Lead Author: Lotti Rutter
Organization: Treatment Action Campaign
Country: South Africa
The 2001 Doha Declaration affirmed that the provisions of the TRIPS agreement do not prevent governments from taking the necessary policy and legal measures to achieve the right to health. The Doha Declaration explicitly states that the TRIPS agreement should be interpreted in a way that promotes access to medicines for all, and that countries are within their rights to take certain measures to limit intellectual property rights (TRIPS flexibilities) when public health interests demand it to enable access to affordable medicines.
In reality though, many countries have yet to implement such measures effectively, fully or at all. The balance between commercial and public health interests (as intended by TRIPS and the subsequent Doha Declaration) has not been redressed. Some national patent laws have only been moderately amended since the adoption of TRIPS to comply with the 20-year patent requirement and still hark back to pre-independence laws
Instead of being provided with support to comply fully with TRIPS by implementing these measures, WTO members face fierce pressure against such efforts. The World Intellectual Property Office (WIPO) offers “assistance” to ensure commercial interests are promoted. Industry purports the unsubstantiated claims that the medical innovation system will collapse and countries will see disinvestment and weakening economies if public health safeguards are enacted. Countries such as the US and those within the European Union – who benefit from a strict global IP regime – “punish” countries attempting to use safeguards with threats of disinvestment, or through mechanisms such as the 301 Watch List. Moreover, developing countries are often pressured into signing trade agreements that require even stricter TRIPS plus measures that restrict access to medicines even further.
This submission calls for all WTO members to fully implement and utilise TRIPS flexibilities and for the United Nations to provide effective guidance and technical assistance in support of such implementation and utilisation. It also calls on the panel to consider the implications of, and to comment on the consequences of, the United States 301 Watch List and other forms of trade pressure.
Introduction and statement of the problem:
In 2001, WTO members adopted the Doha Declaration that clarified the ambiguities arising in the TRIPS Agreement. In response to evidence that strict intellectual property (IP) protection negatively impacts upon access to affordable medicines, the Doha Declaration re-affirmed the right of WTO members to protect public health through the full use of the safeguards outlined in TRIPS (TRIPS flexibilities). It states that "the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health". 
In reality though, many countries have yet to implement such measures effectively, fully or at all. The balance between commercial and public health interests (as intended by TRIPS and the subsequent Doha Declaration) has not been redressed. Some national patent laws have only been moderately amended since the adoption of TRIPS to comply with the 20-year patent requirement.
Where developing countries do attempt to utilise these legitimate and legal safeguards, they are regularly subjected to outside pressure, whether multilaterally from WTO and WIPO or bilaterally from developed countries. The impetus for policy change over patent regimes thus typically comes from abroad rather than from domestic policy objectives.
It is principally for this reason that a number of developing countries have failed to take advantage of the flexibilities allowed within the TRIPS agreement and have not implemented crucial safeguards into their national patent systems for pharmaceutical and health technologies. Rather, many developing countries have been forced to implement TRIPS plus measures through trade agreements, investment agreements, or international initiatives. This leads to unnecessary and avoidable barriers to access to medicines.
1. Government pressure against use of TRIPS flexibilities
1.1. US Special 301 Watch List
While many of the examples in section 2 (below) involve pressure from the pharmaceutical industry, this pressure is typically backed up by pressure from the United States government in the form of the United States Trade Representative (USTR). While we believe the USTR mostly to exert power behind the scenes and in direct negotiations, it also exerts public pressure on countries using its 301 Watch List.
One study showed that the USTR has typically cited countries on the Watch List for issuing compulsory licenses or developing compulsory licensing plans, and expressed concern on behalf of the US government . “Sometimes the criticism is direct; other times the references are oblique or pledges to monitor the situation. But in each case the mere reference is important; a bullying tactic that tends to serve as a warning to all countries against using health rights.” 
In 2012 India issued a compulsory license for sorafenib, a treatment for kidney and liver cancer. Even though the compulsory license was TRIPS compliant, it was nevertheless mentioned in the USTR’s 301 Watch List. The local working provision cited by USTR was only one of several grounds on which India issued its license, the others being affordable price and public needs, and any one of these grounds would have sufficed under Indian law as well as under TRIPS.
In 2012, Indonesia authorised government use of patents for seven HIV/AIDS medicines . As Maybarduk points out “The authorizations are TRIPS compliant, set a critical precedent for global health and could save thousands of lives. Unfortunately, Indonesia made a strange submission to USTR citing an unspecified “mistake in procedure” when issuing the licenses.” The USTR pounced on this noted it in the 301 Watch List – thus sending a clear signal to other countries considering similar compulsory licenses.
Similar examples of USTR trade pressure through the 301 Watch List have been identified in relation to the TRIPS compliant use of compulsory licenses in Thailand, Ecuador and Brazil. (Sources provided in the references section.)
1.2. Wider US pressure
Cables released on Wikileaks between the US embassy in Ecuador and the US Department of State showed the United States, multinational pharmaceutical companies, and three Ministers within the government shared information and worked to undermine an emerging policy in Ecuador. The policy aimed to improve access to medicines and support public health programs through a protocol that would reduce medicine costs - including through the establishment of a compulsory licensing mechanism .
2. CASE STUDIES:
1.1. The PMA case:
South Africa is a good example of the phenomenon of failing to take advantage of TRIPS flexibilities. Because of this, the country’s patent regime has a significant adverse impact on the affordability and accessibility of medicines for people living in South Africa. Levels of pressure against the country have been unprecedented.
In 1997 President Nelson Mandela attempted to include into the Medicines Act provisions for parallel importation, provisions encouraging generic substitution of off patent medicines, and a transparent pricing mechanism . Despite this being signed into law, there was an intense backlash from the Pharmaceutical Manufacturers Association (PMA) who, representing 39 pharmaceutical companies, initiated legal action against the South African government that continued until 2001. The trial was delayed for three years, during which time the Act did not go into effect and access to medicine was severely impeded. The case was only dropped following national and international outcry and the prospect of dying AIDS patients testifying in court.
Not only did the South African government feel pressure from industry, in addition following the ratification of amendments to the Act, the United States Trade Representative (USTR) placed South Africa on the 301 Watch List . Inclusion on this list signifies that the US perceived South Africa had created trade barriers for the US and could therefore be subject to trade sanctions.
Ironically, although the government had vigorously defended these legal measures, which it has built into its amended Medicines Act, the pressures exerted by both the US Government and pharmaceutical companies have made it reluctant to use them .
In addition, the severe pressure that the South African government faced in the PMA case has had a chilling effect on the government’s willingness to undertake further law reform. As a result, South Africa has not amended its patent laws subsequent to the Doha Declaration, even though it is and was at the epicenter of the HIV/AIDS epidemic.
2.2. National intellectual property law reform:
In September 2013, the South African Department of Trade and Industry (“the dti”) released the Draft National Policy on Intellectual Property . The draft policy outlined provisions to include TRIPS flexibilities into national law to ensure a better balance between commercial interests and public health rights. However, 16 years later, history is repeating and the South African government is again facing significant bilateral and industry pressure against this process.
Following the release of the draft policy, 25 pharmaceutical companies under the umbrella organisation IPASA (Innovative Pharmaceuticals Association of South Africa), were revealed to be plotting the finance of a scheme to delay the finalisation of this policy. Despite attempting to distance themselves from the “Pharmagate” plot, leaked documents  illustrated that both IPASA and US-based industry body PhRMA (the Pharmaceutical Researchers and Manufacturers of America) actively selected a “high calibre consultancy group” – PAE – to subvert the South African intellectual property law reform process by financing a covert US $600,000 campaign and that IPASA’s intellectual property committee was ready to proceed with the proposed plot with “urgency” .
The South African Minister of Health, Dr Aaron Motsoaledi, said the campaign sought to restrict access to crucial drugs and called the plot tantamount to “genocide” . South African and other country statements at the Executive Board meeting of the World Health Organization reiterated that IP reform in South Africa would “promote competition and ensure the levelling of the playing field.”  One week after the “Pharmagate” scandal, pharmaceutical company Roche quit, and Novo Nordisk temporarily left the IPASA association .
Furthermore, in mid-2015, the American Chamber of Commerce in South Africa (AmCham) made a submission to the Office of the United States Trade Representative explicitly requesting that South Africa’s eligibility for ongoing inclusion in the African Growth and Opportunities Act (AGOA) should be dependent on the country abandoning certain intellectual property law reforms to protect health.
The argument is contained in a submission  to the Office of the United States Trade Representative (USTR), and echoes a 2013 AmCham submission  to South Africa’s Department of Trade and Industry (DTI) on the country’s Draft IP Policy.
Prominent AmCham members include some of the pharmaceutical companies behind the 2014 Pharmagate scandal. Pharmaceutical companies implicated in Pharmagate and belonging to AmCham include Abbott Laboratories SA, AbbVie, Bristol-Myers Squibb, Eli Lilly SA, MSD and Pfizer.
While there is no clear evidence the US government is linking AGOA eligibility to halting IP reform, the AmCham submission to the USTR makes it clear that AmCham members are lobbying the U.S. government to exert such pressure. AmCham’s submission shows no recognition of South Africa’s need for affordable medicines to address its severe disease burden of HIV, TB, and non-communicable diseases. The Treatment Action Campaign, MSF, SECTION27 and the Stop Stockouts Project made a submission  to the USTR, which countered the AmCham submission to the USTR on South Africa’s eligibility for AGOA. However, while we continue to await the final IP Policy, it remains unknown if trade concessions have been made.
This pressure is not isolated to South Africa but highlights the significant disincentive to amend patent laws in the public interest. Many other countries have also suffered immense pressure for attempting to utilise public health safeguards.
2.3. India vs Novartis:
In 2006, pharmaceutical company Novartis filed complaints against the Indian government challenging the refusal of the patent controller to grant a patent on the beta-crystalline form of its anticancer drug, imatinib mesylate, as well as the validity of section 3(d) of the Indian Patent Act that provided one of several grounds for rejecting its patent application. The case and subsequent appeals continued until 2012. During this time immense pressure was put on the Indian government to grant the patent. Novartis continually threatened to withdraw all manufacturing plants from India if the patent was not granted. Conversely, after losing the case at the Supreme Court, Novartis eventually expanded operations in India. Novartis claimed that this patent was necessary to recoup the development costs of imatinib mesylate. However, research shows that by the most generous estimate, Novartis’ outlay on R&D for imatinib was US $96 million, with the company contributing only 10% of early research costs. Yet in 2012, sales of imatinib generated US $4.7 billion globally – ensuring Novartis realised a return on their investment once every 13 days .
2.2. US-Jordan FTA
Before Jordan joined the WTO, the USTR had listed Jordan on its Special 301 Watch List for failure to adequately protect US intellectual property rights . Following accession to the WTO and the signing of the US-Jordan free trade agreement (that introduced a harsh framework of TRIPS-plus measures) in 2001, medicine prices in Jordan have increased by 20%. One study found that of 103 medicines registered & launched since 2001 that currently have no patent protection in Jordan, at least 79% have no competition from a generic equivalent as a consequence of data exclusivity .
Data exclusivity is a TRIPS-plus measure that creates a new system of monopoly power, separate from patents, by blocking the registration and marketing approval of generic medicines for five or more years, even when no patent exists.
In addition, the study found that “additional expenditures for medicines with no generic competitor, as a result of enforcement of data exclusivity by multinational drug companies, were between $6.3m and $22.04m” . Furthermore, “patients in Jordan pay from two to ten times more for some new medicines compared with patients in Egypt, where new medicines are manufactured locally through licensing agreements and partnerships” and “where there are no TRIPS-plus barriers.” 
When negotiating TRIPS, developed countries promised developing countries that the implementation and expansion of intellectual property protection would result in greater foreign direct investment which would stimulate economic growth. However, despite assertions made by the USTR since the US-Jordan FTA was signed nearly no foreign direct investment (FDI) has been brought by multinational pharmaceutical companies. Moreover “the only FDI into Jordan by multinational drug companies has been to expand scientific offices, which use aggressive sales tactics to ensure that expensive patented medicines are used instead of inexpensive generics.” 
3. Impact on remedying policy incoherence:
While the TRIPS agreement, as clarified in the Doha Declaration, enables countries to take steps to ensure better access to medicines, these enabling provisions are often not used because of trade pressure. This creates incoherence between what is technically possible and what is politically possible. While countries are legally allowed to implement TRIPS flexibilities in domestic laws, they are prevented from doing so through trade pressure.
Greater legal and technical assistance from the United Nations, through its various agencies, could potentially make it easier for countries to implement TRIPS flexibilities. In addition, there is potentially great value in the panel recognising and being openly critical of United States 301 Watch List and its chilling impact on countries seeking to protect the health of their people.
4. Impact on public health:
Reduced trade pressure regarding the implementation of TRIPS flexibilities would enable countries to better shape their domestic laws in ways that allows them to protect access to medicines and public health. At present though, countries are forced to make trade-offs between protecting access to medicines and preferable access to agricultural export markets, for example.
5. Impact on human rights:
By fully implementing TRIPS flexibilities countries will be able to increase access to medicines – thereby better protecting the right to health. The right to health is a basic human right that is recognised in various legal systems and in various international agreements.
Significantly increased and improved implementation of TRIPS flexibilities in domestic legal systems could be achieved through a combination of reduced trade pressure and increased technical assistance from the United Nations and its agencies.
Providing increased technical assistance, through for example the World Intellectual Property Organization (WIPO), is both possible and feasible. The main obstacle however to appropriate technical assistance would be a potential lack of political will within WIPO and opposition from member states such as the United States – who have essentially been campaigning against this kind of intervention through its 301 Watch List.
Whether a significant reduction in trade pressure is possible is less clear. However, we consider there to be a moral obligation on concerned people in positions of power to go on the record about the harmful impacts of excessive trade pressure and mechanisms such as the 301 Watch List. We also believe that the United Nations must offer a more far-sighted and morally sound view than the views expressed by industry lobbyists and governments who do the bidding of industry lobbyists.
While flexibilities exist under TRIPS that can be used to better balance the right to health with the interests of pharmaceutical companies, many of these flexibilities are not implemented in national laws, and where they are implemented, they are often not fully utilised in the public interest.
The two reasons for this lack of implementation and use of pro-public health legal flexibilities are (a) Trade pressure from rich developed countries, in the form of mechanisms such as the United States’ 301 Watch List, and (b) a lack of support from bodies such as WIPO and the WHO to ensure countries implement and use the available flexibilities in international law.
Both these issues must be addressed – firstly in relation to TRIPS flexibilities, but also in regard to any new/future IP frameworks or mechanisms the panel may deem feasible. A key lesson from TRIPS is that good mechanisms are of limited use if their effective implementation can be prevented through trade pressure.
In conclusion we make the following recommendations:
1. For all WTO members to fully implement TRIPS flexibilities in order to better balance the right to health with the private interests of pharmaceutical companies.
2. For the UN, WHO and WIPO to provide guidance and to support WTO members in developing and fully implementing and utilising TRIPS flexibilities. (In this regard we fully support Professor Brook Baker’s submission to the High-Level Panel in relation to Compulsory Licensing.)
3. For the panel to consider and pronounce on the impact of trade pressure on the implementation of TRIPS flexibilities.
4. For the panel to consider and pronounce on the impact of the United States 301 Watch List on WTO members seeking to implement and use TRIPS-sanctioned legal flexibilities.
