What Patent Reform In Brazil And South Africa Can Mean

Article originally found on Pharmalot here. By Brook Baker

In recent months, two countries with large economies and large populations both took steps to rework their patent laws, in part, to expand access to medicines. The moves come amid increasing concerns that treatments for certain ailments, such as AIDS and cancer, are out of reach for many people. Their actions also underscore growing tension with the pharmaceutical industry over pricing policies and an increasing willingness among some governments to rely on international trade agreements to consider compulsory licenses as a work-around solution. Brook Baker, a professor in the Program on Human Rights and the Global Economy at the Northeastern University School of Law, and a member of Health Gap, Global Access Project, suggests other countries may be emboldened to do the same.

It is no coincidence that the governments of Brazil and South Africa have concurrently launched patent law reform projects designed to increase affordable access to medicines of assured quality.  On October 9, the Brazilian Center for Strategic Studies and Debates formally launched its 363-page report “Brazil’s Patent Reform: Innovation Towards National Competitiveness,” which included proposed legislation (read here). The report addresses patent law reform in Brazil taking into account the core standards of the WTO TRIPS Agreement, TRIPS flexibilities, public health imperatives, and industrial development.

And two months ago, the South African Department of Trade and Industries launched its long awaited Draft National Policy on Intellectual Property (here it is). Although the South African reform process is not as advanced as the Brazilian, the Draft Policy also proposes reforming South African patent law to take advantage of TRIPS flexibilities.

Brazil has historically played an important role in responding to the global AIDS pandemic and in shaping market dynamics affecting access to antiretroviral medicines. Brazil was the first developing country to offer universal free access to antiretroviral therapy for people living with HIV and AIDS in 1997. The country also used lawful flexibilities to manufacture pre-1995 antiretroviral domestically thereby reducing the costs of treatment by nearly 75 percent.

Relying on domestic production and sourcing key inputs from India helped to create economies-of-scale for active pharmaceutical ingredients, and those savings have in turn been utilized by Indian generic manufacturers, who have further reduced prices to a tiny fraction of their former cost. In addition, Brazil has used compulsory licenses and the threat of compulsory licenses to obtain lower prices on key ARVs and to accelerate technology transfer. In international forums, Brazil has consistently defended the rights of developing countries to adopt and safeguard TRIPS flexibilities.

Although South Africa lost a decade in its HIV response because of AIDS denialism, civil society was proactive in campaigning for cheaper AIDS medicines through intervention in drug company lawsuits, use of competition law, and promotion of voluntary licenses. More recently, the South Africa government has accelerated from ground zero in 2004 to providing public-sector treatment for over 2.2 million people living with HIV in 2012 and has achieved global best prices in its procurement of first-line antiretrovirals. Like Brazil, South Africa too has championed preservation of TRIPS flexibilities, particularly in African forums.

Now both countries have taken their global and regional stances further by proposing patent law reform that would make it much harder to gain and maintain IP monopolies on medicines.  For example, following on the leadership in this area set by India, Brazil is now undertaking to erect stricter standards of patents to eliminate evergreening (lengthening of patent monopolies) via secondary patents on new uses and new forms of existing medicines.

To help improve the quality of its patent examination, Brazil proposes to adopt pre-grant opposition procedures with broad standing for both competitors and others to provide relevant information; it is reconfirming its drug regulatory authority’s beneficial role in reviewing pharmaceutical patents. The proposed patent law reform in Brazil also precludes patent term extensions for regulatory delays and provides for easier-to-use government-use licenses. Finally, the Brazilian reform confirms that Brazil will not allow monopolies on regulatory data to block registration of therapeutically equivalent generic medicines.

Similarly, the South African government has recently issued its own draft IP Policy that proposes many of the same reforms that are being pursued by Brazil. Like Brazil and India, South Africa proposes to restrict unwarranted patenting and re-patenting medicines by adopting higher standards with respect to patentable subject matter and inventive step. Even more importantly, South Africa is for the first time willing to consider operationalizing a patent examination system, at least on medicines, instead of relying on the blind-trust depository system it currently has that results in more patents on medicines than virtually any country in the world.

