The Sydney Ministerial Parthapratim Pal

On 14th and 15th of November 2002, ministers representing 25[1] of the 145 WTO member countries gathered in Sydney to informally discuss the progress of the Doha Development Agenda and to prepare the ground for the next ministerial meet at Cancun, Mexico. Though a number of issues including agricultural trade reform, market access for developing countries and various TRIPS related issues were on the agenda for this mini-ministerial meet, reports indicate that ‘Doha Declaration on the TRIPS Agreement and Public Health’ got maximum attention in this meeting.

The “Doha Declaration on the TRIPS Agreement and Public Health” recognizes the right of WTO members to override patents on expensive drugs and make the products themselves (by producing generic versions of licensed pharmaceuticals) in the event of “national emergency or other circumstances of extreme urgency”. However, under the WTO’s intellectual property agreement, production under a compulsory licensing scheme must be “predominantly” for domestic use. This creates problems for countries which have too little or no pharmaceutical manufacturing capacity. The Doha declaration recognizes this problem (paragraph 6 of the Doha Declaration on the TRIPs Agreement and Public Health) and sets a deadline for the TRIPS Council to find a solution to this problem by the end of 2002. Some other implementation related problems of TRIPS which are to be sorted by the year-end are the eligibility of the countries which can avail the “Compulsory Licensing Scheme” and the coverage of the diseases which will be under this scheme.

After the Doha Ministerial, discussions on these issues have generated considerable debate among the WTO Member countries. The developed countries, particularly the ones with high-profile pharmaceutical industry like the US, EU, Canada, Switzerland and Japan are vying to restrict the scope and coverage of the compulsory licensing scheme. For example, a letter by the US Trade Representative dated October 25th 2002, addressed to the African Trade Ministers says:

“The U.S. supports a solution that:

  • focuses on the serious epidemics faced by Africans -HIV/AIDS, malaria, and tuberculosis. Broadening the solution to cover any public health problem, as some are advocating, would divert attention and resources away from these epidemics, at Africa’s expense, and risks trivializing the gravity of these serious epidemics.
  • focuses on the products in greatest need in Africa. The clear intent of the Doha Declaration was to facilitate the delivery of low-cost essential medicines to those countries in greatest need. Expanding the products covered to include the full range of diagnostic products and all other health related items diverts attention from the key issue of access to essential drugs. The U.S. has agreed to go beyond medicine in certain, specific cases of demonstrable need, such as AIDS test kits.
  • reserves the benefits of compulsory licensing for those in greatest need. The countries that are most in need of this special exception are those least developed and low-in-come developing countries that do not have the capacity to produce essential drugs domestically (including all sub-Saharan African countries). Allowing developed countries or advanced developing countries to import under compulsory licensing might encourage the solution to be abused for commercial purposes e.g. exporters would likely focus their attention on more lucrative developed country markets rather than on the developing world.”

Similar views have been expressed by the EU also. A recent press release titled “Commission Clears Plan to Boost Access to Medicines for Developing Countries” dated 30th October, 2002, says:

“Today the European Commission cleared a plan to boost developing countries’ access to key medicines. It adopted a draft Council regulation enabling exporters to deliver essential medicines at reduced prices to poor countries, while making sure the goods are not diverted back to the European Union.

EU Trade Commissioner Pascal Lamy welcomed the decision: ‘The EU wants to set an example with a practical means of helping poorer countries struggling with public health crises. Vaccines and contraceptives have long been available at affordable prices – now developed countries need to make an effort with other medicines. I hope other countries will follow suit.’ He said he hoped EU ministers would move quickly to approve the plan, which targets medicines for the prevention, diagnosis and treatment of HIV/AIDS, tuberculosis and malaria in the poorest countries.”

Press release, Brussels, 30 October 2002, available at:

http://europa.eu.int/comm/trade/csc/med07_en.htm,

The Proposal for a Regulation to avoid Trade Diversion into the European Union of Certain Key Medicines” is available at:

http://europa.eu.int/comm/trade/pdf/propreg_med.pdf

In short, EU and USA want the compulsory licensing to be confined to a handful of diseases like HIV/AIDS, malaria, and tuberculosis. Secondly, they want only the “least developed and low-in-come developing countries that do not have the capacity to produce essential drugs domestically” to be within the coverage of compulsory licensing. This effectively excludes high-income developing countries such as Brazil, South Africa, China, Egypt, Hungary and Singapore. India and Thailand, by virtue of their ability to produce drugs domestically are also excluded. Another major rider suggested by the developed countries is that the company supplying cheap generic copies of drugs under CL would have to ask the government of its own country to override the relevant patent, before any export can take place. This makes the imports of the required drugs conditional on the political will of another government and can potentially make the whole process very bureaucratic and time-consuming.

