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INTELLECTUAL PROPERTY: WHO-WIPO-WTO BOOK

Chapter 2: The policy context for action on innovation and access

 

B. Intellectual property, trade and other policy dimensions

Key points

  • Themultilateralstandards for each form of intellectual property (IP) are minimum standards, thus leaving considerablescope for policy-makers to decide on their implementation in a way that supports public health objectives.
  • Thepatent system is designed to support innovation and, at the same time, offer a mechanism to ensure that such innovations are accessible to society.
  • Aproduct, its process of manufacture and its use can be covered by several patents. Patent information helps to determine the freedom to operate, and to what extent and with whom, licences need to be negotiated.
  • Theway in which test data are protected is relevant for innovation in, and access to, medicines. Countries have adopteddifferent regimes of test data protection, ranging from data exclusivity to keeping the data secret, while allowing the competent authorities to rely on them.
  • Thetrademark system serves to distinguish products and to inform the consumer. Trademarks are used to brand bothoriginal and generic products. To avoid confusion, trademarks for pharmaceutical products need to be distinct from the generic international nonproprietary names (INN) of the products.
  • TheWHO selects international nonproprietary names (INNs), i.e. single names of worldwide acceptability for each active pharmaceutical substance that is to be marketed as a pharmaceutical.
  • The creation of sound, competitive market structures through competition law has an important role to play in enhancing access to medical technology and fostering innovation in the pharmaceutical sector. Unwarranted restrictionson competition, resulting from the abuse of intellectual property rights (IPRs), can be addressed on a case-by-case basis through competition law enforcement.
  • All countries rely on imports, to varying degrees, to meet the health care needs of their populations. This reliance is particularly pronounced for the national health systems of smaller developing countries.
  • Efficient,transparent and competitive procurement processes can contribute to improvements in the accessibility andaffordability of medicines and thus towards more efficient and cost-effective health systems. The WTO Agreementon Government Procurement (GPA) seeks to promote transparency and fair competition to deliver improvedvaluefor money for governments which are parties to the GPA and also for agencies of these governments.
  • Bilateraland regional agreements have shaped the framework for access and innovation in many countries. They arenot limited to setting IPR standards, but also include rules on tariffs on pharmaceutical products, as well as rules that have been established regarding government procurement and competition law.

This section provides an overview of elements and legal and policy instruments relating to the IP and international trade system which are relevant to medical innovation and access to medical technologies at the international level.

1. Intellectual property systems

Those forms of IP that are most relevant to innovation in, and access to, medical technologies, as well as cross- cutting issues related to their enforcement are outlined in this section.

(a) Introduction to IP systems

IP systems operate by providing limited rights to exclude certain defined third-party use of protected material. Their protection is generally intended to strengthen market- based incentives for private-sector stakeholders to invest resources in product development and the marketing of new technologies. Such incentives are considered especially valuable for the development of medical  technologies due to the considerable financial and technical resources required, coupled with the high risk of failure even at a late stage in product development and issues related to product liability. Many medical technologies are expensive to develop but are relatively cheap to reproduce. In such instances, it would be unsustainable for companies to invest capital in product development and regulatory approval if their competitors were in a position to immediately introduce replica products.1

Inasmuch as  IP  protection  operates  through  a  right  to exclude others, it can inhibit forms of competition (such as market entry for generic medicines) and hinder further innovation (e.g. where no research exemption exists). IP policy, the laws that embody the policy, and the administration and enforcement of these laws, each aim to balance and accommodate a range of legitimate interests in a positive-sum way that promotes overall public welfare.

The balancing factors are diverse – in the case of patents, they comprise exclusions in patentable subject matter, exceptions and limitations on patent rights, limits on  patent  term  and  maintenance  fees  to  encourage under-utilized patents to lapse, in addition to instruments beyond the scope of patent law, such as competition policy. While the appropriate balance is ultimately set by national policy-makers and legislators, the international legal framework provides the context and general principles for national systems. The multilateral legal IP framework, which is the focus of this section, is defined in particular by the treaties administered by WIPO, and the TRIPS Agreement, which forms part of the WTO legal system and in turn incorporates the substantive provisions of several WIPO treaties, including the Paris Convention (see Box 2.4).

The TRIPS Agreement has considerable implications for the application of IP to medical technologies, notably through the implementation of new international standards requiring patents to be available for inventions in all areas of technology, including pharmaceutical products, and the requirement to protect clinical trial data against unfair commercial use. The negotiations on the TRIPS Agreement and its subsequent implementation have seen a continuing focus on IP and health issues (see Table 2.3) and, particularly, the nature and impact of obligations under the TRIPS Agreement on pharmaceutical patents and test data protection.

Box 2.4. The Paris Convention

The Paris Convention for the Protection of Industrial Property (the Paris Convention) was concluded in 1883 and has been revised several times, most recently in 1967. Open to all states, it applies to industrial property in the widest sense, including patents, marks, industrial designs, utility models, trade names, geographical indications and the repression of unfair competition. It provides for national treatment, right of priority and common rules.

The principle of national treatment under the Paris Convention means that each contracting state must grant the same advantages to nationals of other contracting states as it grants to its own nationals with respect to the protection of industrial property. Nationals of non-contracting states are entitled to national treatment under certain conditions.

The right of priority means the following: on the basis of an earlier regular application filed in one of the contracting states, the applicant applies for protection of the same industrial property subject matter within a certain period of time (priority period) in any of the other contracting states. Then the later applications will not be affected by any event that may have taken place in the interval between the filing date of the first application (priority date) and the filing date of the later application, such as any publication of the invention claimed in a patent application or the sale of articles bearing the mark or incorporating an industrial design. The priority period under the Paris Convention lasts 12 months in the case of patents and utility models, and six months in the case of industrial designs and marks.

The common rules that must be followed by all contracting states include:

  • Patents granted in different contracting states for the same invention are independent of each other.
  • The grant of a patent may not be refused, and a patent may not be invalidated, just because the sale of the patented product, or of a product obtained by the patented process, is not allowed, restricted or is limited under national law.
  • Contracting states may take legislative measures providing for the grant of compulsory licences, with certain limitations, to prevent the abuses which might result from the exclusive rights conferred.
  • The registration of a mark in a contracting state is independent of its possible registration in any other country, including the country of origin. Consequently, the lapse or annulment of the registration of a mark in one contracting state will not affect the validity of registration in other contracting states.
  • A contracting state must accept an application for a trademark which has been previously duly registered in another contracting state (the country of origin), but it is allowed to refuse that application when it does not comply with the requirements under the national law.
  • Each contracting state must refuse registration and prohibit the use of marks which constitute a reproduction, imitation or translation, liable to create confusion, of a mark considered by the competent authority of that state to be well known in that state as being already the mark of a person entitled to the benefits of the Paris Convention and used for identical or similar goods.
  • Each contracting state must provide for effective protection against unfair competition.

 

Table 2.3. TRIPS and public health key milstones

1986

Punta del Este launches Uruguay Round negotiations with mandate on IP.

1994

Negotiations conclude and the TRIPS Agreement is adopted at the Marrakesh Ministerial Conference.

1995

TRIPS Agreement enters into force, and the WTO is established and is given legal and and administrative responsibilities for TRIPS.

2000

Most TRIPS obligations come into effect for developing-country members, but not in relation to pharmaceutical product patents.

2000

WTO panel rules on TRIPS dispute concerning regulatory (Bolar) exceptions to facilitate entry of generic medicines.

2001

WHO–WTO Workshop on Differential Pricing and Financing of Essential Medicines (Høsbjør, Norway).

2001

Doha Declaration on the TRIPS Agreement and Public Health, including extension of transition period to 2016 for LDC members to implement patent and test data protection.

2003

WTO members adopt “Paragraph 6” mechanism enabling special compulsory licences for export of medicines, as additional TRIPS flexibility, initially in the form of a legal waiver, followed by the 2005 Protocol on a permanent amendment of the TRIPS Agreement.

2005

TRIPS obligations to protect patents for pharmaceutical products apply to developing-country WTO members (but not LDCs).

2005

TRIPS Council adopts extension until 2013 of transition period for LDCs to implement TRIPS as a whole.

2010

TRIPS Council’s process of annual review of Paragraph 6 mechanism intensifies substantive discussion of its functioning and of broader aspects of access to medicines.

 

  1. Article 7 of the TRIPS Agreement notably describes the objectives of protection and enforcement of IPRs in terms of a balance of rights and obligations. The objectives refer to  “the  promotion  of  technological  innovation”, to “the transfer and  dissemination  of  technology”,  to the mutual  advantage  of  both  “producers  and  users of technological knowledge” and also to “social and economic welfare”. The principles set out in Article 8 expressly state that WTO members may adopt measures necessary to protect public health and nutrition, provided that such measures are consistent with the provisions of the TRIPS Agreement. The Doha Declaration, a landmark declaration made by the WTO Ministerial Conference in 2001, reaffirmed these objectives and principles as guidance for  the  implementation  of  TRIPS  provisions in line with public health policy. The Doha Declaration referred to a set of flexibilities, or legal options within the TRIPS framework, which are discussed further below, after a general review of IP issues.

The multilateral standards for each form of IP are generally minimum standards that often leave considerable scope for implementation. The TRIPS Agreement specifies that WTO members are free to determine the appropriate method of implementation of TRIPS standards within their own legal  practice.  When  determining  the  range of options for implementation, policy-makers therefore consider international standards as well as practice in other countries and their own national needs and priorities. Countries may also implement more extensive protection if they wish, provided it is TRIPS-consistent. Such protection is sometimes referred to as “TRIPS-plus”. These standards have been established in the IP sections of an increasing number of bilateral and regional agreements.2

The principle of non-discrimination forms a cornerstone of the international IP system. “National treatment” provides that countries must not discriminate against the nationals of foreign countries with regard to the protection of IP, other than as permitted by some fairly narrow exceptions. The principle was set out as early as 1883 in the original text of Article 2 of the Paris Convention, and subsequently largely applied in Article 3 of the TRIPS Agreement. “Most- favoured-nation (MFN) treatment” provides that countries must not discriminate between the nationals of different foreign countries with regard to the protection of IP. The application of MFN treatment is also subject to some exceptions. Long an obligation in international trade law, MFN was applied to IP for the first time through Article 4 of the TRIPS Agreement. Application of the principle means that if two countries agree to give each other’s nationals a higher level of IP protection in a bilateral treaty, they must extend the same benefit to nationals of all other WTO members.3

Apart from such general principles, each form of IP is subject to specific standards, reflecting their distinct policy purposes, different subject matter and economic effects. These differences are apparent in the scope of protected subject matter, the scope of rights, the duration of protection, and the nature of exceptions and other safeguards for third-party interests, as well as in how these rights are enforced.

(b) Patent law and policy

The past decade has seen considerable growth in the use of patents for medical technologies, in terms of the volume of patent filings, the geographical base of activity (with a notable rise in patents from certain emerging economies), and the diversity of private and public entities seeking patents. This same period has also been marked by an intense debate on the role of the patent system regarding innovation in, and access to, medical products.

The dual effect of IP protection – promoting the development of new medicines and impacting on prices – was recognized in the Doha Declaration. Since then, debate has focused on the implications of patent rights for access to essential medicines. In addition, it has been discussed whether the patent system provides sufficient and appropriate incentives to ensure the development of new products in certain areas – for example, with respect to neglected diseases or certain countries. In practice, patents are also used as a medium for concluding many technology partnerships and R&D collaborations, with multiple licensing arrangements in order to deliver a new medical technology to the public.

(i) The rationale of the patent system

The rationale for having patents is to make investment in innovation attractive and to offer a mechanism which ensures that the knowledge contained in the patent application is accessible to society. Among others, the obligation of patent owners to publicly disclose their inventions enables society to know, and eventually use, the knowledge contained in patent documents. If an invention could be freely used by others at no additional cost, “free riders” would not bear the cost of development. This would reduce the expected returns of the original inventor and would result, in theory, in the under-provision of new inventions. A recent WIPO report explains that, it is for this reason that the patent system intends to correct the market failure that would result in the under-provision of innovative activities by providing innovators with limited exclusive rights to prevent others from exploiting their invention, thereby enabling the innovators to appropriate returns on their innovation activities.4

However, the use of the exclusive right can itself contribute to a market distortion and can lead to a situation characterized by inefficiencies, high prices and the under- provision of goods. Empirical studies find evidence of both positive and negative effects of patents on innovation. Inconclusive evidence on the role of the patent system in encouraging R&D and technology transfer makes it difficult to draw any clear-cut conclusions about the effectiveness of the patent system for economic development.5

A number of mechanisms exist in patent systems to prevent and correct undesired effects:

  • Patent rights only last for a limited period of time.
  • Exclusions from patentable subject matter and exceptions and limitations to patent rights are permitted in order to ensure harmony with broader public policy goals.
  • Patent application, examination and grant procedures, as well as opposition, appeal, and other review procedures allow courts and other review bodies to correct erroneous decisions and give relief where necessary, in order to ensure that the patent system as a whole functions as a public interest policy tool.

(ii) The international framework

The substantive multilateral standards for patent protection are largely those set out in the Paris Convention (Stockholm Act of 1967) and the TRIPS Agreement of 1994. The Paris Convention did not regulate what is considered patentable and, until the TRIPS Agreement came into effect in 1995, there was considerable diversity in national law and practice in this respect. In 1988, at an early stage in the TRIPS negotiations, a WIPO report cited 49 countries that either did not grant patent protection for pharmaceutical products at all or only provided a limited form of such protection. Some of these countries also excluded pharmaceutical processes.6 The duration of patents also varied considerably from country to country.

The TRIPS Agreement is the first multilateral treaty to stipulate the core criteria7 for patentable subject matter. It provides that patents must be “available for any inventions, whether products or processes, in all fields of technology” (Article 27 of the TRIPS Agreement). The reference to “all fields of technology” means that patents must be available for pharmaceutical products (such as a new chemical compound with medicinal effect) and processes (such as a method of producing the medicine). It also provides that the available term of protection shall not end before the expiration of a period of 20 years counted from the date of filing the application. These requirements came into effect progressively, but now apply to all WTO members, except LDCs. The most significant change of relevance to the area of public health was the requirement that pharmaceutical products be patentable in developing countries from 2005.

Even with these international standards for patent protection, there is no such thing as a worldwide patent. Patents are granted under national law or on a regional basis. Article 4bis of the Paris Convention provides the independence of patents obtained for the same invention in different countries. This means that a patent granted in one country conveys no rights in any other country. A granted patent on a pharmaceutical technology in one country cannot be used to prevent generic competition in other countries where no patent is in force. An invention may be patented in one country and not in another.

Box 2.5. The Patent Cooperation Treaty

  1. The Patent Cooperation Treaty (PCT)8 makes it possible to seek legal protection for an invention simultaneously in all PCT contracting states by filing an international patent application. Such an application may be filed by anyone who is a national or resident of a PCT contracting state, either, in general, with the national patent office of the contracting state of which the applicant is a national or resident, with a competent regional patent office or with the International Bureau of WIPO in Geneva (the “receiving office”). The effect of the international application is the same as if national patent applications had been filed with the national patent office of each contracting state. The PCT regulates in detail the formal requirements with which any international application must comply, but it does not determine the substantive rules that a country applies in deciding whether or not ultimately to grant a patent.
  1. The PCT provides an international phase within which the international application is subjected to an international search, resulting in an international search report (a listing of the citations of published documents that might affect the patentability of the invention) and a preliminary and non-binding written opinion on whether the invention appears to meet the patentability criteria in light of the search report. The international application, if not withdrawn, is published together with the international search report. In addition, an optional non-binding international preliminary examination is carried out on receipt of a request from the applicant. However, no patents are granted during the international phase under the PCT. If the applicant decides to continue with the international application, with a view to obtaining national or regional patent protection, the applicant needs to commence separately the national/regional procedure in each PCT contracting state in which the applicant wishes to obtain patent protection (the “national phase”). During this “national phase”, a country’s authorities can apply the substantive rules on eligibility for patents that are defined under national law, which may result in different outcomes from country to country.9

There is, however, a global system for filing patent applications, known as the Patent Cooperation Treaty (PCT), administered by WIPO (see Box 2.5). A final decision on whether a patent should be granted is not taken internationally. Rather, it is taken separately by the national or regional authorities responsible for national patent jurisdictions. A number of regional agreements have also harmonized and simplified patent laws within different regions.10

Despite this regional and international cooperation, national patent laws and practices differ, leading to potentially diverging outcomes. Where patent applications are filed for the same invention in different national or regional patent offices, they are processed separately according to the applicable national law or regional law, and such processing may have diverging outcomes. For example, when a PCT application relating to a certain pharmaceutical compound reaches the national phase in the PCT contracting states, different substantive patentability requirements may apply under the patent law of each country or region. Based on the application of these requirements in the national examination processes, the patent claims11 may be amended in one country and remain unchanged in another. Consequently, the same PCT application may result in a patent grant in one country, a modification in another country and a patent refusal in a third country. Moreover, a patent could be invalidated by a court in one country but confirmed by a court in another country.

