4. The use of Flexibilities: 44
4.5. Parallel importation 53
As stated in Chapter 2, the principle of international exhaustion of rights is recognised in Article 6 of the TRIPS Agreement. This principle recognises the possibility of importing a product from another country, without the permission of the right-owner, provided that the product has been already sold, with the authorization of its title-holder, into the market of importation.
South Africa inserted a provision regarding parallel importation only in 2002, with the amendment of the South African Patents Act of 1978.184 Section 45(2) reads:
“The disposal of a patented article by or on behalf of a patentee or his licencee shall, subject to
180 See J. P. Love, Expert Affidavit JPL, para 26. Available online at:
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB8QFjAA&url=http%3A%2F
%2Fwww.tac.org.za%2FDocuments%2FDrugCompaniesCC%2FTACLoveaffidavit-
sep13a.doc&ei=3MjcVOiODs3laoCzgMAH&usg=AFQjCNFOGBIsGlzLYf3h6nHkN95HSRwOTw&sig2=q7kTdOz6 u0bQ5kYSbWwnSQ&bvm=bv.85761416,d.d2s, accessed in February 2015.
181 See J. P. Love (note above) para 46.
182 See Competition Commission Press Release, (16 October 2004). Available online at:
http://www.cptech.org/ip/health/sa/cc10162003.html, accessed in February 2015.
183 See T. Pistorius, (note above) 398.
184 See Patents Amendment Act No. 58 of 2002.
other patent rights, give the purchaser the right to use, offer to dispose of and dispose of that article.”
Before this, in 1997, South Africa introduced the Medicines and Related Substances Control Amendment Act No. 90 (Medicines Act), whose Section 15C, provided for the parallel importation of pharmaceuticals from other nations. Particularly, the Act was aimed at solving the health crisis, due to the intense spread of HIV/AIDS in the country, through a more efficient use of the TRIPS flexibilities, specifically via the policy tools of compulsory licensing and parallel importation.
However, the United States attempted to force the South African government to remove the provision contained in Section 15C, enclosing, in 1999, the country to the list of “Special 301 Section” of the amended Trade Act of 1974.185
Section 15C of the Medicines Act, in particular, intends to ensure the supply of more affordable medicines, giving to the Minister the power to “prescribe the conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public”.
Specifically, the Minister may: (a) “[…] determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent”;
(b)“prescribe the conditions on which any medicine which is identical in composition, meets the same quality standard and is intended to have the same proprietary name as that of another medicine already registered in the Republic, but which is imported by a person other than the person who is the holder of the registration certificate of the medicine already registered and which originates from any site of manufacture of the original manufacturer as approved by the council in the prescribed manner, may be imported”; (c)“prescribe the registration procedure for, as well as the use of, the medicine referred to in paragraph (b)”.
Despite the political pressures from both the United States and the pharmaceutical firms to amend
185 Section 301 was amended by Section 1303 of the Omnibus Trade and Competitive Act of 1998, see online at:
http://www.ustr.gov/Document_Library/Reports_Publications/2004/2004_Special_301/Section_Index.html, accessed in February 2015.
A “Special 301 Report” is annually drafted by the Office of the United States Trade Representative (USTR), which enumerates the countries that are not compliant with the standard of IPRs on the so-called list “Special 301 Section”, threating them with trade sanctions. Particularly, countries whose IP systems are deemed to be critical are divided into a "Priority Watch List" and a "Watch List", depending on the level of concern.
Section 15C,186 the South African government was able to resist those challenges, and, supported by the European Union, national and international NGOs and the WHO, 187 made the pharmaceutical applicants drop their claim and paid for the legal expenses.188
It should also be noted that Regulation 7 of the General Regulations to the Medicines Act 2003, which gives effect to Section 15C of the Medicines Act, clarifies that “a medicine referred to section in 15C(b) of the Act may be sold if: […] the medicine is under patent in the Republic”.
This Section should be read together with Regulation 7 of the General Regulations to the Medicines Act 2003, which gives effect to Section 15C. For instance, the person desiring to import a medicine should submit to the Minister of Health (i) a large number of documents and credentials, notwithstanding the lack of an administrative body, which would receive those papers;189 (ii) documentary evidence of the price at which the medicine will be sold in South Africa, although in some cases the price will be set only at a advanced phase of the process.190 Furthermore, the validity of the permit importation is limited to a period of two years,191 leading to a situation of uncertainty after the expiration of the validity. Additionally, the applicant, after having received the permit from the Minister of Health of parallel importing a medicine in South Africa, must apply for the registration of the medicine, even though the medicine will only be available for two years.192
Despite Section 15C explicitly allows parallel importation in South Africa, no medicines have been imported in the country until now.193 The reason can possibly be found in the complexity of the system set forth by Regulation 7, which, to some extent, unduly aggravates the method of importation with excessive requirements, going beyond what is required by the TRIPS Agreement.
186 See para 3(c) of this Chapter, where the “PMA v Government of RSA” case is analysed.
187 See R. L. Swarns, Drug Makers Drop South Africa Suit Over AIDS Medicine, The New York Times (2001), A1.
188 See World Health Organization, Intellectual Property and access to medicines, (2010) 15-16. See also W. W.
Fisher & C. P. Rigamonti (note above) 5 - 9.
189 See Regulation 7(2) of the General Regulations to the Medicines Act 2003.
190 See Regulation 7(2) e) of the General Regulations to the Medicines Act 2003.
191 See Regulation 7(3) of the General Regulations to the Medicines Act 2003.
192 See Regulation 7(5) of the General Regulations to the Medicines Act 2003.
193 See S27, TAC and MSF in the Joint Submission on the Draft National Intellectual Property Policy, 2013 (note above) 48.