We write:


Testimonials
  • Not only me, but my lecturer was also enchanted with my research paper – thank you so much!! Brenda, Sydney, Australia
  • I couldn’t even imagine that the research you had made would have been so deep and so natural at the same time. Paul, MA, USA

By Pat L. Garcia

One of the numerous agreements concluded in the Uruguay Round of Multilateral Trade Negotiations (1986-1994) is the TRIPs Agreement, which at the same time established the World Trade Organisation. The WTO Agreement became effective on January 1, 1995.

Scholars perceive the TRIPs Agreement as the most significant achievement of the last century addressing the issues of Intellectual Property Rights. Some international conventions, which elaborated over the issues of intellectual property rights, have served as a foundation to the abovementioned agreement. The most significant provisions were taken from the Paris Convention, the Berne Convention, and the Rome Convention, as well as from the Treaty on Intellectual Property in Respect of Integrated Circuits. The Agreement develops these provisions and adds other obligations specifying those stated in the conventions mentioned above. Agreement stipulates minimum protection standards, which are concerned with almost all categories of intellectual property rights available and enforced.[1] Furthermore, the Agreement provides regulations for specific anti-competitive practices in licensing contracts.

At first glance, those levels of protection, which are stipulated by the TRIPs Agreement are the same as those in the existing standards in developed countries’ laws and regulations.[2] Developing countries regard them as exceptionally high.[3] It is necessary to note that all WTO Members have an obligation to include these standards in their own national laws. Non-compliance with such an Agreement will be the cause for initiating dispute settlement procedures.[4]

Many of more than 100 countries, which had signed the amended agreement in Marrakesh in April 1994 ratified it only after a considerable period of time. It seems that many were waiting to see what occurred in the USA where the legislation necessary for implementation was signed by President Clinton on December 8, 1994. However, a sufficient number of countries ratified the agreement by the end of 1994; therefore, it was possible for it to come into effect on January 1, 1995.

Besides raising new issues in the scope of the international trade bureaucracy, this new agreement provided a totally new framework for operation, in particular establishing the World Trade Organization (WTO), which was to have its headquarters in Geneva, Switzerland.

Organizationally, the most crucial change from the old GATT organization was the establishment of a dispute settlement procedure, which is binding for both parties. It may be recalled that under the old GATT version disputes were assigned to a panel for settlement and the GATT Council could accept or reject the panel decision and on some occasions even delay or obstruct the panel’s findings presentation to the Council. Under the new procedures included in the agreement a Dispute Settlement Body was to be established, which comprised both panels. The task of these panels is to make initial determinations on a case and an Appellate Body. Panels are normally described three-person panels and appeals are also normally heard by a three-person panel. Those panels, which are engaged in the investigation of a complaint, obtained the right to seek information or technical advice from anyone they consider appropriate. Findings and recommendations, which are reached by the Dispute Settlement Body can include authorizing a country that has incurred damages by failure of another to perform its obligations pursuant to the agreement to press charges against the party, which is liable.

Part 2

Now, after a brief overview of GATT-TRIPs agreement, let us analyze its influence on the developing countries right after its implementation and now, in the beginning of the 21st century. We have decided to take Egypt and its pharmaceutical industry as a relevant example to be discussed.

First of all it is necessary to note that medicines are of particular importance to Egypt. It is a developing country manifesting an abundance of classic problems related to its economic status (e.g., unemployment). The birth rate in Egypt is deemed to be the highest in the Arab region. As a result, Egypt did not express a great desire to promptly implement the TRIPs’ protection levels from the very beginning, despite being intensively pressurized by a number of developed countries, namely European Union countries and the USA. Egypt recognised the large risk pharmaceutical products were put under if patent protection were to be introduced and the country declared its intention to benefit from the additional grace period, which was established by the Agreement (that is, five years over the regular period assigned to developing countries with the aim of implementing TRIPs agreeement concerning all IPR aspects).

Before the introduction of new IPR law, Egypt’s patents system was taken care of by Law No. 132 of 1949 on Patents, Industrial Drawings and Models (the Old Patents Law). Under this law, patent protection was available for every invention (regardless of it being a product or a process) meeting the three criteria for patentability. Nevertheless, pharmaceutical chemical products and agricultural chemical products connected with foodstuff were excluded. According to the abovementioned law, protection by way of process patent for pharmaceutical and agricultural chemical products was provided only in case such products were produced with the help of new chemical processes.

The protection term for all inventions was fifteen years, which were calculated from the date of filing patent application in Egypt, and this term was eligible for being renewed for another five years under certain circumstances.[5] Nevertheless, according to Article 12(4) of the Law, for ‘process’ patents issued to pharmaceutical and agricultural chemical products the term amounted to only ten years and its renewal was not possible.

