Acceptance of the Protocol Amending the TRIPS Agreement to Implement the Doha Declaration on TRIPS and Public Health
Purpose of Report
11. This note reports on responses to the discussion document "Acceptance of the Protocol Amending the TRIPS Agreement to Implement the Doha Declaration on TRIPS and Public Health" published on 19 October 2007 and makes recommendations for further action.
Analysis
Background
12. Members of the World Trade Organisation (WTO) must provide minimum standards of patent protection. These standards are set out in Part 5 of the TRIPS Agreement. The effect of these standards is that all WTO members must provide patent protection for pharmaceuticals.
13. The TRIPS Agreement also allows Members to grant compulsory licenses over patents. A compulsory license allows a third party to exploit a patented invention without the permission of the patent owner. Under the TRIPS Agreement, use of the invention authorised by the compulsory license must be predominantly for the supply of the domestic market of the Member which issued the license.
14. This requirement can cause problems for countries, particularly developing countries, facing public health problems which have little or no capacity to manufacture pharmaceuticals where a patented pharmaceutical is required to deal with the public health problem. If the patent owner cannot or will not provide a sufficient quantity of the pharmaceutical at a reasonable price, the remedy of issuing a compulsory license will not be effective, as no-one in the country concerned will be able to make use of the license.
15. One way around this might be for another country which does possess sufficient manufacturing capacity to issue a compulsory license. Since the pharmaceuticals produced under the license would not be predominantly for the supply of the market of the country issuing the license, such a license would be in breach of the TRIPS Agreement.
16. In recognition of this problem, the fourth WTO Ministerial Conference held at Doha in November 2001 adopted a Declaration on the TRIPS Agreement and Public Health ("the Doha Declaration") that recognised (in paragraph 6) that:
"WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement [and instructed] the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002".
17. The Declaration, in particular the instruction in paragraph 6, was implemented by a decision of the WTO General Council on 30 August 2003. This established a waiver of the some of the compulsory license requirements of the TRIPS Agreement, so as to allow WTO Members to issue compulsory licenses for the production and export of patented pharmaceuticals to "eligible importing Members". The General Council also agreed to begin work on a Protocol amending the TRIPS Agreement to replace the waiver.
18. This Protocol was agreed to in December 2005, and is open for acceptance until 31 December 2009. It will come into force when two-thirds (101) WTO Members have accepted it. To date (February 2008) 40 WTO Members2 have accepted the Protocol. A number of other members have begun preparations for acceptance. So far, one country (Rwanda) has used the waiver to import pharmaceuticals under compulsory license.
19. A discussion document, seeking the views of interested parties on the question of New Zealand's acceptance of the Protocol, and on options for amending New Zealand's patent legislation to implement the Protocol as an exporting Member, was released on 19 October 2007.
Patents Bill
20. A Patents Bill, to replace the Patents Act 1953 was approved for introduction by LEG on 21 November 2007 and it is anticipated that this will be introduced in the near future. Any amendments to New Zealand's patent legislation arising from acceptance of the Protocol will be implemented through amendments to this Bill rather than by amending the 1953 Act.
Profile of submissions
21. Five submissions were received. The submitters were:
- The Researched Medicines Industry Association of NZ (RMI);
- GlaxoSmithKline (GSK)
- The New Zealand Council of Trade Unions (CTU)
- Sarah Meads (who describes herself as an independent submitter with no commercial interests or affiliations).
- The New Zealand Ministry of Health.
A summary of the submissions and copies of the submissions are attached to this report.
Analysis of Submissions
Acceptance of the Protocol
22. All except one of the submissions supported acceptance of the Protocol by New Zealand. The exception was the CTU, which argued that the Protocol, and the waiver that preceded it, sets up compliance barriers that severely undermine its effectiveness. The CTU argues that New Zealand should not accept the Protocol until the waiver has been adequately tested in practice.
Comment
23. The argument raised by the CTU is one that has been made elsewhere, mainly by NGOs dealing with poor countries. While this argument may have some merit, the Protocol, and the waiver that preceded it, were the result of a compromise between the competing interests of WTO Members, and is likely to be the best outcome that could have been achieved in the WTO context.
24. In light of this, non-acceptance of the Protocol by New Zealand is most unlikely to achieve anything as it is unlikely that there will be further negotiations on this issue in the near future. If New Zealand has not accepted the Protocol by the deadline set by the WTO (31 December 2009), and the Protocol has come into force it may not be possible for New Zealand to accept it at a later date.
25. Given New Zealand's role in negotiating the waiver that led to the Protocol, failure to accept the Protocol might lead some to consider that New Zealand had negotiated in bad faith, a view that officials consider inaccurate and would wish to avoid.
New Zealand as an exporting member
26. All the submitters agreed that New Zealand should amend its patent legislation to become an exporting member. GSK considered that any amendments should not be influenced by any potential economic benefits to New Zealand. This is based on the statement by the Chair of the General Council of the WTO that the system set up by the Protocol should not be used to pursue industrial or commercial objectives.
Legislative Changes: Purpose of the License
27. The only submitters to consider this issue were Sarah Meads and the Ministry of Health. They favoured a flexible, non-prescriptive approach, such as that taken by Norway (see summary of submissions). Officials consider that this would be an appropriate approach for New Zealand to take. This would reduce any risk of New Zealand not being able to export medicines to assist with a public health issue, but which does not fall within the list of health issues identified in paragraph 1 of the Doha Declaration.
Legislative Changes: Products for which a license should be granted
28. Submitters that commented on this issue favoured a non-prescriptive, relatively broad definition of the products for which a license should be granted. The approach taken in the Swiss legislation, in particular the extension of the definition to include vaccines (see summary of submissions), was favoured by both submitters. The Ministry of Health submitted that this approach would be more appropriate for New Zealand and would be more consistent with New Zealand's potential obligations to Pacific nations and other less developed countries in the event of a pandemic or other public health emergency. Again, there seems to be no reason why New Zealand should not adopt this approach.
Legislative Changes: Eligible Countries of Importation
29. None of the submitters advocated excluding in our legislation non-WTO members as eligible to import patented pharmaceuticals under the Protocol.
30. GSK argued that those countries (including New Zealand) that have notified to the WTO that they will not use the Protocol as an importing country should be excluded from eligibility as an importing Member. By contrast, the Ministry of Health argued that those countries that have notified their intention not to import should not be excluded from the possibility of becoming an importing member.
Comment
31. Including non-WTO members would be consistent with New Zealand's obligations and responsibilities to Pacific Island nations, many of which are not members of the WTO.
32. There is no obligation in the Protocol to exclude members which have indicated that they will not use it as importing members. Most other nations that have accepted the Protocol have not excluded this category of Members and there appears to be no good reason for New Zealand to do so. Officials consider that domestic legislation does not need to deal with this issue as it is not a requirement of the Protocol and if the need ever arises whereby New Zealand has a need to import under this Protocol, the issue of New Zealand's notification that registered its intention not to import is better dealt with through WTO channels.
Legislative Changes: Voluntary Licenses
33. Sarah Meads and the Ministry of Health agreed that the "take all reasonable steps" requirement in s46 of the Patents Act 1953 imposes a higher test than the "make efforts" requirement in Article 31(b) of the TRIPS Agreement. GSK however, argued that the TRIPS requirement is the equivalent of the "take reasonable steps" requirement in the Act. No submitters specified whether our current legislation should change to reflect the TRIPS standard to "make efforts
Comment
34. The requirement, in s46 of the Patents Act 1953, that applicants for compulsory licenses must take all reasonable steps to obtain a voluntary license may well impose a higher threshold than the "make efforts" requirement of TRIPS.3 To avoid any doubt, and to provide clarity, it would seem desirable for New Zealand to adopt the "make efforts" requirement in TRIPS. This will require legislative change.
Recommendations
35. After considering the issues, and the public submissions, the Ministry makes the following recommendations:
- New Zealand should accept the Protocol;
- New Zealand should amend its Patent legislation to become an exporting member;
- Any legislative amendments should take a broad, non prescriptive approach to the question of the purpose of any compulsory license, and the products eligible for such a license;
- Any legislative amendments should not exclude non-WTO members from being eligible countries of importation, nor should it exclude, as eligible importing members, those WTO members (including New Zealand) who have notified to the WTO that they will not use the Protocol as an importing member;
- The compulsory license provisions of the New Zealand's Patent legislation should be amended to adopt the "make efforts" standard contained in Article 31(b) of the TRIPS Agreement.
36. If you agree, the Ministry will prepare a paper, together with a National Interest Analysis for submission to the Cabinet Economic Development Committee seeking agreement to present the Protocol to the House. The paper will also seek conditional approval to instruct the Parliamentary Counsel Office to undertake conditional drafting of amendments to the Patents Bill to implement the Protocol if accepted.
37. It is intended that the amendments to the Patents Bill be submitted by way of a Supplementary Order Paper once the Protocol has passed through the Parliamentary treaty examination process.
38. It is also recommended that copies of this report and attachments be sent to the Minister of Trade (who has responsibility for issues relating to the WTO), and the Minister of Health, as the Ministry made a submission.
Recommended Action
We recommend you:
39. Agree that the Ministry prepare a paper, together with a National Interest Analysis for submission to the Cabinet Economic Development Committee seeking agreement to present the Protocol and the National Interest Analysis to the House in accordance with the Parliamentary treaty examination process, and for approval for the Parliamentary Counsel Office to draft the appropriate amendments to the Patents Bill, the paper containing the following recommendations:
- New Zealand should amend its Patent legislation to become an exporting member;
- Any legislative amendments should take a broad, non prescriptive approach to the question of the purpose of any compulsory license, and the products eligible for such a license;
- The eligible countries of importation should not exclude non-WTO members, or those WTO members (including New Zealand) who have notified the WTO that they will not use the Protocol as importing members
- The compulsory license provisions of the New Zealand's Patent legislation should be amended to adopt the "make efforts" standard contained in Article 31(b) of the TRIPS Agreement.
agree/disagree
40. Agree that copies of this report and attachments be sent to the Minister of Trade (Hon Phil Goff) and the Minister of Health (Hon David Cunliffe).
agree/disagree
41. Agree that a copy of this report, together with copies of the summary of submissions, and the submissions be placed on the Ministry's website.
agree/disagree
Bronwyn Turley
Manager, Intellectual Property Policy
Competition, Trade & Investment
Hon Judith Tizard
Associate Minister of Commerce
CC: Hon Phil Goff
Minister of Trade
Hon David Cunliffe
Minister of Health
Back to Top