WORLD TRADE
ORGANIZATIONIP/C/W/339
4 March 2002
(02-1090)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
CONCEPT PAPER RELATING TO PARAGRAPH 6 OF THE DOHA DECLARATION
ON THE TRIPS AGREEMENT AND PUBLIC HEALTH
Communication from the European Communities and their member States
The Secretariat has received the following communication dated 1 March 2002 from the
Permanent Delegation of the European Commission, with the request that it be circulated as a formal
document.
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I. INTRODUCTION
1. Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health recognizes
that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector
could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement.
Therefore, the Declaration instructs the TRIPS Council to find an expeditious solution to this problem
and to report to the General Council before the end of 2002.1
2. The European Communities and their member States (hereinafter "the EC") are committed to
continue the efforts they made before and at D oha by cooperating with the other WTO Members in
order to reach agreement on such a solution.
3. In this communication, the EC examine the probl em referred to in paragraph 6 of the Doha
Declaration on the TRIPS Agreement and Public Health and explore two possible options for a
solution.  The EC recognize that other options migh t exist and are willing to consider any realistic
approach on its merits.  At this stage, the position of countries which are unable to issue a compulsory
licence at all because of an absence of patent protection or because no patents for a given product
have been applied for is not addressed in the current proposal.  Nevertheless, the EC are ready to
consider that issue, too, in the TRIPS Council.
4. As a preliminary remark, the EC wish to point to two important aspects.  First, even when
manufactured under a compulsory licence, medicines may still be unaffordable for certain segments
of the population in poor countries.  After all, production of medicines, even by a manufacturer other
than the patent holder, always has a cost, and manufacturers have to make a reasonable return on
investment if they are to stay in business.  Second, any solution that emerges from the discussions inthe TRIPS Council will never be a panacea for the problem of access to medicines. It is widely agreed
that improving such access requires a mix of complementary measures in different areas.  These
measures include: public financing of drugs purchases; strengthened health care systems, including
                                                     
1 The view of the EC is that finding "an expeditious solution" to this problem means, in effect, that one
should be found before the end of 2002.IP/C/W/339
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the infrastructure for distributing drugs and monitoring their usage; improved information and
education; and increased research and development.  The discussion within the TRIPS Council should
not overshadow these aspects; nor should it divert attention from ongoing international efforts to
make medicines available at affordable prices, such as the Global Fund to fight HIV/AIDS,
tuberculosis and malaria (GFATM) or the Europe an Commission’s own ‘Programme for Action’.2
II. THE PROBLEM
II.1 The legal angle
5. During the previous discussions within th e TRIPS Council on the link between the TRIPS
Agreement and public health, it was argued that WTO Members with insufficient or no manufacturing
capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory
licensing under the TRIPS Agreement with regard to patented pharmaceuticals.  For such Members,and most developing or least-developed country Members in particular, the right granted by Article 31
of the TRIPS Agreement is of no practical use because, in reality, there is no domestic manufacturer
to which such licences can be granted.  As a result, they do not enjoy the degree of flexibility or
possess the kind of leverage that the ability to issue a compulsory licence can give, and in some
circumstances may therefore find it more difficult to obtain substantial price cuts on essentialmedicines.  Finding a solution to the problem posed by their current inability to resort to compulsory
licensing could, therefore, benefit these countries in particular and would be in line with the
development focus of the new trade agenda.
3
6. By virtue of the principle of territoriality of patent protection, these Members cannot grant acompulsory licence to a foreign manufacturer, because the patents in both countries are independent
of each other.  Of course, any WTO Member can grant a compulsory licence to import  a
patent-protected product from other countries.  There is, however, no guarantee that sufficient
supplies will be obtainable on favourable enough terms.
7. These Members could, in theory, rely on another Member to issue a compulsory licence to
one of its own manufacturers with a view to exporting  the production under that licence to the
Member without manufacturing capacity.  In practice, such a solution would in most cases not be
workable because Article 31(f) of the TRIPS Agreement stipulates that a compulsory licence should
be "predominantly for the supply of the domestic market" of the Member granting the licence.
