Ewha Law School

Jungwoo Kang

Pharmaceutical research is time-consuming and expensive, so it needs to be supported by the means that encourages and rewards companies to keep working on development of new drugs, which is granting patent rights. The WTO came up with the Trade-Related Aspects of Intellectual Property Rights(TRIPs) agreement to set common international rules to protect intellectual property rights. Under the protection of the international laws and any other domestic laws, patent holders are granted an exclusive right to make use of the invention, preventing others from exploiting it.

However, as the protection for pharmaceuticals inevitably makes drugs more expensive and less accessible, the WTO has been allowing compulsory licensing under Article 31 of the agreement. Article 31 permits member states to issue licenses and manufacture patented goods without getting consent of the patent holders. To give more clarity in relation to ambiguity of the agreement, the WTO issued the ‘Declaration on the TRIPs agreement and public health’, where they made it clear that every member state (not limited to only developing countries) can issue a compulsory license, and it is their discretion to choose grounds for it.

The need for compulsory licensing has been drawn on the HIV/AIDS drugs in most cases. HIV drugs are expensive, and generally protected by patents under the TRIPs agreement and other national laws. It means patients in deprived areas have only little access, or none, to the drugs. When the government of those countries try to negotiate with the patent owners and the attempts fail, they can apply for compulsory licensing to make those drugs available in the local market without getting consent of the right holders.

However, a study shows that, unlike the expectation after the Doha declaration that the use of compulsory licensing by the least-developed countries would be increased, the use has not been actively increased, nor has it been mostly used by the developing countries. Many of those countries do not have enough resources, technology or supportive patent laws to produce the needed medicines, and the pharmaceutical companies have disturbed manufacture of generic drugs and exports and imports of those by using ‘evergreening tactic’, which is used when producers want to extend the patents that would be expired and prolong the royalties.

India has been successfully dealing with the evergreening strategies of big, multinational pharmaceutical manufacturers and provided an access to many drugs to its citizens and patients in other developing countries. India amended its patent laws in 2005 to have a stricter rule for patentability, and it only allows inventions that are significantly different in relation to its efficacy to be patentable. India’s generic drug industry has been experienced a continuous growth in size, and it has been the main supplier of ARVs, accounting for nearly 90% of the market share in 2008. In 2013, Indian Supreme Court rejected the appeal of Bayer, a German company manufacturing Nexavar cancer drugs, and upheld that Natco, an Indian generic drug maker, can produce a generic version of Nexavar under a compulsory license. Natco could provide the generic version 30 times cheaper than the original Nexavar, and many NGOs have said the ruling would affect many patients in and out of India.

Countries like India can face a reduction of foreign direct investment as other countries might be less interested in trading with those countries where it is hard to protect their patents and to make profits. However, making use of TRIPs flexibilities clearly improves access to patented drugs for the people whose interests are often not considered well in the competitive international market. It is also a good way to handle abuse of intellectual property rights and anti-competition. Even though we realise the need for compulsory licensing, there are still practical difficulties to make use of it for the countries who do not have enough resources, adequate public health policies, and thorough understanding of the diseases affecting local population. We need not only a balanced view between the provision of drugs to developing countries and the right of patent owners, but more efficient and balanced policies for protection of public health in those countries.

References

Amanpreet Kaur and Rekha Chaturvedi (2015) Compulsory Licensing of Drugs and Pharmaceuticals: Issues and Dilemma. Journal of Intellectual Property Rights. 20: p.279-287

Andrew Ward, Amy Kazmin (2014) Bayer loses bid to block cheap version of cancer drug in India. Financial Times. Available at: https://www.ft.com/content/36a2d942-8202-11e4-a9bb-00144feabdc0?mhq5j=e1

Beall R, Kuhn R (2012) Trends in Compulsory Licensing of Pharmaceuticals Since the Doha Declaration: A Database Analysis. PLoS Med 9(1): e1001154. Available at: https://doi.org/10.1371/journal.pmed.1001154

Branda Waning, Ellen Diedrichsen, Suerie Moon (2010) A lifeline to treatment: the role of Indian generic manufacturers in supplying antiretroviral medicines to developing countries. Journal of the International AIDS Society 13:35. Available at: https://jiasociety.biomedcentral.com/track/pdf/10.1186/1758-2652-13-35?site=jiasociety.biomedcentral.com

George T. Haley, Usha C. V. Haley (2012) The effects of patent-law changes on innovation: The case of India’s pharmaceutical industry. Tech Forecasting and Social Change 79(4): p.607-619