AFRO-NETS> EU says patents provide an essential stimulus for creativity and innovation

[Christian Labadie <CLabadie@t-online.de>]

EU says patents provide an essential stimulus for creativity and innovation
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The following is a long document from the European Union, which may 
help to have a detail understanding of how the European Commission 
sees the issues regarding:

        * access to essential drugs
        * creativity and innovation
        * research and development
        * patent rights and trade agreements
        * interpretation of the TRIPS/ADPIC

Source: 
* Press release - http://europa.eu.int/comm/trade/csc/med03.htm
* Background - http://europa.eu.int/comm/trade/pdf/med_trips.pdf
* additional link: 
  http://www.healthnet.org/programs/e-med-hma/e-med.200106/msg00055.html


----------------- PRESS RELEASE -----------------
Source: http://europa.eu.int/comm/trade/csc/med03.htm

European Union -- Trade and Development 
Access to essential medicines
Press release, Brussels, Brussels, 19 June 2001

EU tables proposals to clarify WTO rules on access to medicines

On the eve of an important WTO meeting to address intellectual prop-
erty and access to medicines, the European Commission has tabled con-
crete proposals designed to clarify existing rules in order to fa-
cilitate access to life-saving drugs by needy countries. These plans 
will be presented to fellow WTO members at the Council on Trade-
Related Intellectual Property Rights (TRIPs) on 20 June. EU Trade 
Commissioner Pascal Lamy said "I hope our proposals will enrich the 
debate in the WTO in the run-up to Qatar on how to ensure intellec-
tual property rules are applied in the spirit in which they were in-
tended. We must ensure that needy countries are able to use the 
flexibility these rules provide to access life-saving drugs at af-
fordable prices. Whilst we acknowledge that patents are essential to 
encourage investment in the development of new medicines, we need to 
interpret and apply the rules in such a way as to support developing 
countries in their battle against killer diseases. These matters are 
too important to be left to the whim of lawyers". 

The EU's proposals concentrate on how to clarify the implementation 
of TRIPs provisions that provide the requisite flexibility for coun-
tries to implement an intellectual property regime that serves wider 
policy objectives such as public health, through the use of compul-
sory licensing in emergency situations for example. As far as spe-
cific provisions of the TRIPs Agreement are concerned, Article 31 on 
compulsory licences is an area of particular interest. Here, the EU 
believes TRIPS should be clarified so as to determine whether a de-
veloping country without pharmaceutical production capacity should be 
permitted to import medicines produced in another such country under 
a compulsory license. Other areas where further clarity is required 
include Article 30 (general exceptions) and Article 39.3 (pharmaceu-
tical data protection) as well as on the overarching role of Articles 
7 and 8 (principles and objectives of TRIPs). 

The proposals form a central part of the EU's recently approved Ac-
tion Plan to combat communicable diseases (see IP/01/235). 

In parallel, the European Commission continues to encourage the 
world's pharmaceutical industry to commit itself to a global tiered 
pricing system, which is, in the EU's view, the most effective way to 
ensure sustainable supply of affordable medicines to the poorest. 
Commissioners Lamy and Neilson recently met CEO's of the major drug 
companies to underline this priority (Midday Express May 30,2001). 

Background 

TRIPs and Health 

Discussion at TRIPs Council on 20 June 2001 

The TRIPs Council will for the first time focus exclusively on the 
relationship between TRIPs and Health. The debate will centre on the 
clarification of the interpretation and application of the relevant 
TRIPS provisions so that developing countries are able to operate an 
intellectual property regime that meets their policy needs and is ca-
pable of responding to public health concerns. 

To this end, the EU has submitted a Communication to the TRIPs Coun-
cil which has also been discussed in general terms, at an ad hoc 
meeting of the Health/TRIPs Issue Group with NGOs on 28 May. 

The Communication to the TRIPs Council places the discussion on in-
tellectual property in the broader context of the Commission's Pro-
gramme for Action to combat communicable diseases, recently endorsed 
by Member States. The EU also proposes enhanced technical co-
operation, in particular for the least-developed countries, as well 
as technology transfer to boost local production. 

Tiered pricing 

In the last six months a number of research and development-based 
pharmaceutical companies have come forward with interesting offers 
for developing countries in terms of affordable medicines to combat 
major diseases such as HIV/AIDS, malaria or tuberculosis. The dis-
counts offered by the companies are impressive but more still needs 
to be done given the dimension the diseases have reached in some 
countries. 

