Regulation (EC) No 816/2006 of the European Parliament and of the Council of  17 May 2006  on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems
Date: 2006-05-17
Institutions: Council of the European Union, European Parliament
Subjects: export monitoring, health aid, least-developed country, patents licence, pharmaceutical product

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(Acts whose publication is obligatory)

REGULATION (EC) No 816/2006 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 17 May 2006

on compulsory licensing of patents relating to the manufacture of pharmaceutical products for
export to countries with public health problems

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EURO-
PEAN UNION,

(3)

Having regard to the Treaty establishing the European Com-
munity, and in particular Articles 95 and 133 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and
Social Committee (1),

(4)

Acting in accordance with the procedure laid down in
Article 251 of the Treaty (2),

Whereas:

Given the Community's active role in the adoption of
the Decision, its commitment made to the WTO to fully
contribute to the implementation of the Decision and its
appeal to all WTO Members to ensure that the condi-
tions are put in place which will allow the system set up
by the Decision to operate efficiently, it is important for
the Community to implement the Decision in its legal
order.

Uniform implementation of the Decision is needed to
ensure that the conditions for the granting of compul-
sory licences for the manufacture and sale of pharma-
ceutical products, when such products are intended for
export, are the same in all Member States and to avoid
distortion of competition for operators in the single
market. Uniform rules should also be applied to prevent
re-importation into the territory of the Community of
pharmaceutical products manufactured pursuant to the
Decision.

(1)

(2)

On 14 November 2001 the Fourth Ministerial Confer-
ence of the World Trade Organisation (WTO) adopted
the Doha Declaration on the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS
Agreement) and Public Health. The Declaration recog-
nises that each WTO Member has the right to grant
compulsory licences and the freedom to determine the
grounds upon which such licences are granted. It also
recognises that WTO Members with insufficient or no
manufacturing capacity in the pharmaceutical sector
could face difficulties in making effective use of compul-
sory licensing.

On 30 August 2003 the WTO General Council, in the
light of the statement read out by its Chairman, adopted
the Decision on the implementation of paragraph 6 of
the Doha Declaration on the TRIPS Agreement and
Public Health (the Decision). Subject to certain condi-
tions, the Decision waives certain obligations concerning
the issue of compulsory licences set out in the TRIPS
Agreement
of
to
WTO Members with insufficient manufacturing capacity.

address

needs

order

the

in

(1) OJ C 286, 17.11.2005, p. 4.
(2) Opinion of

the European Parliament of 1.12.2005 (not yet
published in the Official Journal), and Council Decision of 28 April
2006.

(5)

This Regulation is intended to be part of wider European
and international
action to address public health
problems faced by least developed countries and other
developing countries, and in particular
to improve
access to affordable medicines which are safe and effec-
tive,
including fixed-dose combinations, and whose
quality is guaranteed. In that connection, the procedures
laid down in Community pharmaceutical
legislation
guaranteeing the scientific quality of such products will
be available, in particular that provided for in Article 58
of Regulation (EC) No 726/2004 of the European Parlia-
ment and of the Council of 31 March 2004 laying down
Community procedures for the authorisation and super-
vision of medicinal products for human and veterinary
use and establishing a European Medicines Agency (3).

(6)

As the compulsory licensing system set up by this Regu-
lation is intended to address public health problems, it
should be used in good faith. This system should not be
used by countries to pursue industrial or commercial
policy objectives. This Regulation is designed to create a
secure legal framework and to discourage litigation.

(3) OJ L 136, 30.4.2004, p. 1.

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(7)

(8)

(9)

As this Regulation is part of wider action to address the
issue of access to affordable medicines for developing
countries, complementary actions are set out
in the
Commission Programme for Action: Accelerated action
on HIV/AIDS, malaria and tuberculosis in the context of
poverty reduction and in the Commission Communica-
tion on a Coherent European Policy Framework for
External Action to Confront HIV/AIDS, malaria and
tuberculosis. Continued urgent progress is necessary,
including actions to support research to combat these
diseases and to enhance capacity in developing coun-
tries.

