Recent amendments to the TRIPS Agreement – establishment of access to affordable medicines

by Takeshi S Komatani (Member of AIPPI’s Standing Committee on TRIPS)

The World Trade Organization (WTO) announced on January 23, 2017 that an amendment to the WTO’s Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement entered into force which secures for developing countries a legal pathway to access affordable medicines under WTO rules. According to the WTO, the amendment to the TRIPS Agreement marks the first amendment in a WTO agreement since the establishment of the WTO in 1995. The amendment is based on a decision regarding patented drugs and public health originally adopted in 2003, which sought adaptation of the rules of the global trading system to the public health needs of people in poor countries.

One week later on January 30, 2017, the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) welcomed the entry into force of the amendment, particularly the member countries that mostly rely on imports for their medicinal needs.

The amendment came into force since the two-thirds threshold necessary for formally bringing it into the TRIPS Agreement was satisfied due to recent ratification of the protocol amending the TRIPS Agreement by five members including Burkina Faso, Nigeria, Liechtenstein, the United Arab Emirates and Vietnam. Unanimously adopted by WTO members in 2005, the protocol amending the TRIPS Agreement replaces the waiver which has been in force since the 2003 decision and makes permanent a mechanism to ease poorer WTO members’ access to affordable generic medicines produced in other countries.

According to the WTO, the amendment is composed of three parts: (i) addition of Article 31bis after Article 31 of the TRIPS Agreement; (ii) addition of Annex to the TRIPS Agreement to supplement Article 31bis; and (iii) addition of Appendix to the Annex to the TRIPS Agreement.

Under Article 31bis, five paragraphs are added to the TRIPS Agreement. The first allows pharmaceutical products made under compulsory licences granted under the terms of the amendment to be exported to countries lacking production capacity. Other paragraphs deal with avoiding double remuneration to the patent-owner, regional trade agreements involving least-developed countries, ‘non-violation’ and retaining all existing flexibilities under the TRIPS Agreement.

The Annex to the TRIPS Agreement is composed of seven paragraphs. These paragraphs provide definitions of terms for using the system, and other issues such as notification, avoiding the pharmaceuticals being diverted to the wrong markets, developing regional systems to allow economies of scale, and annual reviews in the TRIPS Council.

The Appendix deals with assessing lack of manufacturing capability in the importing country, which was originally an annex to the 2003 decision.

Historically speaking, the Amended TRIPS Agreement originated from the “Declaration on TRIPS and Public Health” also known as the Doha Declaration, which states inter alia that such agreement should not prevent members from taking measures to protect public health. Specifically, paragraph 6 thereof stipulates “[6.] We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002,” which is related to the provisions of Article 31(f) of the TRIPS Agreement, which stipulates that the products manufactured under compulsory licensing must be predominantly for the supply of the domestic market. In this regard, WTO members agreed in 2003 to waive the limitation in Article 31(f) predominantly to supply the domestic market when generic drugs are produced under compulsory license, which allows exporting countries to grant compulsory licenses under the terms of the decision to generic drug makers in order to manufacture and export pharmaceutical products (e.g. drug and diagnostic kits) such as active ingredients necessary for the manufacture thereof, especially for the treatment of HIV/AIDS, tuberculosis, malaria and other epidemics to countries with limited or no production capacities.

WTO members discussed relevant aspect of access to medicines on November 8-9, 2016, including a report from the United Nations Secretary General’s High Level Panel on Access to Medicines.

The subject Amendment to the TRIPS Agreement will likely give a great impact on the pharmaceutical industry and intellectual property practice in relation to pharmaceutical field around the world. In this regard, our AIPPI Standing Committee on TRIPS will continue to monitor and closely watch over the developments of the TRIPS and related issues.