Explanatory Memorandum to COM(2004)737 - Compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems

Please note

This page contains a limited version of this dossier in the EU Monitor.

dossier COM(2004)737 - Compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public ...
source COM(2004)737 EN
date 29-10-2004
1. BACKGROUND

This 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 TRIPs Agreement and Public Health (WT/L/540 of 2 September 2003).

By waiving WTO Members’ obligations under Article 31(f) of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs Agreement), this Decision allows WTO Members to grant compulsory licences for the production and sale of patented pharmaceutical products intended for export to third countries with insufficient or no manufacturing capacity in the pharmaceutical sector. It includes substantial safeguards against trade diversion and rules to ensure transparency, and provides for future replacement of the Decision by an amendment to the TRIPs Agreement.

2. NEED FOR A COMMUNITY INTERVENTION

Given 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 the implementation of the Decision 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, it is important for the Community to contribute to the system set up by the Decision through implementation in the Community legal order.

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 distortion 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.

In view also of the very specific nature of the provisions of the Decision, the fact that national arrangements for compulsory 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. PROPOSED PROVISIONS

Article 1

The Regulation sets out a procedure and conditions for the grant of compulsory licences in line with the Decision. While supplementary protection certificates are not mentioned in the Decision, within the EU they entail the same effects as patents and so are included.

Article 2

The definition of the term “pharmaceutical product” is taken from the Decision, with text to reflect the definition of medicinal product in Directive 2001/83/EC.

Article 3

The competent authorities for granting compulsory licences pursuant to the Regulation will be those notified by the Member States.

Article 4

Eligibility is based on notifications and declarations to the WTO.

Article 5

This includes key elements of information required under the Decision and the TRIPs Agreement. The requirement to provide evidence of a specific request to the applicant by the importing country or from its authorised representatives should help ensure effective control of the amount of product supplied under compulsory licences .

Article 6

Competent authorities should verify whether basic conditions to trigger the system set out in the Decision have been met.

Article 7

Paragraph 1 reflects Article 31(b) of the TRIPs Agreement. While the TRIPs Agreement allows this requirement to be waived in the case of a national emergency or other circumstances of extreme urgency, here it is retained (paragraph 2) in view of the speed of modern communications and the desirability of voluntary agreements.

Article 8

This provision takes over the conditions set out in paragraph 2(b) of the Decision. In addition it reflects conditions usually found in licensing agreements.

Article 9

This specifies under which conditions a competent authority can refuse an application.

Article 10

Paragraph 2(c) of the Decision requires the exporting Member to notify the WTO Council for TRIPS about the grant of any licence. As the Commission is the usual interlocutor before the WTO for matters falling under the Common Commercial Policy, such notifications should be made via the Commission.

Articles 11 – 13

These are based on equivalent provisions in Council Regulation (EC) No 953/2003 on trade diversion.

Article 14

Termination of the licence is provided for if (a) the licence conditions are not respected, or (b) the circumstances which led to grant of the licence cease to exist (Article 31(g) of the TRIPs Agreement).

Article 15

Article 31(i) and 31(j)) of the TRIPs Agreement require provision to be made for review of decisions.

Article 16

As the licensee will not necessarily hold a medicinal products marketing authorisation within the EU for the product manufactured under a compulsory licence for export, the Regulation provides for licensees to ask for a scientific opinion from the European or national regulatory authorities if they should need this for export to the country concerned. Derogations from data protection and caducity rules are provided.

Article 17

This provides for review three years after entry into force of the Regulation.