FACULTY OF LAW
Lund University
Jingtian Chen
Medical Patent Protection Impacts on Access
to Medicine in China
JAMM05 Master Thesis
International Human Rights Law and Intellectual Property Rights
30 higher education credits
Supervisor: Peter Gottschalk
Term: Fall 2013
Contents
Summary ................................................................................................................... 1
Preface ...................................................................................................................... 3
Abbreviations ........................................................................................................... 4
1.
Introduction ....................................................................................................... 5
1.1 Background ...................................................................................................... 5
1.1.1 International background .......................................................................... 6
1.1.2 Access to medicines in China................................................................... 8
1.2 Research questions ........................................................................................ 10
1.3 Methodologies ................................................................................................ 10
1.4 Delimitations ................................................................................................... 11
2.
Access to Medicines as a Human Right ........................................................ 12
2.1 Access to medicines ....................................................................................... 12
2.2 Right to health................................................................................................. 14
2.2.1 Development of the right to health ........................................................... 14
2.2.2 Right to health as a human right .............................................................. 15
2.2.3 Access to medicine as right to health ....................................................... 15
2.3 Other human rights relating to access to medicines ....................................... 16
2.3.1 Access to medicines as right to life .......................................................... 16
2.3.2 Right to enjoyment the benefits of scientific progress and its application . 17
2.4 Relationship between the medical patent right and access to medicines ....... 18
2.4.1 The barriers to access to medicines ......................................................... 18
2.4.2 Medical patent’s impacts on the medicine price ....................................... 19
2.4.3 The debate on the impacts of patent protection to the access to medicine
.......................................................................................................................... 21
2.5 States obligations on balance the rights ......................................................... 23
3.
Overview of Medical Patent in China ............................................................. 24
3.1 Medical patent legislation ............................................................................... 25
3.1.1 Patent Law ............................................................................................... 25
3.1.1.1 The restriction of using genetic resources ......................................... 26
3.1.1.2 Heightened patentability standard ..................................................... 27
3.1.1.3 Compulsory licensing......................................................................... 27
3.1.1.4 Bolar Exemption ................................................................................ 28
3.1.1.5 International exhaustion of rights ....................................................... 29
3.1.2 Measures on Compulsory License for Patent Exploitation (2012) (the new
Measures on CL)............................................................................................... 31
3.1.2.1 The changes in the new Measures on CL ......................................... 32
3.1.2.2 CL issued to promoting public health by other countries ................... 34
3.2 Enforcement of the TRIPS flexibilities ............................................................. 36
3.2.1 Transition periods ..................................................................................... 36
3.2.2 The difficulties on issuing CL.................................................................... 37
3.2.2.1 Local medical manufactures .............................................................. 38
3.2.2.2 Foreign medical patent owners .......................................................... 38
3.2.2.3 The Chinese government .................................................................. 39
3.2.3 Public non-commercial use of patents and Government use ................... 39
3.2.3.1 Public non-commercial use................................................................ 40
3.2.3.2 Government use ................................................................................ 40
3.2.4 Parallel importation .................................................................................. 41
3.2.5 Bolar exemption ....................................................................................... 42
3.3 Beware of the TRIPS-plus introduced through FTAs ...................................... 43
3.3.1 Patent linkage system .............................................................................. 44
3.3.2 Data exclusivity ........................................................................................ 46
4.
Other Factors Impeding Access to Medicines in China .............................. 51
4.1 Government responsibility .............................................................................. 51
4.1.1 Finance expense on public health ............................................................ 52
4.1.2 Pricing privilege of the original drugs ....................................................... 54
4.1.3 Combination of prescribing and dispensing policy adopted by public
hospitals ............................................................................................................ 55
4.1.4 Other policies issues ................................................................................ 56
4.2 Pharmaceutical industry ................................................................................. 57
4.2.1 Foreign pharmaceutical companies ......................................................... 59
4.2.2 Domestic pharmaceutical companies ....................................................... 61
4.3 Impact of other actors ..................................................................................... 62
5.
How can China Improve Accessing to Medicines? ...................................... 64
5.1 Improve access to medicines under the medical patent system ..................... 64
5.1.1 Issuing medicine compulsory licenses ..................................................... 65
5.1.2 Revise and be aware of TRIPS-plus provisions ....................................... 66
5.2 Improve access to medicines through public hospital reform ......................... 67
5.2.1 Separate prescription and dispensing function of public hospitals ........... 67
5.2.2 Attack drug kickbacks by legal means ..................................................... 68
5.2.3 Open the healthcare service market ........................................................ 70
5.3 Lessons learnt from India ............................................................................... 70
5.4 Protect Chinese traditional medicines by IPRs tools....................................... 72
6.
Conclusion....................................................................................................... 74
7.
Bibliography......................................................................................................76
Summary
Along with the interrelation between medical patent right, the generics’
impacts and the right to access to medicines, which as one of intersection
issues between Intellectual Property Rights (IPRs) and Human Rights (HR),
has drawn more and more attention under the international society, the Doha
Declaration on TRIPS and Public Health has reaffirmed the flexibilities of
the Agreement on the Trade Related Aspects of Intellectual Property Rights
(TRIPS) member states in circumventing patent rights for better access to
essential medicines in 2001. Considering the TRIPS flexibilities importance
on promoting access to medicines in the most developing and the least
developed countries, the thesis basically checks how medical patent rights
impact on the access to medicines in China and how China has utilized the
TRIPS flexibilities in recent years.
The thesis starts with defining the access to medicines and through
interpreting its interrelationships with right to health and other relevant
human rights, confirming the right to access to medicines is a human right.
Then considering its conflict with the recently popular development of
patent right, it clarifies the over-protection of medical patent right actually is
limiting the access to medicines and mentions there are other non-IP actors
which also hinders the access to medicines. Following focus on the balance
of IPR and HR protection, the both internal and extraterritorial of states’
obligations would also be acknowledged in the chapter 2.
In the chapter 3, the overview of Chinese medical patent legislation can
be found. It begins with the introduction and comments of the important
provisions within the two most important laws, Patent Law (2008) and
Measures on Compulsory License for Patent Exploitation (2012), by
following checks how the TRIPS flexibilities, such as compulsory licensing,
parallel importation, Bolar exemption etc, have been implemented and
practiced by the government. After the legislation review and the
enforcement examination, the thesis concludes that the fact of lacking
enforcement on making use flexibilities and analyzes the reasons behind of
the phenomenon. This chapter also reviews the TRIP-plus provisions that
adopted by the domestic legislation, by comparing their implantation and
impacts in the US, Japan and other developing countries, it is noted that the
TRIPS-plus’ potential dangers to limit the generic entry into market and its
necessity of revising the current laws to avoid its reverse impact on access
to medicines.
The chapter 4 introduces and analyzes other factors, such as the
government’s limited financial allocation, inappropriate administrative
policies, pharmaceutical companies’ reluctance and the business chains
corruption that impeding the access to medicine in China. Those factors are
complex while are as severe obstacles on promoting the right to health. As
access to medicines is human right, governments have the responsibility to
1
guarantee people can access to medicines especially must prevent the
violations from the third parties. In such case, China should take its
obligation to fully utilize the flexibilities in order to restrict the
overwhelming medical patent protection, by which way to increase the
accessibility to medicines. Taking account of the problems within the
patent legal framework and other areas, the advices on how to improve the
access to medicines in China are presented in the end.
Key words: access to medicines in China, medical patent protection, right
to health, TRIPS flexibilities, TRIPS-plus, compulsory license, generics.
2
Preface
The previous working experience in a pharmaceutical consulting
company arose my interesting on this topic. I noticed that on one hand the
Chinese patients thanks to the foreign patented medicines because they
bring them health. While on the other hand, the high cost leaves them a big
economic burden and it as an obstacle for them accessing to medicines and
health. The willing of knowing what reasons cause this problem drives me
working on this thesis. Within the Chinese national context, undoubtedly
the issue was complicated and sometimes even made me frustrated when I
was trying to make the phenomenon a sense. However, I appreciate the
time of working on it, because after researched on the questions finally I did
found some answers to them and my willingness of working for human
rights became much more!
I would like to thank my supervisor Mr. Peter Gottschalk’s valuable
suggestions which helped me to finish the thesis. And I am grateful for the
work and the support from the program coordinator Mr. Anders Trojer that
helped me to overcome all the difficulties during my study. And also thanks
for my classmate Sergiy Kondratyuk’s comments on the thesis, which
brought me more ideas of the topic. Last but not least thanks to my dear
parents, without their love and support I can never be here today!
3
Abbreviations
WHO
OECD
SIPO
SFDA
MOH
TRIPS
IPR
WTO
The Doha Declaration
ARV
GSK
WIPO
ICESCR
UDHR
ICCPR
ANDAs
NGO
R&D
FTAs
DSB
LDCs
CL
3TC
APIs
NCE
PMS
FYP
NDRC
MDGs
World Health Organization Explanation
The Organization for Economic Cooperation and Development
The State Intellectual Property Office
State Food and Drug Administration
Ministry of Health
Agreement on Trade-related Aspects on
Intellectual Property Right
Intellectual Property Rights
World Trade Organization
The Doha Ministerial Declaration on Public
Health and Trade
Antiretroviral
GlaxoSmithKline
World Intellectual Property Organization
The International Covenant on Economic,
Social and Cultural Rights
Universal Declaration of Human Rights
International Covenant on Civil and Political
Rights
Abbreviated New Drug Applications
Non-governmental Organizations
Research and Development
Free Trade Agreements
WTO Dispute Settlement Body
Least Developed Countries
Compulsory licensing
Lamivudine
Active pharmaceutical ingredients
New chemical entity
Post-Marketing Surveillance
Five-Year plan (2011-2015)
National Development and Reform
Commission
Millennium Development Goals
4
1. Introduction
1.1 Background
Health is one of human being’s most important personal assets. It is
essential to our welfare and sustained economic and social development.
This was recognized more than 30 years ago by the Alma-Ata Declaration
signatories, who noted that “Health for All” would contribute both to a
better quality of life also to global peace and security. 1 The World Health
Organization (WHO) World Health Assembly has agreed to use the legal
recognition of the right to health as an indication for a government to
improve access to essential medicine.2 Yet around the world, although the
percentage of the world’s population without access to medicines had fallen
from an estimated 37% of 1987 to around 30% of 1999, today at least one
third of the world’s population, approximately two billion people, has no
regular access to medicines. 3 In some countries, up to 11% of the
population suffers a severe financial hardship each year, and up to 5% is
force into poverty. Globally, about 150 million people suffer financial
catastrophe annually while 100 million are pushed below the poverty line.4
People living with HIV, cancer patients, those suffering from tuberculosis or
malaria, and other populations in desperate need of life-saving medicines
are increasingly unable to access the existing preventative, curative, and
life-prolonging treatments. In many cases, treatment maybe unavailable or
inaccessible for even some of the most common and readily treatable health
concerns, such as hypertension. The reasons of the global lacking of access
to medicines are numerous and basically they broadly fall into these three
categories: (1) infrastructure, (2) research and development, and (3) the
costs of medications.5
Within the above reasons, most analysis points out two of those factors
that dramatically limit the accessibility to medicines: First, the research and
development is driven by market forces, limiting the incentives for research
into diseases mainly affecting the less developed countries. The second
1
The world health report: Health Systems Financing: The path to Universal Coverage, p.ix,
available at: http://whqlibdoc.who.int/whr/2010/9789241564021_eng.pdf. (Search date:
11/08/2013).
2
Hans V. Hogerzeil, Zafar Mirza, The World Medicines Situation 2011, Access to essential
medicines as part of the right to health, WHO/EMP/MIE/2011/2/10, p.1, available at:
http://apps.who.int/medicinedocs/documents/s18772en/s18772en.pdf (Search date:
11/08/2013).
3
The World Medicines Situation, Access to essential medicines, WHO/EDM/PAR/2004/5,
Chapter 7, 2004, available at: http://apps.who.int/medicinedocs/pdf/s6160e/s6160e.pdf.
(Search date: 11/08/2013)
4
Supra 1, p.x,
5
Anand Grover, Brian Citro, Mihir Mankad, Fiona Lander, Pharmaceutical Companies and
Global Lack of Access to Medicines: Strengthening Accountability under the Right to
Health, Pharmaceutical Firms and the Right to Health, Journal of Law, Medicine & Ethics.
Summer 2012, para1-5.
5
factor is that high prices of patented drugs often make them unaffordable to
the people and governments in the developing world due to the income
inequity.6 So the high cost of medicines has become the biggest obstacle for
people accessing to medicines. Many medicines are currently available in
the market but are simply too expensive for millions around the world to
afford. According to the WHO report, generics competition and differential
pricing can contribute substantially to the affordability of medicines in lowincome countries.7 However, the medical patent right as one of Intellectual
Property Rights (IPRs), which has been asked for respect and protection for
decades, is severe restricting the generic manufacture and reversing the
accessibility to medicines. Consequently the interrelationship between the
access to medicines and medical patent right protection has drawn the
international society’s attention.
Take accessing to medicines from Human Right perspective on one
hand while the medical patent right from Intellectual Property Right
perspective on the other hand which is emphasized to be protected under the
21st century information era by both public and private actors, the question
of how to balance those two expanding rights has been discussed over years.
This thesis is going to check the impact of both The Agreement on TradeRelated Aspects of Intellectual Property (TRIPS) and the following TRIPSplus provisions to the Chinese medical patent legislation and what the
influence of their enforcement to the Chinese citizens’ fulfillment of their
right to health is.
1.1.1 International background
A number of international documents, declarations, and working
groups over the last decades have tried to examine and address the human
rights and public health regarding lacking of access to medicines. Under the
trade globalization background, the linkage of international trade and
intellectual property rights (IPRs) has aggravated the conflicts between IPRs
and right to health.
The TRIPS Agreement, as a part of trade agreements package created
by the World Trade Organization (WTO), explicitly bounds the intellectual
property with the global trade for the first time. The “all or nothing” nature
of the WTO’s accession means that all states that seek the membership to
the WTO must agree its satellite agreements, including the TRIPS
Agreement. As a result, the TRIPS Agreement has effectively globalized
the intellectual property laws: All WTO members must subscribe to the
minimum international standards of protection for IPRs which established
by the Agreement within their domestic legal regimes. Prior to the TRIPS,
most countries, particularly in the developing world, did not have TRIPScompliant intellectual property laws. The Agreement also provides for the
6
Josh Greenstein, Access to patented medicines, the right to health, and the case of
Thailand, p2, available at: http://www.gpia.info/files/u647/Access_to_medicines.pdf.