In addition these individual initiatives fall short of constituting a 
global tiered pricing scheme to make medicines affordable in the long 
run. The EU is taking every opportunity to encourage the world's 
pharmaceutical industry to bring much needed coherence to these ef-
forts which the industry itself recognises are necessary. 

The full text of the EU's submission to the WTO is available here. 

Additional information on the EU health policy towards developing 
countries can be found here. 

----------------- BACKGROUND -----------------
Source: http://europa.eu.int/comm/trade/pdf/med_trips.pdf

COMMUNICATION FROM THE EUROPEAN COMMUNITIES AND THEIR MEMBER STATES 
TO THE TRIPS COUNCIL THE RELATIONSHIP BETWEEN THE PROVISIONS OF THE 
TRIPS AGREEMENT AND ACCESS TO MEDICINES

Brussels, 13 June 2001
Background

1. At the last session of the TRIPs Council (2-5 April 2001), the Af-
rica Group proposed that one day be set aside at the June session to 
clarify the interpretation and/or application of certain provisions 
of the TRIPs Agreement. The discussion is intended to examine the re-
lationship between intellectual property and access to medicines and 
will seek to bring clarity regarding the interpretation and the ap-
plication of the provisions of the Agreement which provide scope for 
members to address public health concerns. The European Communities 
(EC) and their Member States, together with most other delegations, 
welcomed and supported this initiative. It is an important develop-
ment, since it will be the first time that the TRIPs Council dis-
cusses intellectual property issues in the context of public health.

2. In view of the urgent need to fight communicable diseases, the EC 
and their Member States have already taken a number of initiatives in 
the area of access to affordable medicines for developing countries. 
On May 14 2001, the Council of Ministers endorsed the Commission's 
comprehensive Programme for Action targeted at the combating of the 
major communicable diseases. The Council's Resolution focuses on 
three main goals: maximising the impact of existing interventions, 
increasing the affordability of key pharmaceuticals, and increasing 
investment in research and development of specific global public 
goods.

3. The main objective of EC development policy, as set out in COM 
(2000) 212 of 26 April 2000, is to foster sustainable development 
with a view to eradicating poverty in developing countries and to in-
tegrating them into the world economy. It is now clear that certain 
strategic interventions, if implemented effectively, have the poten-
tial to reduce disease and suffering and promote prosperity, thereby 
contributing to a more secure world for all. However, major communi-
cable diseases, such as HIV/AIDS, malaria and tuberculosis, continue 
to act as a brake on human development.

4. For this reason, the European Commission adopted, in September 
2000, a new policy framework set out in its Communication entitled 
'Accelerated action targeted at major communicable diseases within 
the context of poverty reduction' (COM (2000) 585 of 20 September 
2000). This was followed up by a 'High-level Round Table' held in 
Brussels on 28 September 2000 [1], and by a Resolution of the Council 
on 10 November 2000 (Doc 13127/00, Annex II), which called on the 
Commission to draw up an action plan.

5. The Commission proceeded to develop a Programme for Action on ac-
celerated action on HIV/AIDS, malaria and tuberculosis in the context 
of poverty reduction over the next five years. The Programme for Ac-
tion (COM (2001) 96, (see website 
http://europa.eu.int/comm/development/sector/social/health_en.htm ) 
was adopted by the Commission on 21 February 2001.

6. The EC and their Member States recognise that the lack of afford-
able pharmaceuticals is a serious problem in many developing coun-
tries and especially for the poorest people.

Relevance of intellectual property

7. The EC and their Member States consider that intellectual property 
rights provide an essential stimulus for creativity and innovation. 
These rights need to be adequately protected in order to encourage, 
for example, investment in research and development of new medicines, 
and particularly those targeted at the major communicable diseases.

8. The Agreement on Trade-Related Aspects of Intellectual Property 
Rights (TRIPs) which emerged from the Uruguay Round negotiations has, 
however, sometimes been criticised as limiting policy options in re-
lation to public health concerns. In the view of the EC and their 
Member States, the Agreement's objectives, principles and purpose 
(set out in Articles 7 and 8), special transitional arrangements and 
other provisions give these countries a sufficiently wide margin of 
discretion in implementing it. This margin enables them to set up an 
intellectual property regime that meets their policy needs and is ca-
pable of responding to public health concerns. The EC and their Mem-
ber States have declared their willingness - most notably in the Pro-
gramme for Action - to promote discussions, within the WTO, WIPO and 
WHO, to address the link between the Agreement and public health pro-
tection issues. This Communication summarises the views of the EC and 
their Member States on some of the relevant provisions of the Agree-
ment.

