By Carlos M. Correa
GENEVA, Oct 15 2015 (IPS)

The pharmaceutical industry from the US and Europe scored a major victory with the adoption, in 1994, of a binding agreement on intellectual property (Agreement on Trade Related Aspects of Intellectual Property Rights – TRIPS) in the context of the nascent World Trade Organization (WTO).

While some transitional periods were allowed, the TRIPS Agreement did not leave any space for a special and differential treatment based on the countries’ levels of development. In particular, it imposed on all World Trade Organisation members (WTO) the obligation to grant patents in all fields of technology.

The lack of patent protection promotes price competition in the pharmaceutical market and, in some cases, clears the way for the development of generic pharmaceutical industries. The most noticeable case is that of India, which developed a strong pharmaceutical industry and is known today as “the pharmacy of the developing world.”

The Trans-Pacific Partnership (TPP) is an ambitious trade agreement between the U.S. with 11 other countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).

Notably, there are major differences in the level of development of these countries (for example, Vietnam’s gross domestic product per capita (GDP) is approximately 43 times less than the US GDP per capita). Despite this, Washington seeks the application of the same standards of protection to all parties in the partnership.

In fact, tariffs are already low among the TPP negotiating countries. There are very little gains to be obtained from the TPP in this regard.

What these agreements tend to be really about are issues such as intellectual property rights. And the most important strategic reason of this initiative for the US is likely to be to counter China’s growing influence in the Asia-Pacific region, and to make the region less hospitable for the Chinese “state capitalism.”

The enhanced protection of pharmaceutical products was a key concern for the US in trade negotiations that led to the adoption of the TRIPS agreement. Despite the significant enhancement of the international standards of intellectual property protection that that agreement entailed, the pharmaceutical industry from the US and the European Union remained unsatisfied. They aimed at even higher standards of protection.

However, it soon became evident that it would not be possible to obtain such higher standards within the relevant multilateral organizations, WTO and World Intellectual Property Organisation (WIPO), where developing countries resisted further increases in intellectual property protections.

In this scenario, developed countries opted to seek the enhanced protection demanded by the pharmaceutical industry and other constituencies through bilateral or plurilateral trade agreements, where the bargaining position of individual countries is weaker and the promises of market access, or other real or expected trade advantages, make agreements of intellectual property more viable.

Thus, while under the TRIPS Agreement patents must last for 20 years from the date of application, the free trade agreements (FTAs) promoted by the US oblige the partner signatory countries to extend the patent term to compensate for “unreasonable” delays beyond a certain period in the procedures for the marketing approval of a medicine as well as in the examination and grant of patent applications.

FTAs also oblige, among other things, to grant patents based on “utility” rather than industrial applicability and, importantly, to secure market exclusivity on the basis of the protection of test data required for the marketing approval of pharmaceuticals, generally for five years from the date of such approval in the country where protection is sought. FTAs also require partners to establish a “linkage” between the marketing approval of medicines and patents, thereby granting pharmaceutical companies with rights that, under some FTAs, are also stronger than those available under the US law.

For instance, a study found that the patent term extension would generate in Colombia an increase in pharmaceutical expenditures of US$ 329 million and a reduction in pharmaceutical consumption of 7 per cent by 2025.

With respect to the potential impact of the TPP, in particular, a study by Australian and US researchers estimated that, in Vietnam, the government would only be able to provide anti-retroviral therapy to 30 per cent of people in living with HIV (down from its current rate of 68 per cent) since the cost per person per year of treatment would increase to US$ 501 under the US proposal from its current level of $127.22.

The negative impact of TRIPS-plus standards on access to medicines has been found even in developed countries that are not net exporters of intellectual property rights, such as in Canada and Australia.

The costs incurred by the smaller partners in FTAs are disproportionately high in relation to the benefits that accrue to pharmaceutical companies.

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Patient and leading health organisations in South Africa have now joined a Fix the Patent Laws campaign launched in 2011 by Treatment Action Campaign (TAC) and Doctors Without Borders (MSF) to push for reform of the country’s current patent laws.

The campaign’s promoters say that these laws severely restrict access to affordable medicines for all people living in South Africa.

The organisations which have adhered to the campaign are: People Living With Cancer (PLWC), South African Depression and Anxiety Group (SADAG), DiabetesSA, CanSurvive, SA Federation for Mental Health (SAFMH), Stop Stock Outs, Cancer Association of Southern Africa (CANSA), Schizophrenia and Bipolar Disorder Alliance (SABDA), South African Non-Communicable Diseases Alliance (SANCD Alliance), Marie Stopes, Epilepsy South Africa and Cape Mental Health.

Together, they are calling on the South African government to finalise a National Policy on Intellectual Property that champions measures to reduce prices and increase access to a wide range of medicines for people in need across the country.

TAC and MSF reported Jun. 1 that the expanded coalition of organisations represents public and private sector patients in South Africa seeking treatment and care for a range of cancers, mental illnesses, diabetes and other non-communicable diseases – as well as tuberculosis, HIV and sexual and reproductive health diseases.

South Africa currently grants patents on almost every patent application it receives, allowing companies to maintain lengthy monopoly periods on medicines, argues the campaign. This keeps prices of many medicines higher in South Africa than in many other countries.

According to TAC and MSF, it is estimated that 80 percent of patents granted in South Africa do not meet the country’s patentability criteria. This is largely due to the fact that patents are granted without substantive examination of applications to ensure that patentability criteria are met.

“Some cancer patients would rather go to other countries, like India, for treatment – the combined cost of the flight, medical services and drugs is cheaper than buying the drugs alone in South Africa,” said Bernice Lass of cancer group, CanSurvive.

Linda Greeff of PLWC said that her organisation was supporting the campaign because “we want to ensure that there is proper scrutiny of patent applications before patents are granted. We want a patent granting process that is ethical and transparent, so that more people can access the medicines that they need.”

According to Cassey Chambers of SADAG, the group deals with “patients every day who cannot afford medication or treatment, and as a result become more depressed, helpless, hopeless and even suicidal in some cases.”

DiabetesSA’s Keegan Hall stressed that as health organisations, “we have an obligation to take steps to improve affordability and access to medicines. The cost of insulin and other diabetes management tools are far too expensive for many patients,” Hall added.

Health organisations joining the Fix the Patent Laws campaign say that they recognise the opportunity South Africa has to improve access to medicines for all diseases through reforming problematic patent laws.

South Africa’s Department of Trade and Industry (DTI) has already embarked on the process of legislative reform, releasing a Draft National Policy on Intellectual Property for public comment in 2013. The draft policy contained important commitments to reform the laws in order to restore the balance between public and private interest, in favour of people’s health.

The Fix the Patent Laws campaign coalition is calling for urgent approval of a finalised National Policy on Intellectual Property, as a critical first step toward reform of problematic patent laws and practices that deprive people living in South Africa of more affordable treatments for all conditions.

It notes that as a member of the World Trade Organisation (WTO), South Africa is required to uphold minimum standards of intellectual property protection as defined by the international Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This includes granting 20-year patents on medicines.

However, South Africa also has significant flexibility under TRIPS to amend national legislation in order to improve access to medicines. According to the health organisations, reforms could include the government taking measures to limit abusive patents being granted on medicines.

At the same time, it says, government could establish easier procedures for overcoming legitimate patent barriers when medicines are unaffordable, unavailable or not adapted for patient needs.

Edited by Phil Harris   

By Carlos M. Correa
GENEVA, Feb 3 2015 (IPS)

Industry’s demands and political pressures exerted by developed countries to expand and strengthen patent protection worldwide have been based on the argument that patents promote innovation and thereby contribute to achieve social, political and economic well-being, independently of the level of development of the country where they are granted and enforced.

This view ignores the fact that patents do not have the same impact in countries with different industrial bases, research and development (R&D) capabilities and availability of capital to finance innovation, among others.

Carlos M. Correa

Significantly, there is a growing body of academic studies challenging the belief that patents are essential to incentivise innovation, even in advanced countries, or to enhance economic growth.

While many scholars call for a substantial reform of the patent system, others go as far as suggesting its abolition.

In a working paper entitled The case against patents, Michele Boldrin and David K. Levine have argued that “in spite of the enormous increase in the number of patents and in the strength of their legal protection we have neither seen a dramatic acceleration in the rate of technological progress nor a major increase in the levels of research and development (R&D) expenditure. There is strong evidence, instead, that patents have many negative consequences.”

“Both of these observations are consistent with theories of innovation that emphasise competition and first-mover advantage as the main drivers of innovation and directly contradict theories postulating that government-granted monopolies are crucial in order to provide incentives for innovation.”

The role of the patent system is thus controversial, particularly in developing countries.“Patents do not have the same impact in countries with different industrial bases, research and development (R&D) capabilities and availability of capital to finance innovation, among others”

In the last 25 years, much emphasis has been put on the concept of intellectual property as ‘truly property’. Different variants of natural rights-based approaches have been articulated to justify developed countries’ relentless efforts to increase the scope and levels of intellectual property protection, notably for patents.

The idea that patents are a piece of property has provided ideological support for an expansion of the protectable subject matter, the extension of the term of protection, the reinforcement of the exclusive rights, and the strengthening of enforcement measures.

Patents confer exclusive rights. They limit the use of knowledge – a public good by its very nature – and competition, which promotes consumer well-being and innovation.

Nobody can produce or commercialise the protected invention during the lifetime of the patent, unless authorised by the patent holder or under compulsory licences, which are rarely granted. Given the exclusionary effects of patents, they have often been characterised as ‘monopolies’.

Yet, the rights conferred by patents are based on partial and often imperfect factual determinations. The examination process does not allow patent offices to reach definitive
judgments on patentability.

There is also uncertainty regarding the validity of patents in the boundaries of what is protected under individual patents. The patent claims are in many cases ambiguous and it is unclear what the actually protected subject matter is. Australian academic Peter Drahos asserts that “patents, unlike blocks of land, do not come with settled boundaries.”

Thus, it is fuzziness rather than definitiveness that characterises patent grants. This is not accidental, but deliberately sought by patent applicants to discourage competitors.

In addition to imprecise disclosures of what is deemed to be the invention, courts interpret patent claims with different theories and methodologies that lead to diverse outcomes with regard to what is deemed protected and eventually infringed.

Another fundamental problem with the patent regime is that it operates on the basis of a limited capacity to examine the patentability of claimed inventions and on a number of legal fictions created by legislators, patent offices or courts.

Such legal fictions are often dogmatically applied, without a critical assessment of their justification and implications.

A patent is granted in most countries after a substantive examination is conducted to determine whether it meets the patentability standard established by national laws which generally require novelty, inventive step (or non-obviousness) and industrial applicability (or utility).

However, some countries (such as Luxembourg and South Africa) confer patents without such a substantive examination or without assessing inventive step (for example, Switzerland and France).

While patent offices in developing countries (except China) receive a number of patent applications much lower than developed countries, some (such as Argentina, India and Thailand) have introduced legislative or other regulatory changes to tighten the application of the patentability requirements and reduce, through a rigorous examination, the proliferation of patents, particularly in the pharmaceutical field.

The intervention of patent offices through substantive examination in the process of creating patent rights gives them an appearance of validity. However, such intervention offers no guarantee in this respect and the public and uninformed business actors may be grossly misled.

The case of South Africa, where no substantive examination is currently made, is illustrative.

Thousands of patents have been registered in South Africa to cover minor or trivial developments that can block local production or importation of lower-priced generic medicines. However, the government of South Africa recently announced its intention to introduce a system of substantive examination, at least for pharmaceutical patents.

This proposal raised stiff opposition from pharmaceutical multinational companies, which were eventually found to finance a covered lobbying operation aimed at derailing the government’s initiative.

On the one hand, it is to be expected that the introduction of such a system would discourage patent applications that may not survive a serious substantive analysis; hence, the number of applications will presumably diminish over time, especially if fees are established at a level that discourages speculative patenting.

On the other, the available information on patent offices in other developing countries suggests that the number of examiners required to review pharmaceutical patent applications is manageable for South Africa even if it opted to rely on internal examiners only.

Unfortunately, many patent offices have tended to work under the assumption that their role is to grant as many patents as possible, and to decide in favour of the applicant in case of doubt. Applicants are often treated as ‘clients’.

As noted by Dominique Foray, patent offices have become extremely pro-patent since the early 1980s. The applicant, formerly considered with suspicion, has become a ‘client’ whose needs must be satisfied by quick, cheap procedures. The result is a total deterioration of examination procedures.

The patent office should function as a steward of the public interest, not as a servant of patent applicants and must protect the public against the issuance of invalid patents that add unnecessary costs and may confer market power. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

* This column is based on South Centre Research Paper No 58 of December 2014. A full version of the paper is available here.

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