PHARMACEUTICAL INDUSTRY IN EUROPE
6. TRIPs and pharmaceuticals
6.6 CONCLUSION
An analysis of the TRIPs agreement leads to one major conclusion: since 1995 the newly-established international IP system is designed primarily to serve the interests of IP owners, including those in the pharmaceutical domain, based in developed (IP-intensive) countries.
The emergence of the TRIPs agreement at the end of the Uruguay Round negotiations is, without a doubt, a result of heavy pressures exerted by the developed countries, notably the US, the EC, Switzerland and Japan. Motivated by powerful and influential interest groups, such as the pharmaceutical and film industries, these countries sought to include in the GATT framework an agreement that would secure and enforce their IP rights globally.
The structural elements of TRIPs make it the most robust and comprehensive international agreement to be reached on IPRs to date. Being part of the WTO agreements, the TRIPs agreement endorses the basic principles of national treatment and most-favoured-nation treatment. It also incorporates the major international IP treaties: the Paris Convention (1967), the Berne Convention (1971), the Rome Convention (1961) and the IPIC Treaty (1989). Moreover, the TRIPs agreement specifies the minimum standards of IP protection required by
member states in the areas of copyrights, trademarks, geographical indications, industrial designs, patents, layout designs of integrated circuits and the protection of undisclosed information. The implementation dates of TRIPs are also well defined: developed countries – January 1996, developing countries – January 2000, LDCs – January 2006 (Art. 65).
TRIPs operational capacity is guaranteed by three pivotal mechanisms.
The first concerns IP-related disputes: subject to the provisions of Art. 63, WTO members can use the dispute settlement process in order to resolve IP-related disputes. Indeed, empirical evidence suggests that between 1995 and 1998 IP-related disputes accounted for about 10 per cent of total WTO disputes, and that the US and the EU were the most prominent users of the dispute settlement mechanism with respect to IPRs (many of which concerned pharmaceuticals). Second, in order to enforce the rights of IP owners and to prevent the infringement of IPRs, WTO members must adopt civil, judicial and criminal procedures in accordance with TRIPs requirements (Art. 41–62). The third component relates to the Council for TRIPs – the main body responsible for monitoring and facilitating membersʼ compliance with the agreement (Art 68). In its administrative role the Council for TRIPs uses a special system of notifications, aimed at providing accurate information about the IP legislative changes undertaken by WTO members as part of their TRIPs commitments. In its consultative role, the Council operates as a focal point for negotiations on IPRs within the TRIPs framework in general, and on TRIPsʼ built-in agenda in particular.
Despite the above elements, and possibly because of them, the TRIPs agreement is ineffective in dealing with the possible negative implications of an international regime of IPRs, particularly in countries with low IP capabilities.
TRIPs has two major built-in flaws. First, TRIPs (Art. 8.2) is quite vague and too general in dealing with potentially abusive practices undertaken by IP owners. Not only does TRIPs not specify which practices may be considered abusive under a regime of IPRs, it also fails to provide the necessary guidelines for dealing with such practices once they have occurred. Second, the TRIPs agreement lacks the effectiveness to oblige developed countries to provide financial, technical and technological assistance to developing countries and LDCs. The agreement has numerous provisions that aim to increase the flow of assistance from countries with strong IP capabilities to countries with weak IP capabilities (Art. 7, Art.
66.2, Art. 67) yet, thus far, it seems that the latter, particularly LDCs, have received neither the assistance required for the successful implementation of TRIPs nor the compensation needed for committing themselves to a much more rigorous IP agenda. In fact, it is inter-governmental agencies, such as the WTO, the World Bank and WIPO, that provide most of the assistance to LDCs, usually in the form of training.
The pharmaceutical IP agenda established by the WTO TRIPs framework is very impressive. Patent rights are probably the most essential component of the TRIPs pharmaceutical IP agenda (Art. 27–34).
The TRIPs agreement secures and increases the global protection of patented pharmaceuticals by focusing on several key aspects. First, it states that patents shall be granted, on a non-discriminatory basis, in all fields of technology, including pharmaceuticals. Second, under the TRIPs agreement patent owners have a considerable amount of monopolistic control on the uses of their inventions. They have the exclusive right to prevent others from making, using, offering for sale, selling or importing (except in cases of parallel imports) the patented product or process. Third, the term of patent protection granted to pharmaceutical products and processes must be at least 20 years from the date of filing. Given that during the pre-TRIPs era many countries, mostly developing and least-developed countries, granted much shorter terms of protection to pharmaceutical patents, the 20-year-period may be truly considered revolutionary. Fourth, the TRIPs agreement put restrictive and binding conditions on the use of compulsory licensing. When granting compulsory licences, WTO members must not discriminate between different fields of technology (as many countries did in the case of pharmaceuticals prior to TRIPs). Finally, the TRIPs agreement explicitly recognizes the need to make patent rights available in the pharmaceutical and agrochemical fields in developing countries and LDCs (Art.
