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Importing indian generic drugs following trips – case studies of zambia and kenya

Importing Indian Generic Drugs Following TRIPS: Case Studies
from Zambia and Kenya
By

O’Carroll

Introduction

India has established itself as the most important supplier of generic pharmaceuticals to the developing world. Under its 1970 Patent Act, India allowed for the granting of process patents, but eliminated product patents for pharmaceuticals. This paved the way for generic drug companies to replicate the drugs manufactured by brand name pharmaceutical companies under patents in other countries, as long as they did not use a patented manufacturing process. The generic drug industry flourished, and generic antiretroviral drugs (ARVs) from India have become prevalent in the treatment of HIV and AIDS in the developing world. Approximately 350,000 people world wide, half of all people in the developing world who are receiving ARV treatment, use ARVs produced in India.1 Seventy percent of patients in the Medicines Sans Frontieres HIV/AIDS project take ARVs manufactured by generic companies in India.2 In addition to the importance of generic drugs in the supply of ARVs, competition from generic drugs has been credited with reducing the cost of ARVs for a single patient from as much as $15,000 USD per year to as little as $150 USD per year.3 Any changes in the availability of generic drugs from India can be expected to have a significant impact both on the availability and on the affordability of drugs in the future. India amended its Patent Act in March 2005. Among other changes, the new Act allows for the patenting of products as well as processes. Inventors will now be able to patent products that they develop, including generic drugs, and therefore will be able to prevent generic manufacturers from producing these drugs without a licence for the duration of the patent. India changed its laws in order to comply with the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In addition to requiring that India provide product patents in the future, TRIPS required that India introduce a process that would allow inventors to file patent applications as of the date that TRIPS came into force, January 1, 1995. Therefore, pharmaceutical products for which patent applications were filed in India between 1995 and 2005 may also come under patent protection. Clearly this patent protection will limit the ability of generic manufacturers to replicate drugs developed after 1995. While many of the ARVs currently produced in India were developed prior to 1995, and therefore will escape this legislation, it has significant implications for the availability and affordability of any drugs produced after that date. Both TRIPS and the Indian Patent Act allow some flexibility for the production of generic drugs. Provisions are made for the granting of voluntary and compulsory licences, which would allow generic manufacturers to produce pharmaceuticals that are currently subject to patent protection. African countries seeking to import generic versions of pharmaceutical products that are patented in India will need to do so in a 1 “The future of generic medicines made in India” Online: Medicines Sans Frontiers, 21.04.2005, <http://www.msf.org/content/page.cfm?articleid=A6DADC60-3036-44EA-A78B614146ACF5D8>. 2 Ibid. 3 Ibid. manner that complies both with TRIPS, and with the Indian Patent Act. Most African countries are members of the WTO, and therefore, are also Member States with respect to the TRIPS Agreement.4 When importing generic drugs, these countries will need to ensure that they are not violating their own obligations under the TRIPS Agreement. Importing countries may also have domestic patent laws, which will govern the domestic legality of the importation of generic drugs. This paper provides an overview of the requirements that must be met under both TRIPS and the new Indian Patent Act in order for countries to import generic pharmaceutical products from India. The cases of Kenya and Zambia will be discussed as examples of countries that may wish to import generic drugs. The domestic patent laws of both of these countries will be considered. As a least-developed country (LDC) Member of the WTO, Zambia is not required to become TRIPS-compliant until 2016. Kenya is a developing country, but is not an LDC, and as such, has already been required to become TRIPS compliant. A Brief Introduction to TRIPS
Prior to TRIPS, the WTO did not generally include intellectual property rights under its ambit. One exception was Article XX of the GATT, which allowed an exception to GATT obligations for: measures…necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those related to…the protection of patents, trademarks, and copyrights, and the prevention of deceptive practices.5 This exception was qualified by requirements that these measures could not be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade. Therefore, prior to TRIPS, the WTO allowed countries to restrict trade that would infringe domestic intellectual property laws, but did not allow them to do so in a manner that ultimately amounted to an arbitrary restriction on trade. Paris Convention was the major international treaty on patent law prior to TRIPS. This Convention created a national treatment obligation: countries had to extend intellectual property rights to domestic and foreign nationals on equally favourable terms. The Convention also created a priority-registration period (which is discussed further 4 Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Congo, Djibouti, Egypt, Gabon, The Gambia, Guinea, Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Tanzania, Togo, Tunisia, Uganda, Zambia, and Zimbabwe are all members of the World Trade Organisation. These members are all bound by the TRIPS Agreement. Algeria, Cape Verde, Equatorial Guinea, Ethiopia, Libya, Seychelles, and Sudan are observer States at the WTO. Observer states must start accession negotiations within five years of becoming observers. Comoros, Eritrea, Ivory Coast, Liberia, Sao Tome and Principe, and Swaziland are neither members of the WTO, nor observer States. 5 GATT, GATT 1947, Article XX(d). below). Aside from the priority-registration period, the Paris Convention imposed few substantive requirements on member countries. TRIPS follows the Paris Convention in imposing a national treatment obligation on Member States. This agreement also incorporates the priority-registration period, and other rules from the Paris Convention.6 TRIPS, however, imposes many substantive obligations on member states. Article 27(1) requires that: Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Paragraphs 2 and 3 allow for the exclusion of inventions in order to protect public order, and for the exclusion of diagnostic, therapeutic and surgical methods, and plants and animals, other than microorganisms. The requirements set out in Article 27(1) are common in domestic patent laws. The requirement that an invention be new is also referred to as the novelty requirement. An invention must not have been anticipated by prior use or publication; that is, the specifics of the invention must not have been revealed either by the inventor or by anyone else (including another inventor) prior to the application for a patent. The requirement that an invention involve an inventive step is the requirement of non-obviousness. The invention must not be something that would have been obvious to another person skilled in the particular field of the invention. Essentially there must have been some ingenuity on the part of the inventor. The final requirement is that the invention must be “capable of industrial application,” the invention must be useful. If one were to follow the directions set out in the patent specification, the effects that the patentee claims will be produced must, in fact, be produced. Once these three requirements are met, and so long as the invention is not subject to one of the exceptions, TRIPS requires that countries grant a patent for the invention, whether it be a product or a process. Article 29 of TRIPS delineates the rights that must be included in a patent. For product patents, owners must have the right to prevent others from making, using, selling, or importing the product. For process patents, owners must have the right to prevent third parties from using the process, and from making, using, selling or importing the products obtained from that process. Article 33 provides that patent protection must last for a term of twenty-years from the date of the filing of the patent application. Therefore, under TRIPS countries must provide patent protection for any invention, subject to limited exceptions, that meets the basic patent requirements. This protection must include the right to prevent others from making, using, selling and importing the invention, and must last for twenty years. These provisions provide significant protection to patent holders. There is, however, some flexibility in TRIPS under Articles 7, 8 and 31. Article 7 states that the protection and enforcement of intellectual property rights should contribute 6 GATT, Agreement on Trade Related Aspects of Intellectual Property Rights, Annex 1C of the Makkaresh Agreement Establishing the World Trade Organisation (15 April 1994), Art. 2. to the promotion of innovation and the dissemination of technology in a manner conducive to social and economic welfare.7 Article 8 allows members to adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.8 Article 31 provides for compulsory licensing. Once certain conditions are met, governments can compel patent holders to licence third parties to make, use, sell or import the patented invention. Before obtaining a compulsory license, one must attempt to obtain a voluntary licence from the patent holder on “reasonable commercial terms”. Once such a request is refused, it is possible to obtain a compulsory licence. There are, however, several restrictions on compulsory licences. First, these licences cannot be exclusive (other parties seeking compulsory licences must be granted those licences on the same terms). Second, production under the compulsory license is to be for the domestic market only (below there is a discussion of the alterations made in the Doha Agreement). Third, ‘adequate remuneration’ must be paid to the patent-holder, taking into account the ‘economic value’ of the patent.9 In the case of a national emergency, an exception is made to the requirement to seek a voluntary licence. A serious concern arose regarding the Article 31 requirement that production under a compulsory license be for the domestic market. Many countries where access to essential medicines is a concern lack the domestic capacity to manufacture these medicines, therefore, the ability of these countries to issue a compulsory licence for domestic production was not particularly useful. These medicines could not be obtained from another country under a compulsory licence because the stipulations in Article 31 would prevent another country from issuing a compulsory licence for the manufacture of medicines for export. Doha Declaration
Doha Declaration, an attempt to address the public health concerns arising under TRIPS, was adopted in 2001. The Doha Declaration recognised the rights of member states to grant compulsory licences, and to determine the grounds on which they grant such licences.10 It stated: [e]ach 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 7 Ibid., Art. 7. 8 Ibid., Art. 8(1). 9 Ibid., Art. 31(j). 10 WTO, Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2, (20 November 2001) para. 5(1). 11 Ibid., 5(3). This gives members autonomy in determining when they are experiencing a national emergency, and means that they do not need to declare a full-fledged national emergency in order to invoke the compulsory licensing provisions.12 The Doha Declaration also sets the stage for the reconsideration of the compulsory licensing provisions in TRIPS in order to accommodate those countries that lack manufacturing capacity: We recognise 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. Paragraph 6 became the foundation for a later Agreement on compulsory licensing. While the compulsory licensing provision is the section of the Doha Declaration that is most frequently discussed, there are other provisions of interest in this Declaration. One such provision is paragraph 5(4). The TRIPS Agreement states that it shall not be used to address the issue of the exhaustion of intellectual property rights.13 Exhaustion has to do with the expiration of intellectual property rights. Under a doctrine of exhaustion, generally, intellectual property rights are extinguished, or exhausted, upon sale of the item. For example, if A has a patent on drug X, once A sells drug X to B, A cannot prevent B from using that drug or reselling it; A’s intellectual property rights do not extend beyond the sale to control how B uses the drug. It would be possible not to have a doctrine of exhaustion under a country’s intellectual property laws so that the patent holder could prevent even those who legitimately purchase his product from re-selling it. TRIPS does not stipulate whether countries must impose a doctrine of exhaustion. The Doha Declaration reinforces the absence of such a stipulation under TRIPS saying that “The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each member free to establish its own regime for such exhaustion without challenge”.14 This freedom becomes important if countries wish to engage in parallel importation; that is, if they wish to purchase pharmaceuticals after they have been sold in another market.15 If pharmaceuticals are lawfully sold in one country at a low price, another country, which has incorporated the doctrine of exhaustion into its own legislation, can purchase and import these products, despite the existence of a valid patent, which would normally give the patent holder the sole right to import the drugs into that country. The rights of the 12 Jerome H. Reichman, “Non-Voluntary Licensing of Patented Inventions: Historical Perspective, Legal Framework Under TRIPS and an Overview of the Practice in Canada and the United States of America” (Case Study for UNCTAD/ICTSD Capacity Building Project on Intellectual Property Rights and Sustainable Development, 2002) Online: <http://www.ictsd.org/pubs/ictsd_series/iprs/CS_reichman_hasenzahl.pdf>. 13 Supra, note 6, Art. 6. 14 Supra, note 10 at para 5(4). This freedom is subject to the most-favoured nation and national treatment provisions, which are found in Articles 3 and 4 of TRIPS. 15 See discussion in supra note 12. patent holder would be extinguished when the drug was sold in the first market, and could not be used to prevent importation into the second market. If domestic legislation includes a doctrine of exhaustion, patented pharmaceuticals that are legally available at a lower price in another country can be purchased for import. Paragraph 7 of the Doha Declaration extended the deadline for the enforcement of patent rights for pharmaceutical products in LDCs until 1 January 2016. Decision on the Implementation of paragraph 6 of the Doha Declaration
In 2003, an Agreement on compulsory licensing was finally reached. Several requirements are set out for the granting of a compulsory licence for export. The importing Member must have notified the TRIPS Council of the names of the drugs and the expected quantities, have established that it lacks sufficient manufacturing capacity to produce the drug in question (unless it is a least-developed country), and have confirmed that it either has granted, or intends to grant, a compulsory licence in accordance with Article 31 where the drug is patented in its territory.16 The compulsory licence issued by the exporting country must be only for the amount necessary to meet the needs of the importing Member, and all of the drugs produced under the licence must be exported to that member.17 The drugs produced for export under the license must be clearly identified through special labelling, or marking, and the quantity and distinguishing features of the product must be posted on a web site.18 The Agreement on the Implementation of Paragraph 6 retains the requirement that adequate remuneration must be paid to the patent holder.19 Furthermore, it is required that this remuneration must be paid in the exporting member “taking into account the economic value to the importing Member of the use that has been authorised in the exporting member.” The requirement for adequate remuneration is then waived in the importing member, because it has already been addressed prior to import.20 The requirement that the remuneration be paid in the exporting member limits the ability of an importing country to control its drug costs, or to attempt to circumvent TRIPS by not compensating the patent holder. Least-developed country Members are assumed to lack the manufacturing capacity to produce pharmaceuticals that they wish to import. Other Members must establish that either they have no pharmaceutical manufacturing capacity or that their capacity (other than any capacity of the patent holder in that country) is insufficient to meet the country’s needs.21

16 WTO, Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public
Health
, WT/L/540 (1 September 2003) at 2(a).
17 Ibid at 2(b)(I).
18 Ibid., (2)(b)(ii and iii).
19 Ibid., at para 3.
20 Ibid., at para 3.
21 Ibid., Annex: Assessment of Manufacturing Capacities in the Pharmaceutical Sector.
Changes to the Indian Patent Law
The most significant change to the Indian Patent Act is the introduction of product patents for pharmaceuticals. The Indian Government issued an Ordinance outlining the changes to its Patent Law in December of 2004. Under the Indian Constitution, it is possible for the President to issue an Ordinance when the Legislative Assembly is not in session if there is an urgent need for a particular law.22 Ordinances lapse six weeks after the Legislative Assembly is reconvened. The patent ordinance made provisions for granting compulsory licences for the manufacture and export of patented pharmaceutical products to countries lacking manufacturing capacity with the condition that a “compulsory licence has been granted by such country.”23 This condition was highly problematic, in order to grant a compulsory licence, a country would need to have not only a patent law, but a patent law that provided for the granting of such licences. Many of the countries who would seek to import under a compulsory licence are least developed countries, who are not required to become TRIPS-compliant, and thus not required to introduce such patent laws, until 2016. A great deal of discussion was generated regarding the concern that this law would effectively force countries to immediately take steps to become TRIPS compliant in order to import generic drugs from India. These concerns were recognised by the Indian Parliament, and were discussed in the debates in the Lok Sabha (the House of the People) in March 2005, and the Bill was amended before it was passed. The new Indian Patent Act now requires that importing countries either grant a compulsory licence, or that they have “by notification or otherwise, allowed importation of the patented pharmaceutical products from India.”24 It can be assumed that the notification requirement would be satisfied if a Member country were to comply with the notification requirements under the Agreement on the Implementation of Paragraph 6. Once this condition is met, The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him.25 The relationship between this section of the Indian Patent Act and other sections regarding compulsory licensing generally is not entirely clear. The Indian Patent Act provides in general that three years after the grant of a patent, any person can apply to the Controller alleging that the reasonable requirements of the public with respect to the patented invention have not been satisfied, or that the invention is not available at a reasonable price, and ask that the Controller grant a compulsory licence. Some groups have raised concerns suggesting that this 3-year waiting period may also apply to the grant of compulsory licences for export.26 22 The Constitution of India of 1950, (26 January 1950), s. 213. 23 The Patents (Amendment) Ordinance, 2004; Ord. No. 7 of 2004, Promulgated by the President in the Fifty-fifth Year of the Republic of India, Art 92A(1) 24 Indian Patent Act, 2005 s. 92A(1) 25 Ibid., s. 92A(2). 26 See for example: Comment by Access to Medicine and Treatment Campaign (AMTC), Alternative Law Forum, and Lawyers Collective “Patent Amendment: A Critique India”, (March 24, 2005) Online at the It appears to be possible to argue on the basis of the structure of the legislation that compulsory licences for export are entirely separate from compulsory licences for domestic production and use. Section 92A, which addresses compulsory licensing for export, makes no reference to any waiting period. The only requirements that it sets out for the grant of a compulsory licence are that the country to which the pharmaceuticals will be exported has “insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems”; and that the country has either issued a compulsory licence, or has otherwise allowed for the importation of patented pharmaceutical products from India. On its face, this provision does not impose any waiting period prior to the application for a compulsory license for export. Subsection (2) states: “The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence.” The effect of this provision will depend on the interpretation of the term “prescribed manner.” The term “prescribed manner” is defined in s. 2 of the Act as including “the payment of the prescribed fee.”27 The Act defines “prescribed” as follows: “’prescribed’ means … prescribed by rules made under this Act.” The Patents Rules read that “An application to the Controller for an order under section 84, section 85, section 91 or section 92 or section 92A shall be in Form 17, or Form 19, as the case may be.” In the case of an application under section 92A, Form 17 would be the appropriate form. Again, nothing in the rules indicates that a three-year waiting period is required before an application can be made for a compulsory licence under section 92A. Compulsory licensing is addressed under Chapter XVI of the Patent Act, which deals with the working of patents, compulsory licences, licences of right and revocation. Article 84 sets out the principle provisions for compulsory licences, and states that At any time after the expiration of three years from the date of the grant of a patent, any person interested may make an application to the Controller alleging that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price and praying for the grant of a compulsory licence to work the patented invention. This provision specifically refers to the situation of an application made on the basis either that the reasonable requirements of the Indian public are not being met, or that the invention is not available on the Indian market for a reasonable price. The three-year waiting period requirement appears in this provision, but there is no indication that this provision applies in the case of a compulsory licence issued for export. Section 92 deals with compulsory licensing in response to an emergency in India, and states that no waiting period applies in such cases.28 Section 92A both on its face, and read in its context within the Act, does not appear to be subject to the three-year waiting period that is imposed on other applications for compulsory licences in India. Asia Pacific People Living with HIV/AIDS Resource Centre <http://www.plwha.org/Folder.2003-08-09.2843/News.2005-04-07.2159>. 27 Supra., note 24, s. 2(1)(v). 28 Ibid., s. 92. As a least developed country, Zambia has until 2016 to become TRIPS compliant.29 Zambia is, however, a member of ARIPO, the African Regional Industrial Property Organisation, which is a regional organisation with the authority to grant patents for countries. Furthermore, Zambia has Patent Legislation dating from 1958. The legislation is not entirely TRIPS compliant, but does provide for patent protection for a period of 16 years, and gives patent holders the right to make, use and sell the invention.30 ARIPO now provides patent protection for a period of 20 years. Section 28(4) of the Zambian Patent Act grants to a patent holder: subject to the provisions of this Act and the conditions of the patent, full power, sole privilege and authority by himself, his agents and licensees during the term of the patent to make, use, exercise and vend the invention within Zambia in such a manner as to him seems meet, so that he shall have an enjoy the whole profit and advantage accruing by reason of the invention during the term of that patent.31 This wording is unusual; as a point of comparison, TRIPS requires that patent holders be given the right to exclude others from making, using, selling, or importing the invention. The TRIPS formulation of the rule is the formulation generally reflected in domestic patent laws. A patent law that gives an owner the right to make, use, or sell an invention (rather than to exclude others from doing so) is problematic because patents may overlap. If person A invents the car, but person B invents the engine, it will be necessary to have both the car and the engine in order for either invention to work. A cannot use his car without B’s engine, and B cannot use his engine without A’s car. A law such as that articulated in the Zambian Patent Act, however, suggests that both A and B have the right to use their inventions. In order for either to exercise this right (assuming they lack a licence from the other), they must infringe the patent of the other. The exclusionary wording would allow A to prevent B from using his car, and B to prevent A from using his engine, but neither is granted the absolute right to use his own invention. Obviously, it would be advantageous to A and B to develop a co-operative arrangement so that they could each benefit from the use of their inventions. The Zambian Patent Act incorporates ARIPO patents in Section 10A. A patent granted by ARIPO, that has not been objected to by the Registrar under section 3(6) of the Harare Protocol is valid, and is treated as if it had been granted under the Zambian Patent Act. The Harare Protocol allows ARIPO to receive and process patents on behalf of the Member States.32 A single patent application can be filed with ARIPO designating any or all of the Member States in which the applicant seeks patent protection. ARIPO 29 The African Member States of the WTO who are LDCs are: Angola, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic of Congo, Djibouti, The Gambia, Guinea, Guinea-Bissau, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Tanzania, Togo, Uganda and Zambia. The African Members States of the WTO who are not LDCs are: Benin, Botswana, Cameroon, Egypt, Gabon, Kenya, Mauritius, Morocco, Namibia, Nigeria, South Africa, Tunisia, and Zimbabwe. 30 While the Zambian Patent Legislation only provides for patent protection for a period of 16 years, section 3(10) of the Harare Protocol provides patent protection for a period of twenty years. 31 Zambian Patent Act, Chapter 400 of the Laws of Zambia, s. 28(4). 32 ARIPO Member States are: Botswana, The Gambia, Ghana, Kenya, Lesotho, Malawi, Mozambique, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. then examines the application to determine patentability (that the invention is new, non-obvious, and useful). Once this determination has been made, copies of the application are sent to each designated Member States who have six months to inform ARIPO that if the patent is granted it will not have effect in that State. The Zambian Patent Act includes compulsory licensing provisions. Under Article 37, after 3 years from the date the patent was granted, or 4 years after the application, whichever is longest a person who can show that he has been unable to obtain a voluntary licence on reasonable terms can apply to the Registrar for a compulsory licence on the basis that the reasonable requirements of the public for the invention are not being or will not be satisfied. Section 40 sets out provisions for the use of a patented invention by the Government for the service of the State. Section 41 is probably the most useful section with respect to the import of generic pharmaceuticals. Under this section a “period of emergency” is declared by the Minister. During a period of emergency, the Government or a person authorised by the Minister has the power to make, use, exercise and vend the invention “for any purpose which appears to the Minister necessary or expedient.” Possible purposes include “the maintenance of supplies and services essential to the life of the community” and “securing a sufficiency of supplies and services essential to the well-being of the community.” (s. 40(2)) In September of 2004, the government of Zambia declared a 5-year HIV/AIDS emergency, opening the possibility to override patent protection of antiretroviral drugs.33 The Zambian government has already granted a compulsory licence for the manufacture of a triple dose combination by Pharco. Ltd., a company incorporated in Zambia.34 Pharmaceutical companies have not been consistent in applying for patent protection in Zambia. While ARVs such as efavirenz (expires 2013), indinavir (expires 2012), and ritonavir (expires 2013) were patented in other countries including, for example South Africa, they were not patented in Zambia. On the other hand, drugs such as lamivudine, nelfinavir, and nevirapine, have all been patented through ARIPO.35 It should be noted that the priority-registration periods for the first three drugs mentioned have all expired, meaning that the inventors can no longer apply for patents on these drugs in Zambia. An issue arises in a country like Zambia, which is not required to have TRIPS- compliant patent legislation in place until 2016, but which already provides patent protections. Article 65(5) of TRIPS states that “A Member availing itself of a transitional period … shall ensure that any changes in its laws, regulations and practice made during that period do not result in a lesser degree of consistency with the provisions of this Agreement.”36 Article 66 addresses specifically the situation of LDCs and states that: In view of the special needs and requirements of least-developed country Members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, such Members shall not be 33 “Zambia declares AIDS ‘Emergency’”, Africa Renewal, Vol 18#3 (October 2004) Online: www.un.org/ecosocdev/geninfo/afrec/vol18no3/183briefs.htm. 34 Republic of Zambia, Ministry of Commerce, Trade, and Industry, Compulsory License NO. CL 01/2004 online: http://sippi.aaas.org/ipissues/updates/?res_id=432 35 P. Boulet, J. Perriens, F. Renaud-Thery, “Patent Situation of HIV/AIDS-related drugs in 80 Countries” UNAIDS/WHO, Geneva, January 2000, online: http://www.who.int/3by5/en/patentshivdrugs.pdf 36 Supra, note 6, Art. 65(5). required to apply the provisions of this Agreement other than Articles 3, 4 and 5, for a period of 10 years from the date of application as defined under paragraph 1 of Article 65.37 It appears that by virtue of Article 66, LDCs escape the transitional period requirements set out under Article 65, including the requirement that laws, regulations, or practice, not be changed in a way that would make the country less TRIPS compliant during that period. Therefore, a country such as Zambia could take steps to suspend the operation of its current patent laws until 2016 when it will be required to become TRIPS compliant.38 Suspending the operation of its patent laws would have the benefit of allowing Zambia to import generic drugs from India under TRIPS simply on the basis of notification, without a requirement that Zambia grant a compulsory licence. On the other hand, where pharmaceutical patents have already been granted in Zambia, this could be problematic, and could open the government to claims from patent holders. In cases where patents have already been granted, it would likely be more practical for Zambia to issue a compulsory licence for import of the patented pharmaceutical. The suspension of Zambian patent laws could, however, be beneficial in the future, for drugs that have not yet been patented in Zambia. The administrative burden involved in importing generic pharmaceuticals would be lessened if Zambia did not first need to issue compulsory licences. In order to import generic pharmaceuticals from India, Zambia would first have to notify the TRIPS Council of the type and amount of drugs to be imported. As an LDC Zambia does not have to show that it lacks the manufacturing capacity to produce the drug domestically. If Zambia has suspended the operation of its patent laws, or if no patent has been granted for the pharmaceutical in question, no further notification need be made. If a patent has been granted for the pharmaceutical in question in Zambia, Zambia must notify the TRIPS council that it either has, or that it intends to, issue a compulsory licence for the import of this pharmaceutical. Even if Zambia fulfils all of these requirements, India must still grant a compulsory licence to manufacture the drugs for export to Zambia. Under TRIPS, and under the Indian Patent Act, adequate remuneration must be paid to the patent holder in India prior to the export of the pharmaceuticals to Zambia. Zambia has not incorporated the doctrine of exhaustion into its Patent Act. If it were to adopt the rule of exhaustion, or if it were to suspend the application of its Patent Act, it could import unlimited quantities of patented pharmaceuticals from other countries where they are available at a lower price. This option would only arise if patented pharmaceuticals were being sold in another country at a lower price than the price they are sold for in Zambia. Furthermore, pharmaceutical companies would be likely to respond to such attempts at parallel importation by reducing the price differential across countries. While this might be a legally viable alternative, it is unlikely to be practically useful. 37 Ibid., Art. 66(1). 38 This is suggested, for example in Brook K. Baker, “Processes and Issues for Improving Access to Medicines: Willingness and Ability to Utilise TRIPS Flexibilities in Non-Producing Countries” (DFID Health Systems Resource Centre, August 2004) The Doha Agreement and the Agreement on the Implementation of Paragraph 6 were drafted in order to respond to the strict limitations on export under compulsory licences in TRIPS. Article 31(f) of TRIPS provides that compulsory licences must be predominantly for the supply of the domestic market of the authorising Member.39 If an authorising Member issues a compulsory licence predominantly for the supply of its own market, there is nothing in TRIPS to prevent it from exporting a non-predominant share of the pharmaceuticals produced under this licence. Section 90(vii) of the Indian Patent Act specifically allows that where a compulsory licence is granted for the supply of the domestic market, the licensee can also export the product where it is shown that “a market for export of the patented article manufactured in India is not being supplied or developed.”40 Therefore, if the Zambian market for a particular pharmaceutical is not being supplied or developed, and if India were to grant a domestic compulsory licence for the production of that pharmaceutical, the non-predominant portion of the drugs produced under that licence could be exported to Zambia. Again in this situation, if the pharmaceutical is patented in Zambia, Zambia would have to have incorporated the doctrine of exhaustion into its legislation so that importation would not violate the inventor’s patent rights in Zambia. Under Article 31(k), a country can bypass both the voluntary licensing requirements, and the requirement that production be primarily for the domestic market “where such use is permitted to remedy a practice determined after judicial or administrative process to be anti-competitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases.” In the very rare circumstance that a country issues a compulsory licence to combat anti-competitive conduct, Zambia could import unlimited quantities of the pharmaceutical in question (to the extent that it was available) from India under this provision.41 One final possibility exists for the importation of generic pharmaceuticals. Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with the 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.42 Prior to the Agreement on the Implementation of Paragraph 6, some Member States, notably the EU, suggested that a declaration could be adopted allow countries to use Article 30 to authorise the production of a patented product for export to another country that had granted a licence for import and sale in order to deal with a serious public health problem.43 The United States, however, argued for a strict interpretation of Article 30.44 39 Supra, note 6, Art. 31(f). 40 Supra, note 24, s. 84(7)(a)(iii). 41 Further research would be required to determine whether this situation could ever arise under Indian law. 42 Supra, note 6, Art. 30. 43 Duncan Matthews, “WTO Decision on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: A Solution to the Access to Essential Medicines Problem?”, Journal of International Economic Law 7(1), 73-107. 44 Ibid. While the panel in the Canada – Term of Patent Protection case limited the application of Article 30, some commentators suggest that it could be given a broader interpretation in light of Articles 7 and 8(1).45 At this point, it is unclear whether Article 30 could be used to licence the export or import of generic pharmaceuticals. Kenya is not classified as a least-developed country, and is already required to be TRIPS-compliant. Kenya’s Industrial Property Act came into force in 2002. Industrial Property Act gives patent holders the right to exclude others from making, using, selling, or importing the patented object, and from using a patented process, or making, using, selling or importing the product of a patented process.46 These protections last for a period of twenty years from the date of filing of the application.47 Like Zambia, Kenya is a member of ARIPO, and patents granted by ARIPO designating Kenya have effect in Kenya unless the Kenya has indicated that a patent shall not have effect in Kenya.48 Provisions are made in the Act for compulsory licensing. Under section 58, “The rights under the patent shall be limited by the provisions on compulsory licences for reasons of public interest or based on interdependence of patents and by the provisions on State exploitation of patented inventions.”49 After four years from the filing date, or three years from the grant of the patent, whichever period is longer, any person can apply for a compulsory licence to exploit the invention on the grounds that the market is not being supplied on reasonable terms in Kenya.50 In order to acquire a compulsory licence, the applicant must show that he has been unable to attain a voluntary licence on reasonable commercial terms.51 This requirement is waived in the case of “a national emergency or other circumstances of extreme urgency, provided the owner of the patent shall be so notified as soon as is reasonably practicable.”52 Furthermore, where it is required by the public interest, the Minister can order that a patented invention be exploited by the Government or a designated party with adequate compensation being paid to the patent holder.53 The Minster can authorise the importation, manufacture, supply or utilisation of a patented substance, without the payment of compensation to the owner of the patent.54 The 74(2) provision has generated considerable debate in Kenya, where questions have arisen as to how a “national emergency” is designated, and what constitutes an “other circumstance of extreme urgency.”55 This suspension of payment provision is unlikely to be useful for 45 Ibid. 46 Kenya, Industrial Property Act, 3 of 2001, s. 54(1). 47 Ibid., s. 60. 48 Ibid., s. 59. 49 Ibid., s. 58(5). 50 Ibid., s. 72(1). 51 Ibid., s. 74(1). 52 Ibid., s. 74(2). 53 Ibid., s. 80(1). 54 Ibid., s. 80.1A and 80.1B. 55 Robert Lewis-Lettington and Peter Munyi, “Willingness and Ability to Use TRIPS Flexibilities: Kenya case study,” (September 2004) DFID Health Systems Resource Centre, Issues Paper – Access to Medicines. the purposes of importing under a compulsory licence. The Agreement on the Implementation of Paragraph 6 requires that adequate remuneration be paid in the exporting Member country; therefore, in the case, for instance, that Kenya made provisions for the importation of generic drugs from India, adequate remuneration would be imposed in India, and would be reflected in the price paid for the drug there. Further remuneration would not be required once the drug had been imported into Kenya. Therefore, this provision is unlikely to be useful in restricting the costs of imported drugs, though it could be used if Kenya were able to manufacture drugs domestically. Even if applied to drugs manufactured domestically, this provision would violate TRIPS if it denied adequate remuneration to patent holders with respect to compulsory licences granted under Article 31. In order to import generic drugs, under both domestic law and TRIPS, Kenya would be required to issue a compulsory licence. In addition to actually issuing such a licence, Kenya must notify the TRIPS Council of the issuance of that licence. As a Member state that is not a least-developed country, Kenya must also both notify the TRIPS Council of the names of the drugs to be imported, and demonstrate that it lacks the domestic capacity to manufacture the drugs that it intends to import. Like Zambia, if Kenya were to introduce the doctrine of exhaustion into its domestic patent legislation, it could purchase and import patented pharmaceuticals from other countries where they are sold at a lower price. Kenya could also import the non-predominant portion of generic pharmaceuticals produced under a basic compulsory licence in India, and could import generic pharmaceuticals produced in India under a compulsory licence to counter anti-competitive behaviour. Finally, if it is possible to import generic pharmaceuticals under an Article 30 exception, then Kenya could also avail itself of this option. India’s Mailbox
Some confusion has arisen as to the purpose and effect of the “mailbox” provision. As a developing country member, India was not required to become TRIPS compliant until 2005. India was required, however, to take steps to protect the rights of patent claimants in the interim. Article 70.8 of TRIPS reads as follows: Where a Member does not make available as of the date of entry into force of the WTO Agreement patent protection for pharmaceutical and agricultural chemical products commensurate with its obligations under Article 27, that Member shall: (a) notwithstanding the provisions of Part VI, provide as from the date of entry into force of the WTO Agreement a means by which applications for patents for such inventions can be filed; (b) apply to these applications, as of the date of application of this Agreement, the criteria for patentability as laid down in this Agreement as if those criteria were being applied on the date of filing in that Member or, where priority is available and claimed, the priority date of the application; and (c) provide patent protection in accordance with this Agreement as from the grant of the patent and for the remainder of the paten term, counted from the filing date in accordance with Article 33 of this Agreement, for those of these applications that meet the criteria for protection referred to in subparagraph (b). The WTO Appellate Panel considered this provision of TRIPS in its decision in the India - Patent Protection for Pharmaceutical and Agricultural Chemical Products dispute. It will be useful to refer to this decision in considering the effect of the mailbox. In order to receive a patent, the subject matter of an application must meet certain criteria. Article 27.1 requires that subject to certain exceptions, “patents shall be available for any inventions … provided that they are new, involve an inventive step and are capable of industrial application.” These requirements are familiar from domestic patent laws, and are often referred to as requirements that the invention be novel (not anticipated), non-obvious, and useful. There are slight variations in the requirements to meet the novelty standard in different countries; for instance, Canada allows a one-year grace period for publication by the applicant (i.e., an applicant who has disclosed the invention in a publication can still claim a patent on that invention within one year of the date of publication),56 but the European Union allows no such grace period. The novelty requirement exists in the Indian Patent Act, which states that: ‘new invention’ means any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification, i.e., the subject-matter has not fallen in public domain or that it does not form part of the state of the art.57 Therefore, it is only possible to obtain a patent if the subject matter of your application has not previously been disclosed either in a publication, or by being put into use anywhere in the world. This requirement creates a couple of problems, which are addressed by international agreements. The first difficulty presented by the novelty requirement is that in order to file for a patent, one must disclose the invention. Therefore, applying for a patent in one country would constitute disclosure of the invention, and could prevent the inventor from meeting the novelty requirement when applying for patents on the same invention in other countries. This difficulty was remedied by the Paris Convention, an international treaty on industrial property that was negotiated in 1883. The Paris Convention currently has 169 contracting parties, which include India, Kenya, and Zambia, the countries of principal interest in this paper. Under the Paris Convention, if a patent application is filed with one member country, the right of the inventor to file a patent application for the same invention in any other member country is protected for 12 months; this is known as a priority-registration period.58 Therefore, an inventor can still meet the novelty requirement in a patent application despite having disclosed the invention in order to obtain a patent in another country, as long as the patent application is made within twelve months of the filing of the original patent application. The second difficulty presented by the novelty requirement is specific to TRIPS. In countries in which the TRIPS patent applications did not immediately enter into force, the priority-registration period would expire for many patents before these countries had 56 Patent Act, R.S.C. 1985, c. P-4, s. 28.2. 57 Supra, note 24 s. 2(l). 58 Paris Convention, Article IV (A,B,C) actually introduced patent laws that were TRIPS compliant. Therefore, in countries such as India, inventors could be prevented from obtaining patents for inventions created after 1995 (when TRIPS first came into force) because their patent applications in developed member countries would precede their applications in developing member countries by more than one year, thereby defeating the novelty requirement. Article 70.8 of TRIPS addresses this problem. In the India Patents dispute, the Appellate Body held that developing country members must provide a means that would: allow the filing of applications for patents for pharmaceutical and agricultural chemical products from 1 January 1995 and preserve the dates of filing and priority of those applications, so that the criteria for patentability may be applied as of those dates, and so that the patent protection eventually granted is dated back to the filing date.59 The mailbox allowed inventors to file patent applications prior to the coming into force of a TRIPS compliant Patent Act, and once the Act came into force the novelty requirements for those applications would be assessed as of the date of application, rather than as of the date the new legislation came into force. Therefore, once the new legislation came into force, patent applications that were previously filed in the mailbox would be reviewed, and patents would be granted provided that they met all of the other requirements for patentability. The term of protection will expire twenty years after the date of the application. Article 70.8 of TRIPS operates in conjunction with Article 70.9, which provided for the granting of exclusive marketing rights to inventors who had filed a patent application under s. 70.8, where the inventor had filed for and been granted a patent for that product in another Member, and where the inventor had obtained Marketing approval from the developing country Member. Under the new Indian Patent Act, s. 11A(7) provides that: the rights of patentee in respect of applications made under sub-section (2) of section 5 before the 1st day of January, 2005 shall accrue from the date of grant of the