Pharmaceutical Patent Protection and World Trade Law

The Unresolved Problem of Access to Medicines

Jae Sundaram

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780367590918
• eBook ISBN: 9781351973823
• Edition: 1
• Topic: Law
• Subtopic: Intellectual Property Law
• Index: Law

Patents, including pharmaceutical patents, enjoy extended protection for twenty years under the TRIPs Agreement. The Agreement has resulted in creating a two-tier system of the World Trade Organisation Member States, and its implementation has seen the price of pharmaceutical products skyrocket, putting essential medicines beyond the reach of the common man. The hardest hit populations come from the developing and least developed countries, which have either a weak healthcare system or no healthcare at all, where access to essential and affordable medicines is extremely difficult to achieve.

Pharmaceutical Patent Protection and World Trade Law studies the problems faced by these countries in obtaining access to affordable medicines for their citizens in light of the TRIPS Agreement. It explores the opportunities that are still open for some developing countries to utilise the flexibilities available under the TRIPS Agreement in order to mitigate the damage caused by it. The book also examines the interrelationship between the world governing bodies, and the right to health contained in some of the developing country's national constitutions.

1 Introduction

Contents

1 Globalising intellectual property rights

1.1 Knowledge: the new capital

2 Access to medicines and the TRIPS Agreement

2.1 Twenty years of TRIPS and the proliferation of RTAs

2.2 Organisation of the book and areas of enquiry

1 Globalising intellectual property rights

The World Trade Organization (WTO), which is at the forefront of promoting and delivering the agenda on the global economy, is an intricate network of multilateral legal agreements entered into by its Member States. The last quarter of the twentieth century witnessed the birth of the globalised economy administered by the WTO through a series of agreements drawn up amongst the Member States of the Organization. The WTO, which is the custodian of several multilateral agreements, is linked in profound ways to the international economic order and is now the principal institution for international trade. The agreements were the products of negotiations which were carried out over lengthy periods of time in various rounds with the participation from developed, developing and least developed countries. The agreements came to be defined by their primary objective within the multilateral trading system introduced by the WTO, and some were classified as covered, core agreements that were compulsory in nature and a prerequisite for membership in the Organization. One such agreement is the TRIPS Agreement, a product of the Uruguay Round of negotiations (Jackson, 2006),¹ which also saw the creation of the WTO. Since the entry in 1995, the membership of the WTO has swelled to over 160,² with the promise of being part of a globalised economy which is more predictable and committed to reducing tariffs.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)³ is one of the covered agreements under the multilateral trading system administered by the WTO. The Agreement, which entered into force on 1 January 1995,⁴ is largely built upon a long tradition of intellectual property (IP) rights protection found in both domestic and international law of developed Western market economies (Cottier, 2005). Originally conceived as a minor agreement relating to border enforcement measures against counterfeiting and piracy, TRIPS evolved into becoming the third pillar of the multilateral trading system. The Agreement is viewed by IP rights holders as integral to the international legal environment, but in sharp contrast has prompted systemic questions from advocates of better public health; human rights lawyers; advocates of food security, biodiversity, access to medicines, access to cultural works; advocates of better agricultural policies, advocates of international economic laws, to identify a few. The origins of the TRIPS Agreement are clearly traceable to the 1970s when there was a growing trade in counterfeit goods, leading to the formation of the Anti-Counterfeiting Coalition, an alliance comprising 100 multinational corporations (Matthews, 2002). Among the Agreement’s distinctive features are the requirement that the member states provide regulatory standards – which is considered a positive prescription; recognize IP as inherently present in commercially traded products but also in creative ideas, information or expressions – and found embodied in such products; provide for the creation of private rights in economic operators (unlike in a state); establish legal mechanism for enforcement of such rights; and also incorporate substantive rules from pre-existing international agreements on IP rights. Some of the above features are a ‘first time’ in terms of rule-making in international law, and the Agreement also has a distinctive enforcement capability attached to the soft law framework. The TRIPS Agreement is not without its shortcomings, as it sets very high standards of protection for IP rights, leaving little room for flexibility for any developing country member state that had sought to implement it (Cottier, 2005).⁵