The principal purpose for eliminating patents protection to pharmaceutical products was to protecting Egyptian-based companies from strong multinational competitors.[6] The designed objective of such a policy was to “encourage the development of the national pharmaceutical industry by opening the door to legalised copying of drugs. Out of this will emerge a strengthened national industry which will develop export business and, as a result of growing sales and profits, should eventually itself turn to original research”.[7]

The Old Patents Law position was common for developing countries as many of them provided (and still provide) very little or almost no protection at all.[8] At the beginning of the Uruguay Round, about 50 countries did not provide any protection to pharmaceutical products as such, and some, in addition, excluded pharmaceutical processes from protection.

The weak and insufficient protection granted by process patents can be an explanation why there had been a struggle with an aim of introducing product patent protection. A process patent provides protection to a product only in case it is produced with the help of a patented process. Thus if some changes were introduced to the respective formula, the chemical compound in question could be in fact produced by several means and not infringe the patent regulations.[9] It is necessary to note that this was just one argument of many put forward in relation to why the TRIPs Agreement should be introduced in Egyptian pharmaceutical industry without using benefits from the additional grace period.

When the new IPR law is finally ratified, the situation described above will be absolutely different. Patent protection needs to be available for any invention, whether products or processes and in all fields of technology, according to the requirements of Article 27 (1) of TRIPs. Besides, patent rights will be equal for all fields without discriminating the field of technology. Therefore, patent protection shall be provided for pharmaceutical products, in addition to pharmaceutical processes.

A product patent ‘is the most desirable patent’ for the pharmaceutical industry.[10] If there is no patent protection, imitators can freely use the protected invention and copy the compounds for an insignificant proportion of the inventor’s costs. In fact, costs of imitation in pharmaceutical drugs are incredibly low, if we relate them to the innovator’s costs for discovering and developing such new compound. Besides, according to Article 9 of the new IPR law, the protection term is 20 years in duration, which are to be counted from the date of filing a patent application in Egypt. Therefore, this Article corresponds to Art.33 of the TRIPs Agreement.

Under the law, many specified grounds shall be granted compulsory licences, including the fields of public interest and non-working. Invention non-wrking as a ground for providing compulsory licences has actually provoked numerous concerns from the side of several countries, especially the USA. Nevertheless, this requirement is perceived in Egypt as corresponding to both the TRIPs Agreement and the Paris Convention.

There have been arguments that drug prices will grow if high levels of patent protection are introduced as it is stipulated in the new IPR law. Some have claimed it with providing no actual explanations, stating that a ‘dramatic rise’ in prices of pharmaceuticals will occur as a result of the implementation of TRIPs.[11] However, others have clarified their positions. [12] There is a general belief that drug prices would (or might) increase as a result of implementing and using new standards of patents protection under the new IPR law, but such an increase will not happen at once but after the end of five to eight years, which are to be counted from the end of the additional grace period Egypt decided to benefit from in the end.

For full comprehension of the statement  why the increase in pharmaceutical drug prices was not felt as soon as the law entered into force (January 1, 2005 for patent for pharmaceutical products) but will rather be felt at the end of a period of 5 to 8 years, calculated as decsribed above, we need to take into consideration some vital points.

Egypt has in fact benefited from the additional grace period provided for in Article 65 (4) of TRIPs. It means that Egypt provided (that is, the Egyptian Patents Office will have to accept pharmaceutical products applications) patent protection for pharmaceutical products from January 1, 2005.

The new IPR law sets out the new patentability criteria, which are absolute novelty, inventive step and industrial applicability. According to the requirement of novelty, the invention must be new at the time when application if submitted to the Patents Office. Thus any patent applications connected with drugs were on the market until January 1, 2005, would not be new at the time of examination. Therefore, the effect of new law is not extended to these drugs. That is why production (and also importation and other related activities) of such drugs is and will be compatible with either TRIPs or the new IPR law and the prices of such drugs would be the same without any changes.

There is a general belief that the period necessary for pharmaceutical drugs to obtain marketing approval (the period passing before patent application submittance for a drug, during which all the necessary documents need to be prepared and put together and the product is marketed) is about 5-8 years (cf. Subramanian, stating that such a period is ten years[13]). Consequently, new drugs whose patent applications were submitted on or after January 1, 2005, were not marketed until the end of the said period.

