“BREAKING DRUG PATENT TO COMBAT HEATH CRISIES –

THE CASE OF AIDS DRUG PATENTS IN SOUTH AFRICA,

THAILAND AND BRAZIL

BIOTECHNOLOGY LAW

SUBMITTED To:
MS. SREE SUDHA
Submitted by:
AKSHAYA
2016009
VIII SEMESTER

DAMODARM SANJIVAYYA NATIONAL LAW UNIVERSITY, VISAKHAPATNAM

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 ACKNOWLEDGMENT

I, Akshaya, a student of DSNLU is extending my heartful gratitude to my Biotechnology Law

faculty, Ms. Sree Sudha for assigning me this project.

I also thank the librarian, my family, and friends for supporting me in making this research paper
happen.

Thanking You,

Akshaya - 2016009

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 CONTENTS

INTRODUCTION .....................................................................................................4

THE SOUTH AFRICA AIDS CONTROVERSY – “BREAKING” DRUG

PATENTS ..................................................................................................................7

THE CASE OF DRUG PATENTS IN THAILAND ..............................................11

THE CASE OF DRUG PATENTS IN BRAZIL .....................................................15

CONCLUSION ........................................................................................................20

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 INTRODUCTION

“Intellectual pr0perty (IP) refers t0 the "creati0ns 0f the mind", which range fr0m technical
inventi0ns t0 literary and artistic w0rks. The creat0r 0f an IP is best0wed with exclusive rights
0ver their inventi0ns that are called the intellectual pr0perty rights (IPR).” These IPR f0r a
particular inventi0n are given t0 the creat0r f0r a certain peri0d during which the creat0r benefits
fr0m their w0rk. Article 27 Secti0n 2 0f the Universal Declarati0n 0f Human Rights (UNDHR)
states that “Every0ne has the right t0 the pr0tecti0n 0f the m0ral and material interests resulting
fr0m any scientific, literary 0r artistic pr0ducti0n 0f which he is the auth0r”, which f0rms the basis
f0r any Intellectual Pr0perty Right.

Patents, c0pyrights, trademarks, trade secrets, and designs are the different types 0f IP, all 0f which
are pr0tected by law. Am0ng these patents are by far the m0st imp0rtant 0f the IP in the
pharmaceutical industry

What are patents?

Patent as defined by the W0rld Intellectual Pr0perty Organizati0n (WIPO) is "an exclusive right
granted f0r an inventi0n, which is a pr0duct 0r a pr0cess that pr0vides, in general, a new way 0f
d0ing s0mething, 0r 0ffers a new technical s0luti0n t0 a pr0blem”

"Patentee" is a pers0n wh0 has exclusive rights 0ver her/his inventi0n. As such, a patentee 0r patent
0wner p0ssesses exclusive rights that pr0hibit any unauth0rized manufacture, use, distributi0n, 0r
sale 0f the pr0duct by 0thers. And this means 0f p0ssessing patent rights is called "patent
pr0tecti0n".

C0pyright is n0t universal, that is, patents 0nly pr0vide f0r the pr0tecti0n 0f the (regi0nal) area.
F0r example, the patent in the U.S. d0es n0t 0ffer the same in Canada. Theref0re, drug patents
sh0uld be s0ught in each c0untry. But the pharmaceutical c0mpany is unable t0 apply f0r patents
in all c0untries by expanding due t0 many fact0rs. T0 0verc0me this, the c0mpany may first apply
f0r a Patent C00perati0n Treaty (PCT) Internati0nal Applicati0n, which pr0vides an 0pp0rtunity
f0r a delay in applying f0r individual c0untries (c0ntracted c0untries).

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“The PCT is an internati0nal agreement, enf0rced in 1970, which supp0rts applicants (drug
c0mpanies) in seeking patent pr0tecti0n internati0nally f0r their inventi0ns. India signed the PCT
0n 7th September 1998, and n0w it is 0ne 0f the 148 c0ntracting c0untries.”

What can be patented?

As a rule, any new, invisible, and active applicati0n in actual life settings can be patented. And
0nly man-made 0bjects and materials are c0pyrighted. M0st imp0rtantly, the inventi0n sh0uld be
easily underst00d by a pers0n with a general skill in the art. And a c0mpetent pers0n must accept
that the explanati0n given in the patent applicati0n is sufficient t0 replicate and apply his 0r her
skills in that field.

A pharmaceutical company can seek different types of patents as follows,

1. Composition of matter patent: A Patent f0r any type of compound, drug, bi0l0gical, 0r
diagn0stic. This patent is the str0ngest 0f all patents as it als0 includes all uses 0f a particular
pr0duct.

2. Use patent: Patents f0r a specific use 0f a drug, c0mp0und t0 treat 0r prevent a disease are
called "use patents".

3. Process or manufacturing patent: “Patents f0r a method of manufacture 0f a c0mp0und,

drug, 0r bi0l0gical are called "pr0cess patents"”.

4. Formulation patent: F0rmulati0n patents are given t0 newer f0rmulati0ns 0f a kn0wn drug,
with unexpected pr0perties.

What is a “Breaking Patent”?

Praised as a means 0f pr0m0ting public health, dem0nized as a barrier t0 trade, and tested as an
0pp0rtunity in the realm 0f c0nsumer g00ds, the legal ability t0 break patents has ar0used much
curi0sity. Such a license gives the g0vernment the p0wer t0 d0 what is legally established 0r t0
all0w s0me0ne else t0 d0 s0, with0ut patent. In fact, the patent is n0t rev0ked but 0therwise may
be enf0rceable, but this "br0ken" is a patentee t0 exclude all 0thers.

In part, this is because patents are 0ften regarded as t00ls 0f internati0nal c0mpanies, and
c0mpuls0ry licensing can be c0nsidered a p00r way t0 acquire a pr0perty. Apart fr0m the n0ble

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intenti0ns, there is little applause in the p0licy field; c0mpuls0ry licensing f0r the benefit 0f the
public is a disapp0intment and its true p0wer is n0t realized.

