January 2017 Amendment to the WTO Agreement on Trade-Related Intellectual Property Rights

In 1948, General Agreement on Tariffs and Trade (“GATT”) established the rules for international commerce, with agreements signed by governments of the majority of global trading nations. The World Trade Organization (“WTO”) sprang from the de facto negotiating forum under the same name, GATT, through the Marrakesh Agreement Establishing the World Trade Organization. While GATT focused primarily on liberalizing the trade of goods, the WTO Agreement on Trade-Related Intellectual Property Rights (“TRIPs”) extended to cover trade in intellectual property, including services, inventions, creations, designs, copyrighted materials, trademarks, geographical indications, patents, topographies, trade secrets, and pharmaceuticals.

The WTO established TRIPs in April 1994 to promote transparency, consistency, and harmony by setting minimum levels of protection that WTO member governments must give to the intellectual property of other participating members. The agreement discussed basic principles of the trading system, such as national treatment and most-favored-nation treatment, how TRIPS interacts with other international intellectual property agreements, how to adequately protect intellectual property rights, how to enforce intellectual property rights, and how to settle disputes regarding intellectual property between WTO members.

In January 2017, the WTO officially amended TRIPs to include Article 31bis, which provides “the legal basis for WTO members to grant special compulsory licenses exclusively for the production and export of affordable generic medicines to other members that cannot domestically produce the needed medicines in sufficient quantities for their patients.” This provision (the “Amendment”) provides an exception to the otherwise stringent WTO rules for compulsory licensing. Generally, medications produced under compulsory licenses can only be sold in the domestic market where it was produced. However, many developing countries lack the pharmaceutical production capacity to produce sufficient quantities of these potentially lifesaving medications. As a result of the amendment, TRIPs empowered WTO members by facilitating the legal export of medications from secure, generic suppliers from countries where pharmaceuticals are patented to developing countries without the necessary production capacity. This is the first amendment in WTO history, but it reflects a prioritization of public health over intellectual property law. WTO Director-General Roberto Azevêdo said, “[the TRIPs amendment] helps the most vulnerable access the drugs that meet their needs, helping to deal with diseases such as HIV/AIDS, tuberculosis or malaria, as well as other epidemics.”

While the Amendment is widely viewed as a positive development, experts are concerned that there will be “secondary effects” that minimize the public health benefit from the Amendment. For example, patent owners may be unlikely to directly invest in the countries which resort to compulsory licensing, as countries without compulsory licensing may be viewed as more investor-friendly. Experts are also concerned that the Amendment may reduce the incentive to innovate in the pharmaceutical sector, specifically pharmaceutical companies could be less likely to research into epidemic diseases like HIV and Malaria if they believe any future patent would be flimsy and unprofitable. The WTO hopes to mitigate these secondary effects with narrowly tailored licenses. Additionally, in theory, all WTO member countries are eligible to import medications, but a growing number of developed countries announced voluntarily that they will not import using this amendment, or will only import in emergency situations. This commitment by WTO members not to abuse the Amendment might comfort pharmaceutical companies concerned about profit margins.

Although WTO members just ratified the Amendment in January 2017, an August 2003 waiver removed the TRIPs limitation to supply to local markets and the amendment has been pending a two-thirds majority since December 2005—a period of almost twelve years. The WTO members who have yet to accept the Amendment have until the end of December 2017 to agree. The WTO plans to continue its work with the UN High Level Panel Report on Access to Medicines to make the Amendment operational.

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