the conflict-of-priority-patents-profits-and-patients

Unique Submission No.

THEME OF THE ESSAY: INTELLECTUAL PROPERTY RIGHTS AND

PHARMACEUTICAL COMPANIES.

Topic: The Conflict of Priority: Patents, Profits and Patients.

Abstract

The issue of Right to health vi-a-vis patent protection is generally studied as a two dimensional

subject concerning only Intellectual Property Rights and Human rights. The intellectual property

rights are guarded by the west and generally guarded for the vested interest of multi-national

pharmaceutical companies. The role of these two major players in our world of patent protection

and trade laws are never studied in isolation. Therefore a thorough examination in this regard

was much needed. However this linkage of trade laws and patent protection has been studied

from the perspective of Human Rights. Thus, in an attempt to carefully analyse the

aforementioned linkage the paper seeks to explore as to how the two regimes (IPR and HR) came

to a meeting point while undergoing their individual evolution (jurisprudential relation between

the two) and how due to this intersection there was a change in the concept of rights and

primacy of rights. Later, we narrow the Human Rights’ view on Right to health and its

interpretation to seek the ends we wish to accomplish and how such ends are to be met without

interfering with either patent protection laws or with the TRIPS.

PATRON-IN-CHIEF, RESEARCH PAPER WRITING COMPETITION, 2015

1.

INTRODUCTION

The incompatibility between Intellectual property rights and the Human rights is now a decade

old conflict which demands immediate attention. This demand for immediate attention is

primarily owed to the developing and under developed nations which house millions of people

who seek access to medicines at affordable rates. Even though the world came together at Doha

in an attempt to solve this issue, the developed world, along with the pharmaceutical companies

are most reluctant to address this issue in a proper manner. There is a plethora of reasons as to

why and how Human Rights problem with regard to access to medicines has not been able to

gain popularity? This paper seeks to analyse the range of problems offered by the grey area

intersection of Human Rights and the Intellectual Property Rights and offer solutions to the

same.

In an attempt to carefully examine this conflict we need to know how it emerged and what

constitutes the conflict. Therefore, the present paper has been segmented in the following manner

Part I – Understanding the conflict.

1. Jurisprudential relationship of the two regimes and their intersection.

2. Problems posed by the Agreement on Trade Related Aspects of Intellectual Property

Rights.

Part II – Right to health and its related aspects.

1. Interpretation of the term Right to Health.

2. Paradigm shift in the world order with regard to primacy of rights.

Part III – Looking for solutions.

1. The TRIPS flexibilities and the Doha Declaration: A superficial solution.

2. Technology Transfer: A viable solution?

3. The model of Tired Pricing: Does it erode patent protection?


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Part I – Understanding the conflict.

From a jurisprudential point of view it can be easily said that the Intellectual Property Rights

flow from the Human Rights. Thus, the two regimes were never separated in the first place,

rather Intellectual Property Rights branched out from the Human Rights. However, after this the

two regimes evolved independent from each other. Therefore, it should never have come as a

surprise when the two intersected or were brought together through the Agreement on Trade

Related aspects of Intellectual Property Rights.

Jurisprudential relationship of the two regimes.

When the Universal Declaration of Human Rights was adopted in the year 1948, it contained the

Right to science and culture, which is said to lay the foundation for Intellectual Property Rights,

in its Article 27.1 However, after this the Intellectual Property Law evolved to become a much

more monopolistic law in itself. After all, that was the basic idea behind it – i.e. to provide an

incentive to scientists and researchers to share their knowledge in return of statutory rights which

provide them with access and control of their invention. They would bargain their knowledge for

guarantee of an absolute right over their invention/creation. Therefore, the purpose of intellectual

property rights is to encourage innovation by granting their owner a reward better than it could

obtain in a competitive market.2 Therefrom, the intellectual property regime detached itself from

all aspects of Human Rights and entered into a new dimension of rights which it sought to

protect. In all the major conventions3 with regard to Intellectual Property Rights the issue of

Human Rights was an alien to IP Rights. Even in the subsequent conventions reference to

Human Rights are few and inadequate4.