Compulsory licensing

9. In a number of areas, the TRIPs Agreement can be seen as allowing 
Members a certain degree of discretion in the manner in which they 
implement it. Compulsory licensing (or 'other use without the au-
thorisation of the right holder') is one such area.

10. Since Article 31 of the Agreement does not specify the grounds on 
which compulsory licences may be granted, a number of reasons, inter 
alia those of public health, may legitimately be cited. The Article 
simply lays down certain procedural safeguards which have to be re-
spected on those occasions when such licences are issued: for exam-
ple, it is required that a voluntary licence be requested before a 
compulsory one is issued, and that the patent-holder be paid adequate 
remuneration. It is important to note, though, that the requirement 
to first try and obtain a voluntary licence can be waived in the fol-
lowing cases: i) in a national emergency, or other circumstances of 
extreme urgency; ii) where the subject matter of the patent is re-
quired for public non-commercial use.

11. However, some have claimed that Article 31 is hedged around with 
too many procedural restrictions for it to be of use to developing 
countries who might wish to resort to compulsory licensing in order 
to obtain access to patented medicines at affordable prices.

** The EC and their Member States consider that procedural safeguards 
are important to guarantee legal security. Article 31 nevertheless 
leaves some flexibility in cases of national emergency and other cir-
cumstances of extreme urgency, or when the subject matter of the pat-
ent is required for public non-commercial use. Although Article 31 
does not itself contain tailor-made solutions to any specific problem 
raised in the debate on access to health, it does leave WTO Members 
the freedom to determine the grounds for granting compulsory li-
cences, provided the terms of the Article, and of other provisions of 
the Agreement, are met, and it allows for swift action in case of 
emergency or extreme urgency. **

12. The lack of any explicit reference to public health is said to 
make countries wary of using the Article for fear of provoking expen-
sive litigation. This has led to calls for a declaration, or perhaps 
a recommendation to the General Council, to clarify what phrases such 
as 'national emergency' and 'public non-commercial use' can be inter-
preted as referring to. As for the level of HIV/AIDS infection re-
ported in some developing countries, there would appear to be very 
good reasons for describing it as a 'national emergency' or as a 
'circumstance of extreme urgency'.

** The view of the EC and their Member States is that the absence of 
any explicit reference to public health in Article 31 does not pre-
vent WTO Members from invoking public health concerns. Article 7 
('Objectives') refers to 'social and economic welfare' as an objec-
tive of the Agreement while Article 8 ('Principles') allows Members 
to take measures necessary to protect public health, provided such 
measures are consistent with the provisions of the Agreement. Al-
though Articles 7 and 8 were not drafted as general exception 
clauses, they are important for interpreting other provisions of the 
Agreement, including where measures are taken by Members to meet 
health objectives. **

13. Article 31 has been further criticised for requiring that goods 
manufactured under a compulsory licence be 'predominantly for the 
supply of the domestic market of the Member authorising such use.' 
This provision is sometimes said to prevent a small country that has 
no production facilities of its own from obtaining cheap medicines 
from abroad under a compulsory licence. This is an important argument 
as the Agreement does not appear to offer any legal certainty on the 
issue. What can be said is that a WTO Member is free to grant a com-
pulsory licence for the importation of goods which are under patent 
in its own territory, as long as the imported goods have been pro-
duced in a country where they are not patented, or where the term of 
protection has expired. However, the EC and their Member States also 
point to another possible interpretation of the Agreement (see DG 
Trade website http://europa.eu.int/comm/trade/pdf/med_lic.pdf )that 
would allow a Member to issue a compulsory licence to a manufacturer 
in another country, provided the government of that other country 
recognised the licence (which it would not be obliged to do under the 
Agreement), and provided that all the goods manufactured under the 
licence were exported to the country granting the licence. It should 
be noted however that it is far from certain whether such a 'permis-
sive' reading of the Agreement would stand scrutiny by a Panel or the 
Appellate Body.

** The EC and their Member States are ready to discuss this matter in 
order to reach consensus on this issue among all WTO Members. **

Exceptions to patent rights

14. Article 30 of the TRIPS Agreement ("Exceptions to Rights Con-
ferred") also leaves a certain degree of discretion to WTO Members as 
regards its implementation. It allows for limited exceptions to the 
exclusive rights conferred by a patent, provided they are 1) limited; 
2) not unreasonable and 3) do not prejudice the legitimate interests 
of the patent holder or of third parties.

