The right to health and right to intellectual property in the EU. Analysis of the internal and external policies.

University essay from Lunds universitet/Juridiska institutionen

Abstract: It is very common nowadays to speak of an ''information society'' in which control of information or information based knowledge has replaced control over matter as an ultimate source of economic power. The intellectual creations protected through patents, trade marks, copyrights etc constitute often a huge part of the companies' intangible assets. For example, the value of the trade mark Coca Cola (calculated only for the products with the brand on them and for others, sold by the company) was calculated at 69.6$ billions in August 2002. What is interesting however brands usually are not listed on corporate balance sheets, even though they can go further in determining a company's success than a new factory or technological breakthrough. That's because nurturing a strong brand, even in bad times, can allow companies to command premium prices. For more see: BusinessWeek and Interbrand Special Report on the 100 Top Brands, August 5, 2002&semic <&semic>&semic, on 2002-11-07 As value added is increasingly reliant on non-material inputs into products or services, the concept of information as an economic resource becomes more and more dominant, overshadowing its other roles. This shift in objectives and ever increasing role of information in wealth creation also significantly influences political affairs. States, acknowledging that success within the global economy depends crucially upon knowledge creation, view intellectual property through the prism of economic pragmatism and in terms of competitive advantage of their industry in the free market world. In 1997 U.S. government unilaterally imposed import duties on $260 million of Argentine exports in retaliation for Argentina's refusal to revise its patent legislation to conform to U.S. standards. In the same year U.S. made pressure on Thailand. Very famous by now is also dispute between thirty nine pharmaceutical companies and the South African Government over the provisions of the Medicines and Related Substances Control Amendment Act, which aimed to balance patent protection against the need to provide medicines at an affordable price to those in need. Under strong domestic and international pressure the companies withdrew their case in April 2001 after a settlement was agreed. Another well known example is the dispute settlement case between the US and Brazil, in which the U.S. questioned the compatibility with TRIPs of Article 68 of Brazil's Industrial Property Law (Law 9.279/96), which allows the Brazilian government to grant a compulsory license where there is a lack of local manufacture of the patented product. However, under pressure from public opinion the U.S. government withdrew the case The growing pressure from powerful business society to assure maximum protection for ''intangible assets'' does not remain without effect on legal regimes, which through defining the intellectual property The term 'intellectual property' is of generic nature and refers to the creations of human mind, the human ''intellect''. It came into regular use during the 20th century. Analogically, the intellectual property rights are those rights which are derived from human intellectual creativity and that protect interests of the inventors by giving them property rights over their creations and inventions. For the short outline of the evolution of the IPRs see: Drahos, Peter, ''Intellectual Property and Human Rights'', Intellectual Property Quarterly, No. 3 (1999) and the types of protection that accrue to its creators, shape the realization of this right. For example, the patent is often seen just as ''an instrument of economic policy to stimulate further risk taking in the investment of resources in the development of new product and technology''. See: WIPO Worldwide Academy, Collection of Documents on Intellectual Property, WIPO Worldwide Academy, Geneva, 2001, p. 153 Intellectual property has ceased to be a preserve of a specialized branch of private law. It has become one of the hottest topics in international trade law. Govaere, I., The Use and Abuse of Intellectual Property Rights in EC law, London: Sweet &&semic Maxwell, 1996 After all, not without a reason one of the economic theories of legislation, the theory of public choice argues that legislation is essentially a market process in which legislators and interest groups transact business in a way that sees the public interest subordinated to private interest. See: Drahos, Peter, ''Intellectual Property and Human Rights'', Intellectual Property Quarterly, No. 3 (1999) According to Peter Drahos, the intellectual property rights, taking into account their contemporary role, are to be seen as ''rights of exploitation in information'' Drahos, Peter, ''The universality of intellectual property rights: origins and development'', Intellectual Property and Human Rights, WIPO/OUNHCHR panel discussion to commemorate the 50th Anniversary of the UDHR, Geneva, November 9, 1998, p. 14. Such a purely materialistic approach is perhaps best visible and reflected in the TRIPs Agreement Agreement on