Introduction
Tensions often arise between the need to protect intellectual property rights (IPRs) on the one hand, and the need to ensure that users of the commodities in which IPRs are embedded can access them on the market affordably, on the other.Footnote 1 This is because the protection of IPRs leads to monopolization, which results in higher market prices due to lack of competition.Footnote 2 In no other area are these tensions more evident than in the relationship between patents and access to medicines.Footnote 3 It is no wonder, therefore, that in August 2000, the United Nations Commission on the Promotion and Protection of Human Rights adopted a resolution declaring that ‘there are apparent conflicts between the TRIPS regime, on the one hand, and human rights (including the right to health) on the other’.Footnote 4 The problem is particularly acute in developing countries, which are not only plagued with high levels of poverty but also myriad of diseases.Footnote 5
However, there have been attempts to ensure that patents do not block access to medicines. The most notable of these are the ‘WTO–TRIPS flexibilities’,Footnote 6 which seek to enable countries strike a balance between patent protection and access to medicines. The East African Community (EAC) States recently adopted a policy (the Policy) as a regional roadmap to guide EAC Member States in utilizing the WTO–TRIPS flexibilities.Footnote 7 The stated overall objective of the Policy is:
to guide the EAC Partner States on how their national intellectual property legislation must be adjusted in order to enable them to fully utilize the Public Health-related WTO–TRIPS Flexibilities. It provides a comprehensive ‘road map’ of how the latter can facilitate optimization of the populations’ access to health and other health-related products. It further identifies the lowest common denominator of intellectual property legislation that can be approximated across all the EAC Partner States.Footnote 8
This Policy is the case study in this paper.
From the outset, it is crucial to appreciate the rather unique position of developing and least developed countries (LDCs) such as the EAC Member States. This uniqueness lies, first, in the fact that these countries are the most devastated by both disease and poverty.Footnote 9 This means that while there is a greater need for medicines, the population can hardly afford them.Footnote 10 This scenario would seem to justify the adoption of a policy biased towards making medicines available at a reduced cost. However, the second aspect of the unique position of these countries is strategic. This fact is that these countries lack the capacity to manufacture medicines – most of the pharmaceutical companies supplying medicines to these countries are foreign-based, mainly western.Footnote 11 Already, these pharmaceutical companies, due to commercial considerations, neglect investing in developing medicines for diseases rampant in developing countries.Footnote 12
It is important to strike the necessary balance between patent protection and ensuring that developing countries have access to medicines. In other words, access to medicines should be understood not only to mean the medicines are affordable, but also that the medicines are physically available.Footnote 13 This understanding is crucial because there is the real risk of policymakers crafting policies biased towards ensuring financial affordability of the medicines without securing their physical availability. Using the various instruments encompassed in the Policy as a case study, this paper illustrates the inappropriateness of utilizing the WTO–TRIPS flexibilities to reduce prices of medicines by weakening patent protection.
The arguments advanced in this paper are theoretical, based on analyses of the existing literature on the various flexibilities to demonstrate the inappropriateness of the Policy from an ex ante viewpoint. This analysis does not purport to argue that patent protection would necessarily result in investment in research and development of medicines in EAC countries; the argument is that weakening patent protection may discourage investment in research and development of medicines. The analysis aims to merely discount the view that weakening patent protection would promote access to medicines. Similarly, this analysis does not suppose that patent protection policy is the only determinative factor in access to medicines. Other factors, which are beyond the purview of this paper, also play greater or lesser roles.
Structurally, the paper is divided into five sections. Section 2 sets out the theoretical basis for the arguments in this paper while section 3 examines the TRIPS Agreement and its implications for public health. Using the EAC framework as a case study, section 4 critically considers the viability of the common strategies used by developing countries in the utilization of the WTO–TRIPS flexibilities on public health. Section 5 concludes and makes recommendations.
2. Justifying patent protection: the utilitarian theory
The arguments in this paper proceed from the utilitarian justification for patent protection. This justification is used here because it is the most followed justification for patent protection – it is generally agreed that patent protection policy (international and national), follow the utilitarian approach.Footnote 14 As a consequentialist justification, the utilitarian approach affords a most appropriate model for theorizing on the cause-and-effect relationship between patent protection policies, on the one hand, and the effect of such policies on access to medicines, on the other hand.Footnote 15 The logic of utilitarianism is that patent protection enables inventors to recoup their investments in research and development, and, in that way, society benefits because inventions are incentivized.Footnote 16
The basic precept of utilitarianism is that laws are socially justified if they bring the greatest benefit to the greatest number of people.Footnote 17 In the context of this study, utilitarianism is used not just as the raison d'être for patents but also for any framework that seeks to utilize the WTO–TRIPS flexibilities. The application of utilitarianism to the present discussion has a major implication: policies utilizing the WTO–TRIPS flexibilities ought to bring the greatest benefit to the greatest number of people. What would be the greatest benefit and the greatest number of people in these circumstances?
The greatest benefit, without doubt, is the affected populations having access to medicines. The ‘greatness’ of this benefit is what is at issue. Most policymakers in developing countries seem to consider the ‘greatest benefit’ as lying in ensuring access through price reduction. This paper argues, however, that the benefit would be ‘the greatest’ if regard were given to access in its two senses: ensuring financial affordability and securing the physical availability of medicines.Footnote 18 Policies that are biased towards price reduction would only benefit consumers of medicines in the short term, because, in the long term, research and development of medicines may be undermined as inventors would not have the incentive to invest in research and development of the necessary new medicines without a guarantee that they would recoup their investments.
3. The TRIPS Agreement
3.1 TRIPS and Public Health
In 1994, the Uruguay Round negotiations culminated in the establishment of the World Trade Organization (WTO) and the adoption of TRIPS.Footnote 19
TRIPS has been characterized as ‘the most comprehensive treaty dealing with intellectual property rights’Footnote 20 The reasons for this are that, first, it at once covers many aspects of IP such as copyright, trademarks, and patents, and, second, it incorporates a number of international conventions covering different aspects of IP, including the Paris and Berne Conventions.Footnote 21
The adoption of TRIPS brought to the fore certain challenges. In relation to pharmaceuticals, a hot debate arose between developed and developing countries on the interface between patent protection and access to medicines.Footnote 22 While developed countries called for stronger patent regimes, developing countries argued that such stronger regimes for pharmaceuticals made it difficult for their populations to access medicines.Footnote 23
Arguably, there are obvious reasons why this debate has been between developed and developing countries. First, TRIPS was considered, from the outset, as a developed countries’ concept.Footnote 24 There has been contention that TRIPS benefits only developed countries.Footnote 25 It is reported that during the Uruguay Round negotiations, developing countries agreed to TRIPS in reciprocation for developed countries’ concessions in the agricultural negotiations.Footnote 26 The second reason somewhat buttresses the first. This is that developed countries, being home to most of IP, advocate for stronger patent regimes at the behest of the pharmaceutical companies in their countries.Footnote 27 Developing countries, on the other hand, have opposed a strong patent regime to address the public health needs of their population.Footnote 28
This debate ultimately found itself in the interpretation of TRIPS: developing countries read TRIPS as having flexibilities for addressing public health needs; developed countries rejected such an interpretation, insisting that the only flexibility in TRIPS concerned the longer implementation periods allowed to developing countries and LDCs.Footnote 29 This debate on the scope of TRIPS flexibilities led to the Doha Declaration on TRIPS and Public Health.
3.2 Doha Declaration on TRIPS and Public Health
The Doha Declaration was the resolution of divergent interpretations of TRIPS by developed and developing countries. Developing countries had opined that TRIPS allowed states to take measures aimed at addressing the public health needs of their populations.Footnote 30 In advancing their argument, developing countries were of the view that TRIPS should be interpreted based on Articles 7 and 8, which, generally, recognize the adoption of measures to facilitate, inter alia, addressing public health and nutrition needs.Footnote 31
Developed countries countered with the argument that TRIPS already strikes a balance between patent protection and access to medicines because imposing stronger standards of protection is crucial to incentivize invention. In any event, developed countries argued, TRIPS already accommodated the needs of developing countries by allowing them longer transitional periods.Footnote 32 A further argument was that public health matters should not just be tied to patents because there was need for a ‘comprehensive approach that addressed other policy matters such medical infrastructure, doctors, nurses, and initiatives by multilateral institutions such as the World Health Organization’.Footnote 33
Against this backdrop, a raft of proposals was considered, which climaxed in the adoption of the Declaration at the Doha Ministerial meeting in Qatar in November 2001. The Declaration largely mirrors the position of developing countries.Footnote 34
Paragraph 6 of the Declaration deserves mention. This paragraph recognized that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under TRIPS and, consequently, instructed the Council for TRIPS to find an expeditious solution to the problem and report to the General Council before the end of 2002.Footnote 35 It was not until August 2003 that a solution was reported to the General Council. This solution, widely known as the 30 August 2003 Decision, allows WTO members to issue compulsory licences for purposes of exporting to countries with no or insufficient manufacturing capacity.Footnote 36 It essentially waives the requirement that compulsory licences should be issued for the manufacture of generic drugs predominantly for the domestic market.Footnote 37 There are pre-conditions to be met: there must be fair compensation for the compulsory licence; the drugs must be of the quantity needed to address public health needs; the drugs must be exported in their entirety and reasonable measures must be taken to prevent re-exportation.Footnote 38 In 2005, WTO members agreed to incorporate the 30 August 2003 Decision in TRIPS by amendment.Footnote 39
The Decision (the ‘Paragraph 6 system’) was obviously a thoughtful way of trying to give potency to compulsory licences for countries without manufacturing capacity. However, there are practical challenges which perhaps explain why the Decision has been used only once hitherto.Footnote 40 Chief among these challenges is that it is highly unlikely that developed countries, in which most pharmaceuticals are located, will issue compulsory licences against their companies in order to assist developing countries with no manufacturing capabilities.Footnote 41 One only has to recall the endeavours made by developed countries to strengthen the protection of intellectual property (primarily in the interest of their companies).