(Search date: 11/08/2013).
7
Supra 3, Chapter 7.
6
enforcement procedures, remedies, and dispute resolution mechanisms,
backed by the possibility of trade sanctions, in relation to its mandate.
Under the TRIPS Agreement, patenting affords pharmaceutical companies
the right to exclude competitors from the market. As a result, they may
charge higher prices than the competitions of generic drug manufacturers
were exiting. Unlike many other forms of IPRs, such like Copy Right and
Trademark Right, the drugs that constituted by the chemical compounds are
vital to protect the billions of people’s lives and health as their human
rights. So since the TRIPS Agreement came into force it has been receiving
a growing criticism from developing countries, academics society , and nongovernmental organizations for patents’ overprotection brings no benefits
for improving the health situation in the developing world. Some of these
criticisms points that the TRIPS's wealth redistribution’s effect is actually
moving money from people in the developing countries to the IPR holders
in the developed countries.8
By design, the TRIPS Agreement was established as minimum
standards agreement. Article 1.1 states that “members may, but shall not be
obliged to, implement in their law more extensive protection than is
required by this Agreement”.9 Concerns over the effect of patent protection
on the accessibility of medicines have been acknowledged by the WTO
through the adoption of The Doha Ministerial Declaration on Public Health
and Trade (The Doha Declaration) in 2001,10 which explicitly recognized
that medical patents in deed affect the drug prices. The paragraph 5 of the
Doha Declaration reaffirms the WTO member states’ right to make use of
the flexibilities provisions within the TRIPS. 11 The so called TRIPS
flexibilities are to provide the WTO members a certain degree of legislation
freedom to establish some mechanisms within their national intellectual
property regimes, with the aim to assist states adapting to their own different
domestic social and economic contexts. The flexible provisions are such as
transition periods, compulsory licensing, parallel importation, the limitation
on data protection, etc. Using of those approaches to ensure medicines
being equitable available and accessible is very necessary. However, the
assurances of the Doha Declaration had not been successful by noting
paragraph 11 of the General Council Decision of 30 August 2003 on the
Implementation of Paragraph 6 of the Doha Declaration, which regarding
the difficulty for the WTO members, who are with insufficient or no
manufacturing capacities in the pharmaceutical sector, to make effective use
of compulsory licensing under the TRIPS Agreement. Following in 2005 the
WTO members reached an agreement on an amendment to the TRIPS
Agreement to make allow the WTO members to issue compulsory licenses
to export generic versions of patented medicines to the countries without
sufficient and manufacturing drugs capacities. After years this “cross8
G. Westkamp, TRIPS Principles, Reciprocity and the Creation of Sui-Generis-type
Intellectual Property Rights for New Forms of Technology, 2003, 6(6), The Journal of
World Intellectual Property, p827-859.
9
Article 1.1, TRIPS Agreement.
10
The Doha Ministerial Declaration on Public Health and Trade, WT/MIN(01)/DEC/2,
Adopted on 14 November 2001, para1-4.
11
Id, para5.
7
boundary compulsory licensing” mechanism has not been effectively
implemented by states due to its burdensome time and financial consumed
application procedure. Another important reason causing the failure of the
Doha Declaration is that most countries actually are not in the position of
could make extensive use of the flexibilities with various reasons. Even in
countries of India, who is called as “poor countries pharmacy” due to its
cheap generic provision to the other less-developed world countries, the use
of the TRIPS flexibilities is also being systematically eroded.12 Meanwhile,
China is one of the countries where the medical patent legislation endows
overprotection to the medical patent rights. It is maladaptive to its domestic
developing situation has been severely hindering the citizens’ access to
medicines and their right to health.
1.1.2 Access to medicines in China
Since became the world’s second biggest economy in 2010 China has
being drawn the world’s attention to its impressive economic growth,
however we should not forget that the benefits of growth have never been
shared equally across the geographic regions, the rich and poor households,
the urban and rural residents, and the migrants and resident population
within the cities. Basically the Gini coefficient between 0.47- 0.49 shows
that the gap in income distribution is relatively large, while China’s official
Gini coefficient stood at 0.474 in 2012. Meanwhile according to the
unofficial study the Gini was up 0.61% already. 13 The small amount of rich
people are extremely rich while most people however do not get benefit
from the economic fast growth as it is supposed to be. Besides, China’s 8,
387 USD per capita GDP is below the world average level of 10,700 USD,
which ranks the number 96rd among 185 countries in 2012.14 Many people,
especially from the remote and resource-poor areas in the western and
interior regions, their consumption levels are even below 1 USD/day.
