Amendment to the TRIPS Agreement on access of least-developed countries and those with insufficient or no manufacturing capacities to affordable drugs

Amendment to the TRIPS Agreement on access of least-developed countries and those with insufficient or no manufacturing capacities to affordable drugs: the “Paragraph 6 System” of the Doha Declaration has been formally brought into the TRIPS Agreement

On January 23, 2017 an amendment to the WTO’s intellectual property agreement (TRIPS) entered into force making permanent a decision regarding patented drugs and public health originally adopted in 2003. This happened after the acceptance of the change by two-thirds of the WTO members.

I – Importing drugs under compulsory licensing – The “Paragraph 6 System” of the Doha Declaration

WTO members adopted the “Declaration on TRIPS and Public Health” also known as the Doha Declaration, which states inter alia that such agreement should not prevent members from taking measures to protect public health.

Paragraph 6 of the Doha Declaration, the so-called “paragraph 6 system”, recognizes the difficulties that WTO members lacking manufacturing capacities may face in making effective use of compulsory licensing under the TRIPS Agreement, as below:

“6. We recognize 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. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.”

This statement is related to the provisions of Article 31(f) of the TRIPS Agreement which establishes that products manufactured under compulsory licensing  must be predominantly for the supply of the domestic market.

Aiming at solving this inconsistency, WTO members agreed in 2003 to waive the limitation in Article 31(f) of the TRIPS Agreement predominantly to supply the domestic market when generic drugs are produced under compulsory license.

In other words, the 2003 decision allows exporting countries to grant compulsory licenses to generic suppliers for the purpose of manufacturing and exporting drugs, including active ingredients necessary for the manufacture of the drug and diagnostic kits needed for its use especially for the treatment of HIV/ADIS, tuberculosis, malaria and other epidemics to countries with limited or no production capacities.

II – Formal amendment of the TRIPS Agreement: What’s new?

WTO members agreed on December 6, 2005 to permanently incorporate the abovementioned 2003 waiver decision into the TRIPS Agreement.

However, it was necessary the acceptance of two-thirds of the WTO members to formally bring the amendment into the TRIPS Agreement.

The amendment reached the needed threshold last January 23, marking the first change to a WTO multilateral agreement since its foundation.

One should bear in mind that this amendment should be interpreted as an attempt of the WTO members to provide legal certainty for both potential exporters and importers to adopt legislation and create a legal pathway in order to allow countries with insufficient or no manufacturing capacity to import affordable generics from countries where pharmaceutical drugs are patented.

It is worth noting that the provisions of the 2005 long-lasting decision have been adopted by several WTO members for years. Brazil, for instance, accepted the amendment on Nov. 13, 2008 but it has not requested any importation under the “paragraph 6 system” so far in a clear illustration that the amendment will probably bring no news to the Brazilian pharmaceutical local market scenario.

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¹The TRIPS Agreement allows compulsory licensing of patents under quite specific rules.