Canadian Access to Medicines Bill Under Threat

23 March 2011

The fate of legislation seeking to make it easier for Canada to export affordable generic copies of patented drugs to poor nations hangs in the balance, as the ruling Conservative party leadership in the country's unelected Senate stalls debate on it only days before parliament may be dissolved for an election.

The bill, C-393, was approved by a majority of lawmakers in the elected House of Commons earlier this month. It would amend Canada's 2004 law implementing WTO decisions aimed at making it possible for developing countries lacking the ability to manufacture drugs to import cut-price generic versions of essential medicines. That law, which defined Canada's ‘access to medicines regime', has been widely criticised by health and humanitarian activists as well as opposition parliamentarians who claim that its multiple procedural requirements render it nearly impossible to use. In their view, the Canadian law went beyond the already onerous requirements of the WTO's so-called '30 August 2003 decision', the multilateral agreement on intellectual property and access to medicine that the 2004 legislation was supposed to implement.

In nearly seven years, the Canadian law has been used precisely once: to cover two shipments to Rwanda of an HIV/AIDS drug made by Canadian generics manufacturer Apotex. That case remains the only instance in which the 30 August decision has been used (although the existence of the decision may have strengthened governments' hand in price negotiations with brand-name producers). Passing bill C-393, critics say, would make it easier for drugs to get from would-be Canadian generics exporters to the poor countries that need them.

Apotex has complained that the time and costs involved in using the existing system were high, and said that it would be reluctant to repeat the process unless it were streamlined. Canada's brand-name drug industry, on the other hand, argues that the status quo represents a more appropriate "balance between broadening access to affordable drugs and protecting intellectual property rights which are the cornerstone of innovation." In a statement, Russell Williams, president of Canada's Research Based Pharmaceutical Companies (Rx&D), warned that Bill C-393 "opens the doors to diversion which raises the risk of counterfeit and black market profiteering."

Sponsored by a member of a parliament from the opposition New Democratic Party, bill C-393 was passed in the House of Commons two weeks ago, backed principally by opposition lawmakers. In order to become law, it must be approved by the appointed members of the Senate (analogous to the British House of Lords), which is controlled by the ruling Conservative party.

The Senate started a second reading of the bill on Monday, but the Conservative leadership in the Senate moved to adjourn discussions to the following day. It adjourned discussions again on Tuesday, in the face of impassioned appeals for the bill's passage from individual Conservative and Liberal senators citing humanitarian and cost-effectiveness concerns. At time of writing on Wednesday, Senators were set to resume deliberations on the bill. The Senate has considered nearly identical legislation in the past, and in theory could have passed it in no more than two or three days.

It is extremely rare for the Senate, traditionally mindful of its lack of a popular mandate, to reject legislation passed by the House of Commons. It is not, however, without precedent: Conservative senators in 2010 controversially overturned a climate change bill passed by the House. On the other hand, access to medicine is an issue that divides, rather than unites, Canada's ruling party: over two dozen backbench Conservative MPs supported Bill C-393 in defiance of the government's opposition to it; individual Conservative senators have been among those leading the charge for Senate approval.

The uncertainty surrounding the fate of the legislation is compounded by the fact that the government could be defeated this week on a budgetary vote in the House of Commons, where it does not command a majority. This would trigger an election and require the access to medicine bill to start from scratch in a new parliament.

C-393: A ‘one-license solution'

While WTO intellectual property rules allow governments to issue ‘compulsory licences' - effectively suspending patent protections - to authorise the generic production of medicines without the consent of patent holders, they stipulate that drugs thus produced should be "predominantly" for the domestic market. This stipulation means that compulsory licensing flexibilities have been of little to help countries that have little or no pharmaceutical manufacturing capacity. WTO members formally recognised the challenges faced by such countries in 2001. In 2003, the 30 August decision spelled out rules under which the domestic consumption requirement would be waived to allow poor countries to import drugs produced under compulsory licence elsewhere. These rules included requirements for both the importing and exporting countries to notify the WTO about intent to use the scheme along with the drugs and quantities in question, in addition to packaging requirements aimed at preventing diversion to third markets. (WTO members have in principle approved turning the 30 August decision into a permanent amendment to the TRIPS agreement, but not enough have ratified the changes for them to enter into force.)