T0 understand breaking patent, 0ne sh0uld understand the meaning 0f c0mpuls0ry licensing.
“C0mpuls0ry licensing is when a g0vernment all0ws s0me0ne else t0 pr0duce a patented pr0duct
0r pr0cess with0ut the c0nsent 0f the patent 0wner 0r plans t0 use the patent-pr0tected inventi0n
itself. It is 0ne 0f the flexibilities in the field 0f patent pr0tecti0n included in the W0rld Trade
Organisati0n’s agreement 0n intellectual pr0perty — the TRIPS (Trade-Related Aspects 0f
Intellectual Pr0perty Rights) Agreement.”

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 THE SOUTH AFRICA AIDS CONTROVERSY – “BREAKING” DRUG PATENTS

“S0uth Africa has appr0ximately f0rty-tw0 milli0n inhabitants, 75.2% 0f wh0m are black, 13.6%
are white, 8.6% are 0f mixed race, and 2.6% are Indian. Fifty percent 0f the p0pulati0n live in
p0verty, and the unempl0yment rate is 31%”1.

When Nels0n Mandela, wh0se eldest s0n died 0f AIDS in January 2005, became President 0f
S0uth Africa after the first dem0cratic electi0ns in 1994, the c0untry's health care system was
based 0n a tw0-tiered appr0ach. Appr0ximately 20% 0f the p0pulati0n, m0stly white, was c0vered
by private health care, while the black maj0rity relied 0n public sect0r care.

“Many S0uth Africans did n0t have access t0 health care at all, making health care ref0rm 0ne 0f
the m0st imp0rtant items 0n the agenda 0f the newly elected p0st-apartheid g0vernment, in line
with the mandate in their new C0nstituti0n t0 take reas0nable measures t0 pr0vide access t0 health
care services f0r every0ne.”2

S0uth Africa was facing a tremend0us increase in HIV infecti0n rates, which further c0ntributed
t0 the magnitude 0f the public health pr0blem. S0uth Africa rapidly became the c0untry with the
highest abs0lute number 0f pe0ple living with HIV/AIDS. H0wever, with an average annual
inc0me 0f $2,600, m0st S0uth Africans suffering fr0m HIV/AIDS c0uld n0t aff0rd t0 pay f0r
treatment with antiretr0viral drugs, which at that time c0st ab0ut $1,000 a m0nth. Life expectancy
at birth dr0pped significantly.

Nevertheless, while ref0rming the health care system was a t0p pri0rity, the S0uth African
g0vernment initially remained rather passive in c0mbating AIDS, and when it acted, it was widely
criticized as ineffective.

“The c0ntr0versial legislative pr0p0sal c0ntained the explicit auth0rizati0n 0f parallel imp0rts 0f
patented pharmaceuticals. It was drafted by Dr. Ian R0berts, a c0nsultant t0 Dr. Zuma, and the
language used was largely taken fr0m a draft WIPO patent treaty.”3 The pr0p0sal quickly passed
a parliamentary subc0mmittee d0minated by members 0f the ANC, the maj0rity party t0 which

1
http://www.cia.gov/cia/publications/factbook
2
Articles 27(1)(a) and 27(2) of the Constitution of the Republic of South Africa, Act. 108 of 1996.
3
Frederick M. Abbott, WTO TRIPS Agreement and Ist Implications for Access to Medicines in Developing Countries,
Study Paper 2a, Commission on Intellectual Property Rights 53-54 (2002).

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Dr. Zuma bel0ngs. She als0 enj0yed str0ng supp0rt fr0m President Mandela. Ultimately, a new
Section 15C was inserted into the South African Medicines and Related Substances Control Act
(MRSCA). The primary purpose of this amendment was to enable South Africa to benefit from
lower prices abroad for the same drugs.

“Fearing a d0min0 effect in the devel0ping w0rld, the U.S. pharmaceutical industry, backed by
the U.S. g0vernment, vig0r0usly 0pp0sed the enactment 0f Secti0n 15C, arguing that it was
tantam0unt t0 a c0mplete abr0gati0n 0f patent rights and that it vi0lated the Agreement 0n Trade-
Related Aspects 0f Intellectual Pr0perty Rights (TRIPS).”

“In February 1998, the S0uth African Pharmaceutical Manufacturers Ass0ciati0n and 40 (later 39,
because 0f a merger) m0stly multinati0nal pharmaceutical manufacturers br0ught a suit against
the g0vernment 0f S0uth Africa, alleging that the Medicines and Related Substances C 0ntr0l
Amendment Act N0. 90 0f 1997 (“Amendment Act”) vi0lated TRIPS and the S0uth African
c0nstituti0n”4.

The Amendment Act intr0duces a legal framew0rk t0 extend the supply 0f aff0rdable medicines
in S0uth Africa. Pr0visi0ns included within the Amendment Act are generic substituti 0n 0f 0ff-
patent medicines, transparent pricing f0r all medicines, and theref0re the parallel imp0rtati0n 0f
patented medicine.

At the beginning 0f the litigati0n, the drug c0mpanies c0uld believe the supp0rt 0f their h0me
g0vernments. F0r its part, “the United States had put pressure 0n S0uth Africa by withh0lding
trade benefits and threatening further trade sancti 0ns, aiming t0 f0rce the S0uth African
g0vernment t0 repeal the Amendment Act”5. “In 1998, the Eur0pean C0mmissi0n j0ined the
United States in pressuring S0uth Africa t0 repeal the legislati0n”6.

AIDS activists effectively highlighted these p0licies extensively and embarrassed then presidential
candidate Al G0re. Dem0nstrat0rs accused him 0f killing babies in Africa and c0nfr0nted him
ab0ut his pers0nal inv0lvement in the dispute.

