31bis trips

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)

Ending the European Union opt-out from Article 31bis of the TRIPS Agreement

Question for written answer  E-000463/2021 to the Commission Rule 138 Marc Botenga (The Left), Kateřina Konečná (The Left), Clare Daly (The Left), Mick Wallace (The Left), Manuel Bompard (The Left), Niyazi Kizilyürek (The Left), Manon Aubry (The Left), Pernando Barrena Arza (The Left), Petros Kokkalis (The Left), Dimitrios Papadimoulis (The Left), Martina Michels (The Left), Anne-Sophie Pelletier (The Left), Nikolaj Villumsen (The Left), Giorgos Georgiou (The Left), Eugenia Rodríguez Palop (The Left)

The EU Action Plan on Intellectual Property acknowledges the importance of compulsory licensing. In 2017, an amendment to Article 31bis of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) introduced a waiver of the export restriction on medicines manufactured under compulsory licence. The European Union and its Member States opted out of this clause, and are hence ineligible to import medicines manufactured under compulsory licences. On 7 April 2020, over 30 groups and 36 experts asked WTO members concerned ‘to notify the WTO that they have changed their policy and now considers itself an eligible importing country, and in addition, to also use whatever legal means are available to revoke the opt-out as importing members, for goods manufactured under a compulsory licence [1] ’.

• 1. Given the lack of production capacity of COVID-19 vaccine patent owners and manufacturing capacity in Member States, is the Commission considering ending the opt-out, thus facilitating the import of goods manufactured under compulsory licence?
• 2. Is the Commission considering derogations from EU data and market exclusivity rules delaying the effect of compulsory licences for medicinal products within the European Union?
• 3. What principles underlie the emergency coordination mechanism which the Commission envisages could be triggered at short notice when Member States consider a compulsory licence?
• [1]  https://www.keionline.org/32707 (https://www.keionline.org/32707)

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EU Proposals regarding Article 31bis of the TRIPS Agreement in the Context of the COVID-19 Pandemic

Posted by InfoJustice Eds. | Aug 23, 2021 | Access to Medicine , Coronavirus , Multilateral Fora , Trade Agreements

Nirmalya Syam, August 2021 South Centre Policy Brief No. 100

This Policy Brief presents an analysis of the proposal by the European Union (EU) with regards to Article 31bis of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), as part of a Declaration on the TRIPS Agreement and Public Health in the circumstances of a pandemic. It discusses the EU’s proposed clarifications, why Article31bis does not provide an effective solution to promote access to pharmaceutical products and possible options.

Ce Rapport sur les Politiques présente une analyse de la proposition de l’Union européenne (UE) concernant l’article 31bis de l’Accord sur les aspects des droits de propriété intellectuelle qui touchent au commerce (ADPIC), dans le cadre d’une Déclaration sur l’Accord sur les ADPIC et la santé publique dans les circonstances de une pandémie. Il examine les clarifications proposées par l’UE, les raisons pour lesquelles l’article 31bis ne fournit pas une solution efficace pour promouvoir l’accès aux produits pharmaceutiques, et les options possibles.

Este Informe sobre Políticas presenta un análisis de la propuesta de la Unión Europea (UE) con respecto al artículo 31bis del Acuerdo sobre los Aspectos de los Derechos de Propiedad Intelectual relacionados con el Comercio (ADPIC), como parte de una Declaración sobre el Acuerdo sobre los ADPIC y la Salud Pública en las circunstancias de una pandemia. Analiza las aclaraciones propuestas por la UE, las razones por las que el artículo 31bis no proporciona una solución eficaz para promover el acceso a los productos farmacéuticos, así como las posibles opciones.

Click here for the full Policy Brief: https://www.southcentre.int/policy-brief-100-august-2021/

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Article 31bis of TRIPS: How can African countries benefit from this amendment?

Least developed countries can now more easily obtain compulsory licences during public health emergencies, but some have been slow to take advantage. Vítor Palmela Fidalgo of Inventa International explains why.