** The EC and their Member States consider that Article 30 amounts to 
a recognition that the patent rights contained in Article 28 ('Rights 
Conferred') may need to be adjusted in certain circumstances. The 
provisions of Article 30 should be fully respected, and be read in 
the light of Articles 7 and 8 (referred to above). They should not be 
interpreted as allowing for any substantial or unjustified curtail-
ment of patent rights. However, the EC and their Member States are 
not opposed in principle to exceptions being made, for example, for 
purposes of research, provided of course that such exceptions are 
non-discriminatory. **

Protection of undisclosed information

15. Further clarification of Article 39.3 could also be useful in the 
context of the debate on access to drugs. This provision obliges WTO 
Members to protect undisclosed test or other data against unfair com-
mercial use, when those WTO Members require submission of such data, 
the origination of which involves considerable efforts, as a condi-
tion of approving the marketing of pharmaceutical products.

Indeed, a new medicine normally has to go through a series of safety 
tests before it is granted marketing approval. The question then 
arises as to whether the resulting test data can be relied on by the 
regulatory authority years later when reviewing an application for 
marketing approval for a generic version of the medicine, thus avoid-
ing the need for the applicant to submit new data and speeding up 
commercialisation of the generic medicine in, for example, developing 
countries.

** The view taken by the EC and their Member States is that the 
Agreement does contain an obligation to protect test data against 
'unfair commercial use', and that the most effective method of doing 
so is to deny the regulatory authorities the possibility of relying 
on such data for a reasonable period of time. Furthermore, data pro-
tection should be available whether or not the product subject to 
regulatory approval is protected by patent or not, since data protec-
tion is quite a different issue from patent protection. **

16. Concern has been expressed in some quarters that such an inter-
pretation could render compulsory licensing ineffective because it 
would oblige the licensee to produce its own test data in order to 
obtain a separate marketing approval, thereby delaying the arrival of 
the goods on the market.

** The EC and their Member States consider, though, that Article 
39(3) neither obliges Members to have marketing approval procedures, 
nor does it prescribe what those procedures should be. The provision 
should certainly not be interpreted in such a way as to weaken or 
nullify Members' rights under other Articles of the Agreement, such 
as the 'fast track' procedure in case of emergency foreseen under Ar-
ticle 31(b), which is a recognition of the need, in certain circum-
stances, for compulsory licences to be given immediate effect. **

Conclusion

17. The TRIPs Agreement represents a delicate balance between the in-
terests of right-holders and consumers. The EC and their Member 
States stand ready to contribute constructively to any debate con-
cerning the interpretation of its provisions.

18. Moreover, the spiralling health crisis in the developing world 
has underlined the need for rapid action. The TRIPs Agreement has in-
creasingly come under fire for allegedly standing in the way of de-
veloping countries' efforts to implement an effective public health 
policy. The EC and their Member States take such criticisms seriously 
and stand ready to engage in a positive manner in discussion, leading 
where necessary to clarification, of certain of the Agreement's pro-
visions. This paper has focussed on Articles 7, 8, 30, 31 and 39, but 
Members may wish to discuss other provisions they consider to be 
relevant. The EC and their Member States are also ready to discuss to 
what extent technical assistance can take into account health con-
cerns.

19. Improving health at the same time as combating poverty requires a 
mix of complementary social, economic, and health policies and prac-
tices. Health gains largely depend on using available resources in 
productive and efficient ways, as shown by the great strides made by 
some middle and low-income countries. Intellectual property rights 
play a role with regard to access to medicines. However the TRIPs 
Agreement cannot be held responsible for the health crisis in devel-
oping countries, while it must not stand in the way for action to 
combat the crisis. The EC and their Member States will continue to 
constructively and positively take part in the expanding global ef-
fort to develop a coherent and effective response to the health prob-
lems of the developing world.

--
[1] The Round Table was convened by the European Commission under the 
aegis of the French Presidency of the European Union, and was co-
sponsored by WHO and UNAIDS. The proceedings may be consulted at:
http://europa.eu.int/comm/development/sector/social/health_en.htm

--
[This *public* European document is reproduced under 'fair use' by C.
Labadie, mailto:CLabadie@t-online.de ]

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