UNCTAD/CD-TFT 1

Development Dimension: Patents, Regulatory Test Data and their

Impact on Public Health & Innovation

Development Dimensions of Intellectual Property Rights

Hanoi Foreign Trade University, 15 & 16 December

2008

Christoph Spennemann, Legal Expert Intellectual Property Team

Division on Investment and EnterpriseUNCTAD

UNCTAD/CD-TFT 2

Overview of Presentation

• Public health policy objectives• Access• Innovation

• The impact of IPRs• On access• On innovation

• Striking a balance between IPRs and public health: The TRIPS Agreement

• Conclusions

UNCTAD/CD-TFT 3

Public health policy objectives

• Access to affordable medicines• Low income in developing countries• Lack of health insurance out of pocket• Limited resources for publicly funded

treatment programs

• Development of innovative medicines• HIV/AIDS crisis (sub-Saharan Africa)• Other diseases predominantly affecting DCs

(TB, sleeping sickness, river blindness)

UNCTAD/CD-TFT 4

IPRs and access to medicines (1)

• Drug development by industry is costly & risky incentives needed to encourage R&D investment TRIPS obligation to make patents available for drugs

• Exclusive rights contribute to higher drug prices

• OECD countries: safeguards (insurance schemes; competition law & policy to address IP abuses)

• DCs: no or only few safeguards access problem (IP as one among many factors)

UNCTAD/CD-TFT 5

IPRs and access to medicines (2)

• Concerns about access & price WTO Doha Declaration on the TRIPS Agreement and Public Health• TRIPS should not prevent Members from taking

measures to protect public health• TRIPS should be interpreted in a manner

supportive of WTO Members’ rights to protect public health & access to medicines for all

• Members are free to determine grounds for CLs• Members are free to (dis)allow parallel imports

UNCTAD/CD-TFT 6

IPRs and pharmaceutical innovation (1)

• Innovation requires R&D• IPRs as important incentives to recoup

R&D investment (large companies)• Market failure: diseases predominantly

affecting DCs• IPRs as important sources of capital for

small firms (e.g. biotech start-ups): market potential

• IP licensing as important means for small inventors to market invention

UNCTAD/CD-TFT 7

IPRs and pharmaceutical innovation (2)

But R&D requires skills/technological expertise: (+) in OECD; (-) in many DCs

• Skills development through reverse engineering

• Patent prevents reverse engineering of protected products (unless authorization/fees)

• Most patents in many DCs held by foreigners

• Obstacle to domestic learning; dependence on foreign expertise

UNCTAD/CD-TFT 8

IPRs and pharmaceutical innovation (3)

• EU: Despite patent incentive, decreasing number of innovative medicines (EU Commissioner Kroes)

• January 2008: EU Commission launches investigation on potential IP abuses to keep generic competitors out of market (strategic litigation; abuse of dominance)

• USA: low quality patents (not sufficiently new/inventive)

• USA 2002: challenging pharmaceutical patents at success rate of nearly 75% (US Federal Trade Commission)

• Many DCs: few expertise to challenge bad patents

UNCTAD/CD-TFT 9

Recapitulation

• IPRs important tools for drugs development and small business start-ups

• But may block technological learning in DCs (reverse engineering) and follow-on innovation in any country

• In addition, potential for abuse in OECD & DCs: strategic litigation

• Impact of low quality patents on innovation & progress & competition

UNCTAD/CD-TFT 10

Policy responses

• How to reap benefits from IP protection while avoiding negative effects?

• Importance of competition• as a source of innovation • as a means to maintain affordable prices

• Promotion of competition through TRIPS flexibilities: leeway in implementation of minimum standards

UNCTAD/CD-TFT 11

TRIPS Flexibilities for Public Health (1)

• LDC transition periods • 2013 all TRIPS provisions• 2016 protection of pharmaceutical

product patents & related processes; clinical test data

• Window of opportunity for local producers in LDCs

UNCTAD/CD-TFT 12

TRIPS Flexibilities for Public Health (2)

• Parallel imports (IPR exhaustion) • Compulsory licenses (CL)

• New system to facilitate drug exports to countries that lack domestic manufacturing capacities

• Potential for generic drug producers in LDC-dominated trade agreements

• Planned TRIPS amendment (draft Art 31bis)

UNCTAD/CD-TFT 13

TRIPS Flexibilities for Public Health (3)

• Patentability of medical substances• Extractions from nature = invention?

• Product patent – process patent

• New medical use of existing product = new product in patent sense?

• Product patent – process patent – alternative means to protect incremental innovation/traditional medicine (use & pay systems after brief period of exclusivity)

• Trivial changes in chemical structure = inventive step/non-obvious?

• Alternative means to protect incremental innovation

UNCTAD/CD-TFT 14

TRIPS Flexibilities for Public Health (4)

• Exceptions for experimental use: Swiss Patent Law

• Covers both scientific and commercial activities

• Provided research leads to new knowledge about patented product

• Patent protection limited to existing know-how, but does not block follow-on innovation

UNCTAD/CD-TFT 15

TRIPS Flexibilities for Public Health (5)

• Pharmaceutical Test Data: exclusive rights have impact on generic producers

• Generation of own data is too expensive & time consuming

• Apply also to off-patent products

• May exceptionally last longer than patent

• May complicate use of CLs

UNCTAD/CD-TFT 16

TRIPS Flexibilities for Public Health (6)

• Alternative to data exclusivity: use & pay system

• No exclusive rights in data

• Right to claim compensation from competitors (« use and pay »)

• Available under EFTA – Korea FTA

• Implementation: literature discusses at least 3 possible options how to calculate compensation

UNCTAD/CD-TFT 17

TRIPS-Plus developments

• Limitation of available TRIPS flexibilities through bilateral & regional free trade agreements (FTAs): «TRIPS-Plus» obligations (= higher levels of IP protection, reduction of public domain)

• Examples: • Limitation of grounds for authorization of

compulsory licenses• Exclusivity of pharmaceutical test data

UNCTAD/CD-TFT 18

Conclusions

• IPRs impact on public health policies• Access • Innovation

• Importance of public domain for technological learning & competition

• TRIPS provides tools to balance exclusive rights and competition • To maintain prices• To ensure innovation

UNCTAD/CD-TFT 19

Contact

Christoph SpennemannLegal ExpertIntellectual Property TeamDivision on Investment and Enterprise (DIAE)UNCTADE-mail: Christoph.Spennemann@unctad.orgTel: ++41 (0) 22 917 59 99Fax: ++41 (0) 22 917 01 94http://www.unctad.org/tot-ip