WORLD TRADE  
ORGANIZATION  IP/C/W/439 
23 February 2005 
 
 (05-0748) 
Council for Trade-Related Aspects 
of Intellectual Property Rights Original:  English 
 
 
 
REPORT ON THE WORKSHOP ON THE WTO DECISION1 ON ACCESS TO  
MEDICINES AT AFFORDABLE PRICES FOR COUNTRIES WITH NO OR 
INSUFFICIENT MANUFACTURING CAPACITIES, ORGANIZED BY THE 
COMMONWEALTH SECRETARIAT IN CO-OPERATION WITH THE 
ACP GENEVA OFFICE AND THE AGENCY FOR INTERNATIONAL 
TRADE INFORMATION AND COOPERATION (AITIC) 
(GENEVA 12-14 OCTOBER 2004) 
 
 
 The following communication, dated 9 February 20 05, is being circulated at the request of the 
Delegation of Barbados on behalf of the Gr oup of Commonwealth Developing Countries and the 
Commonwealth Secretariat.  
_______________ 
  
I. GENERAL 
By adopting the Decision on Access to Medicines in August 2003, the WTO Members have 
taken an important step towards the creation of a mechanism under the WTO's legal framework, to 
ensure that countries which have no or insufficien t manufacturing capacities are able to get access to 
pharmaceutical products required for treatment of diseas es that are prevalent in their territories, at 
affordable prices.  However, in order to benefi t from the provisions of the Decision, interested 
exporting and importing countries are required to follow the procedures - including those for notification to WTO. 
To assist countries in the effective implem entation of the Decision, the Commonwealth 
Secretariat arranged a Workshop in cooperation with  the ACP Geneva Office and the Agency for 
International Trade Information and Cooperation (A ITIC), in Geneva on 12-14 October 2004, for 
discussions on the measures that could be taken at national a nd regional levels. 
The basis for the discussions was provided by  case studies undertaken in nine Commonwealth 
developing countries
2 by national experts with experience of work in the area of intellectual property 
rights and/or regulation and distribution of pha rmaceutical products at the national level. 
The main objectives of the workshop were to examine: 
• How the quality standards of the pharmaceuti cal products produced and supplied could 
be assured. 
 
• How advantage could be taken of the pr ovisions of the Decision, regarding the 
                                                      
1 The official title of the Decision is "Decision on  the Implementation of Paragraph 6 of the Doha 
Declaration on the TRIPS Agr eement and Public Health". 
2 Bangladesh, Barbados, India, Jamaica, Kenya,  Mauritius, South Africa, Tanzania and Uganda. IP/C/W/439 
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development of imports and production of pha rmaceutical products on a regional basis, 
in order to meet the requirements of me dicines needed for the treatment of diseases 
prevailing in the countries belonging  to regional economic groupings. 
 
• The legislative and institutional framework th at could be adopted at the national level 
by countries with capacities to produce pharmaceutical products under compulsory 
licences;  and by countries interested in obtaining such products, in order to comply with the requirements of the Decision. 
 
The workshop was divided into two parts: 
The first part - a technical preparatory E xpert Level meeting - was held on Tuesday 
12 October and Wednesday 13 Octobe r.  The second part of the works hop, at Ambassador Level, took 
place on Thursday 14 October. 
The participants in the meetings included: 
• authors of the nine case studies (national experts);  
• delegates from the Geneva missions of countries where case studies had been 
undertaken; 
• representatives of a number of international organizations; 
• representatives of non-governmental organizations (NGOs); 
• Geneva-based Ambassadors and Representativ es of other member countries of the three 
sponsoring organizations. 
 
Five teams of rapporteurs - elected at the E xpert Level meeting - were responsible for 
presenting the report to the Ambassador Level meet ing, providing a basis for discussions during the 
second part of the workshop.  
The workshop discussed the following issues:  
• Quality, safety and effectiveness of products produced under compulsory licences. 
 
• Development of regional trade and production. 
 
• Development of regional patent systems. 
 
• Implementation issues, including measures fo r prevention of diversion of products 
produced under compulsory licences. 
 
• The special situation of Least Developed Countries (LDCs). 
 
• Parallel Imports. 
 
II. QUALITY, SAFETY AND EFFECTIVENE SS IN USE OF PRODUCTS PRODUCED 
UNDER COMPULSORY LICENCES 
The legislations of most countries prohibit marketing and sale of pharmaceutical products, 
unless the products have been properly registered for sale in their domestic markets.  Such registration 
is granted only after the health regulatory authorit ies have evaluated the product and found that it has 
been produced at sites meeting the recommendati ons and standards relati ng to Good Manufacturing 
Practices (GMP), and that the product meet s quality, safety and effectiveness standards.  IP/C/W/439 
 Page 3 
 