After more than 11 long years, the amendment to the agreement on intellectual property rights eventually came into force. On 6 December 2005, the World Trade Organization (WTO) general council adopted the protocol amending the Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 31bis) and opened it for acceptance by the member states. The protocol provided additional flexibilities to grant special compulsory licences for the export of medicines, which was first established by a decision taken by members in 2003, known as the Declaration of Doha.

The problem was the well-known conflict between patents and public health. Entered into force in 1995, the TRIPS Agreement raised and standardised IP protection and enforcement for all members of the World Trade Organization (WTO).

This situation became a concern for the least developed countries, which would be forbidden to refuse pharmaceutical patent protection and to manage IP according their local policies. In confronting epidemic problems, such as HIV or malaria, it would be impossible for these countries to purchase and distribute patented drugs. So, the only way-out of this dilemma would be to adopt Article 31 of TRIPS, which provided for compulsory licences.

Following a profound discussion between developed and least developed countries, in 2001, the Doha Declaration was adopted, which affirmed the flexibility of TRIPS in circumventing patent rights so as to allow for easier access to medicines. Apart from stating that public health emergencies would be within the admissible grounds for compulsory licensing, the Doha Declaration went beyond and eventually admitted the use of compulsory licensing through exportation. Actually, despite providing for compulsory licensing in Article 31(f), TRIPS only allowed its use “predominantly for the supply of the domestic market of the member authorising such use”.

In this sense, due to the lack or absence of medicine manufacturing capacity of the least developed countries, this provision would result in a catch-22 situation for these countries, as although they were authorised to issue compulsory licensing for public health reasons, they were unable to make use of it due to the lack of manufacturing capacity. Following the Doha Declaration and a subsequent council decision, a permanent amendment to TRIPS was approved, thus creating the new Article 31bis. This article partly waives Article 31(f) for least developed countries, allowing them to issue compulsory licences for public health reasons through importing the drugs from other countries. The article also contains an open definition of “pharmaceutical products” and some formalities which should be complied with by importer and exporter countries in order to prevent fraud.

Despite having been enacted in 2005, this regime needed to be accepted by two-thirds of the members. After successive delays, this amendment eventually came into effect in January 2017. It is now time to understand how this amendment can be effective for the least developed countries, in particular, for the African countries that make up most of the jurisdictions in this category.

For the time being, this amendment has been ratified by 87 countries. However, among these countries, only 20 are from Africa, namely, Benin, Botswana, Burkina Faso, the Central African Republic, Egypt, Kenya, Lesotho, Mali, Mauritius, Morocco, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Tanzania, Togo, Uganda and Zambia. Furthermore, only Botswana, in Sections 31 and 32 of its Industrial Property Act, Act, provides a legal basis for this regime.

Even before its official incorporation into TRIPS, this legal regime had already been used in Africa. In 2007, Rwanda became the first country in the world to notify WTO of its intent to import products based on a compulsory licence. Canada was the ‘export’ country chosen to provide generic drugs to Rwanda. After tough negotiations but failed with the holders of the patents to obtain a contractual licence, pharmaceutical company Apotex was authorised by the Canadian government to produce a generic version of a drug to treat AIDS, which would cost approximately USD 0.20 per pill compared to its brand name equivalents, which cost USD 6. However, the process revealed itself to be very bureaucratic and cumbersome. The supply of the medication to Rwanda took more than a year to reach the country, despite the fact that Rwanda has received the entire order via two shipments in 2008 and 2009.

How African countries may benefit more from this legal regime is, for the time being, uncertain. First of all, it is unclear why only 20 African countries have ratified this amendment to TRIPS, since its provisions are specifically designed for the countries of this continent. The lack of internal legal amendments would be also a problem, seeing that, for some countries, Article 31bis of TRIPS is not self-executing, meaning it will not become effective immediately without the implementation of the necessary ancillary legislation in each country. There are, in fact, alternative measures to cope with public health crises that can be taken instead of compulsory licences.