The TRIPS negotiations, commenced in the Uruguay Round of negotiations (Van Dijk, 2005; Martin, 1994),⁶ reframed both the international governance of IP and multilateral trade through the ingenious linking of the concept of ‘trade-related aspects’ of IP rights and the very conception of ‘trade’ within the multilateral trading system (Taubman, 2015). In one single stroke, the TRIPS Agreement changed the landscape of international IP governance by being implemented through the multilateral trading system and making it one of the covered agreements, with only a small window of transition period for developing countries and a longer period for the least developed countries (LDCs). Some commentators hold the view that not enough attention has been paid to the concept of ‘trade-relatedness’ in the TRIPS Agreement by legal scholars, and that the ‘concept’ in the past decade has migrated to a number of bilateral trade agreements, where TRIPS-plus standards have been incorporated (Drexl, 2016).⁷ The then CEO of Pfizer Corporation, Edmond Pratt Jr., termed the introduction of the TRIPS Agreement a victory brought about by hard-fought efforts of the US government and US businesses (Drahos and Braithwaite, 2002).⁸ The Agreement’s emergence is to be seen as an example of corporate capture of international lawmaking (Gopakumar, 2016; Sell, 2003).⁹

A strong view exists among scholars that transnational corporations from the US were primarily responsible for the lobbying that brought the TRIPS Agreement into existence (Sell, 2003).¹⁰ The creation of an international IP rights regime was clearly a victory for the patent-holding transnational corporations, which were determined to raise international IP rights standards globally, and in particular in developing countries (Deere, 2009). In short, the Agreement globalised IP rights, without allowing the developing country and the LDC member states of the WTO to comprehend fully the consequences of an international IP rights regime. This view may have sounded a bit exaggerated if it had been made in the 1990s (in the immediate aftermath of the entry of the TRIPS Agreement), or in the early part of the 2000s, but with over two decades of the TRIPS Agreement, there is sufficient evidence to prove it right. As Sell noted, the TRIPS Agreement is hardly the end of the story, and in many ways, it is just the beginning (Sell, 2003). TRIPS, in her view, is only the machinery; the domestic and international institutions have been enlisted for its enforcement, with the private sector activists continuing to play a central role in monitoring implementation and enforcement efforts. With the establishment of the TRIPS Agreement, the mission of strengthening and expanding the international IP rights of transnational corporations commenced. The past two decades have witnessed the transnational corporations successfully implementing their private rights at the cost of public rights, with one such right being the right to health and access to affordable medicines.

1.1 Knowledge: the new capital

Advances made in various scientific fields in the second part of the twentieth century, including pharmaceuticals, computing and electronics, biotechnology, information technology and digitisation, to mention a few, has ushered in a new era in creativity. The developments are heavily reliant on the foundations of a sound knowledge economy and science-intensive products, and knowledge economy is referred to by some as the third industrial revolution (Mowrey, 2009). The knowledge components of the goods produced can be distributed without diminishing their real value with exceptional ease (Dinwoodie and Dreyfuss, 2012). The knowledge one owns, or controls becomes capital, allowing for the same to be licenced or traded across national borders for a fee. Patents, also referred to as industrial property, are viewed as the key component of the knowledge economy. Patent rights fall under the broad spectrum of IP rights and have a very high commercial value in a consumer-driven economy, where rights holders seek to enforce their rights globally. Patent right is a monopoly right granted to a person who has invented a new and useful product, and it prohibits the unauthorised exploitation of the patented product by third parties.¹¹ The justification for an exclusive monopoly right is strongly grounded on the premise that rewarding the inventor for the skill and effort expended will encourage innovation – although no clear evidence is available to lend support to this rhetoric (Basheer, 2012), and is strongly contested (Chien, 2003).¹²

The regime set out by the TRIPS Agreement largely governs knowledge as capital, while paying little attention to how this arrangement affects the provision of the many public goods that rely on knowledge and innovation. The global IP rights regime that was to emerge was premature, as it left unresolved the many complex tensions inherent in governing IP rights. As TRIPS treats IP protection as a trade matter, it effectively marginalises the many other areas where IP rights impact, viz., health, education, human rights and technology transfer, to name a few (Muzaka, 2011). The patent-holding developed countries have lauded the success of globalising IP rights, but the developing countries and least developed countries have found the going extremely difficult in their pursuit of access to affordable medicines, as a direct result of the implementation of the Agreement. The developing countries were required to introduce TRIPS-compliant IP legislation into their domestic laws, which over the past two decades has had the effect of unsettling established domestic laws and health policies which were primarily designed to safeguard the interests of the general public in accessing both affordable treatment and medicines (Sundaram, 2014a, 2014b).¹³ The Agreement’s implementation became a complex political game, played out mostly outside the WTO, with the institution having little or no oversight. Muzaka notes that since the introduction of TRIPS through the multilateral trading system, rules on IP had been negotiated bilaterally and plurilaterally by member states and issued through various international organisations, including the WTO, WIPO, WHO, United Nations Industrial Development Organization (UNIDO), Food and Agricultural Organization (FAO), World Bank, United Nations Development Programme (UNDP), etc. (Muzaka, 2011). This position only goes to demonstrate that IP rights governance cannot be presented as a trade matter and be encapsulated in one agreement, i.e., TRIPS Agreement, without actually addressing the other areas that it impinges on, viz., health, education and human rights. Long prior to the entry of the TRIPS Agreement, developing countries like India did not grant product patent protection for pharmaceutical patents, and granted only a process patent protection. India decided to recognise product patents on the back of the Justice Ayyangar Committee Report,¹⁴ which strongly recommended the process patent protection of pharmaceutical and chemical patents, with the objective of making medicines affordable and accessible to the general public.

Under the scheme envisaged in the Agreement, patents (including pharmaceutical patents) enjoy an extended global protection for a period of twenty years. The current study is more concerned with the protection afforded, in particular, to pharmaceutical patents under the Agreement. Sponsored by the patent-holding developed nations, it has resulted in creating a two-tier system of the WTO member states, and its implementation has also witnessed the price of pharmaceutical products skyrocket, putting essential medicines beyond the reach of the patients in developing and least developed countries. The hardest hit populations by the implementation of the Agreement are to be found in developing countries and LDCs that have a weak healthcare system (or no healthcare system at all in some cases), and where access to essential and affordable medicines is extremely difficult to achieve even in the absence of the Agreement due to weak infrastructure to produce affordable medicines, poor governance and weak socio-economic conditions.

2 Access to medicines and the TRIPS Agreement

The TRIPS Agreement’s ‘one size fits all’ policy ignores the diversity of the world population and the problems that confront them, which is exemplified in the difficulties that developing nations confront (Siew-Kuan Ng, 2010), in their pursuit to access affordable medicines. With such diversity at socio-economic and cultural levels prevalent amongst the member states, a level playing field was not in sight for the implementation of an international IP regime. One of the primary areas of coverage sought under the Agreement was pharmaceutical patent law enforcement in developing countries, which had witnessed the growth of generic medicines to the disadvantage of patented/branded medicines. The prerequisites for implementing an international IP regime required a strong institutional setup including a sound legal system, a healthcare system, and the appropriate level of infrastructure to produce medicines in the domestic markets, which factors were largely absent in most developing countries. Although in theory the Agreement affords flexibility, this is hardly ever allowed to be properly exercised by developing countries in times of need. As allowing the flexibilities to be implemented would mean a reduction in the price of patented medicine, patent-holding transnational corporations go to extremes to protect their ‘private’ rights as against a public good.¹⁵ India, Brazil and South Africa are some of the developing countries that have faced pressure from both pharmaceutical corporations and developed countries when seeking to exercise their rights under the Agreement.¹⁶

Developing countries, generally, do not have a good track record for innovation, especially on the pharmaceutical front, due to weak socio-economic conditions, a weak knowledge economy and a lack of proper industrial infrastructure, as the priorities for any key spending are focused elsewhere. In the above environment, the introduction of TRIPS-compliant pharmaceutical patent protection has had some highly adverse distributive consequences (Reichman and Dreyfuss, 2007). The result was, needless to say, a manifold increase in the price of branded essential medicines in the developing countries and in some cases a decrease in the supply of generics, which combined with weak healthcare has made access to affordable medicines an extremely difficult goal to achieve. Pharmaceutical patent protection introduced under TRIPS has put medical treatment beyond the reach of the populace living in the developing countries, where the healthcare system is weak. In contrast, the TRIPS Agreement supports a system/model prevalent amongst the patent-holding developed nations, which is defined by a strong healthcare system. It is not an exaggeration to postulate that the patent system mandated by TRIPS effectively shifts wealth from developing countries to the patent-holding developed countries (Sundaram, 2015). Although the principles and objectives of the Agreement clearly acknowledge the importance of interests and the necessity to promote social welfare and protect public health, the ground realities of implementing the rules contained in the Agreement seem to bypass the fundamental problem of access to affordable medicines. Commentators have also observed that the outcomes from the WTO Dispute Settlement Body (DSB) lean towards the ‘one size fits all’ theory of TRIPS (Dinwoodie and Dreyfuss, 2004a, 2004b), which does not take into consideration ...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• List of cases
• List of acronyms
• Preface
• 1 Introduction
• Part I Evolution of intellectual property laws, and the introduction of IP protection in the multilateral trading system
• Part II TRIPS and developing countries: implementation, knowledge economy and IP policymaking
• Part III TRIPS at what cost?
• Index