 
 For approval of new drugs that are introduced in  the market for the first time, the regulatory 
authorities require the manufacturer to submit in formation on the product, e.g. its chemical 
composition, packaging and labelling and the results of tests undertaken on animals and of clinical 
studies undertaken on human beings to determine, inter alia , the maximum tolerated dose, the 
pharmacodynamic effects and the adverse effects, if any.  
Regarding generic versions of products that ar e not already on the market, manufacturers are 
not required to undertake such clinical trials or tests on animals.  The manufacturers are only required 
to submit evidence confirming that the generic pr oduct is "therapeutically  equivalent" to the 
innovative product and that it is of  the same quality, and at the same efficacy and safety level, and 
could therefore be considered "interchangeable" wi th the innovative product.  For this purpose, the 
manufacturer is generally required to  undertake studies to establish its stability and carry out clinical 
studies on a limited number of healthy patients, in order to establish in vivo bio-equivalence of the 
generic version to the innovative drug. 
 For imported generic versions the practice in most developing countries is to grant 
registration and marketing authorizations for sale and use in the domestic market, on the basis of 
evidence presented by the importer that the product h as already been authorized  for marketing in the 
producing country. 
 For this purpose, most of these countries require the interested importer to obtain a certificate 
from health authorities in the producing countries, th at the product has been granted authorization for 
marketing in their territories, following the pro cedures of the WHO scheme for ensuring "Quality of 
Products Moving in International Trade".  The Drug Regulatory Authorities (DRAs) in importing 
countries carry out detailed evaluations of the inform ation, viz. product and test data submitted by the 
manufacturer, before granting approval only in rela tion to products for which the manufacturer has 
not obtained marketing authorization for sale in the country of production. 
 In this context, it is important to note that while almost all countries producing 
pharmaceutical products require that both domestic ally produced and imported products must be 
approved for sale in the domestic market, not all require manufacturers to obtain such approval for 
products produced exclusively for export and are not for sale in the domestic market.  Therefore, the 
responsibility for undertaking evaluations to establish th at the generic versions of such products fully 
conform to the quality, efficacy and safety standard as the innovative product, lies on the registration 
and regulatory authorities in the importing countries.  
The WTO Decision on Access to Medicines requires that production should be undertaken 
only for exports to eligible importing countries, wh ich have notified their requirements to the WTO. 
In relation to such products, national legislations  of most countries with capacities for production of 
generic versions under compulsory licences do not - at present - require manufacturers to secure 
approval from the drug regulatory authorities in their countries, of the quality, efficacy and safety of the products that will be exported.  At the same ti me, it has to be recognized that countries with no or 
insufficient manufacturing capacities - which would be  importing these products - would not be able 
to carry out effective evaluations of such produc ts to establish that the products meet required 
standards, as the regulatory authorities do not have  access to qualified and trained human resources 
and adequate well-functioni ng laboratory facilities.  Some of them have not even been able to 
establish regulatory authorities.  In fact, according to a WHO study, nearly a third of its members 
have either no regulatory authority or have only limited capacity to control the trade of medical 
products. 
Against this background, the workshop considered that the solutions that could be adopted to 
ensure that the products produced and exported in  accordance with the rul es of the WTO Decision 
meet the required quality, effectiveness and saf ety standards, could include the following: IP/C/W/439 
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• The legislations and other regulations that  would be adopted for the implementation 
should provide that products produced for expor ts in accordance with  the provisions of 
the Decision would be allowed to be exporte d only after they have been evaluated by 
the DRAs and found to meet the quality and safety standards of the patented products. 
 
• The country wishing to import such products could request the DRA of the producing 
and exporting country to make an evaluation. 
 
• The compulsory licence for exports should invariably impose c onditions, stipulating 
that exports could be made only after it h as been evaluated by the DRA and approved 
for sale. 
 
• The exporting and importing countries may agree to rely on the WHO system for 
pre-qualification of manufacturers and products. 
 
In this context the workshop noted that Canada , where previous patent legislation did not 
require manufacturers to obtain marketing approval  for products produced solely for export, has 
amended its legislation to provide that generic ve rsions produced for export to developing and least 
developed countries must be approved by its DRA befo re they are exported.  The amendments further 
call on the Authority to apply the same regulatory process to such products, as is applied to products 
intended for sale in the Canadian market.  The case st udy on India clarifies that the country's proposed 
amendments of its patent legislation does not incl ude rules stipulating that pharmaceutical products 
produced entirely for exports can be exported only after they have been evaluated by the drug 
regulatory authority and found to meet the required qua lity standards.  However, the Indian authorities 
could - if requested by the authorities of the im porting country - arrange fo r evaluation and approval 
of the products produced under compulsory licences, issued in accordance with the provisions of the 
Decision. 
In this context, the workshop also discussed the feasibility and appropriateness of importing 
countries using the WHO system for pre-qualification of manufacturers and their products, for products produced under compulsory licences in accordance with the WTO Decision.  The WHO 
representative informed the meeting that the evalua tion of the quality of the medicines and of the 
manufacturing sites are made by the world's leading regulatory agencies, approved by the WHO Expert Committee on Specifications for Pharmaceutical Preparations.  For this purpose, the interested 
manufacturers are requested to provide comprehensiv e data on quality, safety and efficacy of their 
products - including the purity of all ingredients used in the manufacturing process.  Furthermore, 
they are required to provide data on finished produc ts, such as information about stability and results 
of in vivo  bio-equivalence tests (e.g. clinical trials conducted on healthy volunteers).  If the evaluating 
authority finds the data satisfactory, the products are sent to professional control testing laboratories, 
contracted by WHO in France, South Africa or Switzer land, for analytical verification of the quality. 
Simultaneously, arrangements are made for visits of  an inspection team to the manufacturing site, 
with the purpose of assessing its compliance w ith WHO Good Manufacturing Practices (GMP) in 
production of pharmaceutical products.  If the pro ducts meet the specified requirements and the 
manufacturing site complies with GMP, both the pr oducts and the manufacturing site is included in 
the WHO list of pre-qualified manufacturers and products. 
The list was originally intended for use by th e United Nations procurement agencies.  Over 
time the list of pre-qualified products has become  a useful reference tool for non-governmental 
organizations and agencies, as well as for count ries in making bulk purchases of medicines. 
Therefore, it should be possible for any country  importing pharmaceutical products in accordance 
with the provisions of the Decision, to require th e exporting manufacturing firm to have its products 
and manufacturing site evaluate d and approved under the WHO pre-qualification scheme. The 
estimated time for completion of the process is three months.   IP/C/W/439 
 Page 5 
 