70.8). These countries were required to establish administrative facilities for the processing of pharmaceutical and agrochemical patent applications (mailbox procedures) as soon as the agreement came into effect in 1996.
The trademark system established by the TRIPs agreement greatly enhances the ability of pharmaceutical IP owners to exploit their branded products internationally (Art. 15–21). As in the case of patents, pharmaceutical IP owners can register and obtain trademark protection without being discriminated against. Pharmaceutical trademark owners have the exclusive right to prevent others from using identical or similar signs for goods which are identical to their own trademarked pharmaceutical products. The TRIPs agreement does not put a time limit on the term of trademark protection, provided it is periodically registered.
Most important, the TRIPs agreement prohibits WTO members from placing special requirements on the use of trademarks for pharmaceuticals, such as the obligation to use a second mark that would make the exterior of brand-based drugs less distinctive. Hence, the TRIPs agreement allows pharmaceutical IP owners to use the international trademark system as an effective tool for distinguishing their branded drugs from the generic substitutes of other companies, even if these products are identical in purpose and quality.
Data exclusivity is one of the most innovative elements of TRIPs concerning the IP pharmaceutical agenda (Art. 39). Not only is TRIPs the first agreement
to treat trade secrets as IPRs, it also explicitly notes that pharmaceutical and agrochemical data submitted to regulatory authorities for the purpose of obtaining market approval (registration data) falls under this category. Practically, WTO members must grant IP owners the right to prevent information, lawfully within their control, from being disclosed, obtained, or used without their consent in a manner contrary to honest commercial practices. WTO members also need to protect the registration-data of pharmaceutical IP owners, both against unfair commercial use, that is by rival companies, and against the involuntary disclosure of such data, except when it is necessary to protect public health.
The parallel importation of patented pharmaceutical products is one element in the TRIPs pharmaceutical agenda that is strikingly inconsistent with the level of IP protection described thus far. The TRIPs agreement prevents WTO members from using the dispute settlement mechanism in cases concerning the international exhaustion of IPRs, thereby allowing for the parallel trade of patented products to take place under its international IP regime (Art. 6 and the footnote to Art. 28).
Overall, TRIPs provisions concerning the pharmaceutical IP domain are highly beneficial to the advanced pharmaceutical industry. They allow pharmaceutical IP owners to increase both the scope and the level of their control, or monopoly, in the international pharmaceutical trading and investment systems. In other words, under the TRIPs agreement, pharmaceutical IP owners are better equipped to secure their knowledge assets against potential competitors, say local companies in developing countries, and to exploit them commercially.
TRIPs provisions are thus open to interpretation and as such may lead to an increase or to a decrease in the level of IP protection provided to pharmaceutical products and processes. Indeed, since the TRIPs agreement came into effect in 1995, issues such as the ʻpatenting of lifeʼ experimentation in patented products and the effective patent term of protection, have become subject to a fierce debate between IP supporters and opponents. In order to preserve its achievements, the advanced pharmaceutical industry in Europe employed highly sophisticated tactics aimed at securing the current level of protection provided by TRIPs, as well as interpreting the agreement in a manner that would strengthen the level of protection provided by its provisions. These are discussed in the following chapters.
NOTES
1. In this text, the TRIPs agreement is also referred to as ʻTRIPsʼ or as ʻthe agreementʼ 2. Reichman (1998: 585)
3. For the history of TRIPs see: Abbott (1989: 689–743); Stewart (1993a: 2245–333); Blakeney (1996: 1–9); Doane (1994: 465–97); Emmert (1990: 1317–99); for a pharmaceutical industry view of the negotiations see: Gorlin (1999: 1–8)
4. Abbott (1989: 712–14); Stewart (1993a: 2260–65); for pressures leading to the Uruguay Round mandate on IPRs see: Ryan (1998: 104–18)
5. Rice (1990)
6. Abbott (1989: 712–20); Emmert (1990: 1350–59); Beier and Schricker (1989); Maskus (1990: 165)
7. Stewart (1993a: 2262–4)
8. Montagon and Dulforce (1998); Abbott (1989: 712–20); Blakeney (1996: 2–7)
9. For the proposals of developed countries see: United States proposal to GATT (20 October 1987), document number: MTN.GNG/NG11/W/14; United States International Trade Representative (BNA, 1987: 1371); European Community proposal to GATT (7 July 1988), document number: MTN.GNG/NG11/W/26; Dulforce (1988); For the position of the IP-based industries see: Keidanren, UNICE and IPCI (1988); For the position of developing countries see Abbot (1989: 713–14)
