Abstract
While the TRIPS Agreement has been amended, through the introduction of the Article 31bis system, to enable patented pharmaceuticals manufactured under a compulsory licence to be exported to patients in less-developed countries upon satisfaction of specific criteria, it is unclear whether this mechanism provides a satisfactory legal framework to enable sufficient life-saving drugs to reach those who are unable to pay the full prices charged by the major pharmaceutical companies in their home markets. This chapter examines the possibility of relying, as an alternative, on another exception within the TRIPS Agreement—the Article 31(k) provision, which permits compulsory patent licences to be granted to remedy anti-competitive practices—to facilitate access to essential medicines by enabling generic versions of patented drugs to be exported to, and imported by, less-developed countries without having to seek the prior consent of the relevant pharmaceutical patent proprietors. It is submitted that, in the hands of courageous and inventive competition authorities who are able to surmount various tricky political, jurisdictional, and doctrinal hurdles, competition law principles may be able provide the means of facilitating such an endeavour.
B. Ong is Associate Professor.
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Notes
- 1.
For a comprehensive account of the series of events directly connected to the efforts to amend the TRIPS Agreement to facilitate the export of patented pharmaceuticals produced under a compulsory licence (starting from the Doha Declaration on the TRIPS Agreement and Public Health 2001 and spanning the TRIPS Council Decision of 30 August 2003 implementing paragraph 6 of the Doha Declaration and the 2005 General Council Decision on the Article 31bis amendment of the TRIPS Agreement), see Gervais (2012), at pp. 54–75.
- 2.
The “Paragraph 6” waiver mechanism for the export of patented pharmaceuticals made under a compulsory licence, which requires both importing and exporting countries to formally notify the WTO of their intentions, has only been utilised by Rwanda (importing country) and Canada (exporting country) in a transaction notified on 30 August 2003. See http://www.wto.org/english/tratop_e/trips_e/public_health_e.htm and n 26 below.
- 3.
See Sect. 4 of this chapter below.
- 4.
See Ng-Loy (2009), p. 162.
- 5.
See Article 28(1)(a) of the TRIPS Agreement. Article 28(1)(b) covers patented processes and requires owners of such patents to enjoy the right to prevent unauthorised third parties from “using the process” and from acts of “using, offering for sale, selling or importing for these purposes at least the product obtained directly by that process”.
- 6.
The most notable of which is Article 30 of the TRIPS Agreement, which only allows Member states to “provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties”.
- 7.
This was one of the principal reasons for setting up the import-and-export mechanism for patented pharmaceuticals via Article 31bis of the TRIPS Agreement. See n 15 and 16 below and accompanying text.
- 8.
Article 31(k) provides that “(m)embers are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive…”.
- 9.
Patents Act 1994, sections 55(1) and 55(2).
- 10.
See Article 44 of the Patent and Utility Models Law No. 24.481, amended by Law No, 24.572 (T. O. 1996) (translated from Spanish).
- 11.
Argentina—Patent Protection for Pharmaceuticals and Test Data Protection for Agricultural Chemicals (WT/DS171). WTO Documents WT/DS171/3, WT/DS196/4, IP/D/18/Add.1, IP/D/22/Add.1 (20 June 2012).
- 12.
WT/MIN(01)/DEC2, Adopted by the WTO on 14 November 2001.
- 13.
At paragraphs 1 and 4 of the Doha Public Health Declaration.
- 14.
At paragraph 5 of the Doha Public Health Declaration.
- 15.
‘Decision removes final patent obstacle to cheap drug imports’, WTO Press Release on 30 August 2003, Press/350/Rev.1, which announced the decision reached by the TRIPS Council following a 2-year deadlock between WTO member governments on how to implement the instructions of the 2001 WTO Ministerial Declaration.
- 16.
See n 12 above.
- 17.
‘Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and public health’, WT/L/540 and Corr.1, Decision of the General Council of 30 August 2003.
- 18.
‘Amendment of the TRIPS Agreement’, WT/L/641, Decision of the General Council of 6 December 2005, Article 31bis (1).
- 19.
