James Love Consumer Project on Technology

1. Making Intellectual Property Rules FairSession on Critical Issues Facing the Poor:What Progress has the world made in fulfilling the basic needs of the poor? James Love Consumer Project on Technology CUTS Partnership Conclave: Governance and its Relationship with Poverty Reduction 13 March 2003 New Dehli, India

2. Number % of Total Cumm % USA 44,609 39.1% 39.1% Germany 15,269 13.4% 52.5% Japan 13,531 11.9% 64.4% UK 6,274 5.5% 69.9% France 4,877 4.3% 74.1% Netherlands 4,019 3.5% 77.7% Sweden 2,988 2.6% 80.3% Korea 2,552 2.2% 82.5% Switzerland/Liechtenstein 2,469 2.2% 84.7% Canada 2,210 1.9% 86.6% All Developing countries 5,359 4.7% 4.7% Who obtains patent protection?PCT Patent Filings, 2002

3. + Marketing + R&D Cost + Profit Free Tim Hubbard’s demand curve problem Cost People treated

4. Changes in Prices for Fluconazole in Thailand, following the introduction of competition in 1998

5. Open Source/GPL models for software development Peer to peer technologies and social organization models UK Commission on Intellectual Property Rights TACD IP agenda Royal Society brainstorming on IPR OECD IPR studies US National Academies of Science US Federal Trade Commission / Department of Justice hearings on competition and intellectual property. MSF Working groups on IPR/DND IETF working group on IPR UNDP Human Development Report 2001 Blur/Banff discussions on music Rockefeller Bellagio meetings / collective management of intellectual property rights World Business Council for Sustainable Development Project on Intellectual Property Rights Aventis Radical IPR scenarios Ransom / Matching Funds model WIPO access to genetic resources / traditional knowledge and folklore WHO/Harare proposal Global brainstorming on intellectual property

6. For TRIPS to be fair to the poor, rights to patent owners must be subject to limitations and exceptions

7. Under the Present TRIPS Accord there is limited but important flexibility • WTO member countries may • Set their own standards for novelty and utility • exclude some inventions under Article 27 • offer limited royalty free exceptions to patent rights under Article 30 • Issue compulsory licenses to patents under Article 31 • Allow for domestic or international exhaustion of rights after sale of product (1st sale doctrine), under Article 6, thereby permitting parallel trade

8. In 2001 in Doha, the WTO promised its patent rules could and should protect public health

9. Paragraph 4 of the Doha Declaration on TRIPS and Public Health We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all. In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.

10. Paragraph 5 of the Doha Declaration on TRIPS (b) Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted. (c) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.

11. Doha Declaration, Paragraph 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.

12. US, Japan, EU used paragraph 6 negotiations to renegotiate and undermine Doha Declaration on TRIPS In order to get consensus on paragraph 6 • US Government seeks to limit scope of diseases • EU proposed list of diseases including AIDS and diseases with little commercial market, such as yellow fever • Japan asks for exclusion of vaccines and other technologies • Japan others seek to limit to emergencies only • EU/US/Japan/Canada demand tight restrictions on eligible countries, excluding nearly every country with any level of economic development • EU insists on extraordinary complex and costly procedures

13. NGOs say bad deal on paragraph 6 is worst than no deal • LDC’s have ignore patents on medicines until 2016, and be source of exports of cheap generic drugs • Every country can permit exports under Article 31.k of the TRIPS • Possibly under refusal to deal grounds • Exports can be permitted under Article 30, if allowed by panel • Canadian early working case • European Parliament Amendment 196

14. The US and EU are hostile to efforts to expand access to medicines • AIDS: Generic manufacturers cannot achieve economies of sale without access to middle income country markets • Diabetes: More than 100 persons in developing countries now have diabetes • Asthma: Common among children in developing countries. Lack of access to best drugs (such as singulair) lead to unnecessary suffering and death • Cancer: 80 million persons in developing countries lack access to treatment for cancer.

15. Glivec Story • Very effective drug • Treats rare forms of leukemia • Developed with significant US government R&D support • Norvartis charges in as much as $50,000 annual for treatment of chronic condition • National health care systems are bankrupted by cost of such drugs

16. Demonstrations in Korea over pricing of Glivec lead to arrests

17. Korea government is pressured to reject compulsory license • The Korean Government reached agreement with the United States in 1999 to price new, innovative drugs at the average ex-factory price of A-7 countries • United States, United Kingdom, Germany, France, Italy, Switzerland, and Japan. • Europe has also been involved in pressure in Korea over drug prices

18. US now seeking higher prices on medicines in many trade negotiations

19. Developing countries need good rules for compulsory licenses • Administrative proceedings should be cheap and fast • Compensation should be predictable and affordable • UNDP royalty guidelines • Grounds should be straightforward

20. Access Gap Theory • If one can establish that there exists a significant gap between those who need medicine and those who actually have the medicine, and • Price is a barrier to access • It is illegal to refuse to license the patent on a non-exclusive basis at a reasonable royalty

21. Advantages of Access Gap Theory • Empirical burden is straightforward • Based upon public health data • Policy is straightforward, • Mechanism to give effect to “access to medicine for all” provisions of Doha Declaration • Exports permitted under Article 31.k of TRIPS

22. For more information Consumer Project on Technology http://www.cptech.org Subscribe to ip-health