Fulfilling this requirement would be impossible if there were insufficient demand for the domestic
market to be able to absorb most of the producti on.  Moreover, in situations of national emergency or
other cases of extreme urgency precious time woul d be lost producing goods which would never be
sent to where they were most needed.
II.2 The patent angle
8. The ability to issue a compulsory licence depends of course upon a certain drug being
patented, which presupposes that the country has patent legislation in place.  Therefore, an important
element to take into account in assessing the problem in question is the patent situation of
pharmaceuticals in developing and least-developed country Members.
                                                     
2 Communication from the Commission to the Council and the European Parliament – ‘Programme for
Action: accelerated action on HIV/AIDS, malaria and tuberculosis in the context of poverty reduction’
(COM (2001) 96 final, 21.2.2001).
3 This paper focuses on the problems faced by developing countries.  However, it is worth pointing out
that any country may find itself in the position of being unable to manufacture a particular treatment and havingto seek supplies abroad.  The recent anthrax crisis in North America is a case in point.IP/C/W/339
Page 3
9. Most developing country Members do provide patent protection for pharmaceutical products.
Patents on antiretrovirals, for instance, are in force in several developing countries in sub-Saharan
Africa.  They appear to be concentrated in countries where pharmaceutical markets are relatively
large, such as South Africa or Kenya.  In South Africa, for example, 13 out of 15 antiretroviral drugs
are patented.
10. The availability of patent protection, though, does not mean that patents have necessarily been
granted. Indeed, according to UNAIDS data, most  of the medicines used in the treatment of
HIV/AIDS are not in fact covered by a patent in the majority of developing countries. The same
appears to be true in respect of other major diseases such as malaria and tuberculosis. Another point is
that several developing countries4 have opted for an additional transition period under Article 65.4 of
the TRIPS Agreement, which allows them to exclude pharmaceuticals from patent protection until1 January 2005. Until that date, these countries can legally manufacture generic pharmaceuticals, and
export  them to Members where these drugs are not patented or to Members which have issued a
compulsory licence for their import.
11. As far as least-developed country (LDC) Members are concerned, Article 66.1 of the TRIPS
Agreement provides that the transition period for implementing the Agreement runs until
1 January 2006, while specifying that the TRIPS Council "shall, upon duly motivated request by a
least-developed country Member, accord extensions of this period".  At the Doha Ministerial
Conference, it was agreed, under paragraph 7 of th e Doha Declaration on TRIPS and Public Health,
that least-developed country Members will not have to implement or apply the TRIPS Agreement'sprovisions concerning patents and data protection for drugs before 1 January 2016, and the TRIPS
Council is instructed to take the necessary action to give effect to this pursuant to Article 66.1 of the
Agreement.
12. However, many least-developed country Me mbers already provide patent protection for
pharmaceuticals.  For example, all 15 Members
5 of the "Organisation Africaine de la Propriété
Intellectuelle" (OAPI), most of which are least-de veloped countries, do provide for patent protection
for pharmaceuticals.  The same applies to the 14 signatories of the Harare Protocol on Patent and
Industrial Designs within the Framework of the African Regional Industrial Property Organisation
(ARIPO)6.  Again, it should be remembered that even where patent protection is available, patents are
not necessarily always applied for so that many medicines remain unpatented in a large number of
least-developed countries.  It is worth noting in passing that access to medicines in countries which donot have patents does not appear any better than in countries which do.
13. At the other end of the spectrum, a few least-developed countries indeed have no patent law at
all.  These countries, plus those developing countries who have availed themselves of the transition
period under Article 65.4, as well as countries which although they have patent legislation have notgranted patents for a particular drug, thus have the legal (but not necessarily the physical) possibility
of manufacturing generic versions of pharmaceuticals that are still patented in industrialized countries.
They could also import them from those Members not yet under an obligation to provide patent
protection for pharmaceuticals - although it may not always be easy to find a reliable and affordable
source of supplies.  It should be borne in mind that generic medicines are not always readily availableon international markets and that the prices of branded medicines, even when imported in countries
where they are not under patent, remain influenced by the fact that they are patented in their country
of origin.