Paragraph 1(b) of the Annex to the TRIPS Agreement defines “eligible importing Member” to mean any least developed country Member or any Member state that has notified the TRIPS Council of its intention to use the Article 31bis system. The developed countries have voluntarily declared that they will not use the system as an importing country, while other countries—namely Hong Kong China, Israel, Korea, Kuwait, Macao China, Mexico, Qatar, Singapore, Chinese Taipei, Turkey, and the United Arab Emirates—have announced that they will only use the system in situations of national emergency or other circumstances of extreme urgency. See WTO Press Release, Press/350/Rev.1, n 15 above.
- 20.
In the Appendix to the Annex to the TRIPS Agreement, Member states can only use the Article 31bis system if they lack the necessary manufacturing capacities in the pharmaceutical sector. If they are least developed country Members, they are deemed to have insufficient or no manufacturing capacities in the pharmaceutical sector. Otherwise, it must be established that the importing Member state has no manufacturing capacity or insufficient capacity for the purposes of meeting its own needs.
- 21.
Subparagraphs 2(a)(i), (ii) and (iii) of the Annex to the TRIPS Agreement.
- 22.
Subparagraphs 2(b)(i), (ii) and (iii) of the Annex to the TRIPS Agreement.
- 23.
Subparagraph 2(c) of the Annex to the TRIPS Agreement, which also requires disclosure of information relating to the identity of the licensee, the products for which the licence has been granted, the quantity for which it has been granted, and the country where they will be exported to, as well as the duration of the licence.
- 24.
Paragraph 3 of the Annex to the TRIPS Agreement.
- 25.
Paragraph 4 of the Annex to the TRIPS Agreement.
- 26.
Rwanda is the only country to have used the export restriction waiver system as an importing Member state, in 2007, to gain access to generic anti-retroviral drugs (a triple combination AIDS therapy drug, TriAvir) produced and exported by Apotex under a corresponding compulsory licence granted in Canada. See Rwanda, Notification Under Paragraph 2(a) of the Decision of 30 August 2003 on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, IP/N/9/RWA/1, 19 July 2007 and Canada, Notification Under Paragraph 2(a) of the Decision of 30 August 2003 on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, IP/N/10/CAN/1, 8 November 2007.
- 27.
As of 5 November 2012, only 45 countries have submitted these instruments of acceptance, far short of the 102 formal acceptances (out of 153 members) required. WTO Member countries appear to have dragged their feet in this matter, even though these amendments proposed in 2005 simply codified the “waiver” system adopted by the TRIPS Council in 2003, which, in turn, emerged from paragraph 6 of the Doha Public Health Declaration in 2001. The General Council had originally contemplated a deadline of 1 December 2007 for the Article 31bis amendments to formally take effect, but this deadline has since been shifted thrice to 31 December 2009, 31 December 2011, and 31 December 2013.
- 28.
Abbott and Reichman (2007), pp. 921, 933 and 936–938.
- 29.
Medecins Sans Frontieres (2006).
- 30.
See paragraph 2(b)(i) of the Annex, n 22 above and accompanying text.
- 31.
See n 6 above. The possibility of devising an exception to exclusive rights of the patent holder under the national laws of an exporting country that is consistent with Article 30 of the TRIPS Agreement is an alternative that is strongly endorsed by Abbott and Reichman (2007), at pp. 957–958. See also Matthews (2004), pp. 73, 89.
- 32.
Abbott and Reichman (2007), at p. 935.
- 33.
See Cottier (2007), p. 173.
- 34.
Article 8(2) of the TRIPS Agreement. These competition-policy-related concerns, which Member states are entitled to act upon, are elaborated upon in Section 8 of the Agreement (‘Control of Anti-Competitive Practices in Contractual Licences’), where examples of “licensing practices or conditions that may in particular constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market” are identified in Article 40(2).
- 35.
This hypothetical scenario is a modified and condensed version of the fact pattern set out by Cottier (2007), at p. 188.
- 36.
Such a compulsory licence could be issued under the national patent framework of Country B, by either its courts or national patent authority, on grounds such as to address a “national emergency or other circumstances of extreme urgency” and would be “predominantly for the supply of the domestic market of the Member authorising such use”.
- 37.
