WORLD TRADE
ORGANIZATIONIP/C/W/340
14 March 2002
(02-1336)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AGREEMENT
AND PUBLIC HEALTH
Communication from the United States
The Secretariat has received from the Permanent Mission of the United States a copy of the
following communication dated 8 March 2002, with the request that it be circulated as an unrestricted
document.
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We are committed to helping countries that are experiencing public health crises.  We want to
find a real solution to problems that prevent Members from being able to address health problemsassociated with access to pharmaceuticals.  We want  all Members to be able to use the full flexibility
of the TRIPS Agreement to help provide their ci tizens access to affordable medicines in times of
crises.
We note that the Doha TRIPS declaration recognizes that the exclusive rights provided by
patents are an important incentive to development of new drugs.  Patents provide market incentives
for innovators to risk time, energy and resources to develop and bring to market new technology.  Asystem of patent rights and enforcement of those rights for pharmaceuticals provides numerous
benefits to society;  the availability of exclusive patent rights for pharmaceutical products spurs
research and development of new medicines, including those resulting from biotechnology, to treat
and cure diseases.  The TRIPS Agreement recognizes  that compelling innovators to relinquish patent
exclusivity is a limited remedy for special circumstances.  Clearly, under TRIPS, compulsory licencesare appropriate, but it must be borne in mind that these are exceptions, rather than the norm.
The TRIPS Agreement allows Members to use co mpulsory licences, if they wish, to help
address supply problems that can arise during health crises.  The Agreement establishes conditions for
the use of compulsory licences that ensure these licences will be limited and carefully drawn.  TheAgreement also recognizes that time is of the essence in a national emergency or other circumstances
of extreme urgency by waiving the requirement to seek first a voluntary licence from the patent
owner.
In paragraph 6 of the Doha Ministerial Declaration on the TRIPS Agreement and Public
Health, Ministers recognized that certain WTO Members, those with "insufficient or no
manufacturing capacities in the pharmaceutical sector," could have difficulty using the compulsory
licensing provisions of the TRIPS Agreement.  The TRIPS Council is instructed to find an expeditious
solution to this potential problem and report to the General Council before the end of 2002.
Obviously, many factors must be addressed in helping countries with limited means address
public health problems.  Among these factors are issues of infrastructure, financing, elimination ofIP/C/W/340
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impediments such as tariffs and internal taxes, traini ng, etc., most of which must be addressed in other
appropriate fora.  In addition, all countries must recognize that there are many people in the world
who are unable to afford needed medicines at any price and under any TRIPS-related solution there
would still involve a cost.1  It is for those who cannot afford needed medicines that the Global Fund is
essential and we encourage all countries that can to contribute to that fund and for those countries thatcan benefit from the fund to avail themselves of it.
CONSIDERATIONS FOR DEVELOPING AN EXPEDITIOUS SOLUTION
It must be kept in mind, when considering particular TRIPS provisions related to patents, as is
the case here, that TRIPS obligations exist only when a patent exists.  If an innovator has chosen notto obtain rights for a pharmaceutical invention in a particular market, if a country does not currently
provide patent protection for pharmaceutical products,
2 or if the patent on a particular medicine in that
market has expired,3 anyone may make, use, offer for sale, sell the product in that market, or import
the product involved into the market, or use the process.  They also may produce the product for
export.
The Council should, in carrying out its work under paragraph 6, develop information
regarding where patents exist currently on pharmaceuticals to treat the diseases cited in the
Declaration afflicting poor countries that lack or have insufficient manufacturing capacities in the
pharmaceutical sector.  This information will provide Members with an idea of the scope of thepotential problem and help us formulate a practical solution.
We note that there are developing countries (i.e., those taking advantage of the Article 65.4,
that possess the technological capability to manufacture pharmaceuticals and are not, and will not be,
subject to Article 31(f) TRIPS requirements until 2005.  In the event a patent exists on a neededpharmaceutical in the territory of a Member that lacks or has insufficient manufacturing capacities,
that Member may grant a compulsory licence to import and distribute foreign-manufactured product
on its local market, including from the developing countries currently taking advantage of the
provisions of Article 65.4.  The expeditious solution the TRIPS Council must devise, therefore, will
apply for the most part to situations arising no earlier than 1 January 2005.
Obviously, even if a patent existed in a country that lacked or had insufficient capacities for
manufacture in the pharmaceutical sector, the country would have no need for compulsory licensing if
the patentee is supplying the market in sufficient quantities at prices equal to or lower than the cost of
drugs obtained using a compulsory licence.
4  Similarly, if there is no patent in force in the country in
need, the country would have no need to employ the solution if generic pharmaceuticals were
                                                     
1 See discussion on access to medicine in Macroeconomics and Health: Investing in Health and
Economic Development, Report of the Commission on Macroeconomics and Health, 20 December 2001,
chaired by Jeffrey D. Sachs: "The poor lack access to essential medicines for many reasons, all of which must
be addressed in a comprehensive manner.  The most important reason, by far, is poverty itself-in the absence oflarge-scale donor support, poor countries in sub-Saharan Africa with high HIV/AIDS prevalence have beenunable to avail themselves, at any significant scale, of these lower prices.  The same problems are observed inthe access to TB drugs, even those that are off patent, as well as many vaccines that are off patent yet still too
expensive for use in the low-income countries in the absence of adequate donor financing."
2 As is the case currently with India and a number of other developing and least developed countries.
Developing countries availing themselves of the tr ansition period permitted under Article 65.4 will not be
obliged to provide patent protection for pharmaceutical products until 2005.
3 Either because the term has ended or because the patentee has not paid the maintenance fees.
4 We note that a component of the overall price of a drug obtained pursuant to a compulsory licence
will be an amount associated with the required pa yment of adequate remuneration to the right holder.IP/C/W/340
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available.  Whenever possible, the country ought first, before granting a compulsory licence, seek
accommodation from the patent owner in order to be assured of a supply of quality product.
Paragraph 1 of the Ministerial Declaration on the TRIPS Agreement and Public Health makes
clear that Ministers were addressing "public health problems," with special reference to "thoseresulting from HIV/AIDS, tuberculosis, malaria and other epidemics."  The Ministers' direction in
paragraph 6, to seek an expeditious solution to potential problems, is limited to the pharmaceutical
sector.  The significance of discussions relating to modifying the TRIPS Agreement, thereby altering
the equilibrium of concessions arrived at under the Uruguay Round, should not be discounted.
Therefore, the Council should focus on fashioning a solution to improve access to pharmaceuticals to
treat diseases referred to in the Declaration, such as HIV/AIDS, malaria, tuberculosis and other
epidemics.
The phrase "with insufficient or no manufacturing capacities in the pharmaceutical sector"
will have to be analyzed in connection with any solution.  We do not believe it is appropriate to
extend this solution to developed countries or to countries that choose not to manufacture certain
drugs based on policy, economic or other reasons.  This solution should reach out to those poorcountries that are truly not capable of manufacturing sufficient supplies of needed pharmaceuticals.
In this connection, we think it would be helpful for more information to be gathered for consideration
by the Council with respect to current levels of pharmaceutical manufacturing capacity worldwide
such as the work already done by the United Nations Industrial Development Organization.
In summary, we reiterate our firm belief that the application of an expeditious solution to
access to pharmaceuticals should be applied to address diseases referred to in the Declaration, such as
HIV/AIDS, malaria, tuberculosis and other epidemics in poor countries that lack sufficient
pharmaceutical manufacturing capacities.
One further question to consider is whether it would be appropriate for this solution to be
employed by entities other than government or other non-commercial actors, (e.g., commercial
entities for profit).  Given that we are trying to address situations where access to pharmaceuticals is
required so that governments and other non-commercial actors can address major health problems
afflicting their populations, we seriously question whether there are any circumstances under which
this solution should employed by commercial entities on a for-profit basis.
SAFEGUARDS TO ENSURE THAT THE SOLUTION IS EFFECTIVE
In order to ensure that an expeditious solution is effective in addressing the situation
identified in paragraph 6 of the Ministerial Declaration on the TRIPS Agreement and Public Health,the TRIPS Council will need to monitor the applicati on of the solution in each case, and the results are
achieved.  Any solution devised should, therefore, include a means for informing the Council when
the solution is being employed and for providing ongoing information regarding the nature and
quantity of pharmaceuticals being exported to a Member, the numbers of people benefiting from the
solution, and the results achieved, and any evidence of diversion of products authorized forproduction under the solution.
We believe that the TRIPS Council must develop, as part of any solution, a commitment by
all Members to take the necessary steps to prevent diversion of the relevant pharmaceuticals.
Likewise, the entire output of the relevant pharmaceuticals manufactured subject to the compulsorylicence should be exported to the Member in need.  Whenever a particular pharmaceutical or
pharmaceuticals are being supplied to a Member through application of the solution devised by the
TRIPS Council, all Members should have an obligation to ensure that the medicines in question are
not diverted from the Member's citizens for whom they were intended into other countries.  TheIP/C/W/340
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submission of information mentioned earlier w ould alert all WTO Members of the particular
medicines involved, their source and destination, and the quantities involved, thereby enabling the
Members to take appropriate steps to prevent diversion into their markets. It should be noted as well,
that notification of the right holder as provided in Article 31(b) will aid in ensuring that action is taken
with respect to any diversion to markets in which patents exist.
PROPOSALS TO DATE
In carrying out the task assigned by Ministers in paragraph 6 of the Declaration, the Council
should seek the solution least prejudicial to balance of rights and obligations negotiated during the
Uruguay Round.  Absent such an approach, it will be difficult to achieve agreement in future roundsof multilateral trade negotiations, since Members will not be able to have confidence that rights and
obligations will be respected.
Article 30
One suggestion made prior to Doha involved an interpretation of Article 30 to include a
limited exception to patent rights for export of medicines to countries lacking or having insufficient
manufacturing capacities in the pharmaceutical sector.  Article 30 authorizes limited exceptions to
patent rights, for such things as research exemptions, prior user rights, pre-expiration testing, so long
as those exceptions do not unreasonably conflict with a normal exploitation of the patent and do notunreasonably prejudice the legitimate interests of th e patent owner, taking account of the legitimate
interests of third parties.  The limited exceptions to patent rights authorized by Article 30 do not
require a government decision in each case.  Article 30 contains no requirements for notifying a patent
owner of use, for establishing particular terms and conditions, for expiration if circumstances change,
or for remuneration to the patent holder.  We believe that an interpretation of Article 30 to allowexceptions to patent rights to permit otherwise infringing acts to supply a patented pharmaceutical for
purposes of export would seriously prejudice the rights and obligations of Members under the TRIPS
Agreement.
Article 31
Another proposal that has been discussed calls for interpretation or amendment of
Article 31 (f) in order to permit a Member to grant a compulsory licence under an existing patent to a
local manufacturer for purposes of export to a Member that lacks or has insufficient manufacturing
capacities in the pharmaceutical sector.  Because Article 31 already establishes agreed terms and
conditions for compulsory licensing to ensure balan ce in situations in which use is permitted without
authorization of the patent owner, consideration of solutions based on Article 31 as a whole havemerit.
For example, Article 31 requires that decisions on compulsory licensing be made case by
case;  that, except in cases of national emergency or other urgent circumstance, or of government non-
commercial use, the potential licensee attempt first to negotiate a voluntary with the patentee;  that thecompulsory licence be non-exclusive;  that the lic ence spell out the term and conditions;  that when
those conditions cease, the licence expires;  that the patentee be paid "adequate remuneration" in the
circumstances of each case, taking into account the economic value of the authorization.
One approach to examine in considering a solution based on Article 31 would be for
Members to agree to a moratorium on dispute settlement in instances in which a Member grants a
compulsory licence, under circumstances clearly delineated by this Council, for purposes of export to
a poor country that lacks or has insufficient manufacturing capacities in the pharmaceutical sector.
Such an agreement would not require amendment of the TRIPS Agreement and application of theIP/C/W/340
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solution could be overseen by the TRIPS Council, incl uding to insure that medicine being supplied to
a Member that lacks or has insufficient manufacturing capacity is not diverted into other markets,
away from the people  it is intended to help.  It is worth considering whether such a solution would not
in fact be the most expeditious and least prejudicial to the rights and obligations of Members under
the Agreement.
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