The majority of patents are applied for, and ultimately obtained in, a relatively small number of countries – typically, those countries where the patent holder intends to concentrate production or marketing efforts, or where there are significant competitors or production capacity. In countries where no patent application is filed, or where a patent application has been abandoned or refused, the claimed invention enters into the public domain following the publication of the patent documents, provided there is no other patent or other right covering the same technology.

Basic patent issues

Patents are territorial rights. In addition, patent protection is limited in time. Patent laws generally provide a protection term of at least 20 years. Patent owners, on the other hand, may abandon a patent earlier if, for example, the commercialization of the invention does not generate the expected return on investment and fails to cover the costs of maintaining the patent. Patents may also be invalidated based on grounds established by the national law.

Five criteria are common to all patent laws: (i) the application must relate to  patentable  subject  matter; the claimed subject matter must be new; (iii) it must involve an inventive step (or be non-obvious); (iv) it must be industrially applicable (or useful) (Article 27 of the TRIPS Agreement); and, (v) as determined by Article 29 of the TRIPS Agreement, the invention must be properly disclosed. These requirements apply cumulatively. Failure to satisfy any one criterion leads to rejection of a patent application.

Even though the same essential patentability criteria are found in the vast majority of countries, there is no agreed international understanding about the definition and interpretation of these criteria. This creates some policy space regarding their establishment under the applicable national law. Accordingly, patent offices and courts interpret and apply national patentability requirements on a case-by-case basis within the applicable legal framework. Many patent offices provide patent examination guidelines for consistent and coherent application of patent law, often basing this guidance on cases previously decided by the responsible courts.12

Inventorship, ownership and entitlement to apply

Every invention begins with an inventor or inventors. While international IP law is silent on who should be considered the inventor – leaving this question to be determined by national laws – the general practice is that those who contribute to the conception of at least one of the claims in the patent grant are joint inventors, irrespective of the proportion that they contributed.

Inventorship does not necessarily imply ownership. Inventions by employees made during the course of their employment, depending on the rules of the national law, may belong to the employer, with or without a specific agreement. Contracts of employment or a consultancy may provide that inventions made outside the course of employment also belong to the employer or the party who engaged the consultant. Inventors frequently assign their economic rights to an invention to the bodies that provide funding for their research.

Policies on ownership of patents on research undertaken within public institutions such as universities can have a significant effect on how medical technologies are developed. In the absence of clear guidelines, uncertainty can ensue.

Patentable subject matter

Patents are only available for patentable subject matter, generally defined as “invention” in patent law. In the absence of an internationally agreed definition of patentable subject matter, national laws define the requirement either positively or through a negative list of excluded subject matter – or both. Exclusions from patentable subject matter may be general – such as mere discoveries, scientific principles or abstract ideas. Patentable subject matter that does not fall into such categories can be excluded on other grounds. This would include, for example, inventions that would be considered against morality if commercially exploited (see Box 2.6), or certain methods for medical treatment of humans or animals (Article 27.3(a) of the TRIPS Agreement). A number of countries have opted to exclude from patent grant (or not permit the

 

Box 2.6. Societal and moral values in the patent system

  1. What is considered contrary to morality depends on the fundamental values of a society in a given context. Article 27.2 of the TRIPS Agreement provides a flexible framework for moral assessments to be made which leaves room for societal and ethical values to be taken into account. For example, Article 53 of the European Patent Convention (EPC) stipulates that European patents shall not be granted on inventions whose publication or exploitation would be contrary to ordre public or morality (paragraph (a)), and shall not be granted for methods for treatment of the human or animal body by surgery or therapy, and diagnostic methods practised on the human or animal body (paragraph (c)).13 The use of human embryos in research has sparked particular ethical concerns that touch on patent law and its interpretation.
  1. A landmark ruling on human stem cell cultures was issued by the Enlarged Board of Appeal of the European Patent Office (EPO) in 2008 in a case involving the Wisconsin Alumni Research Foundation (WARF case).14 The Enlarged Board of Appeal ruled that the EPC forbids the patenting of claims directed to products which could only be prepared by a method which necessarily involved the destruction of the human embryos from which the said products were derived, even if the said method was not part of the claims. This ruling did not, however, address inventions based on cell lines produced in the laboratory.
  1. In 2011, the Court of Justice of the European Union, Oliver Brüstle v. Greenpeace e.V.,15 clarified the application of the EU Directive 98/44/EC on the legal protection of biotechnological inventions.16 While not touching upon questions of a medical or ethical nature, the court ruled that the concept of “human embryo” must be understood in a wide sense. Accordingly, any human ovum capable of commencing the process of development of a human being, whether fertilized or not yet fertilized, must be regarded as a “human embryo” under Article 6(2)(c) of the Directive. The court ruled that patents on inventions using human embryos were prohibited under the Directive. The prohibition also included the use of such patents for scientific research.
  1. Microorganisms and gene patenting
  1. The TRIPS Agreement expressly provides for optional exclusions of plants and animals and essential biological processes for their reproduction. However, this exclusion does not extend to microorganisms and other processes for the reproduction of plants or animals, which must be patentable. There has been no definitive determination of the scope of this provision, although the WTO TRIPS Council has reviewed it since 1999,17 and has heard reports of the diverse ways in which countries have exercised this option. This provision is relevant to access to medical technologies because it overlaps with the question of biotechnological health-related inventions, such as genetic diagnostics, genetically modified organisms used in medical research or other aspects of gene patenting. Some patent systems explicitly exclude parts of plants and animals, such as cells, cell lines, genes and genomes; others consider them a particular type of chemical substance, if isolated and purified from their natural environment, and thus patentable subject matter. A number of countries have expressly elected to exclude patents on any unaltered genetic materials.18

 

enforcement of) inventions concerning methods of medical treatment (or, with similar effect, to limit the enforcement of such patents). Some national laws also articulate very specific exclusions, such as for first and second medical uses, or expressly allow for the patenting of such uses.19

Novelty

The criterion of novelty is intended to ensure that patents are only granted to technologies that are not already available to the public. In many jurisdictions, this criterion is understood to mean that a claimed invention must not already have been disclosed to the public, anywhere in the world, before the filing or priority date of  the patent application) – for example, through publication, or as a result of  having  been  publicly  made,  carried out, orally presented, or used, before filing a patent application. National laws define which kind and form of documentation, if any, constitutes prior public disclosure relevant to an assessment of novelty.

For example, consider a case where a patent application claims a new type of cast used to immobilize a patient’s arm. At the time of filing the patent application, this invention was known only to the employees of the company filing the application. These employees were bound by their employment contracts not to disclose their knowledge to the public. However, if, before the patent filing took place, the cast was tested on patients without confidentiality arrangements already agreed and in place, the claimed invention may no longer be considered novel, since access to the relevant knowledge may not have been sufficiently restricted and therefore it may be considered to have been disclosed to the public.

Inventive step/non-obviousness

Patent law, in general, defines only the basic concept of what constitutes an inventive step and leaves interpretation to patent offices and supervising courts. Practice has developed different methodologies to determine the existence of an inventive step based on a number  of indicators checked by a patent examiner. This criterion is understood in many jurisdictions to mean that the invention must represent a sufficient technical advance in relation to the state of the art – a technical advance from what has been used or described before in the relevant area – that could not be obvious to a person working in the technical area related to the invention with “ordinary skill” or average knowledge (“person skilled in the art”). For example, the inventive step (or non-obviousness) may be demonstrated by an “unexpected” or “surprising” effect that would not have been evident, at the time of invention, to the average person familiar with that area of technology. What is obvious, or not obvious, may change over time. For example, considerable effort was needed to isolate a gene at the end of the 20th century. Today, however, this is considered more routine.20

Industrial applicability/utility

Industrial applicability (or utility) means that the invention can be made or used in any industry, including agriculture, or that it has a specific, credible and substantial utility. In general, the application of this requirement does not pose practical problems. However, in the area of biotechnology, it needs some consideration, given concerns that patent applications claiming gene-related inventions would block the use of the claimed gene sequence for uses that were not yet known by the applicant and, therefore, would not justify the grant of a patent in respect of the function which the applicant was not even aware of.21

Disclosure

Sufficient disclosure of an invention is required in order to grant a patent. Article 29 of the TRIPS Agreement sets out the rule that an applicant for a patent shall disclose the invention in a manner sufficiently clear and complete for the invention to be carried out by a person skilled in the art. In some countries, the applicant may also be required to indicate the best mode for carrying out the invention known to the inventor at the filing date. In some countries, the applicant may also have to disclose details of patents applied for or granted in other jurisdictions.

Some critics of the patent system have argued that disclosure of a patented invention is often not sufficient to “work” the patent. One of the fundamental questions raised with respect to the disclosure requirement is to what extent a patentee must disclose his invention within the patent system in order to contribute to the promotion of innovation and to the transfer and dissemination of technology to the mutual advantage of producers and users of technological knowledge. While an invention must be described in the patent in such a manner that a person skilled in the art can carry out the invention without undue experiment or trials, in order to produce the invention to an economically profitable extent, the technical information contained in a patent often needs to be supplemented with further information assumed to be available already to a specialist reader of the patent. The disclosure requirement is designed for the specific legal and technical purposes of the patent system. Technical information disseminated through the patent system cannot replace other sources of information, for example text books and scientific journals.22

In some cases, a patent might be inadvertently granted even if the requirement concerning the sufficiency of disclosure under the applicable national/regional law has not been complied with. If so, the patent may be defective. Most patent laws provide procedures for the revocation or invalidation of patents where the statutory patentability requirements are not met. Therefore, it would be a risky strategy for a patentee to intentionally not fully disclose an invention in a manner inconsistent with the disclosure requirement under the applicable national/regional law.23

(iv) Patent procedures

Whether a claimed invention in a patent application meets all patentability criteria is usually established by the patent office that receives the application. In some countries, a prior art24 search and substantive examination are carried out by the national/regional patent office. If the office establishes that all applicable requirements have been met, it grants a patent. Such substantive examination leads to a higher degree of legal certainty regarding the validity of granted patents – higher than the degree of certainty provided by a system that simply registers patent applications without carrying out substantive examination.

However, where search and examination are of low quality, this can have an adverse effect because it may raise false expectations in respect of the patent’s validity. Where patent offices do not have the necessary resources to maintain up-to-date prior art documentation and employ examiners with the requisite expertise – or where they do not have a sufficient number of applications to justify having qualified examiners across all technical areas – a substantive examination system may not be the most suitable approach. Alternative options include: grant of patents without substantive examination; the registration of patents granted following substantive examination elsewhere; the use of other offices search and examination results; and cooperation between different patent offices.25 For example, the Patent Cooperation Treaty (PCT) provides for non-binding international search and international preliminary examination, carried out by a number of patent offices which are specifically appointed for that purpose by the PCT Union Assembly. These search and examination reports can be used by national patent offices to decide on a patent grant.

Some developed and  developing  countries  currently employ “registration systems” (as opposed to “examination systems”) which do not provide for substantive examination and thus do not assess whether a claimed  invention fulfils the patentability requirements. Some argue that it is sensible to defer substantive examination until a patent is actually litigated. The validity of such an argument may depend on the cost, duration and amount of patent litigation on the one hand, and the cost of setting up and maintaining an examination system on the other hand. In countries with less well-functioning judicial systems, correction of erroneously granted patents may be challenging.

Where patent laws provide for full examination of patent applications, patent offices examine them with regard to the formal and substantive patentability criteria. Applicants must often narrow the scope of the claims during this process in order to avoid rejection of their applications. The applicant may also have to remove claims which the patent examiner considers do not meet the patentability criteria. This may be because they are already known and therefore are not novel, or because they may be obvious and therefore are not inventive. Often, the scope of rights in a granted patent may end up significantly less than what is originally claimed in the application.26

(v) Review procedures

In practice, patent grants may be erroneous. To address any such deficiencies, patent systems provide review procedures (before an administrative body, such as an appeal board, or before a court). In some countries, third parties may oppose the patent grant before an administrative body within a limited period of time. Such procedures complement the office procedures for patent grant and enable the public to contribute to patent quality. Some countries provide pre- grant opposition proceedings, some provide post-grant opposition proceedings and some provide both.

(vi) Rights conferred by a patent

Once granted, patents confer the right to the patentee to exclude others from making, using, offering for sale, selling in, or importing the patented invention into, the country where the patent rights are granted (Article 28 of the TRIPS Agreement). The scope of protection conferred by the patent is defined by the patent claims. The claims must be drafted in a clear and concise manner and must be fully supported by the disclosure of the invention.

In practice, patents are used not only to exclude competitors but also to allow a third party to make, use, offer for sale, sell or import the patented invention through licensing.

Patent owners can license, sell or transfer ownership of their patents. A licence is a contract in which the patent holder allows another party to use the IP, either in return for a payment of royalties (or some other consideration) or free of charge, for a certain field of use, in a certain territory (which may be for the life of the patent). Licences are frequently used to allow other companies with specialized research or development expertise to access the diverse bundle of patented technologies required to produce a complex pharmaceutical under mutually agreed terms.27

Patents and marketing approval are separate issues. The grant of a patent on a new medicine in a country does not give the right holder the right to sell the medicine in that country without the approval of the regulatory authority. It is irrelevant for the regulatory approval whether or not a patent is granted. Some countries, however, require applicants for regulatory approval to submit information on whether and which patents are granted, and they do not allow their regulatory authorities to grant marketing approval when a relevant patent subsists (“marketing approval/patent linkage”).28

(vii) Exceptions and limitations

Exceptions and limitations to patent rights are tools used to address diverging interests. Such tools are common to  all  IP  systems. Exceptions and limitations may, for

  1. example, restrict certain uses of the patented invention in the enforcement of patent rights. Articles 5 and 5ter of the Paris Convention contain certain rules on compulsory licences and certain limitations on exclusive rights in the context of safeguarding the public interest. Articles 30 and 31 of the TRIPS Agreement provide for exceptions and limitations to the rights, and these provisions set out the conditions under which they may be applied.29

One very common exception is the research exception, which allows others to use the patented invention for research purposes during the life of the patent.30 Another common exception is the regulatory review exception, which allows generic competitors to make limited use of a patented invention before the patent expires to obtain marketing approval of a competitor product. This exception, also known as the “Bolar” exception, is discussed in Chapter IV, Section C.3(a)(i).

National laws may also authorize the grant of “compulsory licences” under certain conditions to third parties for their own use, or for use by or on behalf of governments, without the authorization of the right holder. Under a compulsory licence or government use authorization, a court or the responsible authority grants specific permission to a person other than the patent owner to produce, import, sell or use the patent-protected product, or use the patent-protected process, to address specific requirements. Patent owners are entitled to receive remuneration. The TRIPS Agreement sets out certain requirements regarding the way in which compulsory licences and government use authorizations should be issued, in order to define some practical limits and thus safeguard some of the patent holder’s interests. Notably, each case must be considered on its individual merits (Article 31(a)); prior efforts to negotiate a voluntary licence are required except in circumstances of extreme urgency or in cases of public non-commercial use (Article 31(b)); and the licence must be limited to predominantly supplying the domestic market (Article 31(f)). There are limitations regarding scope and duration (Article 31(c)), and termination (Article 31(g)). The right to use the patent must not be exclusive (Article 31(d)); neither may it be assignable to any third party (Article 31(e)). The patent holder has a right to apply for a judicial or administrative review that could lead to termination of the use or licence (Article 31(g)) and a right to receive adequate remuneration (Article 31(h)).

The requirement to negotiate a voluntary license within a reasonable period of time may be waived in situations of national emergency, in other circumstances of extreme urgency, or in cases of public non-commercial use (Article 31(b)). In cases where the use of the patent is authorized without the consent of the patent holder to remedy anti- competitive practices after a judicial or administrative process, WTO members are not obliged to apply these conditions. In such cases, the licence need not be predominantly for the supply of the domestic market (thus allowing exports of unlimited quantities) and the amount of remuneration can be different (i.e. it could be a lesser amount or even none at all). Some countries have used compulsory licences and government use to manufacture or import pharmaceutical products from generic producers at lower prices to increase access before patents on the products expire.31

The limitation of compulsory licences and government use to predominantly supply the domestic market, found in Article 31(f) of the TRIPS Agreement, was revised following the Doha Declaration to allow production exclusively for exports under a compulsory licence in limited circumstances (see Chapter IV, Section C.3(a)(ii)).

(viii) Patent information

The patent system requires disclosure of inventions to the public and makes published patents (and patent applications in many countries) an important source of technical and legal information. Patent information is a basis for IP and business strategies and decisions, and input into R&D processes. As such, the patent system constitutes a comprehensive and systematic record of technical knowledge (Bregonje, 2005).32

WIPO standards, recommendations  and  guidelines help industrial property offices establish and administer their patent information and publication systems.35 WIPO standards have led to a fairly uniform structure of patent documents all over the world. They address the transmission, exchange, sharing and dissemination of patent information between industrial property offices, and they facilitate access to technical information contained in patent documents and retrieval.36 This has made patent information search easier and more user-friendly.

