Australia, TRIPS and compulsory pharma licences for LDCs: reaching the endgame

A news item concerning Australia and TRIPS caught this Kat's eye last week and it seemed to him to be not merely interesting but also pretty significant -- particularly for any reader who happens to be either a pharmaceutical company or someone in need of pharmaceutical products in a country where those products can only be accessed with difficulty -- or indeed not at all.  Anyway, who better to write on this subject, and to reflect the mood of the moment in that lovely continent, but Katfriend, patent attorney and fellow blogger of Patentology fame, Mark Summerfield, who has kindly taken the time to gift us the following guest post:
Australia implements the TRIPS Protocol -- at long last
On February 2015 the Intellectual Property Laws Amendment Act 2015 (here) received Royal Assent, being signed into law by the Governor General Sir Peter Cosgrove.  Among other matters, this Act includes provisions to amend the Australian Patents Act 1990 in order to implement Australia’s obligations under the 2005 Protocol Amending the TRIPS Agreement, enabling pharmaceuticals patented in Australia to be manufactured and exported under compulsory licence, in cases of special need by least developed and developing nations. 
The Patents Act has always included compulsory licensing provisions. However, these are available only in limited circumstances where, inter alia, the “reasonable requirements of the public” have not been met by the patentee, and they permit domestic working of the invention only.  These provisions are consistent with (though more general than) Article 31 of the original TRIPS Agreement, which enables a country that is experiencing a serious epidemic to ensure that its population is supplied with a patented treatment.   
However, paragraph (f) of Article 31 prevents products produced without the authorisation of the patent owner from being exported in significant quantities.  The World Trade Organization (WTO) has recognised the potential for this restriction to prevent Members lacking the capability to manufacture pharmaceuticals themselves from importing vital medicines from other Members.  The United Nations currently recognises 48 Least Developed Countries (LDCs), and the overall count of developing countries that may fall into the category could be twice this number.  Many of these countries are in the Asia-Pacific region, and thus of particular relevance to Australia.

The TRIPS Protocol

In 2003, the General Council for TRIPS agreed to an interim waiver of paragraph (f) (and paragraph (h)) of Article 31 so as to enable pharmaceuticals to be exported under compulsory licence. The TRIPS Protocol was drafted in 2005, to give permanent effect to the waiver, with the following main features:
  • only pharmaceutical products that are needed to address the public health problems afflicting many developing and least-developed countries are included;
  • products may be imported by any least-developed country Member, and any other Member that has notified of its intention to use the system as an importer;
  • use of the system is subject to requirements to notify the TRIPS Council;
  • the proposed licensee must have made prior efforts (other than in special circumstances) to obtain authorisation from the patent owner and such efforts have not been successful within a reasonable period of time;
  • licences granted under the TRIPS Protocol must include conditions to reduce the risk of pharmaceuticals being diverted from their intended recipients;
  • adequate remuneration must be paid to the patent owner.
The aim of the TRIPS Protocol is not primarily to occupy the time and resources of national Courts with applications for compulsory licences.  It is hoped that the existence of such mechanisms will be sufficient, in itself, to encourage patent owners either to practise price differentiation and provide medicines to least developed and developing countries in need at affordable prices, or to issue voluntary licences to generic manufactures to provide medicines at affordable prices.  However, if a patent owner is unwilling to do this, the Protocol provides a mechanism to force the patent owner to issue a compulsory licence.