Trade-Related Aspects of Intellectual Property Rights (hereafter: TRIPs) constitutes Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization signed on April 15, 1994. All of the TRIPs Agreement is binding on all members of the WTO., which via trade linkage aims to produce ''a singular globalised conception of the legitimate protection of intellectual property through the harmonization of the effects of diverse legislation across members of the WTO'' May, Christopher, A Global Political Economy of Intellectual Property Rights. The new enclosures?, The Routledge, London &&semic New York, 2000, p. 85. Although we can find in it certain flexibility f.ex. article 7 (Objectives), article 8 (Principles), article 27.2 and article 27.3 (Patentable Subject Matter), Article 30 (Exceptions to Rights Conferred), Article 31 (Other Use Without Authorization of the Right Holder) of the TRIPS Agreement. Some exemptions and safeguards are contained also in Article XX (provides for an exception to GATT rules, including national treatment, when necessary to protect health and other public goods) and XXI of the GATT. See: Correa, Carlos M., ''Implementing National Health Policies in the Framework of WTO Agreements'', Journal of World Trade, 34 (5) 2000, p. 89-12&semic Hoe Lim, ''Trade and Human Rights'', Journal of World Trade, 35 (2) 2001, p. 275-300, <&semic>&semic which leaves States some space to reconcile the TRIPs standards and policies with domestic economic and social conditions, taking into account the formulation of TRIPs provisions it is clear that they constitute barely an exemption to the rule. Correa, Carlos M., op. cit., p. 106. Correa states that article 8.2 not only incorporates ''necessity test'' for the measures, but seems to subject it to an additional ''compability'' test Also, the DOHA Declaration on the TRIPs agreement and public health Declaration on the TRIPs agreement and public health adopted on 14 November 2001 at the Doha Ministerial Conference, WT/MIN(01)/DEC/2&semic Declaration confirms that ''the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health''. The IPR protection required by TRIPs ''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.'' , which affirmed the flexibility of the TRIPs Agreement (in particular with regard to patents), states that the public health concerns have priority before pharmaceuticals patent protection - though very positive development and a good example of a possible coherent reading of the WTO provisions taking into account potentially relevant human rights law is barely an exemption which was possible thanks to the mobilization of the public opinion worldwide. Carlos Correa writes that ''in a context of a growing pressures for trade liberalization, clarifying the extent to which a State can impose restrictions on trade in response to public health considerations has become a critical issue''. Correa, Carlos M., ''Implementing National Health Policies in the Framework of WTO Agreements'', Journal of World Trade, 34(5), 2000 Creation of the WTO not only expanded process of trade liberalization and globalization, but unfortunately at the same time made linkage of HR and trade, by for example the use of MFN (in case of US or EU clearly the single most powerful economic lever) not only meaningless but also against the international consensus. What is more the standardization it brought about influences the internal law of states, for example, by requirement of introduction of patent protection on pharmaceuticals, what can have effect on realization of human rights. Therefore one could expect that after taking away some of the human rights enforcement tools from the hands of States, the WTO will assume greater responsibility for the protection of human rights around the world, also through the relevant, human rights spirited interpretation of the WTO agreements, TRIPs among them. But should not the question be how we should frame the trade so that it does not override higher values? Should not the question be as to where shall we draw the line in order to find the just balance between competing human rights, particularly when some of them are of more direct importance for trade then others? It seems that States tend to forget about their human rights obligations and their own recognition of their primacy over other provisions, including those referring to the free trade itself. Already in the Vienna Declaration of 1993, States recognized that ''human rights are the first responsibility of Governments'' Vienna Declaration and Programme of Action adopted by consensus by the World Conference on Human Rights on 25 June 1993, UN Doc. A/CONF.157/23, 12 July 1993, article 1.. If it is so, should not they implement the TRIPS standard (or any other IP standards) bearing in mind both their human rights obligations while using the flexibility inherent in the TRIPs Agreement? It is worth a reminder in this short introduction that all states are bound by UN Charter's article 55, according to which they are obliged ''to promote: a) higher standards of living, full employment, and conditions of economic and social progress and development&semic b) solutions of international economic, social, health, and related problems&semic and