It is imperative that products manufactured pursuant to
this Regulation reach only those who need them and are
not diverted from those for whom they were intended.
The issuing of compulsory licences under this Regulation
must therefore impose clear conditions upon the licensee
as regards the acts covered by the licence, the identifica-
tion of the pharmaceutical products manufactured under
the licence and the countries to which the products will
be exported.

Provision should be made for customs action at external
borders to deal with products manufactured and sold for
export under a compulsory licence which a person
attempts to reimport
into the territory of the Com-
munity.

(10) Where pharmaceutical products produced under a
compulsory licence have been seized under this Regu-
lation, the competent authority may, in accordance with
national legislation and with a view to ensuring that the
intended use is made of
the seized pharmaceutical
products, decide to send the products to the relevant
importing country according to the compulsory licence
which has been granted.

(11)

To avoid facilitating overproduction and possible diver-
sion of products, the competent authorities should take
into account existing compulsory licences for the same
products and countries, as well as parallel applications
indicated by the applicant.

(12)

Since the objectives of this Regulation, in particular the
establishment of harmonised procedures for the granting
of compulsory licences which contribute to the effective
implementation of the system set up by the Decision,
cannot be sufficiently achieved by the Member States
because of the options available to exporting countries
under the Decision and can therefore, by reason of the

potential effects on operators in the internal market, be
better achieved at Community level,
the Community
may adopt measures, in accordance with the principle of
In
subsidiarity as set out in Article 5 of the Treaty.
accordance with the principle of proportionality, as set
out in that Article, this Regulation does not go beyond
what is necessary in order to achieve those objectives.

(13)

(14)

(15)

The Community recognises the utmost desirability of
promoting the transfer of
technology and capacity-
building to countries with insufficient or no manufac-
turing capacity in the pharmaceutical sector, in order to
facilitate and increase the production of pharmaceutical
products by those countries.

In order to ensure the efficient processing of applications
for compulsory licences under this Regulation, Member
States should have the ability to prescribe purely formal
or administrative requirements, such as rules on the
language of the application, the form to be used, the
identification of
supplementary
the patent(s) and/or
protection certificate(s) in respect of which a compulsory
licence is sought, and rules on applications made in elec-
tronic form.

The simple formula for setting remuneration is intended
to accelerate the process of granting a compulsory
licence in cases of national emergency or other circum-
stances of extreme urgency or in cases of public non-
commercial use under Article 31(b) of the TRIPS Agree-
ment. The figure of 4 % could be used as a reference
point
for deliberations on adequate remuneration in
circumstances other than those listed above,

HAVE ADOPTED THIS REGULATION:

Article 1

Scope

This Regulation establishes a procedure for
the grant of
compulsory licences in relation to patents and supplementary
protection certificates concerning the manufacture and sale of
pharmaceutical products, when such products are intended for
export to eligible importing countries in need of such products
in order to address public health problems.

Member States shall grant a compulsory licence to any person
making an application in accordance with Article 6 and subject
to the conditions set out in Articles 6 to 10.

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Article 2

Definitions

For the purposes of this Regulation, the following definitions
shall apply:

(1) ‘pharmaceutical product’ means any product of the phar-
maceutical sector, including medicinal products as defined
in Article
the
European Parliament and of the Council of 6 November
2001 on the Community code relating to medicinal
products for human use (1), active ingredients and diag-
nostic kits ex vivo;

2001/83/EC of

of Directive

1(2)

(2) ‘rights-holder’ means the holder of any patent or supple-
mentary protection certificate in relation to which a
compulsory licence has been applied for under this Regu-
lation;

(3) ‘importing country’ means the country to which the phar-

maceutical product is to be exported;

(4) ‘competent authority’ for the purposes of Articles 1 to 11,
16 and 17 means any national authority having compe-
tence to grant compulsory licences under this Regulation in
a given Member State.

Article 3

Competent authority

The competent authority as defined in Article 2(4) shall be that
which has competence for the granting of compulsory licences
under national patent law, unless the Member State determines
otherwise.

Member States shall notify the Commission of the designated
competent authority as defined in Article 2(4).

Notifications shall be published in the Official Journal of the
European Union.

(c) any country that is not a member of the WTO, but is listed
in the OECD Development Assistance Committee's list of
low-income
countries with a gross national product
per capita of less than USD 745, and has made a notifica-
tion to the Commission of its intention to use the system
as an importer, including whether it will use the system in
whole or in a limited way.

However, any WTO member that has made a declaration to
the WTO that it will not use the system as an importing WTO
member is not an eligible importing country.

Article 5

Extension to least-developed and developing countries
which are not members of the WTO

The following provisions shall apply to importing countries
eligible under Article 4 which are not WTO members:

(a) the importing country shall make the notification referred

to in Article 8(1) directly to the Commission;

(b) the importing country shall, in the notification referred to
in Article 8(1), state that it will use the system to address
public health problems and not as an instrument to pursue
industrial or commercial policy objectives and that it will
adopt the measures referred to in paragraph 4 of the Deci-
sion;

(c) the competent authority may, at the request of the rights-
holder, or on its own initiative if national law allows the
competent authority to act on its own initiative, terminate
a compulsory licence granted pursuant to this Article if the
importing country has failed to honour its obligations
referred to in point (b). Before terminating a compulsory
licence, the competent authority shall take into account any
views expressed by the bodies referred to in Article 6(3)(f).

Article 4

Article 6

Eligible importing countries

Application for a compulsory licence

The following are eligible importing countries:

(a) any least-developed country appearing as such in the

United Nations list;

(b) any member of the WTO, other than the least-developed
country members referred to in point (a), that has made a
notification to the Council for TRIPs of its intention to use
the system as an importer, including whether it will use the
system in whole or in a limited way;

(1) OJ L 311, 28.11.2001, p. 67. Directive as last amended by Directive

2004/27/EC (OJ L 136, 30.4.2004, p. 34).

1.
Any person may submit an application for a compulsory
licence under this Regulation to a competent authority in the
Member State or States where patents or supplementary protec-
tion certificates have effect and cover his intended activities of
manufacture and sale for export.

2.
If the person applying for a compulsory licence is submit-
ting applications to authorities in more than one country for
the same product, he shall indicate that fact in each application,
together with details of the quantities and importing countries
concerned.

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The application pursuant to paragraph 1 shall set out the

3.
following:

(a) each importing country cited in the application which is a
WTO member has made a notification to the WTO
pursuant to the Decision,

(a) the name and contact details of the applicant and of any
agent or representative whom the applicant has appointed
to act for him before the competent authority;

or

(b) the non-proprietary name of the pharmaceutical product or
products which the applicant intends to manufacture and
sell for export under the compulsory licence;

(c) the amount of pharmaceutical product which the applicant

seeks to produce under the compulsory licence;

(d) the importing country or countries;

(e) where applicable, evidence of prior negotiation with the

rights-holder pursuant to Article 9;

(f) evidence of a specific request from:

(i) authorised representatives of the importing country or

countries; or

(ii) a non-governmental organisation acting with the
formal authorisation of one or more importing coun-
tries; or

(iii) UN bodies or other international health organisations
acting with the formal authorisation of one or more
importing countries,

indicating the quantity of product required.

Purely formal or administrative requirements necessary
4.
for the efficient processing of the application may be prescribed
under national law. Such requirements shall not add unnecessa-
rily to the costs or burdens placed upon the applicant and, in
any event, shall not render the procedure for granting compul-
sory licences under this Regulation more burdensome than the
procedure for the granting of other compulsory licences under
national law.

Article 7

Rights of the rights-holder

The competent authority shall notify the rights-holder without
delay of the application for a compulsory licence. Before the
grant of the compulsory licence, the competent authority shall
give the rights-holder an opportunity to comment on the appli-
cation and to provide the competent authority with any rele-
vant information regarding the application.

Article 8

Verification

1.

