US trade rules seek to balance health and patent protection

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The US administration is relaxing its approach to developing countries seeking affordable medicines during public health crises. The move follows protests that Vice-President Al Gore and trade officials put pressure on South Africa to alter a 1997 law — aimed at combating its AIDS crisis — that allows the cheap manufacture or import of patented drugs (see Nature 399, 717; 1999).

Speaking at the World Trade Organization (WTO) meeting in Seattle last week, US President Bill Clinton said that US trade officials will in future consider the public health conditions of developing countries, as well as intellectual property law, in making trade decisions involving medicines.

Specifically, the office of the United States Trade Representative (USTR) will confer with the Department of Health and Human Services when a developing country complains that US trade law is making medicine unaffordable. According to a press release, USTR will “give full weight” to the department's advice on health considerations.

But the administration insists that its policy will not jeopardize the intellectual property rights of US pharmaceutical companies. Charlene Barshefsky, the US trade representative, says that she and health secretary Donna Shalala “believe that sound public health policy and intellectual property protection are, and must continue to be, mutually supportive”.

US activists have welcomed the announcement. “It's a big deal,” says James Love, director of the Washington-based Consumer Project on Technology. “They have reclassified these [situations] as public health issues as opposed to commercial disputes.”

A US official says the United States has not changed its interpretation of a key WTO agreement on trade-related intellectual property rights (TRIPs). This allows countries to manufacture or import drugs cheaply, paying only negotiated royalties to the patent holder, only in cases of “national emergency or other circumstances of extreme urgency”. South African and US trade officials had disagreed on whether South Africa's law breaches the TRIPs agreement.

The USTR said that South Africa had been removed from a ‘watch list’ of countries threatened with sanctions, partly because of an agreement in which both countries promised to protect intellectual property rights while addressing the health issues.

It is not clear how South Africa could bring its legislation in line with its government's commitment to TRIPs. But Alec Erwin, the country's minister for Trade and Industry, maintains that South Africa has sought no agreement with the US on patent right exhaustion.

This occurs when the patent holder loses control over the further sale of his products, and — unlike parallel importing — is not prohibited by TRIPs. In terms of the treaty, compulsory licensing is permitted at the discretion of individual countries.

Local firms could then be licensed to manufacture goods using another company's patented formula, provided that the patent owner is compensated and the government's action is subject to judicial review. This provision had previously been opposed by the US government, which has reserved the right to pressure countries not to use it.

South Africa has not withdrawn its intention to use parallel imports or compulsory licensing to obtain drugs at lower prices, nor did the US government sanction these practices. But parallel importing remains a likely subject of proposed reform of the South African Medicines and Related Substances Act.

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Wadman, M., Cherry, M. US trade rules seek to balance health and patent protection. Nature 402, 567–568 (1999) doi:10.1038/45032

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