Nevertheless, the form of patent publication varies considerably from country to country. Under Article 12 of the Paris Convention, patent offices must regularly publish the names of the proprietors of granted patents with a brief designation of the patented inventions in an official periodical journal. In practice, patent applications are generally published for public access 18 months after their filing dates (priority dates). Similarly, publication of PCT international applications at 18 months from the priority date is generally required by Article 21 of the PCT. Some countries publish only  granted  patents  and  not patent applications. The publication may be limited to a short notice about the patent grant. In such a case, access to the technical information and assessment of the scope and legal status of a patent is much more difficult, and only a file inspection at the patent office will yield detailed information about the claimed invention. Countries may also opt to publish additional useful information, such as search and examination reports, corrections, amendments, translations and legal status information.

A patent family means a number of different patent documents that are related to each other through one or more common priority documents or are technically equivalent. Subsequent applications in other countries usually claim the priority of a first application. Members of patent families may therefore be related to each other by such priority claims. Since subsequent filings can claim several priorities of different earlier applications, a variety of different family concepts exist.37 Databases may use different definitions of what makes up a patent family. For this reason, search results based on patent families may be different for different databases.

Publication and digitization of patent information have made knowledge more easily accessible and searchable. Nevertheless, the retrieval, analysis and exploitation of patent information are very complex matters and require specialized skills. Performing effective patent searches may also pose challenges in relation to the availability of data in databases (WIPO, 2010).

(ix) Patent status and legal status information

Patent status and legal status information help to determine the freedom to operate in respect of a project and to which extent and with whom licences have to be negotiated. The term “patent status” is used in this study to refer to all patents related to a specific product, while the term “legal status” refers to various legal and administrative events that occur during the life cycle of a single patent.38

All patent registers record the most important legal events, such as patent grant and ownership. Reliable and authoritative information on legal status can only be obtained from these primary sources. Secondary sources may also provide information, often involving a delay, but they may lack some of the data contained in primary sources.39

Assessing the patent status of medical products generally requires specific expertise. A product (including products made of combinations of components, e.g. in the case of fixed-dose combinations), its manufacturing process and its use can be covered by several patents protecting various technological aspects. The manufacturers and sellers of a product are not obliged to disclose all pertinent patents. In addition, it is challenging to verify the legal status of all patent family members.

For medicines commercialized in the United States, some information can be obtained from the US Food and Drug Administration (FDA) Orange Book,40 which lists FDA- approved medicines and related product and method of use patent information. Process patents and patents claiming packaging, metabolites and intermediates are not covered by the Orange Book, and information on these patents is not submitted to the FDA.41 Health Canada maintains a similar patent register containing an alphabetical listing of medicinal ingredients and their associated patents, patent expiry dates and other related information.42 The Medicines Patent Pool has made legal status information for antiretroviral (ARV) medicine patent publicly available in a database (see Box 2.7).

(x) Filing trends under the Patent Cooperation Treaty system

According to WIPO (2012), the greatest number of PCT applications filed between 1978 and 2011 related to the area of medical technology. However, this accounted for only a relatively small proportion of all applications (6.6 per cent in 2011). It should be noted that the term medical technologies, as used in WIPO (2012), is different from the term used throughout this study. This study also includes data relating to pharmaceuticals (4.7 per cent of all PCT filings in 2011). The PCT filing numbers for both medical technologies and pharmaceuticals accounted for 11.3 per cent of all filings in 2011 and, in this consolidated form, medical technologies and pharmaceuticals represent the field of technology with the highest number of PCT filings between 1978 and 2011 (see Figure 2.1).

In the area of medical technologies, the total number of PCT applications filed annually remained in a band between 4,496 and 10,481 each year from 2000 to 2010. In the area of pharmaceuticals, the total number of PCT applications filed annually remained in a band between 3,789 and 7,863 each year from 2000 to 2010. With respect to medical technologies (as understood in the context of this study, i.e. including pharmaceuticals), the total number of PCT applications filed annually remained in a band between 8,785 and 18,344 each year from 2000 to 2010 (see Figure 2.2). The total numbers increased each year until 2008, and then declined in the two following years. Among the top ten countries of origin are the United States, Japan, the Republic of Korea and a number of Western European countries (see Figure 2.3).

Box 2.7 The Medicines Patent Pool’s Patent Status Database for Selected HIV Medicines

The Medicines Patent Pool has established a patent database containing information on the patent status of selected antiretrovirals (ARVs) in certain low- and middle-income countries (LMICs). The legal status data was obtained from, and cross-checked with, a variety of sources, including national and regional patent offices, which made this information available through WIPO. Although the information was obtained from primary sources, the database provides just a snapshot of a particular point in time, and it includes only some of the patents relating to each ARV. The information includes the expected expiry date of the patents, based on a 20-year term from the filing date of the patent application. However, it is possible that some patents may have expired or lapsed, or may have been withdrawn, rejected, revised, revoked or opposed, following the inclusion of information about these patents in the database. This shows that it is important to confirm the status of information with the competent patent authority should precise information be needed at a later point in time.43

 


Source: WIPO Statistics Database.


Source: WIPO Statistics Database.

(c) Clinical trials and protection of test data

As seen in Chapter II, Section A.6, in order to obtain marketing authorization for any new pharmaceutical product, submission of test data to regulatory agencies is generally required in countries that undertake an independent evaluation of the quality, safety  and efficacy of medicines. Test data are generated by the applicant company (not the public authorities) through pharmacological and toxicological tests and clinical trials. Test data protection impacts on what the regulatory agency can do with confidential data in the originator’s application dossier. It is closely related to the regulation of medicines. At the same time, it is also part of the IP system, since it represents a form of protection against unfair competition.


Source: WIPO Statistics Database.

The underlying reason for the protection is that considerable effort, both in terms of time and money, is often required to produce the data, especially with increasingly stricter regulatory requirements. In producing the data, originator companies therefore have a strong interest in protecting their investment. Conversely, competing public interests may be trying to ensure early access to generic products. Test data protection is thus one of the more controversial topics in the debate about public health and IP.

(i) International legal standards

Article 10bis of the Paris Convention (which requires effective protection against unfair competition in general) and, in  particular, the WTO TRIPS Agreement contain multilateral standards on this subject.

The TRIPS Agreement requires WTO members to prevent the unauthorized disclosure and unfair commercial use of confidential information submitted to a regulatory authority, subject to certain conditions. Test data must be protected against:

  • Disclosure: this is a straightforward obligation not to disclose the data submitted for regulatory approval purposes. Regulatory agencies may, however, disclose the data when this is necessary to protect the public or where steps are taken to ensure that there is no unfair commercial use of the data concerned (see Chapter III, Box 3.6).
  • Unfair commercial use: the TRIPS Agreement does not provide a definition of the term “unfair commercial use”, nor does it deal with the way in which such protection may be achieved. Therefore, opinions, as well as national practices, differ on what exactly is required. Some argue that the most effective way of ensuring such protection is to give a reasonable period of data exclusivity to the originator companies. Under a data exclusivity regime, the respective regulatory authorities would be prevented for a certain number of years from relying on the data submitted in the application for the originator product, in order to approve later generic versions of the product, possibly on the basis of bio- equivalence data showing that it is similar or essentially similar to the originator product. Others reject the view that TRIPS requires such exclusivity, arguing that other forms of protection against unfair commercial use are permissible. During the Uruguay Round negotiations, the option of making data exclusivity an explicit obligation under the TRIPS Agreement was discussed, but negotiators instead adopted the general wording of the current Article 39.3.

There is no WTO jurisprudence or authoritative WTO guidance on either of these issues (although the matter was raised, but not resolved, in consultations between the United States and Argentina under the WTO Dispute Settlement Mechanism; the mutually agreed solution merely noted that the Parties had expressed their points of view and agreed that differences in interpretation are to be solved under the DSU rules (see WTO documents WT/DS171/3 and WT/DS196/4)). Nor had they been resolved in the TRIPS Council in the lead-up to the Doha Ministerial Conference in 2001, although some views on the interpretation of Article 39.3of the TRIPS Agreement were put forward by members. What can be stated at this point, however, is that: (i) the flexibilities and pro-public health interpretation in the Doha Declaration cover the TRIPS Agreement as a whole and therefore apply to test data protection under Article 39.3; (ii) there is no explicit TRIPS requirement to provide data exclusivity, but some form of protection against unfair commercial use is required; and (iii) the fact that two forms of protection are to be provided under Article 39.3 of the TRIPS Agreement highlights that protection against unfair commercial use must involve more than merely not disclosing the data.

That being said, there are certain qualifying conditions that apply to the protection of test data:

  • The data is undisclosed: Article 39.3 only requires the protection of undisclosed data, not previously published information. If the data has been disclosed, for example, in a scientific journal , patent document or elsewhere, no further protection needs to be granted.
  • The submission of test data isrequired by countries: any country that does not require the submission of test data or other data to conduct its own regulatory review of a pharmaceutical product has no obligation under the TRIPS Agreement to provide any test data protection with respect to that product either. The obligation to protect data stems only from the existence of a regulatory requirement to submit those data as a condition of receiving marketing approval.
  • The products for which marketing approval is sought use new chemical entities: the test data at issue in the TRIPS Agreement only concerns applications for marketing approval of products that utilize “new chemical entities”. This term is not further defined in the TRIPS Agreement and the WTO has not issued any determination of its scope.
  • The generation of the data involves considerable efforts: the TRIPS Agreement does not specify the nature of such efforts, that is, whether they must be technical or economic. Neither does it prescribe that the applicant is required to prove that such efforts have been made.

LDC WTO members are, in any event, not obliged to protect test data with respect to pharmaceutical products due to an extended transition period, which currently runs until 1 January 2016.

(ii) Distinction between protection of patents and of test data

Patents and test data are two distinct categories of IP. The TRIPS Agreement deals with test data protection as a form of protection against unfair competition in the section on protection of undisclosed information and not in the section on patents. While a patent protects the invention – for example a new molecule – irrespective of the effort and investment involved, test data protection covers a different subject matter, specifically the information submitted for regulatory approval (sometimes called the “regulatory dossier”). A patent could therefore be held by one party and the regulatory dossier held by another (e.g. a local licensee under the patent). Both forms of protection can run in parallel for the patented medicines that do make it to market. However, patent protection will typically have begun a number of years earlier. This is because patent applications are usually filed as soon as an invention is made, whereas clinical trials are undertaken only at a later stage in the product development cycle. By the time clinical trials begin, a patent may still be pending or may have been granted. Since test data protection and patent protection are distinct, protecting test data can deliver certain benefits to the company generating the data. Such benefits would apply, for example, where a product is either not under patent protection, where it has only a short remaining period of patent protection or where the validity of the patent is challenged during opposition procedures. In such situations, an exclusivity period may delay the early entry of generics into the market because producers of generics are obliged to wait until the exclusivity period expires.

(iii) National implementation

The disagreement on how to provide for test data protection under the TRIPS Agreement referred to above is also reflected in the way in which this obligation has been incorporated into national law. In line with their political priorities, countries have adopted different approaches to protection against unfair commercial use. In many cases, the approach chosen has also been guided by provisions which countries have subscribed to in free trade agreements (FTAs)44 or, in a few cases, by legally binding commitments providing expressly for data exclusivity in WTO accession protocols (i.e. China and Ukraine). These countries have thus agreed to enter into more detailed obligations than are required under the TRIPS Agreement.

Most developed countries, and some developing countries, provide for a regime of data exclusivity. Other countries, such as India and many other developing countries, prohibit their respective regulatory authorities from allowing third parties to access and use information submitted to them, in accordance with laws on confidentiality and unfair competition. However, they do not prohibit regulatory authorities from relying on test data submitted in an application for a previously approved originator product in order to review and approve an application for second and subsequent market entrants. Furthermore, they do not grant a period of exclusivity. Among the otheroptions discussed for test data protection are compensation or cost-sharing models, under which  reliance  on  the  originator  data  would be permitted, provided that the generic supplier participates in the costs of generating the data. The United States, for example, provides both data exclusivity and a mandatory data compensation system of this kind in  relation  to data submitted in applications for regulatory approval of pesticides (but not pharmaceuticals). The European Free Trade Association (EFTA)–Korea FTA (Article 3, Annex XIII) also admits a compensation scheme as an alternative to data exclusivity.

Among the other options discussed for test data protection are compensation or cost-sharing models, under which  reliance  on  the  originator  data  would  be permitted, provided that the generic supplier participates in the costs of generating the data. The United States, for example, provides both data exclusivity and a mandatory data compensation system of this kind in  relation  to data submitted in applications for regulatory approval of pesticides (but not pharmaceuticals). The European Free Trade Association (EFTA)–Korea FTA (Article 3, Annex XIII) also admits a compensation scheme as an alternative to data exclusivity.

Countries which grant exclusivity rights generally provide for a fixed period of between five and ten years, with the possibility of an extension in some cases. The fixed period usually runs from the date of marketing approval of the originator product in the same country where the test data protection is sought. Some WTO members, such as the European Union and the United States, allow an additional period of exclusivity for new indications and formulations.

Exceptions and limitations to data exclusivity are applied in some countries. US law shortens the period to four years where the applicant for a second product certifies that the patent is invalid or that the second product does not infringe the patent (subject to a possible stay during infringement proceedings). Canada does not provide data exclusivity if the originator product is not being marketed in its territory. Nor do Chile or Colombia if the originator product is not marketed in their respective territories within 12 months of the grant of local marketing approval. Chile does not provide data exclusivity if the application for local marketing approval is filed more than 12 months after registration or marketing approval was first granted in a foreign country.

Other exceptions may cover the protection of the public interest, such as in situations of health emergencies or for exports under compulsory licence under the Paragraph 6 System.45 If it takes the form of data exclusivity, test data protection has the potential to impede the implementation of compulsory licensing of patents, including the situation in which a country requires regulatory review of products destined for export under the Paragraph 6 System.46 Canada and the European Union decided to waive data protection for products produced under compulsory licence solely for export under the Paragraph 6 System. Chile does not provide data exclusivity if the product is the subject of any kind of compulsory licence.

(iv) Innovation and access dimensions of test data protection

The way in which test data are protected is particularly relevant in the context of enabling new product innovations and also in the context of facilitating access to existing medical technologies. The form of protection at the country level will therefore influence the development or introduction of new products and will also determine how early generic competition with an originator product can begin.

 

New medicines must undergo  several  phases  of clinical trials in order to demonstrate their safety and efficacy for the purposes of regulatory approval. These regulatory requirements are an integral part of the development process of new medical products, setting medical innovation apart from other technological areas. Currently, the generation of quality, safety and efficacy data through clinical trials, is still – despite various proposals and debate on this subject – largely funded by companies seeking to introduce a new medical technology to the market.

Even though clinical trials serve legitimate health objectives, the costs involved create significant barriers to market entry for new pharmaceuticals. As product patents on chemical compounds are usually filed relatively early in the R&D process, the length of time involved in carrying out clinical trials, coupled with the regulatory approval process, reduce de facto the period of market exclusivity enjoyed by a patented product, thus reducing the scope to recover the R&D costs of that product, as well as the R&D costs of other unsuccessful products.

The research-based pharmaceutical industry therefore argues that test data protection, especially in the form of data exclusivity, provides  an  important  incentive for that industry to invest in the development of new products and related clinical trials. In addition, innovator companies evidently value the relative certainty  of data exclusivity when compared with the increased uncertainty that applies in relation to the validity or scope of a patent which, in turn, increases uncertainty with respect to the ability to temporarily exclude competitors. One such example would be the development of a paediatric version of an existing medicine, which in certain jurisdictions would be denied a patent, due to lack of novelty. In such a situation, the protection of the clinical test data would be the only incentive to invest in the development of this formulation. A similar situation could arise in relation to clinical trials to test the safety and efficacy of known traditional medicines that are not patentable, due to lack of novelty.

On the other hand, public  health  advocates  highlight that with regard to developing countries the additional incentive for carrying out research and clinical trials is considered marginal whereas the negative impact on prices, and  thus  on  access  to  medical  technologies, is considerable. Similarly, the report released by the Consultative Expert Working  Group  on  Research  and Development: Financing and Coordination (CEWG) in April 2012 found that “there was no evidence that data exclusivity materially contributes to innovation related to Type II and Type III diseases and the specific R&D needs of developing countries in relation to Type I diseases, and therefore we concluded that its removal where it existed would not adversely affect innovation incentives for these diseases and also would contribute to reduced prices of affected medicines” (WHO, 2012a).

One of the main issues with regard to access to medicines is how to deal with applications for market authorization for identical generic products. Under a data exclusivity regime, the market entry of generic medicines may be delayed, as later applicants have to wait for the expiration of the exclusivity period. While the generic producer could, in principle, redo the clinical trials or agree with the originator company on the use of the original data, this does not seem to happen in practice. Among the reasons for this are the cost and time implications associated with the requirement to produce such data. On the other hand, applications for later market entrants for the same medicine can avoid reproducing this original data if they are allowed to rely on the data provided in relation to the originator application to show that their products have  an  equivalent  effect (bioequivalence). This allows generic competitor products to be placed on the market sooner, either in situations where there is no patent protection or after expiry of the patent, and, by enabling a competing medicine to enter the market, creates an alternative for consumers as well as generally reduces prices. From a public health perspective, this is seen as positive because it avoids the unethical duplication of clinical trials and enables the swift entry of generics into the market. However, from the perspective of the first applicant, this may be considered unfair because the second and subsequent market entrants will not have been obliged to invest in costly clinical trials (including failed trials) and thus could compete directly with a major cost advantage.