It has already been stated that the period of patent protection under TRIPs and the new Egyptian law is twenty years calculated from the filing date of the patent application in Egypt. According to the Old Patents Law, the pharmaceutical industry benefited from the comparatively short term of protection (amounting to ten years) that permitted it to produce products whose process patents protection had expired. (It would be incorrect to say that such industry totally benefited from the non-product patents protection situation according to the Old Patents Law). It is expected that the extension of the patent term in Egypt is likely to cause negative effects through the prohibition of the possible use of the protected inventions before the expiration of the patent term.

Moreover, the extended term of patent protection according to the new IPR law would affect the price of pharmaceutical raw materials. If we compare it to the Old Patents Law, the use of such materials was allowed just after any process patent protection had expired (which is only ten years). Alternatively, if Egyptian drug companies wanted to use these materials during the patent protection term, the owner of the patent had to be paid royalties. However, under the new IPR law, the protection period has been extended to 20 years as we have mentioned above, therefore, such use will not be allowed before the term expiration. This means, on the one hand, that royalties payment by Egyptian firms will go on until the end of the twenty-year term. On the other hand, the expected diminishing of pharmaceutical drug prices, as a result of the ten-year protection expiration, had the Old Patent Law still been in force, would not happen until the end of the twenty-year protection term.

The new IPR law, according to its present standing in relation to patent protection of pharmaceuticals, represents an important development in the scope of Egyptian pharmaceutical industry and the public interest. However, a number of recommendations especially in the areas of drugs definition, use of expired patents, to name a few, are perceived to be important.

First of all, a broad definition of a drug should be adopted. Any drug definitions should include not only medicines necessary to treat people from illnesses, but also any other materials, which are used for preventing such diseases. Moreover, it is advisable for this definition to encompass materials that might be used  for public health improvement, these materials including vitamins and cosmetics.

The new Egyptian law, following TRIPs, has no provisions, which deal with the patentability of new uses of known substances or products, especially second or subsequent therapeutic uses for known pharmaceutical products[14], for example, an anti-cancer drug with a new and widely accepted use for treating HIV/AIDS. [15] The provisions of the law lead to a conclusion that the second use of known substances, which are already in the public domain, should be excluded from patentability options (new uses of old substances especially second and subsequent medical uses of a known product are a patentable subject matter under both the European Patents Convention (EPC) and the UK Patents[16]). However, the search for newer and more efficient treatment of diseases must be taken into account by all means. Thus a balance between the two abovementioned factors should be considered[17].

It is also vital to stress the growing importance of using inventions that have already entered the public domain. The use of these inventions should be free of charge. For putting such proposal into effect, it is necessary to know and recognize, which patents have entered into the public domain. Therefore, it is recommended that an authority, either governmental (such as the Patents Office) or non-governmental, is established or granted sufficient competence to look for expired patents and then declare that such patents are freely available to those parties interested and able to use and exploit them. Such an authority should work in cooperation with other regional or international organisations (for example, the World Health Organisation) so that the greatest possible effect is achieved.

It is no less important to consider improving and developing the Egyptian Patents Office so that it is able to consider the requirements of the new IPR law (implementing TRIPs), together with providing the Office with the necessary experience, equipment, and references for it to examine patent applications, which were submitted for reviewal. It is necessary to mention that some developments in this direction have already been made in the Egyptian Patents Office with an aim of presenting a faster and a better-quality service to inventors. One of these developments lies in reducing the period of patent applications examination from six to three years.[18]

There is a crucial recommendation for adopting an on-going research and development policy based on domestic raw materials and traditional plant varieties. In this regard it is vital to create new scientific research centres with future intentions of taking part in modernising the domestic drugs industry and in creating new pharmaceuticals, which will be available for the general public at reasonable prices.[19] Furthermore, the Egyptian Prime Minister calls for the setting up of a council consisting of Ministry of Health officials and drug companies owners, which will be responsible for improving Egypt’s drugs industry, increasing its exports and limiting its imports.[20]

A multifaceted and coherent policy for health care especially with the help of a strong system of medical insurance should be by all means adopted. Donors are invited to make contributions to this system by paying the premiums on behalf of persons, which give less than one hundred 100 US$ per month.

Another important point lies in establishing an efficient system that allows the selling of pharmaceutical products by dosage and not by boxes. Such a system will contribute to minimising the cost of new drugs for an individual.

Using the system of undisclosed information as a ‘back door’ to allow extending monopoly on expired patents should not be tolerated. No protection should be granted to disclosed information in any part of the world. The concept of novelty to the domestic market is not valid because the system of protection of undisclosed information is based on an international instrument, that is, the TRIPs Agreement. Such an Agreement was adopted to exclude the concept of relative novelty as a basic criterion in granting patents in all fields of technology including pharmaceuticals.

