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No. 135, 1 December 2016

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South Centre Side Event to the WTO TRIPS Council on the Paragraph 6 System to facilitate access to medicines

The Panel was composed of representatives from academia, industry – branded and generic, international organizations and civil society. By providing different perspectives, the side event helped inform the ongoing discussion among WTO members in the TRIPS Council on the annual review of the Paragraph 6 system.

By  Dr. Viviana Munoz
The South Centre, co-sponsored by Brazil, China, India, South Africa and Médecins Sans Frontières held a side event to the WTO TRIPS Council on 8 November 2016. The topic of the side event was “Paragraph 6 of the Doha Declaration on TRIPS and Public Health: An Effective Solution?” Representatives from the WTO Secretariat, Médecins Sans Frontières (MSF), government of Canada, the International Federation of Pharmaceutical Manufacturers Association (IFPMA), Cipla Ltd., and the Graduate Institute of International and Development Studies participated in the panel discussion.
The Paragraph 6 issue refers to a decision adopted by WTO Member States to facilitate access to medicines for countries that do not have manufacturing capacity in the pharmaceutical sector.  This was as a follow up on the 2001 Doha Declaration on TRIPS and Public Health.   However there are many conditions attached to using the system, so this mechanism has hardly been used and many developing countries and civil society groups have called for a review of the system and its reform.   (See end of this article for a background to the Para 6 issue.)
The panel discussion was moderated by Dr. Viviana Munoz, Coordinator of the Development, Innovation and Intellectual Property programme of the South Centre. Dr. Munoz welcomed the panellists and participants and said that the South Centre supports and promotes a balanced interpretation and implementation of the TRIPS Agreement, and the right of countries to make full use of TRIPS flexibilities which was reaffirmed in the Doha Declaration on TRIPS and Public Health, and which is just as relevant today. Paragraph 6 of the Doha Declaration recognizes the problem that countries with insufficient manufacturing capacity faces and established a negotiated solution.
Roger Kampf, Counsellor, Intellectual Property Division of the WTO Secretariat, said that the paragraph 6 system is of narrow application, and it needs to go hand in hand with other policy dimensions. He stressed that exclusive focus on patents and compulsory licensing will not work; there is also a need to address procurement, quality, safety and efficacy, licensing, pricing, test data protection, tariffs and non-tariff barriers for medicines. For the first time trade ministers had recognized the gravity of the public health problem under the Doha Declaration. Acceptance of the protocol on TRIPS amendment will transform the political commitment under the Doha Declaration into a permanent legal commitment under TRIPS. It will signal the first ever amendment to WTO agreements, reflecting the importance attached to public health. The current period of acceptance runs until the end of 2017.
Mr. Kampf also pointed out that the paragraph 6 system requires legal changes in exporting members. Implementing legislations have been made in 80% of exporting countries. Since 2005 all acceding members have accepted the amendment. Implementing measures qualify reasonable period of negotiation for voluntary licensing, accelerated procedure to adjust quantities, simplified procedures to renew duration, etc. Model notifications are available in the WTO website. He also clarified that in the Canada-Apotex case, paragraph 6 procedures took only 3 months. He further stressed that today there is greater scope for application of the paragraph 6 system with many more medicines and suppliers in the market. How to use the system as a procurement tool, involve ministries of health, ensure easy to use national implementation measures, make use of patent information, pricing and regulatory issues, make participation in the system economically viable for generic companies are important issues to be addressed in this context.
Carlos Passarelli, Member of the UN High Level Panel on Access to Medicines Secretariat and Senior Treatment Expert, UNAIDS said that the Global Commission on HIV and the Law had concluded that the paragraph 6 system has not proved to be a viable solution and therefore it recommended that the system should be revised or supplemented. Following this, the UN Secretary-General’s High-Level Panel on Access to Medicines received a lot of contributions on the use of the paragraph 6 system. One recommendation by the UNHLP was to find a solution that facilitates swift and expeditious importation of pharmaceutical products. The report of the UNHLP was released on September 14, 2016. 
Yuanqiong Hu, Legal and Policy Advisor, MSF said that anti-retroviral medicines are still unaffordable today and compulsory licenses are a critical TRIPS flexibility that can be used to have access to such medicines. The price levels for these medicines are unjustifiable even with subsidized prices offered by international procurement agencies like the Global Fund, GAVI, etc. In the context of the use of the paragraph 6 system by Canada, MSF found it more suitable to procure the generic medicines from Indian companies which could offer the drugs at lower prices than the Canadian company under the compulsory license in Canada. She also pointed to the rise in TRIPS-plus agreements seeking to limit the scope of use of flexibilities like compulsory licensing and political pressure on developing countries when they have tried to issue compulsory licenses.
Dean Foster, Deputy Director for Global Affairs, government of Canada emphasized Canada’s priority on access to medicines for impoverished populations. He said that the paragraph 6 system addressed one particular niche aspect of access to medicines. Canada was the first to accept and implement the TRIPS waiver. It contained safeguards against inappropriate and illicit use. The Apotex case was the first test case of use of the system, which brings out lessons to be learnt. Though the medicine was manufactured by the Canadian company under a compulsory license issued by Canada, the company encountered a heavy loss in order to offer the medicines at lower prices than Indian generics. The medicines were delivered in 2008/09. Since then Canada has not been approached for a compulsory license under the paragraph 6 system. Generic companies have not demonstrated appetite for further engagement with the system. He suggested that Canada may not be the appropriate country for use of the paragraph 6 system. LDCs too can be better placed to make use of the system.
Guilherme Cintra, Senior Manager, Innovation, Intellectual Property and Trade, International Federation of Pharmaceutical Manufacturers Association (IFPMA) said that within the access to medicines debate, IP is a small part within which the paragraph 6 system is an even smaller part. If a medicine is available in another jurisdiction or from international funding mechanisms, the paragraph 6 system may not be needed. Mr. Cintra said that the specific circumstances for the use of the paragraph 6 system are extremely narrow, which explains the rarity of use of the system.
Denis Broun, Head of Government Affairs, Cipla Ltd. said that in the only instance where the paragraph 6 system has been used in the last 13 years, the generic supplier involved exited the HIV sector following its experience of using the paragraph 6 system. While a number of countries have adopted legislations implementing the paragraph 6 system, these are at odds with access to medicines. The negotiations for the paragraph 6 system were complex. Very often proposals of developing countries were not reflected and complex sets of procedures were built into it.
Some of the requirements in the paragraph 6 system such as an assessment of the need for specific amount of a medicine are unimaginable for LDCs, i.e. it cannot be imagined that they can meet these requirements.   The idea from the outset was to set the system with so much red tape that it would be impossible to use it. The experience of Apotex demonstrated typical problems with medicines manufactured under the paragraph 6 system – expensive development cost, impossibility of recouping costs from sales in other countries, non-transparency in price negotiations.
Mr. Broun stated that Cipla would not use the paragraph 6 system in its current form. He felt that the paragraph 6 system is no longer necessary due to the presence of international funding organizations and Voluntary Licensing. He also said that the likelihood that India will grant a compulsory license is limited due to threats of retaliation. Access to low-income countries is a business model that should be sustainable, not a charity. However, the paragraph 6 system does not provide a sustainable business model for generic companies. Direct negotiation with the originator in full transparency is necessary to provide appropriate access.
As the paragraph 6 system is not yet ratified, it is possible to modify it, to remove red tape, make it applicable to a group of countries, with simpler and faster mechanisms, and to provide long duration of the compulsory license. 
He also stressed on the importance of developing countries making the full use of the TRIPS flexibilities. LDCs like Rwanda should not be required to issue a compulsory license to import medicines under the paragraph 6 system as LDCs are currently exempted from the TRIPS obligations relating to pharmaceutical products. Developing countries should not self-impose TRIPS plus standards in their patent laws. There should be no data exclusivity and the granting of compulsory licenses should be easier. The pre-1992 Canadian example of systematic compulsory licenses may be interesting. There is also a need to buy medicines from other low income countries.  This could avoid the pain of the paragraph 6 system. Cipla has proposed free technology transfer to any LDC to manufacture medicines. Only Uganda has done this. He concluded that revising the paragraph 6 system is essential, and it is important to create local manufacturing capacities to make the paragraph 6 system irrelevant.
Dr. Suerie Moon, Director of Research, Global Health Centre, Graduate Institute of International and Development Studies said that the paragraph 6 system must be renegotiated. She said that the fact that it took 13 years for nearly two-thirds of the WTO members to ratify the paragraph 6 system reflects a deep unease on the part of members. She also said that, the paragraph 6 system essentially restricts trade in medicines. She pointed out that while the global pharmaceutical manufacturing capacity of developing countries is concentrated in India and China, with the rise of patenting of medicines in India, the need for a workable paragraph 6 system will increase. Moreover, today both developed and developing countries face risks of pandemics and outbreaks such as anthrax and Ebola, increasing levels of non-communicable diseases, mental health issues, etc., that were not anticipated in 2003 when the paragraph 6 system was established. These changing priorities in the global health agenda do not fit into the paragraph 6 system. Moreover, the political implications of a non-workable paragraph 6 system should also be considered. A possible alternative option is to seek a compulsory license for anti-competitive practice under Art 31k of TRIPS.
Due to the shortage of time, the Side Event did not have a question and answer session.
The side event served to inform TRIPS Council discussions on 8-9 November 2016 on the annual review of the Paragraph 6 system. The contribution of the South Centre side event is noted in the WTO summary of the discussions, see

