WIPO SCP23 – 1 December 2015 – Statement of Knowledge Ecology International on Patents and Health

1 December 2015

World Intellectual Property Organization (WIPO) Standing Committee on the Law of Patents (SCP 23)

KEI Statement on Patents and Health

Thank you Madame Chair

After five years of secret negotiations, the final text of the Trans-Pacific Partnership (TPP) was released in early November 2015. In the context of patents and health, bilateral and plurilateral agreements such as the TPP, continue to be a cause of great concern. The TRIPS+ measures of the TPP are designed to make drugs, vaccines, diagnostic tests and other medical technologies more expensive, often by broadening and extending the monopoly protections conferred by intellectual property rights.

The harmful impacts will affect all countries, and predictably, the higher prices will limit access to known efficacious treatments for diseases.

The TPP provisions include:

Article 18.37(2), which changes the WTO standard for patents, by mandating that patents are granted for new uses or methods of using known products.

Article 18.48(2), which requires an effective extension of the patent term beyond the 20 years required by the WTO.

Article 18.50, which creates a WTO/TRIPS+ obligation of at least five years of market exclusivity on the test data used used to register products, effectively ensuring monopolies when there are no patents on the product,

Article 18.52, which is designed to extend non-patent exclusivity to eight years, for biologics.

Article 18.74, is the TPP’s aggressive standard on damages, which is TRIPS+, and mandates that judicial authorities have the authority to consider “any measure of damages that the rights holder submits” including “suggested retail price.”

The provision in the TPP concerning damages from infringement is particularly concerning if it is interpreted by the Investor State Dispute Settlement (ISDS) to limit the effective implementation of liability rules that are based upon statutory limitations on the remedies for infringement.

For example, the United States Biologic Price Competition and Innovation Act (BPCIA) has provisions, designed to induce transparency of patents on biologic drugs, that limit the damage for infringement to a reasonable royalty, in some cases. Recently a member of the U.S. Congress (Representative Eshoo) asked the United States to explain how the current U.S. law is consistent with the TPP provisions on damages.

And, recently, Senator Bernie Sanders proposed legislation in the US Senate to expand access to hepatitis C virus (HCV) treatments for veterans, by limiting the compensation to patent holders when prices for products are excessive and if the outlays on the products would exceed the budgetary resources available for veterans.

The TPP appears to limit the ability of the U.S. Congress to take measures that are legal under the WTO rules, but apparently in conflict with the TPP. This directly concerns two important issues in the United States, the current law seeking to induce transparency of patents on biologic drugs, which is designed to reduce the risks facing investors in biosimilar products, and a proposed change in the U.S. law that is designed to protect veterans from access constrained by the excessive prices of drugs.

Here we also note these issues are relevant to the joint proposal in document SCP/16/7 by the African Group and the Development Agenda Group on a work program on patents and health,

Document 16/7 refers to flexibilities under Article 44 of the TRIPS including those cases where injunctions are not made available to stop infringements, and governments or courts allow infringements to take place, subject to some limited and reasonable compensation to the patent holder. The United States is currently the place where Article 44 flexibilities are used most frequently to overcome patent monopolies – including since 2006 – several cases involving medical devices and diagnostic tests.

In developing modules on state practice, we have urged the WIPO secretariat to examine how certain countries, such as the United States, implement limitations and exceptions to remedies associated with the exclusive rights of patents, with a focus on the flexibilities found in Articles 44.1 and 44.2 of the TRIPS Agreement, including cases where non-voluntary authorizations to use patents replace injunctions to enforce exclusive rights.

We urge the WIPO SCP to commission a framework study by leading independent experts to examine the implications of international trade agreements on access to medicines including norms on the evergreening of patents, mandatory patent extension, sui generis exclusivity, damages and the investor state dispute system (ISDS).

The study should examine the impact of patent monopolies on the prices of, inter alia, hepatitis C medicines and cancer medicines.

The study should also examine limitations and exceptions to remedies for infringement contained in Part III of the TRIPS Agreement, the very area that is facing new challenges from the new norms on remedies for infringement included in the TPP.

Finally, we note there is one provision in the TPP that we were grateful to see, and would like to highlight here:

In Article 18.41, Other Use Without Authorisation of the Right Holder, the TPP provides that “The Parties understand that nothing in this Chapter limits a Party’s rights and obligations under Article 31 of the TRIPS Agreement, any waiver or any amendment to that Article that the Parties accept.” What this provision does is protect the use compulsory licensing, under Part II of the TRIPS, as a limitation on the right, rather than the remedies to infringement of those rights.

The positive assurances that the TRIPS flexibilities found in Part II of the TRIPS, for compulsory licensing of rights, will be protected in the TPP, makes the assault on the TRIPS Part III flexibilities regarding the enforcement of rights even more surprising. One wonders, what were the TPP negotiators trying to accomplish?

The United States trade negotiators claim that our concerns over the TPP on the issue of damages are wrong, from a legal point of view, and that governments can, by statute limit the damages for infringement, to a different standard than the one put forth in the TPP. It would be good to clear this up before any government decides whether or not to be bound by the TPP, and perhaps the United States, Australia, Canada, Japan, or any of the other TPP member countries could shed light on this important question.

Thank you Madame Chair