10. Abbott (1989: 713–14); Montagon (1989a).
11. United States International Trade Representative (BNA, 1989: 469); Blakeney (1996: 6);
Abbott (1989: 719)
12. Subramanian and Hartridge (1989: 893–910); Blakeney (1996: 6)
13. Abbott (1989: 719); Maskus (1994: 115); Winters (December 1990: 1288–303))
14. Gorlin (1999: 2–4); the list of developing countries included: Argentina, Brazil, Chile, China, Colombia, Cuba, Egypt, India, Nigeria, Pakistan, Peru, Tanzania, Uruguay and Zimbabwe, document number: MTN.TNC/W/35/Rev.1
15. ʻDraft Text on Trade Related Aspects of Intellectual Property Rights, Including Trade in Counterfeited Good 22 November 1990ʼ, document number: MTN.TNC/W/35/Rev.1 (3 December 1990)
16. Gorlin (1999: 2)
17. Otten (1997: 13); Montagnon (1989b)
18. Blakeney (1996: 6–7); GATT (1991), document number: MTN.TNC/W/89/Add.1; Stewart (1993a, 2276–80)
19. The formal name of the Dunkel Draft is: ʻDraft Final Act Embodying the Results of the Uruguay Round of the Multilateral Trade Negotiationsʼ
20. Reichman (1998: 585–6)
21. Blakeney (1996: 6–7); Intellectual Property Committee (US) (1991); The Economist (1992)
22. INTERPAT (1992); a letter addressed to the UK Department of Trade and Industry from Dai George, ABPI Director of Science and Intellectual Property, concerning ABPI comments on the TRIPs Agreement (7 January 1992), in authorʼs records; UNICE (1991); UNICE (1990), in authorʼs records; Intellectual Property Committee (US) (1994a); letter by PMA Senior Vice President, Dr. Harvey Bale, addressed to principal members of the International Section Administration Committee and Intellectual Property Task Force (EFPIA, PMA, ABPI) concerning a preliminary analysis of the GATT TRIPs text, 23 December 1991; pipeline protection is discussed later in the chapter
23. Uruguay Round Ministerial Declaration (20 September 1986); the TRIPs Agreement opening statement is as follows: ʻDesiring to reduce distortions and impediments to trade, and taking into account the need to promote effective and adequate protection of intellectual property rights and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate tradeʼ
24. Blakeney (1996: 40–42)
25. In this text the term ʻArt.ʼ stands for the term ʻArticleʼ
26. See: TRIPs agreement, Art. 2 and footnote 2; Text of the Agreement between WIPO and WTO, Geneva (22 December 1995); Blakeney (1996: 20–24)
27. WTO Annex 2, Understanding on Rules and Procedures Governing the Settlement of Disputes
28. For an overview of WTO dispute mechanisms see: WTO (1998: 38–42); Jackson (2000:
Chapter 7) 29. WTO (1998: 38)
30. In fact, when reviewing disputes the General Council functions as the DSB 31. WTO (1998: 39–41)
32. Ibid.
33. Ibid., p. 39
34. WTO Secretariat (2000).
35. Ibid.
36. Otten (1998: 527–9) 37. Ibid., p. 528
38. For the case of India see: WTO DSB (5 September 1997c), document number: WT/DSB50/R;
for the case of Pakistan see: WTO DSB (1997a), document number: WT/DS364/4; for the case of Canada see: WTO DSB (2000a), document number WT/DS114/R; Otten (1998:
39. Blakeney (1996: 123–39); International Chamber of Commerce – ICC (1996: Chapter 12)528) 40. Geuze (September 1999); Otten (1998: 524–7); WTO – Council for TRIPs, 1996/7/8 Annual
Reports (IP/C/8, IP/C/12 and IP/C/15 respectively) 41. Geuze (September 1999: 3)
42. Ibid., p. 4
43. Otten (1998: 524–7); Geuze (September 1999: 4–5) 44. Ibid.
45. This is a suspension of subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994, as embodied in the WTO DSU mechanism
46. WTO – Council for TRIPs (1998a)
47. Communication from the CEFTA and Latvia (Geneva: 27 July 1999), document number:
WT/GC/W/275; Also see: Communication from Columbia (14 September 1999), document number: WT/GC/W/316; WTO, Communication from Venezuela, (6 August 1999), document number: WT/GC/W/282
48. Otten (1998: 531–2); Geuze (1999: 13–14)
49. Communication from Turkey (13 July 1999), document number: WT/GC/W/249; Geuze (1999: 14)
50. WTO – Council for TRIPs (1998a) 51. TRIPs Council, 1999, p. 4
52. For an overview on IPRs and non-competitive behaviour see: OECD (1998); European Communities and the Member States (1998)
53. OECD (1998: 7–12); European Communities and the Member States (15 September 1998:
8–10); see also UNCTAD (1975a: Chapter 3); UNCTAD (1996: Chapter 8); Yankey (1987:
24–38); Vaitsos (1972: 83–5) 54. Machlup (1958: 10)
55. Penrose (1951: 153); in this statement Penrose rejects claims against the ʻabusiveʼ behaviour of foreign patentees with regard to domestic firms. She argues that it is not the foreign patentees that are abusive but rather the system itself.
