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Vol.
XXVII No. 34
August 24,
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Charade
On Public Health Before Cancun
Amit
Sen Gupta
AS
the Cancun Ministerial meeting of the World Trade Organisation draws near, a
charade is being played out in the name of public health. It may be recalled
that the previous WTO Ministerial meeting held in Doha in November 2001 adopted
a Declaration on the TRIPS Agreement and Public Health. While there is a
need to recognise the significance of the declaration, there is also the need to
examine the declaration more closely as well as the events that followed.
Contrary to popular perception, the declaration in no way changed the TRIPS
accord. It did not even say that the accord needs to be renegotiated. In that
sense it was really in the nature of a clarification, stating what can be done
by countries to safeguard public health while not at the same time infringing
the TRIPS accord. Thus the declaration said:
Accordingly,
while reiterating our commitment to the TRIPS Agreement, we affirm that the
Agreement 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. Clearly the intent is still to maintain that the
TRIPS accord is inviolable and at the same time say that the accord allows
certain measures to safeguard public health.
Specifically, the declaration clarifies that countries can issue
compulsory licenses when faced with a health crisis or emergency. It further
states: Each Member has the right to grant compulsory licences and the
freedom to determine the grounds upon which such licences are granted. It
must be understood that such clarifications do constitute an advance because, in
the past, the US has tried to prevent countries like Brazil and Thailand from
doing exactly what the clarifications now say are perfectly compatible with
TRIPS.
In concrete terms it means that countries can grant a license to produce
life saving drugs to domestic companies, even if patents for these drugs are
held by foreign patent holders. This is, of course, still far short of what the
1970 Patents Act of India allowed. The 1970 Act did not allow patents to be held
for any product, irrespective of whether they were required to address any
health crisis or not. It is this provision that allowed the development of a
domestic drug industry and also the development of an R&D base in the
pharmaceutical sector. It needs to be realised that what may be construed to be
drugs that are required to address emergencies will always constitute a
small fraction of the total number of drugs manufactured. Hence MNCs will be
able to control the production and distribution of a majority of drugs. This
would mean that Indian companies will not have the unhindered freedom that the
1970 Patents Act provided. In the long run this will have an impact on the
balance in the pharmaceutical sector, allowing the MNCs to once again assume a
dominant position.
Moreover R&D and manufacturing capabilities are built over a period,
and cannot be suddenly switched on when emergencies arise. Restricting the
space in which domestic companies can operate to produce newer drugs will have
an adverse impact on their manufacturing and R&D capabilities as well as
R&D capabilities built up in the public sector. The Doha declaration of
2001, thus, did not constitute a rollback of TRIPS but it did clarify some
so called flexibilities in the agreement that developing countries could make
use of to safeguard their interests. Unfortunately, the second amendment of
the Indian Patents Act, that was passed in Parliament last year did not even
make full use of these flexibilities. The amendments have made the process of
granting compulsory licenses extremely cumbersome, thereby nullifying any
advantage we could have obtained from the Doha declaration.
UNRESOLVED
ISSUE IN DOHA
DECLARATION
The
Doha declaration also fell short of requirements in another key area, and this
is the area around which a charade is being played out. The declaration had
said: We recognize that WTO Members with insufficient or no manufacturing
capacities in the pharmaceutical sector could face difficulties in making
effective use of compulsory licensing under the TRIPS Agreement.
We instruct the Council for TRIPS to find an expeditious solution to this
problem and to report to the General Council before the end of 2002. Most
developing countries, unlike India, have no manufacturing capability. So the
TRIPS agreement (and the clarification in the Doha declaration) does not enable
them to access cheaper drugs because they cannot get these drugs produced
cheaply in their country even if a compulsory license can be granted.
Subsequently,
for almost two years now, the TRIPS council has been supposedly grappling with
this issue. Some international NGOs (like Medecens Sans Frontieres and Oxfam)
had proposed that a way to get around the above problem would be for the TRIPS
council to give an authoritative interpretation that exports to countries
with no manufacturing capability would be deemed as exception to
patentatibility (under Article 30 of TRIPS) and could be done automatically
without authorisation from the original patentee. This would have meant that a
company in India could be granted a licence to produce a patented drug that is
required for a country in Africa which has no manufacturing capability. The
import of this drug from the Indian manufacturer would not then constitute a
violation of the TRIPS accord.
UNDERMINING
THE
DECLARATION
The
developed countries, led by the US, and including the European Union, Japan,
Canada and Switzerland, however, refused to consider this and other suggestions
designed to address this issue. The argument put forward by the US and its
allies is that this would allow companies in India and other developing
countries with manufacturing ability, to circumvent the TRIPS accord and
manufacture patented drugs. The developed countries have also expressed the fear
that once these patented drugs are manufactured under a licence and enter the
market, there is no guarantee that they would not find there way to other
countries, for whom the exports were not intended. In order to address these
concerns the US has been arguing that the number of diseases that would be
covered by this facility should be restricted to a handful. Specifically, it is
being argued that this facility should cover only a few infectious diseases like
HIV/AIDS, Malaria, T B, etc and should not cover diseases like heart disease,
diabetes, etc. Further the US wants that the TRIPS council should have the
powers to decide which disease(s) constitutes an emergency in a particular
country. It further wants strict procedures that would monitor the export of
each consignment that is imported, to ensure that the drug is used only for the
purpose for which it was licensed. It has also asked for special labeling of
these drugs, so that they are not re-exported to other countries.
The
US proposal, clearly prompted by its pharmaceutical lobby (there are more
lobbyists for the pharmaceutical industry in Washington than there are
Congressmen!), is an obvious attempt to make a part of the Doha Declaration
entirely infructuous. The Doha Declaration had clearly articulated that
individual countries have the right to decide what constitutes a national public
health emergency or a matter of urgency. The US proposal wants to take this
right away from sovereign countries. Moreover the Doha declaration had not set a
limit on the number or the kind of diseases that would be covered by the
facility. Further, the US proposal that each consignment would be monitored,
seeks to put in place regulatory mechanisms that would be overseen not by the
sovereign countries, but by a supranational body that derives authority from the
TRIPS Council. In other words, if
the US proposal was to be agreed upon, the TRIPS council would have powers to
police local legislations – a power that even the TRIPS accord does not
provide for. So the Doha Declaration, far from increasing the scope of
flexibilities available for developing countries, would be turned into an
instrument for greater control of national legislations by the WTO.
THE
MOTTA TEXT
The
intransigent attitude of the US delayed the formulation of any discussion text
that would be acceptable to all countries. Finally on December 16, 2002, a draft
was circulated at the TRIPS Council meeting.
This draft, known as the Motta text (called so after the Mexican
Ambassador to the WTO Eduardo Perez Motta, who was instrumental in drafting the
document) was supposed to be a compromise document. Strangely enough, this so
called compromise document, actually is designed to accomodate, virtually, all
the demands made by the developed countries. While the EU and other developed
countries supported this draft, the US contributed to the drama by rejecting
even this compromise document.
The
Motta text overturns all the basic premises set out in the Doha Declaration on
Public Health. The text attempts to circumvent the number and kind of diseases
in its very first paragraph, where it states: pharmaceutical product means
any patented product, or product manufactured through a patented process, of the
pharmaceutical sector needed to address the public health problems as recognized
in paragraph 1 of the Declaration. Paragraph
1 of the Doha declaration says: We recognize the gravity of the public health
problems afflicting many developing and least-developed countries, especially
those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.
Ever since the Doha declaration developed countries have attempted to limit the
scope of the Declaration to the HIV/AIDS crisis and a few other epidemics. But
clearly, what was adopted at Doha goes much beyond what the first paragraph of
the declaration starts with and encompasses the implications of the TRIPS
Agreement with regard to public health in general, without limitation to certain
diseases. The reference to some specific epidemics in the first paragraph
of the Doha declaration does not imply that the Declaration is limited to them.