The issue of test data protection is a good example of the essential dilemma for IP protection. In order to provide an incentive for the development of new products, market exclusivity is created deliberately in some countries to facilitate a certain return on investment, although this may delay generic entry.

(v) Biosimilars: protection of pharmacological, toxicological and clinical test data

One emerging issue, which has implications both for innovation systems and access to the new generation of “biological” medicines, is the potential protection of the pharmacological, toxicological and clinical test data submitted to a regulatory agency to support the approval of original reference products. Established models of protection for small-molecule pharmaceuticals are not necessarily suitable for the more complex, and less easily reproduced, biological medicines (see Box 2.3 on the role of biosimilars). In the European Union and Switzerland, among other countries, data exclusivity associated with the protection of pharmacological, toxicological and clinical test data applies to both small-molecule medicines and biotherapeutics. While Directive 2004/27/EC,47 provides for the submission of supplementary data for biological medicinal products, which are different from generic medicinal products, it does not establish specific rules for the data exclusivity of such products. The rules for authorization of generic medicines therefore apply.

In contrast, the US Congress adopted specific legislation with the Biologics Price Competition and Innovation Act of 2009. The FDA may not approve an application for a biosimilar “until the date that is 12 years after the date on which the reference product was first licensed”. This duration of exclusivity for biologics differs from that of small-molecule or orphan drugs, which under US law lasts for only five or seven years, respectively.

(d) Trademarks

(i) The trademark system

Trademarks allow manufacturers and traders to distinguish their goods from those of competitors. They help consumers make informed choices and they aim to prevent consumer deception. The registration of trademarks is subject to certain requirements that are reasonably standardized throughout the world  and  appear  in  practically  all trademark laws. Trademarks must be distinctive, or at least capable of becoming distinctive, of the owner’s goods or services, and they must not be misleading. Trademarks must not infringe rights acquired by third parties and they must not consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, place of origin, of the goods, or the time of production, or have become customary in the current language or established practices. Generic terms that use ordinary words to define the category or type of good are not distinctive and should remain available for all competitors to use free of trademark rights.

There is a crucial distinction between the generic name of a product – for example ampicillin – which must be available to identify any product, and the proprietary trademarks used by individual companies to distinguish the product they are responsible for  manufacturing and distributing. These are sometimes termed “brand names”. The WHO maintains a system of such generic names, called international nonproprietary names (INNs), which are universally recognized as unique names that identify particular pharmaceutical substances or active pharmaceutical ingredients. Trademarks are linked to a product and are used by both research-based and generic companies to create trust and build a relationship between the company, the prescribing practitioner and the patient, potentially allowing the trademark owners to charge higher prices. The distinction, commonly used, between the “brand name” pharmaceutical manufacturer and the generic pharmaceutical manufacturer can be misleading because both originator and generic companies use trademarks to market and distinguish their products.

Trademarks are protected under the laws of each country or region, and not globally. All countries that are party to the Paris Convention have a trademark registry. Trademark applications must be filed separately in each country or region where registration is sought, or with WIPO, using the Madrid System for the International Registration of Marks (see Box 2.8).48 It is not unusual for a trademark to be protected in some countries but not in others.

Box 2.8. The Madrid System for the International Registration of Marks 

The Madrid System is governed by the Madrid Agreement Concerning the International Registration of Marks (concluded in 1891) and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (concluded in 1989). The Madrid System offers a simple, flexible and user-friendly option for trademark holders to obtain and maintain trademark protection in export markets. By filing one international application, in one language (English, French or Spanish), with payment of fees in one currency (Swiss francs), a trademark holder may obtain protection in more than 80 countries, including the European Union, provided that the holder has a “basic mark”, meaning a trademark application or registration with “the Office of origin”. The International Bureau of WIPO carries out a formality examination. Any matter of substance, such as whether the mark qualifies for protection or whether it is in conflict with an earlier mark, is left to each designated contracting party to determine, in accordance with their national trademark legislation. If the trademark office of a designated contracting party does not refuse protection within a specified period, the protection of the mark is the same as if it had been registered by the office concerned.

The Madrid System also greatly simplifies the management of the mark, as it regards one international registration with one renewal date to follow up, and it may afford trademark protection in many designated contracting parties. It is subsequently possible to extend the trademark protection to additional contracting parties. It is also possible to renew the international registration and record changes to the international registration. Such changes might include a change in name or address or a change in ownership. These can be made using one centralized procedure.

The International Bureau records the mark in the International Register, publishes the international registration in the WIPO Gazette of International Marks and notifies each designated contracting party accordingly. 

The owner of a trademark has an exclusive right to prevent using signs that are identical or similar to their trademark on certain types of related goods or services where such use would result in a likelihood of confusion. The trademark owner, and typically any licensees, may enforce their rights against infringement. Trademarks are not restricted to a maximum term of protection but can be renewed indefinitely, provided they remain in use and maintain their distinctive character. Rights to a trademark can be lost through cancellation, or removed from the registry, if the trademark is not renewed or the due renewal fees not paid. A mark can lose its distinctive character and can become a generic term. This may happen if either the trademark owner or the public, tolerated by the trademark owner, uses a trademark as, or instead of, a product designation or a term in common usage. International minimum standards for protection of trademarks are set out in the Paris Convention and the TRIPS Agreement.

(ii) Trademarks and international nonproprietary names

In contrast with trademarks, which are proprietary private rights, INNs are generic names for active pharmaceutical ingredients. Each INN is a unique name that is globally recognized in almost all WHO member states and is not subject to exclusive rights. The WHO has a constitutional mandate to “develop, establish and promote international standards with respect to biological, pharmaceutical and similar products”. The WHO Secretariat and the WHO 68INN Expert Group collaborate closely with national nomenclature committees, drug regulatory authorities, pharmacopoeias and the pharmaceutical industry to select a single name of worldwide acceptability for each active substance that is to be marketed as a pharmaceutical.

 

The existence of an international nomenclature for pharmaceutical substances, in the form of an INN, is important for the clear identification, safe prescription and dispensing of medicines to patients, and for communication and exchange of information among health professionals and scientists worldwide. As unique names, INNs have to be distinctive in sound and spelling, and should not be liable to confusion with other names in common use. In order to make INNs universally available, they are formally placed by the WHO in the public domain, hence their designation as “nonproprietary”. An INN can be used by any producer or distributor for their product provided that the INN is used accurately. For example, “ibuprofen” is an INN and can be used by any producer or distributor for the designation of this product.

Another important feature of the INN system is that the names of chemically and pharmacologically related substances demonstrate their relationship by using a common “stem” as a part of the INN. The use of common stems ensures that  a  medical  practitioner,  pharmacist or anyone dealing with pharmaceutical products can recognize that the substance belongs to a group of substances having similar pharmacological activity. For example, all the monoclonal antibodies are given the suffix/stem “-mab”, while all adrenoreceptor antagonists use the suffix/stem “-olol”. Ensuring that trademarks are clearly distinguished from INNs is important for the accurate identification of products, and thus for the safety of patients. It is also important to keep INNs in the public domain and to avoid granting private property rights for them. Trademarks must not be derived from INNs and, in particular, they must not include their common stems. The selection of additional names within a series will be seriously hindered by the use of a common stem in a brand name. For the same reasons, INNs should not contain existing trademarks. The INN Expert Group convened by the WHO thus generally rejects a proposed INN that contains a known trademark and there is a procedure for dealing with objections by interested parties. Such objections may be based on a similarity between a proposed INN name and a trademark. On the other hand, trademarks that include an established INN stem infringe the INN system. The WHO has requested member states to  prevent  the  granting  of  trademarks or other exclusive proprietary rights to any INN and INN stem. It circulates every newly published list of proposed or recommended INNs to all WHO member states. Lists of proposed and recommended INNs are also available on the WHO website.49

Following a decision of the WIPO Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications (SCT), and in collaboration with the INN Programme, WIPO officially notifies the national and regional trademark offices of its member states about the publication of each new list of proposed and recommended INNs. A WIPO survey of trademark offices showed that 72 per cent of surveyed offices examine trademark applications for possible conflict with INNs.50

Distinguishing between the INN and the proprietary trademark is important  in  order  to  assist  the  process of selecting specific medicines during a procurement process. This is because procuring a product under its INN name opens the process to all manufacturers of the same product designated by the INN. Many countries require distinct labelling with the INN, printed separately from either generic or originator company names, brands or trademarks. While the TRIPS Agreement states that the use of a trademark in the course of trade shall not be encumbered by special requirements, it allows justified limitations (Article 20 of the TRIPS Agreement). Inaccurate or misleading labelling can also be considered a form of unfair competition. It is covered by Article 10bis of the Paris Convention, as well as by consumer protection laws and similar provisions in many countries, and is designed to safeguard against deceptive or misleading labelling.

(iii) Regulatory approval of proprietary names

The names under which new medicines are to be sold in the market (i.e. trademark/brand names) are also reviewed by regulatory authorities and require approval as part of the marketing authorization of a new medicine. Medicine name similarity and medication errors in the
1990s led the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) to introduce assessments of proprietary nomenclature in the interest of public health and safety.51 Examination of these names in the context of regulatory approval has become more formalized over the past decade, with the establishment of dedicated bodies in the FDA and the EMA,52 which reject 30 per cent to 40 per cent of brand names submitted for approval.53

The criteria for proprietary name evaluation applied by the pharmaceutical regulatory  authorities  are  intended to counter confusion and potential medication errors in the specific context of pharmaceutical distribution and prescription practices. The evaluation thus overlaps to some extent with criteria that are also examined in the context of a trademark application. It aims to exclude names that contain or imply claims regarding drug efficacy and safety which are false, misleading or unsupported by data. In addition, in order to take account of the risks presented by the specific context of pharmaceutical prescription, the regulatory evaluation eliminates names that are verbally or graphologically similar to other drug names or to abbreviations typically used in handwritten prescriptions, such as dosage schedules and forms, or routes of administration.

The requirement for  approval  of  the  proprietary  name of a new medicine as part of the overall pharmaceutical regulatory authorization is an important factor in ensuring the safety of  a  new  medicine  in  the  specific  context of pharmaceutical distribution and prescription. As the marketing of the medicine is approved by the authorities under a specific name (i.e. it cannot be marketed under another name), the challenge for the pharmaceutical companies is to develop a medicine name that will not only meet the approval of the regulatory authorities but can also be protected as a trademark in the main markets where the medicine will be sold. In order to meet this double objective, and to ensure a successful outcome, companies usually develop a number of possible names for the new medicine and register all of them as trademarks in their main markets, before submitting them as alternatives to the regulatory authorities. This practice partly explains the proliferation of trademark applications in the pharmaceuticals area, which accounted for 4.7 per cent of all trademark applications in 2010 (WIPO, 2011a). Such volumes of applications can lead to a situation where there are many unused trademark registrations in existence.

(e) Copyright and pharmaceutical products

Copyright relates to every original creation in the literary or artistic domains, irrespective of the type of work, (as provided by the Berne Convention for the Protection of Literary and Artistic Works, and incorporated into the TRIPS Agreement), but it does not extend to ideas, procedures, methods of operation or mathematical concepts as such. For pharmaceutical products, a key issue in relation to copyright is whether protection covers the package inserts or information leaflets that accompany pharmaceutical products. Generic producers are free to use the information provided in an insert, since copyright does not extend to the information as such, just the way it is expressed. However, given that copyright generally extends to making copies of original works on a commercial  scale,  courts  have sometimes found that generic pharmaceutical producers cannot reproduce for their own products direct copies of the original expressions contained in package inserts of the first producer of the product. This was the finding in 2002 in South Africa concerning a package insert for the antibacterial medicine amoxicillin/clavulanate potassium.54 A similar finding initially was made in Australia in 2011 in relation to the rheumatoid arthritis medicine leflunomide. The Federal Court found that copyright subsisted in product information documents. However, later in 2011, the Australian parliament approved an amendment to Australia’s Copyright Act establishing that use of already approved product information in other pharmaceutical products text, in any manner including a direct reproduction, is not an infringement of copyright. A subsequent court decision confirmed that generic pharmaceutical companies are now able to reproduce product information that has been approved by the Therapeutic Goods Administration, without infringing copyright in a range of prescribed circumstances.55

(f) Enforcement

The value of the IP rules detailed above depends on the availability of an effective system of enforcement.  As IPRs are private rights, their enforcement is generally the responsibility of the right holders themselves. Infringements are thus normally pursued by the right holders in civil actions. However, public interest is at stake when IP infringements takes place at a criminal level, for example, when a trader, without permission, knowingly and on a commercial scale manufactures, distributes or sells goods marked with another company’s trademark. That said, the enforcement of IPRs is clearly distinct from the regulation of medicines for safety, quality and efficacy purposes, including any remedies against substandard and spurious/ falsely-labelled/falsified/counterfeit (SFFC) products.

(i) Link between intellectual property right enforcement and public health

The meaning of “counterfeit” differs in the public health context and also in the IP context, just as the motivation to combat SFFC products also differs in the public health context and the IP context.56 From the perspective of public health, which is driven by regulatory aspects, the term “counterfeit” is used in the broadest sense and should not be confused with trademark infringement. For this reason, it has been replaced in health policy discussions by the term SFFC.57 The fight against substandard and SFFC products is exclusively motivated by the threat to public health, and related concerns about consumer protection. From an IP perspective, using a trademark commercially without the authorization of its owner is the key condition to consider a product as counterfeit. In this context, the objective is to preserve the interest of the trademark owner in enforcing their rights and to protect the public interest by fighting infringements where they take place at a criminal level.

While the motivation may be different, the methods used to prohibit production, trade and distribution of all kinds of trademark infringing products and SFFC products have some similarities, with customs controls and criminal law figuring among the most frequently used means. For example, pharmaceuticals are regularly reported to figure among the top commodities suspended by customs authorities for IPR infringement.58 This is because in international trade, a trademark plays an important role as a trade identifier and is an indication of trade source, which can help to identify fake products. Counterfeiters use trademarks without authorization to pretend, regularly but not always, that the product is a genuine product, thus falsely representing its identity and source. Therefore, some argue that IP enforcement measures to combat trademark counterfeiting can have positive side-effects, potentially supporting efforts to keep dangerous products out of the market. Others argue that public health considerations should be kept strictly separate from IP enforcement so as to avoid blurring the objectives between promoting the enforcement of private rights and serving public health objectives, especially against the background of detention of generic products in transit in Europe.59

(ii) Enforcement under the TRIPS Agreement

The TRIPS Agreement sets out the only comprehensive multilateral framework within which to enforce IPRs. It contains a set of minimum standards that safeguard the rights of IP owners while avoiding barriers to legitimate trade. These standards include civil court  procedures and remedies that should be made available, such as injunctions, damages and orders for the disposal of goods that are infringing trademarks. These remedies must be available for all the IPRs covered by the TRIPS Agreement, including patents, test data protection, trademarks and copyright. Administrative – procedures, such as actions before administrative authorities, are optional and have to conform to the principles applicable to civil procedures. A wider range of procedures, including customs measures and criminal procedures, must be available for counterfeit trademark goods, as defined in the TRIPS Agreement, including medical products, and for pirated copyright goods. The TRIPS Agreement also includes certain general obligations or performance standards which provide that WTO members must ensure that these specific enforcement procedures permit effective action, including expeditious remedies to prevent and deter infringement. The application of these procedures must avoid the creation of barriers to legitimate trade and must provide for safeguards against their  abuse.  The  TRIPS  Agreement  clarified that WTO members are not under any obligation with respect to the distribution of resources between the enforcement of IPRs and law enforcement in general.60

(g) Flexibilities under the TRIPS Agreement and the Doha Declaration

Determining a nation’s optimal choices from within the available range of options is a central consideration in the design of a national IP regime. However, many of these policy options, often referred to as “TRIPS flexibilities”, have long formed part of the mechanisms used in patent systems to maintain a balance of public and private interests – well before the TRIPS Agreement was negotiated, and before the Doha Declaration was framed.