People in those areas are often without access to clean water, arable land.
The health and educational services are not available or adequate. To a
great extent illness treatment continues to be a big contributor to the
poverty, and out-of- pocket medical expenses remain too high to bear.
According to a report from the WHO, Chinese total health expenditure per
capita was 264 USD/ year and the total health expenditure took only 4.3 %
of the GDP in 2008, which ranked number 116th in the world. 15 This
proportion was far behind to the developed countries and the most
developing countries. Besides the payment for the pharmaceutical products
constitutes nearly 40% of China’s total health expenditures, which sharply
contrasted to 17% average level in The Organization for Economic Co12
Supra 5, para.11.
Kevin Yao, Aileen Wang, China lets Gini out of the bottle; wide wealth gap, para11-12,
available at: http://www.reuters.com/article/2013/01/18/us-china-economy-income-gapidUSBRE90H06L20130118 (Search date: 15/08/2013).
14
See statistics from IMF, “List of countries by GDP (PPP) per capita” available at:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita (Search date:
11/08/2013).
15
WHO Department of Health Statistics and Informatics (May 13, 2011), available at:
http://www.who.int/whosis/whostat/2011/en/index.html (Search date: 23/10/2012).
13
8
operation and Development (OECD) countries. 16 Under this context, in
2009 a new round Chinese healthcare reform was started seeking to lower
the pharmaceutical expenditures while increasing the affordability of drugs.
However along with the reform the dilemma comes out. The problems of
which would be also discussed by this thesis later.
In addition, the government sponsoring HIV/AIDS free treatment
programs have been hindered by an inadequate drug supply. Until the end
of 2011, there were 780,000 people affected by HIV/AIDS and 28,000
patients died in 2011.17 As China has provided medical patent protection
since 1993, most antiretroviral (ARVs) drugs patents are under the
protection. GlaxoSmithKline’s (GSK) exclusive patent right on Lamivudine
(3TC), for example, which costs 1,672 $ per patient per year is unaffordable
to the Chinese patients. 18 Along with the increasing burden of noncommunicable diseases in many developing countries, the availability of
affordable cancer drugs has become a big challenge. Every year China has
more than two millions new cancer cases and the number is continue
growing which makes cancer being a leading disease causing death now.19
Some cancer drugs are available only in branded versions under the patent
protection and their prices are really high. In such situation, the average per
patient’s expenditure of Gleevic (imatinib mesylate), a relatively new drug
for several cancers, amounts to about 20,000 RMB/month in China. In the
contrast, a generic version in India costs about 1,300 RMB/month.20 The
high cost of medicines both increases the government’s healthcare finance
burden and difficulties for individuals to access to treatments.
On the other hand, although the Chinese government has devoted
substantial effort to enacting IP protection laws and regulations, there is
always criticism decrying the lack of effective law enforcement. In 2007,
the United States sued China for the IP infringement in the WHO and
brought the dispute to the Dispute Settlement Body. For years, the US
Trade Representative Offices and its multinational pharmaceutical
companies keep demanding stronger pharmaceutical IP protection from the
Chinese government. Therefore, China chose to add TRIPS-plus provisions
within its IP laws while updating its drug regulatory framework, which led
more challenges to the generic industry.
16
A Generic Drug Policy as Cornerstone to Essential medicines in China, World Bank,
China Health policy Notes No 4, 2010.
17
Statistics from the report by Ministry of Health of China, UNAIDS AND WHO,
available at http://news.china.com.cn/txt/2012-01/21/content_24464935.htm (In Chinese)
(Search date: 23/10/2012).
18
Jing Chen, Xioayan Nie, Peng Yao, Luwen Shi, TRIPS-plus and Access to Medicines in
China, Journal of Public Health Policy, April 4, 2013.
19
China Health Statistic Yearbook 2010, Ministry of Health of China, 2010.
20
Responses from Hu Yuanqiong, China Access to Medicines Research Group, Speech to
Informal Interactive Hearings of the General Assembly with Non-government
organizations, Civil society organizations and the Private Sector, New York, June 14-15,
2010 .
9
More than the difficulties of housing, education and pension, the
difficulty of seeing a doctor has become one of these four biggest social
issues to Chinese people. The unequal distribution of healthcare services
and the unreliability of small community hospitals make many people have
to travel far for seeing a doctor in the bigger specialized hospitals which are
reputable for curing the certain diseases. Some big hospitals just focus on
the amount of patients while neglects the quality of their medical services
provided. The news of the patients lost their lives which caused by the
medical accidents with difficulties of getting the compensation are not rare
today, which terribly increases the tension between the patients and their
doctors and hospitals. The expensive medicines and check-up fees leave
more financial burden to the most patients. The causes behind of this high
cost of medicines are multi-factor, surely not only because of the medical
patent protection. However regarding the thesis will analyze the issue from
the legal perspective, it would mainly focus on the medical patent
provisions while the medical administration provisions and the healthcare
system and relevant health policies would be also referred.
