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Compulsory licensing of pharmaceuticals and TRIPS Agreement

By PPO Abogados - 05/07/2022

The pandemic has set in motion the work of scientists, inventors and creators, allowing in record time the long-awaited availability of the vaccine against COVID 19. Several laboratories are producing the vaccine, which generates a delicate situation regarding the rights arising from the protection that the State must provide to the vaccine inventors.

These types of rights are very similarly regulated around the world, and in Bolivia we particularly have national and supranational regulations that regulate the patent regime applicable to the country and its relations with other States in matters of intellectual property.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was adopted in 1995 by the World Trade Organization (WTO). In principle, the TRIPS Agreement guarantees the exclusive right of patent holders to prevent third parties, without their consent, from manufacturing, using, offering for sale, selling or importing the products or processes covered by the patent. In turn, it grants the patent owners the possibility of licensing, transferring or assigning their rights.

Although an exclusive right is guaranteed, the TRIPS Agreement also regulates, exceptionally, certain uses without the authorization of the owner of the rights to the patent. One of such situations is the use of these rights by governments in the case of a national emergency or other circumstances of extreme urgency.

Even so, in order for this "unauthorized use" to be legitimate, it must conform to certain guidelines:

i) the right holder shall be notified as soon as reasonably practicable;
ii) the scope and duration of such use shall be limited to the purpose for which it was authorized;
iii) such use shall be non-exclusive;
iv) such use shall be non-assignable;
v) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use;
vi) authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur.
vii) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization. (1)

With this background, in 2017 an amendment to the TRIPS Agreement entered into force, related to patents and public health, which established, based on the figure of compulsory license, a regime of greater flexibility applicable to pharmaceutical products, understood as “any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems.” (2)

This amendment arises from the Doha Declaration on the TRIPS Agreement and Public Health, which in its most important parts states: "We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members right to protect public health and, in particular, to promote access to medicines for all. Each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.” (3)

The system that is implemented through this amendment relaxes the initial provisions of the TRIPS Agreement and allows the import and export of patented products made based on compulsory licenses. It establishes the figures of "importing country" which is understood to be a developing country whose manufacturing capacities in the pharmaceutical sector are insufficient or non-existent, and an "exporting country", which is understood to be a country that has the capacity to produce the pharmaceutical products and export them to the “importing country”.

Within this system, the granting of the compulsory license implies an adequate remuneration to the owner of the rights. It must include:

i) the name and address of the licensee;
ii) the product for which the license has been granted;
iii) the quantities for which the license has been granted;
iv) the country or countries to which the product is to be supplied;
v) the duration of the license. (4)

This exceptional system aims to protect public health through a system of compulsory licenses that supports countries that find themselves in situations of extreme urgency, while also protecting the interests of right holders. Perhaps in light of this system envisaged by the WTO, it is feasible to explore fair licensing options for COVID 19 vaccine patents, which mitigate the situation in which the world finds itself as a result of the pandemic, but that especially do not allow us to ignore the importance of innovating and promoting the patent system as a tool for excellence and a platform to continue developing new products and processes that improve our quality of life.

(1) Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2017
(2) Annex of the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2017
(3) Doha Declaration on the TRIPS agreement and public health, 2001
(4) Annex of the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2017

By PPO Abogados - 05/07/2022
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