Delays in Australia’s implementation of TRIPS obligations

Legislation to implement the TRIPS Protocol has had a long, and somewhat troubled, gestation.  Australia accepted the terms of the TRIPS Protocol on 12 September 2007, when Prime Minister John Howard’s Liberal–National Party Coalition was in government.  Kevin Rudd’s Labor party came to power in December that year, and nothing further was heard regarding implementation during his (first) tenure as Prime Minister. 
It was not until March 2011 that the Minister for Innovation, Industry, Science and Research and the Minister for Trade jointly announced the Government’s intention to introduce legislation to allow Australian courts to grant compulsory licences to manufacture and export patented pharmaceuticals to countries trying to deal with epidemics and other types of health crises.  By that time, Rudd had been deposed by Julia Gillard, who was leading a minority government supported by cross-bench independent members of the House of Representatives.  Nonetheless, the Government’s stated intention was that the ‘new system’ would be in place by the end of 2011. 
The remainder of 2011, and all of 2012, passed without any further news on the fate of the proposed legislation.  However, on 30 May 2013 the Intellectual Property Laws Amendment Bill 2013 was introduced in the House of Representatives, where it was passed without amendment on 25 June 2013.  The Bill moved rapidly to the Senate, where it received its first and second readings (again without amendment) on 28 June 2013. 
Fate was once again to thwart implementation of Australia’s TRIPS Protocol obligations.  On 26 June 2013, Kevin Rudd replaced Julia Gillard as leader of the Labor Party, and Prime Minister of Australia, and proceeded to call a general election on 4 August, thus halting parliamentary business and causing all pending legislation to lapse.  
Consultation lamentation
Tony Abbott’s Liberal–National Party Coalition was to win the 2013 election, which presented a problem for the reintroduction of the legislation during the new parliamentary term.  Although the 2013 Bill had passed in the House of Representatives without amendment, this was only because the Gillard government had the numbers at the time.  It had, in fact, been opposed by the (then opposition) Coalition parties, which objected that there had been insufficient consultation on a number of provisions in the Bill.  One particular objection was that the provisions implementing the TRIPS Protocol went beyond Australia’s obligation to allow export under compulsory licence to less developed members of theWTO, extending the privilege to other countries recognised as “least developed” by the United Nations. 
In response to the Coalition’s concerns, IP Australia initiated a consultation process in January 2014, inviting comments on an ‘exposure draft’ of a proposed Intellectual Property Laws Amendment Bill 2014, from which most of the more contentious and underdeveloped provisions of the 2013 Bill had been excised.  Significantly, the express inclusion of non-WTO countries as beneficiaries of the TRIPS provisions was replaced with a reference to ‘a foreign country of a kind prescribed by regulation’.  I suggested at the time that this may be a shrewd move to satisfy the government of the day, while enabling expansion of eligible countries at a future date without the need for a further Act of Parliament.  However, I was subsequently assured by IP Australia that the intention remained to extend the range of eligible importing countries beyond the minimum TRIPS requirement, on humanitarian grounds. 
The Intellectual Property Laws Amendment Bill 2014 was introduced in the House of Representatives on 19 March 2014.  Aside from a failed effort by the Greens to reintroduce some of the contentious provisions of the 2013 Bill, it had a relatively smooth passage, passing in the lower house without amendment on 24 November 2014, and in the Senate on 9 February 2015.

Operation of the Australian Implementation

The process for obtaining and exercising a compulsory licence under the Australian implementation of the TRIPS Protocol may be summarised as follows:
  • identify a country’s need for a pharmaceutical product and establish that the country has insufficient manufacturing capacity;
  • identify a suitable Australian manufacturer to make the product and identify the relevant patent;
  • the Australian pharmaceutical manufacturer must then make reasonable attempts to obtain authorisation from the patentee to manufacture and export the product (nb this step may be omitted if the public health problem amounts to a national emergency or other circumstance of extreme urgency, in the importing country);
  • if the Australian pharmaceutical manufacturer is unsuccessful in obtaining the innovator company’s authorisation within 30 days of seeking it, or circumstances of national emergency or extreme urgency apply in the importing country, the importing country notifies its intent to use the Protocol system and other details -– importing countries that are WTO members must notify the TRIPS Council, while those that are not WTO members must notify the Australian Commissioner of Patents;
  • the Australian pharmaceutical manufacturer applies to the Federal Court for a compulsory licence to use the patent, with an expedited process being available in urgent cases.
  • if the Federal Court grants the licence, the licensee must notify the Commissioner of Patents of the licence and of the address of the website where shipment information is to be posted (the Commissioner is responsible for providing this information to the TRIPS Council);
  • the Australian pharmaceutical manufacturer and the patentee may negotiate over remuneration or, if they cannot agree, the Federal Court can determine the remuneration;
  • the licensee makes and exports the patented pharmaceutical in accordance with the terms of the licence, and must post the quantities, destinations, labelling and markings of the product on the nominated website; and
  • the importing country, and anyone importing the pharmaceutical product on its behalf, must take reasonable measures to prevent re-exportation (i.e. diversion) of the pharmaceutical product.
Before issuing a compulsory licence, the legislation requires the Federal Court to be “satisfied” (the term generally implying “on the balance of probabilities”) that
  • the application was made “in good faith”
  • the proposed importation is “by or on behalf of” the identified eligible importing country;
  • the proposed use of the pharmaceutical product is to address a qualifying public health problem in the eligible importing country;
  • a license is actually necessary to enable the pharmaceutical product to be provided to the eligible importing country;
  • the applicant has made reasonable efforts to obtain authorisation from the patentee (or that this is not required in the circumstances, e.g. due to extreme urgency);
  • the notification requirements have been complied with;
  • appropriate measures are being taken to prevent diversion.

Implementing Regulations: consultation still to come

Compulsory patent licensing provisions have rarely been invoked in Australia in any circumstances.  Since the new provisions will apply only in cases of genuine humanitarian need, it is to be sincerely hoped that that they will similarly rarely, if ever, be required.

The provisions come into effect on 25 August 2015.  In the meantime, corresponding Regulations must be drafted and promulgated.  A consultation on the proposed regulations has already been completed, and it is expected that draft Regulations will be made available for review in due course.
Thanks, Mark!
Australia, TRIPS and compulsory pharma licences for LDCs: reaching the endgame Australia, TRIPS and compulsory pharma licences for LDCs: reaching the endgame Reviewed by Jeremy on Tuesday, March 10, 2015 Rating: 5

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