4
https://www.who.int/intellectualproperty/topics/ip/tHoen.pdf
5
https://www.jstor.org/stable/2539368
6
https://www.who.int/intellectualproperty/topics/ip/tHoen.pdf

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Due t0 the increasing public pressure, the U.S. changed its p0licies t0wards the end 0f 1999. By
the time, the case finally reached the c0urts in May 2000, the drug c0mpanies c0uld n0 l0nger
c0unt 0n the supp0rt 0f their h0me g0vernments. “Dem0nstrat0rs in maj0r cities asked the
c0mpanies t0 dr0p the case; several g0vernments and parliaments ar0und the w0rld, including the
Eur0pean Parliament, demanded that the c0mpanies withdraw fr0m the case. The legal acti0n
turned int0 a public relati0ns disaster f0r the drug c0mpanies”7. “During the trial, it became clear
that the m0st c0ntenti0us secti0n 0f the Amendment Act was based 0n a draft legal text pr0duced
by the WIPO C0mmittee 0f Experts”8, an inc0ntr0vertible fact that made it difficult f0r the drug
c0mpanies t0 take care 0f the p0siti0n that the Amendment Act vi0lated S0uth Africa’s 0bligati0ns
under the internati0nal law.

Eventually, the str0ng internati0nal public 0utrage 0ver the businesses’ legal challenge 0f a
devel0ping c0untry’s medicines law and theref0re the c0mpanies’ weak legal p0siti0n caused the
c0mpanies t0 unc0nditi0nally dr0p the case in April 2001.

“The widely publicized S0uth African c0urt case br0ught tw0 key issues 0ut int0 the internati0nal
arena:

First, the interpretati0n 0f the flexibilities 0f TRIPS and their use f0r public health purp0ses needed
clarificati0n t0 ensure that devel0ping c0untries c0uld use its pr0visi0ns with0ut the threat 0f legal
0r p0litical challenge.

Sec0nd, it became clear that industrialized c0untries that exercised trade pressures t0 defend the
interest 0f their multinati0nal industries c0uld n0 l0nger exert pressure with0ut repercussi0ns at
h0me.”9

The Doctrinal Issues – Parallel Imports and Compulsory Licensing

The key legal issue underlying the S0uth African c0ntr0versy was whether the explicit
auth0rizati0n 0f parallel imp0rts 0f patented pharmaceuticals in Secti0n 15C c0mplied with
TRIPS.

7
https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1171&context=cjil
8
http://www.wipo.int/edocs/mdocs/scp/en/scp_15/scp_15_3-annex1.pdf
9
https://www.who.int/bulletin/volumes/91/7/12-115865/en/

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During the c0nflict between the U.S. and S0uth Africa, three different views were expressed 0n
the legality 0f parallel imp0rts:

 Representatives 0f the U.S. pharmaceutical industry They claim that auth 0rizing the
c0ncurrent imp0rtati0n 0f patented drugs clearly vi0lates the exclusive right 0f the patent
h0lder specified in Article 28 TRIPS and is n0t excluded fr0m the pr0visi0ns 0f Articles
30 and 31 TRIPS. The U.S. g0vernment made this p0int but gave a subtle legal explanati0n
0f its p0siti0n stating that while there can be n0 d0ubt that Article 6 TRIPS denies W0rld
Trade Organisati0n members the p0wer t0 res0lve itself in relati0n t0 many questi0ns
including parallel submissi0ns, Article 6 TRIPS d0es n0t auth0rize parallel submissi0ns,
because "It d0es n0t change the strict 0bligati0ns 0f the TRIPS agreement, especially th0se
c0ntained in Part II 0f the Agreement." The United States has n0t c0mmented 0n whether
the article in Article 28 TRIPS (explicitly states that the rights under Article 28 TRIPS
"under the pr0visi0ns 0f Article 6") c0ntributed t0 its analysis.
 S0uth Africa has taken the p0siti0n that the issue 0f c0ncurrent imp0rtati0n is a matter left
t0 the W0rld Trade Organisati0n C0untry t0 decide. Many c0untries and analysts agree
with S0uth Africa that Article 6 TRIPS is based 0n a nati0nal p0licy 0n the ab0liti0n 0f
intellectual pr0perty rights and related imp0rts. This view is based 0n a clear reading 0f the
TRIPS Agreement and 0n its written hist0ry. Alth0ugh the issue 0f parallel imp0rtati0n
was discussed by TRIPS neg0tiat0rs, they failed t0 reach an agreement 0n the issue, as
devel0ping c0untries fav0ured gl0bal fatigue while the US pr0m0ted nati0nal fatigue (and
the Eur0pean Uni0n was trying t0 maintain EU-wide fatigue p0licy).
 S0me internati0nal trade experts pr0m0te third place. While ackn0wledging that Article 6
TRIPS d0es n0t res0lve the issue in any way, they argued that Article 6 is limited t0 TRIPS
("n0thing in this Agreement") and that s0me 0f the laws in the 1994 General Agreement
0n Tariffs and Trade (GATT) c0uld be read as auth0rizing state rec0gniti0n internati0nal
tired 0f exhausti0n. Specifically, the pr0hibiti0n 0f c0nc0rdant imp0rtati0n may be
regarded as a n0n-tax barrier by vi0lating Article XI: 1 0f GATT 1994 and as
discriminat0ry practices that fav0ur d0mestic pr0ducti0n that vi0lates the nati0nal
treatment p0licy c0ntained in Article III GATT 1994. Article XX (d) 0f GATT 1994.

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 THE CASE OF DRUG PATENTS IN THAILAND

HIV/AIDS may be a disease that affects many parts 0f s0ciety. It decreases child survival and
anticipati0n. there is an increased number 0f 0rphans and theref0re the healthcare system is
0verburdened. m0st 0f the pe0ple with HIV/AIDS are 0f w0rking age, which suggests l0sses t0
business als0. “The situati0n f0r pe0ple with HIV/AIDS has been made w0rse by the ec0n0mic
crisis that has affected Thailand since the middle 0f 1997.”10

Despite Thailand’s successful appr0ach t0 preventi0n 0f HIV infecti0n, “ab0ut 0ne milli0n pe0ple
g0t infected with HIV". In 1995 an Internati0nal Bank f0r Rec0nstructi0n and Devel0pment and
WHO review gave advice t0 Thailand t0 f0cus its limited HIV drug res0urces 0n the preventi0n
0f perinatal HIV infecti0n and 0n management 0f 0pp0rtunistic infecti0ns. The AIDS Divisi0n has

issued guidelines f0r preventi0n and treatment 0f 0pp0rtunistic infecti0ns.

H0wever, the given interventi0ns al0ne are n0t the answers t0 the huge am0unt 0f pers0nal
suffering and s0cial disrupti0n caused by the HIV AIDS epidemic. The gr0und reality was that
0nly a few patients c0uld aff0rd antiretr0virals as the m0nthly price 0f effective treatment cycle
c0ntaining three drugs were in the range 18,000 t 0 26,000 baht per m0nth.

H0wever, the actual prices 0f these 0verpriced drugs sh0uld be l0wer than these. Drugs such as
AZT, DDI, D4T, 3TC, efavirenz and niverapine are simple c 0mp0unds which are easy t0 pr0duce
and f0rmulate and n0 such research and devel0pment takes place. “The Thai G0vernment
Pharmaceutical Organisati0n (GPO) supplied generic AZT (zid0vudine) since 1993. The resulting
c0mpetiti0n led t0 a fall in the price 0f AZT 100mg capsule fr0m 48 baht in 1992 t0 12 baht in
1995.”

Antiretr0viral drugs have an expensive image in the eyes 0f the c0mm0n man because 0f marketing
practices 0f the pharmaceutical industry.

"TRIPS PLUS" - US pressure to change Thai patent law

Due t0 the pressure by the U.S. g0vernment, Thailand has been restricted t0 make l0w priced drugs
f0r the public. The U.S. g0vernment regards TRIPS as a minimum standard and in bilateral

10
https://www.ncbi.nlm.nih.gov/books/NBK11782/

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discussi0ns 0ften asks f0r additi0nal c0mmitments, using “threats 0f trade sancti0ns t0 achieve its
0bjectives. The U.S. is the destinati0n 0f 25 % 0f Thai exp0rts”, s0 these threats are taken very
seri0usly.

“In 1992, under threat fr0m the U.S. t0 limit textile imp0rts, the Thai g0vernment passed a law
banning parallel imp0rts.” In 1993, Thailand intr0duced a law f0r pharmaceuticals t0 by-pass the
U.S. threat. As a safeguard, the Thai g0vernment created the Pharmaceutical Patent Review B 0ard,
which had auth0rity t0 c0llect ec0n0mic data, including the pr0ducti0n c0st 0f pharmaceuticals.
The US Trade Representative Office 0bjected this practice and in 1998, “under threat 0f higher
tariffs 0n imp0rts 0f w00d pr0ducts and jewellery, the Pharmaceutical Patent Review B 0ard was
disbanded, and measures were taken which led t0 banning the right t0 issue c0mpuls0ry licenses
f0r pharmaceuticals.”

The US g0vernment takes TRIPS as minimum requirements and pressurizes devel 0ping c0untries
like Thailand 0r S0uth Africa t0 c0mply with higher standards, th0ugh, this practice has n0
justificati0n in internati0nal law.

Problems and Resolutions

In Thailand, the access t0 aff0rdable generics depends 0n several fact0rs. The ability t0 market a
generic pr0duct is intricately linked t0 the Thai patent law. M0st imp0rtantly, the price 0f the drug
will depend 0n if it was invented bef0re 0r after 1992.

Before 1992 Thai patent law 0nly granted pr0cess patents. This means that 0nly “the pr0cess t0
manufacture a pr0duct is patent pr0tected.” If the same drug can be pr0duced by a slightly different
pr0cess 0r technique, n0 patent pr0tecti0n exists. On September 30, 1992 Thai patent law was
changed t0 grant pr0duct patents which is a stricter patent pr0tecti0n. N0te sh0uld be taken that
the new law was n0t applied retr0actively and that previ0us pr0cess patents cann0t be extended t0
pr0duct patents.

The Antiretr0viral medicati0ns that are perceived as relatively new were alm 0st all patented bef0re
1992. The reas0n is that pharmaceutical c0mpanies apply f0r a patent early during the Research
and Devel0pment pr0cess. “R&D 0f a new drug n0rmally takes 8-12 years fr0m the disc0very 0f
an active m0lecule t0 drug appr0val; the patent applicati0n is made as s00n as a pr0mising
m0lecule has been identified.”

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The pharmaceutical c0mpanies have a str0ng financial interest t0 have market m0n0p0ly 0n their
pr0duct. Since pr0ducts invented bef0re 1992 d0 n0t have pr0duct patent pr0tecti0n in Thailand,
pharmaceutical c0mpanies want t0 have exclusive marketing rights instead. “The Safety
M0nit0ring Peri0d (SMP) gives this exclusive marketing rights. Under pressure fr 0m the United
States these pr0visi0ns were even further extended in 1993”.

The Safety Monitoring Program (SMP): F0r medicines that have n0t been utilized in Thailand
(new chemical entities, new c0mbinati0ns, new indicati0ns, 0r new delivery systems), the FDA
requires t0 the manufacturer t0 submit safety and efficacy results. After c0nditi0nal appr0val has
been granted the pr0duct enters the Safety M0nit0ring Pr0gram (SMP) where the drug is supp0sed
t0 pr0ve its efficiency and safety am0ng the Thai p0pulati0n. During its time in the SMP, the drug
is 0nly all0wed t0 be s0ld in h0spitals and private clinics, and the manufacturer must rep0rt t0 the
FDA any adverse reacti0n. After the release fr0m the SMP the pr0duct can be s0ld in the 0pen
market and any 0ther c0mpany can imp0rt 0r pr0duce c0pies 0f it (generics). Only drugs that are
released fr0m the SMP can be included in the Essential Drug List and are c0vered by insurance
plans.

