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Around the turn of the century, developing countries, led by African countries, dramatically fought for and won safeguards to promote access to medicines in international trade law. These safeguards are now being heralded by lawmakers around the world as critical legal mechanisms that nations can and must use in the fight against Covid-19.
Maybe the most important of these safeguards is the right to grant compulsory licenses when the public interest requires it. In short, compulsory licenses allow generic companies to manufacture and sell medicines even if the medicine in question is still under patent. It is called “compulsory”, since the license is granted whether or not the patent-holder agrees to it. The patent-holder is paid royalties as compensation.
The background
International trade law determines the standards of patent protection that World Trade Organisation (WTO) member countries are required to provide. The WTO was established in 1995 to govern international trade and settle disputes between countries. In the same year, the Agreement on Trade-Related Aspects of Intellectual Property Rights (commonly known as TRIPS) came into force. South Africa has been a member of the WTO since 1995.
The TRIPS agreement obliges WTO member countries to provide 20 years of monopoly protection on patent claims meeting countries’ patentability criteria (these can differ widely between countries).
As multiple patent claims are typically filed on single medicines, patent holders’ monopoly periods on medicines often extend long beyond 20 years due to secondary patents. In the absence of competition, patent holders can set high prices unrelated to the costs of developing and manufacturing medicines in order to maximise profits. Consequently, medicines under patent are often unaffordable for many individuals and health systems.
Deadly history
During the late 1990s and early 2000s, patents upheld in South Africa had deadly consequences, blocking access to life-saving HIV treatment for hundreds of thousands of people and contributing to many avoidable deaths.
South Africa amended its national patent laws to provide 20-year patent monopoly periods as required by TRIPS in 1997. However, in the same year, South Africa also amended its legal framework governing the regulation of medicines to include some limited health safeguards contained in TRIPS that enable generic medicine access.
The international pharmaceutical industry quickly fought back against the proposed legislative changes. In 2001, 39 international pharmaceutical companies brought a legal challenge against former President Nelson Mandela’s government, seeking revocation of legal provisions to promote generic medicine access in South Africa. The United States (US) threw its weight behind the pharmaceutical companies and threatened to impose trade sanctions against the fledgling democratic state. The case was eventually dropped following widespread mobilisation by the Treatment Action Campaign (TAC) and international outrage against the actions of the pharmaceutical companies.
However, as a consequence of this case, as well as aggressive actions taken by the US to block access to generic HIV medicines in Brazil, developing countries realised that they would confront significant challenges when seeking to adopt and use TRIPS health safeguards. In response, a group of African countries called on the WTO to convene a special discussion on intellectual property and medicines access. During these discussions, developing countries lobbied for the adoption of a declaration confirming countries’ rights to adopt and use TRIPS health safeguards. The result was the landmark 2001 Doha Declaration on TRIPS and Public Health.
The Doha Declaration and Covid-19
Critically, the Doha Declaration affirmed the right of countries to determine the grounds for granting compulsory licenses to address health needs. Developing countries also successfully opposed efforts by the US to limit the use of compulsory licensing to HIV, tuberculosis and malaria. As a result of the efforts of developing nations, compulsory licensing now provides an important legal avenue available to countries in addressing all health conditions – including Covid-19.
While the Doha Declaration unambiguously confirmed the right of countries to use compulsory licensing and other TRIPS provisions to address health needs, countries must enact provisions into their national laws in order to use the safeguards. Maybe still smarting from the legal battle and trade pressure around the 1997 legislation, almost twenty years later South Africa’s laws have not been amended to enable use of all available health safeguards set out in TRIPS and the Doha Declaration.
Despite the Doha Declaration representing agreed international law, countries continue to face various forms of retaliation and trade pressure when amending their national laws to adopt TRIPS health safeguards or using the safeguards to improve medicine access. In 2007, the pharmaceutical company Abbott withdrew its regulatory applications for new medicines from Thailand in retaliation for the country’s compulsory licensing of the HIV medicine lopinavir/ritonavir. In 2012, Bayer brought a legal challenge against India for granting a compulsory license on the cancer medicine sorafenib (which enabled a 97% price decrease) and Bayer’s CEO Marijn Dekkers famously stated: “We did not develop this medicine for Indians… we developed it for Western patients that can afford it.”
The United States and European Union consistently seek provisions in bilateral trade agreements that restrict the freedom of trading partners to use TRIPS health safeguards. The United States also routinely threatens trade sanctions against developing countries considering or using compulsory licensing provisions for health – regardless of its own avid use of compulsory licensing to secure state access to knowledge and technologies, or remedy anti-competitive practices in America.
