Sonal Singh Godara

BBA LLB
20131387
Section F

Research Paper on Trade and Access to Medicine

Trading Away Access to Health

INTRODUCTION

Right to health is one of the universal fundamental right, which has been recognized in the
international treaties. Most of the pharmaceutical industry origins from the developed countries
like USA and European Union and they found their conquest in 1994, when all the WTO members
has to adhere to the bilateral agreement on intellectual property (‘Agreement on Trade Related
Aspects of Intellectual Property Rights’1).

‘In particular, TRIPS tend to impose patent protection on all the pharmaceutical products in the
developing countries to curb the policies which allowed the production of generic drug. Generic
drugs are priced very low as they are free from the barrier of patent protection, thus creates high
level of competition among various producers. India is considered pharmacy of the developing
world, because of the higher number of generic industries, which provide access to medicine at
affordable prices to the other developing and least developed countries’2.

There are two different interest groups, one in the favor of development of pharmaceutical
companies which provides incentive for the innovation of new medicines and other exist in favor
of generic drugs which makes essential medicine affordable and thus tend to saves millions of the
lives of poor people. Does the access to medicine should be limited to people, who can afford to
it?

‘Such concerns were recognized by the WTO and decided to introduce flexibilities for the
developing countries to ensure that the access to medicine is not traded away. However the
European Union has been putting pressure on India to limit the use of such flexibilities by signing

1
Overview: the TRIPS Agreement, available at https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm

2
Carlos M. Correa, ‘INTELLECTUAL PROPERTY IN THE TRANS-PACIFIC PARTNERSHIP:INCREASING THE BARRIERS
FOR THE ACCESS TO AFFORDABLE MEDICINES’, available at http://www.southcentre.int/wp-
content/uploads/2015/08/RP62_IP-in-TPP-Increasing-the-Barriers-Access-to-Affordable-Medicines_EN.pdf
Sonal Singh Godara
BBA LLB
20131387
Section F

the Free Trade Agreement. FTA is being negotiated behind the closed doors, so public is generally
not known to its provisions, but there is great speculations that it can go against the generic drug
industries in India, thus it would result in limiting the access to medicine to the least developed
countries like Africa’3.

In this paper, in part one, I have described how the balance between IP and access to medicine is
achieved in order not undermine the right of investors and fundamental right to health. In 2nd part,
I wish to highlight how the EU puts pressure over the India for signing the FTA in reference to the
Novartis case. In the 3rd part, I have mentioned how R&D system works for the Rich and described
an innovation model which can benefit both the innovation and public health.

Generic Drug

‘A generic drug is a pharmaceutical product; manufactured without attaining license rights from
an innovator company. It is marketed and used in place of the innovator product after the expiry
date of the patent or other exclusive rights. Generic drugs, often, are as effective as the brand-name
drugs. They are sold under a non-proprietary or approved name and at cheaper rates. Because of
their low price, they are a boon to the poor. For example, paracetamol is a chemical ingredient in
most brand-name painkillers, but is also sold as a low-price generic drug’4.

‘The Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement does not prevent
governments from requiring accurate labeling or allowing generic substitution. Indeed, it is argued
that competition between drug companies and generic producers has been more effective than
negotiations with drug companies in reducing the cost of drugs, as was observed in drugs used to
treat HIV/AIDS’5.

Step by the WTO to strike the balance between intellectual rights and the right to health.

3
Sidonie Descheemaeker, ‘India, Pharmacy of the Developing World IP, Trade and the Access to Medicine’,
available at https://www.law.kuleuven.be/jura/art/49n3/descheemaeker.pdf
4
Trade, foreign policy, diplomacy and health, available at http://www.who.int/trade/glossary/story034/en/

5
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Sonal Singh Godara
BBA LLB
20131387
Section F

1. “Doha Declaration: Patients over Patents (2001)”6

Strict implementation of the TRIPS raised various concerns among the various organization and
WTO decided to provide some flexibilities in the implementation of the patent provisions to the
developing countries. Imposition of trips would lead to rise in the prices of essential medicines
and thus would become unaffordable to the poor people in the low developed countries like South
Africa. The strict implementation of patent provision without the flexibilities would have made
impossible to impede the fight against the infectious diseases such as HIV, tuberculosis and
malaria.

