EU renegotiation of the TRIPS agreement could lead to impasse, warn US experts

Renegotiation of a key amendment in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) would probably lead to an impasse, two US legal experts have warned a hearing at the European Parliament.

In a report commissioned by the European Parliament, these two experts also propose mechanisms that would enable the efficacy of this trade agreement to be strengthened, in particular by creating regional co-operation among several countries in the south to enable them to have access to drugs still under patent.

Negotiated under the World Trade Organisation (WTO), the TRIPS agreement provides for a system of voluntary and compulsory licences regulating the production, marketing and import-export of generics, so as to facilitate access to drugs that are essential but protected by patent.

During the WTO meeting in Doha (Qatar) in 2001, the US and the European Union rejected a solution proposed by several developing countries. Subsequently, faced with the manufacturing difficulties of the less developed countries, the TRIPS council issued a temporary text, known as the agreement of 30 August 2003, enabling a country to buy generic drugs from another country that holds a compulsory licence.

The Trips council decided at the beginning of December 2005 to perpetuate that agreement by integrating it in the form of an amendment into the TRIPS agreement. This modification will be effective when two thirds of WTO members have ratified it.

The European Parliament, which is assessing whether or not the EU should ratify this amendment, commissioned a report from two US academic lawyers, Professor Frederick Abbott of Florida State University and Jerome Reichman of Duke University, Durham, North Carolina.

The authors of the report, which is about to be finalised, claim that a renegotiation of the agreement would lead to an impasse and could even give rise to new limitations, particularly to do with the scope of diseases or that of eligible importing countries.

Parliament, however, could decide to delay ratification of the amendment, to negotiate 'a suitable programme of action' with the Commission and the Council with a view to enabling the agreement to be implemented most effectively, they believe.

The report's authors therefore propose regional co-operation or 'pooling procurement' between the less developed countries, particularly in Africa. By this means, these countries will be able to create economies of scale and will have a tremendous bargaining power' in terms of the pharmaceutical companies, Reichman said.

Through co-operation, these countries will be less affected by possible pressure from the companies, he added. 'If the pharmaceutical companies agree, they keep their market share.'

However, these countries will also be able to play competitors off against each other through negotiating with developing countries that produce generics, such as India and Brazil, he pointed out, noting that less developed countries are exempt from patent protection until 2016.

The report's authors are also asking the EU and its member states to play an active role in technology transfers and in the work to construct infrastructures.

As far as the cost of r&d is concerned - one of the arguments put forward by the industry to protect its patents - the authors say that companies' investment return comes mostly from rich countries. The use of compulsory licences in the poor countries was therefore 'unlikely to have a material effect on the level of research' carried out in the rich countries.

Fearing that new bilateral agreements between rich and poor countries could lead to new IP obligations on developing nations, the two authors argue for the European Parliament to encourage the EU to ask for the implementation of flexibilities in the TRIPS agreement at the WTO, in accordance with the Doha Declaration.