IT WON’T be over even after the lady signs. And even after she signs it, the fight for popular access to affordable medicines won’t be over.
All that the cheaper medicines bill needs to be enacted into law is the signature of President Gloria Macapagal Arroyo. But some legal experts lament that as enrolled, the bill passed by Congress bears “imperfections” that effectively affirm the patent rights of big pharmaceutical companies over public health, a major hurdle to bringing down drug prices.
And while the bill introduced amendments to the Philippines’s intellectual property law, the weak and flabby wording of some provisions could challenge implementation, and keep the promise of cheaper drugs locked in litigation.
Lawyer Elpidio Peria, for one, says that as soon as Arroyo signs the bill into law, the battle shifts to the drafting of its specific implementing rules and regulations or IRR. And that, he says, should teach public-health advocates to study intellectual property issues in the pharmaceutical sector more judiciously.
Peria, an associate of the Third World Network (TWN), one of the nongovernmental organizations that had supported the Senate version of the bill, says that the drafting of the law offers one lesson: It is “dangerous” to leave the debate on intractable intellectual property issues to lawyers and policymakers alone.
“The (bicameral) debates only proved the esoteric nature of intellectual property, which makes it dangerous to be left to lawyers and policymakers,” says Peria. “The (Intellectual Property) Code amendments will now have to be scrutinized closely so that its imperfections might be augmented by the IRR.”
HAVE patent rights triumphed over public health?
Throughout the debate, public-health advocates and legal experts had welcomed the inclusion of amendments to the country’s intellectual property law in the final bicameral draft of the affordable medicines bill.
Undersecretary Alexander Padilla of the Department of Health (DoH) himself says that while the bill lost some of the provisions his department had championed, what is important now is that the law would contain “the more important patent flexibilities.”
The global nonprofit organization Oxfam International also says that, if applied by the government, the IP amendments “should help ensure that patent privileges of drug companies do not get in the way of promoting and protecting public health through affordable medicines.”
Yet the likes of Peria worry that the “simplistic debates” on price regulation and the Generics Act amendments had obscured the bill’s IP provisions. As a result, Peria notes, the IP amendments were not fine-tuned and rid of their inherent weaknesses.
Some legal experts now fear that despite its promise of affordable medicines, the law would face difficulties in its implementation, in large part because pharmaceutical companies could take advantage of the loopholes in the patent-related amendments.
Scuffles over ‘generics-only’
Up until the bill’s ratification by Congress in late April, the bicameral debates had focused mostly on the provision of House Bill 2844 that said only the generic names of medicines would appear on medical, dental, and veterinary prescriptions. This raised a howl among doctors who even threatened to declare a “hospital holiday” if the stipulation — which was among those being pushed by the health department — was not removed.
Later, the legislators wrestled over the House of Representatives’s proposal to create a drug price regulatory board. This further delayed the passage of the bill, which had been certified as urgent by the Arroyo administration way back in 2001.
In the end, the “generics-only” provision was dropped and the price-regulation board was replaced with a price monitoring and control mechanism that places the sole authority to impose price ceilings on the President, upon recommendation of the health secretary.
There were loud grumbles about a “watered-down” bill, but many also took comfort in the retention of several key provisions, including those on intellectual property.
“I would have been happier with the inclusion of the generics-only provision,” says Akbayan party-list Rep. Ana Theresia Hontiveros-Baraquel. But she is nonetheless pleased that the IP Code amendments, which were the intent of the original bill she filed in the House, were adopted.
Ireneo Galicia, former deputy director general of the Intellectual Property Office (IPO), also says he can live with the changes in the price control and generics provisions knowing how “politically” sensitive these issues are, as long as his main advocacy, the IP amendments on patent reforms, are intact.
“No doubt,” he says, “these will help immediately bring about the lowering of prices of patented medicines via the parallel importation provision, and in the long term via the early working and new use provisions.”
Drug patent provisions
For sure, the IP provisions included in the final draft of the bicameral bill are formidable. These include:
- adopting the principle of international exhaustion of intellectual property rights (IPR) for drugs and medicines to improve access to cheaply priced drugs anywhere in the world without risk of patent infringement;
- narrowing the definition of what medicines can be patented by disallowing the practice of evergreening — patent coverage for “new uses” of existing, already patented substances;
- providing for a broad parallel importation provision to allow the government to procure quality, affordable patented drugs and medicines from other countries;
- providing additional means to issue compulsory licenses so that the government can easily set aside patent restrictions in response to public health threats; and
- adopting an “early working” or Bolar provision, which ensures that affordable versions of patented medicines can be introduced into the Philippines market immediately upon patent expiration.
The bicameral version also adopted Section 93-A that was introduced in the House bill, which provides an alternative procedure for the issuance of a special compulsory license under the framework of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
The IPO itself has declared that these amendments are a legitimate exercise of the flexibilities accorded to developing countries like the Philippines in the Doha Declaration on the TRIPS and Public Health.
The World Trade Organization (WTO) had adopted the TRIPS Agreement in November 2001. More than six years later, however, such flexibilities have yet to be incorporated in Philippine intellectual property law that would have made it more responsive to the problem of inaccessible medicines and expensive drug prices.
Lawyer Peria says he is happy that the IP amendments made it to the final draft of the bill. But he echoes other experts in pointing out some of these are likely to face challenges from pharmaceutical companies in court. Congress should have strengthened these so they could withstand such challenges, he says.
In fact, from the outset, multinational drug companies, particularly those represented by the Pharmaceutical and Healthcare Association of the Philippines (PHAP), had opposed the proposed amendments to the intellectual property law. As the drug companies see it, these would weaken the country’s patent system.