The Doha Declaration on TRIPS and Public Health adopted by the WTO Ministerial Meeting in 2001 reaffirmed the ability of WTO Members to make use of TRIPS flexibilities to promote public health.  The Paragraph 6 of that declaration recognizes the limitation in the TRIPS Agreement that generic drug producers in countries that issue a compulsory license for a particular drug - allowing production without the authorization of the patent right holder - have to produce under the license “predominantly for the domestic market.”  This limits the quantity that the compulsory licensing country can export, and thus restricts access to the generic drugs in countries that want to import them. If they lack the capacity to produce them locally they have no other source to meet their demand.  
The WTO General Council addressed the Para 6 problem by adopting a decision in August 2003 that gives a waiver against this limitation to countries producing under compulsory license and which are exporting to countries lacking manufacturing capacity.  However, there are many conditions attached to obtaining and using the waiver, and it has been hardly used at all (it has only been used once).  Developing countries in the WTO, as well as many public health organisations, are advocating for  reform to how the Para 6 issue should be addressed so that a useful and workable solution can be used instead. When 2/3 of the WTO Members accept the waiver, the Paragraph 6 solution will become a permanent amendment to the TRIPS Agreement.

Dr. Viviana Munoz is Coordinator of the Development, Innovation and Intellectual Property programme of the South Centre.
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For more information, please contact Vicente Paolo Yu of the South Centre: Email, or telephone +41 22 791 80 50.
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