 
Another feature of the WHO system is that pre-qualified products are kept under continued 
surveillance and the firms are required to withdraw the products from the mark et if they no longer 
meet the required quality standards. 
A. STEPS THAT COULD BE TAKEN TO ASSIST DEVELOPING COUNTRIES IN IMPROVING THE 
EFFECTIVENESS OF THEI R REGULATORY SYSTEMS  
The meeting briefly discussed the steps that coul d be taken to assist developing countries in 
improving the effectiveness of their regulatory systems for, inter alia : 
• Registration and granting of  marketing approvals, and 
 
• Post-market surveillance of products. 
 A recent assessment made by WHO showed that 50-90 per cent of samples of "anti-malarial" 
drugs failed to meet quality control standards.  In the case of medicines used for treatment of 
HIV/AIDS, more than half of the products failed to meet international standards.  
The workshop noted that an analysis of the in formation in the case studies suggested that in 
relation to the quality, two sets of problems are encountered in developing countries: 
• First, in a number of medicines the contents of active ingredients were either too low or 
too high;  a few of the medicines failed to meet the required dissolution and stability 
standards. 
• Second, in some of the countries there was a large quantity of counterfeit goods 
produced either locally, or brought into the country illegally. 
The WHO representative informed the meeting that the organization was providing support 
by organizing workshops and training of inspectors to assist developing countries in building up effective regulatory systems for granting of market ing approvals and for post-market surveillance of 
the products sold in the countries.  The countries could also take advantage of the manuals for drug 
regulatory authorities and the background documentation prepared by WHO, on the system for pre-qualification of products and manufacturers,  to build up their own systems for marketing 
approvals and for post-market surveillance. 
The main effort for building up a system of in spections and control has ultimately to be made 
by the countries concerned if they wish to ensu re that domestic and im ported products meet the 
required quality standards. 
III. LEGAL ISSUES 
A. R
EVIEWING OF PROVISIONS IN NATIONAL LEG ISLATIONS ON COMPULSORY LICENSING  
The conclusion of the discussions under this ag enda item was that all countries may have to 
review their legislations to ascertain that the re gulations permit production under compulsory licences 
being undertaken "only for exports".  This was particularly so in the case of countries which had 
modified their legislations in order to bring them  in conformity with the provisions of the TRIPS 
Agreement, as Article 31(f) stipulates that production under compulsory licences should be 
undertaken predominantly for the supply of the domestic  market of the country authorizing such use.  
It would also be necessary for countries to re view their laws and regulations to ascertain 
whether they permit the issuing of compulsory licences for import.  If that is not the case, the 
legislation may have to be amended to permit gran ting of compulsory licences for imports, to ensure IP/C/W/439 
Page 6  
 
that countries with no or insufficient manufacturing capacities are able to make effective use of the 
Decision.  
B. I
NCLUSION OF LISTS OF PRODUCTS IN NATIONAL LEGISLATIONS  
A number of participants stressed the importance of the provisions of the Decision, stipulating 
that compulsory licences can be granted for productio n of drugs required for the treatment of not only  
diseases such as HIV/AIDS, malaria and tuberculosis, but also for the treatment of any other disease. 
In this context, some concern was expressed regard ing the listing of drugs in a special scheme that 
forms part of the Canadian legislation.  The repres entative of Canada clarified the issue, stating that 
the list uses as its base all products on the WHO List  of Essential Medicines that are under patent in 
Canada, and includes additional drugs which are not on the WHO list.  The listing can be amended on 
a fairly expeditious basis to include other drugs, if necessary.  The intention of attaching such a list to 
the legislation had been to provide legal certainty  on the kind of products that could be produced 
under compulsory licences for export under the provisions of the WTO Decision, by the Canadian generic manufacturers and thus, avoid unnecessary litigation. 
C. G
UIDELINES ON THE LEVEL OF REMUNERATION  
The meeting discussed whether guidelines could be  elaborated for national laws that may be 
passed in the future, with the purpose of facilitati ng the implementation of the specific provisions of 
the WTO Decision, on the remuneration issue.  It w as pointed out that each country should have the 
freedom to determine the appropriate level of re muneration to be paid, taking into account the 
provisions of the Decision, providing, inter alia , that the exporting country, when granting a licence 
for production under a compulsory licence, shall decide  the level of remuneration to be paid by the 
licensee to the patent-holder, taking into account th e "economic value to the importing member of the 
use of the patent right that has been authorized". 
It was suggested that since the level of rem uneration was to be determined by the exporting 
country, taking into account the economic value of the licensed production to the importing country, it 
may be appropriate for the exporting country to seek information from the importing country on such 
factors as whether the medicines would be supplied: 
• for free, and if not, what price would be charged; 
• the price at which the comparable patented product is sold in the country;  and 
• the prices at which substitutes or other generi c versions are available in the country. 
 Some participants pointed out that there appear ed to be an emerging consensus on the capping 
of royalty payments in the range of 4-5 per cent.  In this context, it was mentioned that the sliding 
scale for royalty payments adopted by Canada for determining royalties - by using the United Nations 
"Human Development Index" (UNHDI) system - could provide a useful basis for further examination 
of the criteria that could be used in determining the level of remuneration.  Under this criterion the 
royalty payable by the patent holder to a firm producing for supply to the eligible country with the lowest standing on the UNHDI would be 0.2 per cent.   Mathematically, the criterion cannot result in a 
royalty rate in excess of 4 per cent.  This ce iling was considered to be consistent with the 
humanitarian and non-commercial considerati ons for which the WTO Decision on Access to 
Medicines was adopted. 
IV. DEVELOPMENT OF REGIONAL TRADE AND PRODUCTION 
The Decision provides additional flexibility to developing countries belonging to regional 
economic groupings of which "at least half of th e current membership" is made up of "countries 
presently on the United Nations list of least devel oped countries".  The basic objective of this  IP/C/W/439 
 Page 7 
 