(i) Flexibilities in the IP system

The adoption of the TRIPS Agreement standards resulted in creating diverse options for WTO members to implement their TRIPS obligations, while taking into account different considerations such as the country’s stage of development and specific national interests (e.g. public health). However, despite repeated references to “flexibilities” in the policy debate, neither the TRIPS Agreement nor any of the later instruments have formally defined the exact meaning of this term. The TRIPS Agreement  makes only limited use of the term. In fact, although flexibilities are available on a much broader scale, including for developing countries and developed countries, explicit reference to “flexibility” is exclusively made in relation to the special requirements of LDC members to create a sound and viable technological base, thus explaining the motivation for the additional transition period accorded to LDCs (see the Preamble and Article 66.1 of the TRIPS Agreement). The expression “flexibilities” only became part of the wider IP community’s glossary in the lead-up to the Doha Declaration and especially following the conclusion of these negotiations.61

In articulating the role of “flexibilities”, the Doha Declaration clarified the importance of specific national choices in the implementation of the TRIPS Agreement. It referred to flexibilities in a  much  more  prominent way. This can be explained by the central importance that the debate about policy options to promote public health assumed from the time preparatory work for the Doha negotiations got under way, culminating in the adoption of the Doha Declaration in 2001. The TRIPS Agreement highlights the existence of flexibilities and their importance for the pharmaceutical sector, and the Doha Declaration confirms “the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility” to  protect  public  health.  The Declaration lists a number of such flexibilities relating to compulsory licensing and exhaustion. The subsequent decision of 30 August 2003 on the implementation of Paragraph 6 of the Doha Declaration (2003 Decision) once more confirms “the rights, obligations and flexibilities that Members have under the provisions of the TRIPS Agreement”.62

Based on the Agreement between the World Intellectual Property Organization and the World Trade Organization of 22 December 1995,63 WIPO provides legal and technical assistance relating to the TRIPS Agreement. Government offices in charge of drafting laws frequently request advice from WIPO regarding how to use the TRIPS flexibilities in their countries. Advice is provided after careful consideration of the flexibilities, consistency in relation to the TRIPS Agreement and their legal, technical and economic implications. However, the ultimate decision regarding the choice of legislative options lies exclusively with each individual member state. Four clusters of flexibilities have been identified in WIPO’s work:

  • the method of implementing TRIPS obligations
  • substantive standards of protection
  • mechanisms of enforcement
  • areas not covered by the TRIPS Agreement.

The use of flexibilities is also addressed in a number of recommendations contained in the WIPO Development Agenda (see Box 2.9). Following the request of the Committee on Development and Intellectual Property (CDIP), WIPO prepared a preliminary study on patent- related flexibilities in the multilateral legal  framework and their legislative implementation at the national and regional level.64 The study  presents  a non-exhaustive number of flexibilities in the patent area, accompanied by a conceptual development for each, as well as annexes and tables reflecting corresponding legal provisions and practices in a substantial number of countries.

The report showed a diverse approach to the implementation of TRIPS flexibilities into national laws, including compulsory licensing, research exemptions, exhaustion of rights, and regulatory review exemption – also called the “Bolar” exemption.65 A second paper extends this research to other flexibilities, namely: transition periods, the patentability of substances existing in nature, disclosure-related flexibilities, aspects related to substantive examination and the ex-officio control by IP offices of anti-competitive clauses in patent licensing agreements (see Box 2.10).66

(ii) Background to the Doha Declaration

The negotiators of the TRIPS Agreement aimed to ensure that countries would make patents available for pharmaceutical products while at the same time retaining certain options on patentability and scope of rights for public health purposes. However, the extent to which the Agreement was supportive of public health became highly controversial, particularly around the time when most of the substantive obligations of the Agreement for developing countries came into force in 2000.

Box 2.9. Definition of flexibilities according to WIPO

  • According to the WIPO CDIP report,67 the term “flexibilities” means that there are different options through which TRIPS obligations can be transposed into national law, so that national interests are accommodated and TRIPS provisions and principles are also complied with. This definition would effectively delimit the scope of the concept through the following elements:
  • It highlights the idea of using various options as a means of implementation.
  • It refers to the legislative process of implementation, reflecting the view that the first step needed in order to take advantage of a given flexibility consists of incorporating that flexibility into national law.
  • It refers to the reason for flexibilities, which is to accommodate national interest.
  • It reflects that a given flexibility needs to be compatible with the provisions and principles of the TRIPS Agreement.
flexibilities can be categorized in different ways, including by grouping them according to the lifetime of the respective IPR. Flexibilities can thus be exercised regarding the:

  • process of acquisition of the right
  • scope of the right
  • enforcing and using the right.

 

Box 2.10. TRIPS flexibilities highlighted in the GSPA-PHI

The WHO GSPA-PHI refers explicitly to the flexibilities reaffirmed by the Doha Declaration. It urges member states to consider implementing TRIPS flexibilities, including those recognized in the Doha Declaration, by incorporating them into their national laws (Element 5.2a). Regarding more extensive IP protection than that required under the TRIPS Agreement, member states are urged to take into account the impact on public health when considering the adoption or implementation of such obligations (Element 5.2b). Member states should also take into account flexibilities when negotiating other (bilateral or regional) trade agreements (Element 5.2c). In addition, the GSPA-PHI highlights a number of flexibilities and public policy options available to member states, which are designed to facilitate research and access to medical technologies:

l

  • Research exception (Element 2.4e).68
  • Voluntary patent pools of upstream and downstream technologies (Element 4.3a).69
  • For countries with manufacturing capacities, consider taking measures to implement the WTO Paragraph 6 System (Element 5.2d).70
  • Develop effective and sustainable mechanisms in LDCs in order to improve access to existing needs, acknowledging the transitional period until 2016 (Element 6.1b).71
  • Regulatory exception or Bolar-type exemption (Element 6.3a).72

In a landmark legal action, a pharmaceutical industry association and 39 of its affiliate companies filed complaints at the Pretoria High Court, alleging, among other things, that South Africa’s law on medicines allowed for parallel importation of (HIV/AIDS) medicines and was inconsistent with the TRIPS Agreement. The lawsuit triggered an active campaign led by non-governmental organizations (NGOs) and AIDS activists. During the court procedure, it was revealed that the South African law was based on a WIPO model law and in the end, the companies withdrew their complaints unconditionally in 2001. By that time, many governments and others were convinced that the relationship between the TRIPS Agreement and public health needed to be clarified.

In April 2001, the WHO and WTO Secretariats convened a workshop on differential pricing and financing of essential drugs in Høsbjør, Norway. Following the publication of the report on that workshop,73 the African Group proposed that the WTO convene a special session of the Council for TRIPS to initiate discussions on the interpretation and application of the relevant provisions of the TRIPS Agreement, with a view to clarifying the flexibilities to which members are entitled and, in particular, to establish the relationship between IPRs and access to medicines. The proposal to hold the special session was supported by all members.74 This was followed in June 2001 by a detailed written proposal prepared by a group of developing countries calling for the WTO to take action to ensure that the TRIPS Agreement did not in any way undermine the legitimate right of WTO members to formulate their own public  health  policies and implement them by adopting measures to protect public health. At the Fourth WTO Ministerial Conference in Doha, Qatar on 14 November 2001, ministers adopted by consensus the Doha Declaration, addressing the concerns that had been expressed.

(iii) Content of the Doha Declaration

In articulating the general role of the TRIPS Agreement in promoting access to medicines, and in clarifying specific flexibilities to that end, the Doha Declaration has provided a clearer context for specific operational choices for the use of policy options under the TRIPS Agreement.

The Doha Declaration recognizes the gravity of the public health problems afflicting many developing  countries and LDCs, and, in particular, the public health problems resulting from HIV/AIDS, TB, malaria and other epidemics. This defining statement was followed by a number of important statements signalling to all members that they are free to use the provisions of the TRIPS Agreement in a manner that is supportive of public health. Paragraph 4 confirmed that “the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health”, that it “can and should be interpreted and  implemented in a manner  supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all”, and, in addition, that WTO members have the right “to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose”.

Paragraph 5 of the Doha Declaration specifically confirms four aspects in which the provisions in the TRIPS Agreement provide flexibility for this purpose:

  • The first clarification concerns the way in which the TRIPS Agreement is interpreted. Each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its  “objectives”  and  “principles”. These terms are not otherwise defined in the Doha Declaration, but there is a parallel with the respective titles of Articles 7 and 8 of the TRIPS Agreement – although objectives and principles can also be found elsewhere in the Agreement.
  • The second and third clarifications concern compulsory licensing. Each WTO member has “the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted”. These clarifications dispelled a misconception that compulsory licences were only available in national emergencies. Each WTO member also has the right to determine what constitutes a national emergency or other circumstance of extreme urgency. These clarifications have practical relevance, because in such situations countries are exempted from first attempting to negotiate a voluntary licence with the patent holder. In terms of examples of what these types of emergency might include, the Doha Declaration cites “public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics”.
  • Finally, the Doha Declaration also confirms the freedom of each WTO member “to  establish  its own regime for such exhaustion without challenge”, subject to the rules against discrimination according to nationality. This allows a WTO member to choose between national, regional or international exhaustion.75 Exhaustion governs the extent to which an IPR holder can prevent the resale and importation of genuine goods placed on the market with its consent in the same or in another country. Countries are thus free to determine whether or not they want to allow parallel importation of patented goods, including medical products.

Paragraph 6 of the Doha Declaration prompted the commencement of work which subsequently culminated in the adoption of an additional flexibility designed to help countries with insufficient or no manufacturing capacities in the pharmaceutical sector to make effective use of compulsory licensing.76

Paragraph 7 of the Doha Declaration reaffirmed the commitment of developed country WTO members to provide incentives to their enterprises and institutions in order to promote and encourage technology transfer to LDC members, as set out under Article 66.2 of the TRIPS Agreement, thus confirming that technology transfer to LDCs is also a public health issue. In addition, paragraph 7 contained an instruction to the TRIPS Council to extend the transition period for LDCs, with respect to their obligations regarding patents and test  data  protection for pharmaceutical products (including enforcement procedures and remedies), until 1 January 2016.

(iv) Implementation of the Doha Declaration

Unlike TRIPS itself, the Doha Declaration does not oblige any specific legislative enactment. Even so, some countries have referred to its statements in a legal measure. The Doha Declaration has also been referenced in the work of other international organizations, notably the WHO Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property (GSPA-PHI), in many other WHO resolutions, the WIPO Development Agenda, and also in UN General Assembly resolutions 65/1 and 65/27777 addressing the MDGs and HIV/ AIDS, respectively.

(v) Least-developed country transition period

The TRIPS Agreement provides for a number of transition periods so that countries can engage in a phased implementation of their TRIPS obligations. Some of these transition periods specifically target the patenting of pharmaceutical products. While these transition periods have now expired for developed- and developing-country WTO members, least-developed countries (LDCs), based on the Doha Declaration and subsequent TRIPS Council 7Decision benefit from an extended transition period, until 1 January 2016, with regard to pharmaceutical patents and test data protection for pharmaceutical products (including enforcement procedures and remedies).78 The WTO General Council also approved a waiver for LDCs from the obligation under Article 70.9 of the TRIPS Agreement and this also extended the transition period until 1 January 2016.79 As a result, LDCs are not obliged to grant exclusive marketing rights for pharmaceutical products while patent applications are pending – even for products that otherwise fall within the very specific circumstances set out in Article 70.9. These decisions are separate from the general extension of the LDC transition period, with respect to most of their other TRIPS obligations, until 1 July 2013.80 Further extensions of the LDC transition periods, are possible upon duly motivated request by LDC members. In this regard, ministers attending the Eighth WTO Ministerial Conference, in December 2011, invited the TRIPS Council “to give full consideration to a duly motivated request from LDC Members for an extension of their transition period”.81 In November 2012, the LDC Group submitted a request for a further extension of the transition period. According to the proposed draft decision, LDCs would be exempted from applying the TRIPS Agreement for as long as they retain LDC status.82 No decision has been taken in the WTO as of the time of writing.

At the national level, therefore, LDCs may, for the moment, maintain their existing legal standards  of  protection and enforcement without having to comply with the patent and test data protection obligations specified in the TRIPS Agreement, with respect to pharmaceutical products. However, if LDCs wished to lower their standards of patent protection for pharmaceutical products, which would be permitted under the above extension decision, they normally would still need to take action to incorporate these changes into their national laws. This is what happened in Rwanda in 2009, when a new law on the protection of IP was adopted. It excludes from patentability “pharmaceutical products, for the purposes of international conventions to which Rwanda is party”.83 Under Rwanda’s previous patent legislation, pharmaceutical products were patentable subject matter. Alternatively, LDCs may leave their laws unchanged and simply declare that until the end of the transition period, they will not enforce legal provisions relating to test data protection or patents in the area of pharmaceuticals. For any of these measures, the LDCs concerned would, in any event, also need to check the conformity of the intended action within their own legal system and with the legal obligations that result from their membership of regional organizations or from bilateral trade agreements or other treaties to which they are a party.

The transition period potentially offers opportunities for these countries to attract investment for the local production of pharmaceutical products.84 While some LDCs exclude pharmaceutical  products from  patent  protection  during the transition period, others, such as LDCs which are members of the African Intellectual Property Organization, have foregone this option because the Bangui Agreement provides for the granting of pharmaceutical patents.85

(h) Terms of accession to the WTO

Terms of accession to the WTO are another potential source of IP commitments in the WTO system. New WTO members have to negotiate their accession to the WTO under Article XII of the Agreement establishing the World Trade Organization.86 The terms of accession are thus a matter of negotiation. These negotiations take place between the acceding member and interested existing members who choose to participate in the Working Party on the accession. At a minimum, terms of accession always provide for compliance with all multilateral WTO agreements, including the  TRIPS  Agreement,  subject to possible transitional periods. In a number of cases in the past, existing members also requested additional commitments. If accepted by the acceding member, such additional commitments are noted in the Working Party report and referenced in the Protocol of Accession, which forms part of the WTO Agreement for that member. Newly acceding members may accept terms of accession that require higher levels of IP protection than those provided by the TRIPS Agreement. However, not all elements in the Working Party report are of equal legal status. While some amount to legally binding commitments, which are detailed in the report and in the Protocol of Accession, other elements are of a descriptive nature, merely reflecting the information provided to the Working Party by the acceding country. In such cases, no commitment is noted by the Working Party.

Issues relating to IP and pharmaceutical products have featured in a number of accession negotiations (see Abbott and Correa (2007) for a comprehensive overview of IP elements in WTO accession agreements). For example, when Ukraine acceded to the WTO in 2008, it recorded a commitment to notify the first applicants for marketing approval of originator pharmaceutical products about subsequent applications, in order to give the first applicants an opportunity to submit information regarding whether these later applications had permission to use the original test data and to grant exclusive rights to test data for at least five years.87

With regard to LDCs, it was agreed in the 2001 Ministerial Declaration launching the Doha Development Agenda that WTO members would work to facilitate and accelerate negotiations with acceding LDCs. In 2002, the WTO General Council adopted guidelines  for  the  accession of LDCs.88 The guidelines provide, among other things, that transitional periods foreseen under specific WTO agreements must be granted – taking into account individual development, financial and trade needs – and that these transitional periods are to be accompanied by action plans for compliance with the trade rules. In addition, a decision taken at the Eighth WTO Ministerial Conference, in December 2011, stipulated that “requests for additional transition periods will be considered, taking into account individual development needs of acceding LDCs”.88 Subsequently, the WTO General Council  decision of 25 July 2012 further streamlined  and  operationalized the LDC accession guidelines, among others, through enhanced transparency and the undertaking that additional transition periods be favourably considered on a case-by- case basis.89 Cambodia and Nepal acceded to the WTO in 2004, Cape Verde acceded in 2008, and Samoa and Vanuatu acceded in 2012 (see Box 2.11).

Box 2.11. The example of Cambodia: an LDC’s terms of accession to the WTO

Cambodia was the first least-developed country (LDC) to conclude WTO accession negotiations (many LDCs were original WTO members on its formation in 1995). Its Working Party was established in 1994 and met from 2001 until 2003, and Cambodia acceded to the WTO in 2004. In its terms of accession, Cambodia made a commitment to implement the TRIPS Agreement no later than 1 January 2007 – although an extension had been agreed for LDC members in the Doha Declaration until 1 January 2016 for patents and test data protection with respect to pharmaceutical products, and a general extension was later agreed for LDC members until 1 July 2013.

Cambodia’s commitment to implement the TRIPS Agreement beginning in 2007 was made on the understanding that during the transition period it would, among other things, grant exclusive rights to test data for five years and provide for patent linkage to marketing approvals (WTO document WT/ACC/KHM/21, paras. 204-206 and 224). Cambodia thus accepted demands from existing members that went beyond the express obligations set out in the TRIPS Agreement. By doing so, Cambodia in its accession agreement appeared to have given away a number of the flexibilities under the Agreement that it would otherwise have benefited from under current transition periods.

However, immediately prior to adoption of the decision on Cambodia’s accession, the WTO Deputy Director-General, speaking on behalf of the Chairman of the Working Party on the Accession of Cambodia, clarified that: “The results achieved in the case of Cambodia speak for themselves, and in this context I should also add that the terms of this accession do not preclude access to the benefits under the Doha Declaration on the TRIPS Agreement and Public Health to Cambodia as a (least developed country)” (WTO document WT/MIN(03)/SR/4).

2. Competition policy

Among the policy instruments available to governments in addressing public health concerns, competition policy has an important role to play in ensuring access to medical technology and fostering innovation in the pharmaceutical sector. Competition is conducive to freedom of choice, low prices and good value for money, while serving as an important driver of innovation and productivity improvement.

(a) The dual function of competition policy

When examining policies which are designed to foster innovation and ensure access to medical technologies, competition policy can be considered as having two interrelated functions which complement each other (Hawkins, 2011).