international cultural and educational cooperation&semic and c) universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion.'' In fact, the clauses of the UN Charter are among the guiding principles of the Union, cited in the preamble of its founding Treaty of Rome (1957). UDHR, which specifies the human rights provisions mentioned in the UN Charter, refers to those objectives in its Preamble. What is more, out of 114 Members of the WTO who have undertaken to implement the minimum standards of IP protection in the TRIPs Agreement, 111 have ratified the ICESCR (all EU Member States among them). Why do I mention this here? It is because the right to intellectual property in human rights sense was delineated first in article 27 of the Universal Declaration of Human Rights, on which the provisions of ICESCR were built up on (article 15). See also the resolution of the Sub-Commission on the Promotion and Protection of Human Rights which reaffirms that the right to protection of the moral and material interests resulting from any scientific, literary or artistic production of which one is the author is a human right, subject to limitations in the public interest. ''Intellectual Property Rights and Human Rights'', Sub-Commission on the Promotion and Protection of Human Rights, Fifty-second session, agenda item 4, E/CN.4/Sub.2/2000/7, adopted on August 17, 2000 Indeed, there is both the ground and an urgent need of challenging the exclusivity of the rule setting in the intellectual property area by the technically minded economic private law experts. The human rights instruments give quite precise indication where and how to approach the issue of intellectual property in order to find the right balance between the rights of creator and the rights of others, between the right to intellectual property and other human rights. We just need to reach and apply. There is one more reason to argue that intellectual property as understood by private commercial law, is not as 'untouchable' as it is often argued by its proponents, who are afraid that human rights considerations will limit the scope of intellectual property rights protection. In 2000, in the Ecuador Arbitration, the WTO permitted for the first time the use of withdrawal of intellectual property rights as a remedy. European Communities - Regime for importation, Sale and Distribution of Bananas- Recourse to Arbitration by the European Communities under Article 22.6 of the DSU, Report of the Arbitrators, 24 March 2000, WT/DS27/ARB/ECU, paragraphs 141, 144, 173 (d), 157. Ecuador has not exercised this retaliation authority so far. For more see: Charnovitz, Steve, ''The WTO and the Rights of the Individual'', International Trade, March/April 2001, pp. 98-108 To be more accurate, the WTO gave the Government of Ecuador a green light to suspend its TRIPs obligations to the European Communities. There are two sides to this decision. On one hand the WTO arbitrators proved that the private rights of individuals (intellectual property rights) can be trumped by the need for the WTO Dispute Settlement Body to approve a sanction on the insubordinated State - thus leaving us with question if also other human rights (after all there exist a right to Intellectual Property) would be 'temporarily switched off' in case it would be needed in the name of free, liberalized market. On the other hand - it proves, that the observance of TRIPs provisions can be 'hibernated', if that is what the restoration of the barrier-free market needs. If then one can do so in the name of the ''market'', then surely it should be possible in a situation when human rights, as for example the right to health, are endangered. After all they have primacy over any other rights. In this paper the author undertakes to analyze the tension within the right to intellectual property itself and its relation to other human rights - exemplified here by the right to health and in particular one aspect of it - access to drugs, against the law and practice of the EU. The analysis of the practice of EU in respect to the right to intellectual property will focus on patent rights as this is believed most relevant for this discussion. Why health and why exactly access to drugs? Apart from the obvious statement that health For the purposes of this paper I will follow the 1946 WHO Constitution, which defines health as ''a state of complete physical, mental and social well-being, and not merely the absence of disease or infirmity'' and stresses that ''the enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being''. For further explanation see chapter on the right to health. allows us to enjoy our lives, it carries also economy related aspects associated with it. Economic development itself is considerably dependent upon the health level of the population, as people's productivity depends on their level of nutrition and general well being. If the society is to function properly and enjoy economic well being, a healthy population is needed as the proper functioning of the economy suffers from illness-related absenteeism. If we happen to live in a welfare-state we can expect receiving sick-pay from social care (and therefore from taxes, which in other situation could be used for example