It covers any public health problem, including those that may be derived
from diseases that affect the population in developing as well as developed
countries, such as heart disease, asthma or cancer. The reference to the first
para of the Doha declaration in the Motta text is obviously a mischievous
attempt to limit the number of diseases that the document addresses.
The
Motta text, further, contains stringent conditions regarding labelling and
mechanisms to ensure that the drugs are delivered only to the specified
benificiary. It says: …. the compulsory licence issued by the exporting
Member under this Decision shall contain the following conditions:
(i)
only the amount necessary to meet the needs of the eligible importing Member(s)
may be manufactured under the licence and the entirety of this production shall
be exported to the Member(s) which has notified its needs to the Council for
TRIPS;
(ii)
products produced under the licence shall be clearly identified as being
produced under the system set out in this Decision through specific
labelling or marking. Suppliers should distinguish such products through special
packaging and/or special colouring/shaping of the products themselves, provided
that such distinction is feasible and does not have a significant impact on
price; and
(iii)
before shipment begins, the licensee shall post on a website the following
information: the quantities being supplied to each destination as referred to in
indent (i) above; and – the distinguishing features of the product(s) referred
to in indent (ii) above; the exporting Member shall notify the Council for
TRIPS of the grant of the licence, including the conditions attached to it. The
information provided shall include the name and address of the licensee, the
product(s) for which the licence has been granted, the quantity(ies) for which
it has been granted, the country(ies) to which the product(s) is (are) to be
supplied and the duration of the licence. The
notification shall also indicate the address of the website referred to in
subparagraph (b)(iii) above.
Finally
the annex of the text on Assessment of Manufacturing Capacities in the
Pharmaceutical Sector attempts to lay down the method by which countries who
can benefit this system will be identified. It says: Least-developed country
Members are deemed to have insufficient or no manufacturing capacities in the
pharmaceutical sector. For other eligible importing Members insufficient or no
manufacturing capacities for the product(s) in question may be established in
either of the following ways:
(i)
the Member in question has established that it has no manufacturing capacity in
the pharmaceutical sector. OR (ii) where the Member has some manufacturing
capacity in this sector, it has examined this capacity and found that, excluding
any capacity owned or controlled by the patent owner, it is currently
insufficient for the purposes of meeting its needs. When it is established that such capacity has become
sufficient to meet the Members needs, the system shall no longer apply.
Clearly,
countries other than LDCs will have to establish that they
qualify to use the facility. This throws open the door for the TRIPS
council and the WTO Dispute Settlement Body to act as inspectors and
determine which country is eligible. It also allows bilateral pressures to be
exerted by developed countries, designed to forbid developing countries from
using the facility. In fact, recently, the USTR on a visit to Philippines, is
believed to have casually let known that the US does not consider that the
Philippines is eligible to use the facility!
PLUNGING
INTO
A
TRAP
Thus,
clearly, the Motta Text constitutes a total dilution of the spirit of the
Doha Declaration on Public Health. It attempts to narrow the coverage of
diseases, places onerous conditions on both the exporting and the importing
country, and puts restrictions on those who would be eligible. It clears the way
for the TRIPS council and the WTO to act as a watchdog on sovereign countries
and their national laws. The question that could then be asked is, if the
text is so restrictive and biased in favour of developed countries, why did the
US not agree to it?
Possibly,
the answer is to be found in the manner in which the discussion on the Motta
Text has proceeded after the US decided to oppose it. The emphasis has shifted
from finding a better solution than the Motta text to attempts to save the
Motta Text. All attempts are now being directed at getting the US to agree to
the Motta text. What is likely to happen is that the US will, just before the
Cancun meeting, make the magnanimous gesture of agreeing to the text. In return
it will ask for, and in all probability receive, concessions from developing
countries in other areas of negotiations – for example in the areas of Trade and
Investment and GATS (services and trade). The
focus will have shifted from how bad the Motta text actually was to start with,
to the apparent success of the Cancun meeting in resolving the issue. The US
would have got something in return for doing nothing! This is a trap in which
most developing countries are in danger of plunging into – India included. And
thus the charade of the so called development round of negotiations will
be allowed to proceed.
