The Doha declaration of the World Trade Organisation has allowed individual countries to declare 'public health emergencies' and then override patent protection. This is said to be a major gain for India and other poor countries. Is that really so?
At present, all countries have not implemented the WTO Agreement on Trade Related Intellectual Property Rights (TRIPS). In India, the legislation to grant product patents is not yet in place.
So, many pharmaceutical companies can easily produce new drugs that are granted patents in some other countries but are not granted patent protection in India.
Countries such as India, China and Brazil have quite a few pharmaceutical companies which can produce and sell such medicines at lower costs for the simple reason that they do not have substantial research and development costs to recover. These medicines can be exported to countries that are yet to implement TRIPS fully. So, if there is a major crisis like AIDS in another country, producers of low cost medicines, in say China, India or Brazil, can easily ship the low-cost medicines to meet the immediate requirements. All this is fine, when TRIPS is not implemented everywhere.
When the TRIPS agreement is enforced in full, it is the company that discovers the drug that can produce it and not the others. The company holding the patent may grant license to other producers. Some countries may insist that the patent holder must compulsorily license a local producer to produce the patented drug.
In such situations, it is reasonably certain that the company holding the patent will insist on limiting production capacity of the licensee to meet only the local requirements. The patent holder might also restrict export of the drug by the licensee to other countries.
In the normal course, the licensee will have to pay his royalties and will be allowed by the patent holder to have very little excess capacity to manufacture for export. Thus, the licensee will not be able to meet the requirement of the patented drugs abroad and also will have very little market presence abroad.
Supposing there is a public health emergency in a third country, what that country can do is ask the patent holder to grant license to a local manufacturer. Usually, there may not be enough time to wait for new capacities to come up and so, that country may allow parallel imports, that is, allow imports from persons other than the patent holder.
In practice, this may not bring in relief to the besieged country because the licensee manufacturing the essential drug may be contractually bound not to exceed certain capacities or export to a third country. The licensee may like to honour his contract with the patent holder and maintain relations with him rather than annoy him.
So, what looks like a great relief for the poor countries now, may not turn out to be so, after TRIPS gets fully implemented everywhere. The poor countries may get some more time implement TRIPS but finally, they will have to fall in line. Similarly, what appears a great opportunity for many pharmaceutical companies in India may turn out to be short lived.
'Golden Rule' is that 'one who has the gold makes the rules'. Naturally, one who has the patents will protect his innovations through contractual obligations, no matter what the ministers say.