The competent authority shall verify that:

(b) each importing country cited in the application which is
not a WTO member has made a notification to the
Commission pursuant to this Regulation in respect of each
of the products covered by the application that:

(i) specifies the names and expected quantities of

the

product(s) needed;

(ii) unless

the importing country is a least-developed
country, confirms that the country has established that
it had insufficient or no manufacturing capacity in the
pharmaceutical
in relation to a particular
product or products in one of the ways set out in the
Annex to the Decision;

sector

(iii) confirms

that where a pharmaceutical product

is
patented in the territory of the importing country, that
importing country has granted or intends to grant a
the product
compulsory
concerned in accordance with Article 31 of the TRIPS
Agreement and the provisions of the Decision.

import of

licence

for

This paragraph is without prejudice to the flexibility that least-
developed countries have under the Decision of the Council for
TRIPS of 27 June 2002.

The competent authority shall verify that the quantity of
2.
product cited in the application does not exceed that notified
to the WTO by an importing country which is a WTO member,
or to the Commission by an importing country which is not a
WTO member, and that, taking into account other compulsory
the total amount of product
licences granted elsewhere,
authorised to be produced for any importing country does not
significantly exceed the amount notified by that country to the
in the case of importing countries which are WTO
WTO,
members, or to the Commission,
in the case of importing
countries which are not WTO members.

Article 9

Prior negotiation

1.
The applicant shall provide evidence to satisfy the compe-
tent authority that he has made efforts to obtain authorisation
from the rights-holder and that such efforts have not been
successful within a period of thirty days before submitting the
application.

The requirement in paragraph 1 shall not apply in situa-
2.
tions of national emergency or other circumstances of extreme
urgency or in cases of public non-commercial use under
Article 31(b) of the TRIPS Agreement.

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Article 10

Compulsory licence conditions

1.
The licence granted shall be non-assignable, except with
that part of the enterprise or goodwill which enjoys the licence,
and non-exclusive. It shall contain the specific conditions set
out in paragraphs 2 to 9 to be fulfilled by the licensee.

The amount of product(s) manufactured under the licence
2.
shall not exceed what is necessary to meet the needs of the
importing country or countries cited in the application, taking
into account the amount of product(s) manufactured under
other compulsory licences granted elsewhere.

3.

The duration of the licence shall be indicated.

4.
The licence shall be strictly limited to all acts necessary
for the purpose of manufacturing the product in question for
export and distribution in the country or countries cited in the
application. No product made or imported under the compul-
sory licence shall be offered for sale or put on the market in
any country other than that cited in the application, except
where an importing country avails itself of the possibilities
under subparagraph 6(i) of the Decision to export to fellow
members of a regional trade agreement that share the health
problem in question.

5.
Products made under the licence shall be clearly identi-
fied, through specific labelling or marking, as being produced
pursuant to this Regulation. The products shall be distinguished
from those made by the rights-holder through special packa-
ging and/or special colouring/shaping, provided that such
distinction is feasible and does not have a significant impact on
price. The packaging and any associated literature shall bear an
indication that the product is subject to a compulsory licence
under this Regulation, giving the name of
the competent
authority and any identifying reference number, and specifying
clearly that the product is exclusively for export to and distri-
bution in the importing country or countries concerned.
Details of the product characteristics shall be made available to
the customs authorities of the Member States.

6.
Before shipment to the importing country or countries
cited in the application, the licensee shall post on a website the
following information:

(a) the quantities being supplied under the licence and the

importing countries to which they are supplied;

(b) the distinguishing features of

the product or products

concerned.

The website address shall be communicated to the competent
authority.

7.
If the product(s) covered by the compulsory licence are
patented in the importing countries cited in the application, the

product(s) shall only be exported if those countries have issued
a compulsory licence for the import, sale and/or distribution of
the products.

if national

The competent authority may at the request of the rights-
8.
holder or on its own initiative,
law allows the
competent authority to act on its own initiative, request access
to books and records kept by the licensee, for the sole purpose
of checking whether the terms of the licence, and in particular
those relating to the final destination of the products, have
been met. The books and records shall include proof of expor-
tation of the product, through a declaration of exportation
certified by the customs authority concerned, and proof of
importation from one of the bodies referred to in Article 6(3)(f).

The licensee shall be responsible for the payment of
9.
adequate remuneration to the rights-holder as determined by
the competent authority as follows:

(a) in the cases referred to in Article 9(2), the remuneration
shall be a maximum of 4 % of the total price to be paid by
the importing country or on its behalf;

(b) in all other cases, the remuneration shall be determined
taking into account
the use
authorised under the licence to the importing country or
countries concerned, as well as humanitarian or non-
commercial circumstances relating to the issue of
the
licence.

the economic value of

The licence conditions are without prejudice to the

10.
method of distribution in the importing country.

Distribution may be carried out for example by any of the
bodies listed in Article 6(3)(f) and on commercial or non-
commercial terms including completely without charge.

Article 11

Refusal of the application

The competent authority shall refuse an application if any of
the conditions set out in Articles 6 to 9 are not met, or if the
application does not contain the elements necessary to allow
the competent authority to grant the licence in accordance
with Article 10. Before refusing an application, the competent
authority shall give the applicant an opportunity to rectify the
situation and to be heard.

Article 12

Notification

When a compulsory licence has been granted, the Member
State shall notify the Council for TRIPS through the inter-
mediary of the Commission of the grant of the licence, and of
the specific conditions attached to it.

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The information provided shall include the following details of
the licence:

(a) the name and address of the licensee;

(b) the product or products concerned;

(c) the quantity to be supplied;

(d) the country or countries to which the product or products

are to be exported;

(e) the duration of the licence;

(f) the address of the website referred to in Article 10(6).

Article 13

Prohibition of importation

1.
The import into the Community of products manufac-
tured under a compulsory licence granted pursuant to the Deci-
sion and/or this Regulation for the purposes of release for
free circulation, re-export, placing under suspensive procedures
or placing in a free zone or free warehouse shall be prohibited.

2.
Paragraph 1 shall not apply in the case of re-export to
the importing country cited in the application and identified in
the packaging and documentation associated with the product,
or placing under a transit or customs warehouse procedure or
in a free zone or free warehouse for the purpose of re-export
to that importing country.

The importer, and where appropriate, the exporter shall be
given ample opportunity to supply the competent authority
with the information which it deems appropriate regarding the
products.

3.
If it is confirmed that products suspended for release or
detained by customs authorities were intended for import into
the Community contrary to the prohibition in Article 13(1),
the competent authority shall ensure that the products are
seized and disposed of in accordance with national legislation.

The procedure of suspension or detention or seizure of
4.
the goods shall be carried out at the expense of the importer. If
it is not possible to recover those expenses from the importer,
they may, in accordance with national legislation, be recovered
from any other person responsible for the attempted illicit
importation.

If

5.
the products suspended for release or detained by
customs authorities are subsequently found not to violate the
the customs authorities shall
prohibition in Article 13(1),
release the products to the consignee, provided that all customs
formalities have been complied with.

The competent authority shall inform the Commission of
6.
any decisions on seizure or destruction adopted pursuant to
this Regulation.

Article 15

Personal luggage exception

Article 14

Action by customs authorities

Articles 13 and 14 shall not apply to goods of a non-commer-
cial nature contained in travellers' personal luggage for personal
from
use within the limits laid down in respect of relief
customs duty.

1.
If there are sufficient grounds for suspecting that products
manufactured under a compulsory licence granted pursuant to
the Decision and/or this Regulation are being imported into the
Community contrary to Article 13(1), customs authorities shall
suspend the release of, or detain, the products concerned for
the time necessary to obtain a decision of
the competent
authority on the character of the merchandise. Member States
shall ensure that a body has the authority to review whether
such importation is taking place. The period of suspension or
detention shall not exceed 10 working days unless special
circumstances apply, in which case the period may be extended
by a maximum of 10 working days. Upon expiry of that
period, the products shall be released, provided that all customs
formalities have been complied with.