1.2 Research questions
With the background of the global trading expansion, the TRIPS
Agreement imposes the WTO member states obligations of complying with
the international standard on patent protection while provides some
flexibilities for the less-developed world countries to make use in order to
promote their national public health situation. The research questions are:
whether China has adopted any flexibility into the national legal framework?
If so on what extent China enforces them? The questions are followed by
asking what other reasons, besides of the patent protection, cause the
barriers to the access to medicines? And are there any advices could be
provided within the judicial and administrative regimes regarding improving
the accessibility to medicines?
To assist answering the above main research questions, the thesis
would start with asking is the right of access to medicines a human right as
the ground to impose the obligations on governments first. The questions of
how about the TRIP-plus provisions’ implementation situations in China
and what actions can be taken to prevent their reverse impact on limiting the
access to medicines will be also raised.
1.3 Methodologies
In order to answer the research questions, I applied the relevant
international and regional human rights instruments to support the argument
of the right to access to medicines has been confirmed as a human right and
the legal doctrines are also used to impose the states and pharmaceutical
companies’ respective responsibilities on this issue. Through checking the
relevant international organizations such as WHO and World Intellectual
Property Organization’s (WIPO) reports and other research papers I would
10
clarify the medical patent protection’s impact on the medicines’ price and its
effect on limiting the access to medicines.
To analyze the patent impact on access to medicines in China, I
reviewed the Chinese patent legislation and relevant administrative
legislation to see the TRIPS flexibilities and the TRIPS-plus provisions
implementation situation under the national context. Through collecting
and sorting the relevant information from scholar papers, industry report and
news, the factual enforcement and the problems of the above provisions will
be identified. The thesis would also compare China with other countries,
such as India, Sweden, Japan etc, with the comparison of the certain
provisions’ implemented and enforced situation in those countries it will
underline the TRIPS-flexibilities’ significant function on encouraging the
generics entry into market, reducing the medicines price and improve the
accessibility to medicines. Regarding to the TRIPS-plus impact to access to
medicines, the thesis would take US Hatch-Waxman Act as a contrast, to
show the importance of establishing rational and expertise judicial and
administration systems on practicing the provisions and to induce what
China should react.
1.4 Delimitations
With the consideration of medicines affordability and healthcare
safeguard environment, the thesis would from economical accessibility
perspective to talk about the access to medicines in China. Other
accessibility actors, such as the distance between patients and hospitals,
facilities and healthcare services, are also very important. However taking
account of the topic is focus on the IPRs impacts on human right, the thesis
would not go further on those actors.
In addition, the issue of whether IPR is a human right would not be the
essential argument on this topic. So the thesis is not going to discuss the
matter in-depth. The thesis is mainly focus on the examining the reasons
that hinder the access to medicines, both patent right and other factors.
Considering the level of the author’s academics and research competency,
the recommendations that suggested in the end would with certain extent of
limitations which could not cover all the potential measures.
11
2. Access to Medicines as a
Human Right
The legal right of access to medicine is not mentioned explicitly in any
agreement, but commonly based on some basic human rights, which are
protected under the international human rights instruments and is confirmed
in Doha Declaration on TRIPS and Public Health, where “that the
Agreement can and should be interpreted and implemented in a manner
supportive of WTO Member’s right to protect public health and, in
particular, to promote access to medicines for all” is affirmed.21
This chapter would apply human rights based doctrine to interpret right
to access to medicines, through the clarification of its relationship between
right to access to medicines and right to health, right to life and right to
enjoyment the benefits of scientific progress and its application, elaborate
that right to access to medicine should be and must be respected as a human
right. Then regarding the debate on the interrelation between the patent
right protection and access to medicines, the thesis introduces the analysis
about the impacts that medical patent right brings to the access to medicines
in different develop level countries. The discussion of this chapter is aiming
to point out that states should take the main corresponding obligation to
respect, protect and fulfill these human rights through different ways
according to the international and regional human rights agreements. If
states simply offer the excessive medical patent right protection under the
pressure given by the foreign pharmaceutical industry which is sacrificing
the right to access to medicines for meeting the business interesting, it can
deem as a breach of states’ obligation on protecting their public’s right to
health. The price of undermining the domestic public health development
for realizing the promise on patent right protection is already too heavy and
the issue must be aware of and to be controlled by many developing
countries, such as China and India. The case of India cautiously not
introducing the TRIPS-plus provisions imposed in the FTAs and its granting
medical compulsory licenses, which is supported by the local court
regardless the foreign pharmaceutical company’s blame, are the examples of
a state complying its state obligation on respect, protect and fulfill human
rights, and the same obligation should be imposed to the Chinese
government.
2.1 Access to medicines
The United Nations Development Group defines “access” as “having
medicines continuously available and affordable at public or private health
facilities or medicine outlets that are within one hour’s walk from the homes
21
The Doha Declaration on TRIPS and Public Health, para4.