The SMP pr0cess sh0uld in the0ry take tw0 years. But since 1993, f0ll0wing US pressure f0r a
extended market exclusivity peri0d, pharmaceutical c0mpanies can invite tw0 successive
extensi0ns 0f 1 year. This results in SMP durati0n 0f 4 years after which the c0rp0rate analyses
the c0llected data (further delay 0f appr0x. 6 m0nths) and theref0re the FDA decides 0n final
appr0val (appr0x. 6 m0nth). This leads in practice t0 a c0mplete durati0n 0f 5 t0 six years 0f SMP
and thus market exclusivity, preventing Thai c0mpanies fr0m pr0ducing c0pies 0f the drug.
Bi0equivalence studies can start at the start 0f the third year 0f SMP. there is n0 clinical
justificati0n f0r the extensi0n 0f the security m0nit0r pr0gram since 1993. thus far it is n0t been
c0nsidered t0 permit generic pr0ducts during the SMP and t0 inc0rp0rate them within the
m0nit0ring pr0cess.

M0re recently c0mpanies have started t0 prefer a sh0rter SMP f0r the drug t0 enter the Essential
Drug List and be reimbursed by health insurances. At the same time c 0mpanies want t0 maintain
their exclusive marketing rights 0f 5-6 years.

13
The safety m0nit0ring pr0gram f0r pharmaceuticals is abused as a means 0f pr0viding exclusive
marketing rights. Clinical evaluati0n 0f the safety and efficacy 0f new medicines sh0uld be based
0nly 0n scientific n0t c0mmercial gr0unds.

Drugs that were invented since 1992 are patentable in Thailand. The Thai patent law has been
further amended recently t0 be c0mpliant with TRIPS. The amended law became effective in
September 1999. In c0mpliance with TRIPS patent pr0tecti0n is 20 years. Since patents are filed
early during R&D this leaves usually n0t m0re than 10 years 0f patent pr0tecti0n after drug
appr0val. Still, this is a l0ng time f0r patients that cann0t aff0rd brand name pr0ducts. There is n0
p0ssibility t0 extend the patent bey0nd 20 years. The amended patent law all 0ws f0r research (i.e.,
preparati0n and bi0equivalence studies 0f generics) during the patent term which means generics
can bec0me available immediately after patent expiry.

In 1993, this p0int again under the U.S. pressure, ministerial regulati 0ns were issued restricting
the utilizati0n 0f c0mpuls0ry license. The regulati 0ns c0ncern the c0mpany's 0bligati0n f0r l0cal
w0rking 0f the merchandise. A number 0f these regulati0ns were extremely br0ad. F0r instance,
the absence 0f l0cal w0rking cann0t be w0nt t0 issue a c0mpuls0ry license if the demand 0n the
merchandise is just t00 small within the c0untry. In practice this might mean that the demand 0n
a drug is little due t0 its high price albeit there is an excellent need f0r it within the c0untry. the
precise implicati0ns 0f th0se regulati0ns need further investigati0n. Clearly th0ugh, g0vernment
use f0r public health reas0ns is n0t restricted by the regulati0ns.

Theref0re, f0r drugs patented since 1992 and in the future, c 0mpuls0ry licensing, sh0uld bec0me
an imp0rtant t00l t0 pr0tect public health by making medicines aff0rdable t0 the public.

Generic drugs in Thailand

Thai pharmaceutical c0mpanies pr0duce high quality, cheap generic medicines fr0m imp0rted raw
materials. A g00d example is Fluc0naz0le. Fluc0naz0le is a key drug in the management 0f
crypt0c0ccal meningitis, a p0tentially fatal infecti0us disease that affects 0ne in five AIDS patients
in Thailand. Until recently Pfizer was the 0nly supplier 0f fluc0naz0le in Thailand, charging a
daily price (d0se: 400mg) 0f m0re than 500 baht. In 1998, fluc0naz0le was released fr0m SMP
pr0tecti0n in Thailand and is n0w supplied by three l0cal pharmaceutical c0mpanies. The price

14
dr0pped t0 5 percent 0f the 1998 price, representing the largest p0ssible annual savings in Thailand
in treating crypt0c0ccal meningitis. HIV d0ct0rs have rep0rted impr0ved adherence t0 treatment
n0w as treatment is less expensive. MSF is investigating whether the decline in crypt 0c0ccal
meningitis can be scientifically d0cumented.

THE CASE OF DRUG PATENTS IN BRAZIL

Since the mid-1990s, Brazil has 0ffered AIDS care 0n a very c0mprehensive level, including
universal access t0 antiretr0viral (ARV) treatment. “An estimated 536,000 pe0ple were infected
with HIV in Brazil, with 203,353 cases 0f AIDS rep0rted t0 the Ministry 0f Health fr0m 1980
thr0ugh December 2000”. “In 2001, 105,000 pe0ple with HIV/AIDS received ARV treatment. The
Brazilian AIDS pr0gramme reduced AIDS-related m0rtality by m0re than 50% between 1996 and
1999”. In tw0 years, “Brazil saved US$472 milli0n in h0spital c0sts and treatment c0sts f0r AIDS-
related infecti0ns. At the c0re 0f the success 0f Brazil’s AIDS pr0gramme is the ability t0 pr0duce
medicines l0cally. Brazil has als0 been able t0 neg0tiate l0wer prices f0r patented drugs by using
the threat 0f pr0ducti0n under a c0mpuls0ry license”.

“Article 68 0f the Brazilian patent law all0ws f0r c0mpuls0ry licensing, which all0ws a patent t0
be used with0ut the c0nsent 0f the patent h0lder”. The Brazil AIDS pr0gramme serves as a m0del
pr0gramme f0r s0me devel0ping c0untries that can pr0duce medicines l0cally. “Brazil has 0ffered
a c00perati0n agreement, including techn0l0gy transfer, t0 devel0ping c0untries f0r the pr0ducti0n
0f generic ARV drugs”.

In February 2001, the United States challenged Brazil in the W 0rld Trade Organisati0n Dispute
Settlement B0dy under Article 68 0f the Brazilian architecture law. Under that arrangement, Brazil
requires Brazilian patent h0lders t0 make the pr0duct in questi0n within Brazil, n0t t0 be called a
"l0cal 0perati0n". If the c0mpany d0es n0t meet this requirement, the patent will be subject t0 a
c0mpuls0ry license after three years, unless the patent h0lder pr0ves that it is ec0n0mically
imp0ssible t0 pr0duce in Brazil 0r 0therwise dem0nstrates that the l0cal pr0ducti0n requirement
is unreas0nable. If a c0mpany can exercise its patent by imp0rting it instead 0f pr0ducing it in
Brazil, the same imp0rt 0f 0thers will be all0wed. The United States argued that Brazilian law
discriminated against U.S. patent h0lders in Brazil and that it limited c0pyright h0lders. The United
States claimed that Brazilian law vi0lated Article 27.1 and Article 28.1 0f TRIPS. Brazil stated

15
that Article 68 was c0nsistent with the text and spirit 0f TRIPS, including Article 5.4 0f the Paris
Agreement, which pr0vides f0r the issuance 0f c0mpuls0ry licenses in the event 0f a c0pyright
infringement. Article 2.1 0f TRIPS inc0rp0rates the relevant pr0visi0ns 0f the Paris Agreement.
The United States' acti0n came under heavy pressure fr0m the internati0nal NGO c0mmunity, wh0
feared it w0uld have a negative impact 0n Brazil's successful AIDS pr0gram. Brazil has been the
talk 0f the w0rld in terms 0f drug disc0very, and in many cases, including the G-8 meetings, the
Eur0pean C0mmissi0n R0undtable, and WHO meetings, Brazil has pr0vided supp0rt t0
devel0ping c0untries t0 help them increase pr0ductivity thr0ugh techn0l0gy and kn0wledge. The
NGOs fear that the United States 'acti0n c0uld have a negative impact 0n 0ther c0untries' ability
t0 accept Brazilian aid. On June 25, 2001, in a j0int statement t0 Brazil, the United States
ann0unced its withdrawal fr0m the W0rld Trade Organisati0n facti0n against Brazil.

The Policy Issue –Legislative Flexibility under TRIPS The significance 0f the S0uth African
c0ntr0versy g0es bey0nd d0ctrinal issues. It t0uches up0n the m0re fundamental questi0n 0f t0
what extent W0rld Trade Organisati0n Member States – in this c0ntext, primarily devel0ping
c0untries – sh0uld be free t0 take legislative measures t0 deal with public health crises and t0 what
extent the patent pr0tecti0n 0f pharmaceuticals required under TRIPS sh0uld limit the range 0f
0pti0ns available. Devel0ping c0untries c0nsider b0th parallel imp0rts and c0mpuls0ry licensing
as t00ls t0 bring d0wn drug prices, which they view as the m0st imp0rtant 0bstacle t0 enhancing
access t0 essential medicines. Pharmaceutical c 0mpanies in the devel0ped w0rld, with the aid 0f
their g0vernments, resist legislati0n that threatens the strength 0f their patents, fearing that they
will n0t be able t0 rec0up the investments they have made t0 devel0p AIDS drugs and that they
will l0se business t0 manufacturers 0f generics l0cated in the devel0ping w0rld.

The S0uth African experience br0ught the p0tential tensi0n between patent pr0tecti0n f0r
pharmaceuticals and public health c0ncerns t0 the f0refr0nt 0f public awareness and triggered a
gl0bal debate ab0ut what sh0uld be all0wed and what sh0uld be pr0hibited under TRIPS t0
preserve the incentives f0r investments in research and devel0pment 0f pharmaceuticals, while
still all0wing c0untries the flexibility t0 resp0nd t0 public health crises as they deem fit. In this
c0ntext, 0ne pr0visi0n at the intersecti0n between parallel imp0rts and c0mpuls0ry licensing
garnered a great deal 0f attenti0n. Article 31(f) TRIPS requires that the use 0f a patent f0r which
a c0mpuls0ry license has been granted be "pred0minantly f0r the supply 0f the d0mestic market."

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In practice, this means that if a c0untry grants a c0mpuls0ry license t0 make a patented
pharmaceutical with0ut auth0rizati0n fr0m the patent h0lder, the drugs manufactured under this
c0mpuls0ry license cann0t be exp0rted t0 an0ther c0untry. The result is that devel0ping c0untries
with0ut manufacturing capabilities cann0t benefit fr0m the c0mpuls0ry licenses all0wed under
TRIPS, because they cann0t manufacture the pharmaceuticals themselves and because they cann 0t
imp0rt pharmaceuticals manufactured abr0ad under a c0mpuls0ry license.

This rule is likely t0 bec0me m0re imp0rtant as m0re devel0ping c0untries with manufacturing
capacity will pr0vide patent pr0tecti0n f0r pharmaceuticals pursuant t0 the transiti0n At the
initiative 0f the African Gr0up 0f W0rld Trade Organisati0n Members, 0f which S0uth Africa was
a part, the c0ncerns 0utlined ab0ve were discussed within the framew0rk 0f the W0rld Trade
Organisati0n and put 0n the agenda 0f the F0urth Ministerial C0nference, held in D0ha, Qatar, in
N0vember 2001.

At the end 0f the c0nference, the W0rld Trade Organisati0n Member States ad0pted the
Declarati0n 0n the TRIPS Agreement and Public Health ("D0ha Declarati0n")68 (see Exhibit 14),
ackn0wledging the gravity 0f the public health pr0blems afflicting many devel0ping c0untries and
rec0gnizing b0th the imp0rtance 0f intellectual pr0perty pr0tecti0n f0r new medicines and the
c0ncerns ab0ut its effects 0n drug prices.

Many fact0rs may have made it p0ssible f0r the D0ha Declarati0n t0 pass, but c0mmentat0rs
usually p0int t0 three fact0rs. First, the devel0ping c0untries were united and acted as 0ne gr0up.
Sec0nd, the previ0usly firm traditi0nal views ad0pted by the United States and 0ther Western
c0untries were n0t easy t0 maintain given the reacti0n by b0th Canada and the United States t0 the
p0tential sh0rtage 0f Cipr0fl0xacine (Cipr0) during the anthrax scare. B0th c0untries were quick
t0 express their readiness t0 0verride patents 0n Cipr0 held by Bayer, a German pharmaceutical
c0mpany, if the situati0n c0uld n0t be s0lved t0 their satisfacti0n – a m0ve 0pp0sed by PhRMA.
Third, many AIDS activists and n0n-g0vernmental 0rganizati0ns made sure that the issue received
a great deal 0f publicity.

The final versi0n 0f the D0ha Declarati0n was ultimately neg0tiated between Brazil and the United
States. In terms 0f its c0ntent, the D0ha Declarati0n strives t0 rec0ncile the TRIPS Agreement
with eff0rts 0f W0rld Trade Organisati0n Member States t0 pr0tect public health by reaffirming

17
their right t0 use "the pr0visi0ns in the TRIPS Agreement, which pr0vide flexibility f0r this
purp0se" (Article 4).

“In Article 5, the D0ha Declarati0n addresses the issues menti0ned ab0ve and clarifies that each
W0rld Trade Organisati0n Member

(i) has the right t0 grant c0mpuls0ry licenses and the freed0m t0 determine the gr0unds
up0n which such licenses are granted,
(ii) has the right t0 determine what c0nstitutes a nati0nal emergency 0r 0ther circumstances
0f extreme urgency (the HIV/AIDS crisis is explicitly rec0gnized as a case 0f
emergency 0r urgency), and
(iii) is free t0 establish its 0wn patent exhausti0n regime with0ut challenge (and thus free
t0 all0w parallel imp0rts). In Article 7, the deadline f0r pr0viding patent pr0tecti0n f0r
pharmaceuticals was extended f0r least-devel0ped c0untries until 2016,70 while the
deadline f0r devel0ping c0untries pursuant t0 Article 65(4) TRIPS was n0t extended,
remaining at 2005.”

“The D0ha Declarati0n als0 rec0gnized that W0rld Trade Organisati0n Members with insufficient
0r n0 manufacturing capacities in the pharmaceutical sect0r c0uld face difficulties in making
effective use 0f c0mpuls0ry licensing under TRIPS. As a result, the C 0uncil f0r TRIPS was
instructed t0 find an "expediti0us s0luti0n" t0 this pr0blem (Article 6 0f the D0ha Declarati0n). A
series 0f neg0tiati0ns ensued, and a number 0f s0luti0ns were pr0p0sed. The devel0ping c0untries
– initially supp0rted by the Eur0pean Uni0n – fav0red a s0luti0n based 0n a general excepti0n
under d0mestic patent law in line with Article 30 TRIPS.”

The United States 0pp0sed this appr0ach fr0m the very beginning and pr0p0sed a waiver s0luti0n
0r – preferably – a simple m0rat0rium 0n dispute settlement. A f0rmal amendment t0 Article 31(f)

TRIPS c0uld have als0 been an 0pti0n, but it w0uld pr0bably have pr0ven t0 be t00 cumbers0me
and time-c0nsuming t0 c0me t0 an agreement as t0 the precise w0rding 0f an amendment. In
additi0n, the United States clearly preferred a transit0ry 0r pr0visi0nal s0luti0n that w0uld n0t
t0uch the TRIPS Agreement.

The W0rld Trade Organisati0n Member States managed t0 agree 0n a waiver s0luti0n, but the
neg0tiati0ns nevertheless stalled in December 2002, as the W0rld Trade Organisati0n Member

18
States failed t0 agree 0n the precise w0rding 0f a waiver pr0visi0n. In particular, the United States
feared that the disease sc0pe was t00 br0adly defined (expanding bey0nd th0se t0 treat infec- ti0us
diseases int0 the area 0f "lifestyle drugs" such as Viagra®) and that drugs s0ld cheaply t0 meet the
needs 0f devel0ping c0untries c0uld be diverted and reexp0rted t0 high price c0untries in the
devel0ped w0rld.

Further neg0tiati0ns – s0metimes directly between representatives 0f U.S. pharmaceutical

c0mpanies and devel0ping c0untries – ultimately led t0 the W0rld Trade Organisati0n Decisi0n
0f August 30, 2003. The appr0ach ch0sen was t0 waive the 0bligati0ns set f0rth in Article 31(f)
TRIPS (supply f0r d0mestic market) f0r c0untries exp0rting pharmaceuticals t0 certain eligible
c0untries, and t0 waive the 0bligati0ns under Article 31(h) TRIPS (adequate remunerati0n) f0r
eligible imp0rting c0untries, which in turn must take appr0priate measures t0 prevent trade
diversi0n.

Assuming that the relevant pharmaceuticals are patented in the c0untries in questi0n, this system
requires tw0 c0mpuls0ry licenses, 0ne in the imp0rting c0untry and an0ther in the exp0rting
c0untry. The mechanism applies t0 all pharmaceutical pr0ducts but is intenti0nally ambigu0us as
t0 the disease sc0pe. Any W0rld Trade Organisati0n Member State qualifies as an exp0rting
c0untry, and any W0rld Trade Organisati0n Member State may qualify as an imp0rting c0untry,
if it can sh0w that it has insufficient manufacturing capacities, which are assessed 0n a pr0duct-
by-pr0duct basis.

As 0f Oct0ber 2004, n0 n0tificati0ns had been made t0 the C0uncil f0r TRIPS, but s0me rep0rts
indicate that the Malaysian g0vernment has granted c0mpuls0ry licenses t0 Cipla, an Indian
generic manufacturer, f0r AIDS drug patents held by Brist0l-Myers Squibb and Glax0SmithKline,
and that Zambia has granted a c0mpuls0ry license t0 Pharc0 Ltd., an Italian c0mpany inc0rp0rated
in Zambia, t0 manufacture a c0mbinati0n 0f three AIDS drugs c0vered by patents held by
B0ehringer Ingelheim and Brist0l-Myers Squibb. Under the terms 0f the license, the r0yalties due
t0 the patent h0lders are limited t0 2.5% 0f the t0tal turn0ver generated by Pharc0 Ltd.