Both Country B and Country C need to issue compulsory licences (to respectively import and export the patented drug) under their respective domestic competition law regimes. National competition authorities will have to first establish a competition law infringement—most likely an abuse of a dominant position by the patent holder—before deciding if a compulsory licence is an appropriate antitrust remedy. Some have taken THE view, which will be elaborated upon below… if a compulsory licence is issued from within the patent regime ON Article 31(k) grounds, then the organ of state granting that licence must be satisfied that the patent holder has engaged in a conduct that would have equally attracted liability under the competition law regime.
- 38.
Cottier (2007), at p. 190.
- 39.
Joined Cases C-241/91P and C-242/91P, RTE and ITP v Commission (Magill) [1995] ECR I-743; Case C-7/97, Oscar Bronner v Mediaprint [1998] ECR I-7791; Case C418/01, IMS Health v NDC [2004] ECR I-5039; Case T-201/04, Microsoft v Commission [2007] ECR II-000.
- 40.
- 41.
The phrase “essential facilities” has only been explicitly used by the European Commission to justify its decisions in a line of infrastructure-related cases starting from Sealink/B&I Holyhead: Interim Measures [1992] 5 CMLR 255, [41]. In Case C-7/97, Oscar Bronner v Mediaprint [1998] ECR I-7791, Advocate General Jacobs, at [65–66], opined the need to strictly confine the limits of the concept of essential facilities, while the ECJ, despite agreeing with the position set out by AG Jacobs, carefully avoided using the term “essential facilities” in its judgment.
- 42.
See Verizon Communications Inc v Trinko LLP 124 S.Ct 872 (2004), 880–881, where the US Supreme Court described the essential facilities doctrine as something “crafted by some lower courts”, with the court finding “no need to either recognize it or to repudiate it” in this case.
- 43.
Fox (2005), at pp. 758–769.
- 44.
Cottier (2007), at p. 192.
- 45.
Drexl (2005), at pp. 702–725. Competition law is not limited to producer interests and efficiency goals. It equally and foremost protects consumer interests and has to serve the public at large.
- 46.
Cottier (2007), at pp. 193–194.
- 47.
Cottier (2007), at pp. 194–195.
- 48.
Cottier (2007), at p. 195.
- 49.
Cottier (2007), at p. 196.
- 50.
Cottier (2007), at p. 198.
- 51.
- 52.
Ng-Loy (2009), at pp. 179–184.
- 53.
India’s acceptance of the TRIPS Amendment took place on 26 March 2007, while Singapore’s acceptance was dated 28 September 2007. India has amended its patent legislation accordingly, with Section 92A(1) of the Indian Patents Act 1970 providing that “[c]ompulsory licence[s] shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems…”.
- 54.
Ng-Loy (2009), at p. 184.
- 55.
These provisions were introduced via section 39 of The Patents (Amendment) Act, 2002 (No. 38 of 2002) (emphasis added).
- 56.
These provisions were introduced via section 54 of The Patents (Amendment) Act, 2005 (No. 15 of 2005) (emphasis added).
- 57.
Ng-Loy (2009), at p. 183.
- 58.
The so-called effects-based approach to extraterritorial jurisdiction, as applied within the context of competition law infringements, can be traced back to the seminal American antitrust decision in US v Aluminum Co. of America, 148 F.2d 416 (1945) which is congruent with the public international law principle of “objective territoriality”. See Akehurst (1972–1973), p. 145.
- 59.
This is highly unlikely because of the national regulatory barriers to market entry for pharmaceuticals and legal restrictions on the movement of such products between countries. See discussion below in Sect. 4.2.1.
- 60.
It has been argued that competition policy can be used to achieve other broader policy goals as well—that “TRIPS provides significant scope within which competition policy may be employed to advance a public health agenda that may be compromised if IP protection is left unchecked”. See Berger (2006), at p. 183.
- 61.
These include intellectual property-competition law interface issues such as market definition, refusals to licence IPRs, the applicability of the essential facilities doctrine in relation to IPRs and IPR licensing restraints imposed by dominant firms. See United Nations Conference on Trade and Development (UNCTAD) (2002), at p. 26.
- 62.
For example, even though such compulsory licensing provisions have been present in the Singapore patent statute for almost two decades, the courts have not had the chance to give a judicial interpretation of its scope of application. The same can be said of the experience in South Africa (see Berger 2006, at p. 199). In contrast, the Indian patent authority recently issued its first compulsory licence to a generic drug manufacturer on the grounds that the reasonable requirements of the public had not been satisfied, that the patented invention had not been made available to the public at a reasonable price, and that the patented invention had not been worked in India. See Natco Pharma Limited v Bayer Corporation, Compulsory License Application No. 1 of 2011 (Controller of Patents, Mumbai) (9 March 2012). See http://www.ipindia.nic.in/ipoNew/compulsory_License_12032012.pdf.
- 63.
As one pro-patient pharmaceutical patent skeptic has put it, “[w]hile Members have significant flexibility to determine what they consider to be anti-competitive, the failure of TRIPS to provide a definition cannot be understood as providing a blank cheque to determine what practices may be considered anti-competitive… [i]t seems appropriate… that the concept of anti-competitive conduct must in some ways be linked to… expressly identified and potentially problematic outcomes. However, given the… appropriate role for the use of competition policy as a means for indirectly increasing access to essential medicines, what may be considered as anti-competitive for the purposes of compulsory licences issued in accordance with the provisions of Article 31 is almost certainly broader than conduct that has a direct anti-competitive effect”. (See Berger 2006, at p. 185.)
- 64.
In addition to the market power derived from having patent monopolies, pharmaceutical companies have also consolidated and strengthened their market positions through strategic transnational mergers and acquisitions over the years. See Rosenberg (2006), at pp. 65–78.
- 65.
See, for example, Article 82(a) of the Treaty of Rome, which prohibits, inter alia, “directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions”. This example of conduct that amounts to an abuse of a dominant position was also imported into the UK legislative framework in Section 18(2)(a) of the Competition Act 1998. Within the European competition law framework, the European Court of Justice has held, in Case 27/76 United Brands v Commission [1978] ECR 207 at [250], that “charging a price which is excessive because it has no reasonable relation to the economic value of the product supplied is … an abuse”, a proposition that was accepted by the UK Court of Appeal in Attheraces Ltd v The British Horseracing Board [2007] EWCA Civ 38 at [204]. More pertinently to the context of this chapter, the UK Competition Appeal Tribunal has upheld a decision of the Office of Fair Trading that a pharmaceutical company had abused its dominant position in the UK by charging excessive prices. See Napp Pharmaceutical Holdings v Director General of Fair Trading [2002] CAT 1, [392].
- 66.
See discussion above in Sect. 2.
- 67.
See n 57 above and accompanying text.
- 68.
See Berger (2006), at pp. 188–194, which explores how the conduct of dominant-patent-owning pharmaceutical companies might be analysed as conventional species of abusive conduct. It should be noted, however, that the focus of Berger’s analysis is to evaluate the possibility of using the competition law regime to facilitate domestic access to patented pharmaceuticals—that is, for compulsory licences to be granted to local generic drug manufacturers to supply generic drugs to patients within that jurisdiction.
- 69.
See, for example, Rosenberg (2006), at p. 74.
- 70.
The policy dilemma at the heart of the intellectual property-competition law interface lies in the difficulty of determining what is the optimal level at which competition policy should be deployed to curtail abuses of the intellectual property regime, particularly when there is the potential to upset the endogenous balance struck within the patent system between the innovation-promoting incentives and the exclusionary impact of granting exclusive legal monopolies to patent holders. However, as one commentator has observed, the innovation-incentive argument in favour of robust protection for patent holders is weaker in the developing world, particularly in the least developed countries that lack the necessary infrastructure to engage in high-level innovation activities. See Berger (2006), at pp. 187 and 192.
- 71.
See Magill, n 39 at [50].
- 72.
See Berger (2006), at p. 192.
- 73.
See Pugatch (2006), at pp. 97–132.
- 74.
This seems to have been the lesson learnt from the complaint lodged with the South African competition authority by civil society organisations against two pharmaceutical giants that led to favourable settlement agreements involving voluntary licensing arrangements with generic drug manufacturers on less onerous terms. See Berger (2006), at pp. 197–200.
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Ong, B. (2015). Compulsory Licences of Pharmaceutical Patents to Remedy Anti-Competitive Practices Under Article 31(k) of the TRIPS Agreement: Can Competition Law Facilitate Access to Essential Medicines?. In: Hilty, R., Liu, KC. (eds) Compulsory Licensing. MPI Studies on Intellectual Property and Competition Law, vol 22. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54704-1_13
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