The LDC medicines extension question: Contemplating next steps

24 September 2014

The WTO previously authorised least developed country (LDC) members not to implement or enforce patent and regulatory data rules until January 1, 2016. Should LDCs seek renewal of the pharmaceutical-related extension at the TRIPS Council before it expires, or does the recent “general” extension for LDC implementation of the TRIPS Agreement until July 1, 2021 already cover the necessary ground?

The  World Trade Organization Doha Declaration on the TRIPS Agreement and Public Health adopted in 2001  was intended to provide assurance that intellectual property rules in force among WTO members would not be interpreted or enforced in a way that would interfere with the protection of public health and the promotion of access to medicines for all. It was adopted following a period of intense international concern and conflict regarding the misguided invocation of TRIPS agreement rules in an attempt to limit access to lower-cost medicines needed to treat HIV-AIDS in Sub-Saharan Africa.

Paragraph 7 of the World Trade Organization Doha Declaration on the TRIPS Agreement and Public Health adopted in 2001 recognised the special situation of least-developed WTO members and directed the TRIPS Council to take the necessary action to assure that LDCs would not be obligated with respect to pharmaceutical products to implement or enforce those parts of the TRIPS agreement relating to patent and regulatory data protection. The TRIPS Council approved a decision extending until January 1, 2016, the transition period during which LDCs do not have to provide or enforce patent and regulatory data protection for pharmaceuticals. As a related matter, on July 8, 2002, the WTO General Council acted to waive any obligation on the part of LDCs to grant “exclusive marketing rights” on newly approved patented drugs during the period until January 1, 2016 (hereinafter collectively the “2016 medicines extension”).

Why was and is the 2016 medicines extension important from a public health standpoint? Access to antiretroviral treatment for a large number of individuals in LDCs was and is made possible because of the availability of low-cost generic drugs the procurement of which is funded mostly by international donors through the Global Fund to Fight AIDS, Tuberculosis and Malaria, the President’s Emergency Plan for AIDS Relief and similar organisations. Donor organisations and their supply chain partners are reluctant to purchase and distribute antiretroviral and other drugs when faced with the possibility of patent infringement lawsuits. Prospective patent infringement issues for suppliers to LDCs had arisen before adoption of the Doha Declaration. Almost immediately following WTO implementation of the Paragraph 7 extension the World Health Organization organised the preparation of  forms that could be used by LDC public health officials to provide assurance to international suppliers that patents would not be enforced based on the 2016 medicines extension. Such assurances have been provided by LDCs many times and assist to allay concerns of producers and intermediary supply chain enterprises that are reluctant to supply under threat of infringement claims.

There are also efforts by LDCs to maintain their own antiretroviral drug manufacturing capacity, such as in Uganda. Continuation of these efforts may depend on the absence of corresponding patents that may otherwise preclude operations.

The no-rollback matter

LDCs might have been obligated to extend patent protection to pharmaceutical products as early as January 1, 2006, based on the transitional arrangement incorporated in article 66.1 (TRIPS). While article 66.1 expressly contemplated extension of an initial 11-year LDC transition arrangement based on a “duly motivated request” by an LDC, when the Doha Declaration was adopted in 2001 there was no assurance that a duly motivated request would be made. Moreover,  at the insistence of certain developed members, the LDC general TRIPS extension that was requested and adopted on November 29, 2005 (running until July 1, 2013) (hereinafter the “2013 general extension”) included conditions that, absent special acknowledgment, would have substantially interfered with the options available to LDCs under the 2016 medicines extension. Notably, the 2013 general extension included a “no-rollback” clause that appeared to preclude LDCs from reducing IP protections already in place. It provided:

“Least-developed country Members will ensure that any changes in their laws, regulations and practice made during the additional transitional period do not result in a lesser degree of consistency with the provisions of the TRIPS Agreement.” (Paragraph 5)

Whether the TRIPS Council had the authority to condition the 2013 general extension on the no-rollback clause is debatable, and whether the terms of the commitment are sufficiently clear to be enforceable is open to question. Nonetheless, the no-rollback clause -- if it applied to patents on pharmaceutical products (which it certainly did not further to Paragraph 6 of the 2013 general extension) -- would have precluded LDCs from “disapplying” existing patent rules or refusing to enforce pharmaceutical patents that may have been granted. Many LDCs make pharmaceutical patent protection available, inter alia, because patent laws were put in place by colonial authorities. In that regard, to make importation of generic products for LDC markets secure from a legal standpoint, it is not sufficient only to put off an obligation to implement patent protection for pharmaceuticals; existing protections must be waived.

As the end of the 2013 general extension, i.e. July 1, 2013, approached, and as LDCs made a duly motivated request for an additional extension, the question whether such an extension would again be conditioned on a no-rollback commitment was actively debated. On this occasion, LDCs were well-prepared to address the question, and objected to the inclusion of such a commitment.

