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Publications - Compulsory Licensing in the WTO: Providing Access to Affordable Medicines

Compulsory Licensing in the WTO: Providing Access to Affordable Medicines

The Ukrainian Journal of Business Law
Vol.8 No9 September 2010

It is no secret that Ukraine leads the list of countries with the highest HIV and tuberculosis case rates in Europe. According to the World Health Organization's Global Tuberculosis Control Report 2009, Ukraine had an estimated 46,916 tuberculosis cases in 2007. In the same vein, as UNAIDS reports, approximately 1.5 million people are living with HIV/AIDS in Eastern Europe and Central Asia, 90% of whom live either in the Russian Federation or Ukraine[1]. The next few years will be crucial in the fight against AIDS and tuberculosis, and the trends of epidemic development depend on governmental efforts to overcome the diseases. In this gear the key target of national health policy is to develop a successful drug supply management system to combat fatal epidemics.
One of the possible tools to ensure people have the necessary affordable medicines is to exercise the government's right to grant compulsory licenses, as envisaged by the WTO agreements as well as by national legislation.

Compulsory licensing under WTO law
A compulsory licensing (hereinafter — CL) is a legal vehicle whereby a producer or an importer is granted the right to produce or to import a product without authorization of the rights holder in the country of production or importation. Since CLs are means to deprive the rights holder of the monopoly granted by the patent, their issuance is the subject of detailed conditions laid out in Article 31 of TRIPS [2].
Article 27.2 of TRIPS states that "Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect human ... life or health...." Likewise, Article 8.1 states: "Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health..."
Article 30 places a general constraint on all such exceptions: "Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking into account the legitimate interests of third parties." These provisions present a limited right to patent exemption under certain social conditions.
CL is also well accepted in international law. For instance, the Paris Convention for the Protection of Industrial Property [3] says, "Each country of the Union shall have the right to take legislative measures providing for the grant of CLs to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent..."
A large part of this was settled in the Doha Declaration on the TRIPS Agreement and Public Health [4]. Paragraph 4 stipulates that TRIPS does not and should not prevent members from taking measures to protect public health. It underscores the ability of countries to use the flexibilities that are built into TRIPS.
On one remaining question, Conference of Ministers assigned further work to sort out how to provide extra flexibility, so that countries unable to produce pharmaceuticals domestically can import patented drugs made under CL. A waiver providing this flexibility was agreed to on 30 August 2003 [5]. It envisioned a process of back-to-back CLs that would enable any country which has urgent need of medicines to seek assistance from other countries able and willing to produce the drugs for export purposes at lower prices than those charged by local patentees, without interference from the patentee in either country.

National regulation

CL in Ukraine can be introduced in accordance with Article 30 of the On Protection of Rights to Inventions and Utility Models Act. The procedures concerning the filing and examination of petitions were described in the Cabinet of Ministers Resolution No.8 of 14 January 2004. Similar provisions were contained in the On Protection of Rights to Integrated Circuits Design Act of Ukraine [6].
Notwithstanding the fact that Ukrainian legislation on CL does not have a long history, CL can be effectively applied in view of self-executing power to the WTO agreements in the national legal system. The matter of direct effect is disciplined by Article 9 of the Constitution of Ukraine, which contemplates that effective international agreements, the binding nature of which was approved by the Verkhovna Rada (Parliament) of Ukraine, are a part of national legislation, and pursuant to Article 19 of the On International Agreements of Ukraine Act of Ukraine are deemed as an integral part of national legislation. The issue of direct effect became particularly relevant in the case of TRIPS in Ukraine because it further opened the possibility of using its prerogative directly.

Possible impediments in application of CL
In 2008 the United Nations Development Programme and the WHO held a workshop on developing a public health perspective in examination of pharmaceutical patents. The workshop report stressed that the number of patents granted after simple changes in existing pharmaceuticals increased. As a result affordable medicines become less available, which constitutes an important obstacle for implementing the right to health [7].
The UNDP and WHO also reiterate the warning issued by innovation experts against overbroad patent protection. The. experts point out that such overpro-tection is more likely to inhibit rather than catalyze innovation in development of new and more efficient pharmaceuticals [8].
For one thing, TRIPS requires members to protect undisclosed information of a commercial value, as well as undisclosed test data.
The exclusivity period is often combined with another TRIPS-plus measure, the linkage between patents of pharmaceuticals and the marketing approval of these products by national health authorities. This prevents national health authorities from granting marketing approval to third parties that may require those authorities to enforce patent rights (which are of a private nature), even when the validity of the invoked patents is doubtful. There is no such linkage in developed countries. In Western Europe there is complete independence between intellectual property protection and registration of pharmaceuticals [9].
In the same vein, Ukraine currently protects pharmaceutical test data against unfair competition in accordance with Articles 505, 507, and 508 of the Civil Code and the On Protection against Unfair Competition Act of Ukraine. The laws do not specifically refer to pharmaceutical test data protection in the terms envisaged under Article 39.3 of TRIPS. However, on its accession to the WTO Ukraine undertook extensive commitments regarding pharmaceutical test data protection [10].
In particular, Ukraine also committed itself to ensuring that the relevant state authorities notify an entity that has registration or is submitting undisclosed test data to obtain registration of a medicine in Ukraine if another application was filed seeking registration of a medicine with the same or similar active ingredient.
The upshot is that the implementation of these commitments in Ukraine will essentially mean that registration of generic medicines will face significant delays, if not being completely blocked, during the patent term and the costs of any eventual generics will be significantly higher than would otherwise be the case [11],
The other possible problem may arise with understanding the term "adequate remuneration" of the patent holder, as prescribed by Article 31 of TRIPS. The term is not defined either by the WTO agreements or national legislation. The burden of determining whether the remuneration is adequate lies on the authorities of the country concerned and should be meticulously scrutinized in national acts.

It should be noted that Ukraine has sufficient capacities to produce antiretroviral drugs as well as any other types of medicines needed to combat epidemics. It's also important that the Doha Declaration confirms that countries are free to determine the grounds for granting CLs, which means that normally governments are independent in exercising this right. The review of laws and analysis in this paper suggests that in order for Ukraine to strike the right balance between creating incentives for innovation through patents on the one hand and spreading the benefits of innovation as widely as possible though the use of TRIPS flexibilities on the other hand, it should focus on:
— Introducing clear language to permit the use of these flexibilities.
— Crafting national laws, policies and regulations in a manner that ensures wide access to essential medicines.
— Despite the absence of a long history of regulation of CL, Ukraine can apply it under the TRIPS, whose provisions are deemed as self executing.
The authors of this research hope, nonetheless, to have set out a path towards the comprehension of the issues under analysis and to have stimulated the debate.

1 UNAIDS Report on the global AIDS epidemic, August 2008 available at http://data.unaids. org/pub/GlobalReport/2008/JC1511_GR08_ ExecutiveSummary_en.pdf
2 Agreement on Trade-Related Aspects of Intellectual Property Rights [Hereinafter cited as TRIPS], Annex 1C to Marrakesh Agreement Establishing the World Trade Organi2ation opened for signature 15 April 1994,1867 UNTS
3 Paris Convention for the Protection of Industrial Property, 20 March 1883, as revised at Stockholm (1967), 21 UST 1583,828 UNTS 305.
4 WT/MIN(01)/DEC/2,14 November 2001.
5 WT/17540, 30 August 2003.
5 WT/ACC/UKR/152. 25 January 2008 Paragraph 424.
7 UNDP WHO Workshop on the Examination of Pharmaceutical Patents: Developing a Public Health Perspective Cape Town 30 — 31 October 2008: Meeting Report', available at http://content.undp.org/go/cms-service/ download/asset/?asset_id=1852065
8 Ibid.
9 Boyan Konstantinov. Acceding to the World Trade Organization: Intellectual Property Issues and Public Health Concerns, available at http://europeandcis.undp.org/uploads/publicl/ nles/Accession%20andIPEnglish_Boyan.doc
10 WT/ACC/UKR/152, 25 January 2008 Paragraph 431.
11 Sisule F. Musungu. The Potential Impact of WTO Accession FTAs and Partnership Agreements on Access to Medicines in the Commonwealth of Independent States — available at http://europeandcis.undp.org/uploacls/publicl/nles/Study_Sisule_English_October.doc

Iryna S. Polovets, is an attorney assistant at Volkov Koziakov & Partners
Tatiana O. Kheruvimova, is an attorney assistant at Volkov Koziakov & Partners

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