Compulsory Licensing in Europe

Agenda item name INTELLECTUAL PROPERTY AND PUBLIC INTEREST:
BEYOND ACCESS TO MEDICINES AND MEDICAL

TECHNOLOGIES TOWARDS A MORE HOLISTIC
APPROACH TO TRIPS FLEXIBILITIES
Meeting name Meeting of the Council for TRIPS
Dates of the meeting 30/07/2020
Document symbol IP/C/M/95, IP/C/M/95/Add.1
Intervention by: South Africa
428. A main focus at the WTO has been how to facilitate access to medicines in the context of
the Doha Declaration on TRIPS and Public Health. The Amendment to the TRIPS Agreement
entered into force in 2017. In the usual way, the term 'TRIPS flexibilities' has been emphasised
in the context of access to medicines and medical technology through compulsory licenses or
Government use and even in that context remains under-utilized. 429. The High-Level Panel
Report on Access to Medicine observes that: "…WTO Members retained important public health
flexibilities that can be used to adapt their intellectual property law, policies and practices to
meet human rights and public health objectives. These include the ability to determine
patentability criteria, issue compulsory licences, authorise parallel importation, apply general
exceptions and employ competition laws to limit and remedy the abuse of intellectual property
rights in domestic legislation." In this regard, there are still a significant number of countries
that do not make full use of available flexibilities under the TRIPS Agreement. Towards an
integrated approach to TRIPS flexibilities 430. The use of TRIPS flexibilities to address a public
health concern is usually seen as a matter concerning patents. However, the COVID-19
pandemic requires a more integrated approach to TRIPS flexibilities that include other various
types of intellectual property (IP) rights including copyrights, industrial designs and trade
secrets. The use of TRIPS flexibilities in other areas of intellectual property, beyond patents, is
less understood at the national level. In fact, in other fields of IP, national IP laws may not even
provide for sufficient flexibilities to address issues of access. A variety of IP rights are relevant
in the fight against COVID-19. 431. The COVID-19 crisis created the need to produce essential
equipment and medical supplies, there is a growing need to be able to manufacture essential
medical devices such as masks, ventilators and other personal protective equipment. As the
debate over COVID-19 moves beyond medical issues, the nature of the pandemic requires non-
medical approaches to detect, diagnose and trace the coronavirus. Studies have found that
levels of neutralizing antibodies against SARSCoV-2 remain high for a few weeks after infection,
but then typically begin to wane. So far, only one infectious disease comparable to COVID-19 in
its broad geographic distribution has been eradicated: this disease is smallpox. 432. According
to GAVI, even if eradication of COVID-19 is ultimately technically feasible, it will likely be
extremely challenging. It cautions that given the uncertainty around the technical feasibility of
eradicating COVID-19, the global community also needs to plan for the possibility that COVID-
19 will be in global circulation indefinitely. In the absence of prophylaxis through a vaccine and
more effective treatments, non-medical measures have been an important priority in dealing
with the devastating impacts of COVID-19. 433. Other goods and services that are needed to
tackle the epidemic include protective equipment such as masks, face shields, and hand
sanitizers. Such equipment and material remain in critical shortage in many countries around
the world. Many WTO Members lack domestic manufacturing capacity and would be dependent
on imports to meet their medical needs. 434. When an exporting country is producing under a
compulsory license mainly for export, the mechanism established by the 30 August 2003
decision, and later translated into an Amendment to the TRIPS Agreement as Article 31bis,
would be applicable. This mechanism waives the condition in Article 31(f) that a compulsory
license should be predominantly for the supply of the domestic market. It should be noted that
the implementation of the Article 31bis mechanism at a national level is very limited and may
not achieve its intended objectives. In any event, many developing countries may also face
legal, technical and institutional challenges in using TRIPS flexibilities. This is especially true for
countries that have never utilized flexibilities such as compulsory licenses. 435. The World
Health Organization has launched the COVID-19 Technology Access Pool (C-TAP) inter alia
calling on intellectual property holders to voluntarily license such rights on a "non-exclusive and
global basis to the UNITAID-established and supported Medicines Patent Pool and/or through
other public health research and development mechanisms, consortia or initiatives that
This is not an official World Trade Organization (WTO) document. The content of this e-TRIPS
Gateway search report serves a purely informative purpose, and has no official or legal status in
the form it is produced here. Please visit the WTO Documents Online database for access to official
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facilitate global and transparent access; and/or voluntary non-enforcement of intellectual
property rights, as appropriate, during the COVID-19 pandemic, to facilitate the widescale
production, distribution, sale and use of such health technologies throughout the world".
However, to date no company has committed to doing so. Instead limited, exclusive and often
non-transparent voluntary licensing is the preferred approached of pharmaceutical companies,
which will be insufficient to address the needs of the current COVID-19 pandemic. Some
Examples Example 1: Big data outside of the health system 436. Smartphones, mobile data,
artificial intelligence, databases and algorithms have been used in the COVID-19 pandemic to
leverage the detection and control and control of the virus. Different types of IP rights are
relevant to protect AI algorithms, some may be protected by copyright and trade secrets while
other technology is protected by patents while database rights and trade secrets may also be
relevant. 437. While these approaches help with efforts to contain the spread of the virus,
they can raise issues about the right to privacy and personal freedoms. National security
concerns may also arise in the context of Article 73 of the TRIPS Agreement. Example 2: 3D
printing technology 438. During this COVID-19 outbreak, an Italian hospital ran out of
ventilator valves (which cost USD 11,000 each) and their regular supplier could not produce
them on time. A duo after scanning an existing valve, 3D printed replacement valves which only
cost about USD 1 each, saving ten lives as of the time of the Article. 439. According to a news
report, the original manufacturer was actually approached by the duo in hopes to ask for the
valve's blueprints in an urgent attempt to save them time and produce the valves to instantly
save the critical COVID-19 victims but they were declined. The pair then proceeded to
manufacture the replicas by manually measuring the valves and 3D printing three different
versions to see which one worked best. 440. According to another news report, "potential
legal and medical issues have stopped Fracassi from distributing the digital design file more
widely, despite receiving hundreds of requests for the 3D-printed valves". 441. Following this
case, a law firm warned "…manufacturers should be aware of the complex intellectual property
issues concerned with this 3D printing technology. Parts such as valves or other medical
devices and equipment are capable of protection by patent and/or registered design.
Unregistered design rights and copyright will also apply to the part itself and/or the digital
model or CAD file. Some or all of these rights might apply in respect of a single component".
442. The firm cautioned "In scanning a component such as a valve, and manufacturing a part
using 3D printing equipment, there is a risk that this action will infringe an existing patent,
design or copyright which protects the component, leading to an injunction or claim from the
rights holder for damages or other remedies (such as delivery up of infringing parts)".
Furthermore the firm advises that any person or company intending to manufacture parts using
3D printing should carry out some due diligence to identify:  who ultimately holds the
intellectual property rights in the component;  whether the part is protected by patent or
registered design; and  whether the rights holder is willing to permit the parts to be
manufactured in return for a small or nominal royalty for the wider public benefit; and 
whether any regulatory approval is needed for supply of the parts. 443. This case clearly
demonstrates the interface between IP and new technologies such as 3D printing and may
require a better understand of how a balance may be achieved between rights holders and third
parties. More collaborative approaches have been achieved through various pooling
mechanisms for access to medicines, this is also true for more generic IP pledges that covers a
broad range of equipment, software, network and device applications useful in healthcare,
containment, tracking, diagnostics, emergency response and social distancing. Such approaches
nonetheless are limited and may require action on the side of national authorities to ensure
access to such technologies where pledges or voluntary licenses cannot be secured on
commercially reasonable terms. Example 3: Trade Secrets 444. Trade secrets encompass vast
quantities of information needed to discover, test, create, and manufacture diagnostics,
treatments, and vaccines. 445. Potential trade secrets include manufacturing processes, test
data, medical formulas, and more. For vaccines and other biologic medicines, cell lines,
genomic information, and other biological material can also be held as trade secrets. Data
about the effectiveness of medicines and vaccines are trade secrets. Even so-called negative
information — information about what does not work — can be a trade secret. 446. Article
39.2 of the TRIPS Agreement requires Members to protect undisclosed information, which is
secret, has commercial value and has been subject to reasonable steps to be kept secret. Both
voluntary and compulsory licenses, though common in other forms of IP are unusual in trade
secrets. 447. Professor David. S Levine posits that: "Clearly, there should be times when trade
secrecy's ability to lock down information gives way to broader national and international
information sharing concerns. If there were ever a case for re-examining trade secrecy's
unquestioned dominance, a public health crisis on the scale of COVID-19 would be the time."
He concludes by saying: "What seems initially like a narrow issue involving intellectual property
law and innovation may actually be a critical barrier to our ability to rapidly, effectively,
affordably, and safely solve the COVID-19 pandemic. The time is now to examine, and re-
examine, trade secrecy's hold on information and our collective health." Questions 1. To what
extent are TRIPS flexibilities embedded in areas outside patent protection well understood? If
so, how are Members implementing such understandings in their national and regional laws? 2.
What are the likely difficulties that Members may face in dealing with a changing technology
landscape where embedded IP rights may affect the dichotomy between IP rights as private
rights and the public interest dimensions recognized in the TRIPS Agreement? 3. What are the
benefits and limitations of initiatives such as voluntary licenses and pledges to access much
needed technology to deal with the COVID-19 pandemic? 4. Are there circumstances where
trade secrets can be shared more broadly? If so, what are those circumstances? Would national
or international health pandemics fall within this category?
Intervention by: Nigeria
448. In response to the questions framed after paragraph 20 of the proposal, the applicability
of the exceptions and limitations of the TRIPS Agreement particularly compulsory license may
be a useful tool in ensuring that the patent system contributes to innovation and technology
transfer, where Governments put in place policies that are against patent non-use and
technology suppression. However, our country experience is such that it is difficult for such a
tool to spark innovation as many private parties lack the technological know-how and the
financial capacity to be able to finance such innovations which if achieved could foster
development in Nigeria. 449. Under the Patent Act of Nigeria, a flexibility exists for
compulsory licensing system that serves to promote a balance between patent protection and
public interest. Nigeria is also working on a national policy and strategy which links the other
parts of the economy with IP. 450. Another application of the TRIPS exceptions is the
provision of fair use. Nigeria, as a common law nation, authorizes fair use as is provided for in
our laws to include any use that is for personal consumption or for educational purposes. This
provision is contained in our Copyright Act and aims at promoting innovation. 451. We reserve
our right to come back on this agenda after due consideration from capital. We are also willing
to hear other member`s experiences and approach under this agenda item.
Intervention by: Indonesia
452. We thank the delegation of South Africa for coming up with this important
communication. We see this as timely reminder on the importance of WTO in discussing the
implication of IP rights over the broad range of products, technology and medical supplies that
desperately needed for responding to COVID-19 Pandemic. 453. Most of our domestic IP
regimes were crafted with compartmentalized approach. In doing so, IP rights laws, excluding
patent and maybe trade secret, does not include flexibilities that could address public health
policy objectives. 454. This is also true with regional trade agreements. The IP chapters are
among the most delicate issues in the negotiation process. In fact, the inability to narrow the
gap of interest in IP matters, made some of our regional trade agreements omit the IP Chapter
completely in favour of TRIPS Agreement. 455. There is room for improvement in
understanding and incorporated flexibilities provided by the TRIPS Agreement in national laws
of Members, especially for developing countries. The Doha Declaration on the TRIPS Agreement
and Public Health reaffirms the right of WTO Members to protect public health. While the
interpretation of this Declaration is covering all spectrum of IPrights, the application of this
principle is inadequately understood at national level. 456. The coverage of intellectual
property rights protection for products, medical supplies, technology, therapeutics, and
vaccines during this COVID-19 pandemic is indeed broad. The delegation of South Africa rightly
pointed out some cases that highlighted the potential impediment mass production of products
and technologies highly needed by Members. In addition, we also note increasing legal disputes
involving IPrights on vaccines development that could further complicate vaccines development
that badly needed. 457. There are two issues that we would like to share in addressing
question number two. 458. First, given the scale of infection of COVID-19 globally, scaling-up
production of products, technology, medicines, and vaccines will be a key issue in ensuring no
countries left behind in access to health for COVID-19. The absence of effective global
cooperation in ensuring collaboration in IPrights, makes the scaling-up production depends
solely in the industry's policies and strategies. 459. Second, even if some Member has
enabling law to ensure application of flexibilities of patents, there are no guarantees of
straightforward production due to the fact that a patented product or technology could consist
of several IP-rights. 460. We are pleased to learn from the WHO vaccines landscape that
many developing-country Members are also in advance stages of developing vaccines for
COVID-19. At the same time, cooperation between developing countries in ensuring mass
production is also increasing. 461. But we understand that we are still facing huge limitations
in access for advanced technology, therapeutics drugs, even vaccines, despite such
cooperation. We are hopeful that voluntary licensing schemes, as initiated by a few
international organizations could help narrow down these challenges. However, as this scheme
mostly leans into the premise of global solidarity from multi-stakeholders, certain barriers,
including possible decreasing incentives from monopoly of supply, make voluntary IP pool a
wishful thinking. 462. On the issue of trade secrets, we believe that Article 39 Paragraph 3 of
the TRIPS Agreement provides legal justification on disclosure of trade secrets where there is a
necessity to protect the public. We are convinced that protection of the public also includes
national and global pandemic. 463. However, to ensure the effective implementation, national
IP law must also regulate the submission of undisclosed test or other data as part of condition
of approving the marketing of certain products.
Intervention by: Chile
464. We wish to thank South Africa for including this agenda item. Chile wishes to reiterate
that the TRIPS Agreement is based on intellectual property not as an end in itself, but as a tool
for development. The minimum standards of protection and flexibilities envisaged in the
Agreement therefore enable Members to establish or adapt intellectual property systems in line
with their national realities, ensuring an appropriate balance at local level between IP rights and
obligations. 465. Chile continues to encourage the use of flexibilities when designing balanced
intellectual property systems that act as a tool to foster innovation while addressing the needs
of society as a whole. In the case of the COVID-19 pandemic, we have witnessed how all of
mankind has joined forces to address and overcome COVID-19 as a shared problem. 466. At
the multilateral level, Chile and other Members have agreed on initiatives such as the WHO's C-
TAP and the expansion of the Medicines Patent Pool's mandate, which encourage voluntary
approaches to ensure that in the future we do not face the same problems that occurred at the
beginning of the year and that continue to affect many Members. We have also seen how this
pandemic has inspired an innovation exercise at the global level, one that is not necessarily
based exclusively on IP, but rather on solidarity. 467. In Chile, the pandemic has generated
an important discussion at the legislative level on the use of the various flexibilities of the
TRIPS Agreement, and we are therefore interested in engaging in dialogue to share experiences
of how IP has fostered innovation in the different areas mentioned in South Africa's document
and in others, and of how flexibilities have been used to address problems such as the one we
are currently facing.
Intervention by: Colombia
472. Colombia is very interested in this discussion. We consider it a priority for Members to
coordinate on how to address the implementation of the flexibilities provided for in the TRIPS
Agreement, while continuing to uphold the principles established in the Agreement and seeking
alternative measures that safeguard public health, without disproportionately and unduly
affecting intellectual property rights. 473. More specifically, regarding the use of the
exceptions provided for in the TRIPS Agreement, Colombia has, until now, been able to address
its public health requirements through direct dialogue with intellectual property right holders. In
this way, we have managed to find solutions jointly and consensually, without any need to use
the flexibilities provided for in the TRIPS Agreement. 474. The current global health crisis is a
different scenario, however. Colombia cannot rule out the possibility of implementing the
various TRIPS flexibilities in the future, particularly in the context of a health crisis such as this
one, where it has become necessary to safeguard the primary objective of protecting public
health. 475. Nevertheless, Colombia reiterates its commitment to respect intellectual property
rights, and we reiterate that if it becomes necessary to use the flexibilities provided for in the
TRIPS Agreement, the country will remain committed to complying with the principles set forth
in that Agreement, and do its utmost to strike a balance as regards the measures taken.
Intervention by: China
476. Once again, we appreciate South Africa's proposal. COVID-19 seriously threatens human
health and safety, causes huge negative effects to the functioning of global supply chain and
poses grave challenges to the normal supply of relevant medicines, medical equipment and
PPEs. China thinks that in the current situation, Members are fully entitled to utilizing
flexibilities in the TRIPS Agreement and the Doha Declaration on the TRIPS Agreement and
Public Health to maintain public health. 477. In China's domestic laws, patent is the major
field where TRIPS flexibilities are employed to ensure access to medicines and medical
technologies. China's Patent Law has a special chapter on compulsory licensing. It stipulates
that in emergency or extraordinary situations, or for public interest objectives, the Chinese
patent administrative agency can issue compulsory licensing of inventions and utility models. In
2012, China issued Measures for Compulsory Licensing for Patent Exploitation and
operationalizes the application and granting procedures of compulsory licensing. Besides,
China's Patent Law also allows parallel imports. 478. China always holds the view that a right
balance should be achieved between IP right holders and public interest. The protection of IP
rights should go in parallel with legitimate use of TRIPS flexibilities. We support an open and
inclusive discussion of IP and Public Interest so that Members can freely exchange views and
experiences in utilizing TRIPS flexibilities.
Intervention by: Malaysia
1. To what extent are TRIPS flexibilities embedded in areas outside patent protection well
understood? If so, how are Members implementing such understandings in their national and
regional laws? 479. TRIPS flexibilities as to the method of implementing TRIPS obligations
allow WTO Members different ways to transpose into national law that the TRIPS Agreement
simply articulate but does not define. For example, in the field of enforcement the TRIPS
Agreement allows WTO Members to resort to their own legal system and practices to implement
enforcement obligations. 480. TRIPS flexibilities with regard to standards of IP protection in
Malaysia include exceptions and limitations provided for, but not limited to, under the copyright
and industrial property laws in Malaysia. For example, copyright protection incorporate
flexibilities where it allows exceptions for visually and hearing-impaired people. 2. What are the
likely difficulties that Members may face in dealing with a changing technology landscape where
embedded IP rights may affect the dichotomy between IP rights as private rights and the public
interest dimensions recognized in the TRIPS Agreement? 481. The relevant IP laws on
protection of technology provide sufficient flexibility in dealing with a changing landscape where
embedded IP rights may affect the dichotomy between IP rights as private rights and public
interest. 482. The main challenge is generally to strike a balance in providing an IPRs
framework that can assure adequate protection of IPRs that is not considered, as under- or
over-protection of IPRs which may undermine the larger economic strategy of a country.
However, in certain circumstances, there may be cases in which private interests in IPRs must
be subordinated to more compelling public interests. Many countries, for example, are facing
increasing social and financial difficulties a consequence of public health and epidemic disease.
483. Another difficulty that Members may face in dealing with a changing landscape is that the
impact of IPRs itself is dependent on the types of technology. For example, the role of IPRs in
the process of development in the pharmaceutical industry is very different to the role of IPRs
in the mobile phone industry. 3. What are the benefits and limitations of initiatives such as
voluntary licenses and pledges to access much needed technology to deal with the COVID-19
pandemic? 484. When patent holder companies issue voluntary licences for patented
medicines, they enable other manufacturers to develop generic versions of these medicines.
This helps to support supply, increase affordability and improve access to ensure an inclusive
and sustainable healthcare to our wider society. In Malaysia's view, the limitation of voluntary
licensing which is based on countries economic developments. Due to COVID-19, many
countries are faced with challenges in addressing the high cost of medicines and technologies
required in mitigating this pandemic. 485. Malaysia welcomes discussion among WTO
Members on the implications of intellectual property rights over the technologies and products
required for mitigating COVID-19 pandemic with the aim of ensuring that IP rights including
patents, industrial designs, copyright and trade secrets do not create barriers to scaling up
research, development and supply of technologies necessary to mitigate COVID-19. 4. Are
there circumstances where trade secrets can be shared more broadly? If so, what are those
circumstances? Would national or international health pandemics fall within this category?
486. WTO Members have a considerable flexibility to define which situations trade secrets can
be shared, provided that such situations are consistent with the WTO TRIPS Agreement.
Intervention by: Zimbabwe
487. Zimbabwe extends its appreciation to the delegation of South Africa for submission of the
document IP/C/W/666 on "Intellectual Property and Public Interest: Beyond Access to Medicines
and Medical Technologies Towards a more holistic approach to TRIPS flexibilities." 488.
Zimbabwe believes that the emergence of the Coronavirus disease 2019 (COVID-19) makes it
incumbent upon us to re-invigorate the discussion on intellectual property and public health.
The search for a COVID-19 vaccine and treatment is of utmost importance and it is necessary
for Members to be cognisant of the limitations and exceptions open to them to ensure universal
access to quality and affordable treatment once a suitable vaccine is found. 489. Zimbabwe
has noted that discussions on TRIPS flexibilities and access to medicines have largely delved on
limitations and exceptions to patent rights. We are aware of the efforts by pharmaceutical
companies to protect their medicines through trade secrets as opposed to patents. 490. We
have also noted the increased reliance by pharmaceutical companies on other forms of IP such
as trademarks and industrial designs to protect medicines. Therefore, this proposal is essential
for Members to fully explore the limitations and exceptions which are afforded by the TRIPS
Agreement to the full spectrum of IP. 491. We call upon all Members to support this very
important proposal and look forward to participating in the ensuing discussions.
Intervention by: India
492. We thank the delegation of South Africa for their submission. 493. The TRIPS
flexibilities have stood out as important policy space for Member Countries to enable them to
create an IPRs regime that ensures compliance with the obligations set out in the Agreement
while taking into account their developmental priorities. These flexibilities include fair use
exception (copyright), research exceptions (copyright and patent), compulsory licensing
(patent), parallel import, transition periods for developing and least developed countries. While
patent law flexibilities are widely discussed owing to the fact that they deal with the extremely
sensitive area of public health, deliberation on flexibilities in other IP areas has been somewhat
limited. 494. As rightly pointed out by South Africa in its communication, battling with a
pandemic like COVID-19 requires a more integrated approach to TRIPS flexibilities in all IP
regimes including those in copyrights, industrial designs and trade secrets etc. Ongoing
COVID19 crisis further highlights the urgent need to initiate discussion and deliberation on the
flexibilities available in these IP regimes. 495. India has incorporated some of the flexibilities
outside the patent protection regime that come within the scope of TRIPS Agreement in its
domestic legislations. For example, the provisions related to fair use, statutory licensing and
compulsory licensing in Indian Copyright Act, 1957 and parallel imports under Indian
Trademark Act 1997. 496. However, the changing technology landscape with embedded IP
rights have led to new challenges. Emerging technologies like 3D printing, artificial intelligence
and their wide use in response to COVID-19 outbreak, including in manufacturing of ventilator
valves, the AI algorithms used in identifying the outbreak and modelling travel patterns,
screening passengers and predicting possible reinfections - may be protected by IP rights other
than patents, like copyright, trade secrets, database rights underlying importance of flexibilities
in those IP areas. 497. The COVID-19 pandemic is an unprecedented crisis, which continues to
cripple economies. Its impact is particularly disastrous for the developing and least developed
countries, as they lack requisite tools such as strong economy and medical infrastructure to
counter the crisis. As these countries lack the capability to develop high end vaccine at short
notice, the need for technology transfer and dissemination of necessary undisclosed
information, trade secrets and sharing of patent has intensified. Due to lack of legal
enforceability, the success of voluntary licenses and pledges will ultimately depend on the
goodwill of IP holders. Moreover, as the voluntary licensing agreements are kept secret and
their terms and conditions are un-known, large markets may remain unserved and monopoly
situations could continue. More transparency in this regard would help in balancing the issue of
IP rights and affordability. 498. Members need to deliberate upon how broader sharing of
information under the trade secret regime can help in addressing a global health pandemic of
the scale of COVID-19. In this regard, it is important to note that Paragraph 1 of Article 39 of
the TRIPS Agreement sets down the context in which the protection to undisclosed information
needs to be provided. The context is to ensure against unfair competition as provided under
Article 10bis of the Paris Convention which mandates Members to provide effective protection
against acts of competition contrary to honest practices in industrial or commercial matters.
499. In conclusion, we believe that further discussion on the flexibilities available in various
IP regimes under TRIPS Agreement is required so as to counter the pandemic.
Intervention by: Chinese Taipei
500. We understand that according to Articles 7, 8, and 13 of the TRIPS Agreement, besides
patent protection, there are flexibilities among WTO Members, in formulating and amending
respective laws and regulations to adopt measures necessary to protect public interest as well
as provide limitations or exceptions to copyright and related rights. 501. Hence, given the
impact of COVID-19, students may be kept out of schools due to temporary school closure. We
have drafted amendments to the Copyright Act to provide limitations and exceptions in relation
to the use of works for distance learning in order to protect significant public interests such as
knowledge dissemination and cultural development. 502. As pointed out in the Doha
Declaration on the TRIPS Agreement and Public Health in 2001, the Agreement can and should
be interpreted and implemented in a manner supportive of WTO Members' right to protect
public health. Particularly, as the COVID-19 is still raging, it is worth placing emphasis and deep
thinking by all WTO Members as to how to more holistically use the TRIPS Agreement's
flexibility to balance between safeguarding IPRs protection and the interests of public health.
Intervention by: Canada
503. Canada would like to thank South Africa for circulating document IP/C/W/666, under the
ad hoc agenda item of "Intellectual property and the public interest", on the topic of access to
medicines and TRIPS flexibilities. 504. The discussion of these issues is particularly timely, as
all countries are working to develop effective treatments for COVID-19. 505. Canada's
longstanding view is that the multilateral framework under TRIPS, as well as the flexibilities
affirmed under the Doha Declaration on the TRIPS Agreement and Public Health, already
establish an appropriate balance between protecting IP rights and promoting access to
medicines. 506. Ensuring this appropriate balance will remain important as the timing and
availability of promising COVID-19 treatments and other technologies becomes clearer in the
months ahead. 507. Canada also reminds that IP rights are one part of a broad discussion
informing the availability and accessibility of medicines and relevant technologies. As the Doha
Declaration emphasizes, the TRIPS Agreement is part of the wider national and international
action to address public health problems. 508. With respect to TRIPS flexibilities more
specifically, Canada is always open to sharing its own national experiences and lessons learned
in implementing the Paragraph 6 system, as well as on our more recent amendments to
Canada's Patent Act, as notified earlier this session, under document IP/N/1/CAN/30. 509.
Similarly, we continue to be interested in learning more about the practices of Members in this
area and invite other Members to share their national experiences in this regard.
Intervention by: United Kingdom
510. We would like to thank South Africa for introducing this agenda item and giving the
Council an opportunity to discuss this important issue. 511. Intellectual property rights
provide incentives to create and commercialise new inventions, such as life-changing vaccines.
They keep innovators innovating, creators creating and investors investing. 512. The UK
believes that a robust and fair intellectual property system is a key part of the innovation
framework that allows economies to grow, while enabling society to benefit from knowledge
and ideas. 513. Multiple factors need to be considered to ensure equitable access for all to
COVID-19 vaccines. These include increasing manufacturing and distribution capacity,
measures to support or incentivise technology transfer, ensuring global supply chains remain
open, and ensuring that effective platforms are utilised to voluntarily share IP and know how.
514. There are existing mechanisms that facilitate the sharing of IP. For example, expanding
the mandate of an existing organisation such as the Medicines Patent Pool to cover COVID-19.
515. The UK has long supported affordable and equitable access to essential medicines,
including in low and middle-income countries. 516. The world urgently needs access for all to
safe, effective, quality, and affordable vaccines, diagnostics, medicines, and other health
technologies to enable an effective response to the COVID19 pandemic. 517. The UK has
played a leading role in financing the global effort and working with our international and
national partners, to identify end-to-end solutions that ensure affordable access for all, such as
such as mechanisms to support the voluntary sharing of IP and know-how, manufacturing at
scale and ensuring no-one is left behind, including the poorest and most vulnerable. 518. We
are committed to collaborating with public and private partners in the UK and internationally,
including exploring voluntary arrangements and approaches such as non-exclusive voluntary
licensing which promote affordable access for all while also providing incentives to create new
inventions, to accelerate development and equitable access in all countries to affordable health
technologies for responding to COVID-19. 519. We encourage active dialogue between
industry and governments to explore how best to work together to facilitate access to
medicines, including TRIPS-compliant licensing models in developing countries.
Intervention by: European Union
520. The EU would like to thank South Africa for introducing this agenda item. 521. The
world quickly needs to develop and deploy effective diagnostics, safe and effective treatments
and vaccines, which are available and accessible everywhere, at an affordable price. This is the
only way to make sure we can jointly defeat the virus. 522. It is clear that broad and
equitable access to existing and new treatments, and ultimately vaccines, will be key to tackle
the present public health crisis, including for developing countries that have no production
capacities or more limited financial resources. 523. It is with this objective in mind that the EU
has led "The Coronavirus Global Response" pledging initiative with the WHO and global partners
to accelerate the development, production and deployment of vaccines, diagnostics and
therapeutics, and to strengthen national health systems against COVID-19. The EU has also led
the work on a Resolution on COVID-19 Response, adopted by the 73rd World Health Assembly
on 19 May 2020. This resolution represents a strong commitment of the global community to
international cooperation in fighting the pandemic and ensuring access to COVID-19 treatments
and vaccines. 524. Global cooperation is essential to accelerate the development and scale-up
the production of safe, effective, quality diagnostics, medicines and vaccines for the COVID-19
response, including through arrangements with industry and existing mechanisms for voluntary
pooling of rights and licensing. 525. Pooling of rights and other voluntary licensing
arrangements allow to accelerate the development of diagnostics, medicines and vaccines for
COVID-19 and scaling up their production. These mechanisms benefit everyone as they drive
both access and innovation. 526. The TRIPS Agreement provides various avenues to address
potential IP matters in the case of health emergencies should voluntary mechanisms fail, not
only with regard to patents, but also with regard to other IP rights. These include general
clauses on exceptions or provisions on compulsory licensing. 527. In the European Union
these provisions are implemented either at regional or national level. For example, the areas of
copyright, trademarks, designs and trade secrets are largely harmonised at regional level,
including provisions on exceptions and limitations. On the other hand, the granting of
compulsory licences in the area of patents is regulated at national level - each EU Member State
has relevant legislation and is able to issue a compulsory licence at national level. 528. The EU
has consistently supported the use, where necessary and justified, of the flexibilities provided
under the TRIPS Agreement and the Doha Declaration with the objective of ensuring effective
access to medicines. 529. We also recall that the TRIPS Council Secretariat has, regularly and
consistently, offered its services to any WTO Member that sees itself in the need of getting help
to manage the process of Article 31bis of the TRIPS Agreement. 530. The innovation model,
based on patents, has delivered consistent progress in global public health, continuously
leading to important new and improved treatments as well as much extended life expectancy,
tackling the global health challenges humanity faced so far. The EU considers that on the basis
of the current system, with the necessary IP tools and arrangements in place, existing and new
treatments, and ultimately vaccines, can be made available and effectively deployed rapidly
across the globe. 531. A well-functioning ecosystem for the protection and enforcement of
intellectual property rights remains a crucial incentive for innovation, the research and
development of new vaccines, medicines and treatments. 532. Let us also recall that evidence
shows that indeed there are many different significant causes of lack of access to medicines. It
is no different in the case of COVID-19. There are no simple solutions to the current crisis. We
need the necessary expertise in production of new treatments or vaccines, we need sufficient
manufacturing capacity and access to resources needed to produce such treatments or
vaccines. 533. It is the view of the European Union that in order to ensure equitable and
affordable access to the required treatments and vaccines, we must work collaboratively with
industry and with each other, incentivise innovative solutions to COVID-19, ramp up
manufacturing capacity and pool resources. 534. There is another aspect in the fight with
COVID-19 that we would like to highlight in this discussion. 535. A report by Europol titled
'Viral Marketing – counterfeits, substandard goods and intellectual property crime in the COVID-
19 pandemic' shows that organised crime groups quickly adapt to the new trade environment
and find their way to infiltrate the legitimate supply chain of pharmaceutical products and
equipment. A study of the European Union Intellectual Property Office and the Organisation for
Economic Cooperation and Development on Trade in counterfeit pharmaceutical products shows
the economic and social costs of trade in fake medicines and the threat to public health. 536.
The surge in demand for anti-COVID-19 products poses heightened risks to public health,
because fake and substandard products, such as unproven and fake treatments, test kits and
medical equipment and supplies – masks, ventilators, gloves, etc. – have flooded the market
and this is bound to get worse when the new COVID-19 treatments and vaccines will be
available. 537. Due to the global nature of these crimes, global cooperation is necessary.
538. Public health in light of the pandemic is a clear and undisputed priority. No effort must be
spared to obtain effective and affordable treatment, vaccines, tests and medical devices
necessary to fight this pandemic and to ensure that these products are safe for our citizens.
These efforts have to be sustained for as long as needed.
Intervention by: Ecuador
539. Ecuador wishes to thank the delegation of South Africa for including this agenda item. Its
inclusion is timely in a context where we should be joining forces and coordinating activities to
re-establish our present and future global health security. 540. We wish to reiterate our
commitment to the Doha Declaration on the TRIPS Agreement and Public Health (the
amendment to which entered into force in 2017), which contributes by ensuring that Members
have the right to protect public health and, in particular, to promote access to medicines for all.
541. Examining the issue raised by South Africa will most certainly help us to better
understand the extent to which different forms of intellectual property rights allow or prevent
access to the various types of technologies and products needed to tackle COVID-19. 542. The
need for access to treatments, diagnostic methods, and medical devices and supplies, as well
as the search for a vaccine, are concerns that must be taken into consideration by the
international intellectual property system. 543. It is important to take into account that the
flexibilities set out in the Agreement are not limited to patents, and we must therefore consider
all the various forms of intellectual property in order to address this issue in a holistic manner.
544. In this context, adopting a multilateral cooperative approach that seeks to foster
innovation, creation and technology transfer will ensure that the intellectual property system
constitutes a key tool for providing answers to countries in their efforts to combat this
pandemic.
Intervention by: Australia
545. Australia thanks South Africa for its communication. 546. Consistent with the 18 May
World Health Assembly COVID-19 response resolution, Australia recognizes the need for
universal, timely and equitable access to essential health technologies and products, consistent
with the TRIPS Agreement. 547. Australia stresses the vital role of IP in incentivising the often
costly and timely development of important health products, including vaccines we continue to
believe that voluntary pooling and licensing initiatives that respect private rights are effective
tools in driving innovation and facilitating widespread access. 548. We also wish to highlight
ongoing international initiatives to finance, access and equitably distribute COVID-19
treatments and vaccines in a manner that respects international IP rules and the rights of IP
holders and note that close and practical collaboration between Members will be critical to
achieve this. 549. In accessing the personal protective equipment and other tools necessary to
address COVID19, Australia reminds Members that beyond intellectual property rules, it is other
traderelated measures have an important role to play in supporting widespread access for
example, APEC and the G20 have already made a number of commitments on the need to
maintain trade in essential goods and Australia underscores the need for all Members to
continue to guard against protectionism and support open supply chains. 550. In this time of
crisis, the TRIPS Agreement should support quick, fair, predictable and implementable access
arrangements to vital health products we recognize the need for all Members to understand
their rights and obligations under the TRIPS Agreement, including its flexibilities to this end, we
support the provision of further information to Members regarding key Articles in the
Agreement. 551. It is Australia's view that a harmonious, well-functioning and clearly
understood international IP framework, underpinned by the TRIPS Agreement and the rights of
IP holders, is crucial in ensuring Members can address the challenges posed by COVID-19.
Intervention by: Switzerland
552. We thank South Africa for their submission. The question of access to medicines and
medical technologies is particularly relevant in a crisis such as the COVID-19 pandemic. 553.
Switzerland is committed to ensure global equitable access to COVID-related medical products
including vaccines. 554. Considering the global toll which the pandemic has already claimed,
all the suffering and the heavy impact on each country's and the world's economy, there is no
doubt that the international community and Governments face a unique challenge these days.
555. How can we enable and ensure access to COVID-19 relevant technologies? 556. In spite
of the magnitude of the challenge, there is also some light, albeit it may not yet be the light at
the end of the tunnel. 557. The pandemic triggered an unprecedented collaboration between
major actors who have come together at the international level to do everything possible to
contain the crisis and, inter alia, provide the medical technology needed. 558. The intellectual
property system is one of the key components leading to access to quality of medical products.
The IP system has contributed to making this extraordinary and continued collaboration effort
at a global scale possible. 559. Partnerships, whether private-private or public-private, are
essential to developing a vaccine and effective treatments against the novel coronavirus. 560.
Within a reliable overall legal framework, IP is a foundation for stakeholders, for the public and
private actors, it spurs their interaction and makes them willing to share information,
knowledge and data, to aliment the global databases, license in and out technology, and to do
what is necessary to scale up capacity. 561. The latter will be the crux when it comes to
specific COVID-19 technologies and a vaccine in particular, and when ensuring populations'
access. 562. Multilateral and global initiatives such as the COVID-19 Vaccine Global Access
facility (COVAX) and the Gavi COVAX Advance Market Commitment (AMC) will consider IP
issues as part of the negotiation package with private providers. 563. South Africa raises the
question of the dimension of TRIPS flexibilities in the current pandemic. We agree with South
Africa that the aspect of IP relating to COVID-19 and public health issues certainly go beyond
patent rights, and goes beyond medical products in the strict sense. 564. Switzerland
acknowledges countries' right to use the TRIPS flexibilities as they were reaffirmed in the Doha
Declaration on TRIPS and public health. 565. However, measures disincentivising efforts and
investment undertaken by relevant stakeholders, including in R&D, we should clearly avoid.
566. We firmly believe that measures need to build on voluntary approaches and that
promoting the use of exceptions and limitations of rights will rather hamper technological, as
well as any other kind of, innovation efforts. Voluntary measures, and especially voluntary
licenses, are preferable because they are faster, provide legal security and are as such more
promising approaches than coercive measures. There is ample proof of success of such
partnership-based approach, from looking back before the present year, and a fortiori now
during the COVID-19 crisis over the past months in 2020. 567. The various platforms such as
the ACT-Accelerator, the COVAX facility (and the Gavi COVAX AMC are important evidence of
this. They are the results of this collaborative approach. 568. The Medicines Patent Pool
(MPP), promoting voluntary licensing, is another example of a platform that successfully builds
on voluntary approaches, where several companies manufacture the respective product at
reduced price; without weakening the patent law and without compromising the quality of the
products. 569. IP protection lies at the heart of a functioning innovation cycle and remains key
for the health system. In this time where we need to confront the coronavirus, collaboration will
be more important than ever to deliver on the high expectations our people have. IP is part of
the solution to overcome this challenge. 570. Besides all the efforts undertaken at the
international level and by the international community, governments have an important role to
play by investing into their public health system and the infrastructure needed to ensure a fair
and equitable access to essential medical products.
Intervention by: United States of America
571. Intellectual property encourages innovation, incentivizes research and development, and
manufacturing and distribution. These core features of intellectual property are necessary for
the global community to find and develop treatments and cures for this deadly pandemic and to
support economic recovery. 572. Innovation is complex and risky, as we are witnessing with
respect to the development of new COVID vaccines and treatments. Intellectual property rights
are necessary to promote innovation in the face of that risk. Moreover, intellectual property
rights help to ensure that there is a robust innovative ecosystem in place that encourages all
relevant actors to participate in the complex process of drug discovery for new and improved
treatment options in the future 573. Investment in research and development for innovative
products has contributed to powerful improvements in public health outcomes, and IPRs has
played a key role in facilitating this innovation, including more than 550 new therapies
developed since 2000. 574. Support for innovation and intellectual property is essential, and
there can be no access to drugs that have not been developed. 575. In fact, in this crisis,
many right holders have voluntarily pledged or given access to intellectual property, whether it
be access to key scientific journals or open source designs for personal protective equipment,
or design specifications for ventilators. 576. In addition, the USPTO's platform Patents 4
Partnerships lists COVID-19 related inventions that are available for licensing to individuals and
businesses. To date, there are over two hundred inventions listed. 577. As we have stated in
past discussions and under agenda item 3, IP is an important piece, but ultimately only one
piece, of addressing the issue of access to any potential therapy. We believe that the IP system
has not been an obstacle in addressing the pandemic but rather has motivated global efforts to
find treatments and cures. 578. As affirmed in the Doha Declaration on TRIPS and Public
Health, the United States respects its trading partners' right to protect public health and, in
particular, to promote access to medicines for all and supports the vital role of the patent
system in promoting the development and creation of new and innovative lifesaving medicines.
579. Consistent with this view, the United States respects the rights of its trading partners to
grant compulsory licenses, in a manner consistent with the TRIPS Agreement, including with
the requirements in Article 31. 580. The United States encourages its trading partners to
consider ways to address their public health challenges while maintaining intellectual property
systems that incentivize the investment and research necessary to develop innovative new
medicines. 581. The United States continues to encourage all WTO Members to promote a
stable and predictable patent system that can nurture innovation. WTO Members can and
should ensure supportive environments for innovators to achieve success and make significant
contributions to economic growth in their country. 582. Many pharmaceuticals have their
origins in countries with strong patent systems. 583. Robust and predictable patent systems
provide interested parties with incentives necessary to encourage them to invest many years
and significant financial resources into worthy endeavours without a guarantee of success.
584. Compulsory licensing diminishes the exclusivity of the patent grant and undermines the
incentive for innovation and investment that is a critical component of technological progress.
585. We urge other Members to exercise caution and careful deliberation on issues related to
compulsory licensing, as they have significant implications that could negatively affect
investment in research and development for the treatments of tomorrow and restrict
investment into new markets, including investments in new manufacturing facilities.
Intervention by: Sri Lanka
586. We thank the delegation of South Africa for bringing this important issue to the attention
of this Committee through their submission. 587. There is a need for a focused discussion
among WTO Members on the implications of intellectual property rights over the technologies
and products required for responding to COVID-19 health issues. In the context of this global
pandemic, it will be important for WTO Members to work together to ensure that IP rights
including patents, industrial designs, copyright and trade secrets do not create barriers to
scaling up R&D, manufacturing and supply of technologies and products necessary to combat
COVID-19 health challenges. Sri Lanka, therefore, views that the proposal by South Africa is
extremely relevant in this current global context. 588. The discussions in response to the
guiding questions raised in the proposal can be useful in many ways, particularly to
understand: a. the extent to which different forms of IP rights impact the rapid development
and affordable access to the various kinds of technologies and products required for responding
to COVID-19; b. the flexibilities available under the TRIPS Agreement to ensure that such IP
rights do not constrain timely, equitable and affordable access; c. the constraints to the use of
such flexibilities; and d. the adequacy of mechanisms that have been put in place to ensure
global access. 589. In the light of this discussion, WTO Members can come to an informed
view on the kind of IPrelated measures that could be adopted at the multilateral level to
support the need for ensuring rapid, equitable and affordable access to the products and
technologies required to respond to similar unprecedented health crisis, such as the COVID-19.
590. The understanding of Doha Declaration is predominantly in the context of patents,
though it's not the only area of IP which should be covered under this. The use of TRIPS
flexibilities in other areas of IP beyond patents is less understood. In this context and the
relevancy of variety of IP rights in the fight against COVID-19, we see immense value in
proposed discussion and invite Members to constructively engage in this dialogue.
Intervention by: Japan
591. The delegation of Japan would like to reiterate the importance of "Access to Medicine and
medical technology", which needs to be discussed in a broader context, taking into account not
only the special compulsory licensing system but also various other relevant measures and
factors such as manufacturing capacity, distribution networks as well as regulatory framework.
592. On countless occasions, humanity has overcome crises throughout history by the
development and promotion of innovation. In this regard, medical technologies used to fight the
pandemic have been created due to inventions throughout time. This type of development has
been made possible by robust intellectual property systems that incentivize and protect
innovation. 593. In addition, there are a number of voluntary initiatives to deal with the
COVID-19 pandemic. We believe that voluntary basis approach is essential for such initiatives,
because it provides possible options for right holders to find solution on the basis of each
situation and does not impede the incentive for innovation. 594. Finally, the delegation of
Japan would like to mention that the Doha Declaration, which confirmed the TRIPS flexibilities,
its relevant statements, and the resulting Amendment to the TRIPS Agreement all rest on an
intricate balance between importance of IP protection and protection of public health.
595. South Africa thanks all Members who contributed to this discussion. I am very
encouraged by the level of engagement that we are seeing on this particular topic it has not
seen like this for a long time and it is a good precedent going forward. So, from that point of
view, we also watch with interest as we develop further topics on the intersection between IP
and public interest.
Intervention by: World Health Organization (WHO)
596. We have seen over the past months how countries have mobilised unprecedented
investments in collaborative, not-for-profit R&D. The COVID-19 pandemic is showing what we
can do when we come together to face a shared global health threat. That is the kind of
collaboration that can save lives and transform the health of billions of people globally. That is
what the nations of the world agreed on SDGS and SDG 3 "ensure healthy lives and promote
wellbeing for all at all ages". 597. WHO would like to thank the initiative of the Government of
South Africa to open the discussions on this topic related to the interfaces between access to
medicines and medical technologies and intellectual property. WHO understands the reference
in the communication (contained in document IP/C/W/666) to the who recently launched
"COVID-19 technology access pool" (C-TAP) and the South African concern as one of the 40
WHO Members that launched "the solidarity call to action: to realize equitable global access to
COVID-19 health technologies through pooling of knowledge, intellectual property and data",
one month ago, together with who director general and the president of Costa Rica. 598.
South Africa mentions that "to date no company has committed to doing so. Instead limited,
exclusive and often non-transparent voluntary licensing is the preferred approached of
pharmaceutical companies, which will be insufficient to address the needs of the current
COVID-19 pandemic". 599. WHO Secretariat would like to take this opportunity to inform the
TRIPS Council that this knowledge, IP and data sharing platform, C-TAP, is meant to provide
equitable access to life-saving technologies by promoting through voluntary means open
innovation models and technology transfer, as well as promoting equitable global access
through access-oriented licensing to fast-track product development and mobilizing additional
manufacturing capacity. 600. WHO calls on WTO Members to join "the solidarity call to action"
and support C-TAP initiative, which is a complementary tool to the access to COVID treatment
Accelerator (ACT-A) and in line with the global strategy and plan of action on public health,
innovation and intellectual property, as well as in accordance to the most recent WHA resolution
on COVID-19 response that, among other aspects, "calls on international organizations and
other stakeholders: (…)(2) to work collaboratively at all levels to develop, test, and scale-up
production of safe, effective, quality, affordable diagnostics, therapeutics, medicines and
vaccines for the COVID-19 response, including, existing mechanisms for voluntary pooling and
licensing of patents in order to facilitate timely, equitable and affordable access to them,
consistent with the provisions of relevant international treaties, including the provisions of the
agreement on trade-related aspects of intellectual property rights (TRIPS Agreement) and the
flexibilities within the Doha Declaration on the TRIPS Agreement and Public Health".
Intervention by: Tanzania on behalf of African Group
1. The African Group thanks South Africa for their paper contained in document
IP/C/W/666 as communicated by South Africa. We think this communication comes at a
critical time when discussions on TRIPS flexibilities are more relevant than ever,
considering the situation WTO Members are going through in relation to COVID-19.
2. The African Group has on several occasions reiterated the importance and need to
intensifying discussions on TRIPS flexibilities particularly in line with the fight against
COVID-19. The Group has been calling for solidarity and cooperation to ensure that
treatment for COVID-19 is accessible and affordable to the world as a public good. In
this connection, we recognize that the TRIPS Council has a significant contribution to
play in the achievement of this objective.
3. COVID-19 has exposed the deficiencies of our public health systems, particularly for the
developing and LDCs. For instance, Africa has been overdependent on imports of
medicinal and pharmaceuticals, a situation that has subjected our public health systems
to systemic vulnerabilities, which were fully exposed during COVID-19 outbreak when
global supplies fell short on essential medical supplies such as ventilators, diagnostic
devices, protective gears and equipment (PPEs) and medicines.
4. It is against this background that the African Group has raised its concerns on the
COVID-19 impact and outlined them in document WT/GC/219 and TN/C/20. With our
submission, together with that by South Africa, we believe we can meaningfully
contribute to discussions on the COVID-19 impact and the requisite trade policy tools to
build our capacities and support our resilience to crises such as COVID–19.
Agenda item name INTELLECTUAL PROPERTY AND THE PUBLIC INTEREST:

THE WTO TRIPS AGREEMENT AND THE COPYRIGHT
THREE-STEP TEST
336. The delegation of South Africa has introduced this item under the heading Intellectual
Property and Public Interest. As delegates would recall we have had a long discussion and
engagement on the issues on intellectual property and public interest as they pertained to
access to health and health technologies and medicine. We thought that it was time to perhaps
look at the public interest dimension more broadly than one would find it in the TRIPS
Agreement and so from this perspective we would want to indicate that the focus of this and
future communications will look at areas outside of access to health technologies and
medicines, but that debate certainly does inform the kind of discussions that we have had
essentially almost for these last two years. 337. The main purpose of this submission is to
address the relationship between the WTO's TRIPS Agreement and copyright, as it relates to
the three-step test on limitations and exceptions to copyright, with a view to clarifying
the flexibilities to which Members are entitled, in particular, in fulfilling the principles and
objectives of the TRIPS Agreement as set out in Articles 7 and 8 of the Agreement. 338. A
balanced interpretation of the copyright three-step test, contained in Article 13 of the TRIPS
Agreement, and predicated upon Article 9.2 of the Berne Convention for the Protection of
Literary and Artistic Works, would ensure that WTO rules do not undermine Members' policies
to promote access to knowledge, culture and development, protect human rights and otherwise
promote the public interest, including through appropriate limitations and exceptions to
copyright and related rights. 339. We note the contours of the three-step test as articulated in
Article 13 of the TRIPS Agreement, which states that "Members shall confine limitations or
exceptions to exclusive rights to certain special cases which do not conflict with a normal
exploitation of the work and do not unreasonably prejudice the legitimate interests of the right-
holder." Certainly, in that formulation we find a litany of technical references which has to be
analysed and understood in this context. 340. Also, the objectives of the TRIPS Agreement as
contained in Article 7 indicate that "protection should contribute to the promotion of
technological innovation and to the transfer and dissemination of technology, to the mutual
advantage of producers and users of technological knowledge and in a manner conducive to
social and economic welfare and to a balance of rights and obligations." 341. Similarly, Article
8 of the TRIPS Agreement provides Members with safeguards in formulating or amending their
laws and regulations 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" and affording Members the right to adopt appropriate measures,
provided that they are consistent with the provisions of this Agreement, "to prevent the abuse
of intellectual property rights by right-holders or the resort to practices which unreasonably
restrain trade or adversely affect the international transfer of technology." 342. Similarly, we
have had a long debate on Article 40 of the TRIPS Agreement which deals with anti-competitive
practices. 343. Access to information and knowledge is fundamental to achieve many
objectives including education and scientific progress. While recognizing the need to protect
legitimate interests of authors and other right-holders, we note that the TRIPS Agreement has
"room to manoeuvre" with respect to the implementation of its obligations, including in the area
of promoting access to knowledge, culture, education, development as well as other
overarching policy objectives. 344. The centre piece of this paper is really the relationship
between TRIPS and the three-step-test for limitations and exceptions to copyright. This, as
Members will note, has not been the subject to in-depth scrutiny at the WTO, except for the
Panel established to consider the United States – Section 110(5) of the Copyright Act case
contained in DS160, which does provide some interpretation of Article 13 of the TRIPS
Agreement in relation to Articles 11bis(1)(iii) and 11(1)(ii) of the Berne Convention (1971). The
panel found that the three-step test requests three separate, independent and cumulative tests
for copyright limitations and exceptions. There is disagreement with this interpretation among
academic scholars and as it relates to state-practice. It would be useful to discuss the
relationship between the TRIPS Agreement and the three-step test for limitations and
exceptions to copyright in order to further clarify the flexibilities afforded to Members to fulfil
their obligations in implementing the objectives and principles of the TRIPS Agreement. 345.
The limitations that Members may provide pursuant to the provisions of the Berne Convention
that have been incorporated into the TRIPS Agreement consist of so called 'free use' that is to
say, the use of protected work that is without an obligation to request authorization or the
payment of remuneration, and 'non-exclusive licences', (use without authorization but with the
obligation to pay equitable compensation). Outside these specific free uses, for example
common law jurisdictions also recognize the notion of 'fair use' or 'fair dealing', which covers
various free uses under international law. The use of privileges at a national level are generally
based on the international copyright acquis. There are many examples of national exceptions
and limitations resting on the international three-step test as can be found in the copyright laws
of parties to the Berne Convention, including for example reproduction for research or teaching
purposes, privileges of libraries, archives or exemptions of reproduction required for
administrative, parliamentary or judicial proceedings. It should be emphasized that fair use and
fair dealing exceptions are not per se in conflict with the international three-step test including
under the more specific approach that the TRIPS Agreement takes to the three-step test under
Article 13. 346. Samuelson and Hachimoto observe the following: "…there is growing
recognition that in an era of rapid technological change, flexible open-ended limitations and
exceptions such as fair use, can play a useful role in balancing the legitimate interests of right-
holders, subsequent creators and the public, and these could include fan fiction authors, making
back-up copies of music and the like, in regulating various uses of copyrighted works that do
not have market destructive effects. These days, legislatures simply cannot anticipate new uses
of works in digital form and decide which ones should be permitted through crafting of specific
exceptions. Applying fair use or a similar flexible doctrine can enable courts to weigh various
factors in order to reach our principle decisions. 347. The above-mentioned paragraph also
provides an important context for our on-going discussion on the 1998 Work Programme on
Electronic Commerce. In 1996 the three-step test was incorporated into the WIPO Copyright
Treaty (WCT) and the WIPO Performance and Phonographs Treaty WPPT), both are collectively
known or referred to as the WIPO Internet Treaties. The Diplomatic Conference that adopted
these two texts, adopted the following agreed statement in respect of Article 10 of the WIPO
Copyright Treaty which applies mutatis mutandis to Article 16 of the WPPT and it states: It is
understood that the provisions of Article 10 permits Contracting Parties to carry forward and
appropriately extend into the digital environment limitations and exceptions in their national
laws which have been considered acceptable under the Berne Convention. Similarly, these
provisions should be understood to permit Contracting Parties to devise new exceptions and
limitations that are appropriate in the digital network environment. 348. South Africa invites
Members to contribute to this discussion and to share their national approaches and
experiences. We also include some questions for discussion as referenced in the document: 1.
Does the three-step test constitute an indivisible whole to the extent that each of the three
steps are to be considered together and as a whole in a comprehensive overall assessment?;
and 2. What approaches have Members taken to reflect limitations and exceptions in their IP
laws?
349. We thank the delegation of South Africa for introducing this proposal. The submission
seeks to initiate discussions on the relationship between the TRIPS Agreement and the three-
step test for application of exceptions and limitations to copyright, as contained in Article 13 of
the TRIPS Agreement. The 3-step test originally applied under the Berne Convention, allowed
the national laws to carve out exceptions to the exclusive right of reproduction of a copyright-
protected work by the copyright owner. 350. We agree with the approach of the submission
that access to information is critical to achieving many fundamental objectives, including
education, scientific progress, research, formats of work for the reading and print disabled, etc.
While recognizing the need to protect the legitimate interests of authors and other right
holders, the paper rightly notes that the TRIPS Agreement has "room to manoeuvre" with
respect to the implementation of its obligations, including in the area of promoting access to
knowledge, culture, education and development as well as other overarching public policy
objectives. The Agreement gives enough leeway for the signatory countries to enact the
copyright law in their municipal jurisdictions concerning use of copyrighted works for purposes
of dissemination of knowledge. Thus, there is considerable flexibility in how a Member may
apply the principles in their domestic laws. 351. Lastly, we want to mention that Members
need time to respond to the questions raised in the submission. Therefore, the issue should be
kept open for inputs/experiences to be shared by Members in subsequent meetings of the
TRIPS Council.
352. As regards the three-step test, does it involve individual, independent, and accumulative
assessment of the requirements where each of which has to be fulfilled? Or are the
requirements considered collectively and assessed as a whole? In practice, we generally assess
each requirement individually and every requirement has to be fulfilled. That said, we will
continue to pay close attention to the development of interpretations globally. 353. Besides,
copyright limitations are prescribed in Articles 44 through 65 of our Copyright Act. For instance,
the "case-specific limitations/exceptions" may apply only when the stipulated requirements are
fulfilled. In addition, Article 65 provides "general copyright limitations/exceptions" which
addresses circumstances of fair use not prescribed in Articles 44 through 64 and it allows for
assessment of individual cases by taking into account all the possible factors/scenarios. We had
taken into account the principle of the three-step test at the time of legislation, and by so doing
we have fulfilled the TRIPS requirement.
354. Indonesia welcomes this opportunity, and views positively the inclusion of IP and the
Public Interest in the agenda of the TRIPS Council Meeting. We also would like to thank South
Africa for circulating document IP/C/W/663. The debate on the WTO TRIPS Agreement and the
copyright three-step test is certainly of interest to our delegation. 355. As everyone
presumably knows, in the area of exception and limitation in intellectual property, the three-
step test is embodied in the Berne Convention and the TRIPS Agreement. There are some
debates on interpretation of three-step test for implementation in national level. The Delegation
of Indonesia supports the discussion for the WTO TRIPS Agreement and the copyright three-
step test on the agenda and we see South Africa's proposal as a good first step to reach for
common understanding about the interpretation of the three-step test.
356. China would like to thank South Africa for developing this proposal and I will address
the second question in the proposal. 357. China has always supported a right balance between
IP protection and public interests. We believe IP system should protect right holders' legitimate
rights and at the same time benefit social welfare. Limitations and exceptions to the copyright
system helps achieve the balance between authors' exclusive rights and the availability of
works to the general public, which is conducive to the dissemination of knowledge and creation
of works. 358. Specifically, in China's Copyright legal system, we have based our domestic
rules of copyright limitations and exceptions on relevant provisions in international agreements,
namely the Berne Convention, TRIPS Agreement and the WIPO Copyright Treaty. In China's
Copyright Law, Article 22 stipulates 12 situations which allow free use of copyrights. Our law
does not explicitly use the term "free use". I am just using the term "free use" for the sake of
convenience to refer to the scenario in which a work may be exploited without the permission
from the author, and without payment of remuneration to the author, provided the name of the
author and the title of the work are mentioned and that other rights enjoyed by the author are
respected. 359. The 12 situations include, for example: (1) for personal study, research and
appreciation, (2) appropriate quotation from a published work in one's own work for the
demonstration of a point, (3) reproduction of a work in its collections by a library; (4)
translation of a work published by a Chinese citizen which is created in the Han language
(Mandarin Chinese), into a minority group language for publication and distribution within
China. Article 23 of our Copyright Law stipulates one situation under which non-exclusive
license can apply. Again we do not use the term "non-exclusive license" in the legal text and I
am just using "non-exclusive license" for the sake of convenience to refer to the situation where
a work can be used without an author's permission, but remuneration has to be paid, the name
of the author has to be mentioned, and other rights enjoyed by the author have to be
respected. The non-exclusive license is used for compiling or publishing textbooks for the
purpose of implementing the nine-year compulsory education in China. 360. Furthermore,
China's Regulation on Implementing the Copyright Law and Regulation on the Protection of the
Right to Communicate Works on Information Networks enacted by the State Council embedded
more detailed rules on limitations and exceptions to copyright. The Regulation on the Protection
of the Right to Communicate Works on Information Networks specifies exceptions to copyright
in the digital environment. To alleviate poverty, a published work of a Chinese citizen on such
topics as planting and breeding, disease prevention and elimination, disaster prevention and
reduction can be made available free of charge to people in the rural area over the internet. No
prior permission from the author is needed but the author is entitled to collect remuneration
paid by the internet service provider. 361. In summary, China is of the view that limitations
and exceptions to copyright is an important aspect to balance IP rights with public interests and
is consistent with the objective of the TRIPS Agreement. We welcome other Members'
interventions under this proposal.
362. The United States recognizes the important obligations that Members have undertaken
with respect to copyright as provided in the TRIPS Agreement. It also recognizes that Article 13
sets forth that limitations or exceptions to exclusive rights shall be confined to certain special
cases that do not conflict with normal exploitation of the work and that do not unreasonably
prejudice the legitimate interests of the right holder. 363. This is an ad hoc item and should
be treated as such, under the rules of procedure.
364. Switzerland would like to thank South Africa for its communication IP/C/663 concerning
the copyright three-step test for exceptions and limitations. 365. The so-called "three-step
test" is a key concept in copyright law and is found, in slight variation, in a number of
international agreements. The main question that South Africa raises for discussion in its
submission in relation to the three-step test is a question of interpretation of Article 13 of the
TRIPS Agreement. 366. However, in the WTO system, the legal interpretation of treaty
provisions, including Article 13 of the TRIPS Agreement, is the role of the WTO Dispute
Settlement Body, to be applied in a specific case of dispute resolution. 367. Questions
concerning the interpretation and application of the three-step test in Article 13 of the TRIPS
Agreement are thus not within the competence of the TRIPS Council but are solely the authority
of the Dispute Settlement Body.
368. Since we did introduce this item, we would like to thank all delegations that took the
floor. This communication is generally worded, and we think that there is definitely some more
space to discuss the approach to Article 13 and specifically how it relates to the three-step test.
We note the intervention from the honourable delegate from Switzerland, we agree that
matters of legal interpretations should be left to the Dispute Settlement Body but nothing in
respect of the subject matter of intellectual property excludes us from having an inclusive
debate and so we had hoped that the introduction of this paper would firstly stimulate sharing
of views in respect of the operation and application of the TRIPS Agreement. 369. I would also
like to thank some of the other delegations including India and specifically China who shared to
large extent how they have incorporated the limitations and exceptions to Copyright into their
laws. Also, we believe that no discussion will be complete if we leave out what Members have
done subsequent to the case and interpretation by the DSB. We note that in many instances
countries have introduced and incorporated the three-step test into national legislation and we
also note that there has been a further evolution of several approaches under free trade
agreements and so from this perspective we think it warrants at least a discussion of what we
see within the realm of state practice and what this has meant for individual interpretations of
the three-step test under national judicial pronouncements. 370. Once again we would like to
thank all Members who took the floor and I certainly hope that my delegation would be able to
continue this discussion by focusing more specifically on some of the issues that we raised in
our paper. As the honourable delegate from the United States clearly points out that when we
referred to the context of the TRIPS Agreement Article 13 we need to take note that Members
shall confine limitations or exceptions to exclusive rights to certain special cases that do not
conflict with normal exploitation of the work, and do not unreasonably prejudice legitimate
interests of right-holders. 371. As I indicated in the initial intervention there are a whole lot of
technical references. Perhaps during the next session of the TRIPS Council we may come back
to have a more wholesome discussion on the relevant parts of the three-step test as articulated
here, and to further break down the possible implications in respect of some of the meanings
and interpretations that have already been given in the context of some of the dispute
settlement cases. This would also include what impact this determination would have on a more
general flexible interpretation of rights and obligations as they are embedded in the TRIPS
Agreement.
372. We think it should be an ad hoc item and that if it were to be raised in the future,
another paper request would be provided.

R&D COSTS AND PRICING OF MEDICINES AND HEALTH
TECHNOLOGIES
Dates of the meeting 17/10/2019-18/10/2019
606. This topic is a continuation of a sustained debate regarding the intersection between
intellectual property and the public interest. The public interest is a central component of the
TRIPS Agreement, which recognizes underlying public policy objectives of national systems for
the protection of intellectual property. The protection and enforcement of intellectual property
rights is not an end in itself. Article 7 of the TRIPS Agreement recognizes that intellectual
property rights must contribute to the promotion of technological innovation and the transfer
and dissemination of technology to the advantage of all stakeholders, including the users of
technological knowledge, and in a manner conducive to social and economic welfare. 607. In
September 2015, 193 members of the United Nations adopted the 2030 Agenda for Sustainable
Development (2030 Agenda). This agenda includes Sustainable Development Goal (SDG) three
that aims to ensure healthy lives and promote the well-being of all people of all ages. 608.
The WTO is central to achieving the 2030 Agenda for Sustainable Development Goals (SDGs),
which sets targets to be achieved by 2030 in areas such as poverty reduction. Trade has proven
to be an engine for development and poverty reduction by boosting growth, particularly in
developing countries. Target 3.b underscores the importance of support for R&D of vaccines
and medicines for the communicable and non-communicable diseases that primarily affect
developing countries. The Doha Declaration on the TRIPS Agreement and Public Health affirms
the right of developing countries to use to the full the provisions in the TRIPS Agreement
regarding flexibilities to protect public health and, in particular, provide access to affordable
medicines and medical technologies for all. 609. The Doha Declaration on the TRIPS
Agreement and Public Health recognizes both the importance of intellectual property for the
development of new medicines and concerns that intellectual property rights affect medicine
pricing. The UN Secretary General's High-level Panel on Access to Medicines observed the
following: "The rules governing human rights, trade and public health exist in separate but
overlapping spheres; their implementation rests at different levels. An important factor behind
the incoherence between trade, intellectual property laws, human rights and public health lies
in the different accountability mechanisms and uneven levels of transparency." It further
observes that transparency is a core component of good governance, especially where civil
society and patient groups rely on transparency of information. Transparency, as further stated,
can also ensure fairness during negotiations that take place between biomedical companies and
procurement organizations. 610. I do not propose to read the entire paper. However, I would
want to focus on one or two further areas before I turn to the questions. Pricing strategies are
based on determinants such as, inter alia, the cost of R&D, costs of production or financial
returns to incentivize future R&D programmes. The true costs of R&D for pharmaceuticals are
often unknown and highly variable, while the contribution made by public and non-profit-
making sectors towards the R&D of medicines is not always accounted for. The marginal
production costs of medicines are relatively small compared to their market prices while a
significant proportion of this expenditure might be for marketing and promotional activities,
which are costs not related to the development of the product. 611. South Africa calls on
Members to share their experiences of how TRIPS flexibilities have been used to address high
prices and barriers to access to medical technologies and medicines in order to achieve public
health and related national objectives. In the past the impact of competition and anti-trust laws
on access to medicines was explored in document IP/C/W/643. The issue of abuse of IP rights
remains relevant in the context of the application of national and regional norms to ensure
cheaper and more effective access to medical technologies and medicine. Policies that influence
the pricing of health technologies or the appropriate rewards for successful research outcomes
can be better evaluated when there is reliable, transparent and sufficiently detailed data on the
costs of R&D inputs (including information on the role of public funding and subsidies), the
medical benefits and added therapeutic value of products. 612. We would like Members to
share their experiences around the following questions:  What are the TRIPS flexibilities
adopted by Members in their patent laws to ensure availability of patented medicines at
reasonable prices?  What are Members' experiences with escalating prices of patented
medicines and what are the policy responses implemented to address this trend through the
use of TRIPS flexibilities?  What approaches have Members implemented regarding price
regulation of patented medicines such as a combination of cost-based pricing, value-based
pricing, reference pricing, and/or through tendering and negotiation, and regulating mark-up
levels? If any of these approaches have been used, what are the results and challenges that
Members face to ensure compliance and disclosure of necessary information or their effect on
the prices of medicines?  What measures have Members implemented to enhance the publicly
available information on the costs of manufacturing medicines, vaccines and health
technologies, in particular information on grants, tax credits or any other public sector subsidies
and incentives relating to the initial regulatory approval and annually on the subsequent
development of a product or procedure?  Can Members share their experiences to improve
the transparency of the patent landscape of medical technologies to ensure that no barriers are
created to generic competition through sharing complete and up-to-date information?
613. We support the statement delivered by South Africa. 614. At the outset, allow me to
thank and compliment my South African colleague for this extremely pertinent and timely
submission that attempts to facilitate sharing of experiences between countries on the steps
taken by them to maintain a balance between the pricing of medicines and the public interest.
615. The National IPR Policy introduced by the Government of India in 2015 envisions an India
where creativity and innovation are stimulated for the benefit of all. The policy emphasizes that
a dynamic and vibrant intellectual property system must focus on enhancing access to health
care, food security and environmental protection among other sectors of vital social, economic
and technological importance. Our existing laws were either enacted or revised after the
TRIPS Agreement came into existence and are fully compliant with it. India has incorporated a
wide array of flexibilities available under the TRIPS Agreement in its Patent Law. 616. Certain
specific examples of such flexibilities include-higher patentability standards to ensure a balance
between the public interest and intellectual property rights protection. Prior to 2005, India
prohibited the grant of pharmaceutical product patents, which had to be changed as part of the
TRIPS commitment. The concern at that time was that while genuine inventions should be
patented, evergreening should not be allowed. Higher patentability standards have tried to
address this concern. 617. A system of pre-grant opposition that allows any third party to
oppose a patent application that is awaiting a decision at the patent office has augmented the
examination capabilities of our patent office so that frivolous inventions are not patented. This
has helped to keep the prices under control. Robust compulsory licence provisions to address
situations where prices become unreasonable or where supply of the medicine is inadequate,
strong disclosure requirements and transparency provisions that require a patent applicant to
disclose the status of his application in other countries and the requirement that every patentee
and every licensee furnish a statement as to the extent to which the patented invention has
been worked on a commercial scale in India have helped in creating an equilibrium between the
obligations taken under the TRIPS Agreement and the rights available. 618. The Bolar
provision is very important for entry of generics as soon as the patent expires. The Indian
Patent Law allows a generic company to seek regulatory approval ahead of the expiry of the
patent. This in turn facilitates the entry of the generics as soon as the patent expires, thereby
ensuring that the patent monopoly does not extend beyond the required period. The patent
landscape is recognized by our National IPR Policy to be critical for enabling innovation and also
to know whether there is freedom to operate. The Policy mentions that efforts should be made
for the creation of a public platform to function as a common database of IPRs. It states that
such a platform would help in scouting the technology landscape to identify white spaces and
thereby promote innovative activities in uncovered areas. In India patent landscape work is
being carried out by the Unit for Research and Development of Information Products (URDIP) of
CSIR. They carry out landscaping work across technologies for small and medium enterprises,
start-ups, research institutions among others. 619. Lastly, we want to mention that the
questions raised in the submission address the issue of access to medicines as a whole and
Members need time to respond. Therefore, the issue should be kept open for
inputs/experiences to be shared by Members in subsequent meetings of the TRIPS Council.
620. The European Union views critically a number of issues discussed in the communication
from South Africa. 621. As previously stated in this Council, the work conducted by the United
Nations SecretaryGeneral's High-Level Panel on Access to Medicines started from an
assumption that "[a]n important factor behind the incoherence between trade, intellectual
property laws, human rights and public health lies in the different accountability mechanisms
and uneven levels of transparency." 622. This statement is recalled in the communication.
623. As the European Union already indicated in its written contribution to the UN Panel and in
various interventions in the framework of this Council, we do not share that assumption. We do
not subscribe to this point of view. 624. The Commission encouraged the Panel at that time to
adopt a holistic approach to the problem of access to medicines that could result in a valuable
contribution to the wider debate. 625. However, due to its limited mandate, unfortunately, the
High-Level Panel has focused its proposals exclusively on addressing an alleged conflict
between a R&D model that (partially) relies on IPR and the possibility of providing affordable
medicines. In doing so, it has missed an opportunity to advance more balanced, comprehensive
and workable solutions to the problem of access to health. 626. As we all know, IP-protected
medicines are only a very small fraction of the medicines that patients in need in many
developing countries lack access to. 627. As already stated at the TRIPS Council of November
2018, in general, we do not consider the TRIPS Council the appropriate forum to discuss
competition policy regarding pricing of medicines and health technologies. There are other
international fora, such as the International Competition Network, where such international
exchanges and cooperation are taking place. 628. While the submission from South Africa
seems to consider the use of competition policy a TRIPS flexibility, the EU would be cautious.
While TRIPS is obviously compatible with the application of competition policy measures, it
clearly does not allow for an "absolute policy space". As provided for in Articles 8.1 and 2, as
well as in Article 40.2, these measures have to be consistent with the provisions of the TRIPS
Agreement and cannot be used as tools in avoiding the obligations under the Agreement. 629.
Generally, competition policy plays an important role in controlling and sanctioning
anticompetitive market behaviour in any sector, including the pharmaceutical sector. 630. The
examples concerning excessive pricing as a competition law infringement in the pharmaceutical
sector in the EU show that competition law enforcement in the EU is done on a caseby-case
basis. 631. Furthermore, compulsory licences to pharmaceutical patents as a remedy to
excessive pricing would have a negative impact on innovation incentives and appear to be
superfluous, because a competition authority, once it has established unlawful market
behaviour, has the normal toolbox of competition policy remedies. 632. The EU seeks to
ensure, on the one hand, that medicines are accessible to those in need and, on the other
hand, to promote the financing of research in new and better medicines through effective IP
protection. 633. The challenge is to strike the right balance between the need to promote and
finance the R&D of new and better medicines, ensuring that medicines are accessible and
affordable to those in need, while guaranteeing the sustainability of health systems. We believe
that these goals are not contradictory and must be pursued jointly. 634. In order to be able to
make innovative medicines available, these medicines have to be researched and developed in
first place. The current innovation model has delivered consistent progress in global public
health, continuously leading to important new and improved treatments as well as much
extended life expectancy, both in developed and developing countries. 635. This model
integrates a variety of tools, such as incentives for innovation based on IP, public and private
financing and awards, or public research. This variety is necessary to address situations where
there is a functioning market and those where there could be market failures. 636. Since, in a
market economy, most medicines are created not by public authorities but by the
pharmaceutical industry, which, as all industries, needs an adequate return on investments to
finance innovation, the challenge is how to use all levers available to public authorities to
promote affordable access to medicine without affecting negatively the investments of the
pharmaceutical industry and therefore the availability of new and innovative medicines. 637.
The development of new drugs requires very significant and long-term research, coupled with
clinical trials and regulatory approval procedures. The exclusive right conferred by a patent is a
critical incentive for innovator pharmaceutical companies to make the necessary investments
into that research and development. The often-long time period of rigorous (clinical) testing for
marketing approval, which is important to ensure the new medicines are safe, limits the
economically effective time of patent protection. 638. It has to be noted that the shorter that
time span becomes as a result, the higher the price for new medicines will have to be to
recover the research cost in the remaining time of patent protection. The higher the price, the
more it will limit access to the innovative medicines and their affordability. 639. Finally,
evidence shows that there are many different and significant causes of lack of access to
medicines, which renders it misleading to attribute the problem merely to, or even principally,
IPR-related aspects. 640. In fact, IPR issues seem to play a minor role in the problem but a
disproportionately large role in the debate. This has also been echoed in a joint-report from the
WHO, WTO and WIPO stating that the "lack of access to medical technologies is rarely due to a
single isolated factor". 641. Additionally, I recall that, currently, most medicines on the WHO
list of essential medicines (i.e. more than 90%) are available in a generic format, either
because they were never protected by a patent or because protection has expired. 642. Still
these medicines do not reach all in need. In fact, many developing countries apply tariffs, taxes
and substantial mark-ups to medicines and lack an efficient procurement and healthcare
system, with the result that medicines are not available to the population or at least not at an
affordable price. 643. I would like to recall also that, the Global Fund, distributing medicines to
patients in need in developing countries with diseases such as HIV or malaria drugs, has been
financed by the EU and its Members with over EUR 19 billion from 2001-2016. For the period of
2017-2019 the EU and its Members finance the Global Fund with around 17 billion (out of the
EUR 29 billion pledged by all countries). According to the calculation of the Global Fund, this
has allowed the Fund to save 22 million lives. The Global Fund also cooperates closely with the
Medicines Patent Pool, which receives licences from some of the world's leading innovative
pharmaceutical companies for free or at a dramatically discounted price. Hence, innovations
such the world's latest HIV drugs can also reach patients in need in places where the countries'
government are not able to provide universal health care. 644. Contrarily to the perception of
some, international trade is vital for access to medical technologies, since no country can aim to
be entirely self-sufficient, in particular not developing countries. 645. In trade negotiations,
the EU always takes into consideration the development status and public health concerns of
our trading partners. For example, we never have nor will we ever ask for provisions which
would be contrary to or otherwise undermine the Doha Declaration on the TRIPS Agreement
and Public Health. 646. The Declaration underlines the importance of public health measures
and allows the granting of compulsory licences for the production and importation of generics
where necessary and the freedom to determine the grounds upon which such licences are
granted. To ensure this, the Commission proposes a legally binding provision in its trade
agreements referring to the Doha Declaration to guarantee that these flexibilities granted by
the TRIPS Agreement remain available. 647. In conclusion, questioning IPRs in trade for
pharmaceutical products as a means to improve their affordability would not only be looking at
the wrong target, but also have consequences opposite to the intended ones. It would reduce
investments and the number of resulting new medicines and treatments or lead to higher prices
of new medicines available worldwide.
648. China appreciates the efforts made by South Africa in submitting the document. 649.
The TRIPS Agreement came into force in 1995, which established a comprehensive international
intellectual property protection system and set minimum standards for intellectual property
protection for all Members. Compared to other international intellectual property agreements
negotiated before, the TRIPS Agreement has broader IP protection scope, better
implementation mechanism and more extensive protection standards. 650. Strengthening
intellectual property protection does not necessarily lead to the improvement of economic
efficiency and the increase of social interests. The negotiators of the TRIPS Agreement
recognize this point, so Articles 7 and 8 of the TRIPS Agreement clearly stipulate that "the
protection and enforcement of intellectual property rights should contribute to the mutual
advantage of producers and users of technological knowledge and in a manner conducive to
social and economic welfare; Member may, in formulating or amending their laws and
regulations, 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" and relevant Articles like Articles 6 and 31 are recognized by Members as TRIPS
flexibilities. The TRIPS flexibilities are considered by Members to be an important right to
safeguard their public interest. 651. At the 2001 Doha Ministerial Meeting, ministers adopted
the Declaration on the TRIPS Agreement and Public Health; they reaffirmed the right of WTO
Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for
this purpose. 652. China emphasizes the importance of intellectual property protection and
commits to fully comply with the provisions of the TRIPS Agreement since accession to the
WTO. And as many other developing Members, China attaches great importance to intellectual
property and the public interest, and it was one of the first Members to accept the Protocol
Amending the TRIPS Agreement. 653. At the domestic level, the compulsory licensing system
is specifically stipulated in the Patent Law of China. In the event of a state emergency or very
urgent situation, or for the public interest, the patent administration under the State Council
may grant compulsory licenses for the implementation of inventions or utility models. In
addition, the Patent Law also permits parallel imports and the Bolar exception. 654. Actually,
as of now, China has not issued any compulsory license. We provide the medicines at
reasonable prices mainly in two ways. First, we include some expensive patented drugs in the
medical insurance catalogue through government procurement. Second, we set up a platform
to help drug purchasers in different regions to buy medicines together at the same time. By
those ways, pharmaceutical companies reduce the price of drugs through the increase in sales
volume and profits. And government can effectively ensure the availability of medicines, and
maintain public health. 655. China believes the protection of intellectual property rights should
contribute to the mutual advantage of producers and users and to a balance of innovation and
the public interest. When a public health problem occurs, Members should have the right to use
the TRIPS flexibilities to protect their public interest. China also hopes to hear from other
Members' experience in using TRIPS flexibilities to safeguard the availability of medicines.
656. We understand that intellectual property and the public interest are central components
of the TRIPS Agreement, and how to strike a balance between intellectual property protection
and the public interest are important public policy objectives for Members. There are relevant
provisions in our Patent Act as follows: 657. In order to implement the spirit declared by the
Doha Declaration on the TRIPS Agreement and Public Health and the WTO General Council
resolution, and for purposes of assisting Members with insufficient or no manufacturing capacity
in the pharmaceutical sector to obtain pharmaceutical product(s) needed for treating HIV/AIDS,
tuberculosis, malaria and other epidemics, according to Articles 90 and 91 of our Patent Act,
when complying with certain requirements and agreeing to comply with the relevant regulations
prohibiting the re-export of compulsory licensed pharmaceuticals, the Specific Patent Agency
may, upon request, grant a compulsory license to the requestor to exploit a patent concerned
for the purpose of producing and importing pharmaceutical product(s) to these Members. 658.
Besides, according to Article 60 of our Patent Act, the effects of the patent right shall not
extend to research and trials, including their practical requirements, necessary for obtaining
registration and market approval of drugs under the Pharmaceutical Affairs Act or obtaining
market approval of pharmaceuticals from a foreign country. It will help the pharmaceutical
companies to obtain marketing approvals, so that the general public can choose and obtain
more reasonable pharmaceutical product(s) as soon as possible. 659. Regarding drug prices,
our National Health Insurance adopts a value-based pricing mechanism in new drug pricing
when a new drug has to obtain market approval before listing. To ensure rational allocation of
medical resources, a new drug has to undergo pricing review procedures prior to listing, in
which the economic and therapeutic values of the new drug are evaluated, and the listing prices
are decided based on the evaluation results. 660. Regarding drugs covered by our National
Health Insurance, to ensure reasonable listing prices, price and volume surveys are
implemented, so that price adjustments can be done by referring to the actual transaction
prices and to reflect the real situation on the market. Besides, patents are taken into
consideration in the price adjustments, in which listed drugs are classified into various
categories based on their patent status and different price adjustment formulas are applied to
different categories. 661. Our National Health Insurance adopts a value-based pricing
mechanism in new drug pricing. In terms of pricing methods, a new drug is priced based on
international prices of the new drug, or the listing prices or the international prices of the
comparators, and may enjoy mark-ups in certain cases such as drugs with better clinical
benefits. Certain drugs such as those used for rare diseases can not only be priced based on
the international prices of related products, but can also be priced by cost-calculation methods.
662. The decision on new drug pricing review is made by a joint meeting composed of
stakeholders including authority officials, scholars and experts, beneficiaries, employers,
healthcare providers, etc. Moreover, the meeting minutes and meeting sound records are
disclosed on the website. 663. Regarding the improvement of the transparency of the patent
landscape of medical technologies, our Pharmaceuticals Affairs Act was amended on January 31
last year (2018) to introduce the system of patent linkage of drugs, entered into force on
August 20 this year. According to the main points of the amendments, the holder of a new drug
permit should submit the patent information regarding such drug within 45 days after the
receipt of the drug permit. The holder of a new drug permit should also list and make public the
patent information of the new drug in the Registration System for Patent Linkage of Drugs.
664. Through patent linkage, we ask the holders of new drug permits to disclose patent
information of the drugs soon after market launch. By making such information public, we
encourage generic drug companies to learn the patent status of the new drugs first, and carry
out necessary circumvention as they develop their own drugs. This shall help to reduce risks of
suspension of sales caused by infringement disputes after the drugs are put on the market and
also provide more comprehensive IP protection for drugs.
Intervention by: Brazil
665. We thank South Africa for its communication to the Council. As a country that offers
universal health and medical care, a constitutional right in Brazil, we reaffirm the importance of
reaching the right balance between access to medication and the development of new
treatments by the pharmaceutical industry. 666. The increasingly high prices of health
products and therapies are not only the reality of several developing countries but also many
developed country Members. 667. The latest multilateral initiatives on the promotion of
transparency of costs of health products – such as the "WHO Technical Report on the Pricing of
Cancer Medicines", the "WHO Roadmap on Access to Medicines and Vaccines", the
"Transparency Resolution" adopted by the 72nd World Health Assembly, and the resolution on
"Access to medicines and vaccines" adopted by the Human Rights Council, promoted or
sponsored by Brazil - have relied on substantial support from a wide range of countries from
different economic and geographical backgrounds. 668. While acknowledging that the matter
of pricing of medicines is a complex one, involving questions relating to supply, taxation,
infrastructure, or regulatory aspects, we should not refrain to acknowledge that patents,
market practices and lack of data also play a significant role. 669. The WTO Multilateral
Agreements and, consequently, the TRIPS Agreement were built upon a very fine balance of
rights and obligations, where mutual concessions led to agreement. Therefore, discussions on
the use of TRIPS flexibilities, including the provisions of the Doha Declaration on TRIPS and
Public Health, which is an integral part of this fine balance, should not be considered politically
sensitive. 670. Brazil remains committed to promoting access to quality, safe, effective and
affordable health products, which we believe is an essential role of governments and
multilateral organizations. 671. In this sense, it is fundamental that all interested actors –
governments, civil society and the private sector – dialogue and contribute to creative solutions
to achieve these goals.
672. This delegation acknowledges the importance of, and fully supports the goals contained
in, the 2030 Agenda for Sustainable Development, including goal number three to ensure
healthy lives and promote wellbeing for all at all ages. 673. By incentivizing research and
development of new medicines, the IP system and patents play a key role in making further
progress towards achieving goal number three by 2030. 674. The communication of South
Africa further refers to the TRIPS flexibilities, confirmed in the Doha Declaration on the TRIPS
Agreement and Public Health in 2001. Members are free to use these flexibilities in situations
where they have to address a public health problem under the Declaration. 675. In addition,
Members agreed on including Article 31bis in the TRIPS Agreement, providing for a compulsory
license for export purposes to address the particular needs of WTO Members with insufficient or
no manufacturing capacities in the pharmaceutical sector. 676. While these TRIPS flexibilities
are there for Members to be used in appropriate circumstances, it is important to underline that
the IP system and patents can only perform their function and incentivize the necessary
investment needed to develop new drugs for unmet medical needs, if IP protection is the rule -
and making use of a flexibility remains the exception. 677. The IP system proved to be
instrumental in the unparalleled success story of modern medicines over the last 100 years, for
the benefit of both developed and developing countries. 678. This said, more progress is
needed to address illnesses that still today are not curable, whether communicable or non-
communicable diseases. The IP and patent system will play a crucial role in mastering this
challenge. Where not sufficient on their own to incentivize investment in R&D - as may be the
case in areas such as neglected tropical diseases or drug-resistant bacteria - additional
incentives are needed to complement the incentives of the patent system. 679. It is the
essence of the patent system to grant to the inventor a time limited right for the commercial
exploitation of her or his invention. The patent system is central as it addresses and remedies
an economic market failure, in order to reward and promote innovative and creative activity. As
any right, an IP right can be abused. In such cases competition law may provide a remedy.
Beyond this, competition and or anti-trust law are outside of the field of responsibility of this
Council. 680. My delegation considers also the pricing of medicines as well as the cost of
research and development to be outside of the purview of the TRIPS Council. The WHO is
currently examining questions in this regard, as the communication of South Africa also notes.
681. Having said this, it would be misleading in this delegation's view to imply that the price
of a medicine is directly related to patents. To ask for a specific price, is not a right conferred
by a patent on its owner. 682. In sum, the IP system, and for cases such as neglected
diseases, complementary incentive and financing systems are needed, to ensure that innovative
and more effective medicines and medical technology continue to be developed also in the
future, to reach the goal of healthier lives and wellbeing for all.
683. For the purpose of having meaningful discussions under this agenda item, the delegation
of Japan would like to suggest other Members to note that it might be better to take a more
thorough and cautious approach, taking into account not only the interests of third parties but
also those of patent-rights holders. 684. We all should note that the development of new and
innovative medical technologies needs so much cost and takes so much time as well, and
therefore Japan believes that there should be an appropriate mechanism to incentivize the
development of such technologies not only for the developed country Members but also for the
whole world. 685. In addition, this delegation would also like to point out that it should not be
focused on the price too much since there is a huge difference in costs between a medicine
based on a new chemical entity (NCE) not previously used in any pharmaceutical product, and
an incremental modification of an existing medicine. However, even for NCEs the stated costs
differ widely. 686. Generally speaking, we have the need to protect intellectual property to
encourage development of new and effective drugs so that new essential drugs will
continuously be developed.
687. The United States respects Members' right to protect public health and, in particular, to
promote access to medicines for all, as affirmed in the Doha Declaration on TRIPS and Public
Health. 688. The United States is firmly of the view that international obligations such as
those in the TRIPS Agreement have sufficient flexibility to allow trading partners to address the
serious public health problems that they may face. 689. The United States supports the vital
role of the patent system in promoting the development and creation of new and innovative
life-saving medicines and urges Members to consider ways to address their public health
challenges while also maintaining IP systems that promote innovation. 690. Pricing of
medicines is a very important issue that is currently being discussed in the United States. 691.
However, we do not believe that it is an appropriate topic for TRIPS Council. 692. It is
important to recognize that drug pricing and drug availability are complex issues. There are
many factors that play a role in it, with IP rights being just one of those factors. 693. As has
been noted during this discussion, the WHO-WIPO-WTO joint study on Promoting Access to
Medical Technologies and Innovation (the "Trilateral Study") highlighted many factors that
contribute to the availability of medicines. Such factors include regulatory barriers; taxes and
tariff policy; procurement mechanisms; increase in the production, sale and use of the
substandard/fake/counterfeit medicines; complex supply chains; and the list goes on. 694. We
believe that the narrowly-focused mandate of the UN High Level Panel was flawed and therefore
cannot lead to outcomes that adequately address this issue. 695. While patents do play a role
in the pricing of products covered by patent protection, the primary role of patents is in
incentivizing the development of new drug products. Discussions on the pricing of new drug
products are moot if there are no new drug products being developed. 696. In our view, a
robust patent system does not prevent countries from taking measures to protect public health.
697. An effective patent system not only incentivizes the discovery of new drugs, new uses for
existing drugs, and improvements on existing drugs, such as methods that improve drug
efficacy, but also importantly enriches the public domain as patents expire. 698. This balance
is best shown by the leading role of the United States in pharmaceutical innovation and by the
strength of the generic market, with nine out of ten prescriptions being filled in the United
States with generic drugs. 699. Without patent protection, especially in the pharmaceutical
field, research into new drugs, new uses of existing drugs, and improvements to existing drugs
would dramatically decline. 700. In terms of pricing, it is important that patents are not issued
for old and obvious ideas and that the patent term is not inappropriately extended, so that
generic manufacturers can make medicines available at lower prices. 701. It is necessary to
look at the whole picture in order to improve the situation. A narrow focus on patent rights as
ostensibly obstructing the availability of reasonably priced medicines would distort a complex
and multifaceted picture and would leave out many factors that are fundamental in addressing
pricing and access to medicines issues. 702. The experience of the United States shows how
patent and pharmaceutical data protection stimulate an environment that promotes innovation,
R&D, job creation, and the creation of new life-saving products. In turn, this environment
maintains and promotes a strong generic pharmaceutical industry, which accounts for over 90%
of all prescriptions filled in the US. 703. Finally, with respect to the proposal to keep this
agenda item open, we request that the Council follow the agreed rules of procedure regarding
how items are added to the agenda.
704. We would like to thank all delegations that took the floor. Just a short reflection on this
debate. We thank especially the European Union delegation for having intervened and having
raised important points. 705. I would like to point out that this particular item does not deal
with competition policy as such. It deals with price transparency and so is different in emphasis.
I believe that in respect of the UN High Level Panel Report we disagree that the panel’s
mandate was narrowly focused on the issues that both the European Union and the US point
out. We note that some of the EU member States have taken different views on the issue
including in the World Health Organization related to transparency of medicine prices. 706. We
would also like to address the issue of competition. The paper does not deal with competition
per se. We would like to point out that the TRIPS Agreement is replete with references to
competition. This specific Division has competition in its title. So, essentially, I think that as
Members of the WTO we are competent to talk about competition. This is not to say that
competition is the only issue on the table. We also thank some of the interventions which
focused on the fact that access to medicines is complicated by various factors. I think we could
agree. Anyone who reads the Trilateral Study which was issued fully understands that it is a
complex landscape. The only purpose of putting this item on the agenda was essentially to
focus attention on high medicine prices, and to also highlight the fact that transparency may be
one of the main issues that we could use to look at this particular issue. 707. South Africa has
been proactive in ensuring that when it comes to the pricing of medicines, all the right policy
and regulatory frameworks are in place, including a single price existence which is composed of
a basket of various inputs based on purchasing parity of consumers, which is revised from time
to time when authorizations are given for medicine as such. We also would like to touch on one
of the points raised by the EU in respect of the WHO Essential Medicines List. Many of the
medicines on the list are off-patent as correctly indicated. Over the course of time also patented
medicines would be added to that list. These medicines remain quite expensive and so one of
the issues is that given the fact that these medicines remain expensive they do put pressure on
budgets that countries have for health purposes. 708. We also would like to thank Switzerland
for their intervention. We believe that prices necessarily imply that the patent exists, but
pricing is also relevant in how companies essentially make a decision as to what level of pricing
to introduce for that particular product or technology. As we indicate in our paper there are
other factors which need to be included in this pricing decision including the fact that some of
the research into medicine and high technology is from public funding, and as a result these
inputs must be reflected and essentially the savings or support must be passed on in how final
pricing methodologies are reached. I also recall the intervention of the United States which
indicated that where public money is invested by the United States Government into the
development of a product, the government usually insists on some government use license.
These are all things that we have to take into account. I think this is a useful opportunity for us
to reflect on the factors that affect access to medicines, one of them being the pricing. 709.
We also want to emphasize, as we have throughout this discussion on IP and the public
interest, that there is no one magic bullet. We have to ensure that the system works overall. All
of us have to do certain things including us developing countries getting our regulatory systems
to work, ensuring that we have the right mechanism to invoke flexibilities. We emphasise this
fact over and over again, and essentially also to ensure that the right balance is struck between
private and public interests as maybe the case when it comes to patents. So from that
perspective, I would like to thank delegations for the positive constructive interventions that we
heard in this regard.
710. The World Health Organization carefully reviewed the communication from South Africa
contained in document IP/C/W/659 on Intellectual Property and The Public Interest: R&D Costs
and Pricing of Medicines and Health Technologies, and in order to contribute to the debate of
the TRIPS Council in relation to this topic we would like to share recent related information and
activities from WHO. 711. During the last World Health Assembly in May 2019, WHO
members, "Seriously concerned about high prices for some health products, and inequitable
access to such products within and among Members, as well as the financial hardship
associated with high prices which impede progress towards achieving universal health
coverage", approved the so-called "Transparency Resolution", WHA72.8, co-sponsored jointly
by more than 20 developed and developing countries (including South Africa), on improving the
transparency of markets for medicines, vaccines, and other health products. The Resolution
recognizes "that the type of information publicly available on data across the value chain of
health products, including prices effectively paid by different actors and costs, vary among
Members and that the availability of comparable price information may facilitate efforts towards
affordable equitable access to health products". The Transparency Resolution urges members,
inter alia, to share information on net prices of health products as well as on costs from human
subject clinical trials; to facilitate improved public reporting of patent status information and the
marketing approval status of health products; and to improve national capacities, including
through international cooperation and open and collaborative R&D and production of health
products in particular in LMICs. 712. The WHO Secretariat will continue to support members in
collecting and analysing information on economic data across the value chain for health
products and data for policy development towards achieving universal health coverage and
SDGs. We will continue supporting efforts to determine the patent status of health products and
promote publicly available user-friendly patent status databases for public health actors and
procurement agencies. In the context of WHO's work on the Global Strategy and Plan of Action
on Public Health, Innovation and Intellectual Property, the current week we launched a
questionnaire addressed to members, which requires an intersectoral response, in particular
from national public health authorities and patent offices, to collect information to facilitate
implementation of the prioritized recommendations included in the global strategy. In order to
provide information on and an opportunity to ask questions and/or request further clarifications
on the completion of the questionnaire, the WHO Secretariat is inviting member State missions
covering health and intellectual property to an information session at WHO headquarters on
Tuesday, 12 November 2019.
713. I would like to thank South Africa and WHO for what they have said and also, I would
like to thank other delegates for the points they have raised. 714. When it comes to
transparency of the cost of medicines members of the European Union and the EU would agree
that we have to provide guaranties and we have to work together so we can boost transparency
in the marketplace. But the actual cost of producing medicines is relatively low or basically zero
in some cases. 715. As was said by colleagues of WHO, other factors have to be borne in mind
such as research and development: these costs are the highest and the most burdensome for
the pharmaceutical industry. 716. If we look at the procedure for bringing to market, clinical
and pre-clinical tests can take years. Public funding differs between EU Members and differs
around the world. Everyone knows that such help, subsidies which vary, are quite often part of
the pricing. 717. I would like to add that the communication which was shared by South Africa
is very interesting but is something that we also raised during the panel discussion at the UN.
718. A patent gives you a monopoly, gives you an operating monopoly, there is no doubt of
that, and a monopoly is allocated to all medicines of the same company. There are medicines,
there is development, there is research but out of that research only very few medicines get to
market and that costs money. Therefore, there is a transparency cost here because
pharmaceutical companies are in a very competitive market and must have return on
investment. We cannot leave aside those facts. Those are market facts. 719. We do not think
in the EU that we confuse competition policy with this. In the EU, within a single market,
competition in the pharmaceutical sector is treated in the same way as for any other sector. We
recognize the actual cost of the medicine is something which is very delicate. I did not want you
to be confused and let South Africa's communication say what it does not. 720. No statements
were made under this agenda item.

PROMOTING PUBLIC HEALTH THROUGH COMPETITION
LAW AND POLICY
525. The communication circulated in document IP/C/W/649 continues the ad hoc item on
"Intellectual Property and the Public Interest: Promoting Public Health Through Competition Law
and Policy" that was introduced by the co-sponsors in documents IP/C/643 and Add.1 of 24
May and 29 May 2018 respectively. 526. IP protection per se cannot be presumed to confer
market power or to indicate anticompetitive behaviour. IPR holders are, for this reason, as a
general rule, not prevented from exercising their exclusive rights. Different approaches are
taken by various jurisdictions regarding the interface of competition law and policy and IP. A
recent WTO staff working paper found that despite different levels of development,
constitutional systems and/or economic structures and industrial profiles in jurisdictions
surveyed displayed a pervasive interest in the interface between competition law and policy and
IP. All the jurisdictions surveyed in this study have rudimentary rules that have a bearing on
potential anti-competitive abuses of IPRs. It is also apparent that clearer competition policy
treatment of IPRs has evolved over time through either iterative processes or evolving practice
of competition authorities. This evolution is informed by jurisdictional cross-fertilization and
peer learning as evidenced by greater interest in and concerns with ensuring an appropriate
balance between IP and competition law and policy in these jurisdictions. This development
underscores the need for further debate and analysis since competition law and policy is no
longer the preoccupation of only a few jurisdictions. 527. During the June 2018 TRIPS Council
session, the cosponsors demonstrated that there are various pro-competitive provisions in the
TRIPS Agreement, including Article 6, Article 8.1, Article 31(k) and Article 40. There is no doubt
that these provisions leave WTO Members broad policy space to apply competition law in
respect of acts related to the acquisition or exercise of IP rights. As a consequence of
accommodating the variety of potential competition approaches, remedies available to address
anti-competitive behaviour may permit a broader range of remedial action than some other
public health-related flexibilities associated solely with patents. Competition policy has an
important role to play in ensuring access to medical technology and fostering innovation in the
pharmaceutical sector. WTO Members have absolute policy space under international law to
design their national competition laws in accordance with their domestic interests and needs
and the level of their development. 528. The use of competition law is not without difficulties,
since many developing countries may not have the capacity to administer or enforce such a
system. Since a substantial body of precedent exists, the sponsor of this document wishes to
demonstrate that many WTO Members already use competition law to address various anti-
competitive practices that affect access to medicines and medical technologies. Practices that
have been identified as detrimental include, but are not limited to the following instances: (i)
abuses of IPRs due to a refusal to deal with or imposition of overly restrictive conditions in
medical technology licensing; (ii) preventing generic competition through anti-competitive
patent settlement agreements; (iii) mergers between pharmaceutical companies that lead to
undesirable concentration of research and development and IPRs; (iv) cartel agreements
between pharmaceutical companies, including between manufacturers of generics; (v) anti-
competitive behaviour in the medical retail and other related sectors; and (vi) bid rigging in
public procurement. In this respect, not all jurisdictions follow the same approach, for instance,
refusal to license may amount to an abuse of dominance in some jurisdictions while others
consider this within the rights of IPR holders. 529. The "objectives" and "principles" enshrined
in Articles 7 and 8 of the TRIPS Agreement form central elements of the interpretation of the
TRIPS Agreement, especially with regard to the relevant provisions that recognize flexibilities to
legislate at the national level. In the WTO case of Canada – Patent Protection for
Pharmaceutical Products, the panel noted that "the exact scope of Article 30's authority will
depend on the specific meaning given to its limiting conditions." To this end, the goals
enumerated in Articles 7 and 8.1 are relevant when doing so. 530. The Panel in Australia –
Tobacco Plain Packaging referred to the report in CanadaPatent Protection for Pharmaceutical
Products regarding the interpretation of the terms of Article 30 of the TRIPS Agreement in light
of its object and purposes. It noted that paragraph 5 of the Doha Declaration is formulated in
general terms, thereby inviting the interpreter of the TRIPS Agreement to read "each provision
of the TRIPS Agreement" in light of the object and purpose of the Agreement, as expressed in
particular in its objectives and principles. Fundamentally, the panel concludes that paragraph 5
of the Doha Declaration constitutes a subsequent agreement of WTO Members within the
meaning of Article 31(3)(a) of the Vienna Convention on the Law of Treaties. This finding may
have important consequences for how flexibilities in the TRIPS Agreement are interpreted.
531. Competition law and policy remains an important topic and is subject to much
multilateral focus and discussion. The United Nations Conference on Trade and Development
(UNCTAD) produces seminal work on this subject-matter and provides technical assistance in
order to improve worldwide cooperation on competition policy matters. Each year,
an Intergovernmental Group of Experts (IGE) on Competition Law and Policy meets to discuss
ways of and enhancing convergence through dialogue. UNCTAD produces a list of competition
laws and annotated commentary contained in the Handbook on Competition Laws (Volume II)
(UNCTAD/DITC/CLP/2009/2). It also has a Model Law on Competition which is available in all
the UN languages. 532. The World Intellectual Property Organisation (WIPO) has actively
discussed the issue of IP and competition. At its thirteenth session (3–5 September 2018), the
WIPO Advisory Committee on Enforcement discussed, inter alia, the interface between IP
enforcement and competition law. Brazil and Peru presented case studies of competition on
administrative approaches to address the interplay of IP enforcement and competition law.
Through concrete examples, the contributors discussed the limitations of unfair competition
laws in relation to the exercise of IP rights as well as interventions of competition rules in cases
where the IP system was abused to prevent competitors from entering or remaining in a
market. 533. The sponsor urges Members to once again share their national experiences and
examples of how competition law is used to achieve public health and related national
objectives. Debate and information exchange could serve to enhance the understanding of
Members of various approaches to the use of competition law and policy to prevent or deter
practices such as: collusive pricing or the use of abusive clauses in licensing agreement that
unreasonably restrict access to new technology, and the use of measures that prevent the entry
of generic companies and result in higher prices for medicines. Capacity building and technical
assistance remain the most important means to enable WTO Members to increase their capacity
to administer and implement competition law regimes. Guiding Questions 534. The questions
are designed to build on previous questions circulated in document IP/C/W/643. Some
delegations indicated that they may revert to some of the questions that were posed during the
last TRIPS Council session. Bearing this in mind, delegations are invited to share their
experiences of using competition law regimes to address anti-competitive practices that affect
access to medicines and medical technologies or to share challenges that they face in the
enforcement of competition law issues that affect access to medicines or medical technologies.
(1) What types of behaviours do WTO Members consider abuses of intellectual property rights
in the pharmaceutical and medical sectors? Has there been any evolution in the approaches
that WTO Members take to assess such types of behaviours? (2) What examples of best
practice can Members identify on the subject of the control and remedies for excessive pricing?
Are there context-specific methodologies employed by Members for determining if prices are
excessive, and the mechanisms to remedy and control pricing abuse? (3) What examples of
best practice can be identified through national competition laws and practices? Are there
certain common trends that can be identified across various jurisdictions? (4) To what extent
can technical assistance and capacity building contribute to the delivery of more effective
policies by WTO Members in the field of competition law to address the abuse of intellectual
property rights?
535. I would like to thank South Africa for circulating document IP/C/W/649. The
communication builds on documents IP/C/W/630 and IP/C/W/643, with the goal of expanding
the discussions on the complex interplay between intellectual property and public interest. The
debate on the relation between intellectual property and competition lies at the heart of the IP
system and is certainly of interest to this Council. This is an issue that has been attracting
increased attention in international forums, as evidenced by the discussions held in September
at the WIPO Advisory Committee on Enforcement. 536. Intellectual property and antitrust law
have common objectives: to stimulate economic development, promote innovation and foster
competition. However, these two disciplines deploy different methods to achieve these same
objectives, which, at first, may seem contradictory. Antitrust law stimulates economic
development by promoting competition and preventing abuse of dominance and exclusionary
practices, whereas intellectual property stimulates innovation by creating exclusive rights,
which prevent competition and use of immaterial goods by unauthorized third parties. 537.
For a long time, the two fields were considered incompatible. However, the debate has evolved
to consider that antitrust and intellectual property are complementary, even though there may
be a tension between them. A dynamic analysis of the competition process shows that
intellectual property is not by itself harmful to competition. Rather, exclusive rights granted
under IP laws promotes competition between companies, which are compelled to invest in
research and development in order to innovate and keep up with the market. 538. Therefore,
antitrust and intellectual property should work together towards their common goals. This is
particularly true in the context of the new economy, in which innovation, knowledge and
intellectual property rights are a central part of the competition dynamics. It does not mean,
however, that the two fields will remain without conflicts. In the concrete economic reality,
there is growing attention from competition authorities to the relationship between the two
areas, because there is also an increasing possibility of abuse of IP rights in innovative and
digital markets. 539. At the Council's last meetings, we presented a case of sham litigation
involving a drug used against breast cancer. Our competition authority, whose acronym in
Portuguese is CADE, imposed a fine of BRL 36.6 million or USD 10 million on the defendants.
540. I would like now to mention two other cases decided by CADE, the first one regarding the
use of auto parts industrial design rights in the aftermarket and the second involving a merger
filing. 541. The "ANFAPE Case", as it came to be known, was filed by the National Association
of Independent Manufacturers of Automobile Parts against original equipment manufacturers.
The plaintiff alleged that the defendants had abused their dominant position and their IP rights
over automobile spare parts by exercising their industrial design rights in the aftermarket, thus
effectively monopolizing the aftermarket. Certain original manufacturers filed legal claims in the
judiciary to safeguard their intellectual property and preclude the independent manufacturers
from commercializing auto parts without properly licensing the industrial design. ANFAPE
argued that those injunctions intended to prevent independent manufacturers from effectively
competing in the aftermarket and argued that the industrial design was restricted to the
primary market. The decision by CADE held that the Brazilian Industrial Property Law did not
restrict the enforcement of the industrial design protection in the aftermarket. The registrations
were obtained lawfully and the means used to enforce the IP rights were reasonable, so there
was no trace of sham litigation. For this reason, no abuse in the exercise of the IP rights was
identified and the case was closed. This understanding reveals CADE's balanced position when
confronting intellectual property matters, achieved after careful consideration of the issues.
542. In the merger filing between Bayer and Monsanto, CADE had the opportunity to address
intellectual property rights issues as they pertain to the sale of goods and tangible assets. The
merger involved the seeds and agricultural defensives markets. The analysis undertaken by
CADE highlighted the importance of IP rights for the companies involved, who heavily rely on
patents and plant varieties protection. Bayer and Monsanto are active in all those areas, which
gave rise to competitive concerns related to increased entry barriers and market concentration
deriving from IP rights. CADE conditioned approval of the merger on remedies that addressed
the competitive concerns caused by the concentration of IP rights. For the merger to go
through, the companies were required to license certain patented seed traits and protected
plant varieties. This merger analysis shows that competition authorities can effectively and
timely intervene to prevent the concentration of economic power generated by IP rights, as well
as potential abuses of dominant position by IP rights holders. 543. Policy coherence between
the IP system and competition must be strengthened in order to promote to the full extent
innovation and access to technologies. Article 8.2 of the TRIPS Agreement provides flexibilities
for governments to adopt competition law measures to prevent abuse of intellectual property
rights, including IP rights related to the life sciences. 544. Abuses of intellectual property
rights, such as reverse payment agreements and anticompetitive licensing practices, may
favour undue extension of the market power granted by a patent. These practices impact both
traditional and innovative companies, stifling competition and harming consumers. One way to
deal with these practices is through the improvement of the patent system, for example by
carefully designing patentability requirements. While some changes may indeed decrease or
eliminate abuses, they should be implemented cautiously to avoid unforeseen outcomes. 545.
Competition law, on the other hand, may be useful in situations where changes to IP policies
are ineffective in dealing with these types of practices. In the pharmaceutical industry,
competition policy benefits consumers in the form of increased access to affordable medicines
by detecting, halting and correcting anti-competitive practices, without harming the dynamic
competition effect granted by IP rights. Furthermore, countries should be able to retain freedom
to utilize to the full flexibilities available in the TRIPS Agreement to ensure access to medicines.
It is also important that technical assistance and capacity building contribute to the delivery of
more effective policies on potentially abusive practices in the pharmaceutical sector in support
of access to medicines. 546. The relationship between antitrust and intellectual property is
complex and there are still many issues to be addressed by authorities. As new competitive
strategies related to new businesses arise, there will be a growing number of antitrust cases
involving IP rights. The core issue is to determine the optimal level of competition law
intervention in the field of intellectual property rights. We must fine tune enforcement work to
ensure competition and intellectual property laws each play their complementary role in
encouraging innovation and enhancing consumer welfare.
547. My delegation would like to support the statements made by South Africa and Brazil.
548. In India, both specific IP legislations and the Competition Act deal with anticompetitive
activities, abuse of dominance and other market unfriendly activities when it comes to abuse of
intellectual property rights. Therefore, complaining parties often move to either the Competition
Commission of India (CCI) the adjudicating authority under the Competition Act, or High Courts
(under different IP legislations) for redressal. In 2015, questions were raised regarding the
selfsufficiency of IP legislation where complaining parties alleged that the IP legislation is
sufficient to deal with anticompetitive concerns and does not need any interventions from the
Competition Act. This dispute is settled for now as the Hon'ble High Court of Delhi has
meticulously analysed both IP provisions and the Competition Act and has come to the
conclusion that the objectives, procedure and nature of remedies of both the legislations differ
to good extent. Therefore, both the laws can determine the manner in which the
anticompetitive issues are to be resolved. 549. In recent years there have been several
instances, where courts have engaged on the issue of anticompetitive practices in the context
of Standard Essential Patents and in some other industries. We have, however, not had any
authoritative decisions on an issue that interacts directly with competition law and public
health. We expect that the jurisprudence on competition law issues in the public health will also
evolve overtime to address the concern more comprehensively.
550. We would like to thank South Africa, Brazil and India for submitting this proposal. We
share the same concern and would like to co-sponsor this proposal. 551. During the second
meeting of the TRIPS Council in June this year, Members have been actively involved in this
issue. Although divergences still exist, we believe a full discussion will help Members to get a
better understanding and promote deepening of this issue. 552. First, we believe that
intellectual property protection should not exclude the application of competition law. In the
TRIPS Agreement, Articles 6, 8.1, 31(k) and 40 are closely related to competition. As part of
the TRIPS Agreement, most of these provisions have been transformed into Members' domestic
laws or regulations that must be abided by. In addition, judicial cases related to intellectual
property and competition have been found worldwide. These all clearly indicate that intellectual
property protection is not boundless, it should be constrained by the application of competition
laws. 553. Second, we believe that intellectual property protection and competition are not in
conflict. They share the goal of improving economic efficiency, safeguarding consumer interests
and protecting public interests while promoting competition and innovation. According to Article
7 of the TRIPS Agreement "[t]he protection and enforcement of intellectual property rights
should contribute to the promotion of technological innovation and to the transfer and
dissemination of technology, to the mutual advantage of producers and users of technological
knowledge and in a manner conducive to social and economic welfare and to a balance of rights
and obligations." It clearly indicates that the purpose of intellectual property protection is to
achieve a balance between the creators and users of IPR, rather than to form a monopoly. The
legislative purposes of each member's competition law are basically the same, that is, to
protect fair competition, to stimulate innovation, and to safeguard the legitimate rights of
operators and consumers. It is clear that there is a common goal between intellectual property
protection and competition. In fact, China's AntiMonopoly Law and the regulation on the
Prohibition of Conducting, Eliminating or Restricting Competition by Abusing Intellectual
Property Rights have also followed the above principles. 554. Third, we believe that the TRIPS
Council is the appropriate forum to discuss intellectual property and competition issue.
Currently intellectual property and competition issue have become an important subject in
WIPO and FTAs. With clear competition provisions in the TRIPS Agreement, as an important
forum for intellectual property, the TRIPS Council could not avoid this issue. 555. China
believes the discussion on intellectual property and public interest should be open and inclusive.
Members are encouraged to exchange views and experiences on how to make better use of
flexibility provisions of TRIPS Agreement, including the competition law and policy.
556. Indonesia would like to thank South Africa for the proposal outline in document
IP/C/W/649. 557. As the world's fourth most populous country, Indonesia places public health
as an important part of its national development strategy and policies, that include access to
medicines and medical technologies as well as the development of its pharmaceutical industry.
558. We understand that in the fields of medicines and medical technologies development, IP
plays an important role to stimulate Research and Development. However, we need to always
remind ourselves, that competition, fair working market-competition process, also stimulates
R&D and the development of pharmaceutical industry. Competition policy and competition
authorities are therefore important in making sure that markets are working well, and that no
industry has to leave a market do to abuses of market rights, such as monopoly rights. 559.
In Indonesia, in addition to IP rules and regulations, we believe that regulating antimonopoly
and unfair practices in the pharmaceutical sector is paramount in achieving our national
development objectives, especially in the field of public health. 560. Indonesia enacted the
Law No. 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business
Competition which contains specific and comprehensive rules governing competition between
business actors. Article 3 of the Law states that its basic objective is to safeguard the public
interest and improve the efficiency of the national economy to improve the welfare of the
public. 561. To that effect, Indonesia has established an independent agency to enforce the
Law called Commission for the Supervision of Business as Komisi Pengawas Persaingan Usaha
(KPPU). 562. In this regard, we would like to share a case handled by KPPU regarding high
price of medicine caused by monopoly practices. 563. In Indonesia, the structure of
pharmaceutical market is competitive. It can be seen from the healthy amount of national
players or companies in the market, such as Kalbe Farma, Sanbe, Soho, Dexa Medica, Tempo
Scan Pacific and Pharos Indonesia. However, market practices are distorted by pharmaceutical
agents and doctors that undermine competition mechanism. A doctor has a dominant role in
determining the choice of drugs, both to be obtained by patients and those available at
hospitals. It is suspected that there is a transactional deal between doctors and pharmaceutical
companies that gives incentives to doctors in prescribing particular medicines. 564. Acting
upon that, KPPU issued recommendations to the Ministry of Health for:  Improvement of
pharmacist's role, "Pharmacists must inform about patent and generic drugs that have the
same active substance to every patient";  The obligation to write prescription of the generic
name and drug availability at Pharmaceutical Installations of Private Hospitals; and 
Enforcement of Doctor's Code of Ethics. 565. Improving pharmacist's role helps strengthening
their role to minimise doctor's role in prescribing certain brand names and in eliminating
transactional deals between doctors and pharmaceutical companies. 566. KPPU's Policy
recommendations related to the strengthening of pharmacist's role were well accepted and
actualised by the Ministry of Health of the Republic of Indonesia with the stipulation and
issuance of Regulation of the Ministry of Health of the Republic of Indonesia No. 98 of 2015 on
Providing Information of the Highest Retail Price for Drugs, set out in Articles 8 and 9. 567.
Article 8 reads as follows:  Pharmacists at the pharmacy or hospital/clinic's pharmaceutical
installation must inform the Highest Retail Price for Drugs to patients or patients' family when
giving services related to doctor's prescriptions; and  In addition to providing information on
the Highest Retail Price for Drugs as stipulated in paragraph (1) Pharmacists must inform
patients or patients' family of other drugs, particularly generic drugs that contain the same
active substance as those prescribed that are available at the pharmacy or hospital/clinic
pharmaceutical installation. 568. Article 9 reads as follows:  Patients or patients' family have
the right to make choices of drugs based on the information conveyed by the Pharmacists as
referred to in Article 8. 569. The policy recommendation provided by KPPU is effective because
it is recognized by the Ministry of Health of the Republic of Indonesia through its regulation. It
has shown what competition law and policies could do to protect competitive process, by
honouring consumers' preferences with respect to the quality, price, and other attributes of
goods and services, in this case, of medicines. 570. In concluding, we would like to once again
highlight that stimulating the development of the pharmaceutical industry should take into
account the relationship between IP protection and competition law. 571. Finally, we look
forward to hearing other Members' comments and experiences on this subject matter.
Indonesia would also like to take the opportunity to once again thank South Africa as the
proponent of this agenda. Therefore, we support that this agenda item be maintained for the
next meeting of the TRIPS Council, especially with regard to discussions on IP issues and Public
Interest including the sharing of experiences regarding the utilization of TRIPS flexibilities by
Members.
572. South Africa has a proud history of robustly engaging with issues that concern the
intersection between intellectual property rights and public health. Indeed, the South African
Government's stance in the case between the Pharmaceutical Manufacturers Association versus
the President of South Africa (the late President Nelson Mandela) in 1998, was a key factor
leading to global dialogue around the potential negative impacts of intellectual property rights
on public health, culminating in the Doha Declaration on TRIPS and Public Health. 573. The
South African Competition Act, for example, is intended to "advance the social and economic
welfare of South Africans", "correct structural imbalances and past economic injustices" and
"reduce the uneven development, inequality and absolute poverty" which is so prevalent in
South Africa. The South African Competition Commission has not issued specific guidelines on
application of the Competition Act to IP. However, it has explained its general approach by
indicating that firms are not automatically exempt from the rules of the Competition Act as a
result of the rights granted in terms of laws like the intellectual property laws. It further
reiterated that firms cannot be automatically allowed to continue with a particular prohibited
practice as outlined in the Competition Act because that practice is allowed by another Act.
574. The Competition Act covers both horizontal and vertical modes of competition. Horizontal
anti-competitive activity refers to conduct among independent enterprises that are suppliers of
competitive (or potentially competitive) goods or services. Vertical anti-competitive activity
refers to the supply chain controlled by a producer, beginning with inputs to production, into
production, intermediate distribution and, ultimately, the retail sale of goods or services.
Instances of horizontal anti-competitive behaviour that are per se illegal in most jurisdictions
include pricefixing among competitors, output restraints and allocation of geographic territories.
Examples of vertical restraints that are per se illegal in many, but not all, jurisdictions are
resale price maintenance (or fixing the minimum price at which retailers may sell) and
'exclusive grantback' requirements in patent licences. 575. There are some significant risks of
anti-competitive conduct in pharmaceuticals markets that are fairly widespread and deserve
close attention from competition authorities. These include bid manipulation in procurement of
health technologies, whereby a group of potential competitors may agree not to submit bids
below a set price and to allocate the 'lowest set price' bid to a particular firm. Such activity may
also involve inappropriate payments to government officials who might otherwise report the
anti-competitive practice. Anti-competitive conduct by patent-owning enterprises may include
requiring a distributor or retailer of health technologies to purchase a complete line of products
as a condition of purchasing a particular product or products (i.e. a tying arrangement).
Perhaps the most widely discussed form of anti-competitive conduct involving patent owners
involves 'buying out' generic challenges to patents that might otherwise result in generic
products entering the market at an early date. 576. Since 2001 many generic manufactures
secured voluntary licenses to produce medicines in South Africa, including over 20 licenses for
medicines in the antiretroviral category. The increase in voluntary licensing agreements for ARV
drugs was often a result of civil society pressure, and the use of competition law. For example,
in 2002 activist initiatives of the Anti-Retroviral Therapy (ART) treatment campaign, resulted in
some multinational companies found guilty of excessive pricing by the South African
Competition Commission. 577. South Africa's Competition Commission investigated several
cases involving the interface of IP and competition concerns, particularly in cases where
complaints of excessive pricing and refusals to license competitors were alleged. The landmark
case in South Africa arose out of a September 2002 complaint by Hazel Tau and the South
Africa Treatment Action Campaign (TAC) and others against GlaxoSmithKline (GSK) and
Boehringer Ingelheim (BI), suppliers of the firstline antiretroviral medicines zidovudine and
lamivudine. In the Hazel Tau case, the prices for antiretroviral medicines from the patent
holders were, at the time, from three to ten times higher than the least expensive generic
version of the same medicines. 578. There had been requests for licenses by generic
pharmaceutical producer Cipla and from the medical services humanitarian organisation,
Médecins Sans Frontières (MSF, or Doctors without Borders). Respondents admitted in
documents filed with the South African Competition Commission a general policy to refuse
licences for the generic supply of their products. It also admitted that they prices were
unaffordable by at least 80% of all South Africans. The case resulted in an order of the
Commission finding that high prices and a refusal to license Indian generic manufacturers
constituted three abuses of dominance under Section 8 of the Competition Act: (a) excessive
pricing; (b) refusing to give a competitor access to an essential facility, when it is economically
feasible to do so; and (c) engaging in exclusionary conduct if the anti-competitive effect of that
act outweighs its technological, efficiency or other pro-competitive gains. In reference to
remedy, the Commission stated that it would "request the Tribunal to make an order
authorising any person to exploit the patents to market generic versions of the respondents'
patented medicines or fixed dose combinations that require these patents, in return for the
payment of a reasonable royalty". 579. Before the referral and prosecution of the case, GSK
and BI negotiated a settlement agreement in terms of which they admitted no liability. GSK and
BI agreed to:  Grant licences to generic manufacturers;  Permit the licensees to export the
relevant ARV medicines to sub-Saharan African countries;  Where the licensee did not have
manufacturing capability in South Africa, permit the importation of the ARV medicines for
distribution in South Africa only, provided all the regulatory approvals were obtained;  Permit
licensees to combine the relevant ARV's with other ARV medicines; and  Not require royalties
in excess of 5% of the net sales of the relevant ARV's. 580. In 2007, the Commission received
another complaint relating to an HIV/AIDS medicine from the TAC alleging that Merck (and its
South African subsidiary, MSD) had abused their dominant positions in the markets for the ARV
medicine efavirenz (EFV) by refusing to license other firms to import and/or manufacture
generic versions of this medicine on reasonable and non-discriminatory terms. MSD held a
twenty-year patent on efavirenz that expired in 2013. The TAC case resulted directly in MSD
and Merck reaching agreement with multiple licensees on reasonable terms to bring a wide
range of generic products containing EFV (an essential drug used as part of first-line ARV
treatment in South Africa) to market. While the Hazel Tau case was settled only after the
Commission had taken a decision to refer the matter to the Tribunal for adjudication, the TAC
case was resolved before the Commission completed its investigation on the matter. 581. In
February 2009, Aspen notified the Commission of its intention to acquire the Lanoxin brand
from GSK South Africa. In its investigation, the Commission noted that GSK had voluntarily
licensed three patented antiretroviral medicines, including Zidovudine, where the parties (GSK
and Aspen) held a combined market share of 95.7% The Commission focused predominantly on
the horizontal aspects of the merger since GSK, to some degree also competed with its generic
licensees. To avoid the reversal of gains obtained by licensing of patented products in the Hazel
Tau case (above), the Commission sought conditions for extension of the license of
antiretroviral medicines to include the Abacavir product. Abacavir was a GSK patented product
which was used primarily for the treatment of children suffering from HIV. At the time of the
merger, GSK was the only supplier of this product in South Africa. The Commission sought and
obtained as a condition for the approval of the merger an undertaking by GSK to not only
license the production and/or importation of this product by Aspen but to also extend the
license to other generic companies. 582. The Commission announced in April 2018 its
intention to investigate local pharmaceutical company Aspen Pharmacare for alleged "abuse of
dominance". Reports in April this year indicated that the Spanish Markets and Competition
Commission initiated anti-trust proceedings against Aspen. In October 2016, Aspen was fined
over EUR 5 million by the Italian Competition Authority for having abused its dominant position
by increasing prices of four of its anti-cancer medicines by up to 1,500%. The Commission also
announced in June 2018 that it would initiate an investigation against pharmaceutical company
Pfizer Inc. for "suspected excessive pricing of lung cancer medication". Furthermore, the
Competition Commission announced in July 2018 that it would investigate the price of cancer
medicines of three pharmaceutical companies. One of these companies is Roche Holdings AG,
which will be investigated for the excessive pricing of Trastuzumab. The investigation
specifically relates to "excessive pricing", "exclusionary conduct", and "price discrimination".
583. The Competition Commission has also finalized its Health Market Inquiry which looked at
how pharmaceuticals and related activities may be a cost driver in the private sector.
584. The United States notes the desire of some Members to introduce discussion of
competition law and policy before the TRIPS Council, and recalls the June 2018 intervention of
the United States on this subject matter. 585. The United States believes that the intellectual
property laws and the antitrust laws share the common purpose of promoting innovation and
enhancing consumer welfare, but also that intellectual property and competition are distinct
disciplines implemented and overseen by different administrative authorities. Given that
relatively few TRIPS Council delegates can be expected to have deep expertise both in
intellectual property and competition law and policy, the TRIPS Council is not the ideal venue to
hold the discussions proposed under this agenda item. 586. Work by non-experts could easily
lead to a misapplication of competition law in the context of intellectual property rights. 587.
In the words of a leading United States competition law enforcement official, "antitrust
enforcers should…strive to eliminate as much as possible the unnecessary uncertainties for
innovators and creators in their ability to exploit their intellectual property rights, as those
uncertainties can also reduce incentives for innovation." 588. I would also like to remind the
Council that the UN Secretary General's High-Level Panel on Access to Medicines Report
includes the following statement from one panellist: "without innovation, there will be no new
tools for public health needs, new pandemics, and AMR. There are already precious few
diagnostics, vaccines, and medicines that can address these menaces and limited sources to
support research into basic biology that underpins them. It would be unwise to set into motion
activities or policies that further choke innovation, placing large populations at risk and
contradicting the core principles under which the HLP was convened." 589. The United States
references but will not otherwise repeat its June 2018 intervention on this agenda item. We
continue to express our reservations regarding discussion of this subject matter in this forum.
of Japan would like to ask other Members to note that it might be better to take a more
also those of patent rights holders. 591. In this context, this delegation would also like to
point out that provisions such as those in Article 31(k) and Article 40 of the TRIPS Agreement,
rest on an intricate balance. Therefore, Japan believes that we should be cautious in discussing
this agenda item. And, these provisions should not be interpreted too broadly. From this
perspective, this delegation has concerns about document IP/C/W/649. In addition, it is
important to note that any measures taken under these provisions should be fully consistent
with the TRIPS Agreement, as is stipulated in Article 8 of the TRIPS Agreement.
592. As already stated at the last TRIPS Council, in general, we do not consider the TRIPS
Council the appropriate forum to discuss competition policy. There are other international fora,
such as the International Competition Network, where such international exchanges and
cooperation are taking place. 593. While the submission from South Africa seems to consider
the use of competition policy a TRIPS flexibility, the European Union would be cautious and
would emphasise the following: while the TRIPS Agreement is obviously compatible with the
application of competition policy measures, it clearly does not allow for "absolute policy space".
As provided for in Article 8.1 and 8.2, as well as in Article 40.2, these measures have to be
consistent with the provisions of the TRIPS Agreement and cannot be used as tools in avoiding
the obligations under the Agreement. 594. Generally, competition policy plays an important
role in controlling and sanctioning anticompetitive market behaviour in any sector, including the
pharmaceutical sector. 595. Concerning excessive pricing as a competition law infringement in
the pharmaceutical sector, there have been only very few decisions in the European Union,
specifically, by Denmark, Italy, and the United Kingdom. 596. At the European Union level,
the European Commission is currently conducting one investigation into unfair pricing of
medicines. That case concerns pricing practices by Aspen, a global pharmaceutical company
headquartered in South Africa, with several subsidiaries in the EEA. The investigation concerns
Aspen's pricing practices for niche medicines used for treating cancer. Aspen acquired these
medicines many years after their patent protection had expired and hence the investigation
concerns generic pharmaceutical products. The European Commission's investigation of Aspen's
pricing in the European Union markets with the exception of Italy is ongoing and therefore we
cannot comment it any further. 597. In a related case concerning the Italian market, the
Italian competition authority found that Aspen's pricing amounted to an abuse of dominance,
and ordered the company to set new fair prices for the medicines concerned. The Italian
authority applied a two-step test (referred to as the United Brands test). First, it examined
whether the difference between cost and price indicated excessive profit margins and, second,
whether that the price was unfair in relation to a number of factors. 598. Apart from the
investigation into unfair, or excessive pricing, the European Commission has sanctioned also
other measures. In 2005, the Commission found that AstraZeneca misled patent offices to
enjoy a patent extension (in the form of a Supplementary Protection Certificate) to which it was
legally not entitled. This finding was confirmed in a final judgment by the Court of Justice in
2012. In 2013 and 2014, the Commission issued three pay-for-delay decisions (Lundbeck,
Johnson&Johnson, Servier) against agreements which sought to extend exclusivity of originator
products by paying out would-be generic entrants, including for discontinuing litigation to
remove patent barriers. 599. The European Union Commission has not pursued any case
involving unreasonably high royalties for a technology transfer. Nor has it ordered an originator
company as the IP holder to grant a licence for its proprietary technology to remedy a
competition law infringement. 600. At the European Union level, the application of competition
policy has so far not been needed as a remedy against excessive pricing as a result of IPR
protection (i.e. a licence to generics to bring down the price) or to otherwise remedy patent
barriers to generic entry. 601. The above examples show that competition law enforcement in
the European Union is done on a casebycase basis. Where the Commission intervenes in cases
involving IPRs, it gives particular attention to preserving the balance between static competition
(short term price effects) and dynamic competition (long term innovation effects). 602. On the
international level, the European Union cooperates with other national authorities, including
from WTO Members, on competition policy and enforcement issues of mutual interest. Our main
objective has been to promote convergence of competition policy instruments and practices
across jurisdictions and to facilitate cooperation with competition authorities in other
jurisdictions in enforcement activities. 603. Cooperation with other competition authorities
takes place at two levels. First, the Commission discusses competition-related matters in
various international fora, such as the International Competition Network (ICN), where
excessive pricing was discussed during its annual conference in Portugal in 2017. ICN brings
together competition authorities from more than 100 jurisdictions which exchange experiences
and best practices in several meetings every year. Second, the Commission is also regularly
engaged in bilateral cooperation, including related to the pharmaceutical sector. The nature of
the cooperation activity varies between countries and can cover cooperation on specific
investigations, dialogue on competition policy issues as well as capacity building support. 604.
Therefore, we remain to be convinced about the need to discuss competition policy at the TRIPS
Council.
605. The World Health Organization (WHO) works under the premise that "Health is a human
right. No one should get sick or die just because they are poor, or because they cannot access
the services they need" (Director-General, Dr Tedros Adhanom Ghebreyesus). The Nations of
the world agreed on SDGs, in particular SDG 3 to "Ensure healthy lives and promote wellbeing
for all at all ages". WHO needs to work with all Members and other international organizations
to achieve this specific health goal, but health is also relevant for all the other SDGs and it lays
the foundation for long-term economic development. 606. Competition Law is one important
tool to promote innovation and access to health technologies. Anti-competitive behaviour in
relation to intellectual property could appear, for example, with life-cycle management practices
and defensive patenting. For example, the European Commission welcomed the Court of Justice
judgment in a case on abuse of dominant position to prevent or delay market entry of generic
competitors through misuse of the patent system and regulatory procedures. There are also
other cases in relation to overly restrictive conditions in medical technology licensing or
mergers between pharmaceutical companies that can lead to undesirable market concentration
and pay-for-delay agreements between originator and generic companies. More examples of
abuse of dominant position for driving out competitors are in China where NDRC fined two
pharmaceutical companies for abusive conducts, found the UK Competition Authority imposed a
fine on two pharmaceutical companies (originator and distributor) for abuse of a dominant
position and charging excessive and unfair prices for a medicine. Other cases in Indonesia,
Thailand or cases involving more than one country are reported by UNCTAD Commission on
Investment, Technology and Financial Issues and also a further case analysis was made by
UNDP in several publications on that topic. 607. Anti-competitive practices may lead to
barriers to innovation and access in the medical sector. It is essential therefore to utilize all
policy tools available to increase access to medicines, vaccines and other health technologies.
IP protection is not exempted from the application of competition law. Effective use of
competition policy could be in the best interests of patients and health systems. 608. WHO
with its transparency policy in terms of pricing of medicines is seeking to contribute to the
assessment of such anti-competitive practices. We are open to work in this field with Members
and other international organizations, including the WTO.
609. I would like to comment on two interventions that were made before by Members. 610.
The first one, was a comment made that IP and competition are distinctive disciplines and are
implemented by different agencies, thus they should not be discussed at the TRIPS Council. We
disagree with that point. We observe for instance that enforcement measures are implemented
by very different agencies than those responsible for trademarks and patent applications.
Enforcement measures for instance are implemented by customs which have very different
disciplines and very different stakeholders involved in comparison with patent offices. The same
could be said for copyright and patent, which are dealt by different agencies. The TRIPS Council
is mandated to discuss issues which are disciplined by the TRIPS Agreement. This involves
copyrights, transfer of technology, patent, enforcement and competition policy. 611. The
second point was a comment made that the International Competition Network already
discusses competition. We certainly recognize the very high-level work that is done by the
International Competition Network but it is an informal venue, as mentioned on their website,
and we do not think that this should preclude discussion at the TRIPS Council. There is an
established relation between IP and competition in academic literature and by national
agencies. So, we think this is an appropriate forum. We look forward to continuing this
discussion perhaps in another session of the Council.

LAW AND POLICY
362. On behalf of the co-sponsors in respect of IP/C/W/643 and Add.1, we are honoured once
again to introduce this very important ad hoc topic, which we have been able to sustain over
the last few TRIPS Council meetings. Today's discussion focuses on Intellectual Property and
the Public Interest: Promoting Public Health Through Competition Law and Policy. Members will
recall that when we first addressed the issue, we had done so through the introduction of the
High-Level Panel Report on Access to Medicines which investigated the relationship between
intellectual property, access to health technologies, incentives for research and development
and the opportunities to the strengthen governance accountability and transparency. In the
process, we have looked at various flexibilities that are imbedded in the TRIPS Agreement, I
will not go through all of it, the paper was circulated to Members (documents IP/C/W/643 and
IP/C/W/643/Add.1) but I want to concentrate for a few minutes on the purpose of today's
discussion, and that is competition law. 363. Competition law is one of the least-discussed
flexibilities within the WTO TRIPS Agreement. The fundamental objective of competition law is
to protect the integrity of competitive markets against abusive conduct and to protect
consumers from the effects of such conduct. Even though TRIPS sets minimum norms for
standards of IP protection that significantly limit Members' discretion on a large number of IP
rights issues, it is not the case with competition law. Members are free to design competition
laws in a way so as to take account of their domestic interest and needs, including their
respective levels of development, subject only to the natural limits defined by the territorial
limitations of such laws. 364. Various other provisions of the TRIPS Agreement are relevant to
competition law including Article 6, Article 31(k) and Article 40. As such, these provisions leave
broad discretion to Members in how they apply competition law in respect of the acquisition and
exercise of IP rights. Article 6 of the TRIPS Agreement authorizes Members to allow parallel
importation of health technologies, a major pro-competitive form of activity that can be used to
secure the lowest priced products available on international markets. Article 31(k) of the TRIPS
Agreement confirms the right of Members to use such licences as anti-competitive remedies.
The only condition required by Article 31(k) for the grant of this type of compulsory licence is
that anti-competitive practice needs to have been determined through a judicial or
administrative process. 365. The possible use of compulsory licences to deal with anti-
competitive practices as explicitly recognized in Article 31(k) of the TRIPS Agreement is of
particular importance to protect public health in cases, for instance, of excessive pricing of
health technologies or refusal to grant licences on reasonable commercial terms. The sponsors
of this communication urge Members to share their national experiences and examples of how
competition law is used to achieve public health and related national objectives. 366. The
debate and information exchange could serve to enhance understanding of Members' various
approaches to the use of competition law and policy to prevent or deter practices such as
collusive pricing or the use of abusive clauses in licensing agreements that unreasonably
restrict access to new technology, prevent the entry of generic companies and may result in
higher prices for medicines. The issue of abuse of IP rights remains relevant in the context of
the application of national and regional law regimes. We have framed the debate by posing
certain questions, such as: what grounds are available in national laws to pursue competition
law and policy to achieve our public health outcomes; what are the difficulties faced by WTO
Members when using competition policy to prevent or deter abusive practices; whether
unreasonably high royalties may deter the transfer of technology; what policies of Members
established to deal with the technology pricing and other aspects of transfer of technology
transactions; and whether or not compulsory licences have been used by competition
authorities in some countries to restore competition in cases involving the exercise of IP rights.
367. I will continue in my capacity as the representative of South Africa, and share some
experiences from the viewpoint of South Africa. 368. South Africa has a proud history of
robustly engaging with issues that concern the intersection between IPRs and public health.
Indeed, the South African government's stance in the case between the Pharmaceutical
Manufacturers Association versus the President of South Africa (the late President Nelson
Mandela) in 1998, was a key factor leading to global dialogue around the potential negative
impacts of intellectual property rights on public health, culminating in the Doha Declaration on
TRIPS and Public Health. 369. South African law reflects the principles embodied in the TRIPS
Agreement and the Doha Declaration in particular with regards to the measures that Members
may implement in domestic legislation to protect the public against the abuse of patent rights
and monopolies. However, the practical implementation of the provisions that give effect to the
TRIPS Agreement, have not been effective in protecting the public against patent monopolies
and ensuring that the public has access to essential medicines, at affordable prices. 370.
Competition policy in South Africa, as reflected in the preamble to the Competition Act 89 of
1998 (Competition Act) seeks to address, amongst other things, inadequate restraints against
anticompetitive trade practices and unjust restrictions on full and free participation in the
economy by all South Africans. It thus aims to open up the economy to greater ownership by a
larger number of South Africans in order to attain an efficient, competitive, economic
environment, one that balances the interests of workers, owners and consumers, and focuses
on the development of all South Africans. This is accomplished by preventing cartels aimed at
price-fixing, limiting output or otherwise restricting competition, by preventing firms from
gaining market power in unjustified ways, including through anticompetitive mergers, thus
raising barriers to market entry by new firms. Competition policy is also concerned with
preventing firms with market power from abusing their dominant positions, including by
charging excessive prices to the detriment of consumers. The role of competition authorities is
therefore to ensure markets function efficiently and to the benefit of both consumers and
producers. 371. South Africa has a well-developed competition regime based on best
international practice. Even though our economic system is mainly based on free market
principles, competition is regulated by statutory-created competition authorities, namely the
Competition Commission, the Competition Tribunal and the Competition Appeal Court. The
Competition Act became effective on 1 September 1999. It fundamentally transformed South
Africa's competition legislation and substantially strengthened the powers of the competition
authorities. Unlike some foreign jurisdictions, South African competition law focuses not only on
pure competition law matters, but also addresses pertinent public interest and social objectives.
372. Both competition law and patent law together can be used to implement competition-
related TRIPS flexibilities and advance consumer welfare. Chapter 2 of the Competition Act
covers practices such as horizontal restrictions, vertical restrictions, and abuse of dominance,
and various licensing provisions in the Patents Act. Horizontal agreements such as price fixing,
market division and collusive tendering are prohibited per se, without requiring a showing of
actual harmful effect or permitting a showing of net efficiency. 373. The Competition Act also
prohibits price discrimination: in relation to prices broadly, discounts, rebates, allowances,
credits, services, or payment terms, for products or services. Again, market power is a
prerequisite – only a dominant firm acting as a seller can be liable. Liability is subject in all
cases to a competitive effects test: is the discrimination likely to have the effect of substantially
preventing or lessening competition? 374. In line with the general approach to South African
competition law and policy, it is accepted that certain anti-competitive conduct may be required
to achieve broader industrial and macro-economic goals which is set out in Section 10(3)(b) of
the Competition Act. The Competition Act therefore provides a mechanism whereby a party or
parties can apply for an exemption from prosecution in certain cases. What is inferred from
section 10(4) is that the legislator intended for the current Competition Act to extend to the
exercise of intellectual property rights and that an exemption is required for certain intellectual
property rights in order to achieve these broad industrial goals. 375. The South African
Competition Commission has not issued specific guidelines on the application of the Competition
Act to IP. However, it has explained its general approach in that firms are not automatically
exempted from the rules of the Competition Act as a result of the rights granted in terms of
laws like the intellectual property laws. This means that firms cannot be allowed to
automatically continue with a particular prohibited practice as outlined in the Competition Act
because that practice is allowed by another Act. It has taken the view that conflicts between
intellectual property rights and competition mandates should be resolved according to the
extent to which the "long-term pro-competitive benefits" of a practice outweigh its "short-term
'anti-competitive' effects." The Competition Commission has thus analysed this conflict by
considering the following factors: a. Competition law should recognize the basic rights granted
under intellectual property law. The creation and maintenance of innovation markets are
necessary for economic progress and development. b. Intellectual property does not necessarily
create market power. c. A practice involving intellectual property should not be prohibited if the
practice leads to a less anti-competitive situation than without the said practice. d. The long-
term pro-competitive benefits should outweigh the short-term 'anti-competitive' effects of
intellectual property rights. 376. I leave it at this and would invite other proponents to share
their perspectives, as well as, other Members of this house.
377. I would like first to thank China, India and South Africa for co-sponsoring document
IP/C/W/643. The communication builds on document IP/C/W/630, with the goal of expanding
the discussions on the complex interplay between intellectual property and public interest. The
debate of the relation between intellectual property and competition lies at the heart of the IP
system and is certainly of interest to this Council. 378. In economic terms, the temporary
exclusivity on the market granted by a patent is expected to generate long-term dynamic pro-
competitive innovation at the cost of short-term anticompetitive effects. Considering this
theoretical background, policymakers strive to design an efficient and balanced patent system,
avoiding a situation in which patents or other intellectual property rights lead to inefficiencies,
high prices or the under-provision of goods. 379. The Brazilian Constitution establishes an
explicit foundation for competition policy. Article 170 states that the "economic order" of Brazil
shall operate with "due regard" for certain principles, including "free competition," "the social
role of property," "consumer protection," and "private property." 380. One way to pursue
competition law and to achieve health outcomes is to prevent illicit conducts such as cartels and
illegal unilateral conducts. Another way is to prevent the formation of undue mergers in the
pharmaceutical sector. 381. Our competition authority is CADE, the Administrative Council for
Economic Defence. It has recently concluded an investigation of a cartel in the segment of
implantable cardiac pacemakers. The companies involved were being accused of facilitating and
promoting the adoption of anticompetitive practices, including through price collusion. Due to
the violation of the economic order, fines totalling approximately R$ 6 million were imposed.
382. By investigating and punishing cartels, CADE prevents this kind of practice, decreasing
the price of medicines and medical products that were artificially high due to anticompetitive
practices. This helps to achieve public policy goals by making health services more accessible.
383. Specifically to intellectual property, I would like to provide an example of how IP rights
may be used in an anticompetitive way. The case was initiated during the years 1990s but only
concluded in the 2000s due to the complexity and the tactics of the company. The defendants
were accused from abusing exclusive market rights in relation to a medicine called
Gemcitabine. Gemcitabine, sold under the brand name Gemzar, is a chemotherapy medication
used to treat different types of cancer. These include breast cancer, ovarian cancer, non-small
cell lung cancer, pancreatic cancer, and bladder cancer. 384. The patent was initially filed in
the United States in 1983 and was approved for medical use in 1995. The company filed the
patent in Brazil in 1993 for the production process of the substance, as the compound itself was
not novel by then. Since our pre-TRIPS legislation did not provide for the protection of
pharmaceutical products, the company requested that the mechanism provided in Article 70.8
TRIPS be applied. However, the patent did not relate to a product, only to a process, thus being
outside of the scope of Article 70.8. 385. After Brazil's patent office had rejected the patent
application, the company tried to transform its limited "process patent" into a "product patent"
application, through an amendment to the original patent application. 386. Additionally, the
company requested to one federal judge the suspension of the INPI decision process. To a
second federal judge (who was unware of the first request), the company complained that INPI
was excessively delaying a final decision in her case. Because of that, it asked for protection
under Article 70.9 TRIPS, which provides that, until a product patent is granted or rejected by
the procedure established in Article 70.8, the company or the individual has, for the period of 5
years, exclusive marketing rights. The only problem, in this case, was that the delay was
caused by the company itself. 387. Unaware of the request to suspend the processing of the
patent application, the second federal judge granted exclusive marketing rights for Gemcitabine
when used to treat a specific kind of cancer. Not satisfied with this result, the company went to
a third judge and claimed unrestricted exclusive marketing right for all kinds of cancer, well
beyond the scope of the original decision. An injunction was granted, extending the protection
for eight additional months, blocking a generic competitor from offering the drug in the
meantime. The result is that during that period the price of the drug in public bids was more
than double the price offered by the same company when the injunction was rejected (from 540
reais or US$144 to 189 reais). 388. That is why CADE understood that the company abused
her exclusive rights and was liable for "sham litigation". CADE imposed a fine of 36.6 million
reais or US$10 million dollars. There was no need to issue a compulsory license in this case, as
the defendant did not have any legal and valid patent. This Antitrust Law decision is important
not only for this case, but also to signal to other enterprises that this kind of illicit strategy will
be punished in the Brazilian Juridical System. 389. In this respect, it is important to underline
that Brazil never used Article 31(k) TRIPS as a remedy for an anticompetitive practice. While
the single case of a compulsory license issued in Brazil did involve a medical product, its
issuance was based on public non-commercial use to treat HIV patients. 390. In recognition of
the underlying public policy objectives of national systems for the protection of intellectual
property, including developmental and technological objectives, Articles 7 and 8 of the TRIPS
Agreement contain clear language regarding the relationship between public interest and the
protection and enforcement of intellectual property rights. Further, Articles 31(c), 31(k) and 40
of the Agreement recognize that the exercise of intellectual property rights may entail
anticompetitive effects. 391. In the field of medical products, it is of particular importance to
assure that the exclusive right granted to the patent, trademark or other right holder does not
become itself a hindrance to technological innovation and access to medicines. 392. Past
government reports in the pharmaceutical sector have shown that the anticompetitive use of
patents not only reduces the welfare of society by restricting access to off-patent medicines,
but also affects innovation activities in the pharmaceutical sector, impacting the generation of
new life-saving medicines. Regardless of each Member's level of development, it must be
stressed that competition law is essential to ensure that the intellectual property system works
properly and fulfils its goals. 393. We hope this document fosters the debate about TRIPS and
its relationship with competition law. The cases and examples mentioned today are part of a
non-exhaustive list of what happened in Brazil, in relation to competition law and public health
outcomes. We invite other delegations to join the debate, allowing us to have a rich exchange
of views and experiences.
394. During the meetings of the TRIPS Council in 2017 and 2018, Members were actively
involved in the issue of intellectual property and the public interest and good results have been
achieved. China believes the protection of intellectual property rights should contribute to the
mutual advantage of producers and users and to a balance of innovation and public interest.
395. With regard to the relationship between intellectual property and competition, China's
anti-monopoly law clearly stipulates that this law is applicable to the conduct by undertakings
to eliminate or restrict market competition by abusing intellectual property rights. 396. We
believe that the scope of the use of intellectual property rights is not borderless. Intellectual
property right holders shall not use intellectual property to restrict or hinder competition. 397.
But we also make sure that intellectual property rights are well protected within the scope of
the laws and regulations. In the anti-monopoly of China, it is also clearly stipulated that this law
is not applicable to conducts by undertakings to implement their intellectual property rights in
accordance with relevant intellectual property laws and administrative regulations. 398. China
thinks that competition and the protection of IP rights do not oppose each other, instead they
have common goals. These are promoting competition, enhancing innovation, protecting
consumers and safeguarding public interest. 399. In 2015, the former State Administration for
Industry and Commerce formulated the "Regulation on the Prohibition of Conduct Eliminating or
Restricting Competition by Abusing Intellectual Property Rights". This regulation is more
detailed and is made to implement principles of the Anti-Monopoly Law. 400. Finally, China
Members could exchange views and experiences on how to take advantage of flexibilities in the
TRIPS Agreement, including the competition law and policy.
401. I would like to support the statements made by South Africa, Brazil and China. In India,
we have specific IP legislations (namely Patents Act 1970, Trademarks Act 1999, Copyright Act,
GI Act etc.) where anticompetitive concerns have also been dealt with. In addition to this, the
Competition Act 2002 as a general act keeps track of every market-unfriendly activity cropping
up in Indian markets. As both sets of legislation (IP legislations and Competition Act 2002)
have the jurisdiction and power to deal with IP cases, therefore, both laws determine the
manner in which the anticompetitive issues relating to IP are to be resolved.
402. Indonesia welcomes the inclusion of this agenda item in the TRIPS Council and supports
the discussion in the Council for TRIPS of the relationship between IP and Public Interest,
especially with regard to the issue of public health and competition policy. As Members are all
aware, the TRIPS Agreement sets minimum standards of IP protection, including the issue of
competition related to public health. Members have the right to design their own policies in
accordance with domestic needs and interests. 403. The legal basis to deal with monopolies
and unfair competition Indonesia has Law No. 5 of 1999 concerning the prohibition of
monopolistic practices and unfair business competition. It states that this is an unfair business
competition and contains specific and comprehensive rules governing competition among
business actors. 404. Article 3 states that the basic objective of Law No. 5 is to safeguard the
public interest and improve the efficiency of the national economy in order to better the welfare
of the public. Indonesia has an independent enforcement agency to enforce the law, i.e. the
Commission for the Supervision of Business Competition, Komisi Pengawas Persaingan Usaha
(KPPU). Related to intellectual property, Law No. 5 provides exemption from its scope
concerning intellectual property rights, trade secrets and franchises. 405. The provision is not
an absolute exemption from the existing prohibition. The exemption provision must be viewed
in the context of the following:  intellectual property licence agreement is not automatically
leading to monopolistic practices and unfair business;  monopolistic practices and unfair
business arising from the implementation of intellectual property licence is a condition which
can be prevented through competition law;  in order to apply the competition law to the
implementation of intellectual property licence agreement, it must be proven that 1) the
intellectual property licence agreement is consistent with the law and 2) that there are
conditions indicating a monopolistic practice and unfair business. 406. Finally, Indonesia will
take the opportunity to support South Africa, China and India as the proponents of this agenda
item. Therefore we propose that this agenda item be maintained for the next meeting of the
TRIPS Council, especially with regard to the session on IP and Public Interest, including the
sharing of experiences regarding the utilisation of flexibilities of the TRIPS Agreement by
Members.
407. The United States welcomes the opportunity to participate in this discussion and share
our views on intellectual property, competition, and the importance of prudently applying
competition law in appropriate circumstances. 408. The United States has long held that IP
protection is very much consistent with furthering the public interest and that international
cooperation to strengthen and provide confidence in domestic IP systems can help maximize
these benefits. We are concerned, based upon the cosponsors' concept paper and some
interventions, that this agenda item could discuss "public interest" in a way that fails to account
fully for the benefits of protecting IP. 409. One potential negative consequence of an
insufficiently nuanced discussion could be to discourage Members from striving towards and
upholding robust domestic IP regimes, harming incentives for critical future innovations that
would greatly benefit the public. 410. The United States fully believes that "the intellectual
property laws and the antitrust laws share the common purpose of promoting innovation and
enhancing consumer welfare." We also recognize that intellectual property and competition are
distinct disciplines implemented and overseen by different administrative authorities. The TRIPS
Council is not the ideal venue to have detailed discussions of competition law and policy
concepts. 411. As we will describe in more detail below, the misapplication of competition law
is particularly concerning in IP disciplines because it runs the risk of forestalling future
innovation. As such, antitrust enforcers should strive to eliminate as much as possible the
unnecessary uncertainties for innovators and creators in their ability to exploit their intellectual
property rights, as those uncertainties can also reduce incentives for innovation. Innovative
firms pay close attention to both IP and competition laws in foreign markets when determining
where to invest and partner. If competition law is misapplied in the IP context it runs the risk of
discouraging the high-value R&D and manufacturing that many Members seek to attract and
promote. Co-sponsor references to outside research 412. The belief that intellectual property
and competition laws can coexist and share common purpose is not unique to the United
States, and, in fact, can be found in the trilateral WTO, WIPO, and WHO study on IP and Public
Health cited by the cosponsors. 413. I would like to draw your attention to two points in the
Trilateral Study that are not included in the cosponsors' submission:  "Openness to
international trade generally promotes competition, and offers improved affordability and
access. By enabling a wider range of suppliers to serve the population, it can also enhance
security of supply."  "In the area of innovation, the aims and effects of IP protection and
competition policy can be complementary: both are aimed at fostering innovation by creating
incentives to develop new products as an advantage over competitors. IP protection for novel
medical technologies is generally considered to be an important means of promoting investment
in R&D of new medical technology. This leads to competition between different originator
companies with regard to the development of valuable new medical technologies, and therefore
with regard to their earlier production and availability. This form of competition is generally not
hindered by IPRs, rather it is enhanced by them." 414. The cosponsors also invoke the 2030
Agenda for Sustainable Development, in particular Sustainable Development Goal 3. It is
important to note that nowhere in the 2030 Agenda is competition law or policy prescribed as a
way to achieve the SDG targets. In fact, misapplication of competition law to IP cases could
make it more difficult to achieve certain goals, such as ending communicable diseases,
promoting newborn and infant health, and supporting the research and development of
vaccines and medicines, as we do not currently have all of the health technologies needed to
fully address these challenges. 415. With respect to the UNSG High-Level Panel Report (HLP)
on Access to Medicines, as the United States explained in previous statements, we were deeply
disappointed by the Report, which detracts from, rather than advances, the critical objectives of
identifying practical ways both to increase access to safe effective, affordable, and lifesaving
medicines around the world and to support policies that drive the development of new
medicines. I remind the Council that the HLP Report lacked consensus among panelists and
note that the Report included the following statement from one panelist that is relevant to
today's discussion: "without innovation, there will be no new tools for public health needs, new
pandemics, and AMR. There are already precious few diagnostics, vaccines, and medicines that
can address these menaces and limited sources to support research into basic biology that
underpins them. It would be unwise to set into motion activities or policies that further choke
innovation, placing large populations at risk and contradicting the core principles under which
the HLP was convened." 416. As the United States and many other Members have explained
during past TRIPS Council interventions, the vast majority of medicines on the WHO's Essential
Medicines List are not patented, yet remain out of reach for many patients. 417. By focusing
on IP-related competition issues, China, South Africa, India, and Brazil have asked the TRIPS
Council to focus on governmental tools that, if misapplied, could threaten innovation, while
ignoring the barriers that affect medicines that are without patent protection. US policy on IP
and competition 418. The United States believes innovation is key to sustained economic
growth. It benefits consumers through the development of new products, processes, and
services that improve lives and address unmet needs. At the same time, innovation is complex
and risky. Intellectual property rights are necessary to promote innovation in the face of that
risk. Likewise, competition drives firms to create new or better products in these complex
environments. As a result, the US believes in strong intellectual property rights and market-
based competition to promote economic development. 419. It is important to keep in mind
what patents can do and what they cannot. The granting of a patent does not confer automatic
commercial success or market share—in fact the vast majority of patents in the United States
are either never commercialized or fail to achieve a profit for the patentee. A patent may
exclude others from making or selling the same invention, but does not prevent others from
finding novel ways to achieve innovative solutions to common problems. It is for this reason
that there are not one, but several, patented medicines on the market to cure or treat certain
illnesses, such as heart disease or arthritis. 420. Furthermore, one of the important benefits of
the patent system is the disclosure of a written description of the invention and manner and
process of making and using it, so as to enable any person skilled in the technological area to
which the invention pertains to make and use the same. This disclosure helps to ensure that
upon expiry of a patent, others have the means to quickly enter the market, which, in turn,
provides consumers with more, and often cheaper, products. 421. Given these and other
benefits of the patent system, of particular concern to the United States is the possibility that
competition laws could be used as a means to gain access to desirable intellectual property
rights or regulate royalties in order to advance broad social or political goals that could
undermine free market competition. When a competition authority favours one competitor over
another through the forced sharing of IP rights, or the regulation of royalty payments, it can
diminish or remove crucial incentives to innovate because exclusive property rights or the
benefits of being first-to-market are eroded. This innovation disincentive can hurt consumers,
who will no longer benefit from newer and higher quality products or services. We believe that
reliance on market-based pricing and unilateral freedom to choose whether to license IP, and if
so, to whom one will license, leads firms to efficient investment in R&D because they know
there is a chance of recoupment. Therefore, we disagree with the cosponsors' submission as to
where it suggests that excessive pricing provisions of competition laws should be used to gain
access to medicine. 422. The competition issues raised in the submission, such as liability for
excessive pricing and the use of compulsory licensing remedies, have been debated in more
competition-focused international organizations such as the OECD and the International
Competition Network (ICN). As these raise competition, not IP issues, those are more
appropriate venues than the TRIPS Council to address such issues. 423. The United States
does not regulate "excessive pricing" under US antitrust law and we have encouraged
jurisdictions that have excessive pricing laws to refrain from applying them to IP rights, which
are designed to promote innovation through, among other things, investment in R&D. Antitrust
enforcers who impose liability for pricing "too high" may deter R&D investment because they
supplant market-based forces with an artificial cap. 424. We believe it is also important to
consider that it is not illegal merely to have market power or a monopoly; many monopolists
obtained their position by creating better, cheaper, more attractive products. This system
promotes innovation because it incentivizes first-entrants to develop the best product. It also
creates incentives for rivals or new entrants drawn by the lure of large rewards. 425. A related
point is that the US Antitrust Agencies do not rely on a presumption that an IP asset conveys
market power. The exercise of an IP right does not necessarily create market power or a
monopoly. There will often be sufficient actual or potential close substitutes for a product,
process, or work to prevent the IP owner from obtaining market power. This point has been
recognized by the US Supreme Court. Many jurisdictions recognize this fact and have adopted
this principle that IP ownership does not necessarily create market power in their own IP-
competition guidance (including China). 426. As China, South Africa, India, and Brazil point
out, TRIPS acknowledges the application of competition law in Article 40. The US Antitrust
Agencies' focus is on evaluating whether specific conduct harms competition. Firms might, for
example, engage in anticompetitive exclusion through collusive agreements that unlawfully limit
entry into a market, which may result in higher prices than would have been the case in a
competitive market. The focus is not on whether a drug's price is too high or particular royalties
for a pharmaceutical patent are unreasonable, but rather on evaluating the effect of conduct.
This keeps the focus of competition enforcers where it should be—on protecting the competitive
process. 427. In addition, the US Antitrust Agencies have also urged caution in the reliance on
compulsory licensing remedies. We recognize that the core right to exclude (as discussed in
Article. 28) promotes innovation. Indeed, choosing not to share an intellectual property right is
a form of exercising that exclusive right. Thus, the US Antitrust Agencies ordinarily will not
require the owner of intellectual property to create competition in its own technology. And we
believe the "antitrust laws generally do not impose liability upon a firm for a unilateral refusal to
assist its competitors, in part because doing so may undermine incentives for investment and
innovation." 428. As we have demonstrated in the United States, IP and competition polices
can and should coexist and complement one another. The United States is committed to
achieving public health goals in a way that upholds IP rights and promotes competition. For
example, by accelerating Food and Drug Administration (FDA) reviews of generic drugs, the
United States approved over 1,000 generic drugs in 2017, which is the most in FDA's history in
a calendar year by over 200 drugs. 429. We urge China, South Africa, India, and Brazil, as
well as other WTO Members, to find responsible ways to carry out domestic IP and competition
laws, so as to contribute to the innovative ecosystem that is made possible by IP incentives.
430. The EU views critically a number of issues discussed in the Communication from China,
South Africa and co-sponsors. To start with and as previously stated, the work conducted by
the United Nations Secretary-General's High-Level Panel on Access to Medicines started from an
assumption that there was "policy incoherence between the justifiable rights of inventors,
international human rights law, trade rules and public health". As the European Commission
already indicated in its written contribution to the Panel and in various interventions at this
Council, it does not share that assumption. 431. This is why in its written contribution to the
Panel, the Commission encouraged it to adopt a holistic approach to the problem of access to
medicines that could result in a valuable contribution to the wider debate. However, due to its
limited mandate, unfortunately, the High-Level Panel has focused its proposals exclusively on
addressing an alleged conflict between a research and development model that (partially) relies
on intellectual property rights and the possibility of providing affordable medicines. In doing so,
it has missed an opportunity to advance more balanced, comprehensive and workable solutions
to the problem of access to health. As we all know, IP protected medicines are only a very small
fraction of the medicines that patients in need in many developing countries lack access to.
432. While there are a number of issues in the Communication the EU disagrees with, we
would like to particularly voice concern over the mentioning of "refining the criteria for grant of
a patent (patentability criteria)" as a TRIPS flexibility. The TRIPS Agreement is very clear and
unambiguous on patentability criteria. TRIPS Article 27(1) states very unmistakably that:
"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." We see with growing concern that misinterpretation of this Article has led many
jurisdictions to apply practices in the patent grant process which could be interpreted as
amounting to additional patentability criteria not mentioned in the TRIPS Agreement. The EU
urges those Members to reconsider their practices. 433. In the general, the EU would also be
cautious to consider the use of competition policy as a TRIPS flexibility. Without doubt, the
TRIPS Agreement is compatible with the application of competition policy measures. However,
as clearly provided for in Article 28(1) and (2), as well as in Article 40 (2), these measures
have to be consistent with the provisions of the TRIPS Agreement and cannot be used as tools
in avoiding the obligations under the Agreement. 434. If applied in a compatible manner with
TRIPS, competition policy has a role in regulating and controlling unlawful market behaviour in
any sector, including the pharmaceutical sector. 435. Taking into account the sensitive
balance between encouraging, incentivizing and ensuring continued innovation in the sector, on
the one hand, and competitive generic medicines, on the other, the EU's antitrust enforcement
seeks to promote open and competitive markets in the sector. 436. In the pharmaceutical and
health services sector, the European Commission's Directorate General for Competition has
investigated a number of anticompetitive agreements between companies (pursuant to Article
101 Treaty on the Functioning of the European Union (TFEU), which prohibits agreements
restricting competition) and abuses of a dominant position by dominant market players (Article
102 TFEU). It also reviews proposed mergers and intervenes where market concentration would
significantly impede effective competition and lead to less innovation. 437. For example, the
EU Commission has adopted decisions against pay-for-delay agreements. A landmark case was
the 2013 Lundbeck decision, which concerned citalopram, Lundbeck's blockbuster
antidepressant medicine. After the basic patent expired, Lundbeck still held a number of related
process patents with limited protection. Lundbeck paid significant sums, purchased generic's
stock for the sole purpose of destroying it, and offered guaranteed profits in a distribution
agreement, in return for agreements from generic producers not to enter the market with
generic product. These agreements were found to infringe Article 101 TFEU. 438. The EU
Commission fined Lundbeck (€93.8 million) and generic competitors (€52.2 million) for delaying
market entry of generic citalopram. In September 2016, the EU General Court basically upheld
the Commission decision. Appeals are currently ongoing before the European Court of Justice.
439. In another example, the EU Commission is currently investigating, for the first time ever,
pricing practices for life-saving medicines in the Aspen investigation. Aspen is a global
pharmaceutical company headquartered in South Africa, with several subsidiaries in the EEA.
The investigation concerns Aspen's pricing practices for niche medicines used for treating
cancer, such as hematologic tumours. The medicines are sold with different formulations and
under multiple brand names. Aspen acquired these medicines many years after their patent
protection had expired. Hence, we are talking here about generic drugs. 440. The Commission
is investigating allegations suggesting that Aspen has imposed very significant and unjustified
price increases of up to several hundred percent, so-called 'price gouging' in violation of Article
102 TFEU. To impose such price increases, Aspen may have threatened to withdraw the
medicines in question in some EU Member States and may have actually done so in certain
cases. The investigation covers all of the EEA except Italy, where the Italian competition
authority already adopted an infringement decision against Aspen in September 2016. 441.
The EU Commission has not pursued a case involving unreasonably high royalties for a
technology transfer. Nor has it ordered an originator company as the IP holder to grant a
licence for its proprietary technology to remedy a competition law infringement. Such
interventions would only occur under very strict conditions and in exceptional circumstances,
which are typically not associated with conditions of competition between the innovator and the
generic companies. 442. In addition to the obligations under the TRIPS Agreement, with
respect to compulsory licencing under Article 102, the test developed by the EU courts sets out
very strict criteria which are usually met in highly exceptional circumstances: (i) licensing is
indispensable for the exercise of an activity in a neighbouring or related market; (ii) the refusal
is capable of eliminating any effective competition on that market; (iii) the refusal prevents the
introduction into the market of a new product for which there is potential consumer demand;
and (iv) the refusal has no objective justification. 443. It has never been applied as a remedy
against excessive pricing (i.e. a licence to generics to bring down the price) or to otherwise
remedy patent barriers to generic entry. 444. Compulsory licences to pharmaceutical patents
as a remedy to excessive pricing would have a negative impact on innovation incentives and
appear to be superfluous, because a competition authority, once it has established unlawful
market behaviour, has the normal toolbox of competition policy remedies.
445. It is with interest that we have studied the communication from China, South Africa, and
co-sponsors. This topic at the intersection of competition law and IP is a challenging one, it is
only to some limited extent relevant in the TRIPS context. 446. However, we think it is
important to include an economic point of view in this discussion. Both competition law and IP
law start from the premise that government intervention can be justified to redress the effects
of a market failure. The promotion of public health and the development of new and better
treatment for unmet medical needs in particular is a textbook example of where you need to
redress the market failure. Without the patent law and test data protection, you would have a
lack of incentive for investing the massive funds required for R&D. 447. Depending on the
characteristics of the market failure, there are different means to fix the problem. We can
distinguish between three kinds of market failure: a. Firstly, relating to goods with public good
characteristics; examples of such goods are "inventions" or "creative works": this market failure
can be fixed with IP such as patents or copyright. b. Secondly, a market failure relating to
information asymmetries between buyer and seller, e.g. concerning the quality of a good: this
market failure can be fixed by introducing another IP right, namely trademarks or geographical
indications. c. And last, but not least, in the case of abuse of market power, for example if you
have the power to control market entry: in this situation, antitrust law can be used as a fix.
448. The challenge we face with respect to IP rights such as patents or copyright is that they
explicitly provide for a temporary monopoly/exclusive right. As for patents, the idea is to
incentivize investments in R&D. Granting such monopoly/exclusive right is considered to be a
precondition for innovation and future wealth. The patent right as well as all other IP rights are
a deliberate restriction on free competition, which provides a necessary incentive. 449. Just
like any other legal right or title granted by a legal system, patent rights can be abused and
there are several means in place to prevent this. Competition law is one legal means to prevent
such abuse. The intellectual property system itself provides a number of its own measures to
safeguard against abuse, which are also reflected in the TRIPS Agreement. 450. Submission
IP/C/W/643 mentions some aspects of the wider framework to be considered. Switzerland only
partially agrees with the reference points set out in the co-sponsors' paper. We would like to
recall that the UN High-Level Panel on Access to Medicines was a process that was not driven
by the member states. The Members of the High-Level Panel did not reach consensus and the
Member States did not endorse the recommendations. 451. Switzerland believes that building
on voluntary and inclusive efforts (such as the Medicines Patent Pool), instead of denouncing
the intellectual property system, is the way forward. This approach also corresponds with the
collaborative spirit of the 2030 Agenda for Sustainable Development. 452. But how do the two
legal institutes, antitrust and IP law, relate to each other? In Switzerland, the Antitrust Act, or
so-called "Cartel Act", states that it does not apply to effects on competition that result
exclusively from the legislation governing intellectual property. Conversely, we can say that the
Antitrust Act may apply in cases where the effects on competition also arise from the Patents
Act. IP and competition law are considered not to be contradictory, but complementary. 453.
Having said that, any strong measures taken under the antitrust act or the intellectual property
legislation, such as compulsory licences, should be considered solely as a policy tool of last
resort. They are measures that may not necessarily reinstate competition, but may rather have
a far-reaching, negative impact on the investment climate, particularly on investments in R&D
of innovative medical products in a market. They should thus be applied with utmost restraint.
Intervention by: Korea, Republic of
454. Korea would first like to thank China, India and South Africa for their proposal
(IP/C/W/643) to discuss how to promote public health through competition law and policy in the
Council. As mentioned by the delegates from the US and the EU, Korea is also of the view that
the TRIPS Agreement and competition law can co-exist in a mutually supportive manner.
Misapplication of competition law in the name of public health could run the risk of unduly
hindering the IPR and forestalling the invention of new, innovative medicines and health
technologies. 455. However, we also think that there exist some explicit anti-competitive
behaviours in the pharmaceutical industry and that proper implementation" of competition
policies can serve as an effective tool to tackle those behaviours and achieve public health by
regulating abusive exercise of IPRs. 456. Without prejudice to Korea's position on the
elements in document IP/C/W/643, I would like to share Korea's experience of tackling abusive
exercise of IPRs through the implementation of competition policy. 457. The case I would like
to mention is similar to the first of the two cases presented by the EU. Although the EU
delegate used a different terminology, the essence is the same- i.e. reverse payment, a
common form of collusive behaviour in the pharmaceutical industry. Unlike the usual practice
where a patent owner of a new drug receives licensing fees from a generic manufacturer, a
patent owner provides the latter with economic benefits, what is known as "reverse payment",
to deter the entry of generic drugs into the market. Reverse payment settlement has a
significant anticompetitive effect: a patent holder maintains a monopoly status in the market
even after the expiration of the patent rights by forestalling the selling of generic drugs, while
consumers pay higher prices than they would otherwise. 458. The Korean Government has
been exerting tremendous efforts to eradicate such anticompetitive practices in the
pharmaceutical industry. In 2011, the Korea Fair Trade Commission, the government agency
responsible for the enforcement of competition law, took remedial actions with regard to
reverse payment. The FTC issued an injunction and fined a patent holder of a drug, a
multinational pharmaceutical company who engaged in the practice of reverse payment in
return for the exit of a generic drug manufacturer from the market. This marks the first case in
which reverse payment was regulated by a government agency in Korea. 459. The Korean
Government will even further strengthen its efforts to promote public health by ensuring a fair
and competitive market environment in the pharmaceutical industry, in a manner that is
consistent with the TRIPS Agreement and does not hamper the necessary innovation in the
health sector.
460. Australia notes the communication regarding Intellectual Property and the Public
Interest: Promoting Public Health through Competition Law and Policy. Australia has a number
of policies and procedures in place to achieve public health outcomes, including in relation to
intellectual property and competition law and policy. For example, Australian law provides
statutory provisions to allow free access to patented inventions for the purpose of research and
experimental use, introduced through the Intellectual Property Laws Amendment (Raising the
Bar) Act 2012. The introduction of this measure provides researchers with a freedom to
experiment and maximises the potential for research in Australia, including to support public
health outcomes.
of Japan would like to ask other Members to note that it might be better to take a more
also those of patent rights holders. As this delegation reiterated, the HLP report should not
constitute the basis for this discussion. 462. In this context, this delegation would also like to
point out that provisions such as those in Article 31(k) and Article 40 of the TRIPS Agreement,
rest on an intricate balance. Therefore, Japan believes that we should be cautious in discussing
this agenda item. And these provisions should not be interpreted too broadly. Any measures
taken under these provisions should be fully consistent with the TRIPS Agreement. From this
perspective, this delegation shares the concern generally expressed by the United States
delegation about document IP/C/W/643.
463. On behalf of the proponents, I would like to thank Members who have intervened on this
particular topic. I believe the objective of having entered into a discussion on competition does
not undermine the application of IPRs as recognized under the TRIPS Agreement. The
proponents demonstrated that there are various pro-competitive provisions in the TRIPS
Agreement. Four provisions specifically refer to competition law issues: Article 6, Article 8.1,
Article 31(k) and Article 40. There is no doubt that these provisions leave WTO Members broad
policy space to apply competition law in respect of acts related to the acquisition or exercise of
IP rights. Outside of these provisions there are several other provisions, as demonstrated, that
give context to these rights. Whereas our paper does not advocate the use of competition policy
to violate rights recognized under the TRIPS Agreement, it reminds all of us that the granting of
intellectual property rights recognize inherently the balance between the rights holder and the
vested rights that society have in this particular process. 464. Article 8 of the TRIPS
Agreement sets out a very important parameter for the application of appropriate measures
and requires that they be consistent with the Agreement. Nowhere in our paper do we make
the statement that rights recognized under the TRIPS Agreement should be unduly impeded by
application of competition law principles. The proponents also indicated that competition law
should recognize the basic rights granted under intellectual property law and that intellectual
property does not necessarily create market power. As a result, to determine the effect of any
restrictive practice, some sort of rule of reason should be applied to assess the effect of such a
practice, short of such a practice essentially being deemed inherently illegal. The facilitation of
universal access to health, including access to medicines and medical technology is not only a
function of the IP system, it requires a much broader approach, as pointed out by the US and
several other delegations. This cannot be disputed. In previous contributions proponents
recognized this fact, the interplay between the domains of health, trade and IP affect medical
innovation and access to medical technologies, so focusing merely on IP as one of the
modalities may be misplaced. 465. In closing, we would also reiterate that the expression of
competition law is generally used to describe a set of rules aimed at addressing anti-
competitive behaviour associated with the existence of market-dominant positions and
restrictive business practices. What we can see is that some competition laws focus on the
effects of regulated conducts on competitors, while others focus on competition as such.
Consumers (and not just competitors) are protected to a different extent under various national
regimes. For instance, the approaches of the United States and the EU differ in the treatment of
dominant firm conduct. The US representative indicated that US antitrust statutes have no
equivalent to the excessive pricing prohibition under EU rules. This is essentially an indication
that all of us apply to a certain extent different rules when it comes to competition. We hope
that this clarification puts the discussion of this topic on an even keel. We are happy to reach
out to any delegation that needs further clarification on any of the points that we have made.
466. I would like to support the statement made by South Africa, I think we have all learned a
lot about this topic, with our discussions here at the TRIPS Council. As mentioned by my
colleague from South Africa, competition law does not endanger IP rights, in fact, it reinforces
them when it provides a level playing field among competitors. I would like to comment on two
topics that were mentioned by the delegations of the US and the EU. The first is on the effect of
patents on access to medicines. The patent issue, as argued in this and other fora, is one of the
central elements to broader issues regarding access to medicines. The broader approach on
access to medicines is rightly done by WHO, but the mandate of this Council is intellectual
property, so I think this is fully under the purview of the TRIPS Council to discuss this. 467.
The second comment that I would like to make is about the WHO Essential Medicines List. It is
factually correct to say that the number of non-patented medicines or the Essential Medicines
List is much higher than those benefiting from patent protection. But despite this fact,
governmental, cooperative and out-of-pocket expenses are proportionally much higher for the
patented medicines on the Essential Medicines List. On top of that, WHO has historically
preferred the inclusion of nonpatented medicines with equivalent therapeutic value, precisely
because they are cheaper. In conclusion, I would like to thank all the delegations who have
made statements under this agenda item. We hope to revert to it at the next session of the
TRIPS Council.
Intervention by: New Zealand
468. New Zealand thanks all Members who have presented under this agenda item. We
recognize the importance of this topic and consider the sharing of examples and national
experiences to be a useful exercise. We look forward to sharing this information with interested
persons back in capital.
469. Just on a point of process, there has been one or two delegations that have indicated
that they may want a continuation in discussion of this topic after referring back to their capital
for further analysis. From the side of the proponents, we would wish to request that this item
be entered as a continuation at the next TRIPS Council.
470. The United States wishes to object to a continuation of this agenda item and
recommends that, if the proponents would like to continue to discuss it, to follow the rules of
procedure and submit it as an ad hoc agenda item at the appropriate time.
471. We note the intervention of the United States and as may be the case, we will follow
such rules, and notify for the next TRIPS Council meeting an ad hoc item that continues a
discussion, but with a different focus in respect to competition law.
472. We would briefly like to reiterate what we also mentioned earlier in the intervention, that
only to the extent that competition policy is relevant to the TRIPS Council, we should also
discuss competition policy on a continuous basis, because many of the cases for example which
we, as an information point mentioned here clearly show that the issue is not necessarily only
related to IP, or probably to a large extent not related to IP, but simply to anti-competitive
behaviours. I do not think that the TRIPS Council should venture into long and detailed
discussions of competition policy, so we would urge the Members who request an ad hoc item
for the next TRIPS Council to duly reflect also the clear linkages if they make that point.
473. We note the intervention from the European Union. I think firstly, as we indicated,
competition-related provisions are squarely within the ambit of the TRIPS Agreement. Secondly,
we believe that, as many delegations indicated, the IP and competition-related issues are
complementary to one another. As a result, this is a topic which is useful. Of course,
competition law in its general meaning perhaps is broadly applied, but when it comes to the
application and exercise of IP rights, there may be certain abusive practices that may be
regulated by the application of competition law norms. As a result, the proponents believe that
there is more scope to discuss national experiences and will formulate a focused discussion,
bringing out some more examples of how IP and competition law can co-exist and how the
application of these norms in a complementary way will lead to increased societal benefits.
474. The United States would just like to support the EU and its position, and remind the
Council that the TRIPS Agreement, the officials present in this room, represent largely IP
agencies. There are already organizations and international organizations such as the OECD and
the International Competition Network that discuss these types of concerns from an anti-trust
and competition perspective. There are more likely to be the appropriate forums to discuss
these issues.
475. We are enjoying very much this interactive discussion. Brazil would like to support what
was mentioned by South Africa on the importance of bringing this topic to the discussion here
at the TRIPS Council. Unfortunately, not all WTO Members are part of the organizations that
were just mentioned by the US, therefore I think it is useful to have a broader discussion here
at TRIPS Council.
Intervention by: United Nations Conference on Trade and Development (UNCTAD)
476. Referring to the communication from Brazil, China, India and South Africa on "Promoting
Public Health Through Competition Law and Policy" (IP/C/W/643/ and Add.1) and based on our
experience in providing technical cooperation in intellectual property and health in developing
countries, UNCTAD would like to confirm the need to build capacities in the use of competition
law and its interface with intellectual property rights and technology transfer in developing
countries. 477. In our technical cooperation activities, we emphasize the use of competition
law and policy to strike a balance between innovation and access. For instance, we discuss
cases where competition authorities in developed countries analysed abuses of IP and of drug
regulatory laws to prevent market entry of generic competitors after patent expiry.
REGULATORY REVIEW EXEPTION
354. I would like first to thank Bolivia, Chile, China and South Africa for cosponsoring document
IP/C/W/639. 355. In the session of this Council held in May of last year, Brazil, China, Fiji, India
and South Africa circulated document IP/C/W/630, with the goal of expanding the discussions
on the complex interplay between intellectual property and public interest. With a view to
continuing discussions on the topic, the sponsors of the agenda item invite delegations to share
their experience regarding the existence and use of the regulatory review exception, also
known as "Bolar exception", under their national or regional frameworks. 356. The issue before
us relates directly to the core goal of intellectual property: to promote technological innovation
in a manner conducive to social and economic welfare. The attainment of such goal is a
constant concern of policy makers and demands an unceasing and careful analysis of the
boundaries of IP rights. 357. As a rule, companies invest in innovation to obtain a competitive
edge in the relevant market, in the form of increased productivity of its industrial processes or
by developing new products. Countries grant patent protection with the goal of incentivizing
innovation by avoiding free-riding behaviour of competitors, since this could lead to sub-optimal
investment in R&D. At the same time, the strong market power granted by a patent allows the
right holder to exclude competitors from manufacturing the patented invention, thus restricting
competition during the term of the patent. 358. In economic terms, the temporary exclusivity
on the market granted by a patent is expected to generate long-term dynamic procompetitive
innovation at the cost of short-term anticompetitive effects. Considering this theoretical
background, policymakers strive to design an efficient and balanced patent system, avoiding a
situation in which patents lead to inefficiencies, high prices or the under-provision of goods.
359. In the field of medical products, it is of particular importance to assure that the exclusive
right granted to the patent holder is not extended beyond what is intended in the patent
legislation and becomes itself a hindrance to technological innovation and access to medicines.
360. If patents become barriers, the development process of new medicines is slowed and other
manufactures may refrain from entering the market, generating increased costs for patients
and uncertainty in the market. 361. Under this framework, the Bolar exception provides a
valuable tool for stimulating competition and ensuring adequate treatment for those suffering
from diseases. 362. Data from a study by the United States' Congressional Budget Office
indicate that the average delay in generic entry after patent expiration fell from more than
three years to less than three months after the approval of a Bolar-like exception in that
country. The average number of generic entrants in the market also increased, stimulating
competition. 363. In other words, without the Bolar exception, generic entry would be delayed
by three or more years in economies with generic pharmaceutical manufacturing capability,
affecting the supply of life-saving medicines. The exception thus guarantees that the term of
protection of a patent produces the optimal effect, in terms of creating incentives to both
innovation and competition. 364. Now turning to the guiding questions listed in our
communication, I would like to provide a brief overview of the regulatory review exception
under Brazilian legislation. 365. The Industrial Property Law, in its article 43, paragraph 7,
provides that acts carried out by unauthorized third parties related to a patented invention are
safeguarded from enforcement, if the goal of such acts is the production of information, data
and test results necessary for obtaining marketing registration after the expiration of the
patent. 366. The provision covers any act by third parties, such as making and using the
invention. It also allows such acts if the end purpose is to obtain regulatory approval in other
countries. Our legislation does not limit the use of the exception to the health industry, as other
technological sectors may also benefit from the expeditious entry of new competitors.
Furthermore, third parties may rely on the exception at any time during the length of the
patent protection. 367. Reports from manufacturers, both in Brazil and abroad, indicate two
potential challenges for its full implementation. The first one, not related to intellectual
property, is access to precursors, that is, the chemical compounds necessary for the production
of the active pharmaceutical ingredient. 368. Another potential challenge is the insufficient
disclosure of the invention as contained in the patent application, creating an obstacle for the
reproduction of the invention even by an expert in the field. The solution for this lies in
adequate implementation of the disclosure requirement in the course of the patent examination
by industrial property offices. 369. The Bolar provision is one of the key tools to ensure an
efficient and balanced patent system by safeguarding against the artificial extension of patent
protection. It is a very useful health-related patent flexibility for promoting public health
objectives and maintaining dynamic competition between companies. 370. The undue extension
of such privilege would go against the very goal that justifies the existence of patent protection.
Past Government reports in the pharmaceutical sector have shown that the anti-competitive
use of patents not only reduces the welfare of society by restricting access to off-patent
medicines, but also affects innovation activities in the pharmaceutical sector, damaging the
generation of new life-saving medicines. 371. The recent entry into force of the Protocol of
Amendment to the TRIPS Agreement demonstrates the need to have mechanisms that ensure
adequate remuneration to intellectual property rights holders while allowing governments to
adopt measures necessary to protect the public interest. 372. Yesterday the Directors-General
of WTO, WIPO and WHO joined together to discuss challenges and opportunities to ensure that
innovative technologies are developed and reach patients in order to realize the fundamental
human right to health. During those discussions, intellectual property had a prominent role,
underlining the importance of a balanced IP regime for promoting the public interest. 373. Let
me conclude by inviting other delegations to the debate, enabling a rich exchange of views and
experiences that enhances the mutual understanding of the matter. The discussion would also
benefit from the comments of international organizations here with us today, such as WIPO and
WHO.
374. As a co-sponsor of document IP/C/W/639, we thank Brazil for introducing it and for
sharing the specific experiences. Its paragraph 1 refers to a document circulated earlier. The
co-sponsors felt that an on-going discussion on matters related to compulsory licensing and
issues raised in the High-Level Panel report was important. Paragraph 3 references the Canada
– Pharmaceutical Patents case where it was held that Canada's regulatory review exemption is
fully in compliance with the TRIPS Agreement, in particular with Article 30, which pertains to
exceptions to rights conferred. Following the panel decision, numerous Members have
introduced similar regulatory review exceptions in their national legislation. It is also important
for delegations to note the questions which have been posed in paragraph 6. 375. The
intersection of IP and public health has long been an issue of contention not only in South Africa
but the world over, and one without resolution to date. 376. The earliest legal recognition of the
problem began as early as 1997, with amendments to the Medicines Act, and the subsequent
case, PMA v the President of the Republic of South Africa. In this case a consortium of
multinational pharmaceutical companies sought to block amendments to the Medicines Act in
1997 that would expand access to medicines. As a result of the legislative amendment, the
USTR placed South Africa on the section 301 "Watch List" and urged the South African
government to repeal its law. In June 1998, the White House announced a suspension of South
Africa's duty- free treatment under the US Generalized System of Preferences program. While
hindsight is 20:20, this aggressive campaign actually hastened the mobilization of opposition to
it. This case was a key factor leading to global dialogue around the potentially negative impact
of IPRs on public health, culminating in the Doha Declaration on TRIPS and Public Health. 377.
South Africa has been a key driver of the now global recognition that the duty owed by states
to safeguard public health is not inconsistent with their concomitant responsibility to honour
international treaty obligations. Paragraph 4 of the Doha Declaration on TRIPS and Public
Health states as follows: "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." 378. In addition to this, the
state's duty to progressively realize the right to health is captured in international instruments
which South Africa has ratified such as the International Covenant on Economic, Social and
Cultural Rights (ICESCR), the Convention on the Rights of the Child (CRC), the Convention on
the Elimination of all Forms of Discrimination against Women and Girls (CEDAW), the
Convention on the Rights of Persons with Disability (CRPD), and regional treaties such as the
African Charter on Human and Peoples' Rights. 379. In order to expedite the availability of
generic medicine on the market post patent, the South African Patents Act was amended in
2003 to include Section 69A, making provision for a statutory licence available for generic
companies to access products under a patent in specific circumstances, effectively introducing a
"Bolar" type exception. This amendment was made following the decision in Stauffer Chemicals
v Monsanto 1988(1) SA 805(T), which held that the experimental use of an invention amounted
to infringement. The Court confirmed the interpretation of section 45(1) – in its form then – by
finding that it entitled the patent owner to have and enjoy the whole profit and advantage of
the invention, but that it does not prohibit the mere possession of an infringing article/product
without an intention to use or dispose of it. The Court stated obiter that even experimental use
of a patented invention will amount to an infringement in that the experiment uses the
patented invention. In the Stauffer case the alleged infringer used the patented invention
during the term of the patent to prepare for marketing registration of its own similar product,
and the Court found that such activity in fact used the patented invention as a springboard to
obtain an improper advantage. This could be viewed as gaining a commercial advantage; such
use was found to constitute infringement. In order to address this situation, South Africa
amended its Patent Act and introduced Section 69A. 380. Section 69A provides as follows:
"69.A(1) It shall not be an act of infringement of a patent to make, use, exercise, offer to
dispose of, dispose of or import the patented invention on a non-commercial scale and solely
for the purposes reasonably related to the obtaining, development and submission of
information required under any law that regulates the manufacture, production, distribution,
use or sale of any product. (2) It shall not be permitted to possess the patented invention
made, used, imported or acquired in terms of subsection (1) for any purpose other than for the
obtaining, development or submission of information as contemplated in that subsection." 381.
It will be noted that the exception is not limited to pharmaceutical products; it applies to any
invention (in any field of technology) in respect of which any law requires the submission of
information for the manufacture, distribution or sale of a product. This would for example cover
pharmaceutical and agrochemical products which require marketing authorization before such
products may be put on the market. Stockpiling of patented products is not allowed under
section 69.A(2). 382. The main import of this section is that it is permissible for a generic
manufacturer of pharmaceutical, veterinary or agricultural products to obtain registration of
generic equivalents of patented products with the registration authorities in South Africa, prior
to the expiration of the relevant patent. 383. South Africa is currently conducting a review of
existing IP laws. Discussions around the "Bolar" exception have focused on whether the narrow
marketing exception should also be extended to a broader category of activities, including early
experimental research. Some stakeholders advocate an approach as exemplified by the US
Patent Act regulatory review exception, which covers both regulatory review and early research
e.g., pre-clinical pathway. Reference is often made to Merck v. Integra Lifesciences, 545 U.S.
193 (2005) where the US Supreme Court found that exempts uses of patented inventions in
preclinical research from infringement even when the research results are not eventually
included in a submission to the FDA. 384. While South Africa's IP Policy Review is still
continuing, there are broad practices in various jurisdictions that allow countries who have not
yet implemented this flexibility to do so with confidence and prior examples of sound regulatory
practice. In this regard a valuable resource can be found on the WIPO website, "WIPO Lex",
contains a comprehensive database with national IP laws and international agreements. On this
point, during the December 2017 meeting of the Standing Committee on the Law of Patents,
the WIPO Secretariat was requested to review a draft reference document on exception
regarding acts for obtaining regulatory approval from authorities contained in document
SCP/27/3. 385. Since the Secretariat has been doing some work in the area of exception
regarding acts for obtaining regulatory approval from authorities, it would be very useful for the
Secretariat to report what it has been doing in this respect. The proponents would greatly value
such a contribution as an add-on to our outreach and experience sharing on exception
regarding acts of obtaining regulatory approval from authorities. 386. Before I end this
intervention, I would like to pay tribute to a global hero and the father of post-apartheid South
Africa, namely Nelson Mandela. As mentioned in the introduction, it was his administration that
took steps to address issues of access to medicine. Many of us would not realize that this year
marks a century since his birth. I mention this because I regard him as a universal standard
bearer. He is a peak of moral authority, rising above the soulless wasteland of the 20th
century; he is a universal symbol for goodness and wisdom, for the ability to change, and the
power of reconciliation. May he rest in peace.
Intervention by: El Salvador
387. We would like to thank the delegations of Brazil, Chile, Bolivia and South Africa for
introducing this item on the agenda and for document IP/C/W/639. 388. We recognize the
importance of the debate on the balance that should exist between intellectual property rights
and the public interest, so we appreciate the debate in this Council. My Delegation takes the
invitation made by the proponents in point 6 of the cited document. 389. Regarding the general
characteristics of the "Bolar" exemption or its equivalent in the case of El Salvador, the
exemption regarding the regulatory examination, is not expressly part of the general exception
for research purposes, but rather it is considered an independent assumption of abstraction of
the rights conferred by a patent that is regulated in Article 116 paragraph e) of the Intellectual
Property Law (LPI). 390. In line with the above, the Regulation for the Protection of Test Data
of New Pharmaceutical Products, which regulates the protection of information on safety and
efficacy of products containing new chemical entities, in its Article 8 expressly, refers to the
"Bolar" exception. 391. Regarding the measures taken by legitimate third parties that are
excluded from the enforcement of patent protection under this exemption, the Intellectual
Property Law in its Article 116, allows generic manufacturers to investigate, develop and submit
information to the competent authorities to authorize the marketing of a product before the
expiration of the validity of the patent, with a view to entering the market immediately after the
patent expires. 392. With respect to the neutrality of the exemption as regards its application,
according to what the law establishes, the exemption covers the sanitary registrations of
pharmaceutical or agricultural chemical products. This is determined inasmuch as the uses
contemplated must be aimed at specifically meeting the marketing approval requirements for
this type of product. 393. Regarding the difficulties faced in applying the exemption, our
national authorities do not report difficulties, but rather highlight the importance of this
mechanism as it saves time, mainly, for the producers of generic pharmaceuticals.
Intervention by: Costa Rica
394. Costa Rica appreciates the opportunity given by proponents of this agenda item to share
our experience regarding the application of the "Bolar Exception" in our legislation. 395. First of
all, we would like to state that compulsory licensing exceptions, parallel imports, and the Bolar
exception, are not restricted by our international commitments and domestic legislation. Costa
Rica has kept these provisions as part of its intellectual property rights framework, since they
constitute a significant guarantee of access to pharmaceuticals in line with international
standards. 396. The Bolar exception included in the DR-CAFTA enables a third party to develop
a generic product (whether pharmaceutical or agricultural chemical) in order to be obtain
marketing approval and then enter the market as soon as the patent has expired. 397. Article
6.3 of the Regulation to our Law of Undisclosed Information (No. 34927-J-COMEX-S-MAG)
allows for generic drugs producers to use a patented invention to obtain marketing approval
without the patent owner's permission and before the patent protection expires. Regarding
agricultural chemicals, said agreement provides that registry can only be granted once data
testing protection period is over, unless the right holder grants authorization. 398. However,
Costa Rica maintains an adequate protection for all patents registered and generic
manufacturers can only enter the market once the patent expires. 399. Costa Rica firmly
believes that this exception is important to balance the interests of inventors with public
interest.
Intervention by: Chile
400. As a co-sponsor of this document Chile would like to share its experience in the use of this
important flexibility under the TRIPS Agreement. In Chile, the so called Bolar exception is
contained in Article 49 of Law No. 19.039 on industrial property. In addition to establishing the
effects of a patent, the Article indicates that "the patent for an invention shall not confer the
right to prevent third parties from importing, exporting, manufacturing or producing the subject
matter protected by a patent with the purpose of obtaining the sanitary registration or
authorization of a pharmaceutical product. The above shall not allow the marketing of said
products without the authorization of the patent holder". The exception thus covers patent
protected pharmaceutical products and allows the protected subject matter to be imported,
exported, manufactured or produced for the purpose of obtaining sanitary registration or
authorization. 401. The use of this exception helps pharmaceutical companies that hope to
market generic products on the Chilean market to lay the groundwork and reduce the time
needed to launch generic medicines and bring them to market, thereby expanding access to
health for the entire population. Chile therefore considers the use of this flexibility to be a part
of the balanced intellectual property system that the country has sought to implement.
Intervention by: Singapore
402. I thank you and the co-sponsors of the agenda item on IP and the Public Interest for the
opportunity to share Singapore's perspective on the use of a regulatory review or "Bolar"
exception. 403. The "Bolar" exception can be found in Section 66(2)(h) of the Singapore
Patents Act, and was introduced in 2004. The use of the Bolar exception is specific to the
pharmaceutical industry, and applies to clinical testing necessary to meet the requirements for
marketing approval in Singapore. 404. Under our legislation, the "Bolar" exception applies only
to acts performed in relation to the subject matter of the patent to support an application for
marketing approval for a pharmaceutical product provided that anything produced to support
the application is not: (i) made, used or sold in Singapore; (ii) exported outside Singapore; or
(iii) for any purpose other than for meeting the requirements for marketing approval for that
pharmaceutical product. There is no specific procedure needed to make use of the Bolar
exception. 405. The legislation was introduced to facilitate the manufacture, sale and
distribution of generic versions of patented drugs immediately after the patents for those drugs
have expired. Singapore consumers stand to benefit as they can gain access to generic versions
of a drug as soon as the patent expires. 406. We hope this brief snippet has been useful, and
look forward to hearing about how other Members frame and implement regulatory review
exceptions in their own jurisdictions.
Intervention by: Canada
407. Canada would like to thank Bolivia, Brazil, Chile, and South Africa for their communication
on this issue, and to provide a brief overview of the regulatory review exception in our domestic
regime. 408. Canada provides a regulatory review (or "early working") exception under section
55.2 of the Patent Act. This exception, which reads as follows, provides that "[i]t is not an
infringement of a patent for any person to make, construct, use or sell the patented invention
solely for uses reasonably related to the development and submission of information required
under any law of Canada, a province or a country other than Canada that regulates the
manufacture, construction, use or sale of any product." 409. For instance, under this exception,
manufacturers of generic drugs in Canada may use a patented invention to obtain regulatory
approval for marketing purposes – such as from health regulatory authorities – without the
patent owner's permission before the patent expires. This allows the generic manufacturer to
be in a position to enter the market as soon as possible after patent expiry. 410. It is also
important to note that Canada's early working exception is drafted without prejudice to the field
of technology. In other words, it is not limited to pharmaceutical patents. 411. As Members
may be aware, Canada's early working exception was upheld by a WTO Dispute Settlement
panel in 2000, under the dispute "DS114: Canada – Patent Protection of Pharmaceutical
Products." Specifically, the Panel found that Canada's early working exception was not
inconsistent with Article 27.1 of the TRIPS Agreement, and was covered by the exception in
TRIPS Article 30.
412. China is glad to state that it would like to co-sponsor the proposal under this agenda item
and we support the discussion of this topic. During the second and third meetings of the TRIPS
Council in 2017, Members actively discussed the issue of intellectual property and the public
interest, good results have been achieved.
413. Bolar exception was introduced in the third revision of the patent law of China in 2008.
Article 69.5 of the patent law provides that it shall not be deemed to be patent right
infringement in the situation where any person produces, uses, or imports patented drugs or
patented medical apparatus and instruments, for the purpose of providing information required
for regulatory approval, or where any other person produces or imports patented drugs or
patented medical apparatus and instruments especially for that person mentioned above.
414. China believes the protection of IP should contribute to the mutual advantage of
producers and users and to a balance of innovation and public interest.
415. China also believes the discussion on intellectual property and public interest should be
open and inclusive. And Members could share views and experience on how to take advantage
of flexibility of TRIPS Agreement including Bolar exception, and effectively solve the public
interest problem.
416. Australia notes the communication from the Plurinational State of Bolivia, Brazil, Chile and
South Africa regarding Intellectual Property and the Public Interest Regulatory Review
Exception. 417. Australia's Patents Act provides infringement exemptions for the purpose of
obtaining regulatory approval of pharmaceuticals (sl 19A). 418. This permits generic
manufacturers to obtain regulatory approval during the term of the pharmaceutical patent so
they can enter the market when the patent term expires. 419. We look forward to hearing other
Members' examples.
Intervention by: Argentina
420. My delegation would like to thank the co-sponsors of this agenda item for the
communication in document IP/C/W/639. 421. A wide range of policy options are built into the
international intellectual property regime that can be used to pursue public policy objectives,
including public health and innovation. 422. These options are not self-actuating at the
international level, though, and attention and action are needed at the domestic level as to how
best to implement such flexibilities, so that the national IP regime responds to each country's
individual needs and policy objectives. 423. This is why we agree with the thrust of document
IP/C/W/639: indeed, Argentina is a country which has made use of the TRIPS flexibilities in
drawing up its legislation, for instance the well known "Bolar" exception. 424. We need to
maintain a balance between intellectual property rights and public interests, bearing in mind the
importance of Articles 7 and 8 of the TRIPS Agreement in the light of document IP/C/W/639.
425. We would like to thank the proponents of the communication Bolivia, Brazil, Chile, China,
and South Africa for bringing this important issue of regulatory exemption for discussion today.
I also thank the delegations of El Salvador, Singapore, Canada, Australia and Argentina for
sharing a national experience of using this important regulatory exemption. 426. The TRIPS
Agreement attempts to strike an appropriate balance between the interests of rights holders
and users. The TRIPS Agreement also recognizes that the principles of IP protection are based
on underlying public policy objectives. In furtherance of the objectives and principles of TRIPS
enshrined in Articles 7 and 8, a number of safeguards or flexibilities have become an integral
part of the TRIPS framework. These flexibilities have been clarified and enhanced by the 2001
Doha Declaration on TRIPS and Public Health that WTO Members have the flexibility to interpret
and implement the TRIPS provisions in a manner supportive of their right to protect public
health. 427. The regulatory review exception or the Bolar Exception is an important example of
what would be covered by Article 30 of the TRIPS Agreement. Bolar Exceptions in India are
covered under Section 107A of the Indian Patent Act. Report of the Joint Committee of the
Indian Parliament, when this amendment was introduced states the objective behind such
insertion of Bolar Exemption via 2002 Amendment to the Patents Act and I quote "This clause
seeks to insert a new section 107-A in the 'principal Act, relating to certain acts which are not
to be considered as infringement. This provision has been made to ensure prompt availability of
products, particularly generic drugs, immediately after expiry of the term of the patent. The
amendment in this clause has been made to make a provision in consonance with the Bolar
provisions at the global level". 428. Bolar exemption originated from Section 202 of the Drug
Price Competition and Patent Term Restoration Act of 1984 of USA with an objective to provide
for a specific exemption for experimental trials conducted on patented drugs in order to
generate clinical data and obtain regulatory approval that would facilitate early entry of
generics as soon as the term of the patent expires. 429. In India the application of Bolar
exceptions as covered by Section 107 A is technology and sector agnostic. These exceptions are
valid for any industry where development and submission of information is required under any
law in force in India or when such information is required in a country other than India for
regulatory purposes. While the application of the exception is technology neutral, it has been of
particular benefit in ensuring early availability of more affordable generic medicines which in
turn has positively affected access to medicines and treatments in India and all over the world.
430. Under the Indian law, acts such as manufacture of the product that includes a patented
technology, export of Active Pharma Ingredient (API) or finished formulation by a generic
company, conduct of clinical trials, or import of the API or formulation by a third party are not
considered to infringe a patent provided the purpose of these acts is to seek relevant regulatory
approvals or for generation of a regulatory dossier in other countries. 431. Bolar exceptions
have an important link with compulsory licensing. The absence of the Bolar exceptions can
severely affect the ability of a country to effectively utilize compulsory license provisions when
considered necessary. In India, the Bolar exception played a vital role in the entry of a more
affordable generic of a cancer drug when the Indian Patent Office had issued the first-ever
compulsory license in India to a manufacturer in 2012 on the drug sorafenib tosylate, used to
treat kidney and liver cancer. 432. We look forward to listening from other delegations on their
experiences on using this important TRIPS flexibility.
433. Indonesia welcomes the inclusion of this agenda item in the TRIPS Council meeting and
supports continuing discussion this issue of great importance which relates the balance between
intellectual property and public interest, especially the Bolar Exception. 434. The need for
protection of IP in encouraging innovation is the most important element in TRIPS Agreement.
However, there is a need to balance the rights of IP holders and the right for people to get
access to affordable medicines. Article 30 of the TRIPS Agreement allows exceptions to the
exclusive rights of patent holders. With such flexibility, "Bolar Exception" or the regulatory
exception of the patent objects can be used without the patent owner's permission and before
the patent protection expires. Such exception may become national legal exception and need to
be set out in the national Patent Law. Our Patent Law has already accommodated the use of
Bolar Exception as stated in Article 167. 435. In line with the TRIPS Agreement and the
flexibilities contained therein, the Indonesian Government also enacted regulation to allow such
flexibility to be put in practice with the primary aim to strengthen Indonesia's capacity to
provide medicines to people in need. 436. The Food and Drugs Supervisory Agency of Indonesia
enacted Regulation Number 24/2017 on Criteria and Drug Registration Procedure as a legal
basis to implement the Bolar Exception. Based on Article 21 of the aforementioned Regulation,
registration of drug which is still under protection of patent, may be utilized by applicants which
are not the holder of the patent. 437. Indonesia would like to reiterate that this agenda item be
maintained for the next meeting of the TRIPS Council, especially with regard to discussions on
patent protections and its possible conflict with the right to health, and how it relates to the
issue of encouraging new inventions and patent applications, as well as for WTO Members to
achieve sustainable development goals of 2030.
438. Switzerland would like to thank the delegations of Bolivia, Brazil, Chile and South Africa for
their paper on public interest, in particular on the regulatory review exception; 439. We
recognize the importance of this discussion and the sharing of national experience in this area;
Public interest is fundamental to this delegation. The current system of intellectual property
protection should and does integrate a balance between private and public interests; 440. The
TRIPS Agreement foresees exceptions and limitations to the scope assigned through private
rights. Such limitations were put in place to strike a balance between the private interest of the
IP holder and the public interest in general. 441. The regulatory review exception, also known
as the Bolar exception, is fully compliant with the TRIPS Agreement. The Panel in DS114
Canada – Patent Protection of Pharmaceutical Products, which the distinguished delegate of
South Africa mentioned before, ruled that: potential competitors of a patent owner are
permitted to use the patented invention, without the authorization of the patent owner during
the term of the patent, for the purposes of obtaining government's marketing approval, so that
they will have regulatory permission to sell in competition with the patent owner by the date on
which the patent expires. 442. It is noteworthy to also highlight that the Panel further ruled
that stock-piling of those medicines in anticipation of market entry was generally in violation of
the TRIPS Agreement. 443. In 2008, Switzerland introduced the Bolar exception in its patent
law. All acts with regard to a patent-protected pharmaceutical product that are required to
obtain a pharmaceutical marketing authorisation are outside of the scope of patent protection.
The Swiss Bolar exception applies to marketing authorisation in Switzerland or in countries with
comparable control of pharmaceutical products. 444. A further aspect should also be
considered. The duration of the patent and the calculation of the effective patent term are
essential for all stakeholders: the patent holder, the competitors and for the public. It should
thus be handled in a balanced manner. For that reason, Switzerland also partially compensates
patent owners for their time lost due to regulatory requirements; the effective patent term can
in fact be drastically shortened due to marketing approval procedures and the time and effort it
takes to generate necessary test data required by the authorities. Applicants undertake
expensive clinical trials which entail a major commercial risk and normally take years to compile
and submit for marketing authorisation; 445. Switzerland encourages Member states to analyse
their relevant regimes and ensure that they can strike a fair balance between the public and
private interest, i.e. between the right holders making available innovative products and
services and the users to have their needs met.
446. The laws of the United States provide for a limited patent exception allowing certain
patented invention to be made, used, offered for sale, or sold within the United States or
imported into the United States solely for uses reasonably reliably related to the development
and submission of information under a U.S. law which regulates the manufacture, use, or sale
of such inventions, facilitating rapid introduction of generic medicines in the U.S. market once
patents, including any patent term extensions and any market exclusivity periods expire. 447.
In fact, U.S. intellectual property and innovation policies have not only helped encourage
investments in pharmaceutical innovation, but also facilitated the approval and utilization of
generic drugs. According to recent data, generic medicines account for 89% of all prescriptions
dispensed in the United States. 448. In fact, the most recent estimates are that a vast majority
of medicines on the WHO Model List of Essential Medicines Patents are off-patent. 449. I share
this relevant information to help illuminate the perspective that IP and patents should not be
viewed as intrinsic barriers to access. 450. To properly address barriers to access, we must look
at factors outside the IP system. These include pricing and procurement policies, taxes,
markups and tariffs, and other national policies (or lack thereof) that ultimately result in higher
costs for consumers and for health systems. 451. Unfortunately, the theme of today's agenda
item does not explore these critical factors.
452. We would first like to thank the proponents for continuing discussions on the relationship
between IP and public interests. The issues of public health and how to promote health
technology are important. 453. Regarding the "Bolar exception", it is prescribed by Article 60 of
our Patent Act. The applicable acts include: exploiting a patent for trials per se, as well as
manufacturing, offering for sale, selling, using, or importing anything that is directly related to
trials. 454. The effects do not extend to acts other than for the purpose of obtaining registration
and market approval, such as trials of drugs conducted by hospitals. According to the relevant
laws and regulations, the pharmaceutical industry is the only industry where this
aforementioned provision is applicable.
455. The delegation of Japan would like to mention that Members, including Japan, have been
aiming to balance the interests of patent rights holders and third parties by, for example,
providing the option to extend the term of patent rights as a measure to compensate for the
loss of a part of the term resulting from regulatory reviews.
456. Therefore, this delegation would like to ask other Members to note that it might be better
to take more comprehensive approach, taking into account not only the interests of third
parties but also those of patent right holders. When regulatory review is discussed, a
comprehensive and evidence-based approach should be taken.
457. In addition, this delegation would also like to point that, as South Africa mentioned, the
27th session of WIPO/SCP has just decided its future work which instructs the WIPO Secretariat
to prepare a second draft reference document on exceptions regarding acts for obtaining
regulatory approval from authorities, and to submit it to WIPO/SCP/28. Given this situation, the
delegation of Japan is of the view that WIPO/SCP is the most appropriate forum to discuss this
matter.
458. Generally speaking, we have the need to protect intellectual property to encourage
development of new and effective drugs so that new essential drugs will continuously be
developed.
459. It is the position of the European Union that a balanced system of intellectual property
rights, which takes into account legitimate interests of users and right holders, does serve the
public interest. It is for this very reason the national and international systems of intellectual
property rights have been created. In the European Union, according to Article 17(2) of the
Charter of Fundamental Rights of the European Union, IPR is a fundamental right. 460.
Intellectual creations need protection if creativity and innovation are to flourish, and this is the
role of IPRs, which play an important function in promoting development and in addressing
today's global challenges. 461. The European Union further believes that TRIPS generally,
although only being minimum standards, provides a reasonable balance and its rules and
flexibilities allow not only least developing countries a pragmatic and flexible approach that can
help Members maximise the potential of their own intellectual assets and further their
integration into international trade, while achieving broader societal welfare. 462. We think that
the compatibility of the so-called "Bolar" or regulatory review exemption with the TRIPS is one
more example showing that TRIPS allows for flexibilities to the benefit of research for new
pharmaceutical products and earlier to market timing for generics in full compatibility with the
relevant IP rights. 463. In our view, it also shows that the carefully balance stroke at the time
of conclusion of the TRIPS allows the WTO system, including its dispute settlement mechanism,
to react to legal questions appropriately and proportionately. 464. The EU took note of the
outcome of the case Canada – Pharmaceutical Patents (DS114) and in fact, a regulatory review
exemption was introduced in EU law in 2004 by Article 10(6) of Directive 2004/27 amending
Directive 2001/83 on the Community code relating to medicinal products for human use. 465.
Under this rule, conducting studies and trials necessary to gain regulatory approval for generic
medicinal products and "the consequential practical requirements" do not constitute acts
infringing patent rights or supplementary protection certificates for medicinal products. 466. We
believe that if the regulatory review exemption is applied in that concrete, specific and limited
way, it can both allow for the necessary flexibility in the marketing approval context as well as
providing legal clarity on what constitutes an IP infringement and what not. 467. At the same
time, the EU would however be cautious in supporting a too broad interpretation of the
regulatory review exemption that could amount to weakening the underlying IP rights for other
purposes, such as for industrial policy reasons. 468. On a final note, we would like to welcome
the constructive tone of the paper submitted by Bolivia, Brazil, Chile and South Africa. We also
welcome the interesting topic chosen that shows how the IP system is successfully integrating
and supporting the public interest. 469. In such a context, the EU, for its part, stands ready to
continue to contribute positively to the debate.

FOLLOW-UP DISCUSSION ON COMPULSORY
LICENSING
462. This statement is read on behalf of Brazil, China, India and South Africa. Following the
circulation of document IP/C/W/630, the co-sponsors introduced "Intellectual Property and the
Public Interest" as a topic for discussion. During the initial discussions, the co-sponsors
emphasized that WTO members have the flexibility to design their national IP systems within
the minimum standards set by the TRIPS Agreement, in cognizance of a country's economic,
developmental and other objectives, including public health. The TRIPS Agreement clearly
recognizes that the principles of IP protection are based on underlying public policy objectives.
Article 8 of the TRIPS Agreement entitled "Principles" states that WTO Members may, in
formulating or amending their laws and regulations, 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. 463. Article 8.2 further states that appropriate measures
may be needed to prevent the abuse of IPRs by right holders, or to resort to practices which
unreasonably restrain trade or adversely affect the international transfer of technology. The
Trilateral Study of the WHO, WIPO and the WTO (2013) points out that prices of medicines are
a critical determinant of access to medicines, especially in countries where the public sector is
weak and poor people purchase their treatment on the private market (2013:146). It posits
that in some developing countries, up to 80% to 90% of medicines are purchased out-of-
pocket, as opposed to being paid for by national health insurance schemes or private insurance
schemes (ibid). 464. In the last session of the TRIPS Council, the co-sponsors invited
delegations to share their experiences on the use of compulsory licences for accessing health
and other technologies. Some delegations indicated that the use of compulsory licences can
assist countries to uphold the delicate balance achieved in the TRIPS Agreement, and noted
that even though the use of compulsory licences is commonly referenced in respect of health
issues, compulsory licences can also be used in a variety of other situations as well. Various
delegations made reference to the entry into force of the Protocol Amending the TRIPS
Agreement, while the United Nations Secretary General's High-Level Panel Report on Access to
Medicine was widely quoted. 465. One delegation expressed the view that a balanced system of
intellectual property rights is one that takes into account legitimate interests of users and right
holders and endorsed the idea of intellectual property as a fundamental right of every citizen.
The right to health is a fundamental part of our human rights and our understanding of a life of
dignity and as such the achievement of the highest attainable standard of health is the right of
every human being, without distinction of race, religion, political belief, or economic or social
condition. This is codified in the 1948 Universal Declaration of Human Rights. In the same vain,
SDG Goal 3, Target 3.b relating to support for research and development of vaccines and
medicines for the communicable and non communicable diseases that primarily affect
developing countries, promotes access to affordable essential medicines and vaccines, in
accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms
the right of developing countries to use to the full the provisions in the Agreement on Trade-
Related Aspects of Intellectual Property Rights regarding flexibilities to protect public health,
and, in particular, provide access to medicines for all. 466. A common theme that emerged
from discussions was how governments use compulsory licences to substantially reduce the
price of essential medicines while striking a balance between the interest of right holders and
users. It is however noteworthy that in specific areas, such as access to antiretroviral therapy,
where substantial progress has been made, and where substantial price reductions for
commonly used first-line ARVs have been achieved, prices for second-line regimes remain much
higher (2013:150). The World Health Statistics 2017 point out that new health technologies,
such as medicines, vaccines and diagnostics are becoming increasingly expensive (2017:19). As
one of the co-sponsors pointed out, pubic interest in the achievement of inclusive public health
goals call on the active participation of governments, pharmaceutical companies and patient
associations alike. As a result, a balanced intellectual property system, through a combination
of flexibilities, complementary policies and incentives, guarantee sustainable public health
outcomes that harness innovation and promotes access to medicines and health technologies.
467. Given the continued interest that delegations have expressed in the topic of compulsory
licences, the co-sponsors have decided to continue an inclusive debate on compulsory licences.
Since the last TRIPS Council meeting, several noteworthy developments have occurred in this
area. 468. On 6 June, 2017, Judge William Martin Conley, a United States District Judge of the
Western District of Wisconsin, issued a compulsory licence allowing Apple Computers to use a
patent it had infringed, owned by the Wisconsin Alumni Research Foundation (WARF), in return
for an ongoing royalty.6 This case follows a long line of cases that seem to suggest that court
decisions in the United States have allegedly responded to instances of infringement of medical
patents by denying injunctive relief, instead granting monetary damages, often in the form of
royalty payments, what would in effect provide for compulsory licensing. Public interest is often
at the heart of such decisions. 469. On 11 July, 2017, the German Federal Supreme Court
announced that it had affirmed the 2016 decision of the Federal Patent Court to issue a
compulsory licence allowing Merck to continue selling its HIV drug, Isentress. The Federal Court
shared the assessment of the Federal Patent Court that a public interest in the granting of a
compulsory licence was credible. 470. On 20 September 2017, the Malaysian Department of
Health announced that Cabinet had authorized a government use compulsory licence in respect
of generics of the Hepatitis C medicine Sofosbuvir. The decision to initiate the Rights of
Government was made after the MOH efforts to include the drug in the Medicine Patent Pool
(MPP) failed and price negotiations with patent holder were unsuccessful. 471. On this basis, I
would like to invite the co-sponsors and other delegations to intervene on the issues taken up
in this statement or any other matter that may be raised in the context of compulsory licences.
472. First we would like to support the statement made yesterday by South Africa. In the last
session, Brazil, China, Fiji, India and South Africa circulated document IP/C/W/630, with the
goal of expanding the discussions on a very important topic for the multilateral trade system.
There is a continuous need of increasing knowledge regarding those aspects and the exploration
of possible solutions for developing as well as for developed countries. Indeed, for all Member
States. 473. In the first session in which the issue was discussed, some delegations claimed
that the document did not take into account the benefits of protecting IP and focused only on
compulsory licenses. As we have stated before, we do not see those issues as mutually
exclusive. On the contrary: Brazil understands that the balance reached by the TRIPS
Agreement allows for ways to address their public health challenges while maintaining
intellectual property systems that incentivize the investment and research necessary to develop
innovative new medicines. This is clearly provided in two of the pillars of the Agreement,
namely, Articles 7 and 8, which contain the objectives and principles of intellectual property
protection under the treaty. In our view, a balanced IP system, with built-in flexibilities as well
as complementary policies and incentives, is the best way to promote innovation in all fields of
technology, including the health sciences. In short: a balanced IP system is a much stronger IP
system. 474. The recent entry into force of the Protocol of Amendment to the TRIPS Agreement
demonstrates the need to have mechanisms that ensure adequate remuneration to intellectual
property rights holders while allowing governments to adopt measures necessary to protect the
public interest. The Preamble of the TRIPS Agreement advocates this view, as it recognizes "the
underlying public policy objectives of national systems for the protection of intellectual
property, including developmental and technological objectives". 475. We have previously
described the process that led to the single compulsory licence issued by Brazil, as well as the
results achieved by it. More recently, developments in countries from different regions have
generated increased interest on the matter. As an example, last July the Bundesgerichtshof,
Germany's highest civil court, decided to uphold the decision of a lower court to grant a
provisional compulsory patent licence on Raltegravir, an antiretroviral drug ingredient. The
producer of that medicine was facing legal threats from the owner of the Raltegravir patent, in
spite of distributing the drug in Europe for some years. In the course of judicial proceedings, it
requested a compulsory license based on Section 24 (1) of the German Patent Act. 476. Section
24(1) of the German Patent Act lists two conditions for the grant of a compulsory licence,
namely, that the licence seeker has, within a reasonable period of time, unsuccessfully
attempted to obtain permission from the owner of the patent and, second, that the public
interest calls for the grant of a compulsory licence. Based on it, it was decided to grant a
provisional compulsory licence, allowing the company to continue to distribute the medicine
containing Raltegravir in the country. 477. The Court understood that there is a concrete need
of certain HIV patient group for a treatment containing Raltegravir. The use of alternative
compounds would entail severe risks of adverse effects and a loss of therapy quality, in
particular for infants and pregnant women. 478. This decision, in Brazil's view, is a good
example of how the IP system provides the basis for advancing the public interest without
prejudicing the innovative efforts by companies. It also shows that this should not be a
polarizing issue, as it is of interest to all Member States of this organization. 479. During the
June session of the Council we heard comments to the effect that access to medicines also
depends on factors outside the IP system. While this is undoubtedly a complex phenomenon
that requires a broad range of actions, the mandate of this Council does not include tax
systems or the physical infrastructure of countries, but intellectual property. Let us focus on
this issue and its concrete effects in a positive and constructive way, enabling a rich exchange
of views and experiences that enhances the mutual understanding of the matter.
480. I would like to support the statements made by South Africa and Brazil. During the last
meeting of the Council for TRIPS, many Members, including India, shared their experiences on
the use of compulsory licensing (CL). We have shared details of provisions in our national law
regarding compulsory licensing, including the one compulsory licence issued by India so far,
i.e., in March 2012, Indian generic manufacturer NATCO Pharma was granted compulsory
licence to manufacture Bayer's drug Sorafenib Tosylate (Nexavar) used for the treatment of
Kidney and Liver cancer. Since the last meeting of the Council for TRIPS, compulsory licences
were issued by Germany and Malaysia. I would like to thank the delegations of South Africa and
Brazil for providing details about these two compulsory licences issued by Germany and
Malaysia. 481. The TRIPS Agreement attempts to strike an appropriate balance between the
interests of right holders and users. TRIPS Agreement also recognizes that the principles of IP
protection are based on underlying public policy objectives. In furtherance of the objectives and
principles of TRIPS enshrined in Articles 7 and 8, a number of safeguards or flexibilities have
become an integral part of the TRIPS framework. These flexibilities have been clarified and
enhanced by the 2001 Doha Declaration on TRIPS and Public Health that WTO Members have
the flexibility to interpret and implement the TRIPS provisions in a manner supportive of their
right to protect public health. 482. Article 31 provides Members complete freedom to decide the
grounds for issue of compulsory licence. The Doha Declaration on the TRIPS Agreement and
Public Health has also duly confirmed what was already implicit in the TRIPS Agreement – that
WTO Members have the freedom to determine the grounds upon which compulsory licenses are
granted. 483. During the 1980s and 1990s, the antiretroviral medicines used to treat HIV/AIDS
were priced beyond the reach of most people who needed them in developing countries.
Countries like Brazil, Thailand, South Africa and others have used flexibilities under the TRIPS
Agreement, including compulsory licensing to bring down the price by increasing the supply of
generic ARV medicines for a fraction of the price of the patented equivalents. Indian generic
companies, especially CIPLA played an important role by announcing in early 2001 that that
triple therapy could be manufactured for less than a dollar a day from the price of standard
triple therapy from US$10,000 per patient/year. Indian generic companies made ARV medicines
accessible to all those who needed the drugs but had previously not been able to afford them.
484. Now, I would like to provide brief details of the compulsory licensing provisions in a
developed Member, the United States. According to United States Congressional Research
Service article "Compulsory Licensing of Patented Inventions" dated 14 January 2014, the law
in the United States permits for the issuance of compulsory licences in a number of
circumstances, and also allows for circumstances that are arguably akin to a compulsory
licence. The Atomic Energy Act, Clean Air Act, the Federal Insecticide, Fungicide and
Rodenticide Act and Plant Variety Protection Act provide for compulsory licensing. Atomic
Energy Act allows for compulsory licensing if the invention or discovery covered by the patent is
of primary importance in the production and utilization of special nuclear material or atomic
energy; Clean Air Act contains a similar provision relating to devices for reducing air pollution;
and Plant Variety Protection act, Section 44-"Public Interest in Wide Usage" provides for
compulsory licensing of seed-bearing plants that are protected by plant variety certificate, a
patent-like instrument granted by Department of Agriculture. The Bayh-Dole Act offers the
federal government "march-in rights," and 28 U.S.C. Section 1498 provides the US government
with broad ability to use inventions patented by others. Compulsory licences have also been
awarded as a remedy for antitrust violations and a court may decline to award an injunction in
favor of a prevailing patent owner during infringement litigation, an outcome that some
observers believe is akin to the grant of a compulsory licence. 485. September 2016 report of
the UNSG's High-Level Panel (HLP) states that many governments have not used the flexibilities
available under the TRIPS Agreement, including compulsory licences for various reasons,
ranging from capacity constraints to undue political and economic pressure from states and
corporations, both express and implied. 486. Political and economic pressure placed on
governments to forgo the use of TRIPS flexibilities violates the integrity and legitimacy of the
system of legal duties and rights created by the TRIPS agreement and as reaffirmed by the
Doha Declaration. 487. I conclude by quoting the recommendations in the HLP report on
Compulsory Licences. "Governments should adopt and implement legislation that facilitates the
issuance of compulsory licences. Such legislation must be designed to effectuate quick, fair,
predictable and implementable compulsory licences for legitimate public health needs, and
particularly with regards to essential medicines. The use of compulsory licensing must be based
on the provisions found in the Doha Declaration and the grounds for the issuance of compulsory
licences left to the discretion of governments." 488. I would request the delegations of the
European Union and Malaysia to provide details on the CL issued by Germany and Malaysia
respectively. We look forward to listening from other delegations on their experiences on using
this important TRIPS flexibility, compulsory licensing.
489. China attaches great importance to the TRIPS and public interest issue. China's Patent Law
and implementation regulation when they were enacted have specific provision of compulsory
licensing and these provisions have been improved with later amendments. In 2012, in order to
increase the feasibility of the system, China issued the new detailed rules for compulsory
licensing. 490. China believes the discussion on intellectual property and public interests should
be open and inclusive. WTO Members could exchange views and experiences on how to take
advantages of the flexibilities under the TRIPS Agreement, and effectively solve the public
interest problem.
491. As already explained during the last TRIPS Council the European Union disagrees with the
underlying assumption in the communication from Brazil, China, Fiji, India and South Africa,
that there would be a contradiction between the system of IP rights and the public interests. On
the contrary, it is the position of the European Union that a balanced system of IP rights which
takes into account legitimate interests of users and right holders does serve the public interest.
It is for this very reason that the national and international systems of international property
have been created. In the European Union according to Article 17, paragraph 2 of the Charter
of the Fundamental Rights of the European Union, IPR is a fundamental right for every
European citizen. The European Union further believes that TRIPS generally, although only
being minimal standards as rightly mentioned in the communication, provides a reasonable
balance and its rules and flexibilities allow not only least-developed countries a pragmatic and
flexible approach that can help Members maximize their potential of their own intellectual
efforts and further the integration into international trade, while achieving broader societal
welfare. 492. Intellectual creations need protection if creativity and innovation are to flourish
and this is the role of IPRs, which plays an important function in promoting and developing the
solutions in today's global challenges. With regards to protecting innovation, recognition of the
importance of patent protection keeps growing, for example, statistics from the European
Patent Office show that the largest relative increase in patent applications in Europe from 2015
to 2016 can be attributed to India. Many of these patent applications are pharmaceutical
applications. 493. But let us now turn to compulsory licences and the discussion on
pharmaceutical patents as mentioned in the last part of the communication from Brazil, China,
Fiji, India and South Africa. The current innovation model based on patents has delivered
consistent progress in global public health continuously leading to important new improved
treatments as well as much extended life expectancy both in developed and in developing
countries. Medicines however are not created by public authorities, but by the pharmaceutical
industry. As all industry, it needs an adequate return on investment to finance innovation. The
challenge is how to use all levels available to public authorities to promote affordable access to
medicines without affecting negatively the R&D by pharmaceutical industry and therefore the
availability of new and innovative medicines. 494. Let us also recall that evidence shows that
indeed there are many different significant causes of lack of access to medicines. It is
misleading to attribute the problem merely to or even principally to IPR-related aspects. In fact,
IPR issues seem to play a minor role in the problem, but disproportionally large role in the
debate. This has also been echoed in the joint report from the WTO, WHO and WIPO, stating
that the lack of access to medical technologies is rarely due to a single isolated factor.
Additionally, it should be mentioned that currently most medicines on the WTO list of essential
medicines, i.e. more than 90%, are available in a generic format, either because they were
never protected by a patent, or because protection has long expired. Still these medicines do
not reach all they need, in fact, many countries apply tariffs, taxes and substantial mark-ups to
medicines and lack an efficient procurement and health care system with a result that
medicines are not available to the population at least not at an affordable price. 495. However,
the EU has never shied away from a serious and constructive debate on the matter in the IPR
context and concrete, broad and effective action with the aim of tackling any problem related to
access medicines. In fact the Global Fund, distributing medicines to patients in need in
developing countries with diseases such as HIV or malaria, has been financed by the UN and its
member States with over €19 billion from 2001 to 2016. For the period 2017 to 2019, the EU
and its member States will finance the Global Fund with around €17 billion out of the total of
€29 billion pledged by all countries. According to the calculation of the Global Fund, this has
allowed the Fund to save 22 million lives. The Global Fund also cooperates closely with the
medicines patent pool which receives licences from some of the world's leading innovative
pharmaceutical companies for free or at a dramatically discounted price. Hence innovation,
such as the world's latest HIV drugs, can also reach persons in need in places where the
country's government is not able to provide universal health care. 496. From the outset, the EU
has also been at the forefront of the debate on TRIPS and access to medicines. In the WTO, the
EU has played an active role with the aim of bringing together the almost in-reconcilable
positions of the opposing sides including on the latest LDC waiver. EU has also consistently
supported the use, where necessary and justified, of the flexibilities provided under the TRIPS
Agreement and the Doha Declaration with the objective of ensuring effective access to
medicines for the relevant populations. The TRIPS Agreement indeed provides for a number of
flexibilities that can be used under clear roads and when there is a real health related contrite
to industrial policy related reasons. In particular, the TRIPS Agreement provides for the
possibility under certain conditions of issuing a compulsory licence for local consumption of
medicines. The quoting of the example for the issuing of compulsory licences in line with Article
31 of TRIPS, among others a case in Germany has been mentioned, actually reassures that the
system works and is not as burdensome as often claimed by some. 497. Finally, the
communication from Brazil, China, Fiji, India and South Africa seems to suggest that the IPR
provisions proposed in certain trade agreements would restrict access to medicines and no
longer enable these countries to produce export generic medicines to other developing
countries. For the EU these concerns are not founded, in all the trade agreements we are
negotiating with developing countries. We take into consideration the development status and
public health concerns of our trading partners. Most importantly, we are not asking for
provisions which would be contrary to or otherwise undermine the Doha Declaration on the
TRIPS Agreement and public health. On the contrary, the provisions on intellectual property we
propose include an explicit reference to the Doha Declaration so as to ensure that the
flexibilities granted by the TRIPS Agreement especially as regards patents on medicines, can be
fully used by trading partners.
498. First, as a point of order, the United States seeks to confirm that the agenda item "IP and
the Public Interest" is not a standing agenda item. The Secretariat considers it to be an ad hoc
agenda item. As do we. 499. Second, as a point of clarification, the delegate of South Africa,
representing also Brazil, China, and India, mischaracterized a recent US court judgment. The
delegate claimed that the outcome is a compulsory licence. This is not correct. The judgment is,
in fact, an example of a court awarding equitable relief in a case of patent infringement. This is
standard practice in the United States and in other jurisdictions. 500. Such remedies are fully
consistent with the rule of law, and most certainly are not the equivalent of a governmental
mechanism for favoring national industries by granting compulsory licences to domestic
competitors of foreign innovative companies. 501. The United States made clear its positions on
compulsory licensing during the last TRIPS Council meeting. Our position has been consistent
for a very long time. As we again noted, the United States' system permits the use of a patent
without the right holders' authorization only in very rare and narrow circumstances. And we
repeat, yet again, that the US Patent and Trademark Office has never issued a compulsory
licence. In fact, it does not have the authority to do so. 502. We urge Members to exercise
caution on issues related to compulsory licensing. Sound decisions require careful deliberation,
and consultation with right holders can offer alternative approaches. Decisions regarding
compulsory licensing can have significant negative implications, including restricting the
availability of innovative treatments in certain markets and limiting investment in R&D into the
next generation of treatments for all. 503. In addition, we share the views of other Members
who lamented the narrow focus of the co-sponsors on the concept of public interest. This is yet
another lost opportunity for a meaningful exchange. 504. A great number of benefits accrue to
the public as a result of national governments' upholding robust IP systems, and managing
those systems consistently with the rule of law. The United States would be pleased to further
explore these benefits in future meetings.
505. The delegation of Japan would like to mention that the Doha Declaration, its relevant
statements, and the resulting amendment of the TRIPS Agreement, all rest on an intricate
balance. On one hand there is the need to make sure that essential drugs become common for
everyone. On the other, we have the need to protect intellectual property to encourage
development of new and effective drugs so that new essential drugs will continuously be
developed. This balance is necessary to meet our common objective, which is to protect public
health, as described in Paragraph 3 of the Doha Declaration.
506. The delegation of Japan also strongly believes that the issue of access to medicines would
be more effectively dealt with through a more comprehensive approach based on the evidence
and facts. Accordingly, this delegation would like to stress once again Japan has concerns about
making any decisions, reports or discussions on the issue of access to medicines based on the
UN High Level Panel report.
Intervention by: Holy See
507. Intellectual property benefits public interest by providing incentives for innovation. An
efficient IP system can help all countries realize IP's potential as a catalyst for economic
development and social and cultural well-being. A flexible policy space within the boundaries of
the international agreed objectives, principles and standards, is necessary to allow each
Member to develop and adopt more adequately the set of IP regulations for their particular
needs and to ensure predictability and mutual confidence. Intellectual property as foreseen by
Article 7 of the TRIPS Agreement should contribute to the promotion of technological innovation
and to the transfer and dissemination of technology to the mutual advantage of users and
producers of technological knowledge in a manner conducive to social and economic welfare
and to balance rights and obligations. To search for a balance between the need, on the one
hand, to protect IPRs and to provide incentives for research and development and the need, on
the other hand, to address concerns about the potential impact of such protection in the health
sector, in particular its effect on prices, has been continuously stated by the Holy See at this
Council and other fora. In line with the objectives and principles of the TRIPS as enshrined in
Article 7 and 8 a number of flexibilities have developed into an integral part of the TRIPS
framework and they can be used to pursue public health objectives. However, to implement
these flexibilities action is needed in the domestic level by incorporating them into national IP
regimes, keeping in mind each country-specific needs and policy objectives. WTO Members
have the flexibility to interpret and implement TRIPS provisions in a manner supportive of the
right to protect public health. The United Nations' High Level Panel on access to medicines in its
report to the Secretary General highlighted the importance of TRIPS flexibilities and addressing
the hope for achievement of 3 Sustainable Development Goals, recommended their use. 508. In
an era of digitization and globalization the needs of the developing countries are even more
critical. Access to knowledge goods both to reach human resources and facilitate economic
growth is an indispensable requirement for the international system. Developing countries have
a role to play by actively implementing limitation and exception in a manner that best suits
their domestic needs, especially the need to stimulate local creativity. In this sense, the efforts
of the developing countries to make greater use of flexibilities, limitations and exceptions to
intellectual property, to advance public policy's objectives in scenarios such as health,
education, agriculture, food and technology transfer could represent a tremendous step
forward. The role of limitation and exception implementing public welfare is a matter of
importance, not only for users of knowledge goods but for creators as well. Without the
appropriate balance between protection and access, the international IP system totally
impoverishes the global public but ultimately it undermines its own ability to sustain and reward
the creative enterprise for the long-term future. 509. In conclusion, respect for the exercise of
intellectual property rights is clearly subordinate to the common good. It serves as a means to
an end; it could not be an end in itself. The knowledge economy is increasingly evolving into a
driving force in the global economy. Thus there is a need to protect intellectual property rights
as an incentive for innovation and technology creation. Yet it is also important to ensure broad
access to technology and knowledge especially for low-income countries. The new goods
derived from progress in science and technology are key to world trade integration and the use
of the flexibilities by the least developed countries could help them catch up and gain
international trade competitiveness.

COMPULSORY LICENSING
224. The communication (IP/C/W/630) dated 31 May was circulated at the request of the
delegations of Brazil, China, Fiji, India and South Africa. The Agreement on Trade-Related
Aspects of Intellectual Property Rights of the WTO established minimum standards of protection
that each government has to give to the intellectual property of fellow WTO Members. Each of
the main elements of protection is defined, namely the subject matter to be protected, the
rights to be conferred and permissible exceptions to these rights, and the minimum duration of
protection. WTO Members have the flexibility to design their national intellectual property
systems within the minimum standards set by the TRIPS Agreement in cognizance of a
country's economic, developmental and other objectives including public health. The TRIPS
Agreement attempts to strike an appropriate balance between the interests of rights of holders
and users. 225. Article 7 of the TRIPS Agreement entitled 'Objectives' recognizes that the
protection of intellectual property should contribute to the promotion of technological innovation
and to the transfer and dissemination of technology, to the mutual advantage of users and
producers of technological knowledge in a manner conducive to social and economic welfare
and to balance the rights and obligations. The search for a balance between the need to protect
IPRs and to provide incentives for R&D on one hand and on the other hand to address concerns
about the potential impact of such protection on the health sector, in particular its effects on
prices, has been an important consideration in the WTO's work. The TRIPS Council also
recognizes that the principles of IP protection are based on the underlying public policy
objectives. 226. Article 8 of the TRIPS Agreement entitled 'Principles' states that WTO Members
may, in formulating or amending their laws and regulations, adopt measures necessary to
protect public health and nutrition and to promote the public interest in sectors of vital
importance to the socio economic and technological development, provided that such measures
are consistent with the provisions of this Agreement. Article 8.2 further states that appropriate
measures may be needed to prevent the abuse of IPRs by right-holders or to resort to practices
which unreasonably restrain trade or adversely affect international transfer of technology. 227.
In furtherance of the objectives and principles of the TRIPS and enshrined in Articles 7 and 8, a
number of safeguards or flexibilities have become an integral part of the TRIPS framework.
These flexibilities can be used to pursue public health objectives. However, to implement these
flexibilities action is needed at the domestic level by incorporating them into national IP
regimes, keeping in mind each country's individual needs and policy objectives. Key TRIPS
flexibilities include transition periods for LDCs extended by the WTO until 1 January 2033,
differing IP exhaustion regimes, refining the criteria for grant of patentability criteria, pre-grant
and post-grant opposition procedures, as well as exceptions and limitations to the patent rights
once granted, including the regulatory review exception or Bolar exception to facilitate market
entry of generics, compulsory licenses and government use. For pharmaceutical patents, these
flexibilities have been clarified in and enhanced by the 2001 Doha Declaration on TRIPS and
Public Health. WTO Members have the flexibility to interpret and implement TRIPS provisions in
a manner supportive of their right to protect public health. 228. Another new flexibility was
added by the Doha Declaration which was put into practice in 2003 by the WTO with a decision
enabling countries that cannot manufacture medicines for themselves to import
pharmaceuticals made elsewhere under compulsory licenses. In 2005, Members agreed to
make this decision permanent through the Protocol Amending the TRIPS Agreement which
entered into force on 23 January 2017 after two thirds of Members had accepted it. The
amendment provides legal certainty that generic versions of patent-protected medicines can be
produced under compulsory licenses specifically for export to countries with limited or no
pharmaceutical production capacity. 229. Many governments have not used the flexibilities
available under the TRIPS Agreement for various reasons, such as capacity constraints or
political pressure from states and corporations, as mentioned in the UN Secretary General's
High Level Panel Report on Access to Medicines. Moreover, even where some developing
countries used the flexibility available to them under the TRIPS Agreement to address public
interest objectives through measures which are fully consistent with the TRIPS Agreement,
these attempts have been challenged legally, as well as politically. Political and economic
pressure placed on governments to forgo the use of TRIPS flexibilities violate the integrity and
legitimacy of the system of legal duties and rights created by the TRIPS Agreement as
reaffirmed by the Doha Declaration. 230. A slew of regional trade agreements containing
'TRIPS+' standards of IP protection and enforcement have the potential to significantly affect
the policy space available for effective and full use of TRIPS flexibilities. The most common
'TRIPS+' provisions in free trade agreements that affect the pharmaceutical sector are (i) the
definition of patentability criteria, (ii) patent term extensions, (iii) test data protection, (iv) the
linkage of regulatory approval with patents and (v) enforcement of IPRs, including border
measures. Such provisions can delay the marketing of generics and increase prices of
medicines. Investor-to-state disputes under regional or bilateral investment protection
agreements are also emerging as significant threats to the use of TRIPS flexibilities in the public
interest. 231. Ironically, the above-mentioned challenges to the use of TRIPS flexibilities to
further the public interest objectives underlying IP protection have been occurring in spite of
the emergence of laws and jurisprudence in developed countries that seek to limit the scope of
IP protection and enforcement. For example, in the 'Myriad-Genetics' case of 2013, the US
Supreme Court had ruled unanimously that naturally occurring genes cannot be patented even
if they are isolated. In 2003, the US Federal Trade Commission had proposed tightening the
'non obviousness' standard in order to limit the grant of unwarranted patents. There is a
growing concern about an imbalance between intellectual property and public interest with
regard to health technology, for example, patents and related monopoly rights. Without
sufficient use of balancing exceptions and limitations to protect the public interest, companies
are permitted to maintain high prices and exacerbate the crisis of access around the world
where many patients cannot afford medicines and force governments with finite health budgets
to rationalize care. 232. Increased copyright protections create similar problems of access to
knowledge goods limiting the ability of many people around the world to access print, audio, or
visual works of education or entertainment that we take for granted. These are only a few
examples of the problem. There is a need to pursue a developmental-oriented approach
towards formulating IP laws and policies rather than to pursue an iconic classic approach to IP
for development. 233. More than twenty years after the adoption of the TRIPS Agreement there
is a need for discussion in the TRIPS Council on the relationship between IP and the public
interest and to broaden the understanding of how the IP system can be more responsive to
public interest considerations. While this issue is very pertinent for developing countries, it has
also been a topic of significant policy debate even in developed countries. During the course of
meetings of the TRIPS Council in this year and later, WTO Members could exchange views and
experiences on measures within the IP system that they have adopted to promote the public
interest, including but not limited, to compulsory licensing, patentability criteria, IP and
competition, and the Bolar exception. 234. The sponsors of this communication invite
delegations to share their experiences on the use of compulsory licenses for accessing health
and other technologies. Compulsory licensing occurs when a government allows someone else
to produce the patented product or process without the consent of the patent owner. Article 31
TRIPS lays down a set of conditions for issuing compulsory licenses of patents. The Doha
Declaration on the TRIPS Agreement and Public Health states that "each Member has the right
to grant compulsory licenses and the freedom to determine the grounds upon which such
licenses are granted". Despite the clarity of this language, WTO Members around the world
seeking to make use of compulsory licenses as tools to create access to affordable medicines
have faced various challenges or barriers. 235. Some possible grounds for compulsory licences
are suggested in Article 5a of the Paris Convention, for example, abuse of patent rights,
including failure of the patent holder to work the invention, and in Article 31 of the TRIPS
Agreement, for example, national emergency and public non-commercial use. However, this list
is not exhaustive. The Doha Declaration on the TRIPS Agreement and Public Health confirmed
what was already implicit in the TRIPS Agreement that WTO Members have the freedom to
determine the grounds upon which compulsory licences are granted. They are thus not limited
to emergencies or other urgent situations, as is sometimes mistakenly believed. A range of
grounds have been set out in national laws, such as non-working or insufficient working, anti-
competitive practices, public interest, dependent and blocking patents and government use.
236. The sponsors of this communication invite Members to share their national experiences
and examples of using compulsory licences. The information exchange could serve to enhance
the understanding of Members on various grounds available for the issue of compulsory licences
and the problems faced by Members while using them. We have also circulated guiding
questions which I summarize as such: what grounds are available in the national laws to issue
compulsory licences; what are the difficulties faced by WTO Members in using compulsory
licences including constraints such as insufficient or no-manufacturing capacities; how the
measure of compulsory licence was used by governments to obtain price reduction form patent
holders; and what was the result of using compulsory licences in terms of price and access to
affordable products and technologies.
237. At the outset, I would like to thank the delegations of Brazil, China, Fiji and South Africa
who are also co-sponsors of this agenda item. We would also support the statement made by
South Africa while introducing our submission contained in document IP/C/W/630. 238. The
TRIPS Agreement attempts to strike an appropriate balance between the interests of rights
holders and users. The TRIPS Agreement also recognizes that the principles of IP protection are
based on underlying public policy objectives. In furtherance of the objectives and principles of
TRIPS enshrined in Articles 7 and 8, a number of safeguards or flexibilities have become an
integral part of the TRIPS framework. These flexibilities can be used to pursue public health
objectives. 239. During the 1980s and 1990s, antiretroviral medicines used to treat HIV/AIDS
were priced beyond the reach of most people who needed them in developing countries.
Countries like Brazil, Thailand, South Africa and others have used flexibilities under the TRIPS
Agreement, including compulsory licenses to bring down the price by increasing the supply of
generic ARV medicines for a fraction of the price of the patented equivalents. Indian generic
companies, especially CIPLA, played an important role by announcing in early 2001 that triple
therapy could be manufactured for less than a dollar per day, as compared to the price of
standard triple therapy at US$ 10,000 per patient and year. Indian generic companies made
ARV medicines accessible to all those who needed the drugs but had previously not been able
to afford them. 240. As regards compulsory licensing, Article 31 provides Members complete
freedom to decide the grounds for issue of compulsory licences. The Doha Declaration on the
TRIPS Agreement and Public Health has also duly confirmed what was already implicit in the
TRIPS Agreement – that WTO Members have the freedom to determine the grounds upon which
compulsory licenses are granted. 241. There have been many studies that examine the possible
grounds for issue of compulsory license. For instance, the diversity in the grounds for issue of
compulsory license is documented in the United States Congressional Research Service Article
titled "Compulsory Licensing of Patented Inventions" by John R. Thomas, dated 14 January
2014, which mentions that "depending upon particular national laws, the grounds for
government award of a compulsory license may include: (i) circumstances of national
emergency or extreme urgency; (ii) where the invention serves vital public health needs; (iii) a
strong societal interest has arisen in access to the patented invention; (iv) the patent owner
has failed to practice the patented invention in the jurisdiction that granted the patent within a
reasonable period of time; (v) the patent owner has abused its economic power in such a
manner as to violate the antitrust laws; and (vi) in circumstances where multiple patents held
by different owners cover a particular technology. For example, combination therapies, such as
triple antiretroviral drugs, may be subject to more than one patent. In such cases, if one patent
owner refuses to license, then the technology may not be marketed absent a compulsory
licensing". 242. I would like to share with you briefly the details of India's law with regard to
compulsory licensing. Sections 83 to 94 of India's Patent Act contain detailed provisions
regarding compulsory licences, including those that generic companies can apply for,
government use licenses, those issued in cases of national emergency, extreme urgency and
public non-commercial use and compulsory licenses for exports. 243. India has issued only one
compulsory licence so far. In March 2012, Indian generic manufacturer NATCO Pharma was
granted a compulsory licence to manufacture Bayer's drug Sorafenib Tosylate (Nexavar) used
for the treatment of kidney and liver cancer. Bayer was granted a patent and received
marketing approval for Nexavar for the treatment of liver and kidney cancers in 2008. Bayer
would have supplied 200 patients in 2011, which was a little more than two percent of the
affected population. The primary reason for this abysmally low coverage vis-a-vis the need was
the exorbitant treatment cost of nearly Indian Rs.284.000 (US$4,370) for a month's treatment
which priced the medicine out of reach of almost all people in India. Patent rights cannot be
allowed to impede protection of public health. 244. NATCO pharma proposed to sell the generic
form of Nexavar for Rs.8,800 (US$135) a month. The Controller of Patents in India granted a
compulsory license under section 84 because the TRIPS Agreement allows Members to adopt
measures to protect public health and Bayer did not meet its duty under the Indian Patents Act,
as the patented invention was not available to the public at a reasonable price, and it was not
worked in the territory of India. The Indian Courts have upheld the decision of the Controller
General of Patents to grant a compulsory licence to NATCO Pharma to manufacture the generic
version of Nexavar in India. 245. Now, I would like to provide brief details of use of compulsory
licences in a few other Members. According to an article entitled "Compulsory Licensing of
Patented Pharmaceutical Inventions: Evaluating the Options" by Jerome H. Reichman 4, the
United States threatened Bayer with a compulsory license on ciprofloxacin (Cipro) in 2001,
which the U.S. intended to stockpile as a defence against anthrax. In response, Bayer
drastically lowered its price. The Italian Competition Law authorities issued compulsory licenses
against Merck, on certain antibiotics, for abuse of a dominant position in 2005; against Glaxo,
for refusal to license a patented migraine headache drug in 2006; and against Merck again for
refusal to license a treatment for baldness in 2008. 246. In Apple Vs Motorola, filed in the
United States District Court for the Northern District of Illinois (Eastern Division), Judge Richard
Posner, in June 2012, while dismissing with prejudice the patent infringement suits, cited the
decision in eBay Inc. v. MercExchange, L.L.C. He specifically noted that a "compulsory license
with ongoing royalty is likely to be a superior remedy in a case like this because of the frequent
disproportion between harm to the patentee from infringement and harm to the infringer and to
the public from an injunction". 247. The September 2016 Report of the UN Secretary General's
High-Level Panel (HLP) states that many governments have not used the flexibilities available
under the TRIPS Agreement, including compulsory licences, for various reasons, ranging from
capacity constraints to undue political and economic pressure from states and corporations,
both express and implied. 248. The HLP Report also refers to Resolution No 2475 by the
Ministry of Health of Colombia that was a pathway for issuance of compulsory licence to access
Imatinib, in public interest, for treatment of Leukaemia. The Report also states that many
domestic and foreign parties have tried to dissuade the Colombian Government from issuing a
compulsory license as provided by the TRIPS Agreement and the Doha Declaration. We request
the delegation of Colombia to share their experiences in this regard. 249. Political and economic
pressure placed on governments to forgo the use of TRIPS flexibilities violate the integrity and
legitimacy of the system of legal duties and rights created by the TRIPS Agreement and as
reaffirmed by the Doha Declaration. 250. I conclude by quoting the recommendations in the
HLP Report on compulsory licences: "Governments should adopt and implement legislation that
facilitates the issuance of compulsory licenses. Such legislation must be designed to effectuate
quick, fair, predictable and implementable compulsory licenses for legitimate public health
needs, and particularly with regards to essential medicines. The use of compulsory licensing
must be based on the provisions found in the Doha Declaration and the grounds for the
issuance of compulsory licenses left to the discretion of governments". 251. We look forward to
hearing other delegations' experiences regarding the use of the TRIPS flexibility, i.e.
compulsory licensing.
252. I would first like to thank the delegations of China, India, Fiji and South Africa who are
also co-sponsoring this agenda item. 253. The proposal for inclusion of the item on 'Intellectual
Property and the Public Interest' aims at spurring the discussion regarding the many facets of
IP within the broader socio-economic framework of Members. The complex and complementary
relationship between these aspects is a topic that merits careful reflection and broad discussion
by Members. 254. IP addresses the public interest by providing incentives for innovation. At the
same time, governments have the responsibility of safeguarding the public against its potential
negative impact, notably on competition. A balanced IP system, therefore, provides powerful
incentives for innovation with the least effects on the competitive landscape; in economic
terms, it will stimulate the pro-competitive dynamic effects of intellectual property while limiting
and controlling its potential anticompetitive static effects. 255. An efficient IP system, by
definition, results from a delicate balancing act. There is no one size-fits-all approach. Rather, a
flexible policy space is necessary to allow each Member to develop and adapt the set of IP
regulations more adequate for its individual reality. This is to be done, of course, within the
boundaries of the internationally agreed objectives, principles and standards, to ensure
predictability and mutual confidence. One of the tools to reach that result is the use of
exceptions and limitation to IP rights, an intrinsic element of the law of every Member. They
serve a number of purposes by conferring the necessary flexibility to guarantee national
security and to shape public policies to meet, inter alia, development, competition, and health
surveillance goals. Therefore, they will generate an increased societal welfare without
unreasonably prejudicing the legitimate interests of the patent owner. 256. In recognition of the
underlying public policy objectives of national systems for the protection of intellectual
property, including developmental and technological objectives, Articles 7 and 8 TRIPS contain
clear language regarding the relationship between public interest and the protection and
enforcement of intellectual property rights. 257. The discussion under this agenda item has,
among its goals, the increase of knowledge regarding those aspects and the exploration of
possible solutions for developing, as well as for developed countries. As an initial effort to
broaden the understanding of how the IP system can be more responsive to public interest
considerations, the proponents would like to mention the topic of compulsory licenses. 258. The
judicious use of compulsory licences assists countries to uphold the delicate balance of the
TRIPS Agreement. While the topic is commonly referenced to with health issues, compulsory
licensing can be used in other cases as well. As we all know, neither Article 31 TRIPS nor Article
5A of the Paris Convention contains any restriction with regard to the ground on which a
compulsory license may be issued, a view confirmed by the Doha Declaration on TRIPS and
Public Health. 259. Under Brazilian law, right holders may be subject to compulsory licences if
they exercise patent rights in an abusive manner, or if they engage in abuse of economic
power. In the case of dependent patents, for instance, anticompetitive behaviour can be
established if the holder of the main patent fails to reach agreement with the patent holder of
the dependent patent on the exploitation of the earlier patent. 260. We would like to refer to a
concrete case in order to further contribute to the debate. In 2007, Brazil issued its first and
only compulsory licence to date, regarding the antiretroviral efavirenz, for public non-
commercial use. The underlying intention was to guarantee that HIV patients received
appropriate treatment from the Brazilian Public Health System, as efavirenz was used by 40%
of all HIV patients in Brazil at the time. Previous to the compulsory license, the Brazilian
Government engaged with the patent owner in several meetings with the view of reaching a
negotiated solution. Those negotiations, however, did not lead to an agreement in terms and
conditions adequate for addressing the public interest. 261. In conjunction with the procedures
necessary for the compulsory license, the Brazilian Government initiated the preparation for the
production of efavirenz. As we all know, issuing a compulsory license is the initial element of a
complex process that involves many actors. 262. The first step was to comprehensively analyse
the invention as disclosed in the patent application, clarifying aspects of the phases of
production. The disclosure of an invention as mandated by Article 29 of the TRIPS Agreement is
an important element of the patent system and could be explored in future discussions under
this agenda item. 263. The second step for the public laboratories responsible for
manufacturing the medicine was to take advantage of a limitation contained in Article 43,
subsection II of the Brazilian Industrial Property Law. The Article states that patent rights do
not extend to acts carried out by [unauthorized] third parties for experimental purposes, in
connection with scientific or technological studies or researches. It aims at maintaining the
incentives for research and studies by third parties, thus allowing the progress of science and
technology. Further to those actions, the last step required to initiate the production of the
medicine under the compulsory license was to obtain regulatory authorization from the Brazilian
health authority, known as ANVISA. To fulfil this requirement, Brazil used another aspect of IP
rights, this time related to clinical test data. 264. In spite of strictly following the requirements
contained in the national and international legal framework, the Brazilian Government faced
legal disputes in national courts, which were initiated by the owner of the patent. These
disputes, however, were not successful. 265. As a result of such efforts by the Brazilian
Government, and taking full advantage of legally permissible limitations and exceptions, it was
possible to substantially reduce the price of efavirenz from US$ 1.59 to US$ 0.45 per tablet at
nominal prices. This helped to ensure the adequate provision of medicine to HIV patients who
needed to take it on a daily basis to keep the disease under control. 266. Thanks to successful
public policies combined with the steady availability of innovative drugs, Brazil is able to provide
treatment to the vast majority of patients diagnosed with HIV/AIDS. Nowadays, among those
receiving treatment in Brazil, 90% of them have no detectable viral load, a sign of success of
the treatment. This result is only possible with the active participation of Government,
pharmaceutical companies and patients associations, in line with the higher level goals of the IP
system. 267. The recent entry into force of the Protocol Amending the TRIPS Agreement
demonstrates the need to have mechanisms that preserve at the same time the adequate
remuneration of IP Rights and the rights of governments to adopt measures necessary to
protect the public interest. Another recent development of interest is the publication of the
United Nations Secretary-General's High Level Panel on Access to Medicines, which contains
many recommendations regarding the interplay between intellectual property and access to
medicines. 268. Brazil believes that respect for intellectual property and efforts to promote the
public interest in sectors of vital importance to a country's socio-economic and technological
development are not mutually exclusive. A balanced intellectual property system, with built-in
flexibilities as well as complementary policies and incentives, is the best way to incentivize
innovation in all fields of technology. 269. We would like to invite other Members to express
their views and share their experiences regarding the topic, providing a rich discussion which
would be beneficial to all countries and generate additional inputs to the TRIPS Council.
270. China would like to thank the other co-sponsors for including this important item on the
agenda. China attaches great attention to TRIPS and public interest issues. China's Patent Law
and implementing regulation have specific provisions on compulsory licensing, which have been
improved with the later amendments. In 2012, combining the related provisions, China issued
the new detailed rules for compulsory licensing for the purpose of easy operation. 271. China
WTO Members could exchange views and experiences on how to take full advantages of TRIPS
flexibilities, and effectively solve the public interest problem.
Intervention by: Fiji
272. Fiji would like to thank the delegations of China, India, South Africa and Brazil as co
sponsors of this agenda item and the submission of document IP/C/W/630. For a small
economy, the issue of intellectual property and public interest is important and for Fiji, in
particular, in relation to ensuring that there is access to medicines for our citizens. The
constitution of Fiji takes reasonable measures within its available resources to achieve the
progressive realisation of the right of every person to health, inter alia, to ensure that the
person is not denied access to medical treatment.
273. Achieving an effective and efficient functioning health system is a priority for the Fijian
Government and access to affordable medicines complements this priority. The Government of
Fiji has put in place a free medical programme for all Fijians. Fiji attaches great importance to
the TRIPS Agreement. On this note we also believe that striking the appropriate balance
between the interest of right holders and users is essential. The more markets are available for
an importing country such as Fiji to access quality and affordable medicines, the better it will be
from a socio-economic perspective for its citizens.
274. As mentioned by other proponents, Fiji is also of the view that there is a need for
discussion in the TRIPS Council on the relationship between IP and public interest. Fiji looks
forward to learning from the experiences of the membership on the use of compulsory licences
in accessing health and other technologies in this relation.
Intervention by: Ecuador
275. Ecuador thanks the delegations of Brazil, China, Fiji, India and South Africa for requesting
inclusion of this item on the Council's agenda in order to address the critically important issue
of intellectual property and the public interest and the implications of compulsory licensing.
276. Article 8 of the TRIPS Agreement mentioned in the proponents' communication refers to
the fact that Members may 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. 277. Taking this principle as a basis and using the flexibilities available under
the TRIPS Agreement in its Article 31 to further public interest objectives, Ecuador has had to
adopt and implement laws providing for compulsory licensing in order to meet legitimate public
health needs of Ecuador. This prompts me to touch upon my country's experience in granting
compulsory licences so as to give the population broader access to medicines. 278. One of the
justifiable grounds for issuing this type of licence under Ecuadorian law was to regard
compulsory licensing as a tool for the Government to break the monopoly on patented
medicines and be able to import or manufacture equivalent, lower cost pharmaceuticals that
have no brand name but are just as effective. This ensures that the entire population has
access to the medicines and treatments they need, strengthens the public health system and
enhances people's quality of life. 279. By means of Executive Decree No. 118, in 2009 the
National Government declared access to medicines to be a matter of public interest, a decision
that enabled Ecuadorian and foreign laboratories established in the country to apply for
compulsory licensing of patented medicines in order to produce and market them domestically.
280. With a view to conducting scientific research and developing active ingredients for the
production of cheaper, generic medicines, the State owned pharmaceutical company ENFARMA
was created that same year and tasked with providing the comprehensive public health network
with a timely and efficient supply of essential medicines, as well as contributing to raise the
percentage of the population with access to medicines for the treatment and cure of diseases.
281. The Ecuadorian Intellectual Property Institute (IEPI) has approved nine applications to
produce mass consumption medicines. The first three licences were issued for the antiretroviral
drugs ritonavir, lamivudine and abacavir, which the Ministry of Public Health supplies free of
charge for the treatment of HIV/AIDS patients. 282. The reason for issuing these licences was
that, according to IEPI data, Ecuador has around 37,000 HIV infected patients and some 700
deaths from the disease are reported each year. The data indicate that as a result of
compulsory licensing the Ministry of Public Health has saved 30 70% on the cost of purchasing
these medicines, which have to be supplied by the State. 283. In addition to the licences issued
for antiretrovirals, licences were subsequently granted for etoricoxib (Arcoxia), a drug of proven
efficacy in the treatment of acute pain diseases; mycophenolate sodium (MYFORTIC), used for
kidney transplant recipients; sunitinib, an anticarcinogen for the treatment of renal cell
carcinoma (RCC) and gastrointestinal stromal tumours (GIST); and certolizumab, used to
relieve the symptoms of rheumatoid arthritis the first licence to be issued in the area of
biotechnology. 284. With compulsory licensing the National Government aims not only to
achieve a significant reduction in the prices of medicines but also to strengthen the country's
pharmaceutical industry so that the largest possible number of imported drugs can be replaced
by domestically produced medicines in the future.
Intervention by: Bolivia, Plurinational State of
285. Let me begin by congratulating the sponsors of this agenda item. The promotion of
flexibilities under the TRIPS Agreement is something which has not been sufficiently
encouraged in the developing world, and we would like to share some thoughts in this respect.
286. For different reasons, Bolivia has not had recourse to compulsory licensing. However, we
are convinced that the use of this instrument deserves greater promotion, particularly, for
instance, in the case of access to medicines. 287. We believe that WTO Members should make
full use of the policy space available under the TRIPS Agreement to meet the needs of their
countries and peoples, and this requires the support of the international organizations in the
form of capacity building to enable them to use these instruments. 288. We also believe that
governments should adopt and implement legislation to facilitate the granting of compulsory
licences to meet legitimate developmental or public health needs. 289. We have witnessed on
more than one occasion, in the Latin American region, the pressure that has been brought to
bear on certain countries when they have wanted to use compulsory licensing. This reality did
not escape the notice of the UN Secretary General's High Level Panel on Access to Medicines
which, in a report published at the end of 2016, not only encouraged the use of compulsory
licensing, but also called upon certain countries and the private sector to refrain from applying
explicit or implicit pressure as well as tactics or strategies that undermine the right of WTO
Members to use the flexibilities provided for under the TRIPS Agreement. According to the High
Level Panel, cases of undue political and commercial pressure should be reported to the WTO
and debated among Members in order to discourage such unwarranted practices.
290. The United States welcomes the opportunity to offer a few initial observations on the
general theme of IP and the Public Interest and the concept paper before us discussing the
issue of compulsory licensing. The United States has long held that intellectual property rights
protection is very much consistent with furthering the public interest and that international
cooperation, to strengthen and provide confidence in domestic IP systems can help maximise
these benefits. The co-sponsors' concept paper (IP/C/W/630) suggests that this agenda item
will perhaps discuss public interest in a way that fails to fully account for the benefits of
protecting IP. One potential negative effect for the co-sponsors' view of the public interest could
be that it discourages Members from striving towards, and upholding robust domestic IP
regimes, and therefore denies the public the benefits of critical future innovations and creative
endeavours. 291. Before addressing the topic of compulsory licences, I would like to respond to
one of the co sponsors assertions that 'TRIPS +' provisions and free trade agreements can do a
disservice to public interest. We would encourage them to consider some of the many benefits
that have been ascribed to IP protection. For example, a 2016 study analysing the launch of
642 new drugs in 76 countries concluded that patent and price regulation regimes strongly
effect how quickly new drugs become commercially available in different countries. Price
regulation delays launch, while longer and more extensive patent rights accelerate it.
Furthermore, US Intellectual Property and Innovation Policies have not only helped encourage
investment in pharmaceutical innovation, but have also facilitated the approval and utilisation
of generic drugs. According to recent data, generic medicines account for 89% of all
prescriptions dispensed in the United States. I share this research to help provide the
perspective that IP and patents should not be viewed as intrinsic barriers to access. To properly
address barriers to access we must look at factors outside the IP system. 292. In fact, the most
recent estimates are that approximately 85% of medicines under WHO model-list of essential
medicines are off-patent. Factors that are relevant to the access question include pricing and
procurement policies, taxes, mark-ups and tariffs and other national policies or lack thereof that
have ultimately resolved in higher costs for consumers and for health systems. Unfortunately,
the theme of today's agenda item does not explore these critical factors as it deals exclusively
with the subset of medicines that is patent-protected in the territory. 293. Moving on to the
issue of compulsory licensing, as affirmed in the Doha Declaration on TRIPS and Public Health,
the United States respects its trading partners' right to protect public health and, in particular,
to promote access to medicines for all and supports the vital role of the patent system in
promoting the development and creation of new and innovative life-saving medicines.
Consistent with these views, the United States respects its trading partners' rights to grant
compulsory licences in a manner consistent with the provisions of the TRIPS Agreement and
encourages its trading partners to consider ways to address their public health challenges while
maintaining intellectual property systems that incentivise the investment and research
necessary to develop innovative new medicines. 294. The United States continues to encourage
all WTO Members to promote a stable and predictable patent system that can nurture
innovation. WTO Members can and should ensure supportive environments for innovators to
achieve success and make significant contributions to innovative growth in their country. Many
pharmaceuticals, whether essential drugs or not, have their origins in countries with strong
patent systems. Robust and predictable patent systems provide interested parties with
incentives necessary to encourage them to invest many years in significant financial resources
into worthy endeavours without a guarantee of success. Compulsory licensing diminishes the
exclusivity of the patent grant and undermines the incentive for innovation and investment that
is a critical component of technological progress. 295. A common view of innovative companies
is that compulsory licences could prevent them from regrouping their investments in research
and development. When these companies make investment decisions, they consider the ability
to secure and maintain patent rights in a given market. The United States' system permits the
use of a patent without the right-holders' authorisation only in very rare and narrow
circumstances and the US Patent and Trademark Office has never issued a compulsory licence.
In fact, it does not have the authority to do so. We urge other Members to exercise caution and
careful deliberation on issues related to compulsory licensing as they have significant
implications that could negatively affect investment in R&D for the treatments of tomorrow and
restrict investment into new markets. The United States welcomes the opportunity to convey
our views and we encourage the co-sponsors to seek topics that appeal to the diverse array of
Member interests and that provide encouragement for upholding robust IP systems.
296. Indonesia supports the proposal made by the delegations of India, Brazil, China, Fiji and
South Africa on Intellectual Property and the Public Interest. As highlighted by the delegation of
South Africa, TRIPS sets minimum standards and allows Members to deliberate further under
national IP systems by taking into consideration the balance between the interests of right-
holders and the public. This is particularly vital with regard to public health interests. The
tendency to introduce new obligations and extended protection through regional trade
agreements containing 'TRIPS+' standards will affect Member's policy for making use of TRIPS
flexibilities and disregards the objective that IP should contribute to the promotion of innovation
and transfer of technology. 297. Some are of the view that innovation and technology begins
with providing an increased protection for inventors. But for many developing countries, the
capacity of inventors is limited by the inaccessibility to data, technology and information
needed to further the research and development. Therefore, for developing countries it is about
such access that results in improved capacity as well as affordable prices. The use of TRIPS
flexibilities should not be hindered, based on the notion that it negates the rights of IP holders.
Instead, it should be born in mind that every private right comes with the responsibility,
particularly where the public is concerned. We should refrain from asserting pressure on any
government wishing to apply TRIPS flexibilities and exceptions, and resist any attempt to derail
from the objectives of the Doha Development Agenda. 298. Indonesia, as a country that has
adopted a mechanism for implementing flexibilities i.e. compulsory licensing, in its national law,
would support the initiative for discussions in this Council on the relationship between IP and
the public interest. Indonesia would be open to share its views and experiences in implementing
compulsory licences and discuss with Members how to address challenges and potential risks
posed by 'TRIPS+' standards. Like many other countries, Indonesia is still facing difficulties in
delivering adequate health services and medicines to all of our citizens. One of the reasons is
due to insufficient raw materials and manufacturing capacity. But this should not be interpreted
as an export potential to a relatively big market which almost always results in expensive
prices. Instead, governments should be encouraged and permitted to implement policies to
enable the development of their industries. In accordance with the Doha Declaration, we
believe that every Member has the freedom to determine the grounds on which compulsory
licences are granted and that it is not limited to emergency situations, as some would have
liked to convince us. It is therefore important that governments are induced to take measures
that help public policy objectives and that this Council contributes to discussions on this matter.
Intervention by: Colombia
299. In Colombia, compulsory licenses are recognized legal instruments in the framework of
multilateral and bilateral trade agreements, as well as in Decision No. 486 of 2000 of the
Andean Community. The grounds for granting compulsory licenses are: lack of exploitation;
reasons of public interest, emergency or national security; abuse of dominant position; and
patent dependency.
300. The procedure for the declaration of public interest is established in the Colombian
legislation. This procedure begins when the Ministry in charge of formulating and adopting the
policies of the pertinent sector considers that it is necessary to issue a declaration. The Ministry
will then compose a Technical Committee of at least one delegate from the Ministry, one from
the Ministry of Commerce, Industry and Tourism and one from the National Planning
Department. This Committee has to examine and evaluate the documents submitted, request
concepts or technical support from other entities, and make a recommendation to the Minister
on the decision to declare the existence of reasons of public interest or not. The
recommendation will be made available to all interested parties for at least 10 days in order to
receive comments. Thereafter, it will be forwarded to the Minister along with all submitted
comments.
301. The resolution issued by the corresponding Ministry or Administrative Department stating
that there are reasons of public interest that merit the issuance of a compulsory license must
identify the situation that affects the general interest, establish the circumstances that led to
the declaration and the reasons why the licence is to be granted. The aspects related to the
specific scope of the compulsory licence that will be granted will be determined by the
Superintendence of Industry and Commerce. Two applications for declarations of public interest
have been submitted in order for the State to grant a compulsory license for medicines.
302. The first case concerned Kaletra (HIV/AIDS), in 2008. Several NGOs filed applications for
a compulsory license. The grounds for the request were: the increase in the number of people
infected; that the consumption of the drug had doubled in the previous year; and that the
patent of the drug had allowed maintaining higher prices than under competition. From the
analysis carried out by the Ministry of Health, it was determined that there were no grounds for
declaring the existence of reasons of public interest in order to grant a compulsory license.
However, the price control mechanism was utilized and a reference price for the drug was
established.
303. Glivec (Imatinib) was the most recent experience. As provided by Resolution 2475 of 14
June 2016, the Minister of Health declared the existence of public interest regarding Imatinib,
but not for granting a compulsory licence. The Ministry of Health requested the National
Commission of Prices of Medicines and Medical Devices to consider applying the regime of direct
price controls to Glivec, using a general methodology that simulates conditions of competition.
Imatinib (active substance) is a very effective drug used to treat chronic myeloid leukaemia and
other types of cancer.
304. This delegation believes that sharing experiences on this matter may be beneficial, as long
as this is an ad hoc agenda item and an information-sharing session without connection to any
future negotiation. 305. For the purpose of having meaningful discussions, we would like to
make two comments. First, when discussing matters such as intellectual property and public
interest, we should make a distinction between matters directly related to the Amendment of
the TRIPS Agreement; and other matters that may need a clear explanation of why such other
matters need to be discussed here. 306. Second, the Doha Declaration, its statements and the
resulting amendment of the TRIPS Agreement all rest on an intricate balance. On the one hand
there is the need to make sure that common drugs become common for everyone. On the other
hand we have the need to protect intellectual property to encourage development of new and
effective drugs so that our stock of common drugs will continuously be updated. This balance is
necessary to meet our common objective, which is to protect public health, as described in
Paragraph 3 of the Doha Declaration. 307. We would also like to recall the Chairman's
Statement JOB (05)/319, which was read out prior to the adoption of the Amendment. I quote:
"Members recognize that the system that will be established by the amendment should be used
in good faith to protect public health and, without prejudice to paragraph 3 of the Article 31bis
of the amendment, not be an instrument to pursue industrial or commercial policy objectives".
308. Thus, we should be cautious in determining the scope of discussions when we mention
compulsory licenses, such as the statement that "they are thus not limited to emergencies or
other urgent situations"in paragraph 12 of the document submitted by the co-sponsors
(IP/C/W/630). This might disturb the balance and objective defined by the Doha Declaration
and the related articles of the TRIPS Agreement. Such arguments would need to be justified
based on evidence and facts, before we are able to have any meaningful discussions.
309. Due to the recent circulation of the submission, we will keep our intervention brief and
may come back to this point at the next Council meeting. 310. Public interest is a very
important topic. The current system of intellectual property protection fully integrates a balance
between private and public interests. In their submission, the co-sponsors focused on access to
medical products. Switzerland would like to highlight that access to medical products
constitutes one of the main objectives of its health policy, notably with regard to its foreign
relations. 311. We wish to recall that a patent only grants so-called 'negative rights', in other
words the right to prevent others to use the patent owner's invention without authorization. A
patent does not confer a discretionary power over pricing upon its owner. It is inherent to the
system that investment in R&D and marketing of innovative medical products are financed via
the patent system through exclusive rights' revenues, which in the short-to-medium term may
be reflected in the prices of medical products. In the long term, however, the patent system
constantly nurtures a pipeline of new generic products. These usually become available after
the patent protection period has expired and at a lower price. 312. As to IP provisions in free
trade agreements: reliable and solid rules on intellectual property rights provide for the
necessary legal certainty to encourage not only the investment in new and better drugs for
unmet medical needs, but also to allow for the use of licencing (in and out) of technological
innovation – of any products, including medical products. In the mid- to long term, the IP
system plays an essential role with regard to availability and accessibility of medical products
and is therefore affirmative of the right to health. The Swiss delegation is aware that a good
intellectual property framework is not the only requisite for foreign direct investment, but one
among many others. 313. We thank all co-sponsors for tabling this topic. Submission
IP/C/W/630 makes reference to compulsory licensing. Whilst such licences may be a legitimate
tool for very specific circumstances, Switzerland considers them as a tool of last resort. We are,
however, aware that the intellectual property system is not a panacea for solving all aspects to
address the challenge of better access to medical products. There may be policy and market
failures that need to be addressed. 314. The Swiss Government provides, for example,
technical and financial support to the WHO to set up a public observatory where research and
development activities are monitored worldwide. Our Government further supports a committee
for the prioritisation of research needs. Switzerland has also given technical and financial
support for a voluntary fund to finance priority research and development initiatives. 315.
Funding of the selected innovative demonstration projects remains insufficient. The Swiss
matching fund provided to complement contributions from low- and middle-income countries
has not been fully used by these countries. To date, we have only been able to disburse
US$700'000 out of US$2 Mio. This is surprising. 316. We also invest in public-private
partnerships for the research and development of medical products (so-called product
development partnerships), especially in the area of poverty- and neglected tropical diseases,
including Medicines for Malaria Venture (MMV), Drugs for Neglected Diseases Initiative (DNDi)
and the Global Antibiotic Research and Development Partnership (GARDP). 317. Furthermore,
this delegation would like to highlight that Switzerland is currently financing a feasibility study
conducted by the Medicines Patent Pool which looks into the challenges and opportunities of
potentially expanding MPP's business model. 318. In summary, instead of advocating the use of
compulsory licences, this delegation strongly believes in the promotion of initiatives and
approaches which incentivise research and development and, by the same token, improve
access to medical products for people in low and middle-income countries. And this is one
important example of how the IP system serves the public interest. We believe that building on
voluntary and inclusive efforts (such as the Medicines Patent Pool, the Global Fund's e-
procurement platform or WIPO Re:SEARCH), rather than disincentivising research into the
development of new and better medical products, is the way forward and corresponds to the
collaborative spirit of the 2030 Agenda for Sustainable Development.
319. It is the formally established position of the European Union that a balanced system of
intellectual property rights which takes into account legitimate interests of users and right-
holders fully serves the public interest. It is for this reason that national and international
systems of intellectual property rights have been created for well more than 100 years. In the
European Union, according to Article 17 of the Charter of Fundamental Rights, intellectual
property is a fundamental right of every European citizen. Additionally we believe that TRIPS
provides a reasonable balance and its rules and flexibilities allow countries to have a pragmatic
and flexible approach that can help them to maximize the potential of their own intellectual
assets and further their integration into international trade while achieving broader societal
welfare. 320. In that sense, today's debate seems to confirm our assumption. In previous
interventions, we heard a number of stories of how the system has functioned and how it has
been used by countries within the extent that is legally permitted to negotiate and to enhance
access to medicines. This debate will actually confirm that the system is well-suited and it has
reached a carefully crafted balance. We have also heard countries that even if they are asking
for more flexibility they have decided themselves not to use them. 321. But let me recall some
of the functions of IP. It is known that the primary function of an intellectual property right is to
permit the right holder to exploit his idea or creation in commercial activities, thus contributing
to innovation. Other less frequently mentioned benefits include, for example, providing
guarantees regarding the quality and safety of products. Many counterfeit products place our
children's and citizens' safety or health at risk; for instance where vehicles' spare parts or
medicines are concerned. Enforcing intellectual property rights in respect of such products
guarantees at least that the product's origin is known and that the products are genuine and
safe; whereas counterfeit products often do not comply with the applicable safety standards.
This is especially true for trademarks but often patent licensing contracts for instance also
include quality insurance clauses. Would it be in the public interest to weaken such safety
mechanisms? 322. Another benefit of IP is the dissemination of information on innovation. Even
where a company or a university or an individual does not intend to protect its own invention,
its staff and researchers can still make use, for instance, of patent information from others. The
disclosure of the invention to the public is part of the contract to get time-limited protection.
Patents are the most prolific and up-to-date source of technological information and contain
detailed technical data which often cannot be found anywhere else. It is estimated that up to
80% of current technical knowledge can only be found in patent documents. Moreover, this
information is rapidly available, as most patent applications are published 18 months after their
first filing. Searches in patent literature can be conducted by anyone by using for instance the
free-of-charge Espacenet patent database. It provides access to more than 90 million patent
documents from all over the world, classified by technological areas on the basis of
international patent classification. Would it be in the public interest to keep all of this
information secret instead? 323. Additionally, IP rights often play an instrumental role for small
and medium-sized companies including start-ups and spin-offs, in trying to convince third
parties to provide financing to them, to attract investment, or to grant loans, etc. In the
absence of tangible assets, their ideas, creativity and innovation are the only assets that these
companies will have, depriving them of the possibility to exploit them. This would clearly not be
in the public interest. 324. To conclude, let me turn briefly to the issue of access to medicines
and the discussion on pharmaceutical patents that was mentioned in the last part of the
communication. The current innovation model based on patents has delivered consistent
progress in global public health, continuously leading to important new and improved
treatments, as well as much extended life-expectancy, both in developed and developing
countries. Medicines are not created by public authorities, but by pharmaceutical industries. As
all industries, they need an adequate return on investment to finance innovation. The challenge
obviously is how to use all levers available to public authorities to promote access to affordable
medicines without negatively affecting the R&D by the pharmaceutical industries and therefore
the availability of new and innovative medicines. Like others have mentioned before, let us also
recall that evidence shows that, indeed, there are many different significant causes for lack of
access to medicines which renders it simplistic and misleading to attribute this problem merely
to or even principally to intellectual property-related aspects. In fact, intellectual property
issues seem to play a minor role in the problem, but a disproportionately large role in the
debate.
Intervention by: Korea, Republic of
325. I thank the proponents and other delegations for sharing their experiences which provide
useful information for the implementation of compulsory licenses.
326. Korea is of the opinion that the current TRIPS Agreement with the amendment effective
since January this year could address the concerns raised in the High Level Panel Report. Korea
believes that the issue of access to medicines needs a comprehensive approach, as various
factors other than patents affect access.
327. Australia notes the communication from Brazil, China, Fiji, India and South Africa
regarding Intellectual Property and the Public Interest: Compulsory Licensing. Australia notes
existing TRIPS flexibilities and welcomes, in particular, the recent entry into force of the TRIPS
Protocol. Australia supports full utilisation of TRIPS flexibilities. We are open to hearing the
views of other Member States in this regard.

LAW AND POLICY
Dates of the meeting
Document symbol IP/C/M/91, IP/C/M/91/Add.1, IP/C/M/91/Corr.1
412. South Africa wishes to continue the discussion on the linkage between intellectual
property and competition law and policy based on the documents which are contained in the
circulated document IP/C/651, which includes inter alia IP/C/643; IP/C/W/649 and Addenda.
413. We wish to continue this debate with specific reference to exploitative excessive pricing
and restrictive practices such as reverse payment agreements, strategic patenting and more
lately, the evolution of niche pricing of off-patent pharmaceuticals. 414. The discussion has
gone through various phases of debate, based on underlying guiding questions. During the
TRIPS Council meeting of 5 and 6 June 2018, co-sponsors endeavoured to enhance the
understanding of Members of the various approaches to competition law and policy and how
competition norms are used to prevent or deter practices such as collusive pricing or the use of
abusive clauses in licensing agreement that unreasonably restrict access to new technology and
prevent the entry of generic companies and may result in higher prices for medicine. 415. We
specifically pointed out that while the TRIPS Agreement sets "minimum norms" for standards of
IP protection that significantly limit Members' discretion on a large number of IP rights issues, it
is however not the case with competition law. 416. During the TRIPS Council meeting of 8 and
9 November 2018, we intensified the debate by pointing out that over the course of time
clearer competition policy treatment of IPRs has evolved through either iterative processes or
the evolving practice of competition authorities. This development, as we argued, underscored
the need for further debate and analysis since competition law and policy is no longer the
preoccupation of only a few jurisdictions. 417. A recent publication of the European
Commission entitled "Competition Enforcement in the Pharmaceutical Sector (2009 – 2017)"
sheds light on the efforts of European competition authorities to ensure affordable and
innovative medicine. It should be noted that not all jurisdictions prohibit exploitative excessive
pricing, however excessive pricing models may often be indicators of underlying competition
problems. Unlike the binding minimum standards of intellectual property protection and
enforcement contained in the TRIPS Agreement, there is no equivalent international legal
instrument for competition law that would provide such minimum standards of protection.
418. Competition policy has an important role to play in ensuring fair access to medical
technology and fostering innovation in the pharmaceutical sector. WTO Members have absolute
policy space under international law to design their national competition laws in accordance
with their domestic interests and needs and the level of their development. 419. We want
once again to urge Members to share their national experiences and examples of how
competition law is used to achieve public health and related national objectives. Debate and
information exchange could serve to enhance the understanding of Members of various
approaches to the use of competition law and policy to prevent or deter practices such as:
collusive pricing or the use of abusive clauses in licensing agreements that unreasonably
restrict access to new technology, the use of measures that prevent the entry of generic
companies and result in higher prices for medicines, reverse payment agreements and strategic
patenting, patent thickets and product switching. 420. We also focus on capacity building and
technical assistance which remains an important means to enable WTO Members to increase
their capacity to administer and implement policies that ensure access to medicines within the
TRIPS flexibilities framework. 421. We also have a list of questions circulated in document
IP/C/W/651. I will focus in questions 4 and 5 only: (4) Have any Members recently conducted
market inquiries into the pharmaceutical sector to assess its impact on access to medicine or
more generally the impact of the pharmaceutical sector on competition in particular market
segments? If so, what were the findings and what remedial actions were recommended or
taken? (5) To what extent can technical assistance and capacity building contribute to the
delivery of more effective policies by WTO Members in the field of competition law to address
the abuse of intellectual property rights? What role can international organisations play in this
regard, including the WTO?
Intervention by: Costa Rica
422. Thanks to South Africa for its communication and for introducing this topic in the agenda.
As a means to contributing to this debate, Costa Rica would like to briefly refer to some of its
experience in this area. 423. When dealing with excessive pricing in the context of anti-trust
or competition enforcement in the pharmaceutical and medical technology sector, our
competition legislation does not contemplate specific provisions to deal with these sectors, but
pharmaceutical and medical technology goods fall within the scope of our competition law. If
there is proof that lack of competition in a particular sector might have as a consequence high
prices, temporary price regulation might be implemented as a remedy to deal with these cases.
424. The Ministry of Economy and Industry of Costa Rica is currently leading a market study
to analyse the impact of possible monopolistic practices on the most sold pharmaceutical
products in the country. The results of this study are still pending and will be made publicly
available in due time. 425. Finally, with respect to technical assistance and capacity building
needed to deliver more effective policies by WTO Members in the field of competition law, Costa
Rica believes that in the specific case of pharmaceutical products, it would be helpful to have
technical assistance both from the WTO and entities related to the field of public health such as
the WHO and the PHO in a coordinated way, in order to reach an appropriate balance between
IPR protection, trade and public health.
426. Brazil would like to thank the co-sponsors for including in the agenda the important topic
of "promoting public health through competition law and policy" under the item IP and the
Public Interest. 427. The promotion of competition and the protection of IPRs are essential
cornerstones for the development of a modern economy, and the challenge Members face,
irrespective of their level of development, is to find the right balance between both policies.
428. In a well-functioning market economy, IPRs may provide incentives for competition,
based on the promise to grant exclusive rights to products or services that eventually bring a
benefit to society and, as a result, more competition in the medium-long term. For this
incentive mechanism to function, however, it is essential that existing IPRs not be employed
abusively, harming competition and innovation in the short term at the expense of IP users.
429. In this sense, competition laws play a key role in ensuring that the exercise of exclusive
intellectual property rights do not give rise to anti-competitive practices, whether through the
abuse of the IP holders´ dominant position in the market or unlawful agreements among right
holders themselves. 430. On patents and health, we believe innovation, bolstered by the
patent system, has produced a number of important technologies that have improved health
outcomes worldwide. Innovation is also vital to achieving the 2030 Agenda´s goal of improving
the health and well-being of all people at all ages, which appears in a number of SDG targets.
431. While important progress has been made, significant gaps persist in health, innovation
and access. To mention one example, according to WHO and the World Bank, 400 million
people worldwide lack healthcare, including access to medicines, vaccines and medical devices.
Three quarters of them live in middle-income countries. Furthermore, an estimated 1.7 billion
people in 185 countries still need treatment and care for neglected tropical diseases. 432. The
WTO, WIPO and WHO report on IP and Public Health highlights that: "Several potentially anti-
competitive strategies in relation to IP rights involving medical technology have been observed
and documented. These strategies mostly are designed to extend patent protection for
originator drugs and to prevent market entry by generic competitors after patent expiry." 433.
The UNDP report, entitled "Using Competition Law to Promote Access to Health Technologies",
also provides a thorough analysis of different strategies companies use to try to curb
competition. The same document underlines the importance of competition law as one of the
important tools to promote innovation and access to health technologies. 434. In our view, the
use of competition law to curb abusive conduct is in line with both the letter and the spirit of
Article 7 of TRIPS, which states that: "The protection and enforcement of intellectual property
rights should contribute to the promotion of technological innovation and to the transfer and
dissemination of technology, to the mutual advantage of producers and users of technological
knowledge and in a manner conducive to social and economic welfare, and to a balance of
rights and obligations". 435. Article 8.1 of the TRIPS Agreement also recognizes that the
principles of IP protection are based on underlying public policy objectives. 436. Various other
provisions of TRIPS are relevant to competition law including Article 6, Article 31(k) and Article
40. These provisions leave broad discretion to Members in how they apply competition law in
respect of the acquisition and exercise of IP rights. 437. We would like to highlight that Brazil
´s approach to IP and Competition aims to be cautious, balanced and pragmatic. 438. The
Administrative Council for Economic Defense (CADE) is the Brazilian Antitrust Authority
responsible for applying Law 12.529/2011 (Antitrust Law). The institutional dialogue between
CADE and our IP office (INPI) has been intensified through a recent agreement for the
exchange of knowledge, information and technical cooperation. The objective of this increasing
collaboration is to ensure IP and antitrust laws are equally respected and assessments are
made on a case-by-case basis. 439. Based on this cooperation, CADE found Eli Lilly of Brazil
and Eli Lilly and Company guilty of sham litigation in order to obtain exclusive marketing rights
(EMR) for a medical drug used in cancer treatment in 2015. 440. In our view, such intra-
agency dialogue and cooperation ensures stability, reliability and legal certainty, essential
elements of a conducive business environment and for attracting investment and innovation.
441. Pursuing a better alignment between IP, trade and health policies is an ongoing, never-
ending process. That´s why, we, Members, have to continue working together to develop a
balanced and effective international patent system that encourages and rewards innovation
and, at the same time, is supportive of public policy objectives. 442. That is why we believe
the item "IP and Public Interest" is of utmost importance and should be further explored in the
TRIPS Council agenda in future sessions. 443. In the Eli Lilly Case, the Brazilian Association of
Generic Medication Industries filed a complaint against Eli Lilly of Brazil and Eli Lilly and
Company, alleging that the defendants had practiced sham litigation by unlawfully enforcing
patents in the medical drug market. The plaintiff claimed that the defendants were creating
artificial barriers to competition by filing suits against public institutions, such as the INPI, in
order to obtain unlawful exclusivity over a medical drug used in cancer treatment. CADE's ruling
identified an abuse of IP rights in Eli Lilly's conduct. According to CADE, the claims filed by the
defendants fulfilled the three requirements for establishing sham litigation, as developed by
case law: (1) implausibility of the claims, (2) provision of erroneous information and (3)
unreasonableness of the means used. The agency highlighted the importance of careful scrutiny
in sham litigation cases involving IP rights due to the high potential of such cases to cause very
harmful effects on competition. CADE addressed the complex interface of antitrust and IP law,
noting that even patents lawfully granted by the designated government agencies did not
preclude the possibility that these IP rights could be abused in enforcement proceedings. 444.
CADE found the defendants guilty of sham litigation for the following reasons: (i) the suits filed
by Eli Lilly were manifestly unreasonable in the sense that they were not credible and had no
chance of succeeding, since the patentability of the pharmaceutical product whose IP was being
enforced had never been analysed by INPI; (ii) the defendants omitted relevant information,
such as the suspension of the patent review and the modification of the patent scope, from
their submissions filed in the judicial suits; and (iii) the means used to enforce the IP rights
were deemed unreasonable since the same claim had been filed in several different courts . The
defendants had obtained an unlawful monopoly, harming competition, by filing various judicial
claims to avoid the practical effects of the refusal to grant the requested patent in order to
obtain EMR. 445. This ruling exemplifies an instance where CADE applied antitrust rules in a
case involving the abuse of IP rights. The defendants' conduct in the Eli Lilly case had clearly
been abusive and the resulting unlawful monopoly had caused serious harm to competition.
446. Firstly, we would like to thank South Africa for registering this agenda item for this TRIPS
Council meeting. There are many ways for us to achieve and promote public health objectives
for the good of public interest and one of those ways is through competition law. In this
opportunity, Indonesia would like to share its experience related to the topic of this agenda
item. 447. Indonesia enacted a law in 1999 which prohibits monopolistic practices and unfair
business competition among business actors. Within that law, there is a mandate for Indonesia
to establish an agency to implement provisions within the anti-monopoly law. The Indonesian
Anti-Monopoly Agency was established in 1999 and since its kick-off in the year of 2000 until
2017 it has handled 348 cases including collecting fines of up to IDR 2.07 trillion. 448. Based
on Article 50 letter (b) of the anti-monopoly law, there is an exception concerning exclusive
rights of intellectual property rights (IPRs). However, the exclusivity of IPRs cannot be
considered unlimited. Based on the anti-monopoly law, if monopolistic practices and unfair
business competition are found through the use IPRs, the agency has an obligation make
corrections. 449. In 2010, there was a case which was handled by the agency, Case Number
17/KPPU-I/2010 concerning Prohibition of Monopolistic Practices and Unfair Business
Competition Law on Amlodipine Therapy Class Pharmaceutical Industry. This case contained
issues on the dominant position of cartels in determining prices for certain medicines. Within its
finding, the agency determined that the exclusivity of IPRs cannot be classified as a license
agreement but rather as a supply agreement. 450. In the health industry of a country of
about 260 million people, "pricing abuse" often occurs in the pharmaceutical sector, where the
price of drugs and medicine tends to be very high. It happens because drugs are considered as
inelastic goods, where prices and demand do not affect each other. Such conditions created a
notion in Indonesia that the price of drugs must be controlled to prevent further abuses and
most importantly to protect consumers and the public interest. 451. Hence the Indonesian
Government created a regulation related to drug pricing which guides the upper limit price for
certain medicines. In addition to that, an electronic catalogue on drugs and medicines, which is
used as a tool to support the National Health Insurance System, was also introduced. Since the
introduction of this initiative, there is a tendency for drugs and medicine prices to decrease in
Indonesia. 452. This is an example on how the anti-monopoly law is used in Indonesia to
ensure public interest. We look forward to hearing other Members' experiences on this subject
matter.
453. In 2018, Members are actively involved in the discussion of intellectual property and the
public interest, the understanding of this issue has been deepened. In the third meeting, the
relationship between IP and competition were discussed from the viewpoint of anti-unjustified
competition, although divergences still exist, the discussion were open and inclusive. China
believes that our discussion today will further the understanding of this relationship. 454.
China reaffirms that TRIPS Council is an appropriate forum to discuss IP and competition issues.
China believes the discussion will help Members to get a better understanding of this issue.
455. In our point of view, firstly we believe that intellectual property protection should not
exclude the application of competition law. Articles 6, 8.1, 31(k) and 40 of the TRIPS
Agreement are closely related to competition. Actually, In WIPO and FTAs, this issue already
has been discussed a lot. As an important forum for intellectual property, the TRIPS Council
should discuss this issue as well. 456. Secondly, China conducts investigation and law
enforcement on monopoly issues in the field of medicine, including IP abuse excluding
competition and others. In 2017, Guidelines for Operator's Pricing on Deficient Medicine and
Drug Materials was introduced for this purpose. 457. Finally, China emphasizes the discussion
of IP and competition should be open, Members can exchange views and experiences on the
flexibility articles in TRIPS including better understanding of competition laws based on their
own legislations and practices.
458. I thank the distinguished delegate of South Africa for introducing its submission
IP/C/W/651. Competition law opens a broad and challenging field. To a large extent, this field is
outside of the responsibility of the TRIPS Council. 459. The goal of the IP system is to grant a
time limited exclusive right for the use of intellectual property to its owner. The IP system
addresses and remedies an economic market failure to ensure sufficient incentive for
investment into and for the promotion of innovation and dissemination of innovative
technology. 460. An IP right may provide one of many possible backgrounds on which anti-
competitive behaviour or an abuse of market power may occur. Competition and anti-trust law
are, however, concerned with that anti-competitive behaviour as such - and not with the
underlying IPR. 461. It is, therefore, misleading, in our view, to refer to competition law as a
TRIPS flexibility. Competition law is not to make inroads or provide exceptions to IPR or to their
protection as stipulated in the TRIPS Agreement. 462. There is no direct or necessary link
between IP and price either, be it in the pharmaceutical or any other sector. A patent does not
grant the right to demand a specific price, not to mention excessive ones. This is illustrated by
the fact that excessive pricing, whether in the pharmaceutical or other sectors, may occur
regardless of whether respective products are patent protected or not. It's practices such as
collusive pricing or abusive clauses in licensing agreement that are the subjectmatter of
examination by competition law - and not IPRs. 463. How competition law shall address such
anti-competitive behaviour is, in this delegation's view, outside the purview of the TRIPS
Council and not its field of competence.
464. The United States has provided its views on this agenda item during the two previous
TRIPS Council meetings and references, but will not otherwise repeat, its June 2018
intervention on this agenda item. 465. The United States continues to be of the view that
intellectual property laws and antitrust laws share the common purpose of promoting
innovation and enhancing consumer welfare, but also that intellectual property and competition
are distinct disciplines implemented and overseen by different administrative authorities. 466.
The United States continues to express reservations regarding discussion of this subject matter
in this forum, as relatively few TRIPS Council delegates can be expected to have deep expertise
both in intellectual property and competition law and policy. 467. We note that there are
already established forums, including the Organization for Economic Cooperation and
Development (OECD) and the International Competition Network (ICN), which bring together
the appropriate experts to discuss such issues. 468. As we have demonstrated in the United
States, IP and competition polices can and should coexist and complement one another. 469.
The United States is committed to achieving public health goals in a way that upholds IP rights
and promotes competition. 470. For more information on the United States' views on IP and
competition, please refer to our June 2018 intervention.
of Japan would like to suggest other Members to note that it might be better to take a more
also those of patent-rights holders. 472. We all should note that the development of new and
innovative medical technologies needs so much cost and takes so much time as well, and
therefore Japan believes that there should be an appropriate mechanism to incentivize the
development of such technologies not only for the developed country Members but also for the
whole world. 473. Taking the above-mentioned points into account, we believe the IP system
is an essential mechanism that should work without undue barriers to promote dynamic
competition. In particular, the current IP system plays a significant role to incentivize the
development of new and innovative medical technologies for several purposes, such as to
overcome incurable diseases and to lower the cost of production of existing medicines. 474. In
this context, this delegation would also like to point out that provisions such as those in Article
31(k) and Article 40 of the TRIPS Agreement, which refer to the relationship between IP and
competition policy, rest on an intricate balance. Therefore, Japan believes that we should be
cautious, in discussing this agenda item. And, these provisions should not be interpreted too
broadly. From this perspective, this delegation has concerns about the document IP/C/W/651.
In addition, it is important to note that any measures taken under these provisions should be
fully consistent with the TRIPS Agreement, as is stipulated in Article 8 or Article 40.2 of the
TRIPS Agreement.
475. Competition law and intellectual property systems are not contradictory, but
complementary systems of law, which both strive to further welfare and growth. As already
stated at the last two TRIPS Council sessions, in general, we do not consider the TRIPS Council
the appropriate forum to discuss competition policy. There are other international fora, such as
the International Competition Network, where such international exchanges and cooperation
are taking place and we invite all WTO Members' competition authorities to participate in those
fora. 476. While the submission from South Africa seems to consider the use of competition
policy a TRIPS flexibility to facilitate the market entry of generic competitors, the EU would be
cautious and would emphasise the following: while the TRIPS agreement is obviously
compatible with the application of competition policy measures, it clearly does not allow for
"absolute policy space". As provided for in Article 8 (1) and (2), as well as in Article 40 (2),
these measures have to be consistent with the provisions of the TRIPS agreement and cannot
be used as tools in avoiding the obligations under the Agreement. 477. Generally, of course,
competition policy plays an important role in controlling and sanctioning anti-competitive
market behaviour in any sector, including the pharmaceutical sector. 478. However,
competition authorities in the EU have been generally reticent to address possible excessive
pricing conduct. In a market economy, prices and profits are generally regarded as useful
indicators and necessary incentives for other firms to decide where to invest, enter a certain
market or expand their business. Lastly, if high profits are the result of a firm's own excellence
and innovativeness, the incentive for such efforts should not be undermined by ex-post
competition policy enforcement. While these reasons, which justify a cautious policy, are
generally well understood, Treaty on the Functioning of the European Union (TFEU) Article 102
has an explicit abuse prohibition of excessive pricing, which has been further developed by the
European Court of Justice. 479. However, in the EU, there were no competition cases of
excessive prices related to intellectual property rights. EU authorities, including the
Commission, have so far intervened in cases where, due to market failure, older, off-patent
drugs saw their prices increase by up to over 2000%. In these cases, i.e. drugs which were no
longer protected by intellectual property rights, high prices were not related to intellectual
property rights and did not act as an incentive for innovation, which intellectual property rights
aim at safeguarding. Conversely, the European Commission has never reached the conclusion
that the pricing of an innovative medicine was excessive. 480. Moreover, competition
enforcement should not only safeguard static price competition, but also be mindful of the need
to secure dynamic competition for the development of new, innovative drugs. Both the
Commission's recent Report on Competition Enforcement in the Pharmaceutical Sector as well
as the Commission's Sector Inquiry recognize the value that systemic protection of intellectual
property rights, together with the other incentives on the pharmaceutical markets (e.g.
incentives for development of orphan medicines), bring by stimulating innovation and
increasing choice for the patients. They also recognize that many legitimate practices of
pharmaceutical companies rely on the intellectual property framework (e.g. patent strategies,
patent litigations and settlements, patent oppositions). 481. Abusive conduct of
pharmaceutical companies, as any other abusive practices, can violate competition law in
certain clearly defined circumstances, and provided that all applicable legal requirements are
met. The Report and the reported cases that include intellectual property elements clearly
underscore that it is not the IPR system as such that is problematic. In fact, it is the opposite,
competition issues originate from the unlawful conduct of pharmaceutical companies, which go
against the objectives of the IPR system, for example, fraud on the patent office, vexatious
litigation, or pay for delay settlement of patent disputes. European authorities have prosecuted
a number of such cases, notably AstraZeneca, Lundbeck, Servier, Pfizer, Boehringer / Almirall
etc, all summarised in the report. 482. The Commission believes that vigilant enforcement is
needed to prevent abusive anticompetitive practices in all sectors, including the pharmaceutical
sector. To that end, EU competition authorities have the normal toolbox of competition policy
remedies, in particular monetary fines. 483. However, it cannot be inferred that patenting,
patent litigation or other IP-related conduct is generally problematic from the competition law
perspective. 484. On the international level, the EU effectively cooperates with other national
authorities, including many WTO Members, on competition policy and enforcement issues of
mutual interest. EU cooperation with competition authorities takes place at two levels. First, the
Commission discusses competition-related matters in various international fora, such as the
International Competition Network (ICN), where excessive pricing was discussed during its
annual conference in Portugal in 2017. ICN is an effective forum with a broad expert outreach
and brings together competition authorities from more than 100 jurisdictions, which exchange
experiences and best practices in several meetings every year. Second, the Commission is also
regularly engaged in bilateral cooperation, including in the pharmaceutical sector. The nature of
the cooperation activity varies between countries and can cover cooperation on specific
investigations, dialogue on competition policy issues as well as capacity building support. 485.
Therefore, we remain to be convinced about the added value of discussing competition policy
here at the TRIPS Council.
486. Competition law and policy is important first for the recognition and secondly the use and
application of IPRs. I think that the discussion we had is indicative of the progress that we have
made in the TRIPS Council. The very name of the division that is responsible for intellectual
property at the WTO contains a reference to competition and so this makes it relevant to the
discussions that we have in this meeting. The second point that we would like to make, given
the different approaches that we see in respect of competition or anti-trust law enforcement, is
that we recognize that these different approaches are legitimate policy choices that countries
make. 487. In respect of the EU intervention, I would like to thank the distinguished delegate
for the analysis and response to many issues that remain on the table and I think that the
approach of the EU has demonstrated as an indicator to all of us that there is some sort of
emerging communality in the way that we approach issues of competition and IP law in general.

Compulsory Licensing in Europe

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Agenda item name INTELLECTUAL PROPERTY AND PUBLIC INTEREST:

BEYOND ACCESS TO MEDICINES AND MEDICAL

Intervention by: South Africa

Intervention by: Nigeria

Intervention by: Indonesia

Intervention by: Chile

Intervention by: Colombia

Intervention by: China

Intervention by: Malaysia

Intervention by: Zimbabwe

Intervention by: India

Intervention by: Chinese Taipei

Intervention by: Canada

Intervention by: United Kingdom

Intervention by: European Union

Intervention by: Ecuador

Intervention by: Australia

Intervention by: Switzerland

Intervention by: United States of America

Intervention by: Sri Lanka

Intervention by: Japan

Intervention by: South Africa

Intervention by: World Health Organization (WHO)

Intervention by: Tanzania on behalf of African Group

Agenda item name INTELLECTUAL PROPERTY AND THE PUBLIC INTEREST:

Intervention by: South Africa

Intervention by: India

Intervention by: Indonesia

Intervention by: China

Intervention by: United States of America

Intervention by: Switzerland

Intervention by: South Africa

Intervention by: United States of America

Agenda item name INTELLECTUAL PROPERTY AND THE PUBLIC INTEREST:

Intervention by: South Africa

Intervention by: India

Intervention by: European Union

Intervention by: China

Intervention by: Chinese Taipei

Intervention by: Brazil

Intervention by: Japan

Intervention by: United States of America

Intervention by: South Africa

Intervention by: World Health Organization (WHO)

Intervention by: European Union

Agenda item name INTELLECTUAL PROPERTY AND THE PUBLIC INTEREST:

Intervention by: South Africa

Intervention by: Brazil

Intervention by: India

Intervention by: China

Intervention by: Indonesia

Intervention by: South Africa

Intervention by: United States of America

Intervention by: Japan

Intervention by: European Union

Intervention by: World Health Organization (WHO)

Intervention by: Brazil

Agenda item name INTELLECTUAL PROPERTY AND THE PUBLIC INTEREST:

Intervention by: South Africa

Intervention by: South Africa

Intervention by: Brazil

Intervention by: China

Intervention by: India