for giving incentives to the economy) for every day (even a single one) of not being in work due to the sickness. Such an approach may lead of course to abuses - which in turn may lead, as in Sweden, to these type of expenditures achieving too high a level, so legislative restrictions - like the rule that the first day (karensdagen) of the sick-leave is not paid for by the state - may occur. See also: van Krieken, Peter - Health gaps and Migratory Movements, RWI Report No. 31, Lund 2000, p. 9&semic See also: Eze C. Osita - ''Right to Health as a Human Right in Africa'', The Right to Health as a Human Right. Workshop - The Hague, Dupuy, Rene-Jean (Ed.), 27-29 July 1978, Sijthoff and Noordhoff 1979, p. 83 In many countries the health sector is an important part of the economy: it is an important employer According to the 1996 Labour Force Survey, more than 10% of those in employment were in employed in health. What is more, health is one of the fastest growing sectors in the 1990s, expanding on average at just under 3% a year. See: Communication on the development of Public Health policy <&semic phpolicy2.htm#41>&semic, it absorbs relatively large amounts of national resources both as a ''consumer of goods'' and is as a significant, if not a leading player in research and development In the EU the average total expenditure on health as a percentage of the GNP is 8,2%, whereas in developing countries it is as low as 2%. See: van Krieken, op.cit., p. 36. Health budgets can reach over 10% of annual state budgets The public expenditure on health (as a percentage of the total public expenditure) is 12,4% in the EU, whereas 23,5% of it constitutes private expenditures. In the US the figures are respectively: 14,8% and 56,1%. See: van Krieken, op.cit., p. 36, even if health care becomes dominantly privatized through major insurance schemes and the (re-) institution of private hospitals/clinics. van Krieken, Peter, op.cit., p. 10 After all, for the population to be, and remain healthy, adequate health policy and a proper infrastructure (which would protect a society against outbreaks of epidemics) needs to exist. ''Factors enhancing and jeopardizing human health reach far beyond the sector of health and encompass, at the societal level access to employment and /or income-generation, access to housing, adequate nutrition, water and sanitation. History has showed that improvements in water and sanitation, nutrition, or housing, has been far more beneficial for the enhancement of health than curative, or even preventative health measures.'', Tomaš&semicevski, Katarina - International law-making for the protection of human and environmental health&semic in: 'Reading material for: Human rights within the EU', VT-02 Unfortunately, due to the high figures during the last decade, health care system reforms have been dominated by mainly economic objectives and motives, with governments searching for a balance between the rights of patients to health care on the one hand, and cost containment and cost control on the other. Den Exter, AndrĂ© and Hermans, Herbert - ''The Rights to Health Care: A changing Concept?'', The Right to Health Care in Several European Countries - Expert Meeting, held in Rotterdam, the Netherlands, April 27-28, 1998, Studies in Social Policy, Kluwer International 1999, p. 1 and 169 This balance will be increasingly harder to achieve taking into account that as a consequence of lengthening life expectancy To a large extent a result of an improved health care system, particularly within EU., the increase in the number of persons suffering from diseases and conditions related to old age is occurring. In particular from cancers, cardio-vascular diseases, physical disabilities and mental disorders and other neuro-degenerative disorders. It had been estimated that by the year 2000, 8 million people in the Community were affected by Alzheimer's disease. Additionally it is expected that by 2020, there will be 40% more people aged 75 and above than in 1990. Communication on the development of Public Health policy, <&semic health/ph/general/phpolicy2.htm#41>&semic At the same time health and ways to improve it are the focus of technological innovations and biomedical research, they are brought into a direct relationship with intellectual property protection regimes. Unfortunately as the 1990s - decade of HIV/Aids pandemic - proved, only margin of sick people took advantage of newly developed medicines - others simply cannot afford them. One of the reasons for this is because of the TRIPs Agreement patent protection of new pharmaceuticals. That protection is meant to allow drug companies to recoup the cost of new medicines development See also: Juan Ignacio Arango F., ''Regulation, policies and essential drugs'', Medicines and the New Economic Environment, Lobo, Felix and Velasquez, German (eds.), Editorial Civitas, Biblioteca Civitas Economia y Empresa, 1998, pp. 165 - 195 and thus give them incentive for further research. A higher cost of a new product is not properly linked to the ''manufacturing cost'' but rather to its previous development process, whereas the development of ''copy'', i.e. generic version of the new drug, requires foremost the identification of the original product ingredients. Therefore without a patent regime the innovator would obviously be at a disadvantage with regard to competition. However, in market reality companies often abuse this semi-monopoly status by pricing drugs at excessive level. Even though access to medicines is dependent not only on affordable prices, but also upon rational selection and use of medicines, sustainable adequate financing, reliable health and supply systems, it is still those drugs that constitute the crucial part of the treatment process. Therefore both their availability That it is 'economy' and not 'heart' that lies behind the pharmaceutical industry one can easily see when comparing statistics. Though for TNCs, developing countries account for more than 80% of their market, new research is targeted at a rich northern market (see: Muddassir, Rizvi, ''TRIPs will push health care beyond poor''&semic <&>&semic). Less than 10% of the $ 56 billion spent each year globally on medical research is aimed at the health problems affecting 90% of the world's population. While pneumonia, diarrhea, TB and malaria account for more than 20% of the diseases burden of the world, they receive less than one per cent of the funds devoted to health research. What is more, some drugs developed in the 1950s and 1960s to treat tropical diseases have begun to disappear from the market altogether because they are seldom or never used in the developed world. (Singh, Someshwar, ''Health: TRIPs and WHO further marginalizing world's poor'', <&>&semic&semic 2002-04-14). Among the 1223 New Chemical Entities developed during 1975-1997, 379 are considered therapeutic innovations. However only 13 of them were meant for tropical diseases with only four developed after targeted research (Muddassir, Rizvi, ''TRIPs will push health care beyond poor'', <&>&semic). as well as their price are of great importance. Not everybody can afford the $10 000 -15 000 person/year treatment with brand named drugs for a lengthy period. It is particularly true in case of countries where the expenditure on health per person a year may be as low as $10. See: Avert, HIV &&semic AIDS drugs in Africa, <&semic>&semic, 13/02/2002 On the other hand, a $350 - 600 person/year Cipla (Indian company that manufactures generics) offer for Medicines sans Frontiers. See: Gathii, James T., ''Construing Intellectual Property Rights and Competition Policy consistently with facilitating access to affordable AIDS drugs to low-end consumers'', Florida Law Review, September 2001 treatment with generics is not only more accessible and affordable for people, but also in situations when it is provided by the state or humanitarian organizations, it allows the treatment of more lives with the same limited, and always insufficient amount of money. Not only developing countries look into the cost of medicines while trying to work out a health care programme that would ensure appropriate care to the biggest number of its citizens. ''Governmental efforts in the United States thus far have been devoted to ensuring that once patents have expired, patients with Federal Medicaid prescription drug insurance (a program covering only the poor) are given strong incentives to choose generic rather than higher-priced branded drugs. This is done through 'maximum allowable cost' measures that reimburse only the price of the least expensive generic substitute. Most hospitals in the U.S. maintain formularies that stress cheaper generics when they are available.'' in: Scherer, Frederic, ''The New Structure of the Pharmaceutical Industry'', Medicines and the New Economic Environment, Lobo, Felix and Velasquez, German (eds.), Editorial Civitas, Biblioteca Civitas Economia y Empresa, 1998, pp. 195-212 Recently the U.S. President himself proposed a solution to rising prescription drug costs, ordering government to block pharmaceutical companies from filling multiple patent-protection lawsuits that can stall cheaper/generic drugs for years. Brand-name drug manufacturers sometimes file lawsuits against generic drug producers poised to put less expensive products on the market. The lawsuits invoke the 1984 Hatch-Waxman Act, which was meant to promote competition in the drug industry but which also gives the brand-name makers up to 30 months of additional patent protection while litigation proceeds. In 2001 the average brand name drug cost more than $72 per prescription, while the average price for generic drugs, just as safe and effective as the brand name drugs, were just $17 per prescription.'' News Flash, White House hopes to make generic drugs available more quickly by blocking patent suits, <&>&semic, 2002-10-21 Since, in developing countries, most people currently pay for health care, including drugs, out of their own pockets, in their case access to medicines For this paper the term 'access' is understood to include both availability and affordability criteria. is particularly sensitive to cost. States are either too poor to afford it - which is true only in a few cases, or simply have distorted budgetary allocations - which constitute majority. At the same time it is also the affordability that is most likely to be affected by trade agreements in the first place. Of course, the consumer prices vary widely, within and amongst countries for a variety of reasons. For example, differences in demand, presence, if domestic R&&semicD and/or generic industry, purchasing capacity, tariffs, taxes, intellectual property rights, pricing mechanisms and the degree of competition between patented and generic medicines Some of the factors which have influence on the price of drugs can be addressed only on a national level (taxes, pricing mechanism, tariffs, etc.), others however like the international IPR framework, are connected to and influenced by the universal trade system. Therefore it is so important what kind of attitude to those issues has and with what type of solutions comes up one of the major players on the global market. As the gap between the substantive law of the GATT and regional economic organizations closes, the EC law on intellectual property and its expectations towards other countries has an importance which extends beyond the shores of Europe. That partly answers the question why the author decided to analyze the approach of the EU. An additional reason is the willingness to check if the strong (at least verbally) commitment to human rights of the European Union, which proclaims in the Treaty of Amsterdam that it ''is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms and the rule of law'', is equally strong when in conflict with very easily measurable interests. To what extend is the EU legally bound in the field of human rights? It depends of course on the status of the EU in international law. As we know, the EU does not have legal personality, which all three Communities, which together built the first pillar of the EU have. Following this, the EU (though not Communities) cannot bear obligations under international law, including international human right standards. However such a strict approach would deny the practical need to address the EU's commitment to human rights. Notwithstanding that somewhat obscure status of the EU under international law, the fact remains that the EU is perceived as an international actor. Also the EU Treaty itself provides that the EU shall respect human rights. Therefore the question as to what extend the EU is bound by human rights consequently deserves a more elaborated answer than simply maintaining that the EU lacks legal personality. See also: Bulterman, Mielle, Human Rights in the Treaty Relations of the European Community. Real Virtues or Virtual Reality?, School of Human Rights Research Series, Intersentia, Antwerpen - Oxford - New York, 2001, p. 65 et seq. Indeed, the EU is a powerful and uniquely representative actor on the international scene and in the WTO-arena, it is no exception. It has the responsibility, reinforced by the capacity and financial resources, to significantly influence the human rights policies of other States as well as those of international organizations. However, if the EU wants to enforce human rights compliance in third states, it has to lead by example. Therefore the need to analyze how the EU deals in practice with more contentious issues in order to see if EU really stands behind its declarations and demands towards other countries is evident. In the following chapters I will attempt to explain what position human rights have in general in EU law. Against this background the right to health and the right to intellectual property will be analyzed in order to have a picture of the balance between them existing (if such balance exists) in EU law. Following this focus will be on how the EU approaches health sensitive aspects of intellectual property in its relations with Developing Countries on the one hand, and the Candidate Countries on the other. The various factors which have an influence on EU practice will be highlighted. As for methodology - this thesis is mainly based on research work carried out at the library of the Raoul Wallenberg Institute (Lund) and UNOG Library (Geneva), as well as relevant materials and information found on the Internet. Here I would like to express my gratitude to Prof. Katarina Tomaš&semicevski. Without the possibility of discussing the points of concern with her and without her comments this thesis surely would not be complete. Additional study visits and interviews where conducted at the WHO, WTO and UNCTAD. I am in particular thankful to Thirukumaran Balasubramaniam (WTO, Technical Officer DAP and EDM), Pedro Roffe (Project Director, UNCTAD), Dr. Jens Gobrecht (WHO, Associate Professional Officer, Strategy Unit and Relations with EU) as well as Peter Ungphakorn (WTO, Information Officer) and Simon Walker (OHCHR, Human Rights Officer, Research and Right to Development Branch), whose valuable information and comments helped me to understand the nature of relations between the EU and respective international organizations, as well as these institutions comprehension of the rights discussed in the paper. Last but definitively not least - my special gratitude to Professor Mpazi Sinjela (WIPO Worldwide Academy Director) for his encouragement and guidance throughout the whole programme and supervision of this thesis. All mistakes and omissions are those of the author.

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