On June 11, 2013, the TRIPS Council adopted a further general extension in favor of LDCs. It provides that LDCs are not required to apply the provisions of the TRIPS agreement, other than those relating to national and most favored nation treatment (and certain procedural matters), until July 1, 2021. That is, an 8 year extension from July 1, 2013 (hereinafter the “2021 general extension”). Despite pressure from some developed country members, the new extension does not include a no-rollback commitment. It includes a statement in Paragraph 2 that “least developed country Members express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement”. (The decision also explicitly provides that nothing in it “shall prevent least developed country Members from making full use of the flexibilities provided by the Agreement to address their needs (…)”.)

There is no mandatory language or language of legal obligation as found in Paragraph 5 of the 2013 general extension. (The earlier no-rollback language was that LDCs “will ensure that any changes…do not result in a lesser degree of consistency”.) The expression of a “determination” to do or not do something is a statement of preference or hopeful intent, but it is not a statement of a legal obligation. It can be foregone. The 2021 general extension expressly provides that it is without prejudice to the 2016 medicines extension, and the right of LDCs to seek further extension of the latter’s January 1, 2016 deadline.

 

The question

 

Assuming that the extension until 2021  is properly interpreted as providing maximum flexibility to LDCs, including the potential to roll back existing IP commitments, is there a need to further extend the 2016 medicines extension? Or, are all the flexibilities that LDCs enjoy under the 2016 medicines extension included within the scope of the 2021 general extension? If under the 2021 general extension LDCs are authorised to roll back existing protections, they can presumably disapply existing pharmaceutical patents and regulatory data rules, and make whatever changes to their pharmaceutical-related patent and regulatory data laws they choose from the standpoint of the TRIPS agreement.

 

The answer(s)

 

The foregoing analysis suggests that further action to extend the 2016 medicines extension is not necessary because the subject matter has already been covered by the 2021 general extension.

Regrettably, on a number of prior occasions various lobbies, whether public or private sector, have strived to exploit even the remotest ambiguities for their own purposes, and some governments promote the objectives of those lobbies.  This practice has certainly affected the medicines sector.

It appears that the LDC extension issue may be subject to this type of “uncertainty generation”. By way of illustration, the EU delegation to the WTO made public comments following adoption of the 2021 general extension suggesting that LDCs would be required to initiate pharmaceutical patent protection in 2016 notwithstanding that LDCs are generally exempt from TRIPS compliance until 2021. The EU delegation also suggested that the 2021 general extension includes a no-rollback commitment, a legal matter addressed to the contrary earlier in this note. While it did not allude to a no-rollback commitment, the United States Trade Representative included similar language to that used by the EU delegation regarding an LDC pharmaceutical patent and regulatory data  implementation deadline in its 2014 Special 301 Report, stating “the LDC Members have until 2016 to implement their TRIPS Agreement obligations for patent and data protection for pharmaceutical products, as proposed by the United States at the Doha Ministerial Conference of the WTO” (at page 27).

The key point is in the absence of a firm basis of legal security, LDCs and suppliers to LDCs may find that doubts are raised as the January 1, 2016 deadline approaches regarding whether flexibility to import low-cost generic drugs will continue after that date. Legal insecurity imposes a cost, and in this case the cost may be an adverse impact on public health. To put it plainly, suppliers of medicines, including intermediaries and funding agencies, have a strong bias against being the subject of patent infringement litigation. The 2016 medicines extension provided legal security for these suppliers. Will these same suppliers find sufficient assurance in the 2021 general extension if doubts are raised about its interpretation, such as were raised by the EU Delegation and USTR?

There is no “easy answer” to this diplomatic and real world question. It is a question that the LDCs will have to answer prior to January 1, 2016 so that they may make an informed decision about whether to seek extension of the 2016 medicines extension from the TRIPS Council and the General Council of the WTO. It may be useful at this stage to consider a few options.

 

A few options for LDCs

 

LDCs could rely on an informed legal conclusion that the 2021 general extension provides all of the flexibility that was incorporated in the 2016 medicines extension. Armed with a sufficiently robust advice memorandum, they could effectively "do nothing" in respect to formal WTO decision-making.

As a somewhat more proactive approach, LDCs also could issue a joint statement setting out their interpretation of the 2021 general extension. Such a joint statement could be presented to the TRIPS Council and the General Council of the WTO. If presented sufficiently in advance of 2016, the LDCs could see what reaction comes from non-LDC members. An unfriendly reaction might indeed inform the LDCs regarding potential next steps.

LDCs could formally approach the TRIPS Council and General Council with a duly motivated request for an extension of the 2016 medicines extension. In this regard, LDCs might consider seeking an extension until a member is no longer an LDC to avoid the need for similar action in the future.

Alternatively, LDCs could seek a declaratory or interpretative statement from the TRIPS Council and General Council that the 2021 general extension covers pharmaceutical patents, regulatory data and exclusive marketing rights, including non-enforcement, and that further action regarding the 2016 medicines extension is not needed.

These are some options available to LDCs. It would probably be wise for LDC diplomats to begin working through the options because action, if it is decided upon, might best be taken well before January 1, 2016.

Author: Frederick M. Abbott - Edward Ball Eminent Scholar Professor of International Law, Florida State University College of Law, USA.

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