1 Universal Declaration of Human Rights, Article 27:

“(1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.

(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”2 Herbert Hovenkamp, Ip And Antitrust: An Analysis Of Antitrust Pinciples Applied To Intellectual Property Law, Aspen Publishers, 2nd Edition. (2002). 3 Referring to Paris and Berne Convention of 1883 and 1886 respectively.4 Referring to TRIPS and TRIPS plus bilateral agreement of U.S.A. and Brazil


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Meanwhile, in Human Rights regime Political and other Natural Rights had gained popularity

and there was a pressing concern to address the Human Rights violations with regard to crimes

committed by the State. Thus, the field of science and culture and the rights related thereto were

sidelined and neglected. However, since it had branched from Human Rights itself someday both

the regimes were destined to meet at some time or other and this intersection was brought by two

major reasons.

1. Firstly, the rights of indigenous communities got lost in the whole idea of patent

protection. People/communities demanded right of recognition and control over the

exploitation of their Traditional Knowledge.

2. Secondly, in the year 1994 WTO sanctioned the Agreement on Trade Related aspects of

Intellectual Property Rights, which sought to bring trade and intellectual property rights.

However, in an attempt to do so, while simultaneously neglecting the needs of the

developing world, the issue of Human Rights again was not addressed at all. This was

probably what can be said to be the last nail in the coffin and gave rise to the conflict

between Human Rights and Intellectual Property Rights through its linkage to Trade.

The paper seeks to analyse and remain only with the second aspect of the intersection and learn

more about incompatibility and problems posed by the conflict of the aforementioned regimes.

Problems and areas of conflict posed by TRIPS for Human Rights.

The agreement on Trade Related aspects of Intellectual Property Rights in order to promote and

make developing countries comply with the Intellectual Property norms being followed in the

west, adopted a relatively high minimum standards of patent protection.5 This has resulted in a

lot of resentment around the developing and underdeveloped nations.6 The developing and

under-developed nations due to their weak economic system are unable to afford the medicines

and drugs which have patent protection. It is essentially this contentious issue that the world is

looking for a solution for. However, it has been put very simply and it in actuality involves a lot

many complexities that need to be first addressed to.

5 Laurence R. Hefler, Human Rights and Intellectual Property – Conflict or Coexistence, Minnessota Intellectual Property Review.6 J.H. Reichman, The TRIPS Agreement Comes of Age: Conflict or Cooperation with the Developing Countries?, 32 CASE W. RES. J INTERNATIONAL LAW JOURNAL 452 (‘Pound of flesh’ mentality ).


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Therefore we begin to find out what are the conditions required for compliane with TRIPS that

the developing and under-developed nation resent to follow and also the reasons for such

resentment to comply with these provisions.

The following are the contentious provisions of the TRIPS talked about in the aforementioned

segment:

1. Exclusive Patent Rights.7

2. Minimum 20 year patent term.8

3. Non-discrimination.9

In attempt to solve the problems posed by the TRIPS, we need a careful examination of what

constitutes the problem i.e. how the operation of the aforementioned provisions affect the

developing/under-developed countries with regard to access to medicines.

Patents, TRIPS and access to medicines: Understanding the paradox.

A patent is an ‘intellectual property right’ which gives its owner the right to prevent others from

making, using, importing, or selling an invention. In other words, patenting an invention gives

the patent owner a monopoly over the invention. A patent is usually granted for a limited time,

such as 20 years. A patent is granted under a country’s domestic laws, which may be affected by

international laws.10 The grant of patent makes the inventor charge/quote high prices for

medicines. This patent is then licensed to pharmaceutical companies who run on a model of

maximization of profits, furthering the cost of drugs, resulting in an escalated cost of drug. Thus,

even for diseases like malaria and Tuberculosis, which kill millions of people in poor countries

of Asia and Africa, the medicine is unaffordable due to the aforementioned reasons. Now, with

the coming of TRIPS strict compliance with patent laws is a must. This further escalates the

problems of such poor countries, as they are unable to manufacture generic medicines till the

