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Blame it on the WTO?A Human Rights Critique$

Sarah Joseph

Print publication date: 2011

Print ISBN-13: 9780199565894

Published to Oxford Scholarship Online: September 2011

DOI: 10.1093/acprof:oso/9780199565894.001.0001

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TRIPS and the Right to Health

TRIPS and the Right to Health

(p.214) 7 TRIPS and the Right to Health
Blame it on the WTO?

Sarah Joseph

Oxford University Press

Abstract and Keywords

This chapter examines the impact of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) on the right to health, particularly the debate regarding the impact of global patent rules on the prices of essential medicines. It also addresses the arguments for and against patent regimes in the drug field. The TRIPS agreement has probably given rise to the most vociferous human rights criticisms of the WTO, especially with regard to its impact on the right to food and the right to health. It is possible that TRIPS in fact allows sufficient flexibility to permit States to comply with their obligations regarding the right to health, but it makes that task more difficult, particularly for poorer States. Furthermore, the traditional justifications for global patent protection are challengeable. The development rationale for global IP protection is highly suspect, especially given that Northern States did not respect such rights during their own paths to development. Specific concerns beyond high prices arise with regard to the pharmaceutical industry, such as an innovation deficit and queries about the real cost to the private sector of pharmaceutical R&D. Despite challenges to the desirability of global patent protection under TRIPS, explicit recognition of important TRIPS flexibilities in the Doha Declaration and the 2003 waiver, the trend in current regional and bilateral trade negotiations is, unfortunately, to drive up standards of IP protection. A rollback of TRIPS for many developing States (not only LDCs) would be a preferable policy trajectory.

Keywords:   World Trade Organization, human rights, TRIPS, right to health, patent rules, global patent protection

In Chapter 6, the problematic effects of TRIPS in the area of agriculture and the right to food were discussed. Another debate has arisen with regard to the effect of TRIPS on the right to health, in particular its effect on access to life-saving medicines. This issue is the subject matter of this chapter, along with a more extensive discussion of TRIPS.

A. Intellectual Property Protection: A Human Right?

TRIPS provides for the compulsory protection of intellectual property (IP) rights by Member States of the WTO. It effectively supplanted earlier global IP regimes, which recognized far greater flexibility for States in applying IP regimes to suit their socio-economic needs. For example, under the Paris Convention for the Protection of Industrial Property, States were permitted to exclude entire sectors from patentability and to individually determine the length of IP protection.1

IP rights reward the creators of new products. IP rights generally comprise the protection of rights of copyright (for authors of creative works), patents (for inventors of industrial goods), trademarks (recognizable brands which convey information to consumers about the origins and quality of goods) and trade secrets. IP regimes typically involve the conferral of monopoly rights on the owners of the relevant IP rights. For example, Part II of TRIPS requires States to confer patent rights, that is exclusive rights of exploitation, for 20 years in respect of ‘new’ inventions involving an ‘inventive step’ and which ‘are capable of industrial application’. IP regimes are said to be justified because they encourage research, creative endeavour and innovation. For example, patent-holders enjoy commercial benefits from their inventions before being exposed to competition. A natural outcome from such monopoly rights is that prices for IP-protected products are inflated. This circumstance creates problems in terms of human rights if the product is essential for the enjoyment of human rights yet it becomes inaccessible to poor people. A paradigmatic example of (p.215) such a problem concerns the impact of compulsory global patents on the price of life-saving medicines.

Before investigating the specific issue of the impact of TRIPS on access to drugs, one must examine whether IP rights are themselves human rights. Article 15(1)(c) of the ICESCR recognizes the right of everyone ‘to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author’. The bare words of Article 15(1)(c) seem to indicate that IP rights might be human rights.

Article 15(1)(c) was the subject of General Comment 17 of the Committee on Economic, Social and Cultural Rights. The Committee distinguished Article 15(1)(c) rights from IP rights by noting that the latter were ‘of a temporary nature’ and could be ‘revoked, licenced or assigned to someone else’, whereas human rights were ‘timeless expressions of the fundamental entitlements of the human person’.2 The right in Article 15(1)(c) protects ‘the personal link between authors and their creations and between peoples, communities, or other groupsand their collective cultural heritage, as well as their material interests which are necessary to enable authors to enjoy an adequate standard of living’. In contrast, IP rights ‘primarily protect business and corporate interests and investments’.3 In that respect, the Committee added that Article 15(1)(c) rights vest only in human beings, rather than corporations.4

Having distinguished IP rights from those in Article 15(1)(c), the Committee nevertheless outlined a number of characteristics of Article 15(1)(c) rights which resemble those commonly found under IP regimes. For example, a key justification for IP regimes is that they encourage innovation, research and development. Similarly, Article 15(1)(c) encourages ‘the active contribution of creators to the arts and sciences and to the progress of society as a whole’.5 Furthermore, protection of the material interests of authors must be ‘effective’,6 and there is a core obligation to ‘respect and protect the basic material interests of authors resulting from their scientific, literary or artistic productions, which are necessary to enable those authors to enjoy an adequate standard of living’.7 The General Comment does not spell out the specific modalities of such effective protection,8 but does suggest that the material interests of authors might be protected by vesting authors with exclusive rights to exploit their work for a period of time.9

However, recognition of such similar characteristics does not mean that the material interests of authors are protected to the same extent as is found in TRIPS.10 Indeed, divergence from TRIPS is inevitable given the non-recognition of corporate rights and the greater recognition of qualifications to (p.216) Article 15(1)(c) due to the need to balance countervailing human rights.11 In particular:

The right of authors to benefit from the protection of the moral and material interests resulting from their scientific, literary and artistic productions cannot be isolated from the other rights recognized in the Covenant. States parties are therefore obliged to strike an adequate balance between their obligations under article 15, paragraph 1 (c), on one hand, and under the other provisions of the Covenant, on the other hand, with a view to promoting and protecting the full range of rights guaranteed in the Covenant. In striking this balance, the private interests of authors should not be unduly favoured and the public interest in enjoying broad access to their productions should be given due consideration. States parties should therefore ensure that their legal or other regimes for the protection of the moral and material interests resulting from one’s scientific, literary or artistic productions constitute no impediment to their ability to comply with their core obligations in relation to the rights to food [article 11], health [article 12] and education [articles 13 and 14], as well as to take part in cultural life [article 15(1)(a)] and to enjoy the benefits of scientific progress and its applications [article 15(1)(b)], or any other right enshrined in the Covenant. Ultimately, intellectual property is a social product and has a social function. States parties thus have a duty to prevent unreasonably high costs for access to essential medicines, plant seeds or other means of food production, or for schoolbooks and learning materials, from undermining the rights of large segments of the population to health, food and education.12

As noted below, exceptions to TRIPS are allowed, though it is uncertain whether the exceptions are flexible enough to cater for the competing human rights of others. It is arguable that they disproportionately favour the commercial interests of IP holders over countervailing public interests, including the human rights of others. Certainly, countervailing rights are only ‘protected’ as exceptions to the TRIPS regime. They are only relevant as a shield in defending against a failure to fully implement TRIPS, rather than as a sword to challenge the implementation of TRIPS. Therefore, the TRIPS regime undoubtedly elevates IP rights over other potentially conflicting rights.

The Committee also anticipates alternatives to IP-like regimes, such as ‘one off payments’ to creators.13 In line with the notion that the right is largely progressive (as with most ICESCR rights), States have some margin of discretion in choosing the protection regime that best suits its needs and circumstances: the Committee also recognizes that relevant national regimes will ‘vary significantly’.14 This is quite different to the ‘one size fits all’ regime in TRIPS.15

The General Comment has distinguished IP rights from those in Article 15(1)(c). It is clear that TRIPS does not protect recognized human rights, especially (p.217) given that the vast majority of the rights protected under that treaty belong to corporations.

B. The Right to Health

The most vocal criticisms of TRIPS have concerned its impact on the right to health, particularly the impact of patent rights on the price of medicines. Prices will be artificially inflated for the prescribed 20-year period as patent-holders seek to maximize returns on their investment. For example, the costs of patented drugs which combat the HIV virus are enormous. A month’s worth of Atripla, an anti-HIV drug, costs US$1,300 a month.16 Such prices are only affordable in industrialized countries due to government benefits, which are not available in the developing world. Clearly, it is impossible for most people in the developing world, where most HIV cases arise, to pay such prices. The result is a health divide: HIV remains a death sentence for most sufferers in the developing world whereas it can be managed for many years by sufferers in the developed world who have access to alleviating medication.17 Similar problems, which have received far less attention than issues regarding access to AIDS drugs, arise with regard to access to drugs and vaccines for other treatable killer diseases. For example, most women in the developing world cannot afford the new vaccine for cervical cancer, which is widely available to women in the North.18 Numerous factors impact detrimentally on access to medicines, such as irrational use of existing supplies,19 but high prices brought about by patents are a key factor.20

Article 12 of the ICESCR recognizes the right of everyone to the enjoyment of the highest attainable standard of physical and mental health. Given the subject matter of this chapter, the right will not be analysed in toto: only the aspects of the right which may be affected by the implementation of TRIPS are highlighted.

Steps to be taken by States in respect of implementing Article 12 explicitly include the ‘prevention, treatment and control of epidemic, endemic, occupational and other diseases’ (Article 12(2)(c)) and the ‘creation of conditions which would assure to all medical service and medical attention in the event of sickness’ (Article 12(2)(d)). (p.218)

The Committee’s General Comment 14 fleshed out the requirements of Article 12. The right is not a right to be healthy: clearly a variety of factors, such as lifestyle and genetic predispositions, impact on whether a person is in good health or not. Instead, the ‘right to health must be understood as a right to the enjoyment of a variety of facilities, goods, services and conditions necessary for the realization of the highest attainable standard of health’.21 Health facilities, programmes, and resources (goods and services) must be available, accessible, acceptable and of good quality.22 An element of accessibility is affordability.23

The right includes access to ‘essential drugs’, as defined by the World Health Organisation (WHO),24 of suitable quality25 on a non-discriminatory basis.26 In fact, the right of access to such drugs is described as a core obligation, a presumptively immediate rather than progressive obligation.27

General Comment 14 links the identification of essential drugs to the WHO’s list of essential medicines, which has been updated from time to time since its initial adoption in 1977. Only about 5 per cent of drugs on the current list are protected by patent.28 How can this be, when numerous patented medicines are the only treatments available, or are the most effective treatments, for certain deadly diseases? One important criterion for inclusion on the WHO list is cost effectiveness. Given that many States cannot afford patented medicines, they are not ‘cost effective’ so they are excluded from the list.29 The exclusion of patented medicines is caused by their high prices rather than any lack of comparable (or superior) effectiveness compared to the cheaper medicines on the list.