‘For the first time in 2001, WTO conceded the fundamental right to health, which was being
jeopardized by the developed countries and the EU and thereby took the steps to promote the public
health by accepting the Doha Declaration. In particular Doha Declaration reaffirmed the right of
WTO members to use, to the full, the TRIPS flexibilities to overcome IP barriers to the access to
medicine and granted extra freedom to developing countries when using these safeguards.
Following are the exceptions provided to the developing nations in order to strike the balance
between the short term goals of providing adequate incentive to the companies for the innovation
and development of new medicines and the long term goals of ensuring that the right to health is
not being traded away and thus people have the access to medicine’7.

(a) Compulsory licensing

‘Under compulsory licensing, the government of the developing countries has the right and
freedom to determine the grounds on the basis of which compulsory licensing would be granted.
In particular, national government of the country has the authority to generate the patented
medicine by other producer’s without the consent of patent holder. However there are certain

6
Sidonie Descheemaeker, ‘India, Pharmacy of the Developing World IP, Trade and the Access to Medicine’,
available at https://www.law.kuleuven.be/jura/art/49n3/descheemaeker.pdf

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Sonal Singh Godara
BBA LLB
20131387
Section F

conditions laid down under which the clause of compulsory licensing can be used such as national
emergencies. In article 31 of the TRIPS agreement, all the conditions are laid down’8.

(b) Parallel Importation

‘It is another measure to make medicines affordable. Parallel imports are imports of a patented or
trademarked product from a country where it is already marketed. For example, suppose company
A has a drug patented in the US and Germany, which it sells at a lower price in Germany .If a
second company buys the drug in Germany and imports it into US at a price that is lower than
company A’s price, that would be a parallel import. The legal principle here is “exhaustion”, the
idea that once company A has sold a batch of its product (in this case, in Germany), its patent
rights are exhausted on that batch and it no longer has any rights over what happens to that batch’9.

‘The TRIPS Agreement says that none of its provisions, except those dealing with non-
discrimination (“national treatment” and “most-favored-nation treatment”), can be used to address
the issue of exhaustion of intellectual property rights in a WTO dispute. So even if a country allows
parallel imports in a way that another country might think violates the TRIPS Agreement, this
cannot be raised as a dispute in the WTO unless fundamental principles of non-discrimination are
involved’10.

‘According to the Doha Declaration, each member has the right to grant compulsory licenses and
the freedom to determine unlimited grounds upon which such licenses are granted, causing the use
of compulsory licensing to go beyond emergency situations. The Doha Declaration clarifies that

8
Trade, foreign policy, diplomacy and health, available at http://www.who.int/trade/glossary/story034/en/

9
Sidonie Descheemaeker, ‘India, Pharmacy of the Developing World IP, Trade and the Access to
Medicine’, available at https://www.law.kuleuven.be/jura/art/49n3/descheemaeker.pdf

10
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Sonal Singh Godara
BBA LLB
20131387
Section F

members can choose how to deal with exhaustion in a way that best fits their domestic policy
objectives; thus ensuring national discretion’11.

(c) Paraphrase 6 system

‘Despite the unlimited grounds, compulsory licenses remained subject to the limiting condition of
article 31(f) TRIPS, which states that medicine produced under compulsory license predominantly
had to be used for the supply of the domestic market. This impeded developing countries with
insufficient or no manufacturing capacities, who imported cheap drugs’12.

‘Paragraph 6 of the Doha Declaration recognized and addressed this problem, giving poor
countries additional flexibility by waiving the exporting restriction under article 31(f) TRIPS and
allowing the total amount of generic medicine manufactured under compulsory license to be
exported to countries that cannot manufacture these cheaper generic medicines themselves. Still,
the effectiveness of the ‘Paraphrase 6 system’ depends on the extent of implementation in the
national laws’13.

