People's Democracy

 Charade On Public Health Before Cancun

 Amit Sen Gupta

AS the Cancun Ministerial meeting of the World Trade Organisation draws near, a charade is being played out in the name of public health. It may be recalled that the previous WTO Ministerial meeting held in Doha in November 2001 adopted a “Declaration on the TRIPS Agreement and Public Health”. While there is a need to recognise the significance of the declaration, there is also the need to examine the declaration more closely as well as the events that followed. Contrary to popular perception, the declaration in no way changed the TRIPS accord. It did not even say that the accord needs to be renegotiated. In that sense it was really in the nature of a clarification, stating what can be done by countries to safeguard public health while not at the same time infringing the TRIPS accord. Thus the declaration said:

“Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all”. Clearly the intent is still to maintain that the TRIPS accord is inviolable and at the same time say that the accord allows certain measures to safeguard public health.  Specifically, the declaration clarifies that countries can issue compulsory licenses when faced with a health crisis or emergency. It further states: “Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted”. It must be understood that such clarifications do constitute an advance because, in the past, the US has tried to prevent countries like Brazil and Thailand from doing exactly what the clarifications now say are perfectly compatible with TRIPS.

     In concrete terms it means that countries can grant a license to produce life saving drugs to domestic companies, even if patents for these drugs are held by foreign patent holders. This is, of course, still far short of what the 1970 Patents Act of India allowed. The 1970 Act did not allow patents to be held for any product, irrespective of whether they were required to address any health crisis or not. It is this provision that allowed the development of a domestic drug industry and also the development of an R&D base in the pharmaceutical sector. It needs to be realised that what may be construed to be drugs “that are required to address emergencies” will always constitute a small fraction of the total number of drugs manufactured. Hence MNCs will be able to control the production and distribution of a majority of drugs. This would mean that Indian companies will not have the unhindered freedom that the 1970 Patents Act provided. In the long run this will have an impact on the balance in the pharmaceutical sector, allowing the MNCs to once again assume a dominant position.

     Moreover R&D and manufacturing capabilities are built over a period, and cannot be suddenly switched on when “emergencies” arise. Restricting the space in which domestic companies can operate to produce newer drugs will have an adverse impact on their manufacturing and R&D capabilities as well as R&D capabilities built up in the public sector. The Doha declaration of 2001, thus, did not constitute a “rollback” of TRIPS but it did clarify some so called flexibilities in the agreement that developing countries could make use of to safeguard their interests. Unfortunately, the second amendment of the Indian Patents Act, that was passed in Parliament last year did not even make full use of these flexibilities. The amendments have made the process of granting compulsory licenses extremely cumbersome, thereby nullifying any advantage we could have obtained from the Doha declaration.

UNRESOLVED ISSUE IN DOHA DECLARATION

The Doha declaration also fell short of requirements in another key area, and this is the area around which a charade is being played out. The declaration had said: “We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement.  We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002”. Most developing countries, unlike India, have no manufacturing capability. So the TRIPS agreement (and the clarification in the Doha declaration) does not enable them to access cheaper drugs because they cannot get these drugs produced cheaply in their country even if a compulsory license can be granted.

Subsequently, for almost two years now, the TRIPS council has been supposedly grappling with this issue. Some international NGOs (like Medecens Sans Frontieres and Oxfam) had proposed that a way to get around the above problem would be for the TRIPS council to give an “authoritative interpretation” that exports to countries with no manufacturing capability would be deemed as “exception to patentatibility” (under Article 30 of TRIPS) and could be done automatically without authorisation from the original patentee. This would have meant that a company in India could be granted a licence to produce a patented drug that is required for a country in Africa which has no manufacturing capability. The import of this drug from the Indian manufacturer would not then constitute a violation of the TRIPS accord.

UNDERMINING THE DECLARATION

The developed countries, led by the US, and including the European Union, Japan, Canada and Switzerland, however, refused to consider this and other suggestions designed to address this issue. The argument put forward by the US and its allies is that this would allow companies in India and other developing countries with manufacturing ability, to circumvent the TRIPS accord and manufacture patented drugs. The developed countries have also expressed the fear that once these patented drugs are manufactured under a licence and enter the market, there is no guarantee that they would not find there way to other countries, for whom the exports were not intended. In order to address these concerns the US has been arguing that the number of diseases that would be covered by this facility should be restricted to a handful. Specifically, it is being argued that this facility should cover only a few infectious diseases like HIV/AIDS, Malaria, T B, etc and should not cover diseases like heart disease, diabetes, etc. Further the US wants that the TRIPS council should have the powers to decide which disease(s) constitutes an emergency in a particular country. It further wants strict procedures that would monitor the export of each consignment that is imported, to ensure that the drug is used only for the purpose for which it was licensed. It has also asked for special labeling of these drugs, so that they are not re-exported to other countries.

The US proposal, clearly prompted by its pharmaceutical lobby (there are more lobbyists for the pharmaceutical industry in Washington than there are Congressmen!), is an obvious attempt to make a part of the Doha Declaration entirely infructuous. The Doha Declaration had clearly articulated that individual countries have the right to decide what constitutes a national public health emergency or a matter of urgency. The US proposal wants to take this right away from sovereign countries. Moreover the Doha declaration had not set a limit on the number or the kind of diseases that would be covered by the facility. Further, the US proposal that each consignment would be monitored, seeks to put in place regulatory mechanisms that would be overseen not by the sovereign countries, but by a supranational body that derives authority from the TRIPS Council.  In other words, if the US proposal was to be agreed upon, the TRIPS council would have powers to “police” local legislations - a power that even the TRIPS accord does not provide for. So the Doha Declaration, far from increasing the scope of flexibilities available for developing countries, would be turned into an instrument for greater control of national legislations by the WTO.

THE MOTTA TEXT

The intransigent attitude of the US delayed the formulation of any discussion text that would be acceptable to all countries. Finally on December 16, 2002, a draft was circulated at the TRIPS Council meeting.  This draft, known as the Motta text (called so after the Mexican Ambassador to the WTO Eduardo Perez Motta, who was instrumental in drafting the document) was supposed to be a compromise document. Strangely enough, this so called compromise document, actually is designed to accomodate, virtually, all the demands made by the developed countries. While the EU and other developed countries supported this draft, the US contributed to the drama by rejecting even this compromise document.

The Motta text overturns all the basic premises set out in the Doha Declaration on Public Health. The text attempts to circumvent the number and kind of diseases in its very first paragraph, where it states: “pharmaceutical product” means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of the Declaration.  Paragraph 1 of the Doha declaration says: “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics”. Ever since the Doha declaration developed countries have attempted to limit the scope of the Declaration to the HIV/AIDS crisis and a few other epidemics. But clearly, what was adopted at Doha goes much beyond what the first paragraph of the declaration starts with and encompasses the implications of the TRIPS Agreement with regard to public health in general, without limitation to certain diseases. The reference to some specific “epidemics” in the first paragraph of the Doha declaration does not imply that the Declaration is limited to them. It covers any “public health problem”, including those that may be derived from diseases that affect the population in developing as well as developed countries, such as heart disease, asthma or cancer. The reference to the first para of the Doha declaration in the Motta text is obviously a mischievous attempt to limit the number of diseases that the document addresses.

The Motta text, further, contains stringent conditions regarding labelling and mechanisms to ensure that the drugs are delivered only to the specified benificiary. It says: “.... the compulsory licence issued by the exporting Member under this Decision shall contain the following conditions:

(i) only the amount necessary to meet the needs of the eligible importing Member(s) may be manufactured under the licence and the entirety of this production shall be exported to the Member(s) which has notified its needs to the Council for TRIPS;

(ii) products produced under the licence shall be clearly identified as being   produced under the system set out in this Decision through specific labelling or marking.  Suppliers should distinguish such products through special packaging and/or special colouring/shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on price; and

(iii) before shipment begins, the licensee shall post on a website the following information: the quantities being supplied to each destination as referred to in indent (i) above; and - the distinguishing features of the product(s) referred to in indent (ii) above; “ the exporting Member shall notify the Council for TRIPS of the grant of the licence, including the conditions attached to it. The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted, the quantity(ies) for which it has been granted, the country(ies) to which the product(s) is (are) to be supplied and the duration of the licence.  The notification shall also indicate the address of the website referred to in subparagraph (b)(iii) above”.

Finally the annex of the text on “Assessment of Manufacturing Capacities in the Pharmaceutical Sector” attempts to lay down the method by which countries who can benefit this system will be identified. It says: “Least-developed country Members are deemed to have insufficient or no manufacturing capacities in the pharmaceutical sector. For other eligible importing Members insufficient or no manufacturing capacities for the product(s) in question may be established in either of the following ways:

(i) the Member in question has established that it has no manufacturing capacity in the pharmaceutical sector. OR (ii) where the Member has some manufacturing capacity in this sector, it has examined this capacity and found that, excluding any capacity owned or controlled by the patent owner, it is currently insufficient for the purposes of meeting its needs.  When it is established that such capacity has become sufficient to meet the Member’s needs, the system shall no longer apply”.

Clearly, countries other than LDCs will have to “establish” that they          qualify to use the facility. This throws open the door for the TRIPS council and the WTO Dispute Settlement Body to act as “inspectors” and determine which country is eligible. It also allows bilateral pressures to be exerted by developed countries, designed to forbid developing countries from using the facility. In fact, recently, the USTR on a visit to Philippines, is believed to have casually let known that the US does not consider that the Philippines is eligible to use the facility!

PLUNGING INTO A TRAP

Thus, clearly, the Motta Text constitutes a total dilution of the spirit of the Doha Declaration on Public Health. It attempts to narrow the coverage of diseases, places onerous conditions on both the exporting and the importing country, and puts restrictions on those who would be eligible. It clears the way for the TRIPS council and the WTO to act as a watchdog on sovereign countries and their national laws. The question that could then be asked is, if the text is so restrictive and biased in favour of developed countries, why did the US not agree to it?

Possibly, the answer is to be found in the manner in which the discussion on the Motta Text has proceeded after the US decided to oppose it. The emphasis has shifted from finding a better solution than the Motta text to attempts to “save” the Motta Text. All attempts are now being directed at getting the US to agree to the Motta text. What is likely to happen is that the US will, just before the Cancun meeting, make the magnanimous gesture of agreeing to the text. In return it will ask for, and in all probability receive, concessions from developing countries in other areas of negotiations - for example in the areas of Trade and Investment and GATS (services and trade).  The focus will have shifted from how bad the Motta text actually was to start with, to the apparent success of the Cancun meeting in resolving the issue. The US would have got something in return for doing nothing! This is a trap in which most developing countries are in danger of plunging into - India included. And thus the charade of the so called “development round” of negotiations will be allowed to proceed.