According to Richard Elliott, executive director of the Canadian HIV/AIDS Legal Network and a vocal supporter of passing C-393, the bill would make full use of flexibilities in the TRIPS Agreement and the 30 August decision without contradicting either.

He said that the legislation would expand the definition of pharmaceutical products from the current specific list of drugs that requires a federal cabinet decision to be modified. The most important reform, he added, is the "one license" solution, which makes the progress of getting a compulsory license "much more straightforward and direct."

Under the existing law, a would-be maker of a generic for export would have to first approach the patent-holders - there would be many in the case of a fixed-dose combination of different HIV/AIDS drugs - to see if the patent-holders would consent to license the drugs on a voluntary basis. After a 30-day period, if a voluntary license is not forthcoming, the generic manufacturer would be able to ask Canadian patent authorities to issue a compulsory license authorising it to produce the drug without the consent of the patent-holder. Currently, however, the 30-day period only starts once the generic manufacturer can tell the brand-name manufacturer the country and quantity of the drug in question. This means that before a Canadian generic manufacturer can start trying to get a license, a developing country government has to have notified the WTO of the names and quantities of the drugs it seeks to import. If the quantity were to change, or another country wanted to import the same drugs, the Canadian generic manufacturer would have to go back to the patent-holders and repeat the process.

Bill C-393's ‘one-license process' changes the sequence of the process, Elliott said, "so that you don't run into this Catch -22 where a generic manufacturer can't get a license until it has a tentative agreement with a country, but a country really has no incentive to make an agreement with a manufacturer when there's no guarantee that the manufacturer could get them the product."

Under Bill C-393, a Canadian generic manufacturer could approach manufacturers for voluntary licenses without a target country or drug quantity in hand. There would still be a 30 day period before the company could seek a compulsory license, although it could be waived in circumstances outlined in TRIPS Article 31(b) - "in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use." If it received a compulsory license, the generic manufacturer would be able to export to all countries covered in Canada's legislation, without any fixed limits on the drugs in question. (The importer would still need to notify the WTO before importing any drugs; anti-diversion rules such as differential packaging would still apply, as would disclosure requirements on an informational website.)

According to Elliott, once armed with more expansive compulsory license, Canadian generics manufacturers would be in a position to bid in developing country governments' standard tenders for drug purchases. The increased competition among legal suppliers would push governments' purchase prices downwards; meanwhile, the prospect of greater sales volumes would make it easier for the Canadian companies to offer competitive prices.

Elliott said that while the Canadian bill corrects the imperfections in Canada's implementation of the 30 August decision that had proven to be stumbling blocks to using it, this did not mean that the WTO mechanism was ideal.

Echoing criticisms made by public health groups and backed at the time by the World Health Organization, he suggested that an approach based on TRIPS Article 30, which provides for "limited exceptions to the exclusive rights conferred by a patent" so long as they do not  "unreasonably prejudice" the legitimate interests of the patent owner, would have been more straightforward. An ‘Article 30 approach' would have amounted to a standing statutory compulsory license for the limited purpose of exporting drugs to poor countries unable to make them.

An earlier version of Bill C-393 included a provision waiving the need for generic manufacturers to negotiation with patent-holders in circumstances not limited to national emergencies. This, said Elliott, went beyond TRIPS Article 31b, but could have been justified under Article 30. However, that clause was taken out over the course of parliamentary deliberations.

ICTSD reporting; "Access to medicines bill stalling in Senate," VANCOUVER SUN, 22 March 2011.

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