General Comment 14 was adopted in 2000. A report by the Special Rapporteur on the Right to Health, Paul Hunt, in 2006 revisited the issue of the ‘human right to medicines’.30 The WHO list was retained as a starting point for identifying the core obligation of a State in respect of providing essential medicines.31 However, States also have progressive obligations with regard to the provision of all effective drugs, whether on the list or not.32 As with all progressive obligations, States should not take retrogressive steps33 with regard to the availability of such drugs, which may preclude the introduction of a patent regime which causes prices to skyrocket.

Another core obligation identified in General Comment 14 is to ‘take measures to prevent, treat and control epidemic and endemic diseases’.34 This obligation is (p.219) separate to the obligation regarding the provision of essential medicines. Of course, one way of combating epidemics and endemic diseases is to facilitate access to the drugs which counter those illnesses, whether they are on the WHO list or not.

Furthermore, the Committee has included the following as examples of State practices that violate Article 12:

the adoption of laws or policies that interfere with the enjoyment of any of the components of the right to health; and the failure of the State to take into account its legal obligations regarding the right to health when entering into bilateral or multilateral agreements with other States, international organizations and other entities, such as multinational corporations.35

Clearly, the Committee believes that a State’s acceptance of TRIPS or other WTO obligations breaches its ICESCR obligations if fulfilment of the former obligations jeopardize enjoyment of the right to health.

In an earlier statement about the relationship between IP and other ICESCR rights in 2001, the Committee was more blunt:

any intellectual property regime that makes it more difficult for a State to comply with its core obligations in relation to health, food, education, especially, or any other right set out in the Covenant, is inconsistent with the legally binding obligations of the State party.36

As noted in Hunt’s 2006 report, States are at the least expected to take advantage of TRIPS flexibilities (discussed below) to make life-saving medicines available to their populations.37

Of relevance to States’ obligations as members of the WTO is the following statement from General Comment 14:

Depending on the availability of resources, States should facilitate access to essential health facilities, goods and services in other countries, wherever possible and provide the necessary aid when required. States parties should ensure that the right to health is given due attention in international agreements and, to that end, should consider the development of further legal instruments. In relation to the conclusion of other international agreements, States parties should take steps to ensure that these instruments do not adversely impact upon the right to health. Similarly, States parties have an obligation to ensure that their actions as members of international organizations take due account of the right to health.38

The Committee in General Comment 14 thus endorses the notion of extraterritorial obligations, which is discussed in Chapter 8.

The recognition of a right of access to medicine was endorsed by consensus in the UN Human Rights Council in 2009.39 The 53 Council members, most of whom (p.220) are WTO Member States, recognized that access to medicines was a fundamental element of the right to health, and called upon States to ensure that ‘the application of international agreements’ was ‘supportive of public health policies that promote broad access to safe, effective and affordable medicines’.40 While the Council recognized the importance of IP protection, it also expressed ‘concerns about its effect on prices’.41 Finally, it called on all States to enforce IP rights in a manner which did not restrict the ‘legitimate trade in medicines’ and which provided ‘safeguards against the abuse’ of such rights.42

It is also worth mentioning the right to life in Article 6 of the ICCPR. The HRC stated in an early General Comment that States should take ‘all possible measures to reduce infant mortality and to increase life expectancy, especially in adopting measures to eliminate malnutrition and epidemics’.43 The General Comment indicates measures that hamper access to life-saving drugs are probably in breach of Article 6.

C. Arguments in Favour of Patents

IP protection restricts trade and competition, so IP clauses are somewhat anomalous in trade agreements, which are normally designed to decrease trade barriers. What is the justification for IP protection?44 Due to their relevance to this chapter, I will concentrate on arguments in favour of patents.45 Patents reward people for their inventions, thus encouraging creativity and innovation. Patents operate on the assumption that people are not inherently altruistic, and expect rewards for their endeavours, especially when those endeavours are risky as they may, and often do, result in costly failure.46 Furthermore, the money raised from patent protection is said to be necessary to fund the considerable costs of research and development (R&D).47 Therefore, without patents, innovation in the pharmaceutical field (or any industrial field) might grind to a standstill. While it is true that the high prices generated by patent protection may render access to drugs selective, (p.221) it is nevertheless better that a drug is available to some rather than non-existent and available to no one.

The global extension of patent law mandated by TRIPS helps to ensure that patents are not undermined by the sale of competing pirated copies. Furthermore, global IP regimes should theoretically encourage greater technology transfer between countries, greater foreign direct investment, and greater local innovation within compliant states.48 All of these outcomes should accelerate the economic development of poor countries, with positive knock-on effects for human rights.

Thus, perhaps it is arguable that pharmaceutical patents are justifiable under international human rights law, as they promote R&D which is essential for the future enhancement of rights to life and health. Furthermore, to the extent that they are held by natural persons, they are one way of protecting that person’s rights under Article 15(1)(c) of the ICESCR.

The issue of justifications for patents is revisited below. Before doing so, it is necessary to outline the effect of the TRIPS regime on pharmaceutical patents.

D. TRIPS Requirements for Pharmaceutical Patents

Article 33 of TRIPS requires Member States of the WTO to provide protection for patent rights for 20 years. Developing States were given a period of time to comply, but these timelines have now run out for all but LDCs. Does TRIPS provide for any exceptions, which permit States to make medicines available at a cheaper price than that prescribed by the patent-holder? If it does not, TRIPS may well prescribe a collision course with Article 12 of the ICESCR, and even the right to life in Article 6 of the ICCPR.

Article 27(2) of TRIPS allows States to prohibit the patentability of products, ‘the prevention within their territory of the commercial exploitation of which is necessary to protect … human, animal or plant life or health’. Some have argued that this provision permits States to deny patentability to medical products.49 However, Dr Adam McBeth’s rejection of that argument is persuasive: he argues that the provision is more likely to be aimed at the rejection of patents for harmful products such as inhumane weapons and dangerous narcotics.50 It seems unlikely that a prohibition of any commercial exploitation of medicines could be deemed necessary to protect health.

Article 30 contains another exception to TRIPS obligations regarding patents:

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 account of the legitimate interests of third parties.

(p.222) The rights of impoverished sick people should be recognized as legitimate third party interests for the purposes of Article 30. However, the setting aside of a patent in order to facilitate their access to drugs might be deemed by WTO panels or its Appellate Body to unreasonably conflict with the rights of the patent owner. Article 30 has rarely been interpreted, so its scope remains unclear. In Canada—Patent Protection of Pharmaceutical Products,51 a WTO panel found that Canadian laws, known as ‘Bolar provisions’, which permitted the testing of generic drugs prior to the expiry of a patent in order to ensure that they could be marketed as soon as the patent expired, were valid. The stockpiling of generic drugs by generic manufacturers in anticipation of the expiry of a patent was not, however, permitted under Article 30. Testing and stockpiling are incidental measures which are not comparable to a measure which might significantly reduce the price of patented drugs for poor people. It seems unlikely that the wholesale rejection of patent rights for life-saving drugs is envisaged under Article 30. On the other hand, it has been suggested that the shortening of a patent period for a life-saving product might be permitted under Article 30.52 Furthermore, Frederick M Abbott and Jerome H Reichmann have suggested that the Canadian—Patent Protection of Pharmaceutical Products case may not be followed by a future WTO panel, given the developments (discussed below) regarding the application of TRIPS to pharmaceutical products which arose after that case, such as the adoption of the Declaration on the TRIPS Agreement and Public Health in 2001.53

Under Article 6, TRIPS explicitly has no impact on the ‘exhaustion’ of IP rights. Exhaustion rules regulate the control a patent-holder has over patented goods after their original sale.54 Once IP rights have been exhausted, the patent-holder has no control over subsequent sales. This means that TRIPS has no impact on parallel importation, which involves the importation of patented goods by one State from another State if the product was marketed in the latter State by the patent-holder.55 Parallel importation can bring down the price of a product if the product is marketed in another country at a cheaper price.56

Article 31 permits States to issue compulsory licences in respect of the generic manufacture of patented goods for a particular purpose without the consent of the patent-holder. Such purposes might include a State’s need to address a refusal by the patent-holder to licence sale of the product or a need to combat anti-competitive practices.57 Compulsory licences may also be issued to ensure that a patented drug is made available at affordable prices in the case of a health emergency. The licence may prescribe that the government itself manufactures the product, or that a third party, such as a generic drugs manufacturer, is authorized to make and sell the (p.223) product.58 A State may only issue a compulsory licence when it has considered the individual merits of issuing such a licence (paragraph (a)). Under paragraph (b), the issuing of a compulsory licence must be preceded by genuine negotiations with the patent-holder to seek a voluntary licence on reasonable commercial terms. This condition is waived in times of ‘national emergency or other circumstances of extreme urgency’ or in the case of government manufacture and use. The patent-holder must nevertheless be notified as soon as possible in such circumstances. The scope and duration of a compulsory licence is limited to the purpose for which it is issued (paragraph (c)). Under paragraph (h), the patent-holder must receive ‘adequate remuneration in the circumstances … taking into account the economic value of the authorization’. Finally, the decision to issue a compulsory licence, as well as the determination of the amount of remuneration, must be subject to judicial or other independent review (paragraphs (i) and (j)). It is uncertain how the ‘adequacy’ of remuneration should be calculated. The reference to ‘economic value’ seems logically concerned with the economic value to the licencee: the purpose of compulsory licensing would be defeated if adequate remuneration is based on the economic value of the patent to the patentee.59

Disputes over the extent of a WTO Member’s compulsory licensing rights arose in the late 1990s and into the new century. A 1999 presidential decree in Brazil confirmed that compulsory licensing was a valid strategy for countering the high prices of anti-AIDS drugs under Brazilian law. At that time, Brazil did not actually issue any compulsory licences but the ever-present threat of doing so enabled it to negotiate deep price cuts with drug manufacturers60 and consequently provide anti-retroviral treatment to all who needed it.61 The greater availability of such drugs halved the number of deaths from HIV,62 and also reduced the rate of infection due to the lower viral load in infected persons.63 The costs of the programme were offset by savings in hospitalization rates, as well as incalculable savings to Brazil’s society and economy.64 Nevertheless, the US initiated a complaint against Brazil in the WTO, claiming that Brazil had breached TRIPS. This action was fairly typical of US policy at the time: it had threatened unilateral action against (p.224) many States for seeking to use policies even though those policies were possibly compliant with TRIPS.65

In March 2001, a group of 39 pharmaceutical companies challenged the constitutionality of South African legislation, which was designed to facilitate access to cheaper drugs, in the High Court in Pretoria in March 2001, claiming that it breached their rights to property, namely their IP. The companies feared that the legislation expanded the government’s powers to issue compulsory licences and import generic versions of patented goods. The companies urged the Court to interpret the legislation in light of TRIPS.66 Notably, they did not urge the Court to interpret the legislation in light of any human rights treaties. No decision was ever made. The companies dropped the suit in April 2001 after a wave of global outrage. The spectre of 39 companies, whose combined profits outweighed the GDP of South Africa, moving to stop the provision of cheap drugs to a population with an appalling rate of HIV/AIDS did immeasurable damage to the companies’ reputations.67

In 2001, developing States conducted a campaign within the WTO to clarify the scope of the compulsory licensing provisions.68 Backtracking by opponents of compulsory licensing on this issue became evident. As noted, the South African pharmaceutical case collapsed. Furthermore, the US effectively backed away from its case against Brazil in 2001.69 Indeed, the US’s position was completely undermined by its own actions in October 2001. A few weeks after the September 11 terrorist attacks, a number of anthrax cases appeared in the US. In late October, the German company Bayer was forced to sell its anti-anthrax drug Cipro to both the US and Canada at a heavily discounted price after both States had threatened to issue compulsory licences. Such actions were astonishingly hypocritical: the US had suffered three deaths and Canada none, which hardly compared to the various medical emergencies, especially the alarming rates of HIV, being experienced in developing States.70

The battle over TRIPS and pharmaceuticals in the WTO culminated with the adoption of the Declaration on the TRIPS Agreement and Public Health71 in December 2001. This Declaration asserted that TRIPS did ‘not and should (p.225) not prevent members from taking measures to protect public health’. Therefore, TRIPS ‘can and should be interpreted and implemented in a manner supportive of WTO members’ right to public health and, in particular, promote access to medicines for all’. In particular, the right of States to issue compulsory licences was reaffirmed, and ‘public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics’ were recognized as national emergencies for the purposes of issuing a TRIPS compliant compulsory licence. Finally, LDCs were given until 2016 before they are required to respect pharmaceutical patents.