We should acknowledge that the new IPR law presents a considerable development in the search for an appropriate balance between the interests of IPR owners and pharmaceutical users. By providing protection to pharmaceuticals (seen as an impetus for R&D), the law does take into account the interests of the rights holders. On the other hand, the interests of the users of protected products and the public are normally taken into account with the help of disclosure provisions, limitations and exceptions that are permitted under the law.

Naturally, the exact implications or influences of the new patent protection for pharmaceutical products are difficult to predict. As patent protection is a very important instrument for industries like pharmaceuticals, it is hoped that by providing such protection under the TRIPs agreement, the flows of foreign direct investment (FDI) will be more located in Egypt and technology transfer will also intensify. Moreover, R&D directed at the concrete needs of Egypt (specific diseases) will thrive. One more thing to mention is that Egypt has certain competitive advantages as far as R&D is concerned, since it has apt local talents and a reasonable infrastructure, which offers research prospects at much lower costs than in developed countries.[21]

As for pharmaceuticals prices, we can say that the improved levels of patent protection will not cause dramatic increase in drug prices. The new patent protection will have no influence or effect whatsoever on existing drugs (understood as those which were marketed before the implementation of the TRIPs Agreement in Egypt). In fact, the increase in prices will not be felt until the end of a five to eight year period, counting from the day the new IPR law entered into force in relation to patents protection for pharmaceutical drugs products (that is, January 1, 2005).

In conclusion, I would like to say that the TRIPs implementation in Egypt as one of the developing countries is certainly on the right track. The new IPR law was ratified, and with some modifications taking into account local peculiarities it will benefit pharmaceutical industry in this country.

References

  1. Abd-elaziz, Osama, Ahram newspaper, 25/12/2002, available from: http://www.ahram.org.eg/ (referring to the speech of Egypt’s Prime Minister in the Annual Scientific Conference and the Seminar on the Future of Medicine).
  2. Abou-El-Enein, Ahmed Ali, (1996) ‘Trade-Related Aspects of Intellectual Property Rights (TRIPs) and the Pharmaceutical Industry in Egypt’ Paper presented at the Seminar on ‘The Intellectual Property Rights in the Pharmaceutical Industry: Facts and Challenges’, Cairo, Egypt.
  3. Bently, Lionel and Sherman, Brad (2001) Intellectual Property Law, (Oxford: Oxford University Press).
  4. Birairy, Mokhtar A., (2000) Commercial Transactions Law, Part I, (Cairo: Dar Al Nahda Al Arabia).
  5. Correa, Carlos M., (2000) Intellectual Property Rights, the WTO and Developing Countries: The TRIPs Agreement and Policy Options, (London: Zed Books Ltd).
  6. Gervais, Daniel, (1998) The TRIPS Agreement: Drafting History and Analysis, (London: Sweet & Maxwell).
  7. Habib, Mohamed, Ahram newspaper, 27/04/03, available from: http://www.ahram.org.eg/.
  8. Lewis, Theresa Beeby, (1996) ‘Patent Protection for the Pharmaceutical Industry: A Survey of the Patent Laws of Various Countries’ 30 (4) The International Lawyer 835.
  9. Nogues, Julio, (1990) ‘Patents and Pharmaceutical Drugs: Understanding the Pressures on Developing Countries’ 24 (6) Journal of World Trade 81.
  10. Shaarawi, Negad M. (1996) ‘Intellectual Property Rights: Egypt’, Paper presented at the Seminar on ‘The Intellectual Property Rights in the Pharmaceutical Industry: Facts and Challenges’, Cairo, Egypt.
  11. South Centre, (1997) The TRIPs Agreement. A Guide for the South. The Uruguay Round Agreement on Trade-Related Intellectual Property Rights, South Centre, available at: http://www.southcentre.org/publications/trips/toc.htm
  12. Subramanian, Arvind and Abd-El-Latif, Mostafa, (1997) ‘The Egypt-EU Partnership Agreement and the Egyptian Pharmaceutical Sector’ Working Paper No.11 (Cairo: The Egyptian Centre for Economic Studies (ECES)).
  13. Subramanian, Arvind, (1995) ‘Putting some Numbers on the TRIPs Pharmaceutical Debate’ 10 (No.2/3) International Journal of Technology Management, Special Issue on the Management of International Intellectual Property, pp.252-268.
  14. Watal, Jayashree, (2001) Intellectual Property Rights in the WTO and Developing Countries, (The Hague: Kluwer Law International).

[1] Correa, Carlos M., (2000) Intellectual Property Rights, the WTO and Developing Countries: The TRIPs Agreement and Policy Options, (London: Zed Books Ltd). – p. 2

[2] Correa, Carlos M., (2000) Intellectual Property Rights, the WTO and Developing Countries: The TRIPs Agreement and Policy Options, (London: Zed Books Ltd). – p. 3

[3] South Centre, (1997) The TRIPs Agreement. A Guide for the South. The Uruguay Round Agreement on Trade-Related Intellectual Property Rights, South Centre. – p. i, preface.  Available at: http://www.southcentre.org/publications/trips/toc.htm.

[4] Gervais, Daniel, (1998) The TRIPS Agreement: Drafting History and Analysis, (London: Sweet & Maxwell). – p. 249.

[5] Birairy, Mokhtar A., (2000) Commercial Transactions Law, Part I, (Cairo: Dar Al Nahda Al Arabia). – pp. 242-243

[6] Shaarawi, Negad M. (1996) ‘Intellectual Property Rights: Egypt’, Paper presented at the Seminar on ‘The Intellectual Property Rights in the Pharmaceutical Industry: Facts and Challenges’, Cairo, Egypt. – p.1

[7] Shaarawi, Negad M. (1996) ‘Intellectual Property Rights: Egypt’, Paper presented at the Seminar on ‘The Intellectual Property Rights in the Pharmaceutical Industry: Facts and Challenges’, Cairo, Egypt. – p.1

[8] 13.        Subramanian, Arvind, (1995) ‘Putting some Numbers on the TRIPs Pharmaceutical Debate’ 10 (No.2/3) International Journal of Technology Management, Special Issue on the Management of International Intellectual Property. – p.253

[9] Nogues, Julio, (1990) ‘Patents and Pharmaceutical Drugs: Understanding the Pressures on Developing Countries’ 24 (6) Journal of World Trade 81. – p. 83

[10] Lewis, Theresa Beeby, (1996) ‘Patent Protection for the Pharmaceutical Industry: A Survey of the Patent Laws of Various Countries’ 30 (4) The International Lawyer 835. – p. 842

[11] Abou-El-Enein, Ahmed Ali, (1996) ‘Trade-Related Aspects of Intellectual Property Rights (TRIPs) and the Pharmaceutical Industry in Egypt’ Paper presented at the Seminar on ‘The Intellectual Property Rights in the Pharmaceutical Industry: Facts and Challenges’, Cairo, Egypt. – p. 3

[12] Subramanian, Arvind and Abd-El-Latif, Mostafa, (1997) ‘The Egypt-EU Partnership Agreement and the Egyptian Pharmaceutical Sector’ Working Paper No.11 (Cairo: The Egyptian Centre for Economic Studies (ECES)). – p. 14-18

[13] Subramanian, Arvind, (1995) ‘Putting some Numbers on the TRIPs Pharmaceutical Debate’ 10 (No.2/3) International Journal of Technology Management, Special Issue on the Management of International Intellectual Property. – p. 258

[14] Watal, Jayashree, (2001) Intellectual Property Rights in the WTO and Developing Countries, (The Hague: Kluwer Law International). – p.104

[15] Correa, Carlos M., (2000) Intellectual Property Rights, the WTO and Developing Countries: The TRIPs Agreement and Policy Options, (London: Zed Books Ltd). – p.201

[16] Bently, Lionel and Sherman, Brad (2001) Intellectual Property Law, (Oxford: Oxford University Press). – pp. 426-436

[17] Watal, Jayashree, (2001) Intellectual Property Rights in the WTO and Developing Countries, (The Hague: Kluwer Law International).

[18] Habib, Mohamed, Ahram newspaper, 27/04/03. – p. 3. Available from: http://www.ahram.org.eg/.

[19] Abd-elaziz, Osama, Ahram newspaper, 25/12/2002/ – p. 23.  Available from: http://www.ahram.org.eg/ (referring to the speech of Egypt’s Prime Minister in the Annual Scientific Conference and the Seminar on the Future of Medicine).

[20] 1.         Abd-elaziz, Osama, Ahram newspaper, 25/12/2002. – p. 31. Available from: http://www.ahram.org.eg/ (referring to the speech of Egypt’s Prime Minister in the Annual Scientific Conference and the Seminar on the Future of Medicine).

[21] Shaarawi, Negad M. (1996) ‘Intellectual Property Rights: Egypt’, Paper presented at the Seminar on ‘The Intellectual Property Rights in the Pharmaceutical Industry: Facts and Challenges’, Cairo, Egypt. – p.9