Bayer, GSK, Pfizer and other MNCs agree to bypass drug patents in Ecuador

No legal right is superior to the requirements of public health, say pharma MNCs

Multinational pharmaceutical companies operating in Ecuador has agreed to bypass patents of some 2000 medicines sold in the country.

Foreign pharmaceutical companies accepted the decision of Ecuador’s President Rafael Correa to enable the country “to bypass patents on 2,000 drugs in order to produce them locally or buy cheaper versions elsewhere,” reports said.

14 multinational companies including European and American giants such as Pfizer, Bayer and GSK conveyed through the local pharmaceutical industry association that the would bypass patent rights of their medicines for the benefit of public health in Ecuador.

“‘We accept the democratic decision … to legally implement this extraordinary measure,” the 14 companies reportedly stated.

“No legal right is superior to the requirements of public health, especially in such serious circumstances,” the statement said.

Certain provisions agreed under World Trade Organization, countries can issue ‘compulsory licenses’ to disregard patent rights, allowing local manufacturing companies the ability to produce generic versions of drugs.

WTO rules, however, mandates that the Compulsory Licensing provision should be used only after negotiating with the patent owners and paying them adequate compensation.

In that case – when countries use the Compulsory Lisensing provision in emergency health needs under WTO – Ecuador has to pay royalties to the holders of international pharmaceutical patents, basing the payments on the sale price of locally produced medicines, the Ecuadorian Institute of Intellectual Property said.

Several countries across the world Brazil, Thailand, Zimbabwe, Malaysia, Indonesia, and Thailand have invoked the Compulsory License procedure to import cheap generic medicines, especially American AIDS drugs.

NGOs and other human rights watchdogs ahve have praised these countries noting that patients who develop resistance to older anti-retrovirals need second-line drugs that can be prohibitively expensive.

High costs, insufficient production and a lack of research have contributed to the fact that millions of people do not enjoy equitable access to medicines in developing countries such as Ecuador, said Andres Ycaza, president of Ecuador’s Intellectual Property Institute.

What is compulsory licensing?

Compulsory licensing, which took effect in January 1995, is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property — the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement.  In such cases a government allows someone else to produce the patented product or process without the consent of the patent owner.

The TRIPS Agreement does not specifically list the reasons that might be used to justify compulsory licensing. However, the Doha Declaration on TRIPS and Public Health confirms that countries are free to determine the grounds for granting compulsory licences.
Compulsory licensing must meet certain additional requirements.

Compulsory licence should issued only for “national emergencies”, “other circumstances of extreme urgency” or “public non-commercial use” (or “government use”) or anti-competitive practices, there is no need to try first for a voluntary licence. It’s the only instance when the TRIPS Agreement specifically links emergencies to compulsory licensing: the purpose is to say that the first step of negotiating a voluntary licence can be bypassed in order to save time. But the patent owner still has to be paid.

All WTO member countries are eligible to import under this decision, but 23 developed countries are listed in the decision as announcing that they will not use the system to import: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and the US. Since they joined the EU, the list now includes 10 more: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia.