21 October 2013

TRIPS, Patents, Competition policy and Health

The UNDP has released 'Using Law to Accelerate Treatment Access in South Africa: An Analysis of Patent, Competition & Medicines Law' [PDF] by Chan Park, Achal Prabhala and Jonathan Berger.

The report notes that
South Africa is reported to have the highest number of people living with HIV of any country in the world. Providing life-saving antiretroviral treatment to over 5 million people living with HIV—especially as new, more effective medicines and treatment regimens emerge—is a health and development priority that could significantly increase the burden on already over-stretched public budgets. Against this backdrop of high HIV prevalence, coupled with significant rates of tuberculosis (TB) co-infection and a growing burden of non-communicable diseases, the Government of South Africa has released a draft intellectual property (IP) policy that cites increased access to IP-based essential goods pertaining to health, food and education as a key objective.
The authors comment that
Accelerating access to affordable, quality-assured treatment is an essential component of South Africa’s National Strategic Plan (NSP) on HIV, STIs and TB 2012–2016. Of note, the NSP recognizes that the cost of anti-retroviral medicines remains the single greatest expenditure in the NSP’s annual budget. The NSP also calls attention to “ensuring an enabling and accessible legal framework that protects and promotes human rights in order to support implementation of the NSP”. This study aims to contribute to the implementation of the NSP, by making specific recommendations on law and policy reforms to achieve such an enabling and accessible legal framework in three key areas: patent, competition, and medicines law. 
The study begins with an overview of the current landscape for treatment access in South Africa, as well as an introduction to one of the major challenges to achieving lower prices of essential medicines—an international legal framework, under the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Protection (TRIPS)— which requires countries, including South Africa, to apply minimum intellectual property protections on the essential medicines used in the country, regardless of whether they are imported or domestically manufactured. However, the study goes on to elaborate a number of public health-related TRIPS flexibilities, which provide countries with options to increase treatment access. 
Chapter 2 focuses on the flexibilities provided for under the current South African Patents Act. The chapter also provides an analysis of existing policy space; compares the experi- ences of other countries in implementing and using each flexibility; and provides recom- mendations on reform options to maximize outcomes on accelerating access. On the issue of patentability criteria, Chapter 2 suggests that in the interests of public health, promoting pharmaceutical innovation and growth of the domestic pharmaceutical industry, South Africa could move towards an examination system, by initially implementing an opposition-based and/or partial examination system. This would reduce the number of patents currently being granted through its current registration system, which does not involve a substantive exam- ination of patent applications. The transition to a substantive patent examination system could be facilitated by establishing easy-to-apply rules on patentability requiring significant disclosures by the patent applicant, and allowing interested parties including civil society to participate in and oppose, where appropriate, patent applications and grants. 
Chapter 2 goes on to note that the South African Patents Act, as it currently stands, does not take full advantage of the flexibilities available in respect of limitations to patent rights. It recommends that the Patents Act make use of the full range of express exclusions from patentability available under TRIPS, and proposes that the process for issuing compulsory licenses be significantly streamlined, with clear legislative guidelines for determining the grounds upon which compulsory licenses can be granted, as well as their terms and conditions to prevent unnecessary delays. The study notes that the disclosures contained in patent specifications can provide much-needed technological know-how to ensure long-term security in the supply of essential medicines. Therefore, stricter requirements for full disclosure of information in patent applications are recommended. Chapter 2 concludes by scrutinizing the risks to treatment access inherent in a system that imposes harsh penalties in patent infringement proceedings – in particular, broad forms of interdictory relief – which could also pose a significant disincentive for domestic pharmaceutical companies to enter the market, and thereby limit competition. It includes recommendations for minimizing such risks, while at the same time meeting minimal obligations to rights holders. 
Chapter 3 examines how to strengthen the competition enforcement framework in South Africa to address anticompetitive practices. South Africa’s Competition Act is relatively young and largely untested in the realm of intellectual property. In theory, the main flexibilities found in TRIPS (compulsory licensing to remedy anticompetitive practices and the power to regulate specific types of abuse of rights that would constitute anti-competitive behaviour) are potentially available to complainants, though the legislation does not expressly recognize such flexibilities. Anticompetitive practices which have the potential to restrict access to treatment include, inter alia, restrictive licensing agreements, patent ‘evergreening’ and litigation aimed to prevent competition, patent settlements and ‘pay-for-delay’ agreements between originator and generic companies, excessive pricing, refusal to license, and undue market concentration as a result of acquisitions and mergers. Chapter 3 also addresses how the law might be reformed to boost South Africa’s ability to identify and respond to such practices. Amendments to the Competition Act that explicitly clarify such flexibilities (Articles 8, 31 and 40 of TRIPS are the main provisions) are one option. 
Another recommended option is to encourage more cases involving intellectual property to be brought to the Competition Commission, by issuing non-binding guidelines that make the task of a complainant clearer. A related intervention would be to make licensing information about intellectual property more transparent, to aid in putting together a complaint, through the increased use of the existing mandatory public register of patent-related licenses under the Patents Act. Chapter 4 examines the issues of the regulatory framework in South Africa. South Africa is generally viewed as complying with Article 39.3 of TRIPS, while taking advantage of the flexibility inherent in TRIPS by providing for a system of ‘test data protection’ as opposed to ‘data exclusivity’. However, while South Africa currently takes advantage of this TRIPS flexibility to a certain degree, the medicines regulatory system in South Africa could still do much more to safeguard against barriers raised by the drug registration process. It is possible to improve the process for granting marketing approval for drugs – without compromising safety – by addressing the manner in which data is requested and examined, and by leveraging opportunities provided by international certification. By providing additional flexibilities and options in the medicines regulatory system – including explicit fast-tracking that is bound by short timelines – acknowledged delays in the drug registration process could be shortened, while also easing human resource capacity constraints and significantly reducing the backlog of pending applications for approval. Such an approach could ultimately benefit patients and the domestic pharmaceutical industry as a whole. Resources to improve the regulatory environment in South Africa are also presented in the chapter, including opportunities for collaboration with other countries, and making use of alternative regulatory mechanisms, such as WHO’s prequalification of medicines programme. 
The study concludes by emphasizing that the recommendations in the report are aimed at achieving mutually reinforcing goals. First and foremost, it focuses on promoting access to essential medicines. But the recommendations are also made with a second objective in mind: to develop and support policies conducive to the growth and development of the domestic generic pharmaceutical industry. There is opportunity to better align and harmo- nize the three laws in question, both with each other and – particularly in the case of the Patents Act – with the South African Constitution. The process of reforming these laws could benefit from a policymaking approach that is consultative, coherent and developed with the input of all relevant actors, governmental and non-governmental alike. 
With the specific commitments found in the NSP, the Government of South Africa has recognized the role of human rights in achieving its objectives around HIV, TB and STIs. The pursuit of the law reform recommendations found in this paper can contribute to the Government’s achievement of its policy objectives and Constitutional commitments to respect, protect, promote and fulfil the right to medicines not only for these diseases, but also for other HIV co-infections and non-communicable diseases.