12
of the population.”22 It is should be noted that the “medicines” we talk here
is in a broad sense, which includes all the essential and available medicine.
However when we talk about the governments’ obligation on the access to
medicines, it only refers the “essential drugs” since the General Comment
No. 14 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR) which in detail explains the scope and meaning of the
right to health and interprets “safe and potable drinking water and adequate
sanitation facilities…and essential drugs” as the underlying determinants to
the right to health, where places an obligation on member states to provide
only “essential drugs”.23 The “essential drugs” as those “satisfy the priority
health care needs of a population” that defined and listed by the WHO.24
Considering states have their flexibility to constitute their own “essential
drugs list” by the WHO list as the reference, the thesis use “medicines” to
avoid different range of “essential medicines”.
Access to medicines depends on four factors, which are availability,
accessibility, affordability and quality/acceptability. Availability is ensuring
that new products are developed or the existing products are adopted for
local use; Accessibility means that people can receive the product and
understand how to use it; Affordability is to ensure patients, healthcare
providers and governments can afford the product; Quality/Acceptability
needs the product can be worked as intended, efficacious and safe.25
In 2002, the UN Human Rights Council established a mandate for a
Special Rapporteur on the right to health to prepare its independent reports,
part of these reports dealing with access to essential medicines and the IP
issues. In 2011, the Human Rights Council requested the Special
Rapporteur to work a study by 2013 on the existing challenges with regard
to the access to medicines within the context of the right to health,
recognizing methods to overcome these challenges and attain the good
practices. The intersection issues between these sectors have become the
focus of several reports and resolutions of UN Commission on Human
Rights. With respect to the HIV/AIDS epidemic, the UN General Assembly
has also passed several resolutions pertaining to protect the human rights of
those people who live with the HIV, and improve their accessibility to the
treatment. In fact, access to essential medicines as an indicator for the
fulfillment of right to health was created by the UN High Commission for
Human Rights. Ensuring access to medicine as one significant human right
obligation to the governments is also always reaffirmed in the study by the
22
Stephen P. Marks, Health: A human Access to Essential Medicines as a Component of
the Right to Health, Swiss Human Rights Book VOL.3, p80.
23
Committee on Economic, Social and Cultural Rights, General Comment No. 14 on the
right to the highest attainable standard of health, 11 August 2000, UN Doc. E/C.
12/2002/11, para4.
24
WHO, Medicines: Essential Medicines [online], fact sheet no. 325, available at :
http://www.who.int/mediacentre/factsheets/fs325/en/index.html
(Search
date:
11/08/2013)
25
The Access to Medicine Index 2012, Access to Medicine Foundation, p11.
13
cooperated work of WTO, WIPO and WTO.26 The thesis would clarify the
opinion that right to access to medicines is a human right through its
interrelationships with right to health and other fundamental human rights.
2.2 Right to health
The right to health is an indispensable right of human rights and of our
understanding of a life in dignity. Internationally, it was first articulated in
the 1946 Constitution of the WHO as “the enjoyment of the highest
attainable standard of health is one of the fundamental rights of every
human being without the distinction of race, religion, politically belief,
economic or social condition.”27
2.2.1 Development of the right to health
Traditionally health was seen as falling within the private, rather than
public, realm. The early laws containing health-related provisions can be
perused back to the era of industrialization. The Moral Apprentices Act
(1802) and Public Health Act (1848) were adopted by the United Kingdom
as a way to relieve the social pressure arising under the poor labor
conditions. And the 1843 Mexican Constitution also included references to
the state’s responsibilities for preserving public health.
With the establishment of the WHO, for the first time the right to
health was recognized internationally, and the concept of health was
changed to be a public issue. The WHO developed the understanding of
health as “a state of complete physical, mental, social well-being and not
merely the absence of disease or infirmity” as before and also defined an
integrated approach linking together all the factors related to human wellbeing, including physical and social surroundings conducive to good
health.28
Universal recognition of the right to health was further confirmed by
the 1978 Declaration of Alma-Ata on Primary Health Care, which reiterated
the government’s responsibility to guarantee the health of their populations.
In the context of the Alma-Ata Conference the WHO designed the
plan, Health for All by the Year 2000, which consists of a series of goals and
programs to achieve the minimum levels of health. Nonetheless, in a
context of which health problems associated with poverty and inequity
26
Promoting Access to Medical Technologies and Innovation, Intersections between
public health, intellectual property and trade, p40-42.
27
The Right to Health, Fact Sheet No.31, Office of the United Nations High Commissioner
for Human Rights, World Health Organization, p1.
28
The right to health, Circle of Rights Economics, Social & Cultural Rights Activism: A
Training Resource, available at:
http://www1.umn.edu/humanrts/edumat/IHRIP/circle/modules/module14.htm (Search
date: 11/08/2013).