Most developing countries, including the African countries are opposed to any restrictions that limit the scope and coverage of compulsory licensing. A submission by the African Group to the WTO dated 14th November 2002, titled “Elements of a Paragraph 6 Solution”[2] elaborates the positions of the developing countries on these issues. The suggestions of the African groups are:

It is the view of the African Group that the expression “other epidemics”, in paragraph 1 of the Declaration on the TRIPS Agreement and Public Health, covers other diseases, including those that may be unforeseen for the moment, and that on this basis Members shall have the right to use the solution in the context of health problems they may face.

Regarding the scope of the solution, the African Group believes that it shall not restrict the rights and flexibility under the TRIPS Agreement. It should be agreed that the solution is intended to be part of a permanent or long-term solution to the problem of lack of or insufficiency of manufacturing capacity while at the same time responding to the short-term or immediate needs of Members with such capacity problems.

The African Group believes that all Members should be eligible as importers, on the understanding that they will use the solution only when they need it, that is, in cases where they lack or have insufficient manufacturing capacity. Indeed, paragraph 6 addresses “Members with insufficient or no manufacturing capacity”.

The proposal that some Members only use the solution in cases of emergencies and other circumstances of extreme urgency relating to HIV/AIDS, tuberculosis, malaria and other epidemics, introduces a distinction that does not have a good basis in the Declaration on the TRIPS Agreement and Public Health, because reference was made to WTO Members with insufficient or no manufacturing capacity.

Given the approaching deadline to solve these problems and in the backdrop of increased differences of opinion between developed and developing countries, the outcome of the Sydney mini ministerial gained special significance for the final outcome of the Doha declaration on TRIPS Agreement and Public Health.

The reports coming out of the Sydney Ministerial indicate that no consensus was reached on the crucial elements of the solution, including the coverage, definition of eligible countries and safeguards against diversion of cheap imported medicines to other countries. A sub-group of five nations (US, EU, South Africa, India and Brazil), under the chairman of TRIPS council, have been set up to discuss and deliberate on the issues. However, following the discussions at Sydney, on 19 November, the Chairman of the WTO Council for Trade-related Aspects of Intellectual Property Rights (TRIPs) released draft legal language for a decision by the General Council on the implementation of paragraph 6 of the Doha Declaration on the TRIPs Agreement and Public Health. The Chair proposed a long-term waiver until an amendment to TRIPs comes into force. This draft also addresses some of the concerns of developing countries as it would allow all developing countries greater flexibility to import generic copies of patented drugs and would not explicitly limit the new rules to a defined set of diseases. This new draft is an improvement over an initial draft which sought to limit the flexibility of generic imports to only the poorer developing countries. The new draft is also considered to better because it makes no attempt to seek greater definition of that language agreed by ministers in the Doha declaration on TRIPS and public health.

But the new draft also introduced a set of safeguard mechanisms. It says that the country supplying cheap generic copies of drugs would have to agree to override the relevant patent and grant compulsory license on a case to case basis. Secondly, it enforces a restriction that only the amount needed by the importing Member should be manufactured under the CL and the entirety of this production should be exported to the Member which has notified its needs to the WTO.

Humanitarian groups denounced the proposed solution as unworkable. A press release by Medecins Sans Frontieres (also known as Doctors Without Borders or MSF) says:

“The major problem is that the country supplying cheap generic copies of drugs needed to combat AIDS, TB, and any other disease, would have to agree to override the relevant patent. This makes the needy importing country unacceptably dependent on the political will of another government, and increases the administrative burden. Potential suppliers would also be under enormous pressure from industrialised countries such as the US and EU not to help out..”

The failure of the Sydney mini-ministerial to reach a consensus on the TRIPS Agreement and Public Health raises serious questions about the intentions of the developed countries. Oxfam, an activist group, monitoring the Sydney meet says:

“This failure is due to the entrenched attitude of several developed countries, like the US, Canada, Switzerland and the European Union, who continue to defend the profits of their pharmaceutical giants to the detriment of the right to health of the world’s poorest people”.

This failure also raises serious doubts whether the deadlines set by the Ministers at the WTO’s Doha Ministerial meeting on issues of implementation, Special and Differential Treatment, and implementing TRIPS and Public Health, can be met.  One year after the Doha Declaration, lack of progress in negotiations on most fronts indicate that most deadlines are going to slip without any firm commitments. Developing countries has the right to feel cheated with the progress so far.

[1] Australia, Brazil, Canada, China, Colombia, Egypt, the EU, Hong Kong, India, Indonesia, Japan, Kenya, Korea, Lesotho, Malaysia, Mexico, New Zealand, Nigeria, Senegal, Singapore, South Africa, Switzerland, Thailand, Trinidad and Tobago, and the US
[2] WTO Document Number IP/C/W/389 Dated 14 November 2002