It is not suggested here that the Paragraph 6 system is completely unworkable. Situations are imaginable of pharmaceuticals giving up patents (likely one nearing its end) to allow for the manufacture of generic drugs on acceptable terms. Indeed, the incentive of guaranteed economic benefits by manufacturing and exporting under the Paragraph 6 system may encourage its use. The elaborate and time-consuming WTO procedures before the Paragraph 6 system can be used, however, are another major handicap.Footnote 42
Developing countries have attempted to utilize the flexibilities under the Declaration, including transition periods at paragraph 7 of the Declaration, and the paragraph 6 system. As the next sections show, the default pattern in developing countries has been to use the flexibilities to weaken patent protection, thereby enhancing access to medicines through price reductions. The Policy adopted by the EAC countries is used a case study to demonstrate the inappropriateness of this strategy, at least from a theoretical viewpoint.
4. A case study of the EAC regional policy framework
4.1 The EAC and the regional policy
The EAC is ‘the regional intergovernmental organization of the Republics of Burundi, Kenya, Rwanda, the United Republic of Tanzania, and the Republic of Uganda’.Footnote 43 After an initial collapse in 1977, the EAC was revived in 2000, and expanded its membership from three states when the republics of Burundi and Rwanda joined in 2007.Footnote 44
The founding legal document of the EAC is the EAC Treaty (the Treaty).Footnote 45 The Treaty spells out the objectives of the EAC. One of the objectives is to ‘to develop policies and programmes aimed at widening and deepening co-operation among the Partner States in political, economic … and legal and judicial affairs, for their mutual benefit’.Footnote 46 The Treaty lays out the stages of integration to be followed in order to attain this objective. The EAC is to commence as a Customs Union, then a Common Market before becoming a Monetary Union and, ultimately, a Political Federation.Footnote 47 Presently, the EAC is a Common Market and negotiations towards a Monetary Union are underway.Footnote 48
The Treaty lists diverse areas of cooperation in which collaboration is necessary to attain the objectives of the EAC.Footnote 49 These areas relate to diverse spheres, with the broader aim of strengthening economic, political, and social integration in the region. As far as cooperation on IP is concerned, the EAC Common Market Protocol envisages cooperation in areas necessary for the effective functioning of the Common Market and maximizing the benefits to be obtained.Footnote 50
The Common Market Protocol specifically provides for cooperation in public health and IP.Footnote 51 It is on this basis that initiatives were launched that climaxed in the Policy and the accompanying Protocol. The Protocol reflects a commitment ‘to the implementation of the EAC Regional Intellectual Property Policy on the Utilization of Public Health-related WTO–TRIPS Flexibilities and the Approximation of National Intellectual Property Legislation’.Footnote 52
The purpose of the Policy, on the other hand, is to enable the EAC Member States to ‘to utilize the Public Health-related flexibilities contained in the TRIPS Agreement and its related instruments in order to help address public health problems afflicting their populations’.Footnote 53 The Policy seeks to attain this by providing guidelines pursuant to which the EAC Member States are to adjust their national legislation in order to fully utilize the Public Health-related WTO–TRIPS flexibilities.Footnote 54 The specific policy tools that Member States should incorporate into their national legislation as minimum standards are spelt out in the Policy. The next subsection elaborates and critically reviews these various policy tools.
4.2 A critical review of the EAC regional policy tools
This subsection critically assesses the policy tools enshrined in the Policy through the prism of utilitarianism. The aim is to ascertain whether the specific policy tools strike the required balance between patent protection and access to medicines. It will be shown that while some of the policy tools are in consonance with the situation in the EAC states, a majority of the policy tools are arguably inappropriate and out of kilter with the reality. It is crucial to note at this stage that while the Policy was passed by the EAC Council of Ministers in May 2013, its implementation requires individual member states to adapt their laws to conform with the Policy standards.
4.2.1 Transition periods
This flexibility, in respect of pharmaceuticals, is available for LDCs – Burundi, Rwanda, Tanzania, and Uganda in this case.Footnote 55 The transition period has been extended twice – it was initially set to end on 1 January 2016, but was extended to 1 January 2033.Footnote 56 This flexibility recognizes the economic, financial, and administrative constraints faced by LDCs, and their need for policy space to develop a viable technological base.Footnote 57
The transition period allowed for LDCs is distinguishable from that allowed for other developing countries. For other developing countries, the transition period was meant to permit them more time to implement TRIPS.Footnote 58 For LDCs, as Hold and Mercurio note, ‘the provision recognizes that a rapid implementation of the Agreement could create a conflict with the economic interests and development priorities’.Footnote 59
This distinction is buttressed by the fact that unlike developing countries, LDCs are not under the non-rollback obligation.Footnote 60 The non-rollback obligation would be violated if a country ‘that already complies with intellectual property protection under the TRIPS Agreement in some form … reduces the level of compliance’.Footnote 61 Utilization of TRIPS flexibilities, however, is not rollback.Footnote 62 The EAC policy tool on transition periods seeks to make use of the absence of the non-rollback obligation in respect of the mailbox provision.Footnote 63 The Policy urges LDCs (including those that had made patent protection available on 1 January 1995 and later suspended it) with a mailbox provision to abolish it.Footnote 64
The mailbox provision requires states that do not yet provide patents for pharmaceutical and agricultural chemical products to create a mechanism for receiving applications, which will then be examined when the states begin providing such protection.Footnote 65 As Ho explains, the goal of the mailbox provision is to ensure that patent applications are examined in light of the prior art that existed when the application was made, and not when the application is examined.Footnote 66
An argument is made here against both the abolition of the mailbox provision and (an extension) the use of transition periods in EAC State laws. Transition periods are no doubt an important and attractive flexibility that can be utilized by LDCs. They are a form of special and differential treatment.Footnote 67 Importantly, they are attractive because they are a non-controversial flexibility, grounded within the WTO legal framework since they are precisely agreed to by WTO members.Footnote 68 However, it is argued here that EAC States should consider granting pharmaceutical patents, despite the flexibility afforded by the transition periods. It is worth noting that Tanzania and Uganda, despite being LDCs, grant patents for pharmaceuticals.Footnote 69 It is only Burundi and Rwanda that have provided for transition periods in their laws.Footnote 70
The next section demonstrates the clear need for a paradigm shift by EAC States towards promoting local innovation and investment in the development of necessary medicines through patent protection.Footnote 71 It is also in this regard that an argument is made in favour of retaining the mailbox provision at least for Rwanda and Burundi that do not grant pharmaceutical patents yet, even though as LDCs they are entitled to abolish the provision. The argument here is that retaining the mailbox provision would encourage the disclosure of discoveries as well as promote innovation, as individuals would at least be incentivized by the availability of the mailbox protection. Abolishing the mailbox provision will have the negative effect of not only stifling innovation but also of discouraging disclosure of discoveries due to the absence of a guarantee of protection.
4.2.2 Patentability criteria and materials excluded from patentability
The Policy seeks to utilize the patentability criteria flexibility in three ways. First, it recommends that States assess novelty using ‘wide prior art definitions’.Footnote 72 This includes everything disclosed to the public whether by use (in written or oral form), including ‘patent applications, information implied in any publication or derivable from a combination of publications, which are published anywhere in the world and which can be accessed by the general public’.Footnote 73 Second, with regard to the inventive step requirement, the Policy requires that the invention be non-obvious to a person highly skilled in the art.Footnote 74 Third, on industrial applicability, it is directed that for the patentability of research tools’ their specific use be identified.Footnote 75 The Policy also excludes from patentability natural substances, new medical uses of known substances, and derivatives of medical products that do not show significantly enhanced therapeutic efficacy or significant properties.Footnote 76
The totality of these provisions makes it difficult to obtain a patent. The threshold is set so high with the intended result that many applications for pharmaceutical patents will not be granted and, as such, States will ‘have enough policy space for public health purposes’.Footnote 77 There are arguments to support such a strict approach to patentability. For one, strict criteria will prevent the patenting of known substances or small modifications to existing products and processes – a practice called the ever-greening of patents.Footnote 78 It is argued that large established firms with experienced lawyers are more likely to take advantage of low patentability criteria to block generic competition through ever-greening.Footnote 79 The ramification of this practice will be that consumers will have to pay for what would otherwise be in the public domain. Despite the persuasiveness of these arguments, this study contends that this approach may be inappropriate in the context of the EAC states for the following reasons.
To begin with, the approach does not seem to recognize the need to foster innovation and develop domestic pharmaceutical capacity. In most developing countries, as Correa notes, ‘the innovation systems are fragmented and weak, and they overwhelmingly depend on foreign innovations’.Footnote 80 Firms in such countries ‘follow “imitative” or “dependent” technological strategies, usually relying on external sources of innovation, such as suppliers, customers and competitors’.Footnote 81 As such, ‘a patent regime based on a low inventive threshold could be functional to the predominantly incremental innovation path prevailing in developing countries, as patents might encourage minor innovations developed by domestic companies’.Footnote 82 From a theoretical standpoint, strict patentability criteria may thus undermine domestic firms. Further, a severe patentability test may result in non-disclosure of small innovations, and, consequently, duplication of research and development costs by firms unaware of earlier innovations.Footnote 83
It is no longer contestable that developing countries now need to develop domestic pharmaceutical industries to address the medical needs of their populations. Of course, the need to have a competitive technological capacity by 2033 when the transition period ends is one of the reasons.Footnote 84 The other reason, however, is that most of the diseases afflicting these countries (tropical/African diseases) are peculiar to the region, and are largely neglected by foreign pharmaceuticals.Footnote 85 As Ferrara observes, these are diseases ‘for which the main problem is still lack of adequate incentive to produce effective drugs’.Footnote 86 The reason why there is no research towards developing ‘orphan drugs’ (medicines for neglected diseases) is that they are not profitable because they affect low income population groups.Footnote 87 Sell notes, correctly, that the ‘increasing commercialization of medicine means that the diseases of the poor will be ignored by firms for sound economic reasons’.Footnote 88
The available option is for the affected countries to develop domestic solutions. With stringent rules on patentability, it may become difficult to spur innovative activities from the small-scale, largely underfunded domestic firms, whose innovation capacities are unlikely to meet a very high patentability threshold. Whereas it is conceded that certain countries, such as India and Bangladesh, developed their pharmaceutical production capacities without patent protection,Footnote 89 it has to be pointed out that at the time the market dynamics were not as they are now, in the sense that there was no obvious neglect of certain region-specific diseases and a preference for diseases of the developed world. The argument here is that the ‘formulation of a patent regime … should not be dissociated from the characteristics of the national innovation system of the country where such regime applies’.Footnote 90 This is the point that the Policy seems to miss.
4.2.3 Research exception, ‘Bolar’ provision, and test data protection
The three flexibilities, research exception, ‘Bolar’ provision, and test data protection, are related. The research exception aims to ‘promote scientific and technological progress’.Footnote 91 The research exception flexibility allows researchers to use a patented substance for scientific research in order to fully understand the substance.Footnote 92 While the Policy allows this exception for both scientific and commercial research, it emphasizes that ‘the predominant purpose of the commercial research must be the improvement of the patented substances, as opposed to mere reverse engineering and copying of the patented invention’.Footnote 93 The second aspect of the research exception flexibility in the Policy requires that legislation provides researchers with a right to claim a non-exclusive licence for the use of patented research tools against payment of reasonable compensation.Footnote 94
This flexibility is largely defensible. One reason for this is that the flexibility, if well utilized, has the potential to enhance scientific and technological advancement in the EAC Member States. As explained in the foregoing sections, the need for local focus on medicines for diseases peculiar to the region cannot be gainsaid.Footnote 95 Interestingly, this exception seems to acknowledge that local scientific and technological advancement may have to be premised on incremental innovations; such advancement identifies the purposes of the research exception as being, first, to fully understand the patented substance, and, second, the improvement of the patented substance.Footnote 96 In all preponderance, this appreciates the necessity of using existing inventions to enhance local innovation. This is one more reason why the strict patentability criteria described above may be inappropriate. It is ‘dissociated from the characteristics of the national innovation system of the country’.Footnote 97
Additionally, the research exception does not seem to curtail the rights of the patent holder. There are strong limitations placed on the use of this flexibility. For one, it is only to enable a full understanding of the patented substance and also, even where it is for commercial research, the predominant goal is the improvement of the patented substance as opposed to mere copying and reverse engineering.Footnote 98 When a patented research tool is to be used, the Policy directs that reasonable compensation be paid to the patent holder.Footnote 99
The ‘Bolar’ provision or the ‘regulatory’ exception enables generic manufacturers to use a patented invention before the end of the patent term and without the patent owner's permission to obtain marketing approval from the regulatory authorities.Footnote 100 The purpose of this flexibility is to ‘ensure early entry of generic pharmaceuticals’.Footnote 101 The rationale for the Bolar provision is that often regulatory approval of medicines takes a long time. If generic manufacturers have to wait until the expiry of the patent term before seeking regulatory approval, the entry of generic medicines into the market will be delayed and, contemporaneously, the patent holder will de facto enjoy longer periods of protection beyond the patent term.Footnote 102
The Bolar provision strikes a proper balance between the private rights of the patent holder and the public interest of access to medicines. This is because the ‘exception is confined to conduct needed to comply with the requirements of the regulatory approval process’,Footnote 103 and ‘the extent of the acts unauthorized by the right holder that are permitted by it will be small and narrowly bounded’.Footnote 104 The generic manufacturers only enter the market at the expiry of the patent term.
As such, the use of this flexibility is unlikely to be a disincentive to research and innovation as it does not affect a patent holder's normal exploitation of the patent.Footnote 105 Importantly, the WTO Panel jurisprudence is of the opinion that ‘the regulatory review exception … is a “limited exception” within the meaning of Article 30 of the TRIPS Agreement’.Footnote 106 The same is true for the research exception.Footnote 107 The flexibility on test data protection may not, however, be as easy to endorse.
The test data protection flexibility is meant to avoid ‘unnecessary costly and lengthy clinical trials of generic pharmaceutical products’.Footnote 108 This flexibility permits generic manufacturers to rely on test data submitted by the originator for the approval of the generic medicines. This averts the duplication of costs and time in conducting fresh clinical trials.Footnote 109 Test data are necessary for marketing approvals because ‘[a]s a practical matter, without this data, no pharmaceutical product with a new active ingredient would be marketed anywhere in the world’.Footnote 110 Yet, ‘extensive testing directly translates into extensive costs for generating the data necessary to obtain approval of each new active ingredient’.Footnote 111 These also include the costs of generating the data associated with products that were abandoned in pre-clinical or clinical trials or were not approved by the health authorities.Footnote 112 In a nutshell, test data are an expensive necessity.
Test data protection is paradoxical. As indicated above, allowing generic companies to rely on original test data averts duplication of costs in fresh repetitive clinical trials and testing. This in turn translates into lower prices for consumers of the medicine.Footnote 113 This, however, it is argued, ‘would jeopardize the ability of the originator to recoup the costs of generating the test data, and would reduce the incentives for the originator to generate the necessary test data to market the product’Footnote 114 The argument is that this is particularly pronounced in developing countries where, because of the low income levels, there is no market incentive to research and develop medicines for tropical diseases, as a result of which test data protection remains one of the few carrots to dangle.Footnote 115
The Policy recommends that EAC States’ legislation should adopt a system to protect data against unfair commercial use and disclosure, while permitting the Medical Regulatory Authorities (MRAs) to rely on the original test data when assessing the safety and efficacy of generic medicines.Footnote 116 The Policy proposes the use of the misappropriation approach instead of the compensatory liability approach as, under the latter, ‘the generic competitor … would have to pay compensation to the data originator, and this might exceed the local generic producers’ financial capabilities’.Footnote 117 This approach is suitable for the EAC States.
The Policy seems to pursue, correctly so, a narrow interpretation of ‘unfair commercial use’ by creating the appearance that reliance by MRAs on original test data to approve generic drugs is consistent with protecting the data from unfair commercial use.Footnote 118 This approach concurs with pundits who argue that MRAs’ reliance on such data does not involve any disclosure to a third party and, consequently, that the competitor does not benefit from the use of the original test data as the result of unfair commercial practices.Footnote 119 The other school of thought considers unfair commercial use from the perspective of the effect of relying on the original test data. In this sense, it is argued that the MRAs’ reliance on the test data accords a generic manufacturer an unfair commercial advantage as, without the data, the generic medicines would not have been approved to enter the market.Footnote 120 The generic manufacturer gets a ‘free ride’.Footnote 121
In the broader context of the EAC States, using test data under the misappropriation approach without compensation may be justifiable, especially since strong patent protection would still enable inventors to recoup their investments. The main reason for this is that there is a need to encourage research into cures for the peculiar regional diseases, which continue to be neglected by foreign pharmaceuticals.Footnote 122 Consequently, as explained above, a conducive framework ought to exist to accommodate the local, small-scale, underfunded inventors.Footnote 123 Since a strong patent protection regime would still enable inventors to recoup their investments, including the test data, the EAC framework is arguably suitable.
Be that is it may, the framing of the Policy problematically presupposes that originators of test data will always be foreign pharmaceuticals. For instance, it is explained that the payment of compensation under the compensatory liability approach ‘might exceed the local generic producers’ financial capabilities’.Footnote 124 Further, the Policy also envisages government's mitigating intervention to protect local generic producers ‘should the EAC Partner States become obliged, under constraint of a free trade agreement or in response to overwhelming bargaining power, to adopt a regime of data exclusivity prohibiting reliance’.Footnote 125 This language is problematic because the underlying rationale of the Policy seems to be that originators will be foreigners. It is out of kilter with the previous flexibilities – for instance, on research exception – which aim at domestic scientific and technological advancement. Even more tragic is that the language is out of kilter with the reality that these States need to develop local pharmaceutical bases that would focus on their neglected diseases.Footnote 126
4.2.4 Disclosure requirements, administrative opposition procedures, and patent abuse
The disclosure requirements under the Policy are that the applicant must disclose ‘all modes and expressly indicate the best mode for carrying out an invention by experts skilled in the art, who reside in the respective EAC Partner State’.Footnote 127 The applicant would also be required to disclose the International Non-proprietary Name (INN) of a pharmaceutical substance or an active pharmaceutical ingredient as soon as it is available.Footnote 128 The stated objective of this requirement is to promote technological learning and follow-on innovation by local innovators.Footnote 129
This requirement is in line with the fundamentals of patent law. Disclosure is ‘an essential feature of the arrangement between the patentee and the state’Footnote 130 This is why ‘[a]dequate disclosure requires that the essential features of the invention are revealed in a way that would enable a person skilled in the particular field … to do so’.Footnote 131 In fact, in many jurisdictions, the disclosure requirement is so paramount that inadequate disclosure can invalidate a patent.Footnote 132 Some commentators hold that a stringent disclosure requirement may invalidate patents to significant inventions.Footnote 133 However, the predominant view is that the target of disclosure should be to educate second-rank technicians rather than leading researchers in the field.Footnote 134
The Policy has a variant; it requires disclosure to have specific focus on experts residing in the respective EAC States.Footnote 135 This of course takes cognizance of the low technological and expert levels in these countries. The stated objective of disclosure: to promote technological learning and follow-on innovation by local innovators fits in well with the research exception flexibility discussed above.Footnote 136 However, high patentability criteria contradict both.Footnote 137 These disclosure requirements are undoubtedly indispensable for technological growth in the EAC States.
Administrative opposition procedures, which provide for both pre- and post-grant opposition, are vital because they are ‘necessary to check frivolous patents’.Footnote 138 These procedures ensure the integrity of patents since the public can provide evidence useful when patent applications are evaluated against the patentability criteria.Footnote 139 For these procedures to be effective, however, public access to information is crucial. In the EAC States, there is not a strong awareness about patent applications; as a result of which some may possibly escape the notice of credible challengers. More transparency is thus required.Footnote 140 A possible argument against a strong opposition system is that it may be manipulated to delay the grant of patents.Footnote 141 This possibility can be remedied by an effective mechanism to sieve out prima facie frivolous oppositions.
The other important stipulation in the Policy concerns anti-competitive behaviour and patent abuse.Footnote 142 This stipulation is founded on Article 8:2 of TRIPS, which allows Member States to take appropriate measures consistent with TRIPS, to prevent rights-holders from abusing IPRs, unreasonably restricting trade, or adversely affecting international transfer of technology.Footnote 143 It also relies on Article 40 of TRIPS, which seeks to control anti-competitive behaviour in contractual licences.Footnote 144 The stipulation recommends that EAC States should develop policies prohibiting the registration of licences with anti-competitive terms that restrict transfer of technology. It further recommends that compulsory licensing be used to remedy patent abuses arising from anti-competitive practices that unreasonably restrict trade and competition.Footnote 145 The justification for this stipulation is undeniable: it recognizes that some ‘patent strategies increasingly aim at blocking competition rather than seeking a reward for genuine innovations’.Footnote 146 Consequently, ‘[p]olicies aimed at enhancing access to medicines in developing countries should include an increased use of competition laws to remedy patent-based anti-competitive practices’.Footnote 147
4.2.5 Parallel importation
What is parallel importation? Simply put, it is the importation without the permission of the patent holder of a patented substance from another market where it has been legally introduced.Footnote 148 These imports compete directly with the still-patented products in the importing market.Footnote 149 Parallel importation thrives on the concept of exhaustion of rights.Footnote 150 The argument is that once a product is introduced into the market, the patent holder has no rights over it and it can thus be sold anywhere.Footnote 151 Countries import medicines from other countries where the prices are lower than in the domestic market.Footnote 152 TRIPS is neutral towards parallel importation. It allows States to choose their own exhaustion of rights regime.Footnote 153
There are three possible exhaustion regimes – national, regional, and international.Footnote 154 National exhaustion excludes parallel importation; regional exhaustion allows parallel imports only from countries party to a regional trade agreement; and international exhaustion permits parallel importation from any country.Footnote 155 The Policy recommends that EAC States adopt an international exhaustion regime.Footnote 156 The advantage of an international exhaustion regime is that it ‘favors consumer interests and access to medicine, because countries are free to import products from the country where they are legitimately sold for the lowest possible price’.Footnote 157 Another advantage is that parallel importation ‘obviates the need for a country to establish its own domestic manufacturing capabilities’.Footnote 158 However, closer scrutiny of parallel importation, in light of the context of EAC countries, suggests that this flexibility may be unsuitable.
Pharmaceuticals use different prices in different regions depending on the income levels of the population, and developing countries benefit under these differential pricing schemes.Footnote 159 However, parallel importation eliminates the incentive to use these schemes.Footnote 160 Parallel importation, it has also been argued, undermines a patent holder's monopoly rights, which in turn disincentivizes investment in research and development of new medicines.Footnote 161 Yet, as the foregoing sections have demonstrated, the so-called African diseases have been neglected by western pharmaceuticals, exposing the need to promote local pharmaceutical activity.Footnote 162
Pundits have also cast aspersions on the utility of parallel importation in light of some external factors (relevant to EAC countries). First, given the low levels of per-capita income, even with parallel imports ‘many countries, including those hardest hit by HIV/AIDS in Africa, might not be able to afford treatment for all those who need it’.Footnote 163 Second, parallel imports are often not useful due to structural problems, such as government corruption.Footnote 164 In the same vein, it has been reported that some importers still proceed to resell the parallel imports at unreduced prices.Footnote 165 Parallel importation also raises quality and safety issues. In fact, in 1999, Kenya banned the parallel importation of medicines over safety and quality concerns.Footnote 166
4.2.6 Compulsory licencing
Compulsory licensing is where a government allows a third party to use a patent without the authorization of the patent holder, subject to monetary compensation.Footnote 167 TRIPS and related instruments such as the Doha Declaration allow governments to issue compulsory licenses in certain circumstances.Footnote 168 Compulsory licensing has been described as an effective tool for enhancing access to medicines in developing countries.Footnote 169 This is because the issuance of compulsory licenses facilitates the manufacture of generic medicines, thereby promoting competition and resulting in lower market prices.Footnote 170 It has also been pointed out that the mere threat of issuing a compulsory license can have the effect of reducing prices of medicines.Footnote 171
One issue with compulsory licensing is that it cannot be utilized by countries with no manufacturing capabilities.Footnote 172 As explained above, the 30 August 2003 Decision was developed to allow the export of medicines manufactured under compulsory licences to countries with no manufacturing capabilities.Footnote 173 The Policy recommends that EAC countries amend their patent laws to include a provision authorizing the export of up to 100% of pharmaceutical production to countries lacking sufficient pharmaceutical capacities.Footnote 174 Such an amendment will facilitate exports/imports of medicines under the Paragraph 6 system amongst the EAC countries. This proposal seems to suppose that one or more of the EAC countries will have manufacturing capabilities.
As mentioned earlier, the Paragraph 6 system has been used only once.Footnote 175 This underpins the difficulties of using the system. Forman identifies these difficulties to include ‘persistent corporate and governmental threats of legal or economic sanctions and the complexity, cost, and limited duration and scope of the rules themselves’.Footnote 176 It is also unlikely that governments (often slow to meet their own health needs) will issue compulsory licenses just to help foreign countries.Footnote 177 The possibility of offending domestic pharmaceuticals and other countries (developed) make the use of the system even harder.Footnote 178
These are not the only problems with compulsory licensing. The issuance of compulsory licences discourages investment in scientific research and development of medicines.Footnote 179 This is even grimmer for EAC States because as Watson succinctly notes, common use of compulsory licenses may undermine investment in research and development of medicines, and this ‘could be “the last blow” to the drug industry's attempts to cure diseases of the developing world, which are overlooked even today’.Footnote 180 According to Mercurio, ‘a developing country in a state of crisis could invoke a compulsory license in such a situation, but it could be that no drug would be on the market to alleviate the problem due to lack of research and development in the area’.Footnote 181 In the same vein, Robert Bird says compulsory licenses may ‘cause patent-owning firms to avoid ventures in a certain nation and seek a more business friendly legal climate’.Footnote 182 This will have overall negative effects on the economy, including limiting technology transfer.Footnote 183
A consideration of the Policy indicates deliberate measures aimed at making it easier, faster, and cheaper to issue compulsory licenses by recommending shortened negotiation periods, broad compulsory licensing grounds, and highly conditional compensation.Footnote 184 This position is inappropriate for the EAC States when considering the foregoing discussion.
Interestingly, while the relevant laws of all EAC States provide for compulsory licensing,Footnote 185 none of the countries, with the exception of Rwanda, which has used the Paragraph 6 system only once, has ever issued a compulsory license – and this is not because the countries have not been faced with epidemics. Even though it may be argued that the rarity in the use of compulsory licensing reflects the success of this flexibility (in that pharmaceuticals reduce prices to avert compulsory licences), the more plausible explanation is the fear of economic repercussions, which include trade sanctions and capital flight.Footnote 186 Brazil, Thailand, and South Africa have previously come under immense pressure, threats of, and actual sanctions, for issuing compulsory licenses.Footnote 187
Again, just like with parallel importation, compulsory licensing does not necessarily result in affordable medicine because the people are just too poor.Footnote 188
The foregoing does not mean that compulsory licensing should not be available as a policy tool. Rather, the argument is that provisions on compulsory licensing must be tailored to balance public health needs and the rights of inventors.Footnote 189 The use of compulsory licenses, as the examples of Brazil and South Africa have shown, will earn international support on humanitarian grounds if it is limited to justifiable and genuine health emergencies.Footnote 190 On the contrary, if compulsory licenses are indiscriminately used to address non-emergency situations – like Egypt issuing a compulsory license for the sex-enhancing drug Viagra – the genuineness of such actions becomes questionable, leading to ramifications such as the withdrawal of investors.Footnote 191
Other ways of minimizing the negative side-effects of compulsory licensing include prior negotiations with patent holdersFootnote 192 and the payment of adequate compensation.Footnote 193
5. Conclusions
The problem that this research has highlighted is the already too familiar tension between patent protection and access to medicines. The legal framework for patents and access to medicines in the EAC region consists of the Policy and the accompanying Protocol.
What has emerged from the analysis is that the policy tools are aimed at enhancing access to medicines mainly through price reduction. This is done at the direct expense of promoting research and development of medicines, which, in line with the utilitarian justification, is achievable through patent protection. This policy position that weakens patent protection is not appropriate for developing African countries. This is because African countries are faced with peculiar, region-specific diseases. Currently, these diseases are largely neglected by the profit-driven pharmaceutical companies, which do not have economic incentives to invest in developing medicines for populations that cannot afford to pay for them. Most of these pharmaceutical companies are foreign, largely based in the Global North. Since these companies do not have economic incentives to invest in the research and development of medicines for developing countries’ diseases, even patent protection has not necessarily been an attractive incentive.Footnote 194 The focus of these companies is now on developed countries’ diseases. In these circumstances, the only standing incentive, especially for spurring domestic innovation from within developing countries, is patent protection. Consequently, any strategy that eliminates this last straw will only worsen the already bad situation.
The situation described above underscores the urgent need to develop local pharmaceutical industries and to create alternative incentives for investment in research and development of medicines for neglected diseases, for example through Public–Private Partnerships (PPPs). Both of these can be attained through an appropriate patent protection regime that does not weaken patent protection. Such a regime must, for instance, be omniscient of domestic innovators’ limited capacity and, consequently, avoid strict patentability criteria, which cannot be met by the small-scale, underfunded domestic innovators. Strict patentability criteria may also discourage disclosure of certain important discoveries, for fear of not attaining the criteria and losing out by disclosure.
In developing local pharmaceutical industries, it is also necessary to find ways of affording patent protection to indigenous medicines and practices, which, for centuries, have been as useful to the populations as western medicine now is. It is the failure to protect these medicines and practices in the first place that has resulted in foreign pharmaceuticals appropriating the knowledge and patenting it, only to return with expensive medicines.Footnote 195 It is the argument here that a patent protection policy would only achieve the greatest good for the greatest number of people, in line with utilitarianism, if it balances the goal of price reduction with the need to encourage further research and development of medicines by ensuring that inventors are able to recoup their investments in research and development. It is only through research and development that the medicines will be made available.