First, competition policy is important in terms of informing regulatory  measures  and  other  relevant  policy  choices relating to innovation in, and access to, medical technologies. Competition bodies can be given the mandate to undertake broad policy reviews of competition and regulation, pharmaceutical price regulation regimes, pharmacy regulation and  wholesale/distribution  arrangements. They can make policy recommendations for a range of policies affecting competition – not only the operation of competition and consumer protection laws, but also in areas directly affecting public health. Institutions such as the Organisation for Economic Co-operation and Development (OECD) and the World Bank have published studies on the interplay between competition policy and health regulation. Such interplay fosters, coordination between competition authorities and agencies that regulate the prices of medical products and the health sector generally.90

Second, the enforcement of competition law also helps to correct anti-competitive behaviour that may take place in the various different business sectors involved in developing and supplying medical technology to patients who need them. It aims to prevent anti-competitive practices that can, for example: restrict R&D; limit the availability of resources needed for the production of medical technology; create unnecessary barriers to the entry of generic or inter-brand competition; and restrict available distribution channels and consumer choices generally. Practices that have been identified as detrimental in this regard include (but are not limited to): (i) abuses of IPRs because of refusal to deal with or imposition of overly restrictive conditions in medical technology licensing; (ii) preventing generic competition though  anti-competitive  patent  settlement  agreements; (iii) mergers between pharmaceutical companies that lead to undesirable concentration of R&D and IPRs; (iv) cartel agreements between pharmaceutical companies, including between manufacturers of generics; (v) anti-competitive behaviour in the medical retail and other related sectors; and (vi) bid rigging in public procurement. These can be addressed on a case-by-case basis through competition law enforcement.

(b) The interface between competition policy and IP protection

In the area of innovation, the aims and effects of IP protection and competition policy can be complementary: both are aimed at fostering innovation by creating incentives to develop new products as an advantage over competitors. IP protection for novel medical technologies is generally considered to be an important means of promoting investment in R&D of new medical technology. This leads to competition between different originator companies with regard to the development of valuable new medical technologies, and therefore with regard to their earlier production and availability. This form of competition is generally not hindered by IPRs, rather it is enhanced by them. Competition policy also  helps  to  maintain the innovative potential of the  industry  by  regulating the market structure  and  providing  countermeasures to anti-competitive behaviour. Competition authorities oversee mergers of pharmaceutical companies and may make them subject to divestiture of certain branches of research in order to prevent the abandonment of research for potentially competing future medical technology.91 Ideally, this leads to so-called between-patent competition in pharmaceutical markets: alternative products of the same therapeutic class may be available, and producers of such drugs then compete in the same market.

In certain circumstances,  however, IPRs, while aiming to stimulate innovation, can potentially prevent or diminish competition in the pharmaceutical  sector  at the manufacturing stage, as competitors are excluded from using the patented or otherwise protected medical technology. One important consideration in this regard is the extent to which alternative products are available. Where competitive alternatives are available, IPRs do not lead to the creation of economic monopolies.

Accordingly, policy-makers face the difficult task of finding an overall balance between the protection and enforcement of legitimate IPRs and the need to stimulate competition and prevent anti-competitive behaviour.

(i) Addressing competition policy concerns in the legal framework for IP protection

Competition policy has informed the legal framework for IP protection in that international agreements as well as national IP laws recognize the role competition policy has to play in providing “checks and balances” to IPRs. Legal provisions on competition can be considered an integral part of rules on IP protection.

At the international level, the relevance of competition policy in designing rules on IP  protection has long been recognized by the Paris Convention as grounds for granting compulsory licences to prevent the abuse of IPRs. It is also reflected in several provisions of the TRIPS Agreement.

Article 8.2 of the TRIPS Agreement stipulates that appropriate measures (consistent with the provisions of the Agreement) may be needed to prevent the abuse of IPRs by right holders, or the resort to  practices which unreasonably restrain trade or  adversely  affect the international transfer of technology. On the face of it, this provision is not necessarily concerned only with competition law violations, but with the arguably more general concept of “abuse” of IPRs.

In a related area, but focusing on the specific issue of licensing practices that restrain competition, Article 40.1 of the TRIPS Agreement records the agreement among WTO members that some licensing practices or conditions pertaining to IPRs, which restrain competition, may have adverse effects on trade and may impede the transfer and dissemination of new technology. To address this concern, Article 40.2 of the TRIPS Agreement recognizes the right of WTO member governments to take measures  to prevent  anti-competitive  abuses  of IPRs. Article 40.2 of the TRIPS Agreement also contains a short illustrative list of practices which may be treated as abuses. These are exclusive grantback conditions, conditions preventing challenges to validity, and coercive package licensing.92

Under Article 31 of the TRIPS Agreement, setting out certain conditions on the use of a patent without the authorization of the right holder, subparagraph (k) makes it clear that members are not obliged to apply certain of these conditions in circumstances where the compulsory licence is granted “to remedy a practice determined after judicial or administrative process to be anticompetitive” – namely, requirements to show that a  proposed  user has made efforts to obtain voluntary authorization from the right holder on reasonable commercial terms and conditions, and that such efforts have not been successful within a reasonable period of time, as well as the requirement that authorization for use of a patent under a compulsory licence be predominantly for the supply of the domestic market of the member authorizing such use. Moreover, authorities may consider the need to correct anti-competitive practices while determining the amount of remuneration due.

In many countries, national IP legislation implementing the TRIPS Agreement also recognizes the role of competition policy with regard to IPRs. For example, the Indian Patent Act provides for the grant of compulsory licences without prior attempt to obtain a licence from the patentee on reasonable terms and conditions in case of anti-competitive practices adopted by the patentee (Section 84.6(iv)), as well as the right to export any products produced under such licences, if necessary.

(ii) Enforcing competition law in the IP context

Competition law enforcement provides a useful tool for correcting abuses of IPRs on a case-by-case basis.93 Generally speaking, no special principles of competition law apply to IP, and IP protection is not exempt from the application of competition law disciplines. Nor is IP protection presumed to confer market power or to indicate anti-competitive behaviour. Indeed, IPRs are considered useful in creating functioning markets and fostering innovation. Competition law does not, as a general rule, prevent IPR holders from exercising their exclusive rights. This general respect for IPRs under competition law is based on the assumption that IPRs were acquired legitimately through a system that does not confer overly broad IPRs.

The role of  competition  law  enforcement  therefore  is to provide “corrective” measures only where needed. Enforcement action under competition laws may be warranted where the IP protection system itself is unable to prevent unwanted restrictions of competition.

3. Trade policy settings

All countries rely to varying degrees on imported goods to provide for the health care needs of their populations. In most countries, especially in smaller developing countries with little or no local production capacity in medical technologies, such imported goods make a unique contribution to these countries’ national health systems. Countries are also increasingly engaging in trade in health care services. Trade policy thus affects the way in which markets for medical technologies are opened to competition from imported goods and services.

Rules for international trade are established at the multilateral level within the framework of the WTO. One of the cornerstones of the WTO is non-discrimination in international trade relations. This is implemented through the principles of national treatment and most-favoured- nation (MFN) treatment. These principles are enshrined in the General Agreement on Tariffs and Trade (GATT) in relation to trade in goods, in the General Agreement on Trade in Services (GATS) in relation to trade in services, and in the TRIPS Agreement in relation to IP. In the case of GATT and GATS, important exceptions apply, notably special and differential treatment in favour of developing countries, and free trade agreements (FTAs).

The WTO also guarantees its members the right to protect public health. Since its inception in 1947, GATT has given countries the right to take trade-restricting measures  necessary  to  protect  human,  animal  or plant life or health under certain conditions set out in Article XX(b). GATS contains a similar exception with regard to trade in services in its Article XIV(b). These general exceptions can override WTO obligations and commitments, provided that the health measures, and the ways in which they are applied, satisfy certain conditions. Furthermore, Article 8 of the TRIPS Agreement recognizes the right of members to take measures to protect public health, as long as these measures are consistent with the TRIPS Agreement.

(a) Tariffs

Tariffs or customs duties on imported goods, are a traditional trade policy instrument and are preferred under WTO rules to quantitative restrictions, such as quotas, which are generally prohibited. Tariffs are relatively transparent and, unlike quotas, do not impose rigid restrictions on volumes of imports.

WTO members have agreed to certain maximum levels for their respective tariffs on all or most imported products, including pharmaceuticals. These maximum levels are called “tariff bindings” and vary according to each country and product. They are the result of decades of tariff negotiations that have gradually led to tariff bindings on more products, which create a more predictable and stable trading environment. Successive rounds of negotiations have also led to lower bound tariff rates and, in fact, WTO members frequently apply tariffs below the bound rate. For example, developing countries have bound their tariffs on formulations on average at 22.4 per cent ad valorem (calculated on the value of the imports), but they actually apply tariffs on average at 3.4 per cent ad valorem.94

Tariffs make imported goods, including medicines, more expensive for consumers. Nevertheless, many countries apply tariffs to bolster the competitive position of locally based companies in the domestic market in an attempt to preserve employment or promote the development of the industry (e.g. the local production capacities of the pharmaceutical sector), or to maintain a certain level of independence from international markets. For consumers, tariff protection can result in costly outcomes. Tariffs also raise revenue for governments, although in the case of medicines, the revenue amounts raised are generally not significant.

In developed countries, the tariffs applied on medicines are very low, if not zero. A number of WTO members, mainly developed countries, concluded the Pharmaceutical Tariff Elimination Agreement in 1994. Under this agreement, they eliminated tariffs on all finished pharmaceutical products as well as on designated  active  ingredients and manufacturing inputs. Since 1994, the parties have periodically updated the agreement’s coverage. Developed countries have applied tariffs on medicines of less than 0.1 per cent ad valorem on average since 2000. In the case of developing countries, over the past decade they have lowered their applied tariffs rates on medicines from 6.7 per cent to 4.2 per cent on average. Included in these developing countries are a few countries with local manufacturing industries that apply relatively high tariffs on finished products. In the case of LDCs, the applied rates range from 4.5 per cent to 2 per cent on average.

Tariff exemptions can often be granted for certain medicines or certain purchasers. Public sector and private non-profit buyers often benefit from waivers from tariffs. Health Action International (HAI), in  collaboration  with the WHO, has undertaken a major project to identify the various costs associated with the prices of medicines in different countries. For some countries, the data include information on tariffs and exemptions.95

(b) Non-tariff measures

The steady decrease of tariff rates through successive rounds of negotiations over the past 60 years has led to a shift in focus to other types of trade measures. Some experts argue that these other trade measures are increasingly used in place of tariffs to protect domestic industries. Non- tariff measures (NTMs) include, among others: sanitary measures; technical regulations; pre-shipment inspections; import licensing; price control measures; charges and taxes; restrictions on distribution and after-sales services. Several WTO agreements are dedicated to these types of NTMs. A basic objective of such agreements is to establish rules for the use of these measures so that they do not become unnecessary trade barriers. While all of these measures can affect trade in pharmaceuticals, the following two have a direct link to public health outcomes.

(i) Sanitary and phytosanitary measures

The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) contains specific rules for countries which aim to ensure food safety and prevent the transmission of plant- or animal-carried diseases to humans via trade. This agreement aims to strike a balance between recognizing the sovereign right of members to determine the level of health protection they deem appropriate, and preventing SPS regulations that represent unnecessary, arbitrary, scientifically unjustifiable or disguised restrictions to international trade. The SPS Agreement requires that SPS measures are not more trade-restrictive than required to achieve the appropriate level of sanitary and phytosanitary protection, taking into account technical and economic feasibility. It therefore encourages members to follow international standards, guidelines and recommendations. Members are allowed to adopt SPS measures which result in higher levels of health protection, or measures for which international standards do not exist, provided that those measures are scientifically justified.96

(ii) Technical barriers to trade

The TBT Agreement applies to technical product requirements that are not covered by the SPS Agreement. It covers both those that are mandatory (“technical regulations”) and those that are voluntary (“standards”) as well as procedures to assess conformity with them, such as inspections. Technical regulations and standards include, for example, quality requirements for pharmaceuticals, labelling requirements for foods and safety standards for X-ray machines. The TBT Agreement incorporates the principle of non-discrimination, in terms of both national and MFN treatment. It also requires that technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks that non- fulfilment would create. The protection of human health or safety is listed as a legitimate objective. In other words, the TBT Agreement allows countries to regulate trade to protect health but requires that such measures do not unnecessarily restrict trade. Members are also encouraged to base their measures on  international  standards, although they may depart from them if they consider that their application would be ineffective or inappropriate for the fulfilment of legitimate objectives.97

Trade in services

Health services contribute significantly to the effective availability and proper use of many pharmaceuticals and other medical technologies, notably services concerned with prevention, diagnosis and treatment, but also ancillary and technical support. For many sophisticated diagnostic services or treatment regimes, there is no clear distinction between effective and appropriate access to a technology as such, and the supply of related services. Choices made in opening up health services to foreign providers may therefore affect access to medical technologies.

(i) The multilateral legal framework

GATS is the main multilateral legal instrument governing trade in health services. It defines trade in services as the supply of a service through four different “modes of supply”, each with bearing on the health sector:

  • Mode 1: cross-border supply (e.g. telemedicine)
  • Mode 2: consumption abroad (e.g. a patient seeking medical treatment in a foreign country)
  • Mode 3: establishment of commercial presence (e.g. a clinic opens an overseas subsidiary or invests in an existing facility abroad)
  • Mode 4: presence of natural persons (e.g. a physician moves abroad to work in a foreign-owned clinic).

(ii) Scope of GATS commitments in health-related sectors

GATS grants WTO members full flexibility when it comes to deciding which sectors and modes of supply to open to foreign competition, as well as the level of obligations that they are prepared to undertake. Health services fall into several categories: (i) hospital services; (ii) other human health services; (iii) social services; (iv) medical and dental services; and (v) services provided by midwives, nurses, physiotherapists and paramedical personnel.98 Other services complement and facilitate access to medical technologies, such as: R&D on medical sciences; the pharmacy, wholesale and retail sale of various pharmaceuticals, medical and surgical goods and devices; maintenance and repair services for medical equipment; and technical testing and analysis services. GATS disciplines do not cover services “supplied in the exercise of governmental authority” (those supplied neither “on a commercial basis” nor “in competition with one or more service suppliers”). For this reason, many public-sector health services lie outside the scope of GATS.

Many countries have gradually liberalized their health services, thus creating more opportunities for private operators. However, such countries remain reluctant to make this opening binding under the terms of GATS. Apart from health insurance services, there are fewer GATS commitments on health services than there are for any other sectors (see Table 2.4). This is possibly due the major role played by public entities in providing public health services, coupled with the issue of political sensitivities and the lack of vocal business interests. Health services have not been the object of active bilateral negotiations, and commitments in this sector are mostly made as a result of a particular country’s own initiative (Adlung, 2010). It is important to note, in any event, that committing to open a service sector to foreign competition does not affect the government’s capacity to regulate the sector.

Across these six health sectors under consideration, there is generally reluctance to enter commitments on cross- border supply of health services. This is probably due to uncertainties on how to design and enforce appropriate regulation of service suppliers located abroad (a pattern observed across other service  sectors).  Commitments on health services consumed abroad account for the highest number of full commitments, perhaps reflecting governments’ reluctance – and inability – to prevent their nationals from leaving the state in order to consume services abroad (a practice that also occurs in all service sectors). Some members restrict the portability of insurance coverage for treatment abroad, possibly deterring patients from seeking treatment outside their country. Nearly half the commitments relating to the supply of health services through commercial presence are bound without limitations at sectoral level, a result that seems above average for all sectors.99 Most commitments under this mode are subject to limitations, for example limits on foreign equity and requirements for joint venture or residency. Some list economic needs tests: criteria such as population density, existing medical facilities, degree of specialization, type of medical equipment, and distance or availability of transport infrastructure are taken into account before new hospitals and clinics are authorized.

Unlike the other modes of supply, commitments on health services supplied through the presence of natural persons have been undertaken on a “horizontal” basis by the vast majority of members, which means that these commitments apply to all covered services sectors. Most WTO members have closely  restricted  commitments on this mode, focusing on highly skilled persons or on individuals linked to a commercial presence, as opposed to the self-employed (WTO, 2009). Some add further restrictions to their commitments, referring to language, residency or nationality requirements, recognition of diplomas, strict time limits, economic needs tests or quotas, thus restricting further the already limited level of bindings. Evidence suggests, however, that health professionals benefit from better access conditions in practice than they would if they were exclusively limited to GATS bindings. Health services commitments are also limited as to the breadth of covered activities, such as exclusions of public suppliers, restrictions of commitments on hospital services to privately supplied or privately funded services, or types of medical specializations covered.

(iii) The growing economic importance of trade in health services and the impact of GATS commitments

According to Gottret and Schieber (2006): “Health care is probably the world’s largest single industry, with a combined turnover in excess of US$ 3.2 trillion annually, equivalent to a tenth of global gross domestic product (GDP), and employing in excess of 59 million staff”. Health services continue to globalize,  through  cross-border  movement of health care workers and patients, as well as through investments of health services companies (WHO/WTO, 2002; Blouin et al., 2006). Technological developments and dwindling telecommunication costs have contributed to the emergence of telemedicine across a range of health procedures (e.g. teleradiology, telediagnostic, telepathology, teleconsultation and telesurgery). It is almost impossible to measure the impact of GATS commitments on health services – and any other sector – because of limited data and the difficulty of distinguishing the effects of trade policy bindings from those of other policy and regulatory measures. However, studies suggest that the effects of GATS commitments – where such commitments exist – on trade patterns probably have been insignificant. GATS commitments do not entail additional liberalization, but (at best) they bind existing levels of market access. Consequently, the commercialization of health services has occurred irrespective of GATS obligations, and the main effect of GATS seems to have been to make national policies more predictable (Adlung, 2010).

