The recent amendment to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is the first ever amendment to WTO accords after its founding in 1995. The amendment to the TRIPs agreement came into force on 23rd January, 2017, after 2/3rd members of WTO accepted it. The amendment facilitates supply of drugs to developing/least developed countries lacking pharmaceutical production capacity under a compulsory license. The amendment was made to address public health needs of people in poor countries with limited or no pharmaceutical manufacturing capacities.
Before this amendment, compulsory license grants were permitted only to address national needs. Now, compulsory licenses can be legitimately granted for export to other needy countries within the aegis of the WTO-TRIPs system. The amendment was approved in 2005 and ratified in 2017.
The First Amendment to WTO Agreements
A new, Article 31bis, has been introduced into the TRIPs Agreement. The article permits countries to include compulsory licensing provisions in their legislations for export to countries with poor pharmaceutical production capabilities in furtherance of alleviating public health needs. With this Article in place, countries can legitimately permit generic companies to supply drugs to other countries at affordable prices and insufficient quantities to meet public health requirements.
In relevant part, Article 31bis reads as follows:
“1. The obligations of an exporting Member under Article 31(f) shall not apply with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out in paragraph 2 of the Annex to this Agreement.
2. Where a compulsory licence is granted by an exporting Member under the system set out in this Article and the Annex to this Agreement, adequate remuneration pursuant to Article 31(h) shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h) shall not apply in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member. … “
Indian Patent Act
India amended the Patents Act in 2005 to legitimize such a compulsory licensing scheme into force in its national law. Section 92A of the Patents Act provides for such a compulsory license. It reads as follows:
“Section 92A. Compulsory licence for export of patented pharmaceutical products in certain exceptional circumstances.—
(1) Compulsory licence shall be available for manufacture and export of patented pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has, by notification or otherwise, allowed importation of the patented pharmaceutical products from India.
(2) The Controller shall, on receipt of an application in the prescribed manner, grant a compulsory licence solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as may be specified and published by him.
(3) The provisions of sub-sections (1) and (2) shall be without prejudice to the extent to which pharmaceutical products produced under a compulsory license can be exported under any other provision of this Act. …”
Under Section 92A, any person may apply for a compulsory license if the following conditions are met:
a. The license is applied to address public health problems in a country, which has no capacity to produce the said patented product; and
b. A compulsory license is granted for the said product in the exporting country; or the exporting country has notified permission to import the product from India.
Only the following rights will be granted:
a. Right to manufacture in India; and
b. Right to export to the specific country.
The said compulsory license is limited to the aforestated and does not grant any additional permissions for sale of the drug in India or any other country. The quantity will be specified in the license, and the products are required to be packaged differently, and their purpose has to be marked.
By addressing the important public health problems in the first amendment to WTO rules, the stage has been set for a inclusive and public interest driven trade relationships among members.
Authored by Dr. Kalyan C. Kankanala.