7 Agreement on Trade Related aspects of Intellectual Property Rights, Article 28.8 Agreement on Trade Related aspects of Intellectual Property Rights, Article 339 Agreement on Trade Related aspects of Intellectual Property Rights, Article 2710Richard Elliott and Marie-Hélène Bonin, Patents, International Trade Law And Access To Essential Medicines, Canadian HIV/AIDS Legal Network and MSF Canada


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patent expires and have to buy medicines at abnormally high prices from these pharmaceutical

companies which tend to exploit such nations.

Therefore, is it safe to say that if the provisions of TRIPS are negotiated/not complied with, it

will result in an upsurge of access to medicines in poor nations? Yes and No both. Firstly, a

country that cannot afford a particular drug cannot be expected to make generic drug of similar

quality as that of the patented drug. Thus, if TRIPS is taken out of picture there will be

production of a lot of generic drugs which will in turn affect the market price of the patented

drug negatively, due to an increase in the competition. However, the quality of generic drug

produced is questionable. Moreover, the due to the lack of technological advancement of such

low-income countries the generic drug-production unit is incompetent to produce such drugs

even after obtaining the compulsory licenses, thereby forcing importation of the main ingredients

of such medicines. This process in itself is unaffordable and too costly for such countries.

Secondly, the Indian pharmaceutical boom has been realized on the foundation of negotiated

principles of the TRIPS. The Indian Patent Act, 1970 gave only ‘process’ patents and did not

give ‘product’ patents. This resulted in a large number of generic drug production giving way to

access of medicines. However, there is a downside to this too and that being, since India could

not have a market for its own needs or could not create one, it profited from producing drugs for

the west and then exporting them.

Further, there are several factors affecting the problem of limited access to essential medicines.

Some of the major factors are:

1. Logistical supply and storage problems.

2. Substandard drug quality.

3. Inappropriate selection of drugs.

4. Inadequate production and

5. Prohibitiveprices.11

11 Ellen M. ‘Thoen, TRIPS, Pharmaceutical patents and other essential medicines: Seattle, Doha and beyond


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Also, essentially drug companies in the developing and under-developed world cannot recoup

the cost of R&D for products to treat diseases that affect their countries due to the lack of

incentive for the pharmaceutical companies present there.12

So, how do we make medicines accessible to all and also make the developing/under-developed

nations comply with TRIPS? In a scenario where a balance has to be made we need to be sure of

what we want i.e. the ends. After everything said and done we need to know what we mean by

Right To Health and how such a right came up in the first place in the intellectual property

regime. All these issues are explored in the immediate segment.

Part II - Right to Health and it related aspects.

Interpretation of the term ‘Right to Health’.

Right to health, as defined in the Universal Declaration of Human Rights, is a economic, social

and cultural right to a universal minimum standard of health to which all individuals are ntitled13.

The Right to health is not a right that can be studied in isolation and has various other socio-

economic factors attached with it. However, with respect to the present paper we narrow the

right to health to limit it to the aspect of accessibility and affordability of medicine and life

saving drugs.

Paradigm shift in the world order with regard to primacy of rights.

The rights that the field of intellectual property wishes to protect was marred by inferiority when

the United States of America changed its policy on accessibility of drugs in the 1999 WTO

ministerial meet held in Seattle. This greatly disturbed the world order. Sanctioning, TRIPS plus

was an attempt by the developed nations to restore this world order and put things back in

perspective, to an advantageous position for the intellectual property regime. They viewed it as a

infringement into their domain and perspective of rights, which they sought to protect. Since

12 Pécoul B. et al.: Access to Essential Drugs in Poor Countries. A Lost Battle? JAMA 1999, 361, 28113 Universal Declaration of Human Rights, Article 25.


http://en.wikipedia.org/wiki/Health

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only 10% of the pharmaceutical companies reside in the developing and under-developed nations

and the rest 90% prospering in U.S.A. and European nations.14

The intellectual property rights were guaranteed to the inventor to incentivize it for him to

divulge the secret behind his research so that it benefits humanity at large. At the same time, the

consumers of these products had no rights at all. When the Human Rights perspective first came

in picture with the United Nations Sub commission on Promotion and Protection of Human

Rights, the advocates of Human Rights quickly acknowledged the primacy of the right to health.

