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Intellectual  Property Rights and Access to Medicines 

I.  Health Policy in India

  1. Improvement in health status of the population has been one of the major thrust areas in social development programs of India. This was to be achieved through improving the access to and utilization of Health Family Welfare and Nutrition Services with special focus on under served and under privileged segments of population.  Technological improvement and increase access to health care have resulted in steep fall in mortality but disease burden due to communicable diseases, non-communicable diseases and nutritional problems continue to be high. In spite of the fact that norms for creation of infrastructure and manpower are similar throughout the country, there are substantial between States and districts in availability and utilization of health care services and health indices of population.
  2. Under the Ninth Plan policy, the government made a commitment to provide essential primary health care, emergency life saving services under National Disease Control programs  and National Family Welfare programs free of cost to all, based on the need for care irrespective of their ability to pay. Under the policy, different states will evolve, implement, evaluate strategies for cost recovery, tertiary as well as super specialty care from people above poverty line and at the same time they will provide a mechanism for improving access to these services for people below poverty line. Based on the experiences of these efforts, future course of action will be charted out.
  3. It has been lately the policy of the government that there is an urgent need to evolve appropriate policy guidelines for funding of health care services to different segments of population.. There has been an increase in the per capita income over the last two decades and therefore it is thought proper to levy user charges for diagnostic and therapeutic services from people above the poverty line; if found feasible this would enable the public sector health care institutions to improve their services. At the same time, cost effective methods for meeting health care expenses need to be evolved. In addition, there is need to promote healthy life styles and empower people to remain healthy.
  4. One of the areas where cost of medicine has been of primary concern is the increasing incidence of HIV/AIDS. India has the distinction of initiating a National Searosurveillance  to define the magnitude and dimension of HIV infection in the silent phase of the HIV epidemic long before AIDS cases were reported . A National AIDS Control Program has been implemented with assistance from World Bank. It is noteworthy that WHO estimates indicate that as of 1997, India had relatively low prevalence of HIV infection. But because of the size of it’s population, India is expected with in the next decade to have nearly 10 million HIV infected people; the number of AIDS cases will also show a steep increase. It is therefore imperative that the country gears up to provide necessary preventive, diagnostic, curative and rehabilitative care to tackle this problem. The government has been in search of low cost strategies for prevention and care of HIV infected persons. It is thought appropriate to search for mechanisms for estimating requirements, unit costs and total costs and the means to meet these with  diverse means.
  5. II. Issues in access to medicine

  6. There has been increasing discussion on issues involving access to medicine. Recently, during 8-11 April, 2001, World Health Organization and World Trade Organization secretariats organized a workshop on differential pricing and financing of essential drugs, two major issues in access to medicine, the others being supply, selection and distribution. The basic contention is that the price of drugs alone does not determine who gets access to health care. Locally available health services, as briefly outlined in India’s health policy above, adequately staffed, equipped, managed and financed, and oriented to local needs and priorities, as well as efficient distribution systems and tariff and tax-free treatment for drugs are some of the other factors that play an important role in enabling access on the basis of medical need.
  7. Financing of health care and essential drugs and differential pricing of drugs have assumed increasing significance due to the new diseases whose treatment requires huge expenditure far beyond the means of poor people and poor countries. Even with low prices, rapid and substantial increase in access to essential medicines requires additional domestic and international financing for purchasing drugs and building health care systems. This is important not only for latest drugs, such as the anti-retrovirals, but also for essential generic drugs such as many of those for treating tuberculosis, malaria, diarrhoeal disease and respiratory infections. For these, in poor countries financing needs will have to be met primarily by the international community.
  8. One way of increasing access to medicines in poor countries is through differential pricing of drugs in the developed and developing countries. Some major companies are already pricing their products in such a manner. However, more widespread and sustainable differential pricing can be feasible provided the right legal, technical and political environment can be secured. In economic sense, differential pricing is feasible where there are substantial fixed costs, and variable or marginal costs of production are relatively low. The companies enjoying patent monopoly rights and resorting to mass production can easily practise differential pricing. In a situation of a discriminating monopoly, based on appropriate segmenting of the market differential pricing can be beneficial to both the consumer as well as the seller. Experience with vaccines, contraceptives and drugs for tuberculosis shows that low prices can be realized for poor countries both for patented and non-patented products. Reductions of 90% or more below developed country prices have been achieved through bulk purchasing, competitive tenders and skillful negotiations. Legal provisions to support market segmentation may be necessary to prevent the diversion of differentially priced drugs to higher income markets.
  9. Differential pricing of essential drugs is fully compatible with TRIPS Agreement and does not require countries to forego any flexibility they have under it. The most important aspect is to recognise the importance of respecting the balance found in the negotiation of the TRIPS Agreement and the rights of the developing countries to use the flexibility in it, in regard to compulsory licensing and parallel imports, to respond to health concerns. TRIPS Agreement is also not against segmenting of the markets through the prohibition of parallel imports. However, adequate provision has to be made for enhanced R&D efforts in the developing countries.
  10. III. Patent Protection for Pharmaceutical and Agricultural Chemical Products in the TRIPS Council               

  11. The WTO’s Agreement on TRIPS is an effort to strike a balance between the long term social objectives for providing incentives for future inventions and creation, and the short term objective of allowing people to use existing  of inventions and creations. The balance is sought to be achieved in three ways, that is (1) Invention and creativity in them should provide social and technological benefits, (2) IPR can serve social goals through wider dissemination, and (3) The TRIPS Agreement provides flexibility for governments to fine tune the protection granted in order to meet social goals. These are largely enshrined in Article 27 and are meant (a) to protect human, animal or plant life or health, (b) to facilitate diagnostic, therapeutic and surgical methods for treating human or animals, and (c) for certain plant and animal inventions. Exceptions to rights under TRIPS are also found in Article 8, which relate to abuse of IPR. There are two provisions in the TRIPS Agreement which facilitate enhancing the supply of patented products. Article 31 provides for compulsory licensing under the phrase “ other use without authorization of the right holder ”. Under this provision, the government allows someone else to produce the patented product or process without the consent of the patent owner. The other provision is that in Article 6 where under the legal principle of “exhaustion ” patented products are imported into another country without the approval of the patent owner.
  12. The  issue  of  impact  of  TRIPS  on  prices  and affordability  of pharmaceutical drugs was  raised  in the last meeting of TRIPS Council by African Group  of 36  WTO  members  and it was decided that  a  one  day special session on “Intellectual Properties and Access to Medicines” be held along with the regular meeting of the Council to discuss the relevant provision of TRIPS Agreement   to  seek  interpretation  and   additional flexibility  and to consider the relationship  between TRIPS  Agreement and affordable access  to  medicines.  The issue has  gained importance due  to  very  high prices  of  medicines for disease  like  HIV/AIDS  and adverse  impact  of  TRIPS  on  drug  prices  due   to increasing monopoly of pharmaceutical companies.
  13. In  order  to focus on the  issue  of  access  to medicine,    our submission to TRIPS council has been to identify the  relevant  provisions  of  the  TRIPS   Agreement, identify the existing flexibility in the Agreement and seek additional flexibility where it is inadequate  at present.   The  relevant  provisions,  which  act   as limitation on patents, in the Agreement are Article 6, 8,  27.2,  30,  31, 32 and 40.  The  main  sources  of flexibility are, however, contained in Article 6 which allows for parallel imports because exhaustion of IPRs can  not  be  brought to the  dispute  settlement  and Article  8  which allows for compulsory  licensing  to protect  public health and nutrition. Articles 30,  31 and  32 lay down conditions for  compulsory  licensing and  forefeiture of the patent. Article 27.2  provides for   exclusion  from  patentability  on  grounds   of protection to human, animal or plant life or health.
  14. There  is enough   flexibility  available  to  the  members   in formulating  the provisions in their  domestic  patent laws  or compulsory licenses and for  government  use. The Doha Declaration by TRIPS Council on IPR and Health has further improved upon the flexibility.  The compulsory license could be for production or  for import, provided reasonable efforts are made to obtain a  license and reasonable compensation is paid to  the patentee.   Developing   countries   could   use   the flexibility  provided  in  the cases  of  public  non-commercial  use  and in the cases of  adjucated  anti-competitive practice as laid down in Article 40 of the TRIPS Agreement.
  15. In  view of the increasing incidence  of  diseases like  HIV/AIDS (likely to be 10 million HIV  cases  in next decade) etc., low income, lack of access and high cost   of   medicine,  the   importance   of   seeking clarification  in  the  existing  provisions  in   the Agreement  and seeking additional flexibility  therein can  hardly be emphasized. One suggestion in this regard is   that   for operationalization  of  Article 8, there is  need  for removal  of  provisions in the Article   that  actions taken  to implement the objectives (to protect  public health and nutrition) should be consistent with  other provisions of TRIPS.
  16. The increasing concern on access to  medicine  is reflected  in  wide ranging discussions  held  recently under  the auspices of UN, WHO and WTO. The issues  in these   discussions   have   concentrated   on   price implications  of  patenting, monopoly  and  patenting, competition  law, differential  pricing,  multilateral funding,  role  of  different  actors  in  access   to medicine, and possibility of multilateral  agreements. Due to multifarious efforts, there have been reduction in  costs  of  HIV/AIDS  drugs.  Patenting, however, remains an important source of limitation and  thus additional   flexibilities  in  TRIPS  is   important. Initiative of Department  of  Commerce  to  make   a submission in TRIPS council is thus timely.
  17. The clarifications and  additional  flexibilities need  to be sought on the basic premise that the  protection  or  other such  action  need  not  be consistent  with  other provision of TRIPS,  at  least where equity considerations are dominant. Thus Article 1 on Nature and Scope of Obligations need not  contain such  a  provision. Where Article 6  (Exhaustion)  and Article  7 (Objectives) are in conflict,  particularly where  objective  of economic and social  welfare  are dominant,  the  latter should  prevail.
  18.  A significant additionality in flexibility  would also   be  possible  if  exclusion  in  Article   27.2 (Patentable  Subject  Matter) is free from  the  rider that  “... such exclusion is not made  merely  because the  exploitation is prohibited by domestic  law.”  In matters such as access to medicine, where  exploitation of  monopoly by right holders is an  established  fact and  where low income prohibits purchase  of  critical drugs,  exceptions to rights conferred  in Article  30 should  include  unequivocal exclusivity.  Also,  many conditions  contained  in  Article  31  (Use   Without Authorization of the Right Holder) could go against social objective  of equity including drugs  availability  at reasonable  prices  to poor as these result  in  large number of cases of infringement in courts, particularly in regard to Article 31 (h), (I) and (j). The rigidity in  these sections of Article 31 needs to be softened. For instance,  Article 31 (h) could keep provision for 'reasonable' rather than 'adequate' and 'purchasing power' rather than 'economic value'.
  19. The  absence of a competition  law  compounds  the monopoly  exploitation in pharmaceuticals. Article  40 (Control of Anti-Competitive Practices in  Contractual Licenses)  contains  significant  safeguards  on  anti-competitive  practices.  This  provision  needs to  be strengthened  by  special  safeguards  for  developing countries. Finally, provision in Article 66 at present applicable to least developed in regard to  technology transfer should be applicable to developing  countries like  India where in the area of access  to  medicine, much needs to be done. This Article can also introduce additional  flexibility  providing  for   differential pricing in favor of developing countries.


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