The Doha Declaration clarified that the compulsory licensing provisions of TRIPS may be used to facilitate access to medicines to combat public health emergencies.

By the end of 2007, 52 developing States had issued post-Doha Declaration compulsory licences, indicating that the Declaration has had the desired effect of prompting needy States to make use of the Article 31 exception.72 Most of these States are LDCs that do not have to provide patents for pharmaceuticals until 2016.73 Use of compulsory licences has also been encouraged by some international donors, such as the Global Fund to Fight AIDS, TB and Malaria, the World Bank, and UNITAID.74 The huge majority of these post-Doha compulsory licences relate to AIDS drugs, with only Thailand and Taiwan issuing compulsory licenses for drugs for other conditions.75

Another breakthrough arose within the WTO in 2003. One general restriction in TRIPS on compulsory licences is that the licence, under Article 31(f), must be issued ‘predominantly for the supply of the domestic market’. This provision was problematic, as many developing States lack the capacity to manufacture generic pharmaceutical products, and therefore must import generics from countries which have such a capacity. Certainly, States may export compulsory licensed products so long as such exports are ‘less than a predominant part of production’:76 India has legislated to routinely allow for export in such circumstances.77 Nevertheless, the ability of States to import compulsorily licensed products is limited under Article 31(f) because other States are prohibited from producing such generic goods primarily for export.78

In 2003, the WTO’s General Council waived the territorial restriction on compulsory licences for pharmaceutical products in certain circumstances.79 The waiver (p.226) remains in place, pending ratification of a formal TRIPS amendment (proposed Article 31bis) designed to enshrine the rules of the waiver.80 Under the waiver, the territorial restrictions on compulsory licences may be lifted to facilitate the export of generic drugs to LDCs, or other States that notify the TRIPS Council of a desire to import due to a lack of manufacturing capacity, for the purposes of combating public health emergencies as specified in the Declaration. There are extensive procedural prerequisites concerning notice by both exporter and importer to the WTO’s TRIPS Council regarding use of the waiver. Safeguards must be implemented to ensure that the compulsory licensed generics are not diverted to another market.

The waiver facilitates exports of generic drugs to LDCs and other vulnerable developing States to allow them to benefit from the compulsory licensing provisions. By March 2010, only Rwanda had notified the WTO of an intention to use the waiver as an importing State; Canada had agreed to export generic versions of the relevant anti-HIV drug. There are a number of possible explanations for this lack of use of the waiver.

First, some developing States with manufacturing capacity (as opposed to LDCs who generally lack such capacity) only had to fully comply with TRIPS with regard to pharmaceutical patents from 1 January 2005. Up until that time, such States could authorize generic production of patented goods, and supply such generics to other States: India in particular was a major supplier to the world of such generics. Therefore, the 2005 deadline delayed the need for some States to use the waiver provisions.81

Furthermore, the Doha Declaration and the waiver are likely to have prompted some pharmaceutical corporations, who feel threatened by compulsory licensing schemes, to make their products available to some developing States on a cheap or even cost-free basis. Indeed, numerous corporations have adopted such a strategy,82 though these efforts are generally confined to drugs for AIDS, malaria, and a few other drugs, rather than the wide range of treatable killer diseases.83

Finally, Howse and Teitel bemoan the excessive formalities, suggesting that the requirements are too costly for generic manufacturers.84 These formalities are discussed further below.

Does TRIPS permit States to comply with human rights duties regarding access to drugs?

In light of the flexibilities allowed under TRIPS, as well as the justification for patents in promoting future R&D, this section examines whether States are able (p.227) to simultaneously comply with TRIPS and their human rights duties regarding access to drugs.

In a 2009 report to the Human Rights Council, the Special Rapporteur on the Right to Health, Anand Grover, wrote extensively on TRIPS and the right of access to medicines. He did not explicitly find that TRIPS conflicted with the right. Instead he stressed that States had to take advantage of available TRIPS flexibilities if they are unable to independently facilitate access to patented goods. That is, States had to make full use of compulsory licensing, importation of generic goods under the 2003 waiver, parallel importation, the limited exceptions permitted under Article 30 TRIPS, and remaining transition periods.85 States should also properly exercise their discretion over the standards for patentability to allow for opposition and revocation procedures and to combat anti-competitive practices. His comments on these issues are analysed below.

On timelines, Grover noted that many LDCs have already implemented TRIPS despite the 2013 deadline for general TRIPS implementation and the 2016 deadline for implementation of pharmaceutical patents.86 This premature introduction of patent regimes deprived them of the ability to continue using generics, and also probably removed policy space that might have enabled the growth of local manufacturing capacity.87

Furthermore, while Article 27 of TRIPS provides that patents must be available for new inventions capable of industrial application, it does not specify particular criteria for patentability. Therefore, States are presumably able to apply strict criteria to prevent the ‘evergreening’ of patents. Evergreening ‘refers to the practice of obtaining new patents on a patented medicine by making minor changes to it’.88 Evergreening delays the introduction of generic competition. For example, Grover noted that India and the Philippines both refuse patents to ‘new forms of known substances unless they [were] significantly more efficacious and new (or second) uses and combinations of new substances’.89 India’s high standard is evident in its refusal to patent new versions of Novartis’s cancer drug Glivec, which was unsuccessfully challenged in local court proceedings by Novartis.90

Grover also noted that TRIPS did not prohibit States from adopting laws which allowed for the opposing and revocation of patents in appropriate circumstances. ‘Oppositions’ could help under-resourced patent offices make educated decisions over whether a product or process was truly patentable. India and Thailand both provide for oppositions, and civil society groups have been successful in both States in staving off patents for certain anti-HIV drugs. The right of ‘opposition’ should be extended to public interest groups and civil society organizations, rather than being limited to business competitors and government bodies.91 (p.228)

On compulsory licensing, the language of the Doha Declaration arguably restricts compulsory licensing in respect of health crises beyond epidemics. Does its wording recognize the right to issue compulsory licences to facilitate access to drugs for sufferers of cancer, diabetes, heart disease, or other lethal non-communicable diseases? The US, for example, has behaved as if it does not, by threatening trade sanctions against Thailand in 2007 for its proposal to issue compulsory licences for medication for heart disease and cancer.92 Canada, in enacting legislation to permit exports of compulsorily licensed drugs under the waiver, restricted such exports to AIDS drugs and off-patent medicines.93

However, it seems clear that the Doha Declaration is meant to list examples of relevant diseases, and is not an exhaustive list thereof: it does not limit its application to specific diseases.94 The Declaration therefore reflects the reality of the global disease burden: ‘the number one cause of death’ in developing States is in fact heart disease.95 In any case, the Doha Declaration did not change TRIPS law (beyond extending the deadline for compliance by LDCs with respect to pharmaceutical patents): it essentially clarified one aspect of TRIPS in order to stave off unwarranted pressure from pharmaceutical companies and developed States, particularly the US.96 There is no reason to assume that Article 31 itself does not permit licences for such diseases.97 However, many developing States may not wish to risk litigation or other consequences to find out.

Furthermore, Grover calls upon States to streamline their domestic legal provisions regarding compulsory licensing, which are often cumbersome.98 In particular, the ‘complex administrative procedures’ entailed in the 2003 waiver have been exacerbated by further requirements imposed by the domestic laws of potential exporting States.99

Indeed, red tape requirements are probably a key reason for the lacklustre response thus far to the 2003 waiver. The waiver stipulates that exporting and importing States must notify the TRIPS council of the types and quantities of drugs involved in use of its scheme. The notification requirements needlessly expose vulnerable States to possible political pressure by alerting the world of their intentions.100 Crucially, the requirements dictate that exporters can only export on a ‘drug-by-drug, case-by-case, country-by-country’ basis.101 An importing country may not be able to provide enough of a market to enable a generics exporter to develop the economies of scale needed to make its venture economically viable.102 In this respect, Abbott and Reichmann have suggested that groups of developing countries act jointly to seek imported generics, so as (p.229) to provide a viable market for offshore generic suppliers.103 Nevertheless, Ellen t Hoen, a former policy and advocacy director for Médecins sans Frontières and now a senior policy adviser with UNITAID, has concluded that the system is ‘highly unlikely [to] provide sufficient economic incentive to keep the generic medicines sector in business’.104

Grover recommends that States adopt laws which give them the greatest flexibility to use parallel importation as a mechanism to bring down prices. In particular, States should adopt the principle of ‘international exhaustion’, dictating that IP rights are exhausted once a product is marketed anywhere in the world, thus allowing for parallel importation. South Africa, Kenya, and Honduras are examples of States which have adopted the principle of international exhaustion. In contrast, a principle of ‘national exhaustion’, which is adopted for example by Brazil and Morocco, only exhausts IP rights for the purposes of further sale inside a country, and does not permit importation of a product without the patent-holder’s consent.105

Article 40 of TRIPS recognizes that IP rights-holders can abuse their position and unduly restrict competition by, for example, imposing unreasonable conditions of licence for use. Grover cites with approval the practice of the South African Competition Commission, which has held that the failure by a pharmaceutical company to grant a licence to a generics manufacturer was an abuse of its dominant position. Such measures could be repeated across the world to ease anti-competitive practices in the pharmaceutical industry.106

Finally, technical incapacities hamper the ability of some States, particularly LDCs, to utilize TRIPS flexibilities.107 In this respect, they may receive technical assistance under Article 67 of TRIPS. Unfortunately, such technical assistance has often prompted developing States and LDCs to implement TRIPS before they were required to, and indeed to adopt IP laws that extend protection beyond that required under TRIPS.108

The implication from Grover’s report is that TRIPS obligations do not conflict with the right of access to medicines, though he does conclude that TRIPS has ‘had an adverse impact on prices and availability of medicines’.109 It is up to States to utilize all available flexibilities, as needed, in order to ensure access to medicines domestically. The common failure to do so amounts to a violation of the right to health by the States concerned.