56. OECD (1998: 10) 57. Ibid.
58. Blakeney (1996: 113–18)
59. UNCTAD (1996: 19–26); ESCWA (1999: 15–20) 60. Primo-Braga and Fink (1998: 537–54 and Table 1) 61. UNCTAD (1996: 25)
62. Maskus (1999: 22)
63. UNCTAD, Least Developed Countries 1998 Report (1999: 162) 64. WTO – Council for TRIPs, Annual Report (1998a: 4)
65. Communication from Colombia, (14 September 1999), document number: WT/GC/W/316 66. Communication from Kenya on Behalf of the African Group (6 August 1999) document
number: WT/GC/W/302
67. WTO – Council for TRIPs (Annual Report 1998a: 5); Abbott (1998a: 519–20) 68. Primo-Braga and Fink (1998: 553–4)
69. Ibid., 1998, p. 553 70. Ibid., pp. 553–4
71. UNCTAD (1996: 30); ESCWA (1998: 16); Nogués (1990b: 4)
72. For an overview of TRIPs patent provisions see: WHO (1997: 13–20); Blakeney (1996:
81–5)
73. For a discussion on IPRs and genetic materials see: Correa (2000: Chapter 6) 74. WHO (1997: 24–5)
75. Blakeney (1996: 87) 76. UNCTAD (1996: 33–4) 77. ICC (1996: 50)
78. UNCTAD (1975a: 54); US Presidentʼs Commission on Industrial Competitiveness (1985:
15–19) 79. Ibid.
80. Gorlin (1999: 41) 81. Blakeney (1996: 88) 82. ESCWA (1998: 53)
83. Blakeney (1996: 88–9); UNCTAD (1975a: 43–4)
84. Blakeney (1996: 90–91); WHO (1997: 27–30); ESCWA (1999: 54); Otten (1997: 13–14) 85. Blakeney (1996: 93)
86. Ibid, p. 90; Maskus ( 2000: 21) 87. WHO (1997: 29)
88. PhRMA (1997: 12)
89. WTO, Ministerial Declaration on the TRIPs Agreement and Public Health (14 November 2001b)
90. WHO (1997: 22–4); ESCWA (1998: 56–7); Blakeney (1996: 94–5); Otten (1997: 15–16) 91. See the discussion in Chapter 4, section 4.4.2
92. WHO (1997: 22–5) 93. Ibid.; ESCWA (1998: 56–7) 94. Otten (1997: 16)
95. Ibid.
96. Doane (1994: 478–9) 97. IFPMA (1995a and b: 4)
98. Blakeney (1996: 53–67); ICC (1996: Chapter 5) 99. Blakeney (1996: 60–65)
100. Ibid., p. 55 101. Ibid., p. 53
102. For a discussion of trademark product amalgamation see Chapter 2, section 2.3.3 103. Blakeney (1996: 59); UNCTAD (1996: 42), ICC (1997: 31–2)
104. Gorlin (1999: 19–20); for additional pre-TRIPs requirements on the use of trademarks see:
Maskus (2000: 20) 105. Gorlin (1999: 19) 106. ICC (1996: 20–21)
107. UNCTAD (1996: 46); Blakeney (1996: 102) 108. Abbott (1989: 743–4); Gorlin (1999: 46–7)
109. GATT Secretariat (1990: 17), document number: MTN/GNG/NG11/17; Stewart (1993a:
2307)
110. Blakeney (1996: 102–3); UNCTAD (1996: 46–8)
111. According to TRIPs, footnote 10 to Art. 39.2: ʻA manner contrary to honest commercial practices shall mean practices such as breach of contract, breach of confidence and inducement to breach, and includes the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failure to know, that such practices were involved in the acquisitionʼ
112. Blakeney (1996: 103–4) 113. Ibid., p. 107; ICC (1996: 60–61) 114. Abbott (1998: 607–36) 115. Ibid., p. 635
116. WHO (1997: 17) 117. EFPIA (1999h: 2)
118. IFPMA (2000); IFPMA (1998: 50–54); Bale (1998: 637–53)