Like Brazil, South Africa will adopt opposition procedures to enhance the quality of its patent determinations and it is proposing to broaden its grounds for compulsory licenses and to ease procedures for their issuance. Under the permissive language of Article 39.3 of the TRIPS Agreement, South Africa is confirming its opposition to data/regulatory exclusivity that thwarts early registration/marketing approval for generic equivalents of previously registered medicines.

Going even further than Brazil in certain areas, South Africa proposes limiting IP-enforcement mechanisms to disallow border interference with lawful trade in generic medicines and to make proactive use of competition law to regulate IP-related voluntary licenses.  In the same vein, South Africa will undertake to make its existing parallel importation regime more useable.

It is a positive signal to low- and middle-income countries more broadly that Brazil and South Africa join India and other countries like Uganda, Zambia, Botswana, and Malawi that are also taking proactive steps to incorporate lawful TRIPS compliant flexibilities, including stringent standards of patentability, pre- and post-grant opposition procedures, easier-to-use compulsory and government use licenses, and restrictions on data/regulatory monopolies among others. Hopefully the leadership of powerful middle-income countries on three continents will create a groundswell of IP reform in the Global South designed to enact and then use all available measures to ensure affordable access to medicines for all.

The pharmaceutical industry and its supporters in the offices of US and EU trade negotiator will not sit quietly while these reforms are undertaken. Both countries have already seen a counter-offensive mounted in the media and behind the scenes with government officials by pharmaceutical company lobbyists and spokespersons – academic or otherwise, who present the same tired litany of responses:  less IP in developing countries will ruin the monopoly profits needed to incentive research in the next generation of life-saving medicines; patents aren’t the problem, the problem is weak health systems; and the absence of IP is thwarting innovative activity by domestic inventors, creators, and artists.  Each of these responses has been discredited over and over again by unrebutted evidence, but that doesn’t prevent the pharmaceutical industry from seeking to preserve and expand its monopoly empires, especially in so-called pharmerging countries like India, South Africa, and Brazil.

Success in the proposed reforms is by no means certain. Threats of pharmaceutical Armageddon, trade losses, and domestic disinvestment will be made.  Domestic political and economic elites might be more satisfied with obtaining sweetheart deals and private concessions than with prioritizing the public health needs of the broader population. Fortunately, the reform efforts in Brazil and South Africa have not come out of a social vacuum.  Both countries have strong civil society and health activist campaigns that have fought for the requested reforms for many years.

The Treatment Action Campaign first addressed these needed reforms in the early 2000’s but then launched a much more concerted campaign along with Doctors Without Borders and Section 27 in 2011. Brazilian activists have similarly challenged their government to be more proactive and to adopt the mainstream reforms that have now been put forward.

The aspiration to achieve the right to health in Brazil and South Africa, and in low- and middle-income countries more broadly, cannot be achieved under the yoke of IP fundamentalism and the continuing threat of longer, stronger, and broader IP monopolies on medicine. Leading countries need to claw back their policy space – the policy space they fought for in the TRIPS and Doha Declaration negotiations. Instead of sticking their necks out sporadically and individually, it makes sense for them to collaborate in adopting and operationalizing TRIPS flexibilities.

Once they amend their laws, then they can approach the more daunting task of implementing the flexibilities so as to achieve robust generic competition in broad markets. This will undoubtedly require coordination in the review of patent applications and in the issuance of compulsory licenses on strategic medicines. At the end of the day, such strategic alignment could embolden BRICS and other countries to question to wisdom and morality of allowing IP monopolies on essential global public goods like medicines and encourage them to pursue broader investigation of proposals to design a better incentive and market system that promotes and rewards therapeutically important innovation and affordable access to the resulting medical technologies.

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