WTO TRIPS Council: Submission of China and South Africa on Promoting Public Health Through Competition Law and Policy

UPDATE: On 29 May 2018, Brazil and India notified the WTO secretariat to be “added to the list of sponsors of the submission circulated in document IP/C/W/643”. (Source: IP/C/W/643/Add.1).

On 25 May 2018, the World Trade Organization (WTO) published a joint submission (IP/C/W/643) by China and South Africa to the TRIPS Council on Promoting Public Health Through Competition Law and Policy. This submission endeavors to facilitate a discussion and the sharing of national experiences on competition, public health, and intellectual property at the next meeting of the TRIPS Council (5 June 2018 to 6 June 2018) under the agenda item: Intellectual Property and the Public Interest. The purpose of this discussion is to “enhance understanding of Members of various approaches to the use of competition law and policy to prevent or deter practices such as collusive pricing or the use of abusive clauses in licensing agreement that unreasonably restrict access to new technology, prevent the entry of generic companies and may result in higher prices for medicines.” (Source: IP/C/W/643).

At the outset, the joint submission referred to the Report of the United Nations High-Level Panel on Access to Medicines (UNHLP).

In September 2015, 193 Member States of the United Nations adopted the 2030 Agenda for Sustainable Development (2030 Agenda). This agenda includes Sustainable Development Goal (SDG) 3 that aims to ensure healthy lives and promote the well-being of all people of all ages. Soon after Member States adopted the 2030 Agenda for Sustainable Development, Ban Ki-moon, then Secretary General of the United Nations, convened an independent High-Level Panel (HLP) on Access to Medicines to investigate the relationship between intellectual property, access to health technologies, incentives for research and development and the opportunities to strengthen governance, accountability and transparency. (Source: Ibid).

The joint submission underscores that “[c]ompetition law is one of the least discussed flexibilities within the WTO’s TRIPS Agreement” noting that while the TRIPS Agreement sets “minimum norms for standards of IP protection that significantly limit Members’discretion on a large number of IP rights issues, it is not the case with competition law.” (Source: Ibid).

In relation the provisions of the TRIPS Agreement relevant to competition, China and South Africa make reference to Article 6, Article 31(k) and Article 40.

Various other provisions of the TRIPS Agreement are relevant to competition law including Article 6, Article 31(k) and Article 40. As such, these provisions leave broad discretion to Members in how they apply competition law in respect of the acquisition and exercise of IP rights. Article 6 of the TRIPS Agreement authorizes WTO Members to allow parallel importation of health technologies, a major pro-competitive form of activity that can be used to secure the lowest priced products available on international markets. Article 31(k) of the TRIPS Agreement confirms the right of Members to use such licences as anti-competitive remedies. The only condition required by Article 31(k) for the grant of this type of compulsory licence is that the anti-competitive practice needs to have been determined through a judicial or administrative process. The possible use of compulsory licences to deal with anti-competitive practices, as explicitly recognized in Article 31(k) of the TRIPS Agreement, is of particular importance to protect public health in cases, for instance, of excessive pricing of health technologies or refusal to grant a licence on reasonable commercial terms.

China and South Africa have proposed the following guiding questions to facilitate the TRIPS Council’s discussions on competition law and policy to achieve public health outcomes.

Guiding questions:

  • What grounds are available in their national laws to pursue competition law and policy to achieve public health outcomes?
  • What are the difficulties faced by WTO Members in using competition law policy to prevent or deter abusive practices, including capacity constraints, pressure from other Members and Corporations?
  • Unreasonably high royalties may deter the transfer of technology. What policies have Members established to deal with technology pricing and other aspects of transfer of technology transactions?
  • Compulsory licences have been used by competition authorities in some countries to restore competition in cases involving the exercise of IP rights. What are the experiences of Members in using compulsory licenses, noting the flexibilities inherent in Article 31(k) of the TRIPS Agreement?
  • For the full text of the submission, please see: www.keionline.org/wp-content/uploads/2018/05/W643.pdf