Parallel imports are an option. This measure involves the importation, without the consent of the patent holder, of a patented product that has a lower price in the exporting country. Although Article 6 of TRIPS provides that member states are free to implement or not the principle of international exhaustion of rights, the concept is normally forbidden or limited by national legislations.

Another option could be a differential pricing strategy. This strategy can ensure that prices in least developed countries are as low as possible, in comparison with most developed countries, which maintain the higher prices and so do not jeopardise the incentives for research and development. Notwithstanding, differential pricing is not an IP issue and, even when big pharmaceutical companies agree to adopt this measure in the poorest countries, the price is still unaffordable for them. Compulsory licences are the main legal tool to address the problem of the prices of patented drugs and public health in Africa. However, much is still to be done. Firstly, political will on the part of some African governments is needed to accept the amendment to TRIPS and implement it in national legislation as soon as possible. Secondly, it is also necessary to change the way a compulsory licence is obtained through this process, since the red tape and complexity involved are not consistent with the emergency that is usually involved in these matters, such as epidemics. It would be necessary, for example, to waive the requirement that demands an attempt to obtain a voluntary licence from the patent holder and to simplify or avoid the numerous notifications required.

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Flowchart: How do the TRIPS agreement, Article 31bis provisions, and 2022 “TRIPS waiver” interconnect in determining generic access pathways?

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The EU proposed Covid waivers of certain TRIPS rules are mostly meaningless

Since October 2020, discussions have been ongoing at the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council about a waiver of certain obligations under the TRIPS Agreement for the duration of the Covid-19 pandemic. The waiver aims to take away IP barriers for would-be manufacturers of generic vaccines, therapeutics and other tools to fight the pandemic. The TRIPS waiver was proposed by South Africa and India and is now supported by the African Group, the Least Developed Country Group, and 19 other countries. The US has publicly endorsed a TRIPS waiver but for vaccines only, not for therapeutics or other health technologies needed to respond to the pandemic. 

The 12th WTO Ministerial Conference, taking place from 30 November to 3 December , is expected to take a decision on the waiver; until then, formal and informal discussions are taking place between WTO members.

Today, all eyes are on the EU because it has so far voiced the strongest opposition to the TRIPS waiver. At the core of the EU’s rejection of the TRIPS waiver has been the argument that the TRIPS agreement offers sufficient flexibility to deal with IP issues around access to pandemic health technologies. The EU in particular seems to embrace the use of compulsory licensing of patents. And takes the position that only some clarification and tweaking may be required.

A leaked EU proposal from 13 October, available on the Huffington Post website , gives some insight into what the EU has in mind. While in principle it is encouraging to see the EU take a more flexible position with regards to compulsory licensing, the document raises some red flags.

According to the EU document, their proposed ‘waiver’ is based on the Decision of 30 August 2003 on the implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (WT/L/540) which waived the requirement that compulsory licenses are worked predominantly for the supply of the domestic market. This waiver formed the basis for the one and only ever amendment of the TRIPS Agreement with article 31bis to enable the export of products produced under a specific compulsory license exclusively to address other countries’ needs. (we have written about this mechanism here and here .) 

Details of the EU proposal are as follows (in italics), with Medicines Law & Policy comments:

Product Scope :

Pharmaceutical products, i.e. vaccines, diagnostics, therapeutics against COVID-19 

The EU proposal focuses on TRIPS flexibilities. The document pays specific attention to improving the way compulsory licensing can be used. Compulsory licensing is a decision by a government or government authority to give others than the patent holder the right to make use of one or more patent (s)s without the consent of the patent holder. Neither the TRIPS Agreement nor the Doha Declaration contains any limitations with regard to disease scope or products.  

Scope of the waiver-TRIPS provisions covered: 

• Article 31(b) – prior negotiations with rights holders – to be waived 

The TRIPS Agreement allows already for waiving of the requirement for prior negotiation “ in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use (TRIPS 31 b.) . No-one will contest that the Covid-19 pandemic presents a situation of national emergency or extreme urgency. This proposed waiver is therefore meaningless as it does not provide any additional rights to WTO members.

• Article 31(f) – requirement to supply predominantly the domestic market – to be waived. 

Waiving this requirement was of course the very purpose of TRIPS article 31bis, which is a waiver to the requirement in article 31f  that a compulsory license should be predominantly for the supply of the domestic market. (Note this does not mean ‘only’ for the supply of the domestic market. Export of non-predominant parts of the supply has always been possible under TRIPS Article 31). Article 31bis however is a suboptimal solution that has only been used once since the mechanism was put in place in 2003. Therefore, a direct and automatic waiver of article 31(f) would indeed facilitate the use of compulsory licenses among WTO members. Alternatively, the EU could propose an interpretation of article 30 (which details exceptions to rights conferred by a patent) that would allow export of products as a straightforward exception. In the past the EC has indeed proposed a solution based on article 30. This proposal from 2002 is worth a read. The article 30 route was also the favourite solution of civil society organisations .

• Article 31bis – mechanism for compulsory licenses for exports – to be waived, with conditions, e.g. on eligible importing Members, for discussion. 

This proposal is meaningless. The direct waiver of article 31 (f), in the previous paragraph, achieves this. Allowing export under an art 30 exception would have also been useful. See above.

• Article 31(h) – remuneration – to be waived and replaced by specific rules on remuneration to support deliveries of the products at discounted prices. 

Article 31 (h) provides that “the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization”. The level and procedure for remuneration are to be determined by the country that is issuing the CL. Several guidelines clarify what adequate remuneration should look like in order to increase access to essential health tools. It is unclear what a waiver would achieve with regard to Article 31(h).  

• Article 28(1), 39 and Part III of the TRIPS Agreement – outside the scope of the waiver as the inclusion of these provisions is not required for the objective described above and would not be justified or proportionate. 

This paragraph covers the rights conferred by patents, the protection of undisclosed data and trade secrets and enforcement of intellectual property rights. All relevant in the pandemic context. Article 39.3 in particular would require a waiver for countries that have implemented it in the form of regulatory data exclusivity to ensure marketing authorisation can be granted to products supplied through a compulsory license.

Other aspects to be considered: 

• Length: 3 years with a possibility of further extension if the General Council so decides (e.g. if the circumstances of the pandemic persist). 
• Transparency: notification to the WTO of the measures taken and exports made.

Considering that investments into vaccine and other health tool production will likely be considerable, a measure that needs renewal after 3 years is likely to discourage such investments from the private sector. The waiver should therefore enable the continued production and supply of goods under compulsory license against the payment of adequate remuneration, even after the waiver terminates.

Transparency is a good thing, but given past references to political pressures, countries should be free to issue compulsory licenses without having to notify the WTO. 

In the context of these waiver discussions, it remains relevant to draw attention to the fact that WTO members may also invoke TRIPS article 73 (national security exceptions) to suspend the protection of intellectual property, specifically WTO members’ right to take any action which it considers necessary for the protection of its essential security interests . The South Centre published a useful research paper on the subject.

Obviously, these measures are likely not needed when companies engage with the WHO Covid-19 Technology Access Pool (C-TAP) established in May 2020. C-TAP’s aim is  to ensure that knowledge, data and intellectual property are shared so that the diagnostics, therapeutics and vaccines needed to respond to the Covid-19 pandemic become available and accessible to all. 

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Continuing to ignore the problem of the know-how gap won’t make it go away., the last mile: a few suggestions for the who pandemic agreement’s last two weeks of talks , european parliament’s amendments make the regulation for eu-wide compulsory licensing difficult to use and need to be rolled back, the european parliament has now explicitly acknowledged the know-how problem too: time to include a workable solution in the draft pandemic accord., related articles, world trade organization members embark on review of the trips agreement, pressure from european countries related to the use of trips flexibilities .

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