Despite its integral role in securing provisions in international trade law enabling compulsory licensing for health, South Africa has never issued a compulsory license on a medicine, not even in the worst days of the Aids epidemic. This is partly because of a lack of political will and partly because of shortcomings with the existing compulsory licensing provisions in South Africa’s Patents Act.
The country has, however, taken important steps towards improving its legal framework for granting compulsory licenses. In 2018, South Africa adopted a national policy committing to pro-public health reform of domestic patent laws, including simplifying its procedures for compulsory licensing for medicines. This policy was broadly welcomed by patient groups in South Africa, who have long advocated for pro-public health reform of South Africa’s patent laws through the "Fix the Patent Laws" campaign. The policy has however as yet not resulted in any change to South Africa’s Patents Act.
In committing to reform its patent laws to promote medicine access and health rights, South Africa stood up to undue pressure from foreign pharmaceutical companies, the United States government and others. In 2014, leaked emails revealed a plot by foreign pharmaceutical companies to fund efforts to subvert pro-public health reform of South Africa’s patent laws. The episode was labelled "Pharmagate" and described as "genocide" by former Health Minister Dr Aaron Motsoaledi. In 2015, the US sought to pressure South Africa to abandon patent law reform in order to remain eligible for inclusion in the US AGOA trade programme.
Is the tide turning?
Opponents of compulsory licensing for health have long sought to stigmatise compulsory licensing through the use of rhetoric that frames the legal mechanism as a form of theft and piracy. They argue that compulsory licensing robs industry of the financing needed for future innovation.
This is despite industry’s ongoing refusal to disclose their financial contributions towards heavily state-subsidised biomedical research and development (R&D) efforts and evidence that industry’s marketing expenditures typically dwarf their R&D contributions. Critics of compulsory licensing often also neglect to mention that the patent-holder receives royalties from generic manufacturers – though these royalties are likely lower than the profits the patent-holder would have made otherwise.
Learning from the Aids crisis and the more recent excessive pricing of cancer medicines, there are legitimate fears that companies will price effective Covid-19 treatments excessively high should effective treatments be found. Should pharmaceutical companies engage in such unethical pricing, compulsory licenses are one legal mechanism governments can use to ensure their people get the medicines they need.
Lawmakers in several countries have already demonstrated an interest in or willingness to use compulsory licensing to access medicines, diagnostics, vaccines and personal protective equipment for Covid-19. It is hard to understate how unprecedented these developments are, especially given that they are occurring in wealthy countries such as Canada, Germany and Israel.
This month Canada and Germany passed emergency legislation simplifying procedures for granting compulsory licenses in response to Covid-19.
Lawmakers in Chile and Ecuador issued resolutions calling on their Ministries of Health to use compulsory licensing for Covid-19 and take steps to enable its use.
Israel went even further, issuing a compulsory license this month to enable generic access to the drug combination lopinavir/ritonavir for Covid-19 (despite important outstanding questions about its effectiveness against Covid-19). And, in stark contrast to the company’s response in Thailand, AbbVie (formerly Abbot) responded to Israel’s compulsory license with an announcement that it would no longer enforce patents on lopinavir/ritonavir anywhere in the world – likely fearing a global wave of compulsory licensing of the drug.
Two decades later
Two decades after the Doha Declaration, few countries have used compulsory licensing for health – fearing trade and other repercussions. Developments in various countries over the last two months suggests that Covid-19 may change this.
The current momentum around and use of compulsory licensing in both wealthy and poor countries may normalise the long-stigmatised legal mechanism and bring it into focus for what it is – a mechanism to serve the public interest when a private company is putting excessive profits ahead of people’s lives.
In the short term, compulsory licensing will have immediate impacts on whether or not people have access to Covid-19 treatments. In the longer term the normalisation of this mechanism may significantly strengthen governments’ ability to curb abusive monopolist behaviours and excessive pricing of medicines. As was the case around the turn of the century much will depend on the ability and political will in developing country governments to drive change that is in the public interest.
South Africa, together with other developing countries, played a critical role in securing an international legal framework that enables compulsory licensing for health. It is critical that we continue to play this progressive leadership role on the international stage. But it can’t stop there. Domestically our lawmakers must now take action to ensure our people can benefit from these hard-fought international gains. This means reforming the country’s patent laws in line with the 2018 national intellectual property policy. At the same time, our Minister of Health and our President must commit to use what compulsory licensing provisions we have in our law should we need to use them in future to ensure access to effective Covid-19 treatments or vaccines.