Table 2.4. Number of GATS commitments

 

Medical and dental services

Nurses, midwives, etc.

Hospital

services

Other human

health services

Social

services

Other

Health insurance

Services

Number of

commitments

65

35

57

26

27

6

103

 

SourceWTOSecretariat (EU member states are counted individually).

79

 

Box2.12. WHO code ofPractice on the International Recruitment of Health Personnel

In order to try and better regulate the migration and movement of health care workers from areas that need them the most, the WHO developed the Global Code of Practice on the International Recruitment of Health Personnel. Key components include:

  • Greater commitment to assist countries facing critical health worker shortages with their efforts to improve and support their health workforce.
  • Joint investment in research and information systems to monitor the international migration of health workers in order to develop evidence-based policies.
  • Member states should meet their health personnel needs with their own human resources as far as possible and thus take measures to educate, retain and sustain their health workforce.
  • Migrant workers’ rights are enshrined and equal to domestically trained health workers.100

The health sector has been virtually absent from the WTO Doha Round negotiations on services, with only about a dozen members, mostly developing countries, presenting offers in this sector. These offers were generally very  restrictive  (concerning  only  one  mode or particular medical specializations). Others, including Canada, the European Union and Switzerland, explicitly excluded health and other social services from  the WTO negotiations. This general lack of interest can be attributed to the dominant role of the public sector in providing health care, coupled with the strong social and public service dimension and a concern not to limit future policy options.

(iv) Challenges linked to the opening of trade in health services

Opening of trade in health services should not be seen as an end in itself, rather as a tool to generate distinct benefits if properly used in a broader policy context. From a public health perspective, increasing trade in services bears both opportunities for improving health service delivery and risks for equity if new cross-border health services are only available for those who can afford them. The concern is often expressed that opening health services may create a two-tier system – good services for the rich, bad services for the poor – thus jeopardizing equitable access for all. For example, exporting health services via the Internet  from delocalized centres may boost employment opportunities in developing countries, and contain costs  in  developed  countries. By attracting health care workers to financially more attractive opportunities, this may leave gaps in the local health sector.

A strong regulatory system with credible implementation is necessary to ensure that competing private suppliers operate in ways that contribute to address broader public policy concerns, such as equitable and affordable access for all. Publicly owned and operated health facilities also generate regulatory challenges. Thus, the appropriate regulatory framework is required in order to ensure that more open trade in health services benefits all sections of the population. An impact assessment on the supply of health services should precede binding commitments under GATS or any other trade agreement. The migration of health workers is a key issue, with workers tending to move from the poorest regions to richer cities within a country, and from there to  high-income  countries (see Box 2.12). Demand for  foreign  health  workers has increased in high-income countries as a result of insufficient numbers of health professionals being trained locally, and also due to ageing populations in these countries. Governments wishing to contain brain drain remain free to do so, as such measures are not subject to GATS disciplines which relate – particularly for Mode 4 – only to the temporary inward migration of foreign health workers. The limited scope of Mode 4, both its definition and specific commitments, means that GATS probably plays an insignificant role in the international migration of health personnel.

4. Government procurement

Government procurement refers generally to the purchasing of goods, services, and construction services, or any combination thereof, by, or on behalf of, government bodies in fulfilment of their public service responsibilities, including in areas of socially vital importance, such as health care. This section addresses the positive impact which a well-designed framework for government procurement can be expected to have on the health sector. It also sets out the rules established for that purpose by the plurilateral Agreement on Government Procurement (GPA)  under the WTO, and the size of procurement markets in health- related sectors covered by that agreement.101

Box 2.13. Evidence of cost reduction/improvements in value for money in the health care sector made possible through transparent and competitive tendering

A2011 study, published by the National Bureau of Economic Research, in the United States (Danzon et al., 2011), examinedthe determinants of prices for originator and generic drugs across a significant number of countries. The studymainly focused on drugs to treat HIV/AIDS, TB and malaria in LMICs. It analysed the effect on drug prices incases where the drugs were sold through the retail pharmacy channel, as opposed to cases where the drugs were acquired in tendered procurements such as those, for example, carried out by the Global Fund and the Clinton Foundation.

The study shows that tendered procurement attracts generic suppliers and significantly reduces prices for originators and generics when compared with the prices that apply in retail pharmacies. Specifically, it finds that: “The evidence from HIV/AIDS, TB and malaria drugs shows that procurement mechanisms lower originator and generic prices by 42% and 28%, respectively, compared to their retail pharmacy prices”.

A 2003 OECD study on the benefits of transparent and competitive procurement processes referred to the following examples of benefits achieved:

  • A 43-per-cent saving in the cost of purchasing medicines in Guatemala, due to the introduction of more transparent and competitive procurement procedures and the elimination of any tender specifications that favour a particular tender.
  • A substantial reduction in the budget for expenditures on pharmaceuticals in Nicaragua, due to the establishment of a transparent procurement agency accompanied by the effective implementation of an essential medicines list (OECD, 2003).

(a) The importance of a transparent and competitive procurement process for the health sector

The possibility of achieving significant savings through the introduction of better government procurement tools is especially relevant for the health sector, where, according to the World Bank, the procurement of medicines has been particularly prone to weak governance, contributing to stock-outs, wastage, poor quality and price inflation (World Bank, 2011). In a similar vein, a medicines pricing study found that, in the Africa, Europe and Western Pacific regions, governments paid an average of 34 per cent to 44 per cent more than necessary for medicines (Cameron et al., 2009). Such deficiencies in public procurement practices should be acknowledged as a significant failure of public health systems. Conversely, the introduction of more efficient, transparent and competitive procurement procedures in the context of public health systems has the potential to contribute substantially to improvement in the accessibility and affordability of medicines, thus helping to establish more efficient and cost-effective health delivery systems that minimize waste and prevent fraudulent and corrupt practices. A range of evidence relating to cost reductions that have been achieved through the application of transparent and competitive procurement processes in the health care sector is summarized in Box 2.13.

(b) Procurement of medical technologies and health services under the GPA

The GPA provides an appropriate framework for rules at the international level which are intended to promote efficient trade and best practices in the area of public procurement. The GPA is a plurilateral agreement, meaning that only those WTO members that have acceded to it are bound by its rules. As of 2012, 42 WTO members are parties to the GPA.

(i) GPA coverage

The GPA has important application vis-à-vis the public health care sector, specifically with regard to the areas it covers – the procurement of medicines, pharmaceutical products and health services. In principle, the GPA promotes transparency and fair competition and helps to deliver improved value for money for governments and their agencies. Unless otherwise explicitly excluded, the GPA covers all goods procured by covered entities in values above the relevant thresholds,102 including medicines and pharmaceutical products (see Table 2.5 for details).

The GPA applies only to such goods and services and government agencies or entities that have been specifically committed by the parties and included in their respective schedules of commitments in Appendix I of the GPA. To determine the specific market access commitments undertaken by GPA parties in  the  health  care  sector, the following factors must be taken into consideration: whether, and if so which, health-related entities are covered in a GPA party’s schedule of commitments; and whether, and if so which, health-related products and services are covered by the GPA.

Table 2.5. Coverage in the health sector by parties to the WTO GPA

Party to the WTO GPA

Coverage of health- related entities at the central government level

Coverage of health-related entities at the sub-central government level

Coverage of goods (pharmaceutical products are generally considered to be goods)

Coverage of health-related services

Armeniaa

P

 

P

      P

Canada

P

       P

P

      X

European Union, including its 27 member states

P

       P

       P

      X

Hong Kong, China

P

N/A

P

X

Icelandb

 

 

P

X

Israelc

P

X

P

X

Japan

P

X

P

X

Korea, Republic of

P

X

P

X

Liechtenstein

 

 

P

X

Netherlands, with respect to Aruba

P

N/A

P

X

Norwaya

P

 

P

X

Singapore

P

N/A

P

X

Switzerland

P

P

P

X

Chinese Taipei

P

P

P

X

United States

P

P

P

P

Notes: Names of parties to the WTO GPA are those used in the WTO. The symbols “P” and “X” have been used respectively to indicate whether a party’s coverage is expressly stated to include health-related entities or not. Where a party’s coverage has been presented in generic of descriptive terms and no additional details have been provided – for instance, by way of an illustrative list – the specific entry has been left blank. In addition, a footnote is provided indicating that the item is neither expressly covered nor expressly excluded. It should also be noted that the following do not have sub-central level of government and accordingly have scheduled no commitments in this regard: Hong Kong, China; Netherlands with respect to Aruba; and Singapore. aIn Norway’s and Armenia’s Annex 2, health-related entities are neither expressly covered nor excluded. bHealth-related entities are neither expressly covered nor excluded. cIsrael has expressly excluded the following goods procured by its Ministry of Health: insulin and infusion pumps, audiometers, medical dressings (bandages, adhesive tapes excluding gauze bandages and gauze pads), intravenous solution, administration sets for transfusions, scalp vein sets, hemi-dialysis and blood lines, blood packs and syringe needles. It should be noted that a number of these exclusions have been deleted as a result of the conclusion of the GPA negotiations.

In relation to the first aspect, health-related entities are covered by GPA parties at various levels of government (see Table 2.5). More precisely:

  • Almost all parties expressly cover such entities at the central government level (e.g. federal entities and ministries).
  • The majority of parties that have a sub-central level of government  (e.g.  states,  provinces,  cantons  and municipalities) cover them at this level or do not expressly exclude them.
  • Three parties cover other types of health-related government entities (e.g. hospitals).

It should also be noted, as is made clear in the revised GPA text, that the GPA does not apply to goods or services procured with a view to commercial sale or resale.

In addition, the European Union  has  undertaken binding commitments under the  GPA  for  health- related entities at  the  central  government  level  for all of its 27 member states and for a significant number of such entities at the sub-central government level. The United States has commitments covering procurement by the federal Department  of Health and Human Services, and by health-related entities at sub-central governmental level.

Another key point is that under the GPA, pharmaceutical products are generally considered to be goods, and accordingly, unless otherwise specified, are normally considered to be covered by the GPA when purchased by entities listed in the parties’ schedules, in values above the relevant thresholds. Furthermore, none of the GPA parties currently incorporates a general exclusion of such products in its schedules. One smaller party has excluded a number of goods procured by its Ministry of Health. With regard to the coverage of health-related services under the GPA, the United States is the only GPA party currently covering them. In summary, the GPA provides relatively broad coverage for entities in the health care sector, particularly with respect to goods (including medicines); on the other hand, its coverage of health services is limited.

(ii) The magnitude of GPA parties’ health-related procurement

The GPA is the pre-eminent international instrument regulating trade in government procurement markets, with the total value of covered procurement under the GPA estimated at around US$ 1.6 trillion in 2008.103  In order to appreciate the importance of the government procurement markets covered by the GPA in health- related fields, it is necessary to quantify the potential value of these market access commitments. An important source of statistical information on the size of covered procurement markets is now available from recent statistical reports that have been submitted by the GPA parties to the Committee on Government Procurement. Although these statistical reports are not necessarily consistent in all respects (efforts are under way to ensure greater consistency  in  methodological  approaches), they nevertheless represent a very useful source of information regarding the magnitude of the market access commitments under the GPA.104

These official sources make clear that the size of government procurement markets in health-related sectors covered by the GPA is substantial.105 For example, the United States notes in its statistical reports that the total general expenditure, by function, of the 37 states covered under the GPA in 2008 was US$ 40 billion for hospitals and US$ 50 billion for health.106 In addition, the United States reports that the value of goods and services covered by the GPA and procured by the US Department of Health and Human Services in 2008 was estimated to be around US$ 30 billion. The European Union also notes in its statistical report for 2007 that its covered entities had procured an estimated EUR 11 billion of medical  and  laboratory  devices,  pharmaceuticals  and related medical consumables covered by the GPA.107 Finally, Japan reports that the value of contracts covered by the GPA awarded by the Japanese Ministry of Health, Labour, and Welfare in 2010 was estimated at US$ 1.8 billion.108

5. Free trade agreements

(a) Current trends in trade negotiations beyond the multilateral arena

There is a worldwide trend for countries to enter into economic integration arrangements in various  bilateral and regional configurations (see Box 2.14), in parallel with multilateral agreements – a development that is presenting significant systemic challenges for the multilateral system outlined in this chapter (and analysed in WTO, 2011). These agreements have been dubbed regional trade agreements (RTAs), free trade agreements (FTAs), bilateral trade agreements (BTAs), or (the term used in recent reports by the World Bank and the WTO) preferential trade agreements (PTAs), reflecting the fact that many agreements are not “regional” but can cover countries which are geographically dispersed, and that such agreements provide for preferential tariffs on many goods. These terms often overlap, and several can, in effect, apply to the same agreement, depending on the characteristics of the agreement being considered. For the purposes of this study, the term “FTAs” is used in reference to any kind of trade agreement.

In the past, integration arrangements often focused on trade in goods and the elimination of tariff duties and other restrictions between parties to an agreement. However, WTO (2011) notes that in recent years, trade agreements have frequently taken the form of deep integration processes that include provisions on a wide range of behind- the-border or regulatory policy areas, such as services and IP and include a wider range of different players. The trade openness resulting from such processes creates pressures to reconcile divergent national practices and produces demands for governance and the rule of law that transcend national borders. In the area of IP law and policy, this trend may manifest itself in important changes in national laws, which in turn directly affect the framework governing access to, and innovation in, medicines and medical technologies – a set of processes that have recently been more dynamic than norm setting at the multilateral level.

Box 2.14. The changing geography and FTA coverage

PTAs may be FTAs or customs unions with common external tariffs. This most recent “wave” of regionalism covers a much wider network of participants – including bilateral, plurilateral and cross-regional initiatives – and encompasses countries at different levels of economic development – including “developed–developed”, “developing–developing”, and “developed–developing” alliances. Although these new agreements, like previous PTAs, involve preferential tariff reductions, they focus even more on other issues, such as capital flows, standards, IP, regulatory systems (many of which are non-discriminatory) and commitments on labour and environmental issues.

Many factors are at play in here. WTO (2011) refers to:
(i) neutralizing beggar-thy-neighbour trade policies that seek benefits for one country at the expense of others; (ii) increasing market size; (iii) enhancing policy predictability; (iv) signalling openness to investors; and (v) the expansion of international production networks. WTO (2011) concludes that, for developing countries, common policies with advanced economies may create benefits by allowing them to import regulatory systems that are “pre-tested” and  represent  “best  practices”. On the other hand,  developing  countries  may  also be pressurized to adopt common rules which are inappropriate for their level of development, or which could be used by advanced economies to protect vested interests.

Increasing market size can be a reason for establishing FTAs, since it enables companies from signatory states to exploit economies of scale and to gain a relative advantage over  excluded competing  companies.  In addition, preferential access to a larger market may increase a country’s  attractiveness  as  a  destination for foreign direct investment (FDI). Both reasons are particularly valid for small economies, which may help to explain why these countries agree to make concessions on other more controversial issues, such as IPRs or environmental standards,  when negotiating  FTAs  with large economies (WTO, 2011).

(b) Bilateralism and regionalism: the question of preferences

A key feature of FTAs is the idea of preferential treatment and benefits for parties to the agreement that may not be automatically extended to other parties. For some other areas beyond the traditional scope of agreements on trade in goods, such as government procurement or competition policy, negotiators also have the option to provide preferences that only benefit parties to the agreement. However, the situation is different for most aspects of IP standards.

Unlike other WTO trade agreements, such  as  GATT and GATS, the TRIPS Agreement does not provide for broad exceptions to the principle of MFN in the case of FTAs. This can have important implications for access to medicines and medical technologies, as well as for the innovation of new products. In  concrete  terms,  if  two WTO members agree to accord each other’s nationals higher standards of IP protection than provided in the TRIPS Agreement, they cannot, in principle, deny the same higher level of protection to nationals of any other WTO member. In other words, the agreed higher level of protection would not be limited to nationals of the FTA parties but would have to be extended to the nationals of all other WTO members as well. For example, if two countries agreed to provide patent term extensions for one another’s patent holders, the MFN principle under the TRIPS Agreement would require  them to provide the same patent term extensions to patent holders from all other WTO members. In contrast, if they agreed to abolish tariffs on pharmaceuticals or chemical ingredients imported from one another as part of a FTA or customs union, they would not need to abolish tariffs on imports from other countries.

