Access to Drugs Initiative

1. Access to Drugs Initiative Access to Medicine— Putting TRIPS to work by testing Canadian legislation Prof. Noah B. Novogrodsky, Visiting Professor, Georgetown University Law Center and Sarah Perkins, Asst. Director, International Human Rights Program, University of Toronto Faculty of Law. Gilbert’s LLP

2. Today’s Presentation • Background to TRIPS and compulsory licensing • Canada’s Legislation • ADI and the Ghanaian test case • Thinking Bigger

3. TRIPS • 1995 World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) aims to harmonize intellectual property standards globally. • 2001 members of the WTO adopted the Doha Declaration on TRIPS and Public Health. Paragraph 4 of the Doha Declaration states that the TRIPS “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.”

4. Covenant on Economic Social and Cultural rights article 12 1. state parties recognize everyone’s right to the enjoyment of the highest attainable standard of physical and mental health 2. steps to be taken for full realization include those necessary for c. preventing, treating and controlling epidemic, endemic, occupational and other disease d. creating the conditions which would assure to all medical services and medical attention in the event of sickness article 2 each state party undertakes to take steps, individually and through international assistance and cooperation, to the maximum of available resources, to achieve progressively the full realization of the covenant rights by all appropriate means

5. TRIPS • To remedy barriers posed by patents, the WTO permits all countries to issue compulsory licenses. • A compulsory license is issued by government to allow an invention to be used without permission of the patent holder.

6. Why is compulsory licensing useful? Through compulsory licensing a country can: a) issue a compulsory license for the domestic production of generic medicine b) issue a compulsory license to permit import of generic medicines from other countries c) lower the price of patented medicines through threat of compulsory licenses (Brazil, Canada, U.S.)

7. TRIPS and compulsory licensing • TRIPS does not restrict the circumstances under which a compulsory license may be issued, but it requires certain procedures to be followed in issuing the license. • TRIPS Article 31 • license must be non-exclusive; • Patent holder must receive adequate remuneration; • Patent holder must have some rights of appeal.

8. Limitation: In most cases, the license must be for the supply of the domestic market. This applies to compulsory licenses issued for import of product, and for domestic production TRIPS: Compulsory license limitation Result: Creates barriers for countries with insufficient manufacturing capacity

9. WTO August 30, 2003 Decision Exception to the domestic market limitation: Permits governments to issue a license for export: • This exception exists to assist countries with little or no manufacturing capacity to access affordable pharmaceuticals.

10. Oh Canada! • Sept. 2003, Canada announces its intention to implement the Aug. 30, 2003 decision in its national law. • May 2004, Bill C-9, also known as the ‘Jean Chretien Pledge to Africa’ (JCPA) passed.

11. Bill C-9: Strengths and Weaknesses • The Act allows Canadian generic manufacturers to export otherwise patented medicines but… • Includes a limited list of products, • Did not anticipate new fixed-dose combination medicines • Allows exports only to listed “least developed countries” or non-WTO member states that have declared an emergency • Requires generic firms to charge less than 25% of the brand price, and • Limits the compulsory license to a two-year period. After two years, the generic co. must apply for a new license based on a new contract. • Medicines must be labeled, colored and tracked. • The patent holder reserves the right to sue the generic producer for infringement

12. To implement C-9… • Two compulsory licenses must issue – one from the generic producer in Canada – and a second from an importing state. At base, it is a drug-by-drug, country-by-country, case-by-case decision-making process.

13. The test case: Ghana • Working to streamline compulsory licensing in Ghana to ensure Ghana can lower cost of medicine through the import or domestic production of generic medicine. • To make compulsory licensing accessible in Ghana, the procedures must be simple, efficient and predictable. • Ghana’s Patent Act, 2003 is TRIPS PLUS.

14. ADI offered technical assistance and proposed amendments to Ghana’s Patent Act: • Broader grounds for issuing license, licenses issued through an administrative regime, provisions to protect government from liability, timelines, transparent application procedure. • C-9 equivalent for Ghana • GATT exception

15. Meanwhile, back in Canada… • Medecins Sans Frontieres sought a compulsory license for export. • February 2005: Apotex agreed to develop a 3-in-1 ARV of AZT/3TC/NVP • September 2005: AZT/3TC.NVP is added to Schedule 1 of C-9.

16. Bill C-9 Update • Not a single pill has been exported under Canada’s legislation • Only one Canadian generic company has expressed interest in producing ARVs. • The generic industry has distanced itself from C-9. • Canada’s new Minister of Health has promised to ‘review the legislation.’

17. At the same time… • Ghana issued a compulsory license for a single ARV. • The order was filled by an Indian company.

18. Significance • Clinton Foundation will not fund efforts that are not TRIPS compliant. • Canadian legislation has spawned similar acts in other industrialized nations that are learning from the Canadian experience. • Apotex’s 3FDC has been approved in Canada and is ready to be sold at US $0.36 per tablet.

19. Permits adeveloping country that is a party to a regional trade agreement to re-export product imported under a compulsory license to neighbouring countries belonging to the RTA. Thinking Bigger1) The GATT exception: Benefit: Allows developing countries to harness economies of scale. More purchasing power = ability to negotiate lower prices

20. Permits a developing country to re-export product domestically produced under a compulsory license. GATT exception ALSO… Benefit: Creates incentives for domestic manufacturing of essential medicine

21. GATT MODEL Country ‘A’ Issues license Under the authority of 1 license, Country A can export to members of the Regional Trade Block

22. The applicable RTA must be within the meaning of Art. 24 of GATT and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries. 50% of the RTA Members must be least-developed countries. May only export to members sharing the health problem in question. GATT exception technical requirements

23. Regional Procurement • WTO included the GATT exception to allow developing countries to harness economies of scale. • Increasing purchasing power to negotiate lower prices is the force behind existing pooled procurement regimes.

24. Examples of Existing Regional Procurement Regimes • Organization of Eastern Caribbean States • Since 1989 • Has reduced prices by average of 44% • Central purchasing unit manages purchases on behalf of 9 countries. • In 2002, procured $3.5 million U.S. worth of medicine.

25. Regional Procurement Regimes • Gulf Cooperative Council • Since 1976 • Has reduced prices by an average of 30%. • Issued $234.5 million U.S. worth of tenders in 2001. • Fills 80% of public sector drug needs through regional procurement. Through the GCC, Saudi Arabia fills 100% of its public sector drugs needs (2002)

26. Benefits of regional procurement • Reduce drug prices • Harmonize drug registration • Improve quality assurance • Improve service by suppliers • Decrease administrative workload and procurement costs

27. How would it work? • Option 1 • Country A obtains a compulsory license to import or domestically produce generics. • Country A negotiates with supplier and imports the product, or domestically manufacturers the product under the authority of the license. • Country A exports product to member countries Without the GATT exception, this scheme would violate TRIPS

28. How would it work: • Option 2 • Member countries collaborate to negotiate prices from supplier, • Country A issues a compulsory license, • Country A redistributes to member countries under the authority of the 1 license. =Regional Procurement via single port of entry

29. The GATT Model in West Africa • Ghana is poised to become the first country in the world to have implemented the GATT exception into domestic legislation. • Ghana has the administrative and legislative infrastructure to issue compulsory licenses.

30. GATT exception in West Africa—technical requirements Need to identify a regional trade agreement in West Africa that qualifies under Art. 24 GATT and the Enabling Clause ECOWAS

31. ECOWAS • ECOWAS notified WTO under Enabling Clause in September 05. • 50% of ECOWAS member countries are least-developed countries • ECOWAS member states share similar health problems – HIV/AIDS, malaria, TB.

32. GHANA ECOWAS REGIONAL PROCUREMENT MODEL Secretariat requests compulsory license. Ghana issues license. Secretariat coordinates tender, negotiates with supplier Secretariat coordinates shipment SUPPLIERS ECOWAS MEMBERS SECRETARIAT Secretariat notifies bank and requests bank pay supplier Bank issues payment to suppliers ECOWAS members top up bank account after bank pays supplier CENTRAL BANK

33. Thinking Bigger • 2) One-stop shopping. • Harmonizing legal, funding, capacity-building and business modeling will address a number of issues at once. • A comprehensive answer to the question: Why don’t life-saving medicines reach states and people in need?

34. SUMMARY • Developing countries should have more control over access to essential medicines and, specifically, drug prices. • an environment of high volume and high demand will help to encourage competition between suppliers, and, • promotes local manufacturing. • Cannot continue to ignore TRIPS- TRIPS does not only create barriers, it also provides us with solutions. But it’s here to stay. • Need to establish long-term sustainable solutions that will carry us forward.

35. Final thought