WTO gives third world generic drug boost

By Kirsty Barnes

- Last updated on GMT

Related tags Intellectual property

After a two-year tug-of-war, the World Trade Organization (WTO) has
solidified a landmark agreement to allow poor nations to import
generic versions of patented drugs to treat serious diseases or

The ruling finally makes permanent a temporary waiver introduced in 2003 to the Agreement on Trade-related Intellectual Property Rights (TRIPS), allowing developing countries with no manufacturing capacity to import generic drugs from foreign countries under a compulsory-license system.

Prior to the amendment, the first made to WTO rules since its introduction 10 years ago, countries could only break patents for drugs produced by domestic manufacturers to serve the home market.

The current waiver remains until the new ruling becomes permanent on 1 December 2007, by which date all 148 WTO members should have ratified the amendment in accordance with their national laws.

To date, this temporary waiver has never been used, partly because domestic patent legislation in exporting countries has prevented them from doing so. Norway, Canada and India have already changed their domestic patent laws, while South Korea and the EU say their new laws will shortly come into force.

"The EU is fully committed to implement the system set up by the decision. Last week, the European Parliament cleared the way for its full implementation by European Member States before the end of the year. The EU calls on other WTO members to implement the system as well,"​ said a EU statement.

Under the agreed system, developing countries will notify the WTO of the medicines they need, and generic manufacturers will be able to apply to meet the demand. This would involve contacting their national authorities for a 'compulsory license' from the holder of the drug's patent.

The WTO agreement clears the way for generic manufacturers to develop the processes required to make certain patented APIs and secure an immediate market for the products, ahead of the expiration of the originator's patents.

This could accelerate the introduction of generics once the intellectual property for a drug expires, but has also raised concerns that the products could be diverted from their intended recipients and re-imported for sale in developed countries.

The amendment therefore includes safeguards against abuse and trade diversion and rules to ensure transparency. Under the new rule generic drugs may be imported strictly for humanitarian reasons only and not for commercial purposes.

The decision this week follows another agreement last week to give least developed countries until 2013 to implement WTO intellectual property rules. They already have until 2016 to introduce patents on pharmaceuticals.

The EU has encouraged the new ruling as being an essential part of a development package for poor countries, aimed at cutting trade barriers across a wide range of sectors. Trade ministers will meet to agree on a final package in Hong Kong next week.

However, Médecins Sans Frontières (MSF) has branded the waiver, which the agreement will replace, as burdensome and unworkable and said the WTO has failed to prove it can increase patient access to medicines.

"This decision shows that the WTO is ignoring the day-to-day reality of drug production and procurement. The amendment has made permanent a burdensome drug-by-drug, country-by-country decision-making process, which does not take into account the fact that economies of scale are needed to attract interest from manufacturers of medicines,"​ said a MSF statement.

Without the pull of a viable market for generic pharmaceutical products, manufacturers are not likely to want to take part in the production-for-export system on a large scale. Without competition among several manufacturers, MSF fears it will be extremely difficult to ensure that prices of newer medicines will fall the way first-generation AIDS medicines did.

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