                                                     
4 Cuba, Egypt, India, Madagascar, Pakistan, Qatar, United Arab Emirates.
5 Benin , Burkina Faso , Cameroon, Central African Republic , Chad , Congo, Côte d’Ivoire, Gabon,
Guinea , Guinea-Bissau , Mali , Mauritania , Niger , Senegal , and Togo .  LDC Members are in bold .
6 Botswana, The Gambia , Ghana, Kenya, Lesotho , Malawi , Mozambique , Sierra Leone , Sudan ,
Swaziland, Tanzania , Uganda , Zambia  and Zimbabwe. LDC Members are in bold.IP/C/W/339
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14. We are, therefore, some way off from a situation where all pharmaceuticals are patented in all
WTO Members.  At the same time, however, it would be false to claim that patents are not a factor to
be taken into account, especially in view of the concerns expressed by developing and least-developed
country Members.
15. In the light of the preceding paragraphs, the EC remain convinced that the problem identified
in paragraph 6 of the Declaration on the TRIPS Agreement and Public Health is one for which an
expeditious solution does indeed need to be found.  Any such solution, though, should not ignore
potential side-effects, which is why close attention will need to be paid to feasibility and to ensuring
that the Agreement is not undermined in any way and that adequate safeguards are put in place.  Any
such solution should also ensure an adequate participation by patent right holders and not affect theircapability of offering the drugs needed on better conditions.
III. POSSIBLE SOLUTIONS
16. At this stage, and without in any way excluding other possibilities, the EC consider that there
are two possible solutions which merit particular attention:
(1) amend Article 31 of the TRIPS Agreement in order to carve out an exception, under
certain conditions, to Article 31(f) for exports of products needed to combat serious
public health problems and produced under compulsory licences; or
(2) interpret the limited exceptions clause of Article 30 of the TRIPS Agreement in a way
which would allow production for export, to certain countries and under certain
conditions, of products needed to combat serious public health problems.
III.1 Possible amendment of Article 31 of the TRIPS Agreement
17. A first possibility that could be considered by the TRIPS Council is the introduction of an
exception to the principle stated in Article 31(f) of the TRIPS Agreement that compulsory licences
"shall be authorized predominantly for the supply of the domestic market of the Member authorizing
such use".
18. Such an exception clause would state that Article 31(f) does not apply to compulsory licences
granted for the purpose of supplying a poor country with a product needed to address serious public
health problems.  An exception to Article 31(f) already exists under Article 31(k), which states that
the former does not apply to compulsory licences "where such use is permitted to remedy a practice
determined after judicial or administrative process to be anti-competitive".
19. The objective of the exception clause would be to cover exceptional circumstances, such as
those when serious public health problems arise in small economies lacking adequate pharmaceutical
production capacity.  However, such an exception clause would need to be carefully drafted and
hedged around with conditions to prevent abuses and diversion of trade.  This is of the utmost
importance.  Safeguards will be needed to ensure that production pursuant to the proposed exception
is not diverted from its destination.  Any abuse could open the door to massive circumvention ofintellectual property rules, which would seriously impair the legal security of right holders and
undermine the basic principles of the TRIPS Agreement.
20. Therefore, three of the most important conditions to be further discussed and refined are:
- the need to provide safeguards against exports to countries which do not face serious
public health problems;IP/C/W/339
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- the need to provide safeguards against re-exportation from the country of destination,
especially to rich countries, to avoid creating “black markets” for the products
concerned;  and
- the need to make the system transparent, in order to allow other Members to be
informed if a Member makes use of this mechanism.
21. If the exception is not properly limited by such conditions, there could be a risk that any
abuse of this exception would undermine confidence in the TRIPS Agreement as well as in initiatives
taken to supply medicines at affordable prices to  poor countries, and would weaken industry support
for any subsequent initiative on access to medicines.
22. An advantage of the approach considered here is that there would be a clear basis, in the
TRIPS Agreement itself, for a country to export to a small or least-developed country, in response to a
compulsory licence issued by the latter country, products needed to address serious public health
problems, whatever the patent situation of the product concerned in the Member in question.  Any
Member would be free to decide whether or not to incorporate this mechanism in its legislation.
