Governments face a difficult challenge to achieve a balance between the need to provide an incentive for investment in research and development of new drugs and access to affordable medicines. As the US Federal Trade Commission recently stated, a proper balance between competition and patent policies is necessary to promote innovation. Since the adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), trade agreements have changed intellectual property laws in many nations, emphasising the rights of patent holders. This paper calls into question the advantages to developing countries of stringent intellectual property protection, and recommends II measures to ensure a better balance between the interests of inventors, consumers and brand-name and generics companies.
Federal Trade Commission (2003) ‘To promote innovation: The proper balance of competition and patent law and policy’, Report, October.
2.
NewW. (2003) ‘Trade: U.S. announces talks with Andeans; Panama expected next’, National Journal's Technology Daily, 18th November.
3.
Professor Peter Drahos addressed this three-level strategy in a report commissioned by the Commission on Intellectual Property Rights: ‘Bilateral intellectual property and investment agreements are part of a ratcheting process that is seeing intellectual property norms globalise at a remarkable rate. The two actors responsible for this process are the US and the EU. In short form this ratcheting process is dependent upon (a) a process of forum shifting — a strategy in which the US and EU shift the standard-setting agenda from fora in which they are encountering difficulties to those fora where they are likely to succeed (eg from WIPO to the WTO to BIPs [bilateral intellectual property agreements]); (b) co-ordinated bilateral and multilateral IP strategies; and (c) the entrenchment in international agreements of a principle of minimum standards. The principle of minimum standards plays a vital role in this strategy. Each bilateral or multilateral agreement dealing with intellectual property contains a provision to the effect that a party to such an agreement may implement more extensive protection than is required under the agreement or that the agreement does not derogate from other agreements providing even more favourable treatment (See, for example, Art. 1702 of NAFTA, Art. 1.1 of TRIPS, Art. 4.1 of the Jordan FTA and Art. X1 of the Nicaraguan BIT). This means that each subsequent bilateral or multilateral agreement can establish a higher standard … The global ratchet for IP consists of waves of bilaterals (beginning in the 1980s) followed by occasional multilateral standard-setting (eg TRIPS, the WIPO Copyright Treaty). Each wave of bilaterals or multilateral treaties never derogates from existing standards and very often sets new ones. For the time being at least there appears to be no end in sight to the use being made of this global IP ratchet. The current negotiations of the Free Trade Area of the Americas (FTAA) have produced a long draft text on intellectual property rights. The draft text is far from final form and contains a lot of bracketed text indicating that the relevant clause or phrase is the subject of negotiation’. DrahosP. (2002) ‘Developing countries and international intellectual property standard-setting’, Study Paper 8, 8th February.
4.
‘The Department of State has, as its primary mission, the use of the U.S. foreign policy tools to protect Americans’ security and prosperity. The protection of intellectual property abroad figures prominently among our international economic objectives. Our Ambassadors and embassy country teams around the world have as a priority objective the protection of intellectual property by mobilizing U.S. Government resources in the field and aggressively engaging host government officials and the local private sector.’ Testimony of E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, before the House Appropriations Subcommittee on Commerce, Justice, State, the Judiciary and Related Agencies — Loudoun County, Virginia — 23rd April, 2002. Available at http://usembassy.state.gov/posts/ja1/wwwhec0545.html.
5.
Section 301 of the Trade Act of 1974 provides the USA with the authority to enforce trade agreements, resolve trade disputes and open foreign markets to US goods and services. Section 301 is the principal statutory authority under which the USA may impose trade sanctions on foreign countries that either violate trade agreements or otherwise maintain laws or practices that are unjustifiable and restrict US commerce. (Source: http://www.ita.doc.gov/td/industry/otea/301alert/about.html). As a State Department official explained, ‘The Department of State plays a key role in the annual USTR-led Special 301 review of country intellectual property practices. … The objective of the review is not simply to give our trading partners an intellectual property report card. Rather, we seek to employ Special 301 to leverage real progress with host governments.’ See testimony of E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, cited above.
6.
See also Oxfam Briefing Paper (2002) ‘US bullying on drug patents: One year after Doha’, November.
7.
USTR Press Release (1997) ‘USTR-designate Barshefsky announces GSP sanctions against Argentina for continuing IPR problems’, 15th January.
8.
The governments of Nicaragua and the USA signed a Bilateral Investment Treaty in July 1995, and a Bilateral Intellectual Property Rights Agreement on 16th December, 1997.
9.
‘The FTA [with Singapore] is comprehensive in scope and covers aspects of trade in goods, services, investment, government procurement, protection of intellectual property, competition policy and the relationship between trade and labor and environment. This FTA builds upon the basic foundation of the NAFTA and WTO agreements and improves upon them in a number of ways. The U.S.–Singapore FTA can serve as the foundation for other possible FTAs in Southeast Asia. President Bush envisaged this prospect when he announced his Enterprise for ASEAN Initiative (EAI) last year.’ Testimony of Ralph F. Ives, III, Assistant Secretary US Trade Representative for Asia, the Pacific and APEC, before the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection, 8th May, 2003.
10.
See Statement of AllgeierPeter F., Deputy US Trade Representative, before the Subcommittee on International Trade, Finance Committee, US Senate, 13th May, 2003.
11.
Médecins Sans Frontières stated in a letter to the Chair of the Committee of Government Representatives on the Participation of Civil Society of the FTAA on 1st May, 2002, ‘Patents have been one of the most hotly debated topics on access to essential medicines since the creation of the World Trade Organization (WTO) and the conclusion of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994. Patents are by no means the only barrier to access to life-saving medicines, but they can play a significant, or even determinant, role in that they grant the patent holder a monopoly on a drug for a number of years. The patent holder's freedom to set prices has resulted in drugs being unaffordable to the majority of people living in developed countries’.
12.
SchondelmeyerS. (1995) ‘Economic impact of GATT patent extension on currently marketed drugs’, PRIME Institute, University of Minnesota, March.
13.
TRIPS was implemented in Brazil by the Industrial Property Law — Law No. 9.279, of 14th May, 1996.
14.
MendoncaT. (1999) ‘The pharmaceutical industry — Brazil’, US Foreign Commercial Service and US Department of State.
15.
This finding by the US Foreign Commercial Service and the US Department of State contradicts statements published by the US Department of State in its webpagehttp://usinfo.state.gov/products/pubs/intelprop/progress.htm, that ‘[s]trong pharmaceutical patent regime increases local pharmaceutical research and development, technology employment, and increases exports’. Also, the importation of medicines increased in Chile in the 1990s following the introduction of higher levels of IP protection (IMS data).
16.
World Trade Organization (2003) ‘Implementation of para. 6 of the Doha Declaration on the TRIPS Agreement and public health’, Decision of the General Council of 30th August, 2003, WT/L/540, 1st September.
17.
Article 8.1 of the TRIPS agreement (Principles), ‘Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.’.
18.
In a 14th June, 1995 letter from USTR Mickey Kantor to the Argentine Minister of Economy, Kantor requested that Argentina not use multi-year transition, parallel imports and compulsory licensing.
19.
USTR (2001), Special 301 Report.
20.
See the open letter to Vice President Gore signed by 307 public health experts and concerned persons, regarding US trade pressures on South Africa and efforts to obtain access to essential medicines, 1st August, 1999, available at http://www.cptech.org/ip/health/sa/goresignon.html.
21.
‘The statements in the trade representative's annual reports and trade watch lists document a shameful history of successful US efforts to get Thailand to pass patents on medicine, to abolish the pharmaceutical review board that monitored drug prices, to pass the safety monitoring period of market exclusivity and to refrain from issuing compulsory licences.’ RosenbergT. (2001) ‘Look at Brazil’, The New York Times, 28th January.
22.
The agreements with Singapore and Chile establish a maximum term for the extension. The agreement with Jordan does not establish a specific number of years for such an extension.
See, for example, the letter sent by Senators Orrin Hatch and Edward Kennedy and Representative Henry A. Waxman to Secretary of Health and Human Services, Tommy Thompson, on 17th August, 2001, urging him to change the practice.
25.
A 30-month stay of FDA approval of a generic applicant is invoked if a brand-name company receives notice of a generics applicant's paragraph IV certification and files suit for patent infringement within 45 days of that notice. See ‘Generic drug entry prior to patent expiration: An FTC Study’, July 2002.
26.
Federal Trade Commission (2003) ‘To promote innovation: The proper balance of competition and patent law and policy’, October.
27.
WechslerJ. (2001) ‘Pressure mounts to revise generic drug policies’, Pharmaceutical Technology, 1st February.
28.
See articles: Anon. (2003) ‘US and Thailand talk trade on eve of APEC summit’, Agence France Presse, 16th October; Anon. (2003) ‘US ‘aggressively’ seeking regional, bilateral free trade pacts’, Agence France Presse, 17th October; Anon. (2003) ‘Bush trip an offer of thanks for help; Some to give cold shoulder’, The Washington Times, 14th October; Anon. (2003) ‘Noodle soup; Trade in South-East Asia’, The Economist, 7th October; Anon. (2003) ‘The Real Cancún. What went wrong at the trade talks’, The Weekly Standard, 6th October; Anon. (2003) ‘EU firm on sanctions for US export tax breaks’, Financial Times, 3rd October; Anon. (2003) ‘Business: Going up in flames’, Newsweek, 29th September.
29.
See, for example, PearR. (2003) ‘Drug companies increase spending to lobby congress and governments’, The New York Times, 1st June.
30.
Federal Trade Commission (2002) ‘Generic drug entry prior to patent expiration: An FTC Study’, FTC, July.
31.
BCP Securities, LLC (2003) ‘Overview: Free trade is never free’, The Latin American Adviser, 19th August.
32.
Anon. (2000) ‘The TRIPS agreement and pharmaceuticals — Report on an ASEAN Workshop on the TRIPS agreement and its impact on pharmaceuticals’, Jakarta, 2nd–4th May.
33.
‘We find that Japanese firms have been rather unresponsive to the change in patent scope. Japanese firms have adjusted the nature of their patenting by increasing the number of claims per patent, but we find no evidence of an increase of innovative effort or innovative output that could be plausibly attributed to patent reform.’ From SakakibaraM.BranstetterL. (2001) ‘Do patents induce more innovation? Evidence from the 1988 Japanese Patent Law Reforms’, Rand Journal of Economics, Spring.
34.
In December 2003, President Bush signed into law a Bill passed by Congress restricting 30-month stays that delay the entry of generics into the market.
35.
In addition, some countries allow manufacturers of generic drugs to use the patented invention to obtain marketing approval — for example, from public health authorities — without the patent owner's permission and before the patent protection expires. The generics producers can then market their versions as soon as the patent expires. This provision is sometimes called the ‘regulatory exception’ or ‘Bolar’ provision, available at Art. 30. This has been upheld as conforming with the TRIPS agreement in a WTO dispute ruling. In its report adopted on 7th April, 2000, a WTO dispute settlement panel maintained that Canadian law conforms with the TRIPS agreement in allowing manufacturers to do this. (The case was titled ‘Canada — Patent protection for pharmaceutical products’.) Source: WTO.
36.
Federal Trade Commission (2003) ‘To promote innovation: The proper balance of competition and patent law and policy’, October.
