Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the European Parliament and of the Council on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems (COM(2004) 737 final – 2004/0258 (COD))
Date: 2005-06-08
Institutions: European Economic and Social Committee
Subjects: TRIPS, export, patents licence, pharmaceutical product, public health, third country

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— independence and impartiality in relation to the litigant

parties;

— transparency and accountability in their actions.

In particular, the freedom to provide services should be guaran-
teed in all Member States, which would, in smaller countries,
ensure the independence of the mediator with regard to the
parties involved.

4.3.1
The Committee broadly welcomes the option of a
European code of conduct as a means of setting the rules for
mediators, although for this code to be valid, the Commission
– the relevant body in this case - would have to consider the
fact that the professionalism, independence and accountability

of persons, both natural and legal, practising as mediators
should always be guaranteed as proposed in relation to Article
4.

4.4
Depending on the specific judicial characteristics of each
State, the problem posed by the cost of mediation cannot
simply be solved by including this in the general court costs.
There should be a requirement either for tariffs in proportion
to the issue in question and its scale or, alternatively, a manda-
tory advance payment that would enable the parties to decide
whether or not it was worthwhile proceeding. In any event, the
procedure should never be more costly to the parties than judi-
cial proceedings.

Brussels, 9 June 2005.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the Proposal for a Regulation of the
European Parliament and of the Council on compulsory licensing of patents relating to the manu-
facture of pharmaceutical products for export to countries with public health problems

(COM(2004) 737 final – 2004/0258 (COD))

(2005/C 286/02)

On 15 December 2004, the Council decided to consult the European Economic and Social Committee,
under Article 251 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 23 May 2005. The rapporteur was Mr Braghin.

At its 418th plenary session, held on 8 and 9 June 2005 (meeting of 8 June), the European Economic and
Social Committee adopted the following opinion by 64 votes to one with one abstention.

1. Gist of the opinion

Furthermore, the EESC recommends strengthening the

1.3
operational provisions in order to ensure:

the

The

EESC endorses

European Commission's
1.1
proposal, which aims to implement
the Decision that was
adopted by the WTO General Council on 30 August 2003. It
also appreciates the Commission's active role - with interna-
tional bodies and other stakeholders - in seeking appropriate
solutions to the serious health problems affecting developing
countries with no pharmaceuticals production capacity and
inadequate health structures.

— full compliance with current legislation, particularly in rela-

tion to production quality control,

— that the conditions for compulsory licensing are reinforced
(Article 8), particularly in relation to the arrangements used
to differentiate between a licensed pharmaceutical product
and its original, in order that illegal re-export within the EU
or to third countries is avoided,

The EESC supports both the procedure governing the
1.2
compulsory licensing of pharmaceutical products covered by a
patent or a supplementary protection certificate and the chosen
control arrangements.

— a coordinated effort with the authorities of the importing
countries in order to avoid fraud, counterfeiting and uses
other than those originally provided for,

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— that the implementation of Member States' customs rules
and sanction arrangements are closely monitored to deter
illicit operations,

— wider disclosure of compulsory licensing to better safeguard

intellectual property rights.

2.4
The Commission has also adopted an active, positive
approach in terms of awareness-raising and the search for
common solutions with international bodies and other stake-
holders. The aim is to improve the availability of basic medi-
cines and to ensure equal access for the poorest populations
whilst defending the intellectual property rights enshrined in
international trade agreements, and eliminating the risk of spec-
ulative re-importation or sale to third countries.

1.4
The EESC hopes that the scope is extended to include
veterinary medicinal products in view of possible health emer-
gencies arising from outbreaks of contagious animal diseases or
contamination of food products of animal origin.

Lastly, the EESC hopes that the European Commission
1.5
continues its worldwide efforts to ensure that emergency medi-
cines and adequate health structures are also made available to
non-WTO developing countries.

2. Introduction

The health situation in many parts of

2.1
the world is
highly critical and is marked by a constant risk of epidemics,
inadequate structures and treatment and very high morbidity
and mortality rates. The challenge is a global one, requiring
better health and social services not just in the developing
countries, but even in those relatively developed ones that do
not allocate sufficient resources to solving their health and
social problems.

2.2
Health care aid provided by the more developed coun-
tries is insufficient to resolve the problems, and therefore new
instruments must be sought. It is not enough to provide medi-
cines for emergencies, as is usually the case with developing
countries; the aim should be to improve the overall perfor-
mance of the system. This means targeting scarce resources on
real priorities, ensuring resource management and control
capabilities benefit those who actually need them, finding solu-
tions to shortcomings
in pharmaceuticals production and
services and ensuring the latter are managed efficiently.

2.3
The Commission has been particularly active in this
field, acting on several health-related fronts and seeking suitable
forms of cooperation and aid. One example is the action
programme to tackle the three diseases that impact most on
the high mortality rate in the less developed and developing
The
countries
tuberculosis
programme also aims to strengthen local health systems,
increase opportunities to secure the necessary medication at
reasonable prices and promote research into medicines and
vaccines to combat these diseases.

and malaria) (1).

(HIV/Aids,

(1) OJ C 133 of 6.6.2003.

2.5
The Commission's work has been decisive in advancing
discussions of these objectives at the World Trade Organisation
(WTO) in relation to the TRIPS Agreement (2). WTO Member
States adopted a declaration on the TRIPS Agreement and
public health (3) at the Conference of Ministers which was held
in Doha in 2001. The Declaration cleared up the issue of the
degree of flexibility allowed in implementing the agreement in
the context of national health policies. The Conference also
established the basic principles for ensuring that less developed
countries with limited or no pharmaceuticals production capa-
city can have recourse to compulsory licensing, a matter which
is predominantly regulated by the national authorities.

2.6
The above-mentioned Doha declaration on public health
asserted the principle that TRIPS agreements were to be inter-
preted and implemented in such a way as to support the right
of public health protection and to promote access to medicines
for all, and, in particular, the right of every WTO Member State
to establish what constitutes a ‘national emergency’ or ‘circum-
stances of extreme urgency’ with a view to justifying granting
compulsory licensing. Furthermore, after taking note of the
problems facing countries with limited or no pharmaceuticals
production capacity,
the declaration authorised the General
Council to find a speedy solution to the problem.

the various players,

2.7
The WTO General Council reached a solution with its
Decision of 30 August 2003 (4). The Decision clearly defines
the principles and commitments of
in
order to ensure that the products imported under the system
are genuinely used to meet public health needs without trade
diversion. Furthermore, it acknowledges the case for coopera-
tion among the WTO Member States with a view to encoura-
ging technology transfers and creating productive capacity in
the pharmaceutical sector, in accordance with Article 66(2) of
the TRIPS Agreement.

(2) TRIPS stands for Agreement on Trade-Related Aspects of Intellectual
Property Rights: the agreement regulates the possibility of making
compulsory changes to intellectual property rights, binding them to
certain conditions.

(3) Declaration on the TRIPS Agreement and public health, adopted on 14

November 2001, http://www.wto.org

(4) Decision of the General Council on implementation of paragraph 6
of the Doha Declaration on the TRIPS Agreements and public
health, http://www.wto.org

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The official

statement which the chairman of

2.8
the
General Council (5) made when the Decision was adopted, is of
some significance. It highlights the obstacles encountered in
this wide-scale national and international action to resolve the
problem, and sheds light on the logic and fairness of the
adopted measures, thus enhancing the content of the Decision.
The statement also notes that some WTO members, including
the Member States of the European Union, have resolved not
to use this particular compulsory licensing mechanism for
imports of proprietary medicines.

The General Council's Decision stipulated that it would
2.9
cease to apply when the TRIPS Agreement was amended to
comply with the provisions of the Decision. Despite the tight
deadlines, the initiative of the General Council has not yet led
to such a resolution. Consequently, some initiatives to bring
the Decision into effect have been adopted autonomously by
some WTO Member States and the Commission is moving in
the same direction with its proposed regulation.