III.2 Possible interpretation of Article 30 of the TRIPS Agreement
23. An alternative approach would consist of interpreting Article 30 of the TRIPS Agreement in a
way that would allow a Member to introduce a specific exception in its legislation for the purpose of
supplying another country which had granted a compulsory licence for the importation of a specificpharmaceutical product.
24. To this end, WTO Members could adopt a declaration stating that a WTO Member may, in
accordance with Article 30 of the TRIPS Agreement, provide that the manufacture, on its territory, of
a patented product, without the authorization of the right holder, is lawful when it  is meant to supplyanother country which has granted a compulsory licence for the import and sale of the product
concerned in its territory in order to deal with a serious public health problem.
25. The key to this interpretation lies in the fact that, from a TRIPS point of view, the legal
situation  pertaining in the two WTO Member c ountries concerned would not be the same, thereby
rendering it possible for a country lacking sufficient manufacturing capacity to give full effect to a
compulsory licence on its own territory, without falling foul of the provision in Article 31 thatrestricts "other use" to use other than that allowed in Article 30.  Thus on the one hand, we would
have a country without sufficient manufacturing capacity for pharmaceuticals which, pursuant to
Article 31 of the TRIPS Agreement, grants a compulsory licence to an economic operator, authorizing
him to import and sell a patented pharmaceutical on its territory.  On the other hand, we would have
another Member which would make use of a limited exception under its patent law (based onArticle 30 of the TRIPS Agreement) to allow a  producer designated by the destinee of the
compulsory licence to manufacture that product, without the authorization of the patent holder, for
export to the first Member providing a number of conditions were fulfilled.
26. The advantage of this approach would be that it  could fit within the flexibility offered by the
existing TRIPS Agreement, without there being a need to amend any of its provisions.  Here again, it
would be left to each Member’s discretion to decide  whether or not to incorporate an exception based
on  Article 30 in its own legislation.
27. As with the first option, it should be underst ood that such an exception can only be considered
if it is accompanied by the necessary safeguards to ensure that the product only goes to the Member
issuing the compulsory licence.  Hence the need fo r conditions to make sure that the quantities
produced in the country of manufacture do not exceed the quantity needed by the country of
destination, that production pursuant to the proposed exception is not diverted from its destination,IP/C/W/339
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and that a reasonable degree of transparency is maintained.  These conditions would, at the very
minimum, be that:  (i) the entirety of the production allowed under the Article 30 exception must be
imported by the Member having granted the licence; and (ii) the product must be commercialized or
distributed solely in the Member having granted the licence, and for the sole purpose for which the
licence was issued, and must not be re-exported.  Furthermore, both Members involved in theactivities outlined above would need to take all necessary measures to avoid trade diversion.
28. These conditions should not be seen as cr eating burdensome new obligations for Members;
instead, they demonstrate the need for the Members concerned to take the necessary measures within
the context of their existing administrative procedures, notably in the area of customs, and to provide
for legal security and due process.
29. It should also be stressed that any interpretation agreed upon on the basis of Article 30 should
be in full conformity with the other relevant pr ovisions of the TRIPS Agreement, and in particular
Article 27.1 thereof, with the general principles of treaty interpretation as laid down in the Vienna
Convention (as specified in paragraph 5(a) of the Doha Declaration on the TRIPS Agreement and
Public Health), as well as with relevant rulings by WTO Panels and the Appellate Body.
30. Finally, from the procedural  point of view, if consensus were to be reached in the TRIPS
Council for a solution based on Article 31, this could not be implemented until the fifth WTO
Ministerial because it would require a proposal to the Ministerial Conference for the amendment of
the TRIPS Agreement itself (Article X GATT). For a solution based on Article 30, on the other hand,a three-quarters majority in the General Council would suffice (Article IX GATT).
31. The EC would welcome any comments other Members may have, and reserve their final
position subject to those comments and to any other proposals that may be tabled on this issue.
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