Bulletin of the World Health Organization

Compulsory patent licensing and local drug manufacturing capacity in Africa

Olasupo Ayodeji Owoeye a

a. University of Tasmania, Faculty of Law, Private Bag 89, Hobart, Tasmania 7001, Australia.

Correspondence to Olasupo Ayodeji Owoeye (e-mail: oaowoeye@utas.edu.au).

(Submitted: 03 August 2013 – Revised version received: 30 October 2013 – Accepted: 03 November 2013 – Published online: 10 January 2014.)

Bulletin of the World Health Organization 2014;92:214-219. doi: http://dx.doi.org/10.2471/BLT.13.128413

International patent law and access to medicines

Since the adoption of the Agreement on Trade-Related Aspects of Intellectual Property Rights (hereafter, the “TRIPS Agreement”) in 1994, the implications of the World Trade Organization (WTO) intellectual property regime for access to medicines in developing countries have been the subject of robust discussion. By imposing certain minimum standards of intellectual property protection for all WTO member states, the TRIPS Agreement made it mandatory for such states to recognize patents for pharmaceutical products to the extent that the products meet the criteria for patentability. Owing to these standards, countries such as China and India, which have built strong manufacturing capacity in the pharmaceutical sector, might no longer be able to produce generic versions of patented drugs.1 This restriction will substantially undermine the supply of drugs to African countries: in 2011 China and India alone accounted for over 20% of pharmaceutical imports into Africa.2

A practical way of preventing the abuse of patent rights under the TRIPS Agreement is compulsory licensing, which allows governments to authorize the use of patented products without the consent of the holder of the patent right.3 Such authority may be granted to an agent of the government or to an independent third party. Compulsory patent licences may be issued to meet the demand for a patented product in a domestic market, to enhance competition by aiding the growth of domestic competitors, or to facilitate the development or establishment of a domestic market.3 Compulsory licensing may also be used to protect the public interest, especially during public health emergencies, or to act as a safeguard against abuses that might arise from the monopoly rights conferred by patents.4

Article 31(f) of the TRIPS Agreement provides that products made under a compulsory licence shall be predominantly for use in the domestic market of the country granting the licence. Because this provision does little to increase access to medicines in countries with little or no pharmaceutical manufacturing capacity, paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health mandated that the TRIPS Council help such countries meet their pharmaceutical needs.5 Some of the measures taken by the WTO are specified in Table 1.

African disease burden and TRIPS

Africa bears a very heavy burden of disease. According to the World Health Organization (WHO), 61.2% of deaths in the WHO African Region during 2011 were caused by communicable diseases, maternal and neonatal diseases and nutritional deficiencies that in many instances can be treated successfully with pharmaceutical agents.10 WTO law currently contains considerable flexibilities that facilitate access to affordable medicines. For instance, of the world’s least developed countries, 26 of those that are WTO members have allowed the importation of generic health products, irrespective of their patent status, by adopting legislation that relies on provisions in the Doha Declaration.11 However, recent studies show that the median availability of generic medicines in the public sector in Africa – defined as the percentage of outlets that have a given generic medicine in stock – is only about 40%.12 In the private sector, the median availability of generic medicines and of originator brand products is less than 60% and less than 25%, respectively.12 The median prices of the lowest-priced generic medicines in the African private sector are 6.7 times the international reference prices, whereas the median prices of originator brand medicines are as high as 20.5 times the international reference prices.12

Many off-patent drugs can be obtained as substitute medicines and it has been argued that patents might not inhibit access in developing countries to essential pharmaceuticals on WHO’s Model Lists of Essential Medicines.13 There are, however, circumstances in which patents might play a major role in hindering access. Compulsory licensing remains one of the most effective ways of ensuring access to drugs while preventing patents abuse, but there are limits to its effectiveness. Although African countries with little or no pharmaceutical manufacturing capacity can import generic versions of drugs from outside the continent, many new medicines might not be eligible for importation owing to the current global standard for intellectual property protection.

It seems unrealistic to expect these standards to become less restrictive, because the international patent system is flexible enough to enable countries to deliver responsible governance and use the system to address their problems provided they have the political will to do so. The recent decision in Novartis AG v. Union of India (2013) lends credence to the argument that the TRIPS Agreement can still be implemented in a way conducive to the socioeconomic welfare of countries.14 In this case, the Supreme Court of India held that the Novartis-manufactured drug Glivec (which is already patented in Switzerland and the United States of America) was not patentable in India because it failed to meet the inventive step requirement under Indian law.

Pharmaceutical manufacturing capacity

Most African countries lack the necessary pharmaceutical manufacturing capacity for effective use of compulsory licensing.15 Among sub-Saharan countries, only South Africa has a limited primary manufacturing capacity (i.e. it is capable of producing active pharmaceutical ingredients).16 It is equally notable that the existing frameworks for compulsory licensing in several African countries are not fully compliant with the TRIPS Agreement (Table 2). Exceptions include countries such as Ghana and Rwanda, which have fully incorporated into their national law the provisions of international conventions on intellectual property law to which they are signatories. Multinational pharmaceutical corporations have raised minimal objections to the lack of compliance with the TRIPS Agreement because the necessary infrastructure for aggressive use of compulsory licenses does not exist in Africa. As recently as 2008, 90% of the medicines available in sub-Saharan African countries were imported from outside Africa and 80% of the drugs used to treat human immunodeficiency virus (HIV) infection across the continent were imported.22

Foreign aid has played a significant role in making drugs available in Africa, particularly those for treating HIV infection.16 The availability of these and other medicines might decrease substantially if the flow of capital and aid to developing countries continues to dwindle23 and a self-reliant means of ensuring medicine availability remains absent. The time has therefore come for Africa to look beyond foreign aid to increase its access to medicines.

The African Union has begun investigating strategies for the full use of compulsory licensing on the continent. In the 2005 Gaborone Declaration, 55 African ministers of health agreed to find ways to take advantage of the flexibilities offered by the TRIPS Agreement and the Doha Declaration.24 A draft pharmaceutical manufacturing plan was created in 2007 and it was recommended that a technical committee be established to produce a detailed report on the implications of local production of pharmaceuticals in Africa.25 In its subsequent report, the technical committee asserted that the local production of affordable, high-quality, safe and efficacious medicines is possible only if African countries work together to strengthen drug manufacturing capacity.22 The 2012 business plan for Africa’s pharmaceutical manufacturing plan emphasized the need for collaboration among stakeholders at the national and international community levels to enable sustainable progress in developing substantial pharmaceutical manufacturing capacity on the continent, as well as the importance of establishing an effective legal basis for collaboration.22 The African Union’s position seems to place more emphasis on national and regional collaborative efforts.16 However, continent-wide collaboration overseen by the African Union and involving representatives from each region in Africa is likely to be a more effective means of creating local manufacturing capacity.

Economic collaboration

To obtain high-priced medicines, especially if they are patented, a recent study undertaken under the auspices of the WHO recommended the application of political pressure to achieve differential pricing and the use of legal flexibilities available under the TRIPS Agreement.12 The use of political pressure can be greatly enhanced through the formation of an African free trade area. As part of its mandate, the TRIPS Council stipulated that if a developing or least developed WTO member country is part of a regional trade agreement (RTA) within the context of the WTO, goods produced in or imported under a compulsory licence to that country can be exported to other developing countries or to least developed member countries in the RTA that share the health problem the goods are intended to alleviate, provided that half of the parties to the RTA are recognized as least developed countries by the United Nations.7,8 This provision allows developing countries to aggregate their markets to make the creation of a local pharmaceutical industry more attractive.26 More than half of the countries in Africa are currently recognized by the United Nations as least developed countries. An African RTA will therefore make it possible under WTO law to issue compulsory licences for the importation of drugs that can circulate without trade or legal barriers within the continent. An African free trade zone will also provide a substantial, commercially viable market and will thus dissolve a major concern, raised in a recent evidence-based study, about whether local production would yield a large commercial market opportunity.27 There is therefore a compelling need to build a regional alliance not only to build strong pharmaceutical manufacturing capacity, but also to facilitate trade within the African region.

The case for an African regional trade agreement

The Treaty Establishing the African Economic Community (hereafter, the “African Treaty”) was signed on 3 June 1991 by 51 African heads of state and government. Article 6 of the African Treaty provides that the community shall be established over a transitional period not exceeding 34 years, with an allowance of up to 40 years for the cumulative transitional period. However, during the 22 years since the adoption of the African Treaty not much has been done towards the establishment of the community. The current public health crisis in Africa has made exigent the need to facilitate the full realization of the African Treaty’s objectives. Such an economic alliance will give Africa a stronger voice in international politics, better economic leverage in international trade and the ability to harness the resources of WTO member states to substantially advance socioeconomic development in the continent. Substantial manufacturing capacity can thus be built in Africa by using the platform of an African RTA to harness existing resources and establish an industry that is owned jointly by the community and managed by an umbrella body, such as the African Union. Although the immediate establishment of an African economic community might not necessarily attract popular support at the moment, steps can be taken to unify the existing eight regional economic communities on the African continent to establish an African free trade area as soon as possible.

Africa has been recording some economic growth in recent years.28 The argument that the continent is too poor to have a strong pharmaceutical manufacturing capacity may therefore not be supportable in the light of current developments. According to the International Monetary Fund’s world economic outlook for 2012, Africa is recording strong economic growth compared with other parts of the world.29 The African Union can use the platform of an economic coalition through the instrumentality of an RTA to take advantage of the current growth in the African economy and bring African countries together to build a strong manufacturing capacity in the pharmaceutical sector. This will surely go a long way towards improving health-care delivery in Africa and bringing about the much desired growth in human development on the continent. Besides, the development of significant manufacturing capacity in the pharmaceutical sector, coupled with the transitional provisions in the TRIPS Agreement that enable the least developed countries to derogate from obligations under the agreement until 2021, will enable Africa to take full advantage of compulsory licensing and generic manufacturing on the continent, pending the expiration of the transitional arrangement.

The formation of an African RTA at this stage will not only facilitate the eventual establishment of an African economic community but can also enable the continent to obtain compulsory licences from patent pools to meet its public health demands. A patent pool is constituted when two or more patent owners put their patents together in such a way that authorization for use can be granted for all patents in the pool as a single package.30 Through a regional collaborative arrangement, African countries can obtain licences from the pool to meet the health needs of their populations, especially in relation to the epidemic of HIV infection. Because the TRIPS Agreement requires parties to seek voluntary licences before they resort to seeking compulsory licensing, an African RTA can also provide a stronger platform for negotiating the terms of voluntary licences. When a voluntary licence cannot be obtained, an African RTA can enable a single African country to issue a compulsory licence for local production or importation to meet its internal needs and the needs of other countries that are parties to the RTA.7

Conclusion

Although the problem of poor access to medicines in Africa did not begin with the adoption of the TRIPS Agreement, the agreement has exacerbated it. Continued reliance on foreign aid will not resolve the problem. As emerging economies in Asia begin to implement a more protectionist intellectual property framework, Africa is ill-advised to continue relying on generic manufacturers in Asia for access to affordable pharmaceuticals. There is therefore an urgent need for Africa to begin developing a strong pharmaceutical manufacturing capacity. Although it might be particularly difficult for a single African country to do this, countries can pool resources through an economic coalition in the form of an African RTA to develop a capacity strong enough to provide medicines for the continent.

The benefits Africa stands to gain from developing strong manufacturing capacity in the pharmaceutical sector are immense: of the 54 fully recognized sovereign states in Africa, 33 are ranked as least developed countries by the United Nations31 and are therefore eligible to refuse to grant patents for pharmaceuticals until July 2021. Thus, building a strong manufacturing capacity on the continent at this stage not only will facilitate the production of generic drugs in the continent but also will make the effective use of compulsory licences much easier and attractive. Local production of pharmaceuticals, coupled with the formation of an African free trade area, will facilitate the movement of drugs within the continent, without trade barriers or excise duties, inexorably leading to cheaper drugs throughout Africa. It will also spur human development and improve the technological base of the continent. Until Africa develops local manufacturing capacity and substantially reduces the current barriers to free trade on the continent, the effective use of compulsory licences is likely to remain a highly daunting task.


Competing interests:

None declared.

References

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