On the heels of the statement by South Africa earlier this week on patents and health, the Fix the Patent Laws campaign is again very encouraged to see the second statement from the South African government, made on 14 December 2016. This time, a comprehensive account of South Africa’s experience related to access to medicines was given to the Standing Committee on the Laws of Patents (SCP) at the World Intellectual Property Organisation (WIPO).
The statement makes specific mention of the Fix the Patent Laws campaign and the changes being proposed for South Africa’s laws. While the coalition applauds these latest statements, we urge the government to remember that we need these reforms urgently. We know that people will continue to suffer until actual legal change is brought to South Africa’s patent laws, allowing better access to affordable medicines.
The latest statement is below:
South Africa Access to Medicines: South Africa’s Experience Related to the Topic of Access to Medicines at the Standing Committee on the Laws of Patents
Madam Vice Chair,
South Africa is pleased to be afforded the opportunity to share its journey in the quest to provide access to essential medicines through the patent system.
As some of you would be aware, South Africa has a proud history of robustly engaging with issues that concern intersection between Intellectual Property (IP) rights and public health. Indeed the South African government’s stance in the case between the Pharmaceutical Manufacturers Association versus the President of South Africa (the late President Nelson Mandela) in 1998, was a key factor leading to global dialogue around the potential negative impacts of intellectual property rights on public health, culminating in the Doha declaration on TRIPS and Public Health.
South Africa has been a key player in the global recognition that the duty owed by States to safeguard public health is not inconsistent with the responsibility to honor international treaty obligations.
In the late nineties, for countries such as South Africa, the affordability of antiretroviral medicines was the main barrier to them being listed as essential medicines, and provided to patients. In 1998 the National Essential Medicines Lists Committee recommended to the Minister of Health that antiretroviral therapy (ART) be approved for provision to persons living with HIV/AIDS, provided that the price of the medicine could be reduced. It was within this context that the interpretation of TRIPS and IP protection and their impact on pricing and affordability of medicines became salient.
Measures to ensure affordability in South Africa
To address some of the challenges associated with patent-related pricing monopoly, South Africa amended its Medicines and Related Substances Control Act, (Act 101 1965) introducing Section 15C, titled “Measures to ensure supply of more affordable medicines.” This section was introduced to provide for parallel importation and compulsory licensing.
The pharmaceutical industry, backed by some governments, vigorously opposed the enactment of Section 15C, arguing that it was tantamount to a complete annulment of patent rights and that it violated the TRIPS agreement. In spite of vociferous opposition, Section 15C was signed into law by the late President Nelson Mandela on 12 December 1997.
In an attempt to block the implementation of Section 15C, over 40 of the World’s largest and most powerful pharmaceutical companies initiated a court action, challenging the constitutionality of Section 15C before the High Court of South Africa in February 1998. Section 15C was also put on the agenda for high-level bilateral trade discussions between South Africa and some countries which resulted in South Africa being placed on a special ‘watch list’ in 1998 and 1999 relating to international trade relations.
These tensions escalated, and ultimately created significant public awareness and controversy regarding the conflict between the pharmaceutical industry and developing countries. As this pressure increased the narrative emerged that pharmaceutical companies were putting ‘profit before the people’. The lawsuit against the South African government was ultimately withdrawn unconditionally in May of 2001, with costs. Civil society treatment access activists cite the successful media campaigns as central to achieving this victory.
Doha Declaration & TRIPS flexibilities
As the global narrative in favor of access to medicines continued to strengthen, in 2001 developing countries raised concerns about the possible negative impact that a narrow interpretation of TRIPS could have on certain policy objectives, particularly public health outcomes relating to access to medicines. These concerns culminated in the Doha Declaration on 14 November 2001, which clarifies that the TRIPS agreement should be interpreted in a way that support public health objectives, by stimulating the creation of new medicines whilst also promoting access to existing medicines. Thus, the TRIPS agreement “should not prevent Members from taking measures to protect public health…and should be interpreted in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicine for all.”
This declaration clarifies TRIPS flexibilities, including compulsory and voluntary licensing, the Bolar exception, non-commercial use and the parallel importation of medicines. These mechanisms have been incorporated into our law through the amendment of our Patents Act of 1979, the Medicines and Related Substances Control Act and other relevant legislation, to circumvent limited access to medicines due to market exclusivity. However, providing access to essential medicines still remains a challenge because of the delicate exercise of balancing interests of both innovators i.e. (pharmaceutical companies) and the public at large.
Activist pressure, competition law & use of voluntary licenses
Since 2001 many Generic manufactures have secured voluntary licenses to produce medicines in South Africa, including over 20 licenses for medicines in the antiretroviral category. The increase in voluntary licensing (VL) agreements for ARV drugs was often a result of civil society pressure, and the use of competition law. For example, in 2002 activist initiatives of the Anti-Retroviral Therapy (ART) treatment campaign, resulted in some multinational companies being found guilty of excessive pricing by the South African Competition Commission. At this time the prices of patent holders were between 3 and 10 times higher than the least expensive generic version of the same medicines.
In 2004, the prices of ARV dropped to a level where the South African department of health introduced them as essential medicines. However, prices remained relatively high and there were concerns regarding financial sustainability. Over time, however, often as a result of ongoing civil society pressure, increasing numbers of voluntary licenses were issued, resulting in steady price decreases. In one example, in 2006 a license for the drug tenofovir (TDF), was granted to a generic manufacture and as a result the price for the drug decreased by 64%.
Similarly in 2007, activist pressure resulted in complaints to the Competition Commission regarding more multinational companies for excessive pricing. As a result, these companies issued voluntary licenses, after which competition increased and prices for the medicines concerned decreased in state tendering processes. Licenses for generic manufacturing of APIs in other parts of the world have also contributed to cheaper APIs, and thus cheaper medicine formulation since APIs accounts for approximately 70% of the cost of manufacturing for ARVs.
The current activist initiative ‘Fix the Patent Laws’ has resulted in a number of media battles and ongoing pressure towards multinational pharmaceutical companies regarding pricing and affordability for patented medicines. This activist campaign aims to strengthen Intellectual Property laws in South Africa in the interests of stimulating medicine price competition. This is an ongoing process with multiple stakeholder involvement including the Department of Trade and Industry, the Department of Health and the Department of Science and Technology.
Intellectual Property Law in South Africa
South Africa has never issued a compulsory license but those manufacturers who have actively courted multinational pharmaceutical companies have acquired lucrative voluntary license agreements where pressure exists to improve generic manufacturing. These companies are careful to maintain IP regulations and good relationships with pharmaceutical firms, in favour of potential of local voluntary patent pools for innovation, rather than supporting a compulsory licensing approach.
As a way forward, in July 2016, the South African cabinet approved a new IP Policy Consultative Framework, which aims to promote competition and ensure the levelling of the playing field in the area of public health and intellectual property rights. The new IP policy framework takes a consultative approach that seeks to include all relevant stakeholders, which includes government, the pharmaceutical industry, NGOs and the general public.
This framework will consider the amendment of current IP laws, to ensure that a balance is struck between IP rights and the rights of every citizen to access to medicines. It will also consider simplifying the processes of providing access to medicines and fast-tracking the approval processes required to access such medicines. In South Africa, the current process to obtain a compulsory licence requires a judicial process which is a lengthy process and because it involves litigation, it is an expensive process. The policy will therefore consider a more streamlined and accessible administrative process as opposed to a judicial process for obtaining a compulsory licence.
As highlighted above, parallel importation of medicines in South Africa is governed by section 15C of the Medicines and Related Substances Act and it is also dealt with in the South African Patents Act of 1979 as amended, which provides for exhaustion of rights. However there is some uncertainty over whether Section 15C applies not withstanding any rights conferred in terms of the South African Patents. The policy will also clarify maters on exhaustion of rights where parallel importation is concerned.
The policy will also consider amendments to the Patent Act to provide for substantive examination of patent applications and introduction of opposition proceedings in the grants of patent rights. We have already heard the story of Thobeka, who required a cancer drug in the treatment of breast cancer. However, due to the high price of this drug, it was inaccessible to most patients who have been diagnosed with breast cancer, resulting in the unnecessary deaths of patients even though suitable treatment was available. Interestingly, the patent had expired in most countries where patent protection had been obtained. But because South Africa has a depository system, this patent continued to remain in force on the patent Register. In terms of South African law, it would have required protracted and expensive litigation to challenge the validity of this patent. Hence it is a policy position of the South African government to introduce substantive search and examination and opposition proceedings to ensure that only quality patents remain on our registers.
In conclusion, South Africa is embarking and consultative and inclusive process to address issues of IP rights and access to essential medicines. We recognize the importance of striking a balance between the needs of indigent people who require access to medicines but because of their status are unable to afford and access essential medicines and on the other hand, the need to incentivize pharmaceutical companies to continue in investing in research and development of new medicines to address future needs.
In all these efforts, we would want to be in a position to continue to call on WIPO, to support us to craft IP policies that support our objectives of balancing the rights of innovations and needs of the public.
I thank you Madam Chair