Bibliography and References
1. <In response to evidence that strict intellectual property (IP) protection negatively impacts upon access to affordable medicines, the Doha Declaration re-affirmed the right of WTO members to protect public health through the full use of the safeguards outlined in TRIPS (TRIPS flexibilities).> Doha Declaration, 2001. Available here: http://www.who.int/medicines/areas/policy/doha_declaration/en/
2. <With the exception of Canada’s 2007 export arrangement with Rwanda, every recent pharmaceutical compulsory license or major compulsory licensing policy – at least, of which USTR is aware, and so far as I can tell — has been referenced in the 301 Report. (I had to go back to 2004/2005 to find exceptions, in the case of Indonesian and Malaysian government use licenses for AIDS.)> Maybarduk, May 2013. “US Government Special 301 “Watchlist” and Developing Country Use of Compulsory Licenses for Healthcare”. Available at: http://infojustice.org/archives/29493
4. See: http://www.citizen.org/actions-indonesia.
5. See Indonesia’s submission at page 7: http://www.regulations.gov/#!documentDetail;D=USTR-2012-0022-0071. (The document also oddly states that licenses were issued on nine products.) Indonesia’s submission opened a door for USTR criticism.
6. Public Citizen, 2011. “Leaked Cables Show U.S. Tried, Failed to Organize Against Ecuador Compulsory Licensing”. Available at: http://www.citizen.org/leaked-cables-show-US-tried-failed-to-organize-against-ecuador-compulsory-licensing
7. South Africa’s Medicines and Related Substances Control Amendment Act. Available at: http://www.gov.za/sites/www.gov.za/files/b72b-97_0.pdf
8. Flynn, S. 2010. “Special 301 of the Trade Act of 1974 and Global Access to Medicine”.
Available at: http://infojustice.org/download/gcongress/ipandhumanrights/Flynn%20-%20Speical%20301%20and%20Global%20Access%20to%20Medicine.pdf
9. TAC, 2011. “10 years of TAC”. Available at: http://www.tac.org.za/files/10yearbook/files/tac%2010%20year%20draft5.pdf
10. The Department of Trade and Industry, September 2013. Draft National Policy on Intellectual Property. Available at: http://ip-unit.org/wp-content/uploads/2013/09/DRAFT-IP-POLICY.pdf
11. KEI, January 2014. “New leaked Merck missive reveals deep drug, medical device company opposition to South African patent reforms”. Available at: http://keionline.org/node/1908
13. Mail & Guardian, January 2014. “Motsoaledi: big pharma’s satanic plot is genocide.” Available at: http://mg.co.za/article/2014-01-16-motsoaledi-big-pharmas-satanic-plot-is-genocide
14. IP-Watch, January 2014. “WHO Chief: No Government Should Be Intimidated For Doing “Right Thing” In Public Health”. Available at: http://www.ip-watch.org/2014/01/24/who-director-general-no-government-should-be-intimidated-by-interested-parties/
15. Business Day Live, February 2014. “IPASA axes committee in wake of patents row.” Available at: http://www.bdlive.co.za/business/healthcare/2014/02/07/ipasa-axes-committee-in-wake-of-patents-row
16. AmCham, 2015. “Submission on the Out of Cycle Review of South Africa’s Eligibility for Benefits.” http://www.msfaccess.org/sites/default/files/MSF_assets/IP/Docs/IP_SouthAfrica_AmCham_SA_-_AGOA_-_Submission_on_the_Out-of-Cycle_Review_of_South_Africa_Eligibility_for_Benefits-2015-ENG.pdf
17. AmCham, 2013. “COMMENTS ON SOUTH AFRICA’S DRAFT NATIONAL POLICY ON INTELLECTUAL PROPERTY.” Available at: http://www.msfaccess.org/sites/default/files/MSF_assets/IP/Docs/IP-SouthAfrica_US-chamber-submission-on-draft-national-ip-policy_2015-ENG.pdf
18. Submission of TAC, MSF, SECTION27, Stop Stockouts Project, 2015. Available at: http://www.msfaccess.org/sites/default/files/MSF_assets/IP/Docs/IP_SouthAfrica_Submission-TACS27MSFSSO-regarding-SouthAfrica-AGOA-OCR-2015-ENG.pdf
19. Love. J. (2013). ‘R&D costs for Gleevec’. Knowledge Ecology International. Available at: http://www.keionline.org/node/1697
20. Abbott, 2012 “Access To Medicines And Intellectual Property In Jordan”. Available at: http://www.ip-watch.org/2012/07/23/access-to-medicines-and-intellectual-property-in-jordan/
21. Oxfam, 2007. “All costs, no benefits: How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines”