`Breaking' patents — Effective use of compulsory licensing

This article was published in The Hindu Business Line on Wednesday, Dec 15, 2004.

In the light of the Doha Declaration and the bold Brazilian initiative to break the patent of several HIV/AIDS medications, the Government should provide for effective compulsory licensing which, exercised cautiously, has the power to remedy most of the problems relating to access and pricing of drugs. Doing so would be a great show of political will in implementing the legitimate flexibilities available under the WTO.

THE Brazilian Government's World AIDS Day message came as a shocker to many pharmaceutical majors. The Government announced that, to prevent the financial collapse of its successful public health programme providing free antiretroviral drugs to HIV/AIDS infected persons, it would break the patent of several medications.

As the Brazilian law permits the government to disregard patents in case of health emergencies such as the HIV/AIDS epidemic, antiretroviral drugs will no longer enjoy patent.

By this, the Brazilian Government has given a new dimension to compulsory licensing. Ordinarily, the TRIPS (Trade Related Intellectual Property Rights) Agreement does not allow countries to provide for compulsory licences for drugs which are patented elsewhere.

In its new avatar, compulsory licensing will be extended to permit domestic production of the drugs covered by foreign patents with the permission of the Brazilian Government.

Technically, the term "breaking" patents means that the patented drugs enjoying monopolistic protection will be allowed to be manufactured domestically.

Thus, a patented drug could be used without the authorisation of the patent holder. In economic terms, it would mean national production of patented drugs from start to finish without having to depend on outside support for essential materials.

Article 31 of the TRIPS Agreement provides for such use without the authorisation of the right holder.

Though the TRIPS Agreement emphasises on obtaining authorisation from the right holder on reasonable commercial terms, it, nevertheless, does allow this requirement to be waived in the case of a national emergency or other circumstances of extreme emergency or in cases of public non-commercial use.

This exception is embodied in Section 92 of the Indian Patents Act, 1970 which empowers the Central government to grant compulsory licences in special circumstances.

Compulsory licensing in India

As the Indian experience shows, the grant of compulsory licences is riddled with technical absurdities. Under Section 84 of the Patents Act, an application for the grant of compulsory licence can be made to the Controller of Patents only after the expiration of three years from the date of the grant of a patent.

In a world where diseases spread in epidemic proportions, a monopoly to manufacture and market a life-saving drug for three years can result in certain havoc.

The Section also requires the person making the application to set out the nature of interest and provides an opportunity for the patent holder to oppose the application.

All this may sound fine in the interest of natural justice, but as compulsory licensing would be resorted to in emergency situations, any difficulty in seeking a grant would unnecessarily delay the process. Delay in getting access to life saving drugs would literally be a matter of life and death.

Chapter XVI of the Patents Act deals with compulsory licences. This chapter is drafted along the lines of Article 31 of the TRIPS Agreement. It is pertinent to note that the Article deals only with "use" and not with "manufacture" of patented articles.

So far, compulsory licensing has been generally understood to include a right covered by the patent. Currently, only process patent is available for drugs and medicines. Accordingly, a compulsory licence so granted will be to the extent of the preceding process patent.

Come 2005, the patents laws in India will be amended to introduce product patents for drugs and medicines for a period of 20 years. When product patents are granted, the corresponding licences would normally include all the rights covered by the product patent. The final say, however, is with the Controller of Patents who shall decide the terms of the grant of compulsory licence.

Moreover, under the Indian Patents Act, the grant of compulsory licence is available only for drugs patented under the Act. It does not provide for compulsory licensing of drugs patented elsewhere.

This loophole has been exploited by many pharmaceutical majors which prefer to export their drugs into India and have chosen not to apply for a patent in India.

Proposed Amendment

The controversial Patents (Amendment) Bill, 2003 attempts to remedy this situation partially. It proposes to introduce Section 92A, which will empower the Controller to grant compulsory licence for the manufacture and export of patented pharmaceutical products to any needy country if a compulsory licence has been granted in that country.

The hue and cry over the proposed Patent Bill is predominantly premised on the availability and pricing of drugs.

Unless the new amendment, which will have the effect of fully complying the Indian patent laws with the WTO standards, takes care of access to live saving drugs and the related pricing issues, the hard work done at every World Trade Organisation meeting will be rendered futile.

Doha Declaration

The Declaration on TRIPS Agreement and Public Health (Doha Declaration) gives member-countries the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.

It also states that the TRIPS Agreement can and should be interpreted and implemented in a manner supportive of the WTO members' right to protect public health and to promote access to medicines for all.

The Government, the courts and the patent offices should uniformly recognise the problem at hand and work together to interpret and implement the TRIPS Agreement keeping public health as the priority.

In the light of the Doha Declaration and the bold Brazilian initiative, the Government should provide for effective compulsory licensing, which exercised cautiously has the power to remedy most of the problems relating to access and pricing of drugs.

To do so will be a great show of political will in implementing the legitimate flexibilities available under the WTO.

See my previous post Breaking patents.