3.5 Within the Community uniform implementation of the
Decision is needed to ensure that
the conditions for the
granting of compulsory licences for export are the same in all
EU Member States, to avoid any distortions of competition for
operators in the EU single market and to apply uniform rules
to prevent re-importation into the territory of the European
Union of pharmaceutical products manufactured under
compulsory licences.

3.6
In view of the very specific nature of the provisions of
the Decision, the fact that national arrangements for compul-
sory licensing already exist, and the need for urgent action to
allow for the export of medicines to countries with public
health problems, the Commission proposes implementation by
way of a regulation based on Articles 95 and 133 of the
Treaty.

3. Gist of the proposal for a regulation

4. Comments

3.1
The proposal aims to implement at Community level
the WTO General Council Decision of 30 August 2003 on the
implementation of paragraph 6 of
the Declaration on the
and public health. By waiving WTO
TRIPS Agreement
members' obligations under Article 31(f) of the WTO Agree-
ment on trade-related aspects of intellectual property rights,
this decision enables them to grant compulsory licences for the
production and sale of patented pharmaceutical products
intended for export to requesting third countries with insuffi-
cient or no manufacturing capacity in the pharmaceutical
sector.

4.1
The EESC fully agrees that action is needed to ensure
that countries with limited economic and productive resources
to
- and consequently lacking the necessary instruments
combat endemic diseases and tackle health crises - are provided
with basic pharmaceutical products. The proposed Regulation,
in compliance with the patents system, enables the supply of
patented pharmaceuticals under very specific
conditions.
However, it does not address the problem of the lack of unpa-
tented medicines in developing countries, as this is not covered
by the content of the WTO decision.

3.2
The regulation is intended to be part of the wider Euro-
pean and international action to address public health problems
faced by least developed countries and other developing coun-
tries, with a view to improving access to affordable medicines
in WTO Member States facing national emergencies or circum-
stances of extreme urgency.

The Decision includes substantial safeguards against
3.3
trade diversion and rules to ensure transparency, and provides
for future replacement of the Decision by an amendment to the
TRIPS Agreement.

3.4
The Commission believes that it is important for the
Community to contribute to the system set up by the Decision
through implementation in the Community legal order,
because of the active role played by the European Communities
and their Member States in the adoption of the Decision, their
commitment made at the WTO to fully contribute to its imple-
mentation and their appeal to all WTO Members to ensure that
the right conditions are put in place to allow the system set up
by the Decision to operate efficiently.

4.2
The EESC therefore welcomes the Commission's initia-
tive, which aims to promote the full and uniform implementa-
tion of the procedure for granting compulsory licences in rela-
tion to patents and supplementary protection certificates
concerning the manufacture
and sale of pharmaceutical
products to countries that have requested them in order to
the
address a significant health problem, and believes that
chosen arrangements are basically suitable. Nonetheless,
it
believes that the wording relating to some specific points could
be improved, as the following comments show.

The definition of

‘pharmaceutical product’ explicitly
4.3
refers to Directive 2001/83/EC of the Parliament and of the
Council (6) on medicinal products for human use. The WTO
General Council Decision does not mention veterinary medic-
inal products: nevertheless, in order to be able to cope with
health emergencies which could occur as a result of animal
diseases transferring to humans or contamination of
food
products of animal origin, the EESC hopes that the scope of
the Directive is extended to include veterinary medicinal
products, through the adoption of a specific WTO General
Council Decision, if necessary.

(5) The General Council chairperson's statement, 30 August 2003,

http://www.wto.org

(6) OJ L 311 of 28.11.2001

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4.4
The regulation is applicable to WTO members (Article
4), which is logical, being an instrument used to implement an
internal decision of this international organisation. The EESC
calls upon the Commission and the Member States to continue
international discussions and to seek globally applicable solu-
tions that comply with intellectual property rights and current
international agreements.

