27 Compulsory licensing of patents for
pharmaceuticals
| (26116)
14209/04
+ ADD 1
COM(04) 737
| Draft Regulation on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems
|
| Legal base | Articles 95 and 133 EC; co-decision; QMV
|
| Document originated | 29 October 2004
|
| Deposited in Parliament | 10 November 2004
|
| Department | Trade and Industry
|
| Basis of consideration | EM of 29 November 2004
|
| Previous Committee Report | None
|
| To be discussed in Council | No date set
|
| Committee's assessment | Legally and politically important
|
| Committee's decision | Cleared
|
Background
27.1 The TRIPS Agreement (the Agreement on trade-related Aspects
of Intellectual Property Rights) requires members of the World
Trade Organisation (WTO) to provide patent protection for technology-based
products including pharmaceuticals. A Ministerial Declaration
agreed at Doha in 2001 emphasised that the TRIPS agreement should
be implemented and interpreted in a way that supports public health
by promoting access both to existing medicines and the creation
of new medicines.
27.2 The TRIPS agreement provides for minimum standards
for intellectual property rights, in particular by restricting
the circumstances in which compulsory licences may be granted
(that is licences granted permitting the use of the patented invention
irrespective of the consent of the patent owner). It provides
that products which are manufactured under a compulsory licence
must be intended predominantly for the domestic market. However,
many developing countries lack the manufacturing capacity to produce
pharmaceutical products, with the result that little practical
advantage is gained from the grant of compulsory licences within
the national territory, since such products have to manufactured
elsewhere for import into such countries.
27.3 The WTO Decision of 30 August 2003 on the implementation
of the 2001 Doha Declaration seeks to overcome this difficulty
by allowing WTO members to grant compulsory licences for the production
and sale of pharmaceutical products which are intended for export
to third countries with insufficient or no domestic manufacturing
capacity.
The proposed Regulation
27.4 The proposal seeks to implement the WTO Decision
at Community level by allowing EC-based manufacturers to export
products made under compulsory licence to developing countries
which have insufficient domestic production capacity. It provides
for the grant of a compulsory licence for the manufacture of a
pharmaceutical product where such product is to be exported to
an "importing WTO member". An eligible WTO member is
defined as any least-developed member of the WTO, or any other
WTO member which has notified the Council of the TRIPS agreement
that it will use the system as an importer.
27.5 The authorities in the Member States which are
competent to grant compulsory licences must verify that the importing
WTO Member has made the appropriate declaration to the WTO specifying
the names and expected quantities of the product required. Where
the WTO country is not a least-developed country, the competent
authority must also confirm that the importing WTO member has
established either that it has no manufacturing capacity in the
pharmaceutical sector or that such capacity is insufficient for
meeting its needs. Where the patented product is also patented
in the territory of the importing WTO member, the competent authority
must also establish that the importing WTO member has granted,
or intends to grant, a compulsory licence for the import of the
product concerned.
27.6 The draft Regulation also provides that the
compulsory licence is to be non-exclusive and that it may not
be assigned. Products made under such a licence may not be imported
into the Community.
27.7 The Commission argues that uniform implementation
of the WTO Decision is necessary to avoid distortions of competition
within the single market and to apply uniform rules to prevent
the re-import into the European Union of products manufactured
under compulsory licence. With respect to the legal base, the
Commission proposes the use of Article 95 and 133 EC "in
view of the very specific nature of the provisions of the Decision,
the fact that national arrangements for compulsory licensing already
exist, and the need for urgent action to allow for the export
of medicines to countries with public health problems".
The Government's view
27.8 In his Explanatory Memorandum of 29 November
2004, the Parliamentary Under-Secretary of State for Science and
Innovation at the Department of Trade and Industry (Lord Sainsbury
of Turville) explains that the Government is sympathetic to the
needs of developing countries and therefore favours the speedy
implementation of the proposal so as to allow EU and UK generic
manufacturers to be able to export generic pharmaceuticals to
appropriate developing countries. The Minister further explains
that the Government also recognises the concerns of the pharmaceutical
industry that their intellectual property rights should not be
undermined. Since the purpose of the WTO Decision would be defeated
if pharmaceutical products supplied under that Decision were to
be diverted from the markets for which they were intended, the
Government also supports the anti-diversion measures contained
in the proposal.
27.9 On the question of the legal base, the Minister
comments as follows:
"The dual legal base of Articles 95
and 133 would appear to be justified as the proposal is intended
both to avoid distortion of competition in the single market and
to provide for customs action at external borders to prevent re-imports
into the Community of products sold for export under a compulsory
licence. However, before accepting the dual legal base, the Government
would propose to clarify that the use of Article 133 as a legal
base relates solely to the provisions on border controls and not
to the harmonisation of measures for the compulsory licensing
of patents under TRIPS. The Government would not be prepared to
concede that the harmonisation of intellectual property provisions
in implementation of the WTO Decision fell under Article 133.
Acceptance of a dual legal base would also be on the premise that
co-decision applies to the adoption of the Regulation so as to
preserve the prerogatives of the European Parliament."
Conclusion
27.10 The WTO Decision represents a compromise
between the competing interests of the pharmaceutical industry
and the need of developing countries for affordable medicines
to address major public health problems, such as those of AIDS
in sub-Saharan Africa. The proposal gives effect to that Decision
within the context of the Community, and appears to us to be in
an appropriate form.
27.11 We support the points made by the Minister
on the legal base and his intention to ensure that the use of
Article 133 EC is confined to measures on customs action at borders
and is not extended to the harmonisation of intellectual property
law within the Community. This latter should be undertaken, if
at all, under Article 95 EC so as to safeguard the rights of the
European Parliament under the co-decision procedure.
27.12 We have no further questions to put to
the Minister and we are content to clear the document.
| 