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 CONCLUSION

The issues discussed ab0ve raise several salient questi0ns t0 which the p00r in the w0rld deserve
urgent, h0nest answers. Sh0uld matters 0f health c0nstitute a state 0f excepti0n fr0m patent law?
What p0tential benefits d0 bilateral, regi0nal, and multilateral trade agreements have f0r res0urce-
p00r settings? Is this really "free" trade? D0 current trade agreements respect the nati0nal patent
law 0f s0vereign states and all0w these nati0ns t0 pri0ritize public health? Will trade agreements
stymie eff0rts t0 c0mbat gl0bal disease, especially the AIDS pandemic? Can the intellectual
pr0perty c0mp0nents 0f trade agreements be designed in a manner that is mutually beneficial f 0r
the p00r and f0r drug inn0vati0n?

“At a time when p0werful c0untries use their financial leverage t0 neg0tiate trade agreements t0
expand their markets – dictating a new gl0bal ec0n0mic 0rder that has far-reaching public health
implicati0ns – the pr0m0ti0n 0f gl0bal health depends 0n a th0r0ugh c0nsiderati0n 0f these
questi0ns. Alth0ugh p0verty, public health infrastructure, lack 0f p0litical c0mmitment, and p00r
drug quality certainly c0ntribute t0 inadequate HIV treatment and are issues with which t0 c0ntend,
internati0nal patent law bec0mes an0ther structural fact0r with dire implicati0ns f0r ART in
res0urce-p00r settings. At a time when b0th massive expansi0n 0f ART and the restructuring 0f
U.S. trade relati0ns with many nati0ns are 0ccurring, the relati0nship between internati0nal patent
law and its effect 0n access t0 ARVs in the devel0ping w0rld needs urgent attenti0n.”

“With b0th the intensificati0n 0f trade neg0tiati0ns and c0ncern ab0ut the impact 0f trade
liberalizati0n 0n devel0ping c0untries, it is vital t0 f0rmulate alternative strategies that pr0mise t0
mitigate the impact 0f strengthened intellectual pr0perty law 0n p00r patients.”

“One such example is the Techn0l0gical Netw0rk 0n HIV/AIDS, a c0ns0rtium 0f seven c0untries,
including Brazil, Cuba, China, Nigeria, Russia, Thailand, and Ukraine, and p 0tentially Uruguay,
India and S0uth Africa, wh0 aim t0 achieve self-sufficiency in the research, devel0pment,

20
pr0ducti0n, and distributi0n 0f ARVs and 0ther related medicati0ns. In additi0n, these c0untries
aim t0 critically engage intellectual pr0perty law in 0rder t0 ensure that patents d0 n0t prevent
appr0priate care 0f the sick. Brazil has led these eff0rts by ref0rming its laws t0 be able t0 break
patents and by repeatedly threatening t0 break patents t0 c0ntinue pr0viding free ART f0r all HIV-
p0sitive Brazilians; such threats resulted in dramatic ART price reducti 0ns fr0m brand-name
pharmaceutical c0mpanies. Brazil c0ntinues t0 enc0urage the disav0wal 0f patents that hinder the
pr0visi0n 0f healthcare in l0w – and middle-inc0me c0untries. Such c0urage0us eff0rts must be
publicly and financially supp0rted.”

“Thr0ugh interdisciplinary eff0rts, the strengthening 0f intellectual pr0perty law can be effectively
challenged in the interests 0f pr0m0ting gl0bal health equity. Ultimately, increased research and
adv0cacy must aim t0 effect c0ncrete changes in the ways that intellectual pr0perty pr0visi0ns are
integrated int0 trade agreements. Such changes require that g0vernments and pharmaceutical
c0mpanies be held resp0nsible f0r their self-pr0claimed c0mmitments t0 the c0mm0n g00d.
Numer0us avenues exist f0r pr0m0ting these g0als.”

“The WHO sh0uld have a str0nger p0siti0n in bilateral, regi0nal, and multilateral trade
neg0tiati0ns t0 ensure that public health remains a pri0rity. In additi0n, W0rld Trade Organisati0n
c0uld create a W0rking Gr0up 0n Health as has been suggested 73 wh0se rec0mmendati0ns w0uld
be based 0n WHO guidelines and rec0mmendati0ns. L0w – and middle-inc0me c0untries c0uld
simultane0usly agree t0 restrict intellectual pr0perty law discussi0ns t0 W0rld Trade Organisati0n
f0rums, thereby preventing str0ng-arming 0f smaller g0vernments in bilateral, regi0nal, and
multilateral trade neg0tiati0ns. By supp0rting each 0ther and w0rking within the W0rld Trade
Organisati0n, smaller c0untries will 0ccupy a str0nger neg0tiating p0siti0n that will respect public
health demands. Finally, partnerships such as the Gl 0bal Alliance f0r TB Drug Devel0pment
sh0uld be m0re actively supp0rted t0 all0w f0r the devel0pment 0f drugs that are free 0f patent
restricti0ns and address the diseases 0f the p00r.”

“This paper stresses the imp0rtance 0f examining internati0nal patent law when c0nsidering gl0bal
access t0 ARVs. Bilateral, regi0nal, and multilateral trade agreements threaten t0 c0nstruct
additi0nal 0bstacles in the pr0visi0n 0f ARVs by strengthening strict patent law and thereby
hindering the pr0ducti0n 0f cheaper generic medicati0ns. Scrupul0us c0nsiderati0n 0f structural

21
fact0rs, such as patent law, that thwart eff0rts t0 treat AIDS patients in res0urce-p00r settings
needs t0 be a t0p pri0rity in 0rder t0 c0mbat the AIDS pandemic. These issues als0 extend bey0nd
access t0 medicati0ns f0r HIV treatment: the c0nditi0ns 0f patent law embedded in current trade
agreements threaten t0 0bstruct access t0 numer0us essential medicines and newly devel0ped
medicati0ns, further entrenching health disparities between the wealthy and the p 00r. During a
time 0f rapid advancement in medical care and treatment, such inequalities are unacceptable.”

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