(web link: http://ictsd.org/i/news/bridges/69177/)

The Andean country has joined a growing number of developing nations in taking advantage of flexibilities in the WTO’s intellectual property rights agreement in order to secure access to life-saving medicines.

On 23 October, Ecuador’s President Rafael Correa signed a decree that allows the country’s intellectual property institute (IEPI) to grant compulsory licences for the treatment of illnesses considered to be public health priorities.

The authorisation will be considered on a case-by-case basis in collaboration with the Ecuadorian health ministry, and royalties based on the price of the generic will be paid to patent holders. IEPI is currently designing a mathematical formula to calculate royalties, which may vary from case to case, the institution’s director, Andrés Ycaza, told Bridges. Other sources speculated that royalties might range from 0.3 to 5 percent.

Drug registration for imported or domestically produced generic copies must be granted within 30 days of the request provided that all legal requirements have been fulfilled, and quality, safety and efficacy controls have been completed.

Earlier in October, some 20 civil society organisations from around the world wrote to President Correa to “congratulate Ecuador on its courageous plans to grant compulsory licenses for medical patents.” They noted, inter alia, that over the past decade competition between generic and branded medicines had fuelled a revolution in HIV/AIDS treatment, reducing the cost of first-line antiretroviral therapy by over 98 percent, from US$10,000 per person annually to near US$100 today.

Among the most expensive medicines sold in Ecuador today are patented cancer drugs and second-line antiretroviral treatments for HIV/AIDS. According to Essential Action, a Washington-based advocacy organisation, the latter currently cost more than twice the price of competing generics, and some cancer treatments exceed US$35,000 a year per person, far more than many hospitals can afford.

The research firm Intercontinental Marketing Services estimates that foreign companies control about 82 percent of the Ecuadorian pharmaceutical market valued at some US$720 millions annually. Only 66 of the 243 pharmaceutical firms established in the country are in local hands.

Hundreds of Compulsory Licences Unlikely

Prior to releasing the decree, President Correa said on his weekly radio show that, as a result of the new policy, generic copies of more than 2,000 medicines could be manufactured by local laboratories or imported from other countries. “All those pharmaceutical products we can produce and copy, we will elaborate in Ecuador,” he stated.

Peter Maybarduk, an attorney with Essential Action, said that the figure mentioned by the president reflected the total number of granted and/or requested patents for pharmaceuticals in the country. However, multiple patents may apply to a single medicine and “it is thus not even theoretically possible for Ecuador to license 2,214 medicines as there aren’t that many patented pharmaceuticals,” he explained.

IEPI’s Andrés Ycaza said the decree did not mean that compulsory licences would be issued for all drugs under patent. The institution is currently waiting for the Ecuadorian health ministry to draw up a list of the illnesses and treatments that would be of priority public interest. Once this is done, IEPI will examine each request on its individual merits. Considering the time this will take, as well as initial supply constraints, compulsory licenses are unlikely to be granted by the hundreds or even dozens, at least in the short term.

Legal Underpinnings

The presidential decree cites the Ecuadorian constitution, which guarantees citizens’ right to health, as well as the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), which recognises that countries may issue compulsory licences under certain circumstances.

In conformity with TRIPS Article 31, IEPI will determine the scope, purpose and duration for which the compulsory licence is granted, as well as the amount and conditions for paying royalties to patent-holders, who will be notified that they will be subject to the compulsory licensing regime. IEPI may also terminate the authorisation “if and when the circumstances which led to it cease to exist and are unlikely to recur.”

The decree also evokes the 2001 Declaration on TRIPS and Public Health, which clarified that the agreement “does not and should not prevent Members from taking measures to protect public health” and should be “interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.” The declaration further states that countries have “the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.”

Brandname Industry Accepts Decision

Industria Farmacéutico de Investigación (IFI), an association of 14 major foreign companies operating in Ecuador, said in a statement that its members accepted the president’s decision to “legally implement this extraordinary measure. […]  No legal right is superior to the requirements of public health, above all in circumstances of special gravity.” The group also said it expected IEPI to implement the decree through a ‘legitimate and transparent’ process, and underlined the importance of monitoring domestic production under compulsory licence to ensure that it follows the technical norms and procedures specified in international manufacturing standards.

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