World Trade Organization’s 17-Year Patent Waiver Impact’s Least Developed Countries and Pharmaceuticals

Posted by Kaustubh Nadkarni on November 9, 2015

World Trade Organization (“WTO”) extended a waiver that will allow the world’s poorest economies to have a pharmaceutical patent-free regime for the next seventeen (17) years. The extension by the World Trade Organization (WTO) council was in compliance with the Trade-Related Aspects of Intellectual Property Rights (“TRIPS”), allowing least developed countries (“LDCs”) to avoid applying and enforcing IP rights on pharmaceutical products until January 1, 2033.

While there was reluctant to grant a permanent waiver, the WTO Committee last week agreed to grant a shorter seventeen (17) year version. Without a waiver by WTO, local pharmaceutical companies in LDCs would have to halt production, distribution and sales of crucial medicines, under the enforcement of IP rights agreement around the world.

LDCs are the most vulnerable and poorest in the international community. Majority of the LDCs are in the Sub-Saharan region. They are characterized by low per capita income, low level of human development, and economic vulnerability, in addition to inherent geographical and environmental constraints.

The LDC’s request for patent waiver on pharmaceuticals garnered vehement support from many developing countries, the European Union members, various United Nations and international agencies, suppliers of generic medicines to LDCs, civil society organizations from across the world.  However, on the other hand, the waiver faced strong opposition from United States delegation, preferring to limit waiver for ten (10) years rather than the expansive seventeen (17) years as granted. This is primarily because the United States is home to some of the largest pharmaceuticals. The argument is that pharmaceutical monopolies via patent protection prevents illegal trading, promotes good medicine even in marginalized economies, and justifies costs associated with research and development, some of the tenants of pharmaceutical fundamentalism.

Nevertheless, a key component to determine whether use of waiver is warranted is based on whether a nation desires to manufacture medical drugs under a mandatory license for export to other nations who have advanced their intent to import such medical drugs. However, the waiver is important because it requires that drugs made under the license be predominantly for domestic use. Nonetheless, the domestic use can also be waived, if additional procedures are followed.

Specifically, the patent waiver on pharmaceutical drugs may be applicable if three (3) of the following conditions exist:

  • (1) The LDC needs drugs at a lower price than they can currently obtain;
  • (2) The LDC has inadequate manufacturing capacity to make its own low-cost generic version (regardless of whether it provides patent protection); and
  • (3) The LDC is seeking to import drugs that would be made under mandatory license for export from another nation where they are currently patented.

It is to be noted that the patent waiver is NOT applicable to import drugs that are made as legitimate generics in another nation, where they are not patented. So for instance, if LDC like Ethiopia is importing a generic drug from India, the waiver may not be applicable.  However, if the drug is patented in Ethiopia, it needs the mandatory license to import the drug regardless of the waiver. On the other hand, any WTO nation can export drugs pursuant to the Waiver, provided that the exporting nation has its own national laws in place to permit issuance of the mandatory license to export.

Accordingly, benefiting LDC’s like Bangladesh, for instance, comprise of two hundred and fifty (250) drug manufacturing companies. These pharma companies account for 97% of domestic demand for medicines, while over thirty (30) of them export crucial medicine to hundred and seven (107) different nations around the world, including Germany, United States, France, Italy, United Kingdom and Canada. Ambassador Shameem Ahshan of Bangladesh, a member of the LDC group noted:

“[The historic decision] will assure the LDCs the necessary legal certainty to procure or to produce generic medicines for those who need it most but do not have any access.”

In addition, European Union Trade Commissioner, Cecilia Malmstrom, a stern supporter of the patent waiver stated:

"Even if this waiver is not quite as far-reaching as we would have hoped, it is very good news that there is a consensus in favor of a very long waiver period. This should provide the legal certainty and policy space needed by the least developed countries to ensure better access to medicines"






Topics: Intellectual property, Intellectual Property Law, Patents, Pharmaceuticals, World Trade Organization