Compulsory licensing and parallel imports

Contact us Site map A-Z Search. Patenting : WTO members have to provide patent protection for any invention, whether a product such as a medicine or a process such as a method of producing the chemical ingredients for a medicine , while allowing certain exceptions. Article Patent protection has to last at least 20 years from the date the patent application was filed.

Non-discrimination : Members cannot discriminate between different fields of technology in their patent regimes. Nor can they discriminate between the place of invention and whether products are imported or locally produced. Disclosure : Details of the invention have to be described in the application and therefore have to be made public. Member governments have to require the patent applicant to disclose details of the invention and they may also require the applicant to reveal the best method for carrying it out.

Governments can refuse to grant patents for three reasons that may relate to public health:. Under the TRIPS Agreement, governments can make limited exceptions to patent rights, provided certain conditions are met.

Many countries use this provision to advance science and technology. They allow researchers to use a patented invention for research, in order to understand the invention more fully. The generic producers can then market their versions as soon as the patent expires. Articles 8 and Compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner.

Even in the US copyright registration is not fully mandatory. The protection of new original works is automatically available around the world to approximately countries. Trademarks like words or logos that typically identify the company that manufactured or supervised the manufacturing a product are protected in countries that share a common law legal tradition because they are used in commerce in that country. In jurisdictions with a different legal tradition including most of Europe , registration is generally required.

Indeed, even in common law countries registration is recommended. This means that the owner of a trademark must take steps to protect a trademark in multiple countries and that worldwide protection is not automatic. Parallel importation of goods legally put in the market in a different country with the consent of the owner of the intellectual property right. Having said that, there are many different fact patterns that can arise. Let us assume the same goods are sold in countries A , B, C, D and E, with the following differences.

Though answers to this question remain somewhat controversial in some jurisdictions, the following seems likely to be correct:. Second, there are specific international rules with respect to patent compulsory licensing that limit re-export of patented goods made under a compulsory license such conditions, especially art 31 f of the TRIPS Agreement.

The amendment contains detailed rules concerning diversion to more economically developed markets. In the copyright field, by contrast, compulsory licensing is allowed in certain circumstances.

For example, under the Appendix to the principal international copyright instrument, the Berne Convention, which was incorporated into the TRIPS Agreement, developing countries can issue reproduction and translation licenses for books.

Country E is a somewhat harder question. The rights cannot have been said to be exhausted because there were never any rights to exhaust so that the traditional rationale for parallel importation should not apply.

Yet the goods are undoubtedly legal in their territory. Lexmark , by focusing on the import of authorized goods seems to assume exhaustion and the answer would, therefore, be no, the goods cannot legally make it into country A.

The main rationale against parallel importation of goods protected by copyright or a patent is that it prevents price discrimination. In the copyright field, a book publisher can charge a different price depending on the perception of what the market can bear in that particular country. The idea is that if such a country needs to turn to the option of compulsory licensing to produce needed affordable pharmaceuticals, producers overseas can step up and supply that need, even if a compulsory licence is needed in that country.

It's therefore a compulsory licence specially for production in one country, for export, to meet the public health needs of one or more other countries. This was possible after two thirds of WTO members had formally notified their legal acceptance of this change, in line with the general rules for amending WTO treaties, following a sharp increase in the pace of such acceptances since details available here.

WTO member governments had already unanimously agreed, back in , that the Agreement should be amended, following a proposal by African members. Earlier, in , they had agreed on a waiver to the applicable rules which was subsequently formalised as the legal amendment. The amended TRIPS Agreement now applies to members who have accepted it; others can still use the waiver decision pending their acceptance. All WTO members are eligible to export medicines under this special compulsory licensing mechanism.

As regards eligible importing members, LDCs can use it straight away; others have to notify their intention to do so, through a brief communication. For their part, industrialized countries have elected not to use it for imports. Several other members have said they would only use it for imports in situations of national emergency or other circumstances of extreme urgency.

These positions were put on record at the time the waiver and amendment decisions were adopted see Chairperson's statements from and According to the Annex to the Amended TRIPS Agreement, the mechanism covers pharmaceutical products, including medicines, vaccines and diagnostics, needed to fight an epidemic.

But to make it work requires practical steps. The amended rules create the legal pathway, but countries have to make use of it. The welfare: if the costs of engaging in such trades are low, there would be gains from permitting it; if the costs are high, it would be more sensible to ban it. Countries with low trade barriers might prefer an open regime of parallel trade. The tradeoff: parallel imports will benefit consumers in the high-price country but hurt consumers in the low-price country as such trade forces the manufacturer to set an inefficient wholesale price to limit its extent Danzon , Towse , cited in Gyldmark, ; Markus and Chen, It also found that parallel trade increases the profitability of pharmaceutical wholesalers and retailers and may not totally lower the prices for drugs in the high-priced country.

The cost and benefits of parallel importation is summarized in Figure 7. Once the company Y has sold its product to Country B, its patent is exhausted and it no longer has any rights over what happens to that product refer to Figure 6.