 
additional flexibility is to harness "economies of scale" for the purpose of enhancing purchasing 
power for, and facilitate local produc tion of, pharmaceutical products. 
The workshop discussed these i ssues relating to the development of regional trade and 
production in accordance with the above pr ovisions, under the following headings: 
• General issues. 
• Cooperation among countries through poo ling of import requirements of 
pharmaceutical products. 
• Development of intra-regional trade in  imported pharmaceutical products among 
member countries of regional economic groupings. 
• Development of production of pharmaceutical products to meet the health requirements 
of countries belonging to regional economic groupings. 
A. GENERAL ISSUES  
A number of participants noted that by limiting the application of the rules relating to 
development of trade and production on a regiona l basis only to member countries of regional 
economic groupings of which at least half of the members are LDCs, the Decision prevented regional 
developing country groupings in re gions other than Africa from taking advantage of this additional 
flexibility of the Decision, for the development of trade and production on a regional basis.  
Therefore, it would be necessary to review these provisions at an appropriate time, with a view to examining whether this additional flexibility could be extended also to member countries of other 
regional economic groupings of developing countries. 
B. C
OOPERATION BETWEEN COUNTRIES THROUGH POOLING OF IMPORT REQUIREMENTS OF 
PHARMACEUTICAL PRODUCTS  
One cooperation possibility for member countri es of the regional economic groupings is to 
"pool" their import requirements of pharmaceutical products and issue tenders on a joint basis, in 
order to benefit from discounts available on bulk purch ases.  One of the most successful systems in 
this respect was the Procurement Services System (PSS) of the Organisation of Eastern Caribbean States (OECS).  The PSS had enabled its member stat es to obtain drugs at prices as low as 40 per cent 
of the price that might have been charged if  each country had purchased drugs individually. 
 It was, however, noted that even though procurement of pharmaceutical products on a pooled 
basis may result in price and other advantages for each individual country in the regional economic 
grouping, many countries were reluctant to resort to  pooled purchasing as they wished to retain the 
right to make decisions themselves on the specific product to be imported (patented or generic), taking into account their price and quality.   The meeting considered that despite this ge neral reluctance, it would be desirable for 
countries belonging to eligible regional economic groupings to cooperate in purchasing 
pharmaceutical products produced under compulso ry licences issued in  accordance with the 
provisions of the Decision.  Since the producing firm s are not expected to sell such products in the 
domestic market or to export it to any other country  than that indicated in the licence, the costs of 
production for manufacturing relativel y small quantities, required by one or two importing countries, 
is likely to be high.  In this situation, negotiatin g for price and other conditions on the basis of pooled 
requirements of countries in the region may result in lo wer prices, as the firm w ould be able to derive 
advantages of "economies of scale" by being able to produce larger quantities.  IP/C/W/439 
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C. D
EVELOPMENT OF INTRA -REGIONAL TRADE IN IMPORTED PR ODUCTS BY MEMBER COUNTRIES 
OF REGIONAL ECONOMIC GROUPINGS  
 In discussing these issues, the meeting noted th at the case studies had shown that some trade 
in pharmaceutical products (both in imported an d domestically produced products) was currently 
taking place among member countries of regional econom ic groupings.  The level of such trade was, 
however,  low compared to the total imports.  One of  the obstacles to developing trade arose from 
differences in the regulations of these countries, relating to manufacture, import, export and distribution of pharmaceutical and health products .  Therefore, the meeting noted the need for 
regional trading blocks to collaborate in:  
• Harmonizing drug licensing and requirements re lating to good manufacturing practices 
(GMP).  
• Entering into arrangements for mutual r ecognition of marketing approvals of drug 
inspections. 
• Creating free port facilities to act as a hub for re-exports to neighbouring countries. 
 Regarding the facilitation of trade in impor ted products produced under compulsory licences 
by countries belonging to eligible regional economic  groupings, it was noted that - in addition to the 
harmonization of regulations relating to registration of products - they would have to take additional 
steps to comply with the conditions of the Decision.   Such steps would have to include measures to 
ensure that products are re-exported only to member  countries of the region that "share the health 
problem in question".  D. D
EVELOPMENT OF PRODUCTION OF PHARMACEUT ICAL PRODUCTS ON A REGIONAL BASIS TO 
MEET THE HEALTH REQUIREMENTS OF  THE COUNTRIES IN THE REGION  
 In the discussion on the subject of the development of production for pharmaceutical products 
by countries which do not currently have suffici ent manufacturing capacities to meet the regional 
demand, the workshop noted that development of  a pharmaceutical industry requires not only the 
existence of a physical infrastructure (e.g. availa bility of electricity and clean water), but also 
availability of chemists, pharmacists and persons traine d in other related scientific fields, as well as 
laboratory and other facilities to undertake research  on production of both new drugs and of generic 
versions.  Taking this into account, the m eeting had a brief exchange of views on: 
 
