Cooperation between the Council of Ministers and the European
Parliament has allowed the rapid amendment and adoption of the
Commission's proposal. The Regulation will be directly applicable
in all Member States from the 20th day after its publication in the
Official Journal of the EU, expected imminently.
The text of the Regulation makes clear that the compulsory
licensing system set up by this Regulation is intended to address
public health problems and therefore it should not be used by
countries to pursue industrial or commercial policy objectives.
The Regulation imposes conditions upon the licensee as regards
the acts covered by the licence, the identification of the
pharmaceutical products manufactured under the licence and the
countries to which the products will be exported.
Background
The Regulation fulfils a World Trade Organisation Agreement of
December 2005 under which national authorities can grant compulsory
licences for such production if certain conditions are
fulfilled.
The WTO Members agreed to amend the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS Agreement) to make
permanent a provisional decision on compulsory licensing originally
adopted in August 2003.
The existing rules on intellectual property provide that
compulsory licences can only be authorised predominantly for the
supply of the domestic market. The amendment will allow any WTO
Member to export pharmaceutical products made under compulsory
licence for the purpose of supplying developing countries with no
or insufficient manufacturing capacities in the pharmaceutical
sector. The new rules will be formally incorporated into the TRIPS
Agreement.
Under the new Regulation, companies in the EU can apply for a
licence to manufacture, without the authorisation of the patent
holder, pharmaceutical products for export to countries in need of
medicines and facing public health problems. There is no specific
restriction on the pharmaceutical products covered, although there
is acknowledgement that they are required to address public health
problems since that is the context of the WTO Decision of August
2003.
The Regulation represents an instrument that will allow the
compulsory licensing procedure of the WTO decision to fit within
the context of Member States’ national patent law and their
compulsory licensing procedures. This is to give transparency and
clarity for those companies operating within the EU’s internal
market and wishing to apply for compulsory licences for export to
countries in need.
Provided countries in need notify to the WTO the medicines they
need, it would be up to generic companies to decide to apply for
licences to manufacture them.
Once export takes place, the Regulation prohibits re-importation
into the EU and provides for customs authorities to take action
against goods being re-imported. The patent holder can use existing
national procedures to enforce its rights against re-imported goods
if they do enter the EU, and the licence can be terminated.
The Regulation also foresees a role for non-governmental and
international organisations as being potentially involved in any
purchasing procedures and able to make requests on behalf of an
importing country with that country’s approval.
Safety and efficacy of medicines for export can be certified
through the EU’s scientific opinion procedure, or equivalent
national procedures. The EU felt this was a necessary complement to
the licensing mechanism in order to assist importing countries.
Comment
Trade Commissioner Peter Mandelson said: "This is an important
EU contribution to the fight against killer diseases in developing
countries. It shows that the EU is committed to the WTO process,
and to ensuring that the WTO system can respond to the public
health concerns of poor countries in need of affordable
medicines."
Chris Martin, an intellectual property specialist with Pinsent
Masons, the law firm behind OUT-LAW.COM, said the intention behind
the Regulation is laudable. But Martin expects some industry
observers to question the implementation.
"The UK pharmaceutical industry is on record as stating that
patent protection is not the main barrier to the availability of
key drugs to the developing world," he said. "It follows that they
will not regard the compulsory licensing of patents in favour of
the manufacturers of 'generic' drugs an appropriate solution."
Despite the Regulation's safeguards against re-importation,
Martin says the unlawful parallel importation of patented drugs
into the EU and other parts of the developed world seems
inevitable.
"Big Pharma will instruct its IP enforcement departments to
monitor closely the grant of compulsory licences under the
Regulation and to vigorously enforce patent rights against any
generic manufacturers who work the patent rights beyond the scope
of the compulsory licence," he said. "Patent rights holders should
also begin to consider whether it would be better to do upfront
commercial deals with generic drug manufacturers, rather than
subject themselves to the vagaries of the compulsory licensing
system under which the issue of compensation will be outside their
control."
The practical relevance or otherwise of the Regulation will
depend on the number of generic manufacturers who decide to apply
for licences. "It will be interesting to see whether more licences
are applied for and granted under the Regulations than has
historically been the case under the somewhat infrequently used
compulsory licensing provisions currently available at law in the
UK," concluded Martin.