Similarly, the placement of pressure on weaker States by stronger States to forego such flexibilities constitutes an extraterritorial breach of human rights obligations by the latter States.110 Despite the 2001 Doha Declaration and the 2003 waiver, such pressure continues. Thailand has been pressured by both the US and the (p.230) European Commission for its issuance of compulsory licences in 2006–2007.111 Thailand has however made clear that it will ‘bring a claim for WTO dispute settlement if trade sanctions are wrongfully imposed’ against it in respect of those licenses, which are almost definitely TRIPS compliant.112 Thailand’s calling of the bluff of the North is an excellent development from a human rights point of view.

Pressure also comes from pharmaceutical companies: an example is Novartis’s court challenge to India’s failure to patent new versions of Glivec. After Novartis lost its case in the Madras High Court, it announced that it would ‘redirect its research and development programs away from India to more receptive environments’.113 While India seems robust enough to resist pressure from Novartis, the same is not necessarily true of more vulnerable developing States.

Therefore, despite the Doha Declaration and the waiver, pressure has been applied by the North and pharmaceutical companies, somewhat unsuccessfully, to attempt to dissuade States with emerging economies, such as Thailand, from making use of compulsory licensing. In contrast, such pressure has not been overtly applied to LDCs, such as the many from sub-Saharan Africa which have issued compulsory licences.114 LDC markets are possibly too small to mobilize a backlash from pro-IP States and lobbies. More importantly, LDCs lack the capacity to manufacture their own generics so they must import them. If pressure is successfully applied to prevent States such as Thailand, India, and Brazil from manufacturing generics, import-dependent LDCs will lack suppliers outside the rubric of the scheme outlined in the waiver. As discussed above, that scheme is highly problematic.115

McBeth has also suggested that TRIPS does not directly conflict with the right to health. Rather:

the greater impediment to the realisation of the right to health in the context of access to essential medicines is not the framework of international trade law, but the conduct of governments and pharmaceutical corporations under cover of the sympathetic or at least ambiguous intellectual property provisions of the WTO system.116

At the least, however, TRIPS might be deemed to be an unfortunate development for the protection of human rights. Even the World Bank has deemed it ‘inequitable’ with regard to its impact on the developing world.117

E. A Reconsideration of the Justification for Intellectual Property

The diluting of IP rights via the extensive use of flexibilities, as advocated by Special Rapporteur Anand Grover, would presumably diminish the benefits of IP. For example, incentives for future R&D and technology transfer to developing (p.231) States might be jeopardized. Therefore, it is now necessary to revisit the justifications for IP.

First, one may note that Grover’s recommendations are essentially aimed at developing States. While patented goods are expensive in developed States, those States generally have the capacity to provide many patented medicines to those who need them. Therefore, the real question is whether the adoption of flexibilities by developing States will have consequences for future innovation.

In response, one may note that the pharmaceutical industry reaped huge profits and engaged in significant levels of R&D long before TRIPS mandated the global extension of its patents. Furthermore, the developing world component of the patented pharmaceutical market is so small that it would make little difference to pharmaceutical profits, and therefore its well of R&D resources. For example, Africa constituted only 1.3 per cent of the pharmaceutical market at the turn of the century, prior to any possible impact of the Doha Declaration.118 In 2006, the World Bank cited a study indicating that the extension of patent protection for drugs in the developing world by 20 years would equate, for the purposes of calculating profits, to a two-week extension for patents in the North.119 Therefore, compulsory licensing or deep discounts per se in the developing world do not threaten pharmaceutical R&D.120 Indeed, pharmaceutical companies could potentially benefit by basing their businesses on a ‘high volume-low margin’ basis in developing States, as opposed to virtually no profits due to a lack of sales.121

However, there is the danger of low price drugs in the developing world being re-imported back into Northern markets, which would undercut profits, and therefore pose a danger to existing levels of R&D. In response, one may note that parallel importation must have been a similar threat prior to TRIPS, yet the pharmaceutical industry managed to consistently reap exceptional profits. Secondly, Northern States are free under TRIPS and should be encouraged to pass laws that prevent parallel importation, if such measures are needed to preserve the feasibility of low prices in the developing world.122

Of course, Northern consumers might object to paying more than the developing world for the same pharmaceutical products. However, the level of need in the developing world regarding access to essential drugs is so comparatively great as to justify differential pricing or patent systems and the effective subsidization of third world drug prices by Northern governments.123 In any case, as noted above, the third world market for pharmaceutical products is presently too small to greatly impact on the industry’s pricing policies in the developed world. Insistence on the payment of full price simply shrinks that market even more.124 More radical (p.232) solutions will be needed to reduce the huge outlays paid by Northern consumers, usually via their governments or insurers, to pharmaceutical companies.125

As noted above, there is an economic argument that developing States ultimately benefit from IP laws through increased domestic innovation and technology transfer. However, the evidence of technological transfer in the pharmaceutical sector is ‘not compelling’.126 Abbott and Reichmann explain:

The major multinational pharmaceutical companies do not ‘out-license’ newer products for manufacture and distribution in developing country enterprises; research and development is concentrated in the home countries of major producers; and manufacturing facilities are shuttered and relocated as a matter of economic convenience.

The evidence suggests that the wealthy OECD nations are little inclined to promote the development of world-class pharmaceutical producers in poor countries, which might eventually compete with the existing originators.127

One may recall the argument from Chapter 5 that the now-developed States freely used many policies, such as infant industry protection, to facilitate their own development, which are now denied to developing States. A similar argument may be made regarding IP protection. Robert Wade notes that developed States did not face global IP laws during their development processes: Japan, Taiwan, and South Korea were all previously known as ‘counterfeit capitals’, while the US in the nineteenth century was a ‘bold pirate of intellectual property’.128 The economist Ha-Joon Chang states that ‘even the most advanced countries were still routinely violating the [IP rights] of other countries’ citizens well into the twentieth century’.129 Professor Daniel Gervais also notes that developed States ‘gradually increased their level of [IP] protection over several decades’,130 a far cry from the mere decade in which most developing States were given to jump from minimal protection to full TRIPS compliance. Finally, Chang has stated that economic development is essentially about ‘absorbing advanced foreign technologies’, so ‘[a]nything that makes it more difficult … is not good for economic development’.131 While TRIPS might encourage greater technology transfer, it still restricts the ability of underdeveloped States to borrow (or steal) more advanced technologies, a tactic blatantly used by the now developed States while they were developing.

Furthermore, Professor Drahos has noted that ‘the empirical evidence’ that patents encourage innovation and invention is not ‘clear cut’.132 Strong IP rights (p.233) may restrict the use of innovations and ideas, either legally or practically via the threat of expensive patent litigation.133 Indeed, certain previously successful industries have been stunted by the introduction of patents. The granting of drug patents in Italy, which began in 1978, has not reportedly generated any real increase in R&D expenditure and drug innovation by Italian drug companies. Rather, the most noticeable result has been a sharp drop in Italy’s drug export market, which had relied on generic copies.134 India made full use of its transition period under TRIPS (delaying implementation until 2005) and became ‘a global supplier of affordable generic medicines’.135 Indeed, India’s abolition of pharmaceutical patents in the 1970s catalysed its generic drug industry and transformed it from a drug importing country into a major generic exporter.136 The World Bank has cited a report indicating that the gain to the Indian economy was $450 million, with consumers benefiting from $400 million of that gain, and drug producers sharing the rest. The loss to foreign producers was only $53 million.137

Gervais has suggested that the development rationale for TRIPS, that is that it will prompt innovation in the developing world, was based more on belief rather than actual data: ‘TRIPS put the policy cart before the empirical horse’.138 Nevertheless, he finds that there is evidence of significant R&D underway in the developing world, particularly India and China. However, Northern companies might simply be using these countries as ‘new export markets and possibly lower-cost production centers, while maintaining the technological superiority in the West [or North], and hence, continued economic dominance’.139

Then again, it is questionable the extent to which such companies can prevent their technology from ultimately being exploited by these recipient countries for their own benefit. For example, India’s computer and software industry has evolved considerably from the basic coding and call centre functions initially transferred to the country at the beginning of the century.140 However, as noted above, India’s pharmaceutical industry flourished prior to implementation of TRIPS, largely because of its abandonment of product patents 30 years earlier. Of course, India’s pharmaceutical industry might now evolve to innovate and capture the massive profits available from new technologies and patents. Unfortunately, that strategy (p.234) would be bad news for its impoverished customers in the developing world who have long relied on the ‘pharmacy of the developing world’.141 While India’s drug companies might benefit from new business strategies catalysed by TRIPS, the poor probably will not.

Of course, most developing States lack the capacities of India and China. They have not yet reached a point where the increased costs generated by TRIPS and IP protection in general are outweighed by innovation benefits.142 Such ‘graduation’ is not inevitable given that most States lack certain unique characteristics of India and China, such as geopolitical importance and massive manpower.

At this point, it is worth noting briefly another human rights and development problem generated by IP laws. Copyright laws obstruct access to educational materials by raising their price. The trade-focused NGO 3D has, for example, documented the difficulties in primary education in the Philippines caused by copyrights in textbooks, jeopardizing that State’s compliance with human rights obligations regarding the right to education under the ICESCR and Article 28(1) of the Convention on the Rights of the Child.143 Robert Wade reports that research libraries paid 66 per cent more for scientific monographs in 2001 than they did in 1986, yet they received 9 per cent fewer monographs for that money. They paid out 210 per cent more for 5 per cent fewer journals. He concludes that those ‘price escalations widen the North-South gap in access to scientific knowledge’.144 One can imagine the price escalations have become worse since many States implemented TRIPS after 2001. I will not embark upon a thorough examination of the potential clash between the right to education and TRIPS.145 Suffice to note that any obstacles to basic education are completely counterproductive to a State’s aspirations for economic, institutional and social development.

LDCs are a long way from achieving any benefits from IP. In 2005, the WTO Council on TRIPS extended the transition period for full compliance with TRIPS for LDCs to 2013.146 However, that extension forbids the roll-back of laws to make them less TRIPS compliant, which renders the extension largely useless for many LDCs. Furthermore, it seems doubtful that that extension of time will be enough to permit LDCs to attain a position where IP laws are at all beneficial to them: further extensions will almost inevitably be needed. Nothing in these decisions affects the right of LDCs to delay TRIPS implementation with regard to pharmaceutical (p.235) products until 2016. However, even that deadline is beginning to loom large as one which will need extending.

Problems regarding patents in the pharmaceutical industry

The most obvious argument against pharmaceutical patents is that they artificially raise prices and therefore restrict access to a product, which can be crucial for the enjoyment of rights to life and health. The following commentary focuses on other arguments against current levels of patent protection in the pharmaceutical industry. First, it is arguable that the pharmaceutical industry is unduly exploiting its patent monopolies, given the consistently massive level of profits in the industry. Second, concerns may be raised about the type of innovation currently occurring in the pharmaceutical industry.