14
continue to pose the main obstacles to attain the minimal levels of wellbeing for most of the world’s population.29
2.2.2 Right to health as a human right
Right to health then further developed as a human right and adopted by
many human rights instruments. Article 25 of the Universal Declaration of
Human Rights (UDHR) of 1948 states that “Everyone has the right to a
standard of living adequate for the health and well-being of himself and of
his family, including freedom clothing housing and medical care and
necessary social services”30 In the ICESCR, Article 12 also recognizes the
“right of everyone to the enjoyment of the highest attainable standard of
physical and mental health,” and continues to explain that the signatory
states must take steps to ensure “the prevention, treatment and control of
epidemic, endemic, occupational and other diseases,” and “the creation of
conditions which would assure to all medicines service and medical
attention in the event of sickness.”31
Right to health is also widely recognized in other regional human rights
instruments, such as in the Article 33 of American Declaration on the Rights
and Duties of Man (1948), Article 11 of European Social Charter (1961,
revised in 1996) and Article 16 of African Charter on Human and People’s
Rights (1981).32 These instruments represent a further commitment on the
part of states in respect of the right to health, and established the framework
for an integrated policy aimed at securing its enjoyment.
2.2.3 Access to medicine as right to health
Pursuant to Article 12.2 (c) (d) of ICESCR, the right to health care
includes the right to emergency care, health facilities, goods and services.
Access to medicines is the core content of the right to health, both as the
treatment for epidemic and endemic diseases and as part of the medical
attention in the event of any kind of sickness. Besides, the General
Comment No.14, which provides that the “availability, accessibility
(affordability), acceptability (medical ethics) and quality” as four minimum
elements to fulfill the right to health, also embodied the right to essential
29
Alma Ata Declaration, Wikipedia, available at:
http://en.wikipedia.org/wiki/Alma_Ata_Declaration (Search date: 11/08/2013).
30
Universal Declaration of Human Rights, United Nations General Assembly, December
1948.
31
International Covenant on Economic Social and Cultural Rights, United Nations General
Assembly, January 1976.
32
The right to health, Circle of Rights, Section 5- Understanding Specific ESC Rights,
available at:
http://www1.umn.edu/humanrts/edumat/IHRIP/circle/modules/module14.htm (Search
date: 11/08/2013).
15
medicines and established that the provision of essential medicines as one of
the state’s minimum core duties.33
The 12/24 Resolution adopted by the Human Rights Council in 2009
also recognized that “access to medicines is one of the fundamental
elements in achieving progressively the full realization of the right of
everyone to the enjoyment of the highest attainable standard of physical and
mental health” and stressed “the responsibility of States to ensure access to
all, without discrimination, of medicines, in particular essential medicines,
that are affordable, safe, effective and of good quality”.34 The resolution
was continuing updated as the 15/22 and the 17/14 Resolutions by the
Human Rights Council in 2010 and 2011 respectively.35
2.3 Other human rights relating to access
to medicines
Besides right to health, the interpretation of accessing to medicine from
human right approach also interrelates to other human rights, such as right
to life and right to enjoyment the benefits of scientific progress and its
application.
2.3.1 Access to medicines as right to life
Traditionally, the right to life is viewed as a negative right to prevent
intentional loss of lives. It did not guarantee an appropriate standard for
living, food, housing and medical care. However, recent developments
consider the right as a positive right, which has been extended to the basic
conditions of life, the component necessary for survival, and part of right is
coexistent with economic, social and culture rights, which includes
accessing to life saving medicines.
Right to life as one of the fundamental human rights is included in the
UDHR, International Covenant on Civil and Political Rights (ICCPR),
European, African and Inter-American human rights conventions. 36 The
UN General Assembly affirms that the safeguarding of right to life is an
essential condition for the enjoyment of entire range of economic, social and
33
General Comment No.14, The right to the highest attainable standard of health, UN
Economic and Social Council, E/C. 12/2000/4, 11 August 2000, para12.
34
Resolution on access to medicine in the context of the right of everyone to the enjoyment
of the highest attainable standard of physical and mental health, UN Human Rights
Council, A/HRC/RES/12/24, 12 October, 2009.
35
Resolution on the right of everyone to the enjoyment of the highest attainable standard of
physical and mental health, A/HRC/RES/15/22, 6 October 2010; Resolution on the right
of everyone to the enjoyment of the highest attainable standard of physical and mental
health in the context of development and access to medicines, UN Human Rights
Council, A/HRC/RES/17/14, 14 July 2011.
36
See Article 3 of UDHR, Article 6 of ICCPR, Article 2 of European Human Rights
Convention, Article 3 of African Charter on Human and People’s Rights, Article 24 of
American Convention on Human Rights.
16
culture, as well as civil and political rights. Therefore right to health and its
essential measure, access to medicine, lies at the basis of full realization of
the right to life. