&D
programmes. The true costs of R&D for pharmaceuticals are often unknown and
highly variable, while the contribution made by public and
non-profit-making sectors towards the R&D of medicines is not always
accounted for. The marginal production costs of medicines are relatively
small compared to their market prices while a significant proportion of
this expenditure might be for marketing and promotional activities, which
are costs not related to the development of the product.

South Africa calls on Members to share their experiences of how TRIPS
flexibilities have been used to address high prices and barriers to access
to medical technologies and medicines in order to achieve public health and
related national objectives. In the past the impact of competition and
anti-trust laws on access to medicines was explored in IP/C/W/643. The
issue of abuse of IP rights remains relevant in the context of the
application of national and regional norms to ensure cheaper and more
effective access to medical technologies and medicine. Policies that
influence the pricing of health technologies or the appropriate rewards for
successful research outcomes can be better evaluated when there is
reliable, transparent and sufficiently detailed data on the costs of R&D
inputs (including information on the role of public funding and subsidies),
the medical benefits and added therapeutic value of products.

We would like Member to share their experiences around the following


   What are the TRIPS flexibilities adopted by Members in their Patent laws
   to ensure availability of patented medicines at reasonable prices?

   What are Members experiences with escalating prices of patented
   medicines and what are the policy responses implemented to address this
   trend through the use of TRIPS flexibilities?

   What approaches have Members implemented regarding price regulation of
   patented medicines such as a combination of cost-based pricing, value-based
   pricing, reference pricing, and/or through tendering and negotiation, and
   regulating mark-up levels? If any of these approaches have been used, what
   are the results and challenges that Members face to ensure compliance and
   disclosure of necessary information or their effect on the prices of
   - What measures have Members implemented to enhance the publicly
   available information on the costs of manufacturing of medicines, vaccines
   and health technologies, in particular information on grants, tax credits
   or any other public sector subsidies and incentives relating to the initial
   regulatory approval and annually on the subsequent development of a product
   or procedure?
   - Can Members share their experiences to improve the transparency of the
   patent landscape of medical technologies to ensure that no barriers are
   created to generic competition through sharing complete and up to date

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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