The pharmaceutical industry has consistently, for many decades, been an extraordinarily profitable sector.147 Furthermore, there is evidence that the amount reinvested into R&D is small compared to certain non-R&D outlays. For example, pharmaceutical companies tend to spend much more on marketing than they do on R&D.148 These large marketing budgets indicate that prices can be trimmed without cutting R&D budgets.

Moreover, it has been suggested that pharmaceutical companies have routinely overstated their R&D costs.149 For example, much of the R&D that contributes to the creation of new drugs is undertaken at public expense in government or university laboratories.150 Indeed, public bodies may sometimes hold the initial patent on a drug, and then assign that patent to a drug company.151 Publicly funded researchers (p.236) may often perform the basic research into a drug, which is the most risky phase as future marketability is at its least predictable.152 However, public funds are also often used at the later stages of a drug’s development, such as in clinical trials.153 Furthermore, reported R&D costs do not necessarily take into account the generous tax deductions available in many countries to the pharmaceutical industry.154 Finally, increasing funding for R&D is coming from philanthropic organizations such as the Bill & Melinda Gates Foundation.155 The pharmaceutical industry fought a nine-year battle in the US to prevent the disclosure of its R&D costs to congressional investigators, culminating in victory in the Supreme Court in 1983 in Bowsher v Merck.156 The questions raised regarding the ‘real’ cost of pharmaceutical R&D suggest that prices could be lowered without sacrificing R&D outlays.

Finally, the differences in cost between patented drugs and generic competition are enormous. Special Rapporteur Grover reported that first generation antiretrovirals for treating HIV dropped from $US10,000 per person per year to US$350 per person per year for the generic product.157 If pharmaceutical companies will not freely release the figures on R&D costs, one is entitled to be sceptical of the notion that R&D costs justify a 3,000 per cent markup.

Serious questions may also be raised regarding the current level of innovation in the pharmaceutical industry. The pharmaceutical industry spends much of its R&D money on ‘me-too’ or ‘copycat’ drugs, which are innovative enough to attract patent protection in many States (via ‘evergreening’), but which in fact add little therapeutic value to existing medical treatments. These ‘me-too’ drugs are the fruits of ‘safe’ R&D, entailing only slight variations on themes already known to be profitable.158 Indeed, ‘me-toos and line extensions typically take up around 80 per cent of R&D spending’,159 so there is arguably a ‘wasteful concentration of research on problems whose solution in the near future can be foreseen’160 or has in fact already eventuated. One possible benefit of patented ‘me-toos’ is to provide price competition to the original patented drug.161 However, the cost of patented drugs continues to escalate, (p.237) unlike patented goods in other industries, such as information technology, where computer products drop in price soon after their placement on the market.162

Finally, the incentives prompted by patent protection can create problems regarding the creation of needed drugs.163 Lots of R&D is put into drugs which deal with chronic, ongoing conditions, like heart disease or high cholesterol, as opposed to cures and vaccines, which do not have the same ongoing market potential.164 Disproportionate research is put into drugs to combat lucrative problems like obesity, cellulite, and impotence. These are distressing conditions but they are rarely life-threatening.165 Comparatively little research is conducted into third world killers like malaria, tuberculosis, or sleeping sickness.166 Perhaps it is arguable that the historically weak patent protection offered in the developing world has caused the industry’s indifference to its diseases.167 However, it is extremely doubtful that the pharmaceutical industry will significantly increase its R&D on diseases in the poorest States which cannot pay big money, regardless of the relevant standard of patent protection.168

A ‘high volume, low margin’ marketing strategy, if adopted, might mean that a company which successfully engages in such R&D could recoup significant economic returns with regard to new drugs for those neglected third world diseases which afflict huge numbers like malaria. Such a company would also benefit from the boost to its reputation.169 However, the present conservatism within the business models of pharmaceutical companies is sending them down the tried and true route of R&D, including ‘me-too’ R&D, into diseases and conditions which afflict the affluent.170 Nothing in the TRIPS model of global compulsory patents encourages pharmaceutical companies to diverge from that path.171 The World Health Assembly, in adopting a ‘Global strategy and plan of action on public health, innovation and intellectual property’ in 2008, similarly concluded that IP rights alone do not provide sufficient incentive for development of new products to ‘fight diseases where the potential paying market is small or uncertain’.172

A radical proposal?

Given these issues of excessive profit and innovation deficit, perhaps all States, including developed States, should control health budgets, and thus increase their (p.238) ‘available resources’ for the purposes of ICESCR, by imposing price caps on the pharmaceutical industry.173

Reduction of patent rights or the imposition of price caps would of course reduce profits. Despite high levels of profit in the pharmaceutical industry, any reduction in profits will probably lead to a reduction in R&D expenditure, given that it will be the corporations themselves that determine how to absorb the consequent revenue loss. Thus, any move to reduce prices could lead to a drop in R&D. Notwithstanding the present ‘innovation’ flaws in pharmaceutical R&D, it is still important not to jeopardize the possibility of breakthrough R&D, such as that which has produced the new generation HIV-AIDS therapies. Perhaps therefore, current government action in developed States which facilitates patents and high prices within their own territories is justifiable in international human rights law as a necessary means of ensuring ongoing innovation in the pharmaceutical industry.

In this regard however, it is worth noting that the biggest purchasers of patented prescription drugs are government healthcare programmes in the developed world.174 Indeed, the high percentage of government trade within the total trade enjoyed by the pharmaceutical industry may not be comparable to any other industry except the armaments sector. Therefore, taxpayers’ money constitutes the majority of the patent-generated profits of the pharmaceutical industry. While it may be reasonable for taxpayer money to largely subsidize pharmaceutical R&D costs, it may not be reasonable for taxpayers to largely subsidize marketing costs, executive salaries, and very large profits. Given the high percentage of government custom in the pharmaceutical industry, it seems that there is scope for interventionist public sector solutions to the problem of high pharmaceutical costs.

It must be noted that the predominance of government custom in pharmaceutical sales is not the case in the largest market, the US, where pharmaceutical benefits are largely funded by private rather than public health insurers.175 Nevertheless, taxpayers in the US still largely subsidize pharmaceutical costs, as most taxpayers obtain health insurance, either personally or through their employer, to cover their potential health costs. Prescription drugs in the US are subsidized by taxpayers in their guise as consumers of health insurance rather than as taxpayers per se. Furthermore, tax subsidies are available for most private purchases of medicines.176

If there were weaker patent rights, those taxpayer costs would be considerably smaller. The consequent public savings could be redirected from the purchase of drugs at inflated prices to government-funded R&D into pharmaceutical products (p.239) in universities and government research bodies.177 Public savings on patent-inflated prices could pick up the shortfall into R&D that might eventuate from any reduction in patent rights. Such a plan might not lead to more net R&D, but it may lead to cheaper drugs for all without a diminution in R&D. Such a plan might also lead to more consistently useful innovation, as publicly funded scientists are hopefully more concerned with Nobel prizes than profits.178

This ‘public sector’ solution to the problem of access to drugs could well cause a plunge in pharmaceutical profits to the detriment of its many shareholders. Furthermore, sceptics would undoubtedly question the capacity of the public sector to be as innovative as the private sector. It is recognized that such a solution is unlikely to presently garner much political support. I include it, however, to show that IP regimes are challengeable as the preferable means of promoting innovation in certain industries. To that end, I turn to two other proposals regarding IP alternatives.

Other alternatives to IP

As noted above, a problem with the current structures and incentives (largely based on IP) of the pharmaceutical industry is that they do not incentivize research in drugs for neglected diseases, that is those that overwhelmingly afflict people in the developing world but not people in the developed world. Furthermore, patents incentivize research into symptom relief rather than cures and vaccines. In response, Thomas Pogge has proposed an alternative scheme for incentivizing pharmaceutical research. He has proposed that States contribute to a Health Impact Fund from which pharmaceutical innovators are paid according to the positive health impact of their products. Such funding would incentivize products which cure diseases, including those which exclusively afflict the poor, and would also encourage lower prices so that the health impact of a drug is increased. The details of this proposal are beyond the scope of this book.179 It is mentioned to demonstrate that there are probably feasible alternatives to IP protection in order to incentivize much-needed medical innovations.

The NGO, Knowledge Ecology International (KEI), has put forward a proposal for a new treaty to be included under the rubric of WTO commitments, which would contain binding commitments offered on a voluntary basis on the GATS (p.240) model, by WTO Members to fund and support ‘the provision of global public goods involving knowledge’.180 The KEI has chosen the WTO as an appropriate domain for such a treaty due to its current existence181 and its strong enforcement mechanisms.

A ‘public good’ is not a commodity as such. It is ‘non-rival’, in that one or more people can use or consume it at the same time without diminishing its availability. For example, hammers and apples are ‘rival’ whereas a scenic view, clean air and public safety are non-rival.182 Public goods are also non-excludable in that no one can be excluded from using it. Examples of public goods include environmental preservation, security, and knowledge. A ‘global public good’ addresses an issue of global importance which cannot be addressed adequately by one State acting alone, and must therefore be addressed multilaterally.183 The tackling of climate change is an example of a global public good. There is a deficit in global public goods because States do not have sufficient incentives to contribute to the global public good compared to their own national public good. At the same time, there has been a growth of private sector interest in global public goods such as Wikipedia and other knowledge based products available freely via the web. Examples of knowledge-based global public goods which need greater resources are: the funding of the development of an AIDS vaccine and drugs for neglected diseases, patent or copyright buy-outs of products that are valuable for the enjoyment of human rights, the running of clinical trials, and digitization of publications in the public domain.

It is beyond the scope of this book to discuss the pros and cons of the KEI’s proposal. At this stage, KEI states that a proposal will be made within the WTO itself ‘in the not too distant future’. The KEI’s proposal is an interesting challenge to the WTO’s paradigmatic approach of promoting private enterprise and private ownership of knowledge under IP laws. There are clearly many goods and services which are best provided on a public and open access basis rather than on a profit basis: surely not everything should be commodified, packaged, and sold. It is also an interesting counterpoint to the IP regime promoted by TRIPS, recognizing that private ownership of certain desirable knowledge goods is problematic because there are not enough incentives for the private sector (for example, in the case of drugs for neglected diseases) or because private ownership restricts access too much (for example, in the case of goods which are essential for the enjoyment of human rights).

The WTO’s cart is currently hitched exclusively to the private sector horse, backed by an assumption that private sector initiatives are more efficient and preferable. Yet private markets do not and may not be able to address certain ‘public goods’ (p.241) problems, such as the need for low-cost medicines for poor people.184 Furthermore, there is no particular reason why the WTO should continue to ignore the need for the facilitation of access to public goods. Indeed, such facilitation represents perhaps a fruitful new direction for its work, especially when one considers that it is proving very difficult to reach agreement on the further liberalization of private trade.

Certainly, initiatives that diverge from traditional IP protection are on the global agenda. For example, the World Health Assembly, in its ‘Global strategy and plan of action on public health, innovation and intellectual property’, has suggested that, where appropriate, the costs of R&D and the price of health products should be de-linked,185 which would ‘break the vicious cycle of financing R&D through high drug prices’.186 The Strategy also calls for intergovernmental talks to explore the utility of new instruments and mechanisms, including ‘an essential health and biomedical R&D treaty’.187 The Strategy document clearly recognizes that TRIPS, ‘today’s predominant global R&D treaty’,188 does not adequately address global needs regarding rights to adequate standards of health.

F. The IP Maximalist Trend

Despite serious and justified misgivings about the desirability of global IP laws and the promotion of a human rights approach of permitting States to utilize TRIPS flexibilities as much as possible to facilitate access to medicines, an IP maximalist approach is taking hold in global trade negotiations.

To be sure, there are no serious proposals to strengthen IP protection in the WTO. However, as noted in Chapters 3 and 9, bilateral free trade agreements have proliferated in the last decade while Doha round negotiations have stalled. ‘TRIPS-plus’ provisions, which impose even stricter IP obligations than TRIPS on States, have been included in numerous bilateral agreements, particularly those concluded by the US. TRIPS-plus obligations have also been imposed as conditions on States that have acceded to the WTO, such as China, Jordan, and Cambodia.189 Typical ‘TRIPS plus’ provisions include longer patent terms, a guarantee of patentability for second uses, a guarantee of data exclusivity, further conditions on compulsory licensing, bans on parallel imports, and stronger enforcement mechanisms.190

Under TRIPS, the 20 years of patent protection is deemed to run from the date of filing for a patent. Thus, the term of effective protection is reduced if a State’s determination of patentability takes a long time. Article 62(2) of TRIPS states, (p.242) vaguely, that national procedures permit the granting or registration of patent within a ‘reasonable’ time. US bilateral agreements now oblige parties to extend a patent term in case of unreasonable curtailment of the patent period caused by the marketing approval process.191

As noted above, Article 27 of TRIPS seems to leave significant room for States to impose strict patentability standards, as has occurred in India. US bilateral agreements with a number of States, including Morocco, Bahrain, and Australia dictate that patents must be available for ‘new uses and methods of using a known product’, thus narrowing State discretion with regard to patentability requirements.192

Provisions mandating protection of data exclusivity are contained in US bilateral agreements with Chile, Morocco, Bahrain, Australia, and Singapore.193 Depending on the term of such protection, data exclusivity may prevent a generic competitor from relying on the clinical data gathered by a patent-holder in bringing the drug to market: it must therefore conduct its own clinical trials. Data exclusivity delays the introduction of generic competition and raises costs for generic competitors. It also raises ethical concerns, as it prompts the conduct of unnecessary human trials.194

Some US bilateral trade agreements contain restrictions on compulsory licensing beyond the restrictions imposed by Article 31 of TRIPS. First, data exclusivity may significantly delay the impact of a compulsory licence.195 Secondly, provisions in US bilaterals concluded with Australia and Singapore might restrict the ability of those States to sign up to the 2003 waiver as exporting countries.196

Some US bilaterals also demand that the parties adopt the principle of national exhaustion, thus effectively prohibiting parallel importation. So far, this provision has only affected States that already follow that principle.197 Nevertheless, such provisions prohibit such States from altering their law.

Finally, stronger enforcement mechanisms may provide greater obligations to impose criminal sanctions for pirating, and mandatory expansions of powers of subpoena in IP infringement cases. Stronger enforcement provisions could have a greater ‘chilling impact’ on potential competitors.198 These provisions are troubling as IP infringement cases are often lost, indicating that overambitious infringement claims are often made. It is unfortunate if entities are discouraged from testing where the limits of an IP right might lie due to the increased consequences of losing an infringement case. Furthermore, stronger enforcement mechanisms may result in seizures of suspect goods even in transit, as occurred when the Netherlands seized generic drugs sent from India to Brazil, and returned them to India.199 Such actions could frustrate use of the 2003 waiver. (p.243)

The TRIPS plus provisions of the US bilateral agreements, which are negotiated under conditions of an asymmetric balance of power,200 contravene the spirit of cooperation engendered by the Doha Declaration and the waiver.201 To that end, the US has faced criticism, such as that from the (then) French President Jacques Chirac who accused the US of ‘immoral blackmail’.202 However, while the EU has been less aggressive than the US in terms of raising IP standards in bilateral trade agreements, it has pursued various TRIPS plus outcomes. For example, under the European Partnership Agreements (EPAs) currently being concluded or negotiated with African, Caribbean, and Pacific States, the EU has pushed for TRIPS plus provisions. EPAs with Caribbean States mandate stronger protection of digital content than is required under TRIPS, with likely impacts for the right to education in those States.203 The EU is also pushing for inclusion of a requirement that its EPA partners adopt the IP system developed by the International Union for the Protection of New Varieties of Plants (UPOV)204 as the standard for protecting IP in new plant varieties. The problems with the UPOV standard with regard to the right to food are discussed in Chapter 6.205

The sting in the tail of TRIPS plus provisions is that those bound by them may have to offer those same TRIPS plus protections to all other States in the WTO. While GATT and GATS contain exceptions permitting some departure from MFN provisions for bilateral and regional free trade deals,206 TRIPS contains no such exception. Therefore, TRIPS plus protection might have to be offered to all other States in the WTO on the basis of MFN obligations.207

Despite some ‘wins’ for those who wish to alleviate the potential human rights impacts of TRIPS in the form of the Doha Declaration and the 2003 waiver, IP maximalists are successfully recasting and strengthening the global IP landscape via the conclusion of WTO accessions, bilateral and regional agreements. In fact, the Pharmaceutical Research and Manufacturers of America (PhRMA) has been quite open about this strategy. In 2004, it stated:

PhRMA recognises that the current impasse in the Doha Development Round negotiations as well as in the deliberations in the TRIPS Council call into question the current value of the WTO as a venue for improving the worldwide protection of intellectual property. Free Trade Agreements thus provide a logical approach to gaining improved intellectual property protection.208


G. Conclusion

The TRIPS agreement has probably given rise to the most vociferous human rights criticisms of the WTO, especially with regard to its impact on the right to food (as discussed in Chapter 6) and the right to health. The above commentary has largely focused on the impact of TRIPS on access to pharmaceuticals. It is possible that TRIPS in fact allows sufficient flexibility to permit States to comply with their obligations regarding the right to health, but it makes that task more difficult, particularly for poorer States. Furthermore, the traditional justifications for global patent protection are challengeable. The development rationale for global IP protection is highly suspect, especially given that Northern States did not respect such rights during their own paths to development. Specific concerns beyond high prices arise with regard to the pharmaceutical industry, such as an innovation deficit and queries about the real cost to the private sector of pharmaceutical R&D. Despite challenges to the desirability of global patent protection under TRIPS, explicit recognition of important TRIPS flexibilities in the Doha Declaration and the 2003 waiver, the trend in current regional and bilateral trade negotiations is, unfortunately, to drive up standards of IP protection. A rollback of TRIPS for many developing States (not only LDCs) would be a preferable policy trajectory.209


(1) Human Rights Council, ‘Report of the Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health, Anand Grover’, UN doc. A/HRC/11/12 (31 March 2009) para 24.

(2) Committee on Economic, Social and Cultural Rights, ‘General Comment No. 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he or she is the author (art. 15, para. 1(c))’, UN doc. E/C.12/GC/17 (12 January 2006) para 2.

(11) Higher standards of protection are permitted, but only so long as they do not ‘unjustifiably limit the enjoyment by others’ of other human rights: ibid, para 11.

(12) Ibid, para 35; see also paras 22 and 39(e).

(15) A different regime is now prescribed for LDCs, who do not have to fully comply with TRIPS until 2013, nor do they have to protect pharmaceutical products with patents until 2016. However, it is envisaged that TRIPS will provide the model for IP protection in those States.

(16) Daniel Costello, ‘HIV treatment becoming profitable’ Los Angeles Times, 21 February 2008.

(17) Sarah Joseph, ‘Trade and the Right to Health’ in Andrew Clapham and Mary Robinson (eds), Realizing the Right to Health (Swissbook, Geneva, 2009) 362–3.

(18) Kevin Outterson, ‘Should access to medicines and TRIPS flexibilities be limited to specific diseases?’ (2008) 34 American Journal of Law and Medicine 279, 292–3. See also Ellen FM ‘t Hoen, ‘The Global Politics of Pharmaceutical Monopoly Power: Drug patents, access, innovation and the application of the WTO Doha Declaration on TRIPS and Public Health’ (AMB Publishers, the Netherlands, 2009) 8 〈http://www.msfaccess.org/main/access-patents/the-global-politics-of-pharmaceutical-monopoly-power-by-ellen-t-hoen/〉 accessed 20 September 2010.

(19) t Hoen, above n 18, 3.

(20) Frederick M Abbott and Jerome H Reichmann, ‘The Doha Round’s Public Health Legacy: Strategies for the Production and Diffusion of Patented Medicines under the Amended TRIPS Provisions’ (2007) 10 Journal of International Economic Law 921, 968.

(21) Committee on Economic, Social and Cultural Rights, ‘General Comment 14: The right to the highest attainable standard of health (art. 12)’, UN doc. E/C.12/2000/4 (11 August 2000) para 9.

(27) Ibid, para 43(d); see Chapter 1, text after note 81.

(28) See Amir Attaran, ‘How Do Patents And Economic Policies Affect Access To Essential Medicines In Developing Countries?’ (May/June 2004) Health Affairs 155.

(29) See World Health Organization, The World Medicines Situation (WHO, 2004) Chapter 7, via 〈http://apps.who.int/medicinedocs/en/d/Js6160e/9.html〉 accessed 20 September 2010.

(30) UNGA, ‘Report of the Special Rapporteur on the right of everyone to the enjoyment of the highest standard of physical and mental health, Paul Hunt’, UN doc. A/61/338 (13 September 2006) para 37.

(33) See Chapter 1, text at notes 71–2. See also General Comment 14, above n 21, para 32.

(36) Committee on Economic, Social and Cultural Rights, ‘Human Rights and Intellectual Property: Statement by the Committee on Economic Social and Cultural Rights’, UN doc. E/C.12/2001/15 (14 December 2001) para 12.

(37) Report of the Special Rapporteur on the right to health, above n 30, para 47.

(38) General Comment 14, above n 21, para 39 (emphasis added).

(39) See Human Rights Council, ‘Access to Medicine in the context of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health’, UN doc. A/HRC/RES/12/24 (12 October 2009).

(43) Human Rights Committe, ‘General no. 6, The Right to life (art. 6)’, Sixteenth session 1982 (30 April 1982), para 5.

(44) The following commentary is adapted from Sarah Joseph, ‘Pharmaceutical Corporations and Access to Drugs: the “Fourth Wave” of Corporate Human Rights Scrutiny’ (2003) 25 Human Rights Quarterly 425, 431–5.

(45) It may be noted that many of the arguments in favour of patents apply analogously to other IP rights such as copyright.

(46) Apparently, ‘only one of 4000 new chemical compounds discovered in the laboratory is ever marketed.’ See Shanker A Singham, ‘Competition Policy and the Stimulation of Innovation: TRIPS and the Interface Between Competition and Patent Protection in the Pharmaceutical Industry’ (2000) 26 Brooklyn Journal of International Law 363, 373.

(47) Ibid, 372–4; see also James Thou Gathii, ‘Construing Intellectual Property Rights and Competition Policy Consistency with Facilitating Access to Affordable AIDS drugs to low-end consumers’ (2001) 53 Florida Law Review 727, 771–83, commenting on the costs of R&D in the US drug industry caused by the (perhaps overly) high standards of the Food and Drug Authority (FDA).

(48) Singham, above n 46, 375–85.

(49) See, eg, Sara Ford, ‘Compulsory Licensing Provisions under the TRIPS Agreement: Balancing Pills and Patents’ (2000) 15 American University International Law Review 941, 965.

(50) Adam McBeth, International Economic Actors and Human Rights (Routledge, Oxford, 2009) 140.

(51) WTO doc. WT/DS114/R (17 March 2000) (Report of the Panel).

(52) Robert Weissman, ‘A long strange TRIPS: the Pharmaceutical Industry drive to Harmonize Global Intellectual Property, and the Remaining WTO Legal Alternatives Available to Third World Countries’ (1996) 17 University of Pennsylvania Journal of International Economic Law 1069, 1111.

(53) Abbott and Reichmann, above n 20, 957–8, 986.

(54) McBeth, above n 50, 145.

(55) WTO, ‘TRIPS and Pharmaceutical Patents’ (WTO Fact Sheet, September 2006) 5.

(56) McBeth, above n 50, 145.

(57) Report of the Special Rapporteur on the Right to Health, above n 1, para 36.

(59) Weissman, above n 52, 1114.

(60) Commission on Human Rights, ‘The impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on human rights: Report of the High Commissioner’, UN doc. E/CN.4/Sub.2/2001/13 (27 June 2001) (UNHCHR) paras 51–8. Note that Brazil did issue a compulsory licence in May 2007 after negotiations with the manufacturer Merck broke down in relation to an AIDS drug. See 〈http://ictsd.org/i/news/bridges/11643/〉.

(61) Tina Rosenberg, ‘Look at Brazil’ New York Times Magazine, 28 January 2001; Gathii, above n 47, 734–5.

(62) Oxfam, ‘Patients versus Patents: Five years after the Doha Declaration’ (Oxfam Briefing Paper 95, 2006) 〈http://www.oxfam.org/sites/www.oxfam.org/files/Patents%20vs.%20Patients.pdf〉 accessed 27 October 2010.

(63) See Rosenberg, above n 61, 26; Consensus Statement of Members of the Faculty of Harvard University, Antiretroviral Treatment for AIDS in Poor Countries, March 2001, 14, 〈http://www.hsph.harvard.edu/hai/conferences_events/2001/consensus_aids_therapy.pdf〉 accessed 20 January 2003; Dirceu B Greco and Mariangela Simão, ‘Brazilian policy of universal access to AIDS treatment: sustainability challenges and perspectives’ (2007) 21 AIDS S37, S40.

(64) Joseph, above n 44, 444.

(65) Ken Shadlen, ‘Resources, Rules and international political economy: the politics of development in the WTO’ in Sarah Joseph, David Kinley, and Jeff Waincymer (eds), The World Trade Organization and Human Rights: Interdisciplinary Perspectives (Edward Elgar, Cheltenham, 2009) 118–19. Eg, Shadlen notes at fn 22 that the US had withdrawn GSP preferences from States that failed to comply with higher IP standards than were required under TRIPS. See also McBeth, above n 50, 144.

(66) It seems unlikely that the Act actually breached TRIPS.

(67) Joseph, above n 44, 443–4.

(68) Shadlen, above n 65, 119.

(69) The complaint was settled on the basis that Brazil would consult with the US before issuing a compulsory licence due to a patent-holder’s failure to work a patent locally: Duncan Matthews, ‘Intellectual Property Rights, Human Rights and the Right to Health’ in W Grosheide (ed), Intellectual Property Rights and Human Rights: a Paradox (Edward Elgar, 2010, forthcoming).

(70) Joseph, above n 44, 446–7; Joseph Stiglitz, Making Globalization Work (Penguin, London, 2007) 122. See also Abbott and Reichmann, above n 20, 939.

(71) WTO doc. WT/MIN(01)/DEC/2 (adopted on 14 November 2001). The following commentary is adapted from Joseph, above n 17, 364.

(72) t Hoen, above n 18, 44.

(74) Ibid, 63–5. In contrast, the US President’s Emergency Plan for AIDS Relief (PEPFAR) does not encourage implementation of the Doha Declaration.

(76) Abbott and Reichmann, above n 20, 958.

(77) t Hoen, above n 18, 58–9.

(78) Howse and Teitel believe that the export of generics to impoverished States that lacked appropriate manufacturing capacity would have been permissible under Article 30: Robert Howse and Ruti Teitel, ‘Beyond the Divide: the International Covenant on Economic Social and Cultural Rights and the World Trade Organization’ in Joseph, Kinley and Waincymer (eds), above n 65, 61–2. See, for a similar argument, Abbott and Reichmann, above n 18, 957 and 986. At 958, Abbott and Reichmann also argue that generics can be exported to non-WTO members that lack capacity to manufacture their own products under Article 30.

(79) WTO, ‘Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health’ (Decision of the General Council of 30 August 2003), WTO doc. WT/L/540 (30 August 2003).

(80) WTO, ‘Amendment of the TRIPS Agreement’ (Decision of 6 December 2005), WTO doc. WT/L/641.

(81) Abbott and Reichmann, above n 20, 934, 949; t Hoen, above n 28, 37.

(82) See, eg, 〈http://www.diflucanpartnership.org/en/welcome/Default.aspx〉 regarding Pfizer’s initiatives. See also Abbott and Reichmann, above n 20, 948–9.

(83) Outterson, above n 18, 289–90.

(84) Howse and Teitel, above n 78, 62–3. See also Adam McBeth, ‘When Nobody Comes to the Party: Why Have No States Used the WTO Scheme for Compulsory Licensing of Essential Medicines?’ (2006) 3 New Zealand Journal of International Law 1, 23–30.

(85) Special Rapporteur on the Right to Health, above n 1, para 27.

(90) Novartis v India W.P. Nos 24759 of 2006 and 24760 of 2006, High Court of Madras (India), 6 August 2007. See also Abbott and Reichmann, above n 20, 959.

(91) Special Rapporteur on the Right to Health, above n 1, paras 50–2. On the provision for opposition in India, see t Hoen, above n 18, 77–8.

(92) Outterson, above n 18, 282.

(94) Abbott and Reichmann, above n 20, 937; t Hoen, above n 18, 32.

(95) Outterson, above n 18, 283; see also t Hoen, above n 18, 86.

(96) Shadlen, above n 65, 121; see also James Harrison, The Human Rights Impact of the World Trade Organisation (Hart, Oxford, 2007) 165.

(97) Grover confidently proclaims that Article 31 allows compulsory licensing of drugs to combat such diseases at Special Rapporteur on the Right to Health, above n 1, para 37.

(100) t Hoen, above n 18, 36–7.

(102) Ibid, xvii; Abbott and Reichmann, above n 20, 943.

(103) Abbott and Reichmann, above n 20, 943, 972–7.

(104) t Hoen, above n 18, 39; see also 42.

(105) Special Rapporteur on the Right to Health, above n 1, para 44.

(106) Ibid, paras 53–5. See also European Union Directorate-General for Competition, Pharmaceutical Sector Inquiry-Preliminary Report, 28 November 2008.

(107) Special Rapporteur on the Right to Health, above n 1, para 65.

(110) See Chapter 8 on extraterritorial obligations.

(111) Abbott and Reichmann, above n 20, 953–6; t Hoen, above n 18, 49.

(112) Abbott and Reichmann, above n 20, 956.

(114) t Hoen, above n 18, 65.

(116) McBeth, above n 50, 150.

(117) World Bank, World Development Report 2006: Equity and Development (World Bank, Washington DC, 2006) 215.

(118) Rosenberg, above n 61.

(119) World Development Report 2006, above n 117, 214, citing Jean O Lanjouw and William Jack, ‘Trading Up: How Much Should Poor Countries Pay to Support Pharmaceutical Innovation?’ (2004) 4 CGD Brief 1, 6.

(120) World Development Report 2006, above n 117, 224.

(121) Abbott and Reichmann, above n 20, 970–1.

(122) UNHCHR, above n 60, para 47.

(123) See also Chapter 8; Stiglitz, above n 70, 120.

(124) See also World Development Report 2006, above n 117, 224–5.

(125) See below, text at notes 173–8.

(126) Abbott and Reichmann, above n 20, 986.

(128) Robert Wade, ‘What Strategies are Viable for Developing Countries Today? The World Trade Organization and the Shrinking of Policy Space’ (2003) 10 Review of International Political Economy 621, 626, citing, inter alia, the grievances of Charles Dickens. See also Yong-Shik Lee, Reclaiming Development in the World Trading System (Cambridge University Press, Cambridge, 2006) 127.

(129) Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (Anthem Press, London, 2003) 57; see also 84–5.

(130) Daniel J Gervais, ‘Trips 3.0: Policy Calibration and Innovation Displacement’ in Chantal Thomas and Joel P Trachtman (eds), Developing Countries in the WTO Legal System (Oxford University Press, New York, 2009) 363, 391 (emphasis added).

(131) Ha-Joon Chang, Bad Samaritans: the Myth of Free Trade and the Secret History of Capitalism (Bloomsbury Press, New York, 2008) 127.

(132) Peter Drahos, ‘The Rights to Food and Health and Intellectual Property in the Era of “Biogopolies”’ in Stephen Bottomley and David Kinley (eds), Commercial Law and Human Rights (Aldershot, Ashgate, 2002) 227.

(133) Gathii, above n 47, 758–9; see also Tom G Palmer, ‘Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects’ (1990) 13 Harvard Journal of Law and Public Policy 817, 849; Roger E Meiners and Robert J Staaf, ‘Patents, Copyright, and Trademarks: Property or Monopoly’ (1990) 13 Harvard Journal of Law and Public Policy 911, 914; UNHCHR, above n 60, para 40.

(134) FM Scherer, ‘The Pharmaceutical Industry and World Intellectual Property Standards’ (2000) 53 Vanderbilt Law Review 2245; see also Drahos, above n 132, 192, at 230.

(135) Special Rapporteur on the Right to Health, above n 1, para 29.

(137) World Development Report 2006, above n 117, 214, citing Chaudhuri, Shubham, Pinelopi K Goldberg, and Panle Jia, ‘Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India’ (World Bank: Washington, DC, 2004), 〈http://www.econ.yale.edu/∼pg87/TRIPS.pdf〉 accessed 20 June 2010.

(138) Gervais, above n 130, 370.

(140) Much of the initial outsourcing of computer coding to India arose due to the Y2K bug crisis: see Thomas Friedman, The World is Flat: the Globalized World in the Twenty-First Century (Penguin, 2005) 131–6.

(141) t Hoen, above n 18, 78. Also see Report of the Special Rapporteur on the Right to Health, above n 1, para 30, n 34.

(142) See also Gervais, above n 130, 390.

(143) 3D, ‘The Philippines: Impact of copyright rules on access to education’ (July 2009) 〈http://www.3dthree.org/pdf_3D/3DCRC_PhilippinesJun09.pdf〉 accessed 20 September 2010.

(144) Wade, above n 128, 624.

(145) See, generally, Andrew Rens, Achal Prabhala, and Dick Kawooya, ‘Intellectual Property, Education and Access to Knowledge in Southern Africa’ (2006) Trade Law Centre for Southern Africa Working Paper No 13/2006 〈http://www.tralac.org/unique/tralac/pdf/20061002_Rens_IntellectualProperty.pdf〉 accessed 20 September 2010); Margaret Chon, ‘Intellectual Property from Below: Copyright and Capability for Education’ (2006–2007) 40 UC Davis L Rev 803.

(146) WTO Doc. IP/C/40, 30 November 2005.

(147) For an overview of recent revenues and profits enjoyed by the pharmaceutical industry (2009 figures), see 〈http://money.cnn.com/magazines/fortune/global500/2009/industries/21/index.html〉. See also Marcia Angell, ‘The Pharmaceutical Industry: To Whom is it Accountable?’ (2000) 342 New England Journal of Medicine 1902.

(148) See, eg, the figures quoted in the respective annual reports of 2009 for Merck 〈http://www.merck.com/finance/annualreport/ar2009/pdf/Merck_form_10-k.pdf〉 accessed 20 June 2010, 62 (US$8,543.2m for ‘marketing and administrative expenses’ and US$5,845m for R&D in 2009); 2009 Annual Report (Form 10-K) of Pfizer, filed 26 February 2010 for the fiscal year ended 31 December 2009, 〈http://media.pfizer.com/files/annualreport/2009/form10k_2009.pdf〉 accessed 20 June 2010, 46 (US$14,875m for ‘selling, informational and administrative expenses’ and US$7,845m for R&D in 2009. See also Harrison, above n 96, 152.

(149) See generally, Bob Young et al, ‘Rx R&D Myths: The Case Against Drug Industry’s R&D “Scare Card”’ Public Citizen’s Congresswatch, July 2001, 〈http://www.citizen.org〉 accessed 20 January 2003.

(150) Ibid, 7–10, App C thereto (National Institute of Health, NIH Contributions to Pharmaceutical Development: Case Study Analysis of the Top Selling Drugs, February 2000). See also James Packard Love, Affidavit (signed 9 April 2001) in the matter between Pharmaceutical Manufacturers’ Association of South Africa and Others v. The President of the Republic of South Africa and Others (2000) (3) BCLR 241 (South Africa Constitutional Court) 〈http://www.cptech.org/ip/health/sa/loveaffidavit/〉 accessed 21 September 2010. See also t Hoen, above n 18, 80; Stiglitz, above n 70, 111, and Chang, above n 129, 31.

(151) Assignment of patents arising out of publicly funded research is permitted in most countries. In the US, under the Bayh-Dole Act of 1980, publicly funded researchers are required to keep their patents, but may licence another to act as the exclusive marketer of a patented product; the rights of an exclusive licencee in such situations generally mirror those of a patentee. Bayh-Dole Act of 1980, Pub. L. No. 96-517, 94 Stat. 3015-28 (codified as amended at 35 U.S.C. §§ 200–11, 301–07 (1994)).

(152) Young et al, above n 149, 10.

(155) Outterson, above n 18, 287.

(156) 460 US 824 (1983) (Supreme Court of the United States). Congress could subpoena the documents (the power of subpoena was distinguished from the right of access in Inspector General v Banner Plumbing Supply, 34 F. Supp. 2d 682 (N.D. Ill. 1998)), but has thus far chosen not to do so. Note also that one of the reasons why a consortium of pharmaceuticals dropped action against the South African government in respect of new proposed drug laws (see above, note 150) was possibly because the relevant court may have ordered disclosure of R&D costs: see Nick Mathiason, ‘The Pretoria Court Case: Drugs Round One to Africa’ Observer, 22 April 2001, Business, 3.

(157) Special Rapporteur on the Right to Health, above n 1, para 20. Price drops of 99% have even been reported.

(158) tHoen, above n 18, 81; Angell, above n 147, 1903; Young et al, above n 149, 13–14.

(159) Jeffrey Robinson, Prescription Games (Simon & Schuster, London, 2001) 12. See also UNHCHR, above n 60, para 39.

(160) Friedrich A von Hayek, The Fatal Conceit: The Errors of Socialism (W.W. Bartley III edn, 1988) (quoted in Gathii, above n 47, 135).

(161) Singham, above n 46, 370–1; see also Edmund W Kitsch, ‘Elementary and Persistent Errors in the Economic Analysis of Intellectual Property’ (2000) 53 Vanderbilt Law Review 1727, 1729–38.

(162) See Robinson, above n 159, 89. Singham concedes that the ‘key criterion [for price reduction in the pharmaceutical sector] appears to be the number and weight of off-patent chemical entities’, rather than competition from patented ‘me-toos’ at above n 46, 370.

(163) World Development Report 2006, above n 117, 224.

(164) Anna-Marie Tabor, ‘Recent Developments: AIDS Crisis’ (2001) 38 Harvard Journal on Legislation 514, 524.

(165) Of course, morbid obesity is life-threatening, and obesity per se can lead to chronic health problems.

(166) See, generally, Médecins sans Frontières (MSF), Fatal Imbalance: The Crisis in Research and Drugs for Neglected Diseases (Médecins Sans Frontières, Geneva, 2001); UNHCHR, above n 60, para 38; Harrison, above n 96, 152.

(167) Singham, above n 46, 392–3.

(168) Drahos, above n 132, 229.

(169) Abbott and Reichmann, above n 20, 982.

(170) t Hoen, above n 18, 82–3.

(171) Outterson, above n 18, 293.

(172) WHO doc. WHA 61.21, 24 May 2008, para 7.

(173) See UNHCHR, above n 60, 64; see also General Comment 14, above n 21, para 51.

(174) Outterson, above n 18, 285–6; S Jacobzone, ‘Pharmaceutical Policies in OECD Countries: Reconciling Social and Industrial Goals’ OECD Labour Market and Social Policy Occasional Papers, No 40, (OECD Publishing, Paris, 2000) 4, 9, 94.

(175) US public funds do however make up a sizeable proportion of pharmaceutical purchasers, due to safety net schemes for the poorest people.

(176) Outterson, above n 18, 285–6.

(177) Due to the idiosyncratic public/private divide of pharmaceutical expenditure in the US, it is likely that any plan to increase publicly funded R&D in the US would result in an increase rather than a mere redirection of public expenditure. However, due to likely decreased costs of private health insurance in the US, it might not lead to increased expenditure by actual taxpayers (who are simultaneously consumers of health insurance).

(178) Note that by July 2001, publicly funded scientists had won 90 Nobel Prizes compared to four from private industry; see Young et al, above n 149, 8.

(179) See Thomas Pogge, ‘Medicines for the World: Boosting innovation without obstructing free access’ (2008) Revista Internacional de dereitos humanos 8, 5–6http://www.yale.edu/macmillan/igh/files/SUR.pdf〉 accessed 17 April 2010, 11–14. For more details, see Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making New Medicines Accessible to all (Incentives for Global Health, 2008)http://www.yale.edu/macmillan/igh/#〉 accessed 20 September 2010.

(180) Knowledge Ecology International, ‘KEI Proposal: A WTO Agreement on the Supply of Knowledge as a Global Public Good’ (June 2008) via 〈http://www.keionline.org/wtoandpublicgoods〉 accessed 23 January 2010. The following commentary summarizes a presentation on the topic by James Love at the WTO Ministerial in Geneva on 1 December 2009.

(181) It is easier to utilize an existing institution rather than create another international institution.

(182) See 〈http://en.wikipedia.org/wiki/Rivalry_(economics)〉 accessed 29 January 2010.

(183) Stiglitz, above n 70, 281.

(184) Abbott and Reichmann, above n 20, 987.

(185) WHO doc. WHA 61.21, 24 May 2008, para 4.

(186) t Hoen, above n 18, 93.

(187) WHO doc. WHA 61.21, 24 May 2008, para 30(2.3)(c).

(188) t Hoen, above n 18, 93.

(189) Eg, Cambodia’s WTO accession provides for data exclusivity: see United Nations Development Program, Asia Pacific Human Development Report 2006: Trade on Human Terms (Colombo, UNDP, 2006) 133. On Jordan, see t Hoen, above n 18, 72.

(190) Special Rapporteur on the Right to Health, above n 1, para 78; Jean-Frédéric Morin, ‘Tripping up TRIPS debates IP and health in bilateral agreements’ (2006) 1 Journal of Intellectual Property Management 37, 39.

(191) Morin, above n 190, 43–4.

(194) Special Rapporteur on the Right to Health, above n 1, para 78.

(195) Ibid, para 82; Morin, above n 190, 47.

(196) Morin, above n 190, 47.

(198) Special Rapporteur on the Right to Health, above n 1, para 91.

(199) Indeed, India and Brazil have now launched a WTO dispute against the EU in respect of that seizure. See, eg, International Centre for Trade and Sustainable Development, ‘EU Challenged on Generics Seizures’, Bridges, Vol 14, No 3, September 2010.

(200) World Development Report 2006, above n 117, 215. See Chapter 3, Part E.

(201) Morin, above n 190, 51.

(202) Ibid, 51, citing Jacques Chirac, Message à la Quinzième Conférence Internationale sur la Sida.

(203) Oxfam, ‘Partnership or Power Play? How Europe should bring Development into its trade deals with African, Caribbean, and Pacific countries’ (Oxfam Briefing Paper 110, 21 April 2008) 33.

(204) UNGA, ‘Report of the Special Rapporteur on the Right to Food, Olivier de Schutter: Seed policies and the right to food: enhancing agrobiodiversity and encouraging innovation’, UN doc. A/64/170 (23 July 2009) para 16.

(205) See Chapter 6, Part E, especially at notes 234–9.

(206) Article XXIV GATT and Article V GATS.

(207) Abbott and Reichmann, above n 20, 963–4.

(208) Pharmaceutical Research and Manufacturers of America (PhRMA), ‘Special 301 submission’, 12 February 2004, as cited in Morin, above n 190, at 40.

(209) Stiglitz, above n 70, 119.