(c) Intellectual property standards

As discussed in Chapter II, Section B.1(a), and Chapter IV, Section C.5, WTO members are free to incorporate into their national laws more extensive IP protection than the minimum standards required by the TRIPS Agreement, provided that this protection does not contravene TRIPS requirements. A number of FTAs provide for more extensive protection for patents and test data, as well as higher enforcement standards, which affect trade in pharmaceuticals and can have an impact on prices for medical technologies. Many of these agreements form “families” which are each grouped around a “hub”. EFTA, the European Union and the United States are the most important “hubs” in terms of the number of agreements containing such  provisions.  Each  hub tends to use a consistent approach when negotiating agreements, so that the IP provisions (among others) of all agreements within each family often share many prominent characteristics. In effect, the process exports aspects of the regulatory regime of the hub to its trading partners. In this respect, WTO (2011) notes that, compared with the WTO agreements, this process has generally served to heighten commitment levels. The areas embodying legally enforceable commitments are relatively few and are to be found predominantly in the fields of investment, competition policy, IPRs and the movement of capital.

The impact of FTAs on national IP regimes can be far- reaching because, as indicated above, the more extensive protection that they require for IP, including patents and test data, must be made available without discrimination to the nationals of all other WTO members, and not just to the nationals of the other party to the FTA. Moreover, in areas that usually operate through the use of national regulations, such as IP, services and competition policy (WTO, 2011), it would, in any event, be costly in practice to tailor regulations in order to favour nationals originating from preferential partners, and this becomes even more difficult as the number of FTAs to which a country is a signatory increases. Thus, reasons of principle and practicality lead to a “ratcheting-up” effect on IP standards, in that they can lock in higher levels of protection, with potential effects on innovation and access to medical technologies. A number of guides on FTAs have been published. For example, the WHO Regional Office for the Eastern Mediterranean has published a policy guide for negotiators and implementers of IP provisions in bilateral FTAs (El Said, 2010).109

(d) Commitments in other sectors

FTAs are, by their very nature, not limited to setting standards regarding IPR  protection  and  enforcement. A thorough analysis of the potential effects of FTAs on innovation in, and access to, medical technologies must therefore also take into account the commitments and standards agreed in other key policy areas which directly relate to the pharmaceutical sector, such as tariffs, government procurement and competition law.

With respect to tariffs, however, while earlier FTAs were motivated by lowering relatively high tariffs applied on an MFN-basis, the achievement of such tariff reductions, including for pharmaceutical products, is likely to have lost some of its initial relevance in recent years, and may therefore only occasionally play a role in FTAs. As WTO (2011) notes, this is due to the average applied tariff of merely 4 per cent across products and countries in 2009, implying that there is usually not much room left for exchanging preferential tariff concessions in trade agreements.

On the other hand, matters including investment, competition policy and government procurement have increasingly made  their  way  into  the  more  recent generation of FTAs, complementing the reduction of trade barriers and reflecting the trend towards the globalization of policies which previously were addressed at the national level. Related disciplines may either be addressed in stand-alone FTA chapters or, as is often the case for the competition sector, they become an integral part of chapters, for example, on IPRs or government procurement. WTO (2011) estimates, for example, that about 20 per cent of IPR chapters incorporate provisions preventing the abuse of IPRs or anti-competitive behaviour.


1. For a review the economics of IP in the field of medical technologies, see Chapter II, Section C.5.  back to text

2. As discussed in Section B.5 below. back to text

3. This effect of "multilateralizing" the scope of bilateral deals on IP is discussed in Chapter IV, Section D. back to text

4. WIPO document SCP/12/3 Rev.2. back to text

5. Ibid. back to text

6. WIPO document MTN.GNG/NG11/W/24/Rev.1. back to text

7. For further explanation on the patentability criteria, see Section (iii) below. back to text

www.wipo.int/treaties/en/registration/pctback to text

9. Article 27 of the PCT. back to text

10. Notable regional agreements include: the European Patent Convention (EPC), the Eurasian Patent Convention, the Harare Protocol of the African Regional Intellectual Property Organization (ARIPO), the Bangui Agreement of the African Intellectual Property Organization, the Patent Regulation of the Gulf Cooperation Council (GCC) and Decision 486 on the Common Intellectual Property Regime of the Andean Community (CAN). back to text

11. For an explanation on the term claim, see below in Section B.1(b)(vi). back to text

12. See Chapter IV, Section C.1(b). back to text

13. Rule 29 of the Implementing Regulations to the Convention on the Grant of European Patents, contained in the EPC, provides further clarifications regarding the patentability of inventions relating to the human body, the use of human embryos for industrial or commercial purposes and a number of other cases where the grant of European patents is excluded. back to text

14. See G 002/06 (Use of embryos/WARF) of 25 November 2008, OJ 2009, 306, available at www.epo.org/law-practice/case-law-appeals/pdf/g060002ep1.pdf. See also T 1374/04 (Stem cells/WARF) of 7 April 2006, OJ 2007, 313, available at www.epo.org/law-practice/case-law-appeals/recent/t041374ex1.htmlback to text

15. See C-34/10 of the 18 October 2011, available at http://curia.europa.eu/juris/liste.jsf?language=en&num=C-34/10back to text

16. OJ 1998 L213/13. back to text

17. WTO document IP/C/W/369/Rev.1. back to text

18. This question is discussed further in Chapter III, Section D.3(a). back to text

19. These issues are addressed in Chapter III, Section D.3(b). back to text

20. Ibid. back to text

21. Ibid. back to text

22. WIPO document SCP/13/5. back to text

http://scc.lexum.org/decisia­scc-csc/scc-csc/scc-csc/en/item/12679/index.do. The Supreme Court of Canada in its decision of 8 November 2012 [EN 70] held that the Canadian Patent 2,163,446 granted on an invention for the treatment of impotence was void because the patent application did not satisfy the disclosure requirements set out in the Canadian Patent Act, R.S.C. 1985, c. P-4. The court stated that adequate disclosure in the specification was a precondition for the granting of a patent. The specification, which included the claims and the disclosure, had to define the "precise and exact extent" of the right being claimed. The public, from the perspective of a person skilled in the art, had to be enabled only by the specification to make the same use of the invention as the inventor could at the time of the patent application. In this case the claims were structured as "cascading claims", with Claim 1 involving over 260 quintillion compounds, Claims 2 to 5 concerning progressively smaller groups of compounds, and Claims 6 and 7 each relating to an individual compound. The court stated that the practice of cascading claims was common and did not necessarily interfere with the disclosure requirement. The skilled reader knew that when a patent contained cascading claims, the relevant claim would usually be the one at the end concerning an individual compound. The compounds that did not work were simply deemed invalid with any valid claim surviving. However, in this case, the claims ended with two individually claimed compounds and there was no basis for a skilled person to determine, only from the disclosure in the specification, which of Claim 6 and Claim 7 contained the effective compound. Further testing would have been required to determine which of those two compounds was actually effective. Hence, the disclosure did not state in clear terms what the invention was, rather obscured it. back to text

24. "Prior art" is, in general, all knowledge that has been made available to the public prior to the filing or priority date of a patent application under examination. Prior art is used to determine the scope of novelty and inventive step, two patentability requirements (WIPO document SCP/12/3 Rev.2). back to text

25. WIPO documents SCP/12/3 and CDIP/7/3. back to text

26. Patent grant procedures from an access to medicines perspective are addressed further in Chapter IV, Section C.1 and 2. back to text

27. Further information on opposition Systems and other administrative revocation and invalidation mechanisms is contained in WIPO document SCP/18/4. Review procedures from an access to medicines perspective are addressed in Chapter IV, Section C.2. back to text

28. Licensing is further addressed in Chapter III, Section D.4(c), and Chapter IV, Section C.3(d)  back to text

29. For further information, see Chapter IV, Section C.5(a)(vi). back to text

30. See also WIPO documents SCP/13/3, SCP/15/3, SCP/16/3, SCP/17/3 and SCP/18/3. Exceptions and limitations and flexibilities in the patent system from an innovation and access to medicines perspective are addressed in Chapter III, Section D.4, and in Chapter IV, Section C.3(a), respectively. back to text

31. See Chapter III, Section D.4(b). back to text

32. Compulsory licences are discussed in Chapter IV, Section C.3(i) and (ii). back to text

33. Patent information is addressed in Chapters III, Section D.4(f), and IV, Section C.4, from an innovation and access to medicines perspective. back to text

34. See the online WIPO publication, Handbook on Industrial Property Information and Documentation, www.wipo.int/standards/en/back to text

35. For a list of WIPO Standards, Recommendations and Guidelines, see www.wipo.int/standards/en/part_03_standards.htmlback to text

36. For more information, see: WIPO Handbook on Industrial Property Information and Documentation (available at www.wipo.int/standards/en/pdf/08-01-01.pdf); and the EPO patent family definitions (available at www.epo.org/searching/essentials/patent-families.html). back to text

37. An overview about freedom to operate issues is provided in Chapter III, Section D.4(g). back to text

38. One WIPO technical study (WIPO document CDIP/4/3 REV./ STUDY/INF/3.) examined the availability of legal status data from primary sources and secondary sources, and described the challenges associated with the availability, reliability and comparability of such data. A total of 87 patent authorities contributed information to the study, which confirmed the sometimes deficient situation regarding availability of reliable legal status data and their comparability. The study includes recommendations for improvement, which would require considerable commitment from national authorities. For further information on the WIPO Project on Patent Legal Status Data, see www.wipo.int/patentscope/en/programs/legal_status/index.htmlback to text

www.fda.gov/Drugs/InformationOnDrugs/ucm129662.htmback to text

www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?fr=314.53back to text

41. See www.hc-sc.gc.ca/dhp-mps/prodpharma/patregbrev/index-eng.phpback to text

www.medicinespatentpool.org/patent-data/back to text

43. See Chapters II, Section B.5, and IV, Section C.5. back to text

44. This is explained in Chapter IV, Section C.3(iii). back to text

45. Ibid. back to text

46. Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004 amending Directive 2001/83/ EC on the Community code relating to medicinal products for human use. back to text

47. See http://www.wipo.int/madrid/en/. back to text

48. See www.who.int/medicines/publications/druginformation/innlists/en/index.html. In addition, the INN Extranet, MedNet, grants free access to the INN searchable database: http://mednet.who.int/back to text

49. WIPO document SCT/19/4. back to text  back to text

50. Other countries, such as Australia, Canada, Japan, Mexico and South Africa have established their own reviews of proprietary names under their ministries of health. back to text

51. The FDA Division of Medication Error Prevention and Analysis (DMEPA) and the EMA (Invented) Name Review Group (NRG). back to text

52. The NRG rejected 47 per cent of all proposed names in 2011. See EMA, "Overview of Invented Names Reviewed in November 2011 by the Name Review Group (NRG)", Press Release EMA/802336/2011, 2011. DMEPA rejects "roughly one-third of all proposed proprietary names" (Scheib and Witherell, 2011). back to text

53. Case No. 594/2000: Delivered in March 25, 2002, by Pretoria's High Court in favour of Beecham Group plc and SmithKline Beecham Pharmaceuticals (Pty) Ltd acting as Plaintiffs, against Biotech Laboratories (Pty) Ltd acting as Respondent. The Court considered the Plaintiffs had demonstrated that the package insert qualified as a literary work according to the definition of the South African Copyright Act, and interdicted Biotech from infringing the copyright. Biotech Laboratories (Pty) Ltd appealed the Court's decision, which was dismissed with costs. back to text

54. Case No. FCA 1307: Delivered in November 18, 2011 by the Federal Court of Australia, not entitling to any relief in respect of copyright infringement to the Plaintiffs: Sanofi-Aventis Australia Pty Ltd, Sanofi-Aventis Deutschland Gmbh and Aventisub II Incoporated, against the Respondent Apotex Pty Ltd. back to text

55. See Chapter IV, Box 4.10. back to text

56. Ibid. back to text

57. See: WTO documents IP/C/W/570 and IP/C/W/571; and European Commission (2010). back to text

58. See Chapter IV, Section C.3(e). back to text

59. Developments regarding IP enforcement and the link with access to medical technologies, including the impact of higher enforcement standards resulting from either national or interregional frameworks, such as the Anti-Counterfeiting Trade Agreement (ACTA), are discussed in Chapter IV. back to text

60. WIPO document CDIP/5/4 Rev. back to text

61. WTO document WT/L/540. See Chapter IV, Section C.3(iii), and Annex II. back to text

62. See www.wipo.int/treaties/en/agreement/trtdocs_wo030.htmlback to text

63. WIPO document CDIP/5/4 Rev. back to text

64. Ibid. back to text

65. WIPO documents CDIP/7/3 and CDIP/7/3 Add. back to text

66. See www.wipo.int/treaties/en/agreement/trtdocs_wo030.htmlback to text

67. See Chapter III, Section D.4(b). back to text

68. See Chapter III, Box 3.8. back to text

69. See Chapter IV, Section C.3(iii). back to text

70. See Chapter II, Section B.1(g)(v). back to text

71. See Chapter IV, Section C.3(a)(i). back to text

72. The report is available at http://whqlibdoc.who.int/hq/2001/a73725.pdfback to text

73. For records of the special session, see WTO document IP/C/M/31. back to text

74. For an explanation, see Chapter IV, Section C.3(c). back to text

75. See Chapter IV, Section C.3(a)(iii). back to text

76. UN documents A/RES/65/1 and A/RES/65/277. back to text

77. WTO document IP/C/25. back to text

78. WTO document WT/L/478. back to text

79. WTO document IP/C/40. back to text

80. WTO document WT/L/845. back to text

81. WTO document IP/C/W/583. back to text

82. Article 18(8), Law No. 31/2009 of 26/10/2009 on the Protection of Intellectual Property. back to text

83. See Chapters II, Section B.1(g)(v), and IV, Section B.6. back to text

84. See www.wipo.int/wipolex/en/other_treaties/details.jsp?treaty_id=227back to text

85. WTO document LT/UR/A/2. back to text

86. WTO document WT/ACC/UKR/152, paras. 425, 433 and 512. back to text

87. WTO document WT/L/508. back to text

88. WTO document WT/L/846. See www.wipo.int/wipolex/en/other_treaties/details.jsp?treaty_id=227back to text

89. WTO document WT/L/508/Add.1. back to text

www.oecd.org/regreform/liberalisationandcompetitioninterventioninregulatedsectors/bestpracticeroundtablesoncompetitionpolicy.htm. In particular, see the following Policy Roundtable papers: Generic Pharmaceuticals (2009); Competition, Patents and Innovation II (2009); Competition, Patents and Innovation (2006); Competition in the Provision of Hospital Services (2005); Enhancing Beneficial Competition in the Health Professions (2004); Competition in the Pharmaceutical Industry (2000); and, more generally, Relations Between Regulators and Competition Authorities (1998). back to text

91. Recent mergers between pharmaceutical companies have been reported as resulting in reduced R&D activity in the sector. See, for example, LaMattina (2011). back to text

92. "Exclusive grantback conditions" refer to any obligation on a licensee to grant an exclusive licence to the licensor in respect of its own improvements to, or its own new applications of, the licensed technology. "Conditions preventing challenges to validity" are those that impose an obligation on a licensee not to challenge the validity of IPRs held by the licensor. "Coercive package licensing" refers to an obligation on a licensee to accept a licence on several different technologies when the licensee's interest is limited to only part of these technologies. back to text

www.jftc.go.jp/en/legislation_guidelines/ama/pdf/070928_IP_Guideline.pdf, Guidelines on Standardization and Patent Pool Arrangements is available at www.jftc.go.jp/en/legislation_guidelines/ama/pdf/Patent_Pool.pdf and Guidelines Concerning Joint Research and Development under the Antimonopoly Act is available at www.jftc.go.jp/en/legislation_guidelines/ama/pdf/jointresearch.pdfback to text

94. For more details on tariff data, see Chapter IV, Section D.1. back to text

www.haiweb.org/medicinepricesback to text

96. For further details, see WHO/WTO (2002). back to text

97. Ibid. back to text

98. These sectoral descriptions are found in the Services Sectoral Classification List (WTO document MTN.GNS/W/120), which WTO members have generally used for scheduling their GATS commitments. Sectors (i) to (iii) above are found in the section on "Health-Related and Social Services" sector; sectors (iv) and (v) under "Professional Services" and (vi) under "Financial Services". back to text

99. If one takes into account horizontal limitations listed in some schedules (i.e. limitations applying across all scheduled sectors), partial commitments dominate. back to text

100. WHO, "Migration of Health Workers", Fact Sheet No. 301, 2010. back to text

101. For additional details, see Müller and Pelletier (forthcoming). back to text

www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htmback to text

103. See http://shenyang.usembassy-china.org.cn/wto-gpa.htmlback to text

104. Additional statistical information is available at www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htmback to text

105. It should be noted that the following analysis focuses only on the market access opportunities available under the GPA. It does not consider barriers to market access that could arise outside the scope of the GPA (e.g. IPRs). back to text

106. WTO document GPA/102/Add.3. It is recalled that the GPA applies to the entities, goods and services that are specified in each individual party's schedules. back to text

107. WTO document GPA/94/Add.4. back to text

108. WTO document GPA/108/Add.4. The reported value was expressed Special Drawing Rights (SDRs) and has been converted to US dollars. The estimate may be affected by variations in exchange rates and related problems of conversion. back to text

109. Some of the specific features of the FTAs relevant to pharmaceuticals are discussed in Chapter IV, Section C.5. back to text