The TRIPS Agreement simply says that none of its provisions can be used to address the issue of exhaustion of intellectual property rights in a WTO dispute Article 6 unless fundamental principles of non-discrimination are involved. Parallel imports of pharmaceuticals are common in the EC to promote a common market, and the savings can be substantial. Firms like Informedica track parallel prices for clients seeking to minimize the expenditure on medicines.

In a recent analysis, Informedica compared the UK list and best UK contract prices to the prices charged by five parallel importers for eight important drugs for HIV.

That is why parallel import is said to be one of the preventive steps in drugs price control. Glaxo's prices for Zantac and Voteran were lower in the UK than in Indonesia, for example, despite Indonesia's low income. Even though the variation of prices seems to benefit consumers in low-income countries, there are some disputes by US pharmaceutical manufacturer over parallel trade in these countries.

Parallel Importation in Malaysia The purpose of Patent Act Act is to give legal protection to patent holders together with exclusive rights which includes the exploitation of the patents, to assigned or transferred the rights and signing license contract. This Act is effective from 1st October Non-patentable inventions include the following: discoveries, scientific theories and mathematical methods; plant or animal varieties or essentially biological processes for the production of plants or animals, other than man-made living micro-organism processes; schemes, rules or methods for doing business, performing purely mental acts or playing games; methods for the treatment of the human or animal body by surgery or therapy, and diagnostic methods practiced on the human or animal body Patents Act , Sect.

Two revision had been made to this Act ever since. The first revision, Patent Act Revision , is effective from 1st August to speed up the processing and granting the patents in accordance with Paris Convention and to extend the protection of patents. The second and latest revision is Patent Act Revision , which is effective from 1st August Among others, the Act allows parallel import of the products that has been patented after the product has been marketed at overseas.

The impact of parallel importation on drug prices can be evaluated by comparing prices of patented branded drugs obtained from local retailers, which is imported directly from the original manufacture by its agent or sole distributor, and prices of the same patented drugs obtained from international market. The drug selections are based on the National Essential Drugs List.

The selected drugs are those with available patented drugs as at year The usage of each drug is also noted. For every drugs sold, it will be priced according to dosage and packaging of drugs. The most available package will be recorded and used for evaluation of price variations.

Prices for comparison will be based on a unit of each selective active ingredient. For the purpose of this research, all the prices gathered are retail prices.

Local retail prices of branded and generic drugs are obtained from several retail pharmacies located in Klang Valley and recommended retail price compiled by National Pharmaceutical Control Bureau NPCB , Ministry of Health. International retail prices are gathered from different pharmaceutical retailers in India, Thailand, Australia, Hong Kong and New Zealand.

These retailers are certified retailers in their country and also provide the services through the internet. It is important to note that the prices studied are retail prices and meant for personal usage. The original prices obtained from these retailers are in US dollars and inclusive of freight charges from the particular third party country to Malaysia. International prices are recorded in the US dollar and then converted to Ringgit Malaysia as at 1st January Due to the limited time frame, the findings of this study are based on a small market sample, i.

The selection of branded drugs is limited as certain drugs are not available in all countries understudy. It is due to differences in disease pattern, local dominant generic drugs that makes selling of branded drugs would be unprofitable or smaller demand in the particular country. The price of drugs are assumed does not affected by other factors such as inflation, income per capita, currency exchange or other economical and social factor.

Most of the drugs do not have generic substitute. These monopolized drugs are listed in Table 1. Three of the drugs are originated from US where patent is most protected. Comparison of prices on each patent drugs is listed in Table 2 to Table 9 and discussion on each finding is appended after each related tables.

Dihydrate Belongs to a group of drugs called macrolide antibiotics Treats rashes, Mometasone Schering Corp. Parallel importation shall be used to make cancer treatment more affordable to patients in Malaysia. However, the drug will cost more of 1.

Given parallel importation is not permitted in Thailand, no reason could be verified for a higher price in Hong Kong. As usual, India and New Zealand offer more competitive price, if parallel importation came into practice, at a discount rate of 60 percent and 20 percent respectively. It may cause variation of prices between third party countries. For the lowest dosage, 50 mg, the variation of prices are not obvious, i.

On the other hand, for the higher dosage, i. By and large, parallel importation would benefits the end user in Malaysia for this drug that treats duodenal and gastric ulcer, which is a common infection to the Malaysian. To conclude, The ratio of price from third party countries are ranged from 1. Retailers should be aware of the current changes in our legislation system in order to provide the public with more access to cheaper medicines. As the price in this study is retail prices, it is expected wholesalers could import the drugs at a much lower cost.

However, the parallel importation would be not beneficial to the society as a whole if the retailers parallel import the drugs but priced it as high as the price of original country. Then, not only the retailers, the consumers should be educated and provided with such information that they actually have an alternative to a same but cheaper drugs.

In relation to the pharmaceutical industry, a compulsory license is granted to a third party to produce a generic drugs interchangeable with the invented, patented drugs Eliot and Bonin, , under certain conditions, while a proprietary or branded name drugs is still protected by its patent.