The competent authority, the rights-holder and the manu-
2.
facturer or exporter of
the products concerned shall be
informed without delay of the suspended release or detention
of the products and shall be given all
information available
with respect to the products concerned. Due account shall be
taken of national provisions on the protection of personal data
and commercial and industrial secrecy and professional and
administrative confidentiality.

Article 16

Termination or review of the licence

1.
Subject to adequate protection of the legitimate interests
of the licensee, a compulsory licence granted pursuant to this
Regulation may be terminated by a decision of the competent
authority or by one of the bodies referred to in Article 17 if
the licence conditions are not respected by the licensee.

The competent authority shall have the authority to review,
upon reasoned request by the rights-holder or the licensee,
whether
the licence conditions have been respected. This
review shall be based on the assessment made in the importing
country where appropriate.

2.
Termination of a licence granted under this Regulation
shall be notified to the Council for TRIPS through the inter-
mediary of the Commission.

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the licence,

Following termination of

3.
the competent
authority, or any other body appointed by the Member State,
shall be entitled to establish a reasonable period of time within
which the licensee shall arrange for any product in his posses-
sion, custody, power or control to be redirected at his expense
to countries in need as referred to in Article 4 or otherwise
disposed of as prescribed by the competent authority, or by
another body appointed by the Member State, in consultation
with the rights-holder.

to the extent necessary to meet

4. When notified by the importing country that the amount
of pharmaceutical product has become insufficient to meet its
needs, the competent authority may, following an application
by the licensee, modify the conditions of the licence permitting
the manufacture and export of additional quantities of the
product
the needs of the
importing country concerned. In such cases the licensee's appli-
cation shall be processed in accordance with a simplified and
accelerated procedure, whereby the information set out
in
Article 6(3), points (a) and (b), shall not be required provided
that
identified by the
licensee. In situations where Article 9(1) applies but the deroga-
tion set out in Article 9(2) does not apply, no further evidence
of negotiation with the rights-holder will be required, provided
that the additional amount requested does not exceed 25 % of
the amount granted under the original licence.

the original compulsory licence is

In situations where Article 9(2) applies, no evidence of negotia-
tion with the rights-holder will be required.

Article 17

Appeals

Appeals against any decision of the competent authority,
1.
and disputes concerning compliance with the conditions of the
licence, shall be heard by the appropriate body responsible
under national law.

2. Member States shall ensure that the competent authority
and/or the body referred to in paragraph 1 have the power to
rule that an appeal against a decision granting a compulsory
licence shall have suspensory effect.

Article 18

Safety and efficacy of medicinal products

1. Where the application for a compulsory licence concerns
a medicinal product, the applicant may avail himself of:

(a) the scientific opinion procedure as provided for under

Article 58 of Regulation (EC) No 726/2004, or

(b) any similar procedures under national law, such as scientific
opinions or export certificates intended exclusively for
markets outside the Community.

2.
If a request for any of the above procedures concerns a
product which is a generic of a reference medicinal product
which is or has been authorised under Article 6 of Direc-
tive
in
protection
Article 14(11) of Regulation (EC) No 726/2004 and in Arti-
cles 10(1) and 10(5) of Directive 2001/83/EC shall not apply.

2001/83/EC,

periods

out

the

set

Article 19

Review

to the European Parliament,

Three years after the entry into force of this Regulation, and
every three years thereafter, the Commission shall present a
report
the Council, and the
European Economic and Social Committee on the operation of
this Regulation including any appropriate plans for amend-
ments. The report shall cover, in particular:

(a) the application of Article 10(9) on determining the remu-

neration of the rights-holder;

(b) the application of the simplified and accelerated procedure

referred to in Article 16(4);

(c) the sufficiency of the requirements under Article 10(5) to

prevent trade diversion, and

(d) the contribution this Regulation has made to the imple-

mentation of the system established by the Decision.

Article 20

Entry into force

This Regulation shall enter
into force on the 20th day
following that of its publication in the Official Journal of the
European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Strasbourg, 17 May 2006.

For the European Parliament

The President

J. BORRELL FONTELLES

For the Council

The President

H. WINKLER