No doubt that in the larger scheme of things Right to health should have primacy over patent

rights but to declare it like that would have had major repercussions. And as a matter of fact it

did. The multinational companies which apprehended that some serious consequences would

flow from such primacy quickly tried to gain the confidence of the west/developed world in an

attempt to protect their own patents ant interests. Thus, came into existence the nexus between

the multi-national pharmaceutical companies and the developed world. The TRIPS plus was a

result of this symbiotic relationship between the developed Europe and the Big Pharma

companies.15

Even though the United Nations through the World Health Organization may take a view about

primacy of the Right to health over intellectual property rights, much of it remains in theory and

will hardly transform into on ground practice.

Part III - Looking for Solutions.

The TRIPS may have had certain solutions and backdoors open for the developing and under

developed nations but are they enough to tackle the issue given the fact the number of ailing and

sick in such poor countries is rising at an unprecedented rate and in an uncontrolled manner?

More so, is the west trying to close these backdoors too by bringing in sanctions like the TRIPS

14 Ellen M. ‘Thoen, TRIPS, Pharmaceutical patents and other essential medicines: Seattle, Doha and beyond.15 This can be clearly seen after the Big Pharma v. Nelson Mandela case in the Dispute Settlement board of the WTO ; wherein the major pharmaceutical companies stated that The Medicines and Related Substances Control Amendment act violated the TRIPS agreement. This claim was initially backed by the United States government initially and which also threatened to impose trade sanctions against the South African government. However later withdrew advocating the claims of pharmaceutical companies under international pressure from various NGOs around the world.


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plus? Is the Doha declaration and the TRIPS flexibilities enough to give an assurance to the

poorer countries or we need to expand the horizon in search of a pragmatic solution for the actual

realization of the Right to health in all the poor countries of Asia and Africa?

The TRIPS flexibilities and the Doha Declaration: A superficial solution.

The TRIPS flexibilities are marred by a lot of barriers and practices which in reality don’t

percolate down to as is thought in theory to do. We shall study the two major TRIPS flexibilities

to understand this problem more effectively. In order to promote access to medicines to poor

nations and increase their affordability the TRIPS agreement had certain flexibilities which were

supposed to address this issue. They were:

1. Compulsory licensing. Under TRIPS, a country’s laws may allow the state or the courts

to issue a “compulsory license,” which permits either the government, an individual or a

company to use a drug (i.e. produce or import a generic drug) without the authorization

of the patent owner. Compulsory licenses are usually granted on grounds of general

interest such as public health, economic development, national defence and the absence

of working (i.e. when the holder is not “exploiting” its patent). The TRIPS agreement

does not limit the grounds on which governments or courts may issue compulsory

licences.16

2. Parallel Importing. Manufacturers often charge lower prices for a drug in one country

than in another. This means a country with limited resources can sometimes afford more of a

patented drug by purchasing it abroad and importing it, rather than buying it directly at home

from the manufacturer at a higher price.17

Problems affecting these flexibilities.

1. Compulsory Licensing requires production of generic medicines on the model of the

patented drug. However, it is often forgotten that the active ingredient required for the

manufacture of such medicines is to be imported and thus rounds up to still high

production costs. The west often forgets that such flexibilities were supposed to be

incorporated for the poor countries of the world which lack technological know-how and

16 Agreement on Trade Related aspects of Intellectual Property Rights, Article 3117 Agreement on Trade Related aspects of Intellectual Property Rights, Article 6


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infrastructure and thus need economic assistance in that regard. Therefore, to expect

them to manufacture generic medicines all by themselves is inconsistent in principle.