Article 5 lays down that ‘Any person may submit an
4.5
application for a compulsory licence’. The EESC believes that
the blanket term ‘person’ used to describe the applicant stems
from the desire to offer the greatest possible number of produc-
tion opportunities. Nonetheless, it believes that it is advisable
to specify that the applicant must meet all the requirements of
European legislation relating to pharmaceutical products so
that current production regulations governing citizens' health
in the EU can be enforced even if in the case in question the
product is intended solely for export.

4.6
The EESC believes that all the relevant authorities need
to monitor compliance with production quality standards,
which must be the same for the internal market and for
exports to countries that do not have adequate health control
adequate
structures. When implementing the Regulation,
checks must be devised for importer country control arrange-
ments, and coordinated action will be particularly necessary in
order to avoid (i) fraud or counterfeiting, thus ensuring patients
are protected in their home territory (ii) pharmaceutical
to compulsory licensing being diverted to
products subject
another destination, or (ii) illegal re-importation.

4.7
On the sensitive issue of authorised production volumes,
the EESC notes a discrepancy between Article 6(2) which lays
‘the total amount of product authorised to be
down that
produced [must] not significantly exceed the amount notified
to the WTO’ and Article 8(2) which asserts that ‘the amount of
… product(s) manufactured under the licence shall not exceed
what is necessary to meet needs’. To resolve the discrepancy,
the EESC suggests modifying the text of Article 6(2) with a
view to clarifying that production should not exceed the neces-
sary requirements.

4.8
Since the system implies limited ownership rights, the
regulation rightly provides that it should be used in good faith
(6th recital) and that the products manufactured pursuant to it
should reach those who need them and should not be diverted
from those for whom they were intended (7th recital).
However, it would be preferable to have these assertions – to
which the EESC fully subscribes – written into those Articles

Brussels, 8 June 2005.

setting out the detailed implementation arrangements (e.g. Arti-
cles 5 and 6), or in the ones that provide for suspension proce-
dures and the termination of compulsory licences (Articles 12
and 14).

4.9
The EESC endorses the measures envisaged to avoid the
unfair use of the compulsory licence. Moreover, it would like
to see a specific reference to the fact that the holder of a patent
or supplementary protection certificate can report or object to
any matters that have not been complied with, particularly
with respect to proof of prior negotiation and conformity of
production checks as laid down in Article 8 (paragraphs 4, 5
and 8 in particular).

4.10
Article 8(1) appears to contain an error as it refers
only to subsequent points 1 through 8, whereas it should also
include point 9, which also deals with the licensee.

Article 8(4)

lays down the labelling, marking and
4.11
packaging rules that govern products manufactured under the
present regulation in order to ensure that the product is exclu-
sively exported to and sold in the requesting importing
country. The EESC suggests that it should be specified that
trademarks, graphic logos and packaging colour too should be
distinctive with a view to hindering illegal re-exportation to the
EU or third countries.

4.12
Article 10, which lays down that the Commission shall
be notified of the compulsory licence granted by EU Member
States, does not appear to provide for adequate disclosure with
regard to the right holder and the players in the sector. The
EESC hopes that, provided that confidential
information is
protected, suitable arrangements can be made so that these
details may be made available to the interested parties.

4.13
The wording of Article 11(2) does not appear to be
sufficient to avoid unfair practices, particularly in the case of
medicines that are not manufactured in the EU but pass
through EU territory, and it consequently lacks teeth. The EESC
calls on the Commission to monitor the control arrangements
and the implementation of
the sanctions approved by the
Member States to ensure that, in compliance with the customs
Regulation (7), they are genuinely effective, proportionate and
dissuasive, thereby avoiding fraud and counterfeiting.

4.14
Lastly, the EESC urges that the European Commission
consider how best to implement arrangements, such as bilateral
agreements,
in order that similar arrangements can also be
implemented in non-WTO developing countries.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(7) Chapter V, Article 18 of Regulation 1383 (2003).