UNITAID, which is hosted and administered by World Health Organisation, in its report titled “The Trans-Pacific Partnership Agreement: Implications for Access to Medicines and Public Health” (“Report”), voiced its opposition against Trans-Pacific Partnership Agreement (“TPPA”) which encapsulates TRIPS plus commitments. TPPA is positioned as a model agreement for future trade agreements including those involving developing countries. According to the Report, such agreements will delay generic market entry and competition which will in turn lead to increased prices of pharmaceuticals and the consequent increase in public expenditure for health programs. This Report is quite pertinent considering the various FTAs in the pipeline including the Indo-EU FTA. Further, this Report helps us to judiciously judge the various criticisms leveled against Indian IPR regime by US lobbyists. As you know, piqued by the use of the TRIPS flexibilities, there is considerable pressure upon the U.S. Trade Representative for designating India as a “priority foreign country” in its 2014 Special 301 report, due on April 30.
Context
TRIPS agreement encapsulates certain flexibilities. This was profoundly put across by the late Commerce Minister Mr. Murasoli Maran: “We are all aware that the text of the TRIPS is a masterpiece of ambiguity, couched in the language of diplomatic compromise, resulting in a verbal tight-rope walk, with a prose remarkably elastic and capable of being stretched all the way to Geneva.”
TRIPS sets certain minimum standards for IPR protection. Any municipal legal regime is within its liberty to award TRIPS plus rights. The regime cannot, however, go below certain standards. This flexibility given to the municipal regimes (which essentially means the leeway to set its standards and mechanisms without compromising the minimum standards) is, however, circumvented by bilateral or regional trade agreements which mandate higher commitments than those agreed in TRIPS. For instance, extending the minimum 20-year patent term to compensate for delays in the drug regulatory approval and patent granting processes is a TRIPS plus commitment. If this is agreed by a party, it is agreeing to a TRIPS plus commitment.
Overview
According to the Report, “Although in the WTO developing countries succeeded in pressing for the adoption of the Doha Declaration on the TRIPS Agreement and Public Health—which confirmed the right of countries to adopt public-health-friendly and access-sensitive provisions in complying with the TRIPS Agreement’s obligations—the TRIPS-plus provisions in subsequent FTAs limited the effectiveness of the Doha Declaration and undermined flexibilities in TRIPS. The concern is that TRIPS-plus requirements will prevent countries from formulating and implementing an intellectual property regime that can calibrate between two intertwined challenges: ensuring affordable access to health products and technologies on the one hand and, on the other, facilitating continued research and development, technology transfer and innovation to meet the public health needs, particularly of developing countries.”
Through substantive provisions that seek to lower the standards of patentability, to limit exclusions from patentability and weaken disclosure requirements, as well as procedural requirements that remove the important safeguard of pre-grant opposition proceedings, the TPPA proposals may have the general effect of permitting the grant of a greater number of patents on medicines and medical technologies. This will a) lead to an increase in the number of weak patents and b) create more barriers to generic production. Further, presumption of validity will make challenging patents difficult. As you all are aware, patents unlike trademarks do not enjoy presumption of validity.
The Report noted that the extension of the minimum 20-year patent term and the proposal on data exclusivity (as provided in the TPPA) will delay generic entry. It was also critical of the proposals relating to enforcement mechanisms involving law enforcement and customs authorities. This circumvents the TRIPS flexibilities relating to the same.
Further, “…the expansive rights and privileges accorded foreign investors, with the corresponding obligation on governments to provide protection of such rights is likely to have the effect of significantly restricting governments’ ability to regulate how companies operate within their national borders…Second, the investment provisions combine strong investors’ rights and high protection standards with a dispute settlement mechanism (the ISDS), which would provide the “teeth” for enforcement of those obligations. It is also noted that intellectual property rights are included in the definition of “investment”, which would mean that a government measure affecting the intellectual property holdings of investors may be considered an “expropriation” or the withholding of “fair and equitable treatment”. This raises concern about the ability of governments to implement and use the range of TRIPS flexibilities, many of which could be seen as limitations or restrictions of the exclusive rights granted under a patent. Although the proposals provide that compulsory licensing does not constitute an expropriation where such a licence is granted “in accordance with the TRIPS Agreement”, this still leaves room for investor corporations to challenge the compulsory licence using the ISDS on the grounds that it does not comply with TRIPS. A third concern is that the extensive investor rights and the accompanying ISDS provide a legal framework by which corporations may challenge any government measure, thus engendering a “chilling effect” on government regulation and action.”
Comments
The Report is a ‘must read’ for policy makers especially for those belonging to developing and least-developed countries. The Report makes some suggestions which warrant due consideration: a) given the increasing numbers of bilateral and regional trade agreements, there is a need for corresponding level of analysis of such FTAs from the economic and public health perspectives; b) appreciating the role of Competition law in balancing the IPR; and c) the import of public-health-sensitive examination of pharmaceutical patents.
As I see it, this Report is a shot in the arm for all those who wish to draw red lines in FTA negotiations. Further, this will help them to judge the issues from a better vantage point. As for Indian policy makers, this Report re-affirms the perspective that we should not cede ground on TRIPS flexibilities under any circumstance whatsoever.
It is quite pertinent to consider the feasibility of a ‘TRIPS flexibility safeguard clause’. A standard ‘TRIPS flexibility safeguard clause’ in a FTA explicitly mentions that the FTA does not in any way impact TRIPS flexibilities which are otherwise available to contracting parties to deploy whilst implementing TRIPS standards. Prof. Shamnad Basheer had earlier introduced the article “The International Law Relation between TRIPS and Subsequent TRIPS-Plus Free Trade Agreements: Towards Safeguarding TRIPS Flexibilities?” by Dr Henning Grose Ruse Kahn. Prof. Basheer noted as follows: “Henning’s key thesis is that the emerging set of ‘safeguard’ clauses in TRIPS-plus FTAs offers an interesting way out for developing countries that are at the receiving end of harsh FTA’s. They often can be used to achieve policy space similar or equivalent to that offered by TRIPS flexibilities. However, this requires the willingness and ability of interested FTA parties to do so. Only time will tell whether these clauses possess nothing more than mere parchment value or whether they will ultimately help preserve TRIPS flexibilities….” I agree with Dr. Henning. The import of a safeguard clause depends on the breadth and width of the wordings of both the clause and the text of the agreement. In other words, a safeguard clause may not always safeguard the TRIPS flexibilities. Therefore, it is unwise to be carried away by the offer of incorporating a safeguard clause. I, therefore, implore the negotiators to be on their feet while negotiating on any clause which may compromise the TRIPS flexibilities. It is quite possible that a safeguard clause may turn out to be a mirage. Therefore, I am inclined to advise caution in this regard.