• The type of incentives that could be provided by the governments of countries wishing 
to establish a pharmaceutical industry, to en courage development of human resources 
and other required facilities. 
• The incentives the governments of develope d and developing countries with well-
established pharmaceutical industries could provide  to their firms, to encourage them to 
transfer technology and to establish production capacity in countries with no or insufficient manufacturing capacities. 
• The steps that would have to be taken to ensure that there is "resource sharing", 
"industrial complementarity" and "industrial cooperative activity" among the countries 
belonging to the regional economic grouping in developing pharmaceutical industry. 
The box lists specific measures that the workshop partic ipants suggested could be taken at national 
level for development of production on a regional basis.   IP/C/W/439 
 Page 9 
 
 
 
 The Commonwealth Secretariat and the two other sponsoring organizations – the ACP 
Geneva Office and AITIC – indicated their willi ngness to consider providing assistance on request, 
for further work in this area at regional levels.   
Measures that could be taken for the develo pment of production on a regional basis 
A. Background studies 
Undertake background studies to: 
• Take stock of the patent protection regimes in countries in the region; 
• Make an inventory of the existing patents in these countries; 
• Assess the needs of individual countries of the variety and volumes of patented 
and generic drugs. 
 
B. Measures that could be taken at na tional level for development of production 
• Promote joint ventures on the basis of public-private partnerships in view of 
limiting financial commitments and risks. 
• Grant tax incentives on profits over a number of years. 
• Waive custom tariffs on essential equipment and material. 
• Make available purpose-built buildings for the commissioning of factories. 
• Create awareness among entrepreneurs th rough participation in industrial 
pharmacy forums, exhibitions etc. 
• Limit control on the prices of selected classes of non-essential drugs. 
• Adopt comprehensive preferential treatment clauses in legislations dealing with 
national procurement of goods for local manufacturers.  
• Encouraging foreign enterprises to de-lo calize parts of their services, e.g. 
accounting, invoicing to a developed country. 
• Carry out or assist companies in undertaking marketing studies in the region. 
• Create regional directories of industries,  particularly supporting pharmaceutical 
industries. 
• Create and maintain a database of regional manufacturers to avoid duplication. 
• Determine a "break even point" for the cost effective production of each drug. 
• Exchange information on drug requiremen ts of countries in the region, their 
sources of supply and impediments to sustained supply. 
• Promote local pharmaceutical industries in regional trade fairs. 
• Establish mechanisms to ensure comp lementarities throughout the chain of 
production and processes in drug manufactur ing in the region.  This will avoid 
duplication of efforts, investments and scarce resources. 
• Encourage cooperation with countries, pa rticularly developing countries that 
have developed a pharmaceutical industry,  such as India, China, Malaysia and 
Egypt. 
 IP/C/W/439 
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V. DEVELOPMENT OF REGIONAL PATENT SYSTEMS   
The meeting discussed the issues relating to the encouragement of the development of 
regional patents, taking into account that in the work on developing regional cooperation in 
intellectual property rights, including patents, tw o different approaches were noticeable.  The first 
approach, which was followed in Latin America an d the Caribbean region, aimed at establishing a 
forum for dealing with intellectual property issu es as a component of the broad regional economic 
integration and related process.  This approach  enabled member countries to discuss and adopt a 
policy approach in relation to patents for pharmaceu tical products taking into account public health 
needs and priorities.  
The second model for regional cooperation in inte llectual property matters is a model where 
intellectual property organizations are established as  independent organizations  with no linkage to 
regional economic and development or ganizations.  This scenario prevails mostly in Africa, where 
two intellectual property orga nizations (ARIPO and OAPI)
3 have been established.  Even though 
regional economic organizations like COMESA, SADEC and others appear to be paying increasing 
attention to the intellectual property issues, the work  done by them appears to have no formal link 
with that done by the two specialized intellectual property organizations.  While the work done by the 
latter organizations helped in ha rmonizing patents and other intellect ual property rights on a regional 
basis, it was argued that it is unlikely that they wo uld provide a forum for discussions on public health 
implications of such harmonization. 
On the issue of desirability and appropriaten ess of harmonizing patents on a regional basis, 
particularly those relating to pharmaceutical products , some participants observed that – as had been 
pointed out in one of the case studies – nearly all app lications for registration of patents in developing 
countries were made by foreign producers.  Adopti on of regional patents for pharmaceutical products 
would therefore only go to strengthen the monopoly po sitions of foreign multinational companies in 
dictating prices of medicines needed for the treatme nt of the diseases prevailing in the countries in the 
region. 
The counterview was that the adoption of such regional patents may enable regional 
intellectual property organizations to issue a compulsory licence for imports on a regional basis in pursuance of the provisions of the Decision, inst ead of having each member country to issue a 
separate licence.  Thus, the regional patents could complement and strengthen the measures taken by 
countries for the development of trade and production on a regional basis. 
A suggestion was made that instead of pushi ng for harmonization of patents on a regional 
basis, the member countries of regional economic gr oupings may enter into bilateral or plurilateral 
arrangements for recognition of compulsory licences i ssued by one country, in order to facilitate trade 
in pharmaceutical products among countries in the re gion, imported and produced in accordance with 
the WTO Decision.  It was suggested that this sugg estion may need further examination, as there were 
doubts as to whether the concept of mutual rec ognition – which was applied for recognition of 
standards and technical regulations  – could be applied under the pate nt law which aimed at creating 
rights in favour of private, natural and juridical  persons.  In the latter case the cooperation 
arrangements may have to provide for the automatic issuing of compulsory licences by authorities in 
the member countries of the group immediately after such a licence is granted in one of the member 
states.  
 
                                                     
 
3'Organisation Africaine de la Pr opriété Intellectuelle' (OAPI) and the 'African Regional Industrial 
Property Organisation' (ARIPO). 
  IP/C/W/439 
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VI. IMPLEMENTATION ISSUES, INCLUDING  MEASURES FOR THE PREVENTION 
OF DIVERSION OF PRODUCTS PRODUCED UNDER COMPULSORY LICENCES 
A. THE PRACTICAL IMPACT OF THE DECISION  
 To provide a basis for discussion on how the Decision was being implemented and to assess 
whether any practical problems were being enc ountered in its implementation, the Chairman 
requested the WTO representative to inform the part icipants of the number of notifications made by 
Member countries to the WTO Secretariat of:  
• compulsory licences for export and import; 
• a country's intention to utilize the system as an "eligible importing country";  or  
• any other aspect for which notification is required. 
 In this context the representative of WTO in formed the delegates that no notifications had 
been made to the Council for TRIPS of the use of the system pursuant to the provisions of the 
Decision.  Nevertheless, [a few] licences had b een granted within the other flexibilities available 
under the provisions of the TRIPS Agre ement (no notifications required).  
  During the workshop discussions it was pointed out that the effectiveness of the Decision 
should not be evaluated on the basis of the number of  compulsory licences issued, but rather in terms 
of the influence the governments' right to issue compulsory licences had on the prices of patented 
products. Evidence had confirmed that the prices of ce rtain patented products had fallen compared to 
the price levels prior to the period when ne gotiations for adoption of the WTO Decision had 
commenced.  In a few cases, the prices had fallen to  nearly 1/10 of the prices charged previously. 
Moreover, the information in the case studies had hi ghlighted a greater willingness of patent holding 
companies to grant voluntary
 licences to domestic firms for production of generic versions of patented 
products.   The counter-argument was that patent holding companies might wish to lower prices on a temporary basis when they were apprehensive th at a compulsory licence may be issued. Experience 
had shown that prices had increased after an a pplication for a compulsory licence had been 
withdrawn, or when it had become clear that a ge neric manufacturer would no longer be interested in 
obtaining a compulsory licence.   It was also pointed out that the decision to grant a compulsory licence for production for 
export or to import, required c onsultation amongst different Ministries and also a decision at the 
political level.  An analysis of the time taken in one developing country showed that while the 
Ministry of Health was pressing for the granting of a licence on an urgent basis to import drugs 
needed for treatment of HIV/AIDS, other Ministri es - particularly the Ministries of Finance and 
Industry - were reluctant to support the proposal, as they considered that granting of such licences 
could have an adverse impact, in the long term, on  the flow of foreign investment.  The matter was 
ultimately resolved at the Ministerial level.  For e ffective implementation of the system created by the 
Decision, for meeting requirements of pharmaceutical  products needed for diseases prevailing in the 
country, it was therefore necessary to establish proce dures that would recognize that in taking such 
decisions the Ministry of Health would play a pivotal role.  IP/C/W/439 
Page 12  
 
B. N
O PRODUCTION FOR COMMERCIAL PURPOSES : IMPLICATIONS  
 When the Decision was adopted, WTO Members re cognized that the system established by it 
should be used "…in good faith to protect public health…" and "…not be an instrument to pursue 
industrial or commercial policy objectives".  
 In the discussions on the implications of th e Chairman's Statement (General Council) the 
Canadian delegate drew attention to the provisions in his country's legislation providing that, where 
the price charged by the licensee is in excess of 25 per cent of the average price of the drug on the 
Canadian market, the patentee may apply to the Fe deral Court for termination of the compulsory 
licence.  The delegate explained that it was not a matter of automatic termination, but rather of 
providing the patentee with the opportunity of exam ination by a court whether the licensee's activities 
constitute production for commercial purposes.  He also stressed that the Canadian government 
recognized that generic companies were businesse s and thus needed to make a profit for these 
ventures to be viable.  
C. P
REVENTION OF DIVERSION OF PRODUCT S PRODUCED UNDER COMPULSORY LICENCES  
 There was a brief discussion of the steps expor ting and importing countries were expected to 
take to prevent divers ion of generic products  produced under compulsory licences, to the original 
market(s) where the patent holder was charging the higher (original) price.   The view was expressed that the requirement  to make the product look different from the 
product marketed by the patent holder – e.g. through different colouring of the medicines or shaping 
of the tablets - could lead to increased costs of th e generic product.  Furthermore, it was pointed out 
that even if the manufacturing costs of colouring or shaping the product differently may not be high, the companies would find that costs would increase,  as the DRAs often require that products must 
receive new approval if any changes are made of the colour of the medicines or shape of the tablets. 
 
D. P
RACTICAL PROBLEMS THAT MAY ARISE WHEN  PRODUCTION IS UNDERTAKEN BY THE SAME 
FIRM UNDER A COMPULSORY LICENCE ISSUED UNDER ARTICLE 31 AND THAT ISSUED UNDER 
THE PROVISIONS OF THE DECISION  
 In this context, the meeting also discussed pr actical problems that are likely to arise where, 
for instance for treatment of HIV/AIDS, a country  has granted compulsory licences for production to 
a domestic firm: 
 
• to meet the domestic needs under the provisions of Article 31;  and 
• for exports to eligible importing countries in accordance with the provisions of the 
Decision. 
 In the first case, viz. where a licence is issued for production to meet the domestic demand, 
the provisions of paragraph (f) of Article 31 - which recognize that even though production is 
undertaken "predominantly" for domestic use some exports could be made - would apply.  The 
Decision, clarifies that its provisions are without  prejudice to the extent to which such production 
could be exported.   The discipline the Decision prescribes for no tification to WTO before commencing exports 
and for colouring of medicines, shaping of tablet s in order to make them look different from the 
patented products, would apply to exports of products produced by the firm solely for exports under 
the compulsory licence in accordance with the provisions of the Decision and not to the products 
exported from the production undertaken under the licence issued under Article 31.  IP/C/W/439 
 Page 13 
 
 
 It was pointed out that this situation is likely  to arise often, as pharmaceutical companies in a 
number of developing countries consider that th ey may be able to produce and supply generic 
versions that are economically a nd substantially lower than the pa tented product, if production is 
undertaken on a large scale.  This could ha ppen in most cases, if production is undertaken 
simultaneously under licences issued for meeting dom estic needs under Article 31 and to meet the 
requirements of eligible importing countries under the provisions of the Decision. 
  Some of the practical problems that may arise as a result of the differences in the disciplines 
applicable to exports made from production under these two sets of compulsory licences would be overcome, if the firm voluntarily decides on applyi ng colouring and shaping requirements to exports 
of all products produced by the firm.  It would,  however, be necessary fo r it to keep records to 
establish that the entire production - produced unde r a compulsory licence issued under the provisions 
of the Decision – has been exported to the eligible  importing country (ies) mentioned in the licence. 
 
E. P
OSSIBLE IMPLICATIONS OF THE ADOPTION OF THE "TRIPS PLUS " APPROACH IN THE 
APPLICATION OF THE RULES RELATING TO PROTECTION OF UNDISCLOSED TEST AND OTHER 
DATA  
 A related issue that was discussed was the im pact of the "TRIPS pl us" approach in the 
recently negotiated Free Trade Agreements between developed and developing  countries - in relation 
to the provisions of the WTO Decision on protecti on of "undisclosed test and other data" - on the 
ability of generic manufacturers to obtain marke ting approvals for generic versions produced in 
accordance with the provisions. 
  Article 39 of the TRIPS Agreement calls on c ountries to protect "undisclosed test and other 
data" submitted by an applicant to a DRA for mark eting approval, "against unfair commercial use" by 
subsequent applicants.  The DRAs are also under a separate obligation not to disclose the data to 
anyone, including subsequent applicants. 
  The TRIPS Agreement leaves a considerable flexibility to WTO Members to decide on the 
ways and periods for which such protection of " undisclosed information" against unfair commercial 
use should be granted.  Therefore, a number of coun tries rely on this flexibility and provide protection 
to undisclosed test and other data against unfair commercial use for a period of approximately five 
years. 
  In providing protection of such data a num ber of countries have - instead of confining 
protection against disclosure of data to subsequent applicants - adopted the concept of a "right to 
exclusive use of the test data" by the first appli cant (patent holder) who submitted it.  Such exclusive 
protection of test data prohibits DRAs from disclosing the data to other manufacturers with competing 
interests, and, in order to protect against unfair comm ercial use, also prevents them from relying on or 
using such data in examining subsequent appli cations for marketing approvals made by generic 
manufacturers.    It was noted that the Free Trade Agreements (FTAs), which some of the developed countries 
have negotiated in recent years with  developing countries, require them  to adopt the concept of "data 
exclusivity" in their legislations, by providing for a period of protection for undisclosed data for a 
period which exceeds five years - in some cases up to 10 years.  Some members claimed that these 
developments would add further to the difficulties the generic manufacturers may be facing in obtaining marketing approvals.  
 IP/C/W/439 
Page 14  
 
 In the discussions that followed, the US delega te clarified the position of the US government. 
This position is that the FTA provisions with resp ect to data protection and exclusivity would not 
stand in the way of the effective utilization of th e TRIPS/health solution reached in August 2003, to 
ensure that developing countries that lack pharmaceutical manufacturing capacity may import medicines. 
 
 Some of the experts responsible for th e preparation of national case studies – with 
background and experience of work in DRAs - obs erved that where an applicant seeking marketing 
approval had relied on the information available in the disclosures made by the patent holder at the 
time of applying for patents and other information in the public domain for the preparation of the 
generic version, the practice of DRAs in devel oping countries was to grant approval on the basis of 
the stability and bio-equivalence tests and other inform ation submitted by the applicant. In such cases 
the DRA may not have to rely on the undisclosed data and the test results submitted by the first applicant in the examination of the application for the generic version.  VII. THE SPECIAL SITUATION OF THE LEAST DEVELOPED COUNTRIES (LDCS) 
 The meeting discussed how LDCs could take advantage of the flexibilities and special and 
more favourable treatment available to them unde r the Decision and the TRIPS Agreement for import 
of pharmaceutical products at affordable prices; a nd for the development of trade and production of 
pharmaceutical products needed for treatment of diseases prevailing in such countries. 
 
 It was noted that the obligation of LDCs to bri ng their national legislati ons in conformity with 
the provisions of the TRIPS Agreement by 1 January  2006, when the transitional period expires, does 
not apply to "pharmaceutical products".  The transiti onal period for such products has been extended 
to 1 January 2016 by the Decision adopted by the TRIPS Council in June 2002, in accordance with 
the recommendations contained in the Doha Declaration on TRIPS and Public Health. 
 
 As a result of the extension of the trans itional period, LDCs which presently provide 
protection for pharmaceutical products for a period  of less than 20 years (the minimum period 
prescribed by the TRIPS Agreement), can continue pr oviding protection for such shorter periods.  The 
countries providing protection under their national laws  to "processes" and not to "products" could 
continue to do so during the entire additional tr ansition period, even though the TRIPS Agreement 
stipulates that patent protection must be extended to both processes and products.  
  The meeting discussed how far LDCs can take  advantage of these flexibilities to develop 
domestic production of pharmaceutical products.  A related issue that was discussed, was whether it 
would be possible to develop produc tion of generic versions by using a manufacturing process that is 
different than the one used by the manufacturer of the patented product as was done by developing 
countries like India and Brazil in the past.   In the discussions on this issue it was noted th at – with the exception of Bangladesh - most of 
the LDCs had no significant manufacturing capacities.  Moreover, where production was present, in most cases the industry was heavily dependent  on imports of both raw materials and active 
ingredients.  Another major obstacle for the deve lopment of production was the small size of the 
domestic markets in LDCs.  This prevented industr ial units from taking advantage of the economies, 
which accrue when production is undertaken on a large scale.   It was suggested that some of these problem s could be overcome if foreign manufacturers 
from developing and developed countries, wh ich have the technology for producing active 
ingredients, could establish production facilities or enter into joint ventures with companies in the 
LDCs, in order to take advantage of the flexibility that may be available in some of these countries to 
manufacture generic versions by using a process other than that used by the patent holding company, 
because national legislations permit patenting of pro cesses and not of products. In the case of LDCs  IP/C/W/439 
 Page 15 
 
 
belonging to eligible regional economic groupings, such products could be e xported to other member 
countries.   There was consensus at the meeting that th ese possibilities would need further analysis. In 
particular, it was considered necessary to examine the type of incentives that could be provided by 
counties with capacities to manufacture pharmaceuti cal products, for the purpose of transferring 
technology to LDCs.  The LDCs th emselves may have to examine the type of measures they could 
take for promotion and development of a nationa l pharmaceutical industry and for development of 
human resources required for working in such an industry.  
 Nevertheless, the meeting recognized that for a large number of LDCs the development of a 
pharmaceutical industry would remain a distant goal for a number of years to come, and the immediate objective would have to be to consider how in practice they could take advantage of the 
WTO Decision to import the required products.  The Decision recognizes that the obligation it imposes on countries wishing to import, to establish that they have no or insufficient manufacturing 
capacities, does not apply to LDCs.  Therefore, any such country could begin importing the product 
by notifying the WTO of the quantities it wishes to import.  However, the country would have to 
ensure that imports of products produced under the compulsory licence are permitted under its 
national law.  If a patent for the product to be impor ted is patented in the country and the period of 
patent protection provided under the national law has not expired, the patent holder can block imports 
unless the country concerned has issued a compulsory licence. 
 VIII.  PARALLEL IMPORTS  
 Under this agenda item, the discussions centr ed on two main issues:  The desirability of 
permitting parallel imports; and the link such im ports may have to trade in counterfeit goods. 
 
A. D
ESIRABILITY OF PARALLEL IMPORTS  
 Participants expressed the view that, as the criti cal issue was to ensure that drugs are accessed 
at the lowest prices possible, the developi ng countries should permit  parallel imports of 
pharmaceutical products by modifying - where n ecessary - their legislations to provide for 
international exhaustion of  patent rights. In this context the meeting noted that Kenya had recently 
changed its laws to provide for intern ational exhaustion of patent rights. 
 
B. PARALLEL IMPORTS AND COUNTERFEITING  
 It was stressed that counterfeiting was a genera l problem in some of the developing countries 
and not a problem exclusive to the issue of parallel imports.  Therefore, there is an urgent need to 
improve the technical and human resource capacities of developing countries, to deal with this 
problem.  However, it was further recognized that if parallel imports would increase the sources from 
which pharmaceuticals are accessed, they could complicat e verification of the authenticity, safety and 
efficacy of the imported drugs.  
 
IX. OTHER FINDINGS AND RECOMMENDATIONS 
 The workshop discussions stressed the importa nce of paying attention to the regulatory 
aspects of production and trade in pharmaceutical pr oducts in further discussions on securing effective 
implementation of the WTO Decision, and wo rk that may be done on making necessary 
pharmaceutical products available to developing countri es at affordable prices.  The countries with no 
or insufficient manufacturing capacities are no doub t in need of pharmaceutical products for the 
treatment of diseases like HIV/AIDS, malaria and tuberculosis at affordable prices.  However, it will 
have to be ensured that products that are supplied to them meet th e required quality standards and are 
effective in treatment of the ailments from wh ich the people in these countries are suffering. IP/C/W/439 
Page 16  
 
 Addressing many of these and other issues raised  in the discussions would require a greater 
degree of cooperation at the national level between Ministries of Trade, Industry and Health and 
between international organizations handling i ssues relating to health, trade and industrial 
development.  The workshop recommended that in fu rther work in this area, this aspect should be 
given due importance. 
 
 The meeting further recommended that the report on the discussions should be presented to the WTO Council for TRIPS, as it may provide a useful  basis for further discussions in the Council on 
the issues relating to the implementation of the WTO Decision on Access to Medicines;  and broader issues relating to the implications of the developments  in the application of rules by countries relating 
to patents in the pharmaceutical sector and prot ection of data submitted to the drug regulatory 
authorities by pharmaceutical companies seeking marketing approvals for their products.  
__________