(d) Extension of transition period for LDCs

‘Lastly, paragraph 7 of the Doha Declaration granted the LDCs a ten-year extension to comply
with the provisions on pharmaceutical patents of the TRIPS Agreement, allowing LCDs to exempt
medicine from patent protection until 2016 instead of 2006. Striving for the limitation of the impact
of IPRs on the access to affordable medicine, it can be concluded that the Doha Declaration, giving
primacy to public health over private intellectual property, was without a doubt the biggest
accomplishment of the lobbying of developing countries. The Doha Declaration clearly places

11
Sidonie Descheemaeker, ‘India, Pharmacy of the Developing World IP, Trade and the Access to Medicine’,
available at https://www.law.kuleuven.be/jura/art/49n3/descheemaeker.pdf

12
Trade, foreign policy, diplomacy and health, available at http://www.who.int/trade/glossary/story034/en/

13
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Sonal Singh Godara
BBA LLB
20131387
Section F

patients above patents, attempting to assure that IP serves the public interest instead of the
commercial sector’14.

2. Free Trade Agreement (FTA) and European Union pressure over the generic drug
production in India.

‘However the problem is not yet solved and decision doesn’t really go in the favor of the
developing countries. The European Union introduces the free trade agreement in 2007 and since
then the negotiation to pass the free trade agreement by the India has been going on. In addition,
there is evidence that the FTA contains provisions regarding IP and competition. It is very likely
that Pharmaceutical companies who have suffered loss in the profit margin due to the generic drug
market in India is provoking the governments of developed countries to sign the FTA with India
to minimize the effects of flexibilities provided to India, causing several of their patents not be
recognized, thus the FTA can contain enhanced IP protection, which is referred as TRIPS plus
provisions. It could prove to be a great threat not only to the Indian market but also to the other
developing as well as LCDs. Indian public is not certain about the proposal of FTA, but there could
be possibility that barriers could be put to the production of generic version of life saving drugs,
thus we choose to believe, in order to avoid infringements upon the right to health, the best solution
would be for India to simply not sign the FTA’15.

‘CASE STUDY OF THE CURRENT SITUATION: INDIA, PHARMACY OF THE

DEVELOPING WORLD’16

Novartis vs. India: the Glivec patent case

14
Sidonie Descheemaeker, ‘India, Pharmacy of the Developing World IP, Trade and the Access to Medicine’,
available at https://www.law.kuleuven.be/jura/art/49n3/descheemaeker.pdf

15
Access, available at http://www.nature.com/nrd/journal/v8/n12/full/nrd2961.html

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Sonal Singh Godara
BBA LLB
20131387
Section F

This case clearly depicts the current situation of India, which is considered the pharmacy of the
developing world due to the highest production and exportation of generic drugs to the other
developing nation. In this case, the Novartis, a Swiss company filled the case against India to put
patent protection over the essential cancer drug. Supreme Court gave the verdict against the
Novartis and it wasn’t happy with the verdict. If verdict could have been given in favor of Novartis,
there could have been limitation on the generic production and exportation of life saving cancer
drug called Glivec and thus lots of lives could have been jeopardized by the Novartis in order to
generate its cooperate interest. Such cases clearly depicts how the wealth comes before the right
to health. Novartis has been threatening to stop the further investment in India. Such threat clearly
depicts how much influence and power does these companies hold over the developing nations
like India. Therefore it can be concluded that the much required balance between IP and the access
to medicine, an achievement of the TRIPS Agreement and the Doha Declaration, has been
complicated by the pressure of rich countries and strong pharmaceutical multinationals.

3. ‘AN R&D SYSTEM THAT WORKS FOR THE RICH’17

Can the legitimate right of the investors be undermined to protect the fundamental right to health?
Pharmaceutical companies are losing their significant market share in the developing countries due
to the higher production of generic medicines. In such scenario, the sole reliance on the high
monopoly prices over the patented medicine to provide incentives for research and development
(R&D), innovation is generally lacking behind where there is no profitable market.