patent: Provided also that after a patent is granted in respect of applications made under sub-section (2) of section 5, the patent-holder shall only be entitled to receive reasonable royalty from such enterprises which have made significant investment and were producing and marketing the concerned product prior to the 1st day of January, 2005, and which continue to manufacture the product covered by the patent on the date of grant of the patent and no infringement proceedings shall be instituted against such enterprises. Under this provision, a pharmaceutical company, which filed a patent application in the mailbox, would not be able to bring an infringement claim against a generic drug company that had begun producing and marketing the product prior to January 1, 2005, and that continued to do so after January 1, 2005. The only recourse for a pharmaceutical company in this case would be to demand “reasonable” royalties. Commentators have suggested that this provision is not compliant with TRIPS.60 Essentially, this provision 59 India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WTO Appellate Body Report, AB-1997-5. 60 See for example: Manoj Pillai, “India’s Patents Bill, 2005 – Is It TRIPS Compliant?” Online: Mondaq < http://www.mondaq.com/article.asp?articleid=31717&product_id=9&company_id=20143&friend=1>. would allow generic companies that began producing drugs, which receive mailbox patents, to bypass the licensing rules, and to simply continue to produce these drugs in exchange for paying royalties to the patent holder. Given that TRIPS does not limit the nature of that patents that will be eventually granted for applications made under Article 70.8, and that TRIPS has explicit requirements for licensing, it appears quite likely that if this provision were challenged it would be found to be non-compliant. While this provision may not be TRIPS compliant, Zambia and Kenya could potentially import generic pharmaceuticals licensed under this provision of the Indian Patent Act. It should be noted that in a decision on 12 July 2002, the WTO waived the obligations of least-developed country Members under Article 70.9 until 1 January 2016.61 Therefore, LDCs do not have to grant exclusive marketing rights to patent applicants prior to 2016. Currently there are 8,926 pharmaceutical and agrochemical patent applications in the Indian patent mailbox. Over 7000 of these applications come from foreign nations. Conclusion
Zambia and Kenya each have a number of potential alternatives available for importing generic drugs from India. For Zambia, the most practical method will be to supsend the future application of its Patent Act until 2016. At this time, Zambia may import those pharmaceuticals for which it has already granted patents under a compulsory licence, and import those pharmaceuticals for which it has not granted patents under notification to the TRIPS Council. For Kenya the most practical method will be to grant a compulsory licence under its own Industrial Property Act. Any effort by either Kenya or Zambia to import generic drugs from India under these provisions will depend on the willingness of the Indian government to grant compulsory licences, and of pharmaceutical companies to produce under them. Some commentators are pessimistic about the possibility of pharmaceuticals being produced under compulsory licences for export. So far, no country has notified the TRIPS Council of its intention to either import or export pharmaceutical products under a compulsory licence. The notification requirements will impose some costs on both importing and exporting countries, and the requirements the pharmaceutical products be made “distinctive” will impose additional costs on the generic manufacturer. Amir Attaran presents a particularly pessimistic view: … the chance of a compulsory licence being used for export, as Paragraph 6 aims for, is itself fantastically unlikely. The reasons has to do with politics: if governments in the last decade have refused to compulsorily license medicines that might be consumed domestically to help the health of their own citizens, surely they are not about to do so for export, where the only reason is to help the 61 General Council Decision, “Least-Developed Country Members – Obligations Under Article 70.9 of the TRIPS Agreement with Respect to Pharmaceutical Products”, Decision of 8 July 2002, WT/L/478 12 July 2002. health of diseased foreigners. After all, the citizens can organise into patient groups, they can lobby, and they can vote. The foreigners cannot vote.62 This statement may have some weight with respect to developed countries, though even there I doubt it is entirely accurate, but it does not capture the situation in the Indian market. Indian pharmaceutical companies are able to produce at a lower cost than their counterparts in more developed parts of the world due to factors such as the lower price of labour. Furthermore, these companies have already engaged in exporting pharmaceuticals to African countries, and their infrastructure to do so is already in place.63 Indian pharmaceutical companies are highly adept at re-engineering pharmaceutical products, which helps to minimise their costs. Not only are these companies able to export to Africa, but a large portion of their income had traditionally come from developing country export markets.64 While Indian consumers may not be interested in issuing compulsory licences for exports of pharmaceutical products to Africa, Indian pharmaceutical companies are quite likely to be interested in the issuing of such licences. The political pressure is likely to come from the pharmaceutical industry, rather than from the public at large. Obviously, at this point the future strategies of the Indian pharmaceutical companies are simply conjectures, but there is significant reason to expect that they will engage in exporting to Africa under compulsory licences in the future. In the future while the administrative costs of importing generic pharmaceutical costs will increase, and the costs of the drugs themselves are likely to increase due to remuneration of patent holders, the supply of generic medicines from India should remain viable. The need to import pharmaceutical products under compulsory licences will increase in the future as countries seek access to more products that are under patent protection. 62 Amir Attaran, “Assessing and Answering Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Helath: the Case for Greater Flexibility and a Non-Justiciable Solution” (2003) 17 Emory Int’l L. Rev. 743. 63 Cheri Grace, “The Effect of Changing Intellectual Property Protection on the Pharmaceutical Industry Prospects in India and China: Considerations for Access to Medicines.” (June 2004) DFID Health Systems Resource Centre, Issues Paper – Access to Medicines. 64 DFID HSRC, “Access to Medicines in Under-served Markets: What are the Implications of Changes in Intellectual Property Rights, Trade and Drug Registration Policy?” (September 2004).

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