2. Parallel Importing must be used “in good faith to protect public health and not be used as

an instrument to pursue industrial or commercial policy objectives”.18 However, it lacks

the coherence with basic economic principles of understanding monetary incentives that

drive a marketplace and entice commercial manufacturers to undertake highly procedural

exportation processes.19 Moreover, when small importing countries undertake parallel

importing, they are supposed to identify a manufacturer who shall develop generic

medicines at low costs for non commercial objectives. Local drug pharma companies

may have little incentive to undertake such commitments for minimal no guaranteed

returns.

Further, the Doha declaration has been hyped too much for safeguarding the interests of the

developing world and also been heralded for being a bastion of public health. To the contrary,

one needs to think how could a compromise be reached favouring the low-income countries

while going against interests of those countries which actually run the WTO?20 Well, the truth

lies in the own little agenda of the developed world behind passing the Doha Declaration. Due to

the uncompromising positions of western countries such as the United States and Canada were

hard to maintain in light of the anthrax crisis and the threat that a shortage of ciprofloxacine

(Cipro™) might occur. Both the United States and Canada rapidly expressed their willingness to

set aside the patent held by the German company Bayer if other solutions could not be found.21

Feasibility of the Doha Declaration.

The Doha declaration aims at providing a much more flexible interpretation of the TRIPS which

it sought to provide however was unable to do so due to the various political factors that came

18 GENERAL COUNCIL WT/GC/M/82, 13 November 2003, paragraph n. 29 <http://www.wto.org/english/tratop_e/trips_e/gc_stat_30aug03_e.htm> accessed on 26.06.201419 Victoria E. Hopkins, Analysis of International patent protection and global public health, Journal of Public and International Affairs. 20 Referring to countries such as Canada, U.S.A. and the European Union.21 Harmon A. and Pear R.: A Nation Challenged: The Treatment; Canada Overrides Patent for Cipro to Threat Anthrax. NY Times A1, Oct 19, 2001.


http://www.wto.org/english/tratop_e/trips_e/gc_stat_30aug03_e.htm

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into existence before the TRIPS plus bilateral agreements. Now since much of the Doha

declaration rested on the use, acknowledgement and liberal interpretation of the TRIPS

flexibilities. The above complexities and barriers in the TRIPS flexibilities are a proof enough of

the breakdown and lack of feasibility of the Doha declaration.

The main idea behind the Doha Declaration was to interpret the TRIPS in a much more liberal

manner. However, while not realizing the pressing concerns on public health and accessibility to

medicines needed amending the provisions of the TRIPS agreement and not just merely invoking

a norm of liberal interpretation.22 Therefore, the optimism of Doha declaration was premature.

Model of Tiered pricing: Does it erode patent protection?

Tiered pricing or differential pricing is a pricing strategy wherein in exchange for the same

product qualitatively and quantitatively different prices are quoted/demanded. How effective this

system will be if put in place at a global level. Well as a matter of fact the answer is – very

effective and efficient. The reason for this is that the way this system works it not only is capable

of covering profits but can create a world order of balance and mutual co-existence and

cooperation. So, how does it work? It works on the principle that the people living in countries

like the Unites States of America and most of the European countries with relatively high

affordability will be charged more than what the actual cost of the drug. This extra monetary

budget/ profit will be accommodated against the countries with low purchasing power (poor

countries of Asia and Africa). This will not only make life-saving drugs and other medicines

affordable and accessible in the developed world but also balance out the profits of the patentee

but also ensure that he does not incur a loss. Such a mechanism is much needed in the world

today as it is the only viable option to protect the mutual interest of both the Human Rights as

well as the Intellectual Property regime.

22 Reference to objections made by Switzerland in the 4th ministerial WTO conference held in Doha.