In PHAP’s 27-page position paper submitted to Congress during deliberations on the bill, 17 pages were devoted to the changes in the IP Code, arguing that these are discriminatory and violative of the due process and equal protection clauses of the Constitution. It also said that these were inconsistent with the country’s international treaty obligations of the Philippines.
These days, Peria’s organization, TWN, has made known its concerns over the final draft’s Section 72, which is on the international exhaustion of patent rights. Peria says this provision was weakened when the bicameral panel opted to retain the national exhaustion principle by inserting the phrase “in the Philippines.” He says this provides patent owners with additional ammunition for litigation as they can argue that the national exhaustion rule still applies in specific circumstances when there is a patent existing in the Philippines for the drug in question.
Section 72.4 on the “early working” or Bolar provision adopted from the House bill, meanwhile, is also weak since it copied the data protection provisions of Article 39.3 of the TRIPS Agreement without its key provisos, says Peria.
These provisos, he explains, stipulate that data protection applies only to new chemical entities and that it should involve data generated through a considerable effort and investment. Without these, the section practically imposes higher levels of intellectual property protection — also known as TRIPS-plus rules — that tend to undermine or weaken the public-health safeguards allowed under TRIPS.
The same is true of Section 74 in regard to government’s use of an invention, says Peria, as it qualifies the public non-commercial use of the patent by the government with the phrase “without satisfactory reason.” This, the lawyer says, is an additional requirement that is not found in the TRIPS Agreement.
And while Peria says that a stipulation allowing government use in case demand for the patented medicines is not met is good, it could be subjected to litigation by the patent-holder because of the phrase “to an adequate extent and on reasonable terms.”
Tripping on TRIPS
Another problematic amendment is Section 93-A regarding the grant of a “special” compulsory license. The provision, he says, “operationalizes” Paragraph 6 of the Doha Declaration on TRIPS and Public Health that calls for making effective use of compulsory licensing by countries with insufficient or no drug manufacturing capacity.
Peria says that legislators may not have realized the international implication of their action when they “unwittingly” grafted to this section Article 31 bis. He says this is an amendment to the TRIPS Agreement that was meant as a “permanent solution” to the issues raised in relation to Paragraph 6 of the Doha Declaration.
In an August 30, 2003 decision, the WTO General Council proposed a “temporary solution” by waiving the limitation that compulsory licenses should be predominantly for the supply of the domestic market. But patent experts and public-interest health groups criticized the decision, noting that it also imposed several conditions and procedures for generics exporters and importers that were largely seen as hindering access to medicines.
Essentially, what Article 31 bis does is to remove this limitation on the grant of compulsory licenses. But Peria says that by calling it “special,” Section 93-A is a “misapprehension” of Paragraph 6 of the Doha Declaration.
“(Paragraph 6) doesn’t refer to the license, but to the process that may be undergone by a country that accepts the Article 31 bis amendment to the TRIPS Agreement,” he explains. “What does that make of the other compulsory licenses in the other provisions of the IP Code? Is there basis for that distinction? Without any basis, the provision can be easily questioned in court.”
Besides, the amendment has yet to come into force, with less than two-thirds of WTO member-nations ratifying it.
Other potentially litigious amendments, says TWN, are the anti-evergreening provisions found in Sections 22 (on Non-Patentable Inventions from HB 2844) and 26 (on Inventive Step from SB 1658). Patterned after amendments in the India Patents Law, both sections exclude from patent protection “new uses” of a previously patented product or process. This addresses the phenomenon of “evergreening,” which consists of the patenting of minor changes to existing products (e.g., formulations, dosage forms, polymorphs, salts, etc.) thereby artificially extending the protection conferred by the original patent over a drug.
Peria says that what legislators might have thought of as double protection against the proliferation of frivolous patents on just about any demonstrable “new use” could be construed as a case of double standards. PHAP, which has insisted that the current IP Code has sufficient safeguards against double patenting and evergreening, may well question these provisions for making it doubly difficult for drug firms to comply, he says.
A veiled US warning?
Heightening worries of public-health advocates regarding the IP amendments is the release last month — just as the bicameral debates on the bill were winding up — of the annual IP report of the U.S. Trade Representative (USTR).
The report highlights, among others, the need for proper implementation of the TRIPS Agreement by developed and developing country-members of the WTO. According to the United States, it will consider all options, including (but not limited to) initiation of dispute settlement consultations in cases where countries do not appear to have implemented fully their obligations under the agreement.
Yet while the Philippines is on its Watch List, the USTR’s concern is more on the apparent increase in piracy cases, particularly concerning books, as well as illegal downloads using mobile devices and the Internet, and illegal camcording of films in cinemas.
Still, the report’s comments on Thailand, which remains on the USTR’s Priority Watch List, could be a veiled warning to the Philippines. After all, the report cites the “overall deterioration” in Thailand of IP rights protection, which includes the use of compulsory licenses to produce cheaper versions of patented medicines.
The USTR has urged Thailand to respect the viability of the existing patent system. It sides with the developed-nation pharmaceutical industry that has expressed concern that “the use of such licenses in mid-size economies such as Thailand could inflict economic harm on the industry and its ability to carry out research and development.”
The Office of the U.S. Trade Representative was suspected of attempting to modify some of the provisions in House Bill 2844 during the deliberations prior to its passage on third and final reading last year. An unsigned position paper circulated among members of the Lower House’s trade and industry committee was traced to the USTR based on references in the paper to U.S. “modern free trade agreements.”
The paper had called the legislators’ attention to the strict definition of patentability and the provision on the government’s use of compulsory licensing in the House bill.