‘Most of the IP-driven R&D system excludes the majority of the world; they are solely profit-
driven. For example, Indian government decided in 2013 to grant a compulsory license on Bayer’s
cancer medicine. At $69,000 per year, the drug was too expensive for most people in India. The
license allowed for the generic version to be sold at less than 4 percent of Bayer's price. The views

17
‘TRADING AWAY ACCESS TO MEDICINES – REVISITED’, available at
https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp-trading-away-access-medicines-290914-
en.pdf
Sonal Singh Godara
BBA LLB
20131387
Section F

of some CEOs of major pharmaceutical companies in this context suggested that they do not accept
governments’ use of available legal means to provide access to medicines for their citizens’18.

Ebola crisis in West Africa

‘The recent Ebola crisis in West Africa poses fundamental questions about the way that R&D is
financed. While Ebola is a highly infectious lethal virus, its outbreaks happen mainly in Africa.
However, pharmaceutical companies are not interested in the R&D of medicines or vaccines for
markets that will not produce high profits. It is only now with the threat of widening spread, that
companies have started or resumed research – mostly funded by public money from the US. The
shortage of new antibiotic treatments due to the lack of market incentives is another demonstration
of the flaws of the current R&D system’19.

Companies have gradually shifted their business model from focusing on therapeutic innovation
towards marketing schemes, expanding patent protection, litigation against competitors and the
development of medicines of little therapeutic advantage while neglecting key areas of R&D.

NEW INNOVATION MODELS THAT CAN BENEFIT ALL AND CAN MAINATIN THE
REQUIRED BALANCE BETWEEN THE IP and ACCESS TO MEDICINE.

‘Collaborative networks and open research will be more efficient in delivering cheaper
innovations. New product development partnerships (PDPs) have suggested a pipeline of
medicines that could deliver new treatments for neglected diseases, while financing mechanisms
have introduced incentives to encourage private sector R&D for the same purpose. In addition,
new access and innovation models such as medicines patent pools, open data pools and prize funds
have been created or conceived. These could generate and ensure access to technologies that meet
the public health needs of LMICs’20.

18
Id
19
‘TRADING AWAY ACCESS TO MEDICINES – REVISITED’, available at
https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp-trading-away-access-medicines-290914-
en.pdf

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Sonal Singh Godara
BBA LLB
20131387
Section F

Principles to ensure access to medicine and innovation

‘(a) Open knowledge innovation- It refers to research and innovation that generates knowledge
that is free to use without legal or contractual restrictions. This paves the way for capacity building
and transfer of technologies for developing countries, and enables others to build upon existing
innovations to further their reach and potential’21.

(b) ‘Delinkage- It refers to mechanisms other than traditional reliance on monopoly protection
and high prices to incentivize R&D. The aim is to develop needs-driven R&D, rational marketing,
and the fair use of results and to enable affordable medicines’ prices’22.

CONCLUSION

The fundamental right to health cannot be undermined at any cost. Through this paper, I have tried
to argue that neither the investors of the pharmaceutical company can be ignored nor the public
health. Therefore, it is essential to maintain the balance between the intellectual rights and the
access to medicine, because none of these could be ignored at a long run. However prioritizing the
corporate interest over the lives of poor people could jeopardize the human right, the right to health.
The flexibilities introduced in the Doha declaration has been a great step toward achieving the
balance between the innovation and access to medicine. In order to ameliorate the innovation
model and access to medicines, EU should ensure that it affiliate with its development and public
health motives. Consequently EU should not make misuse of FTAs to introduce TRIPS-plus IP
rules that enhances the IP protection to the prejudice of access to medicines.

21
‘TRADING AWAY ACCESS TO MEDICINES – REVISITED’, available at
https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/bp-trading-away-access-medicines-290914-
en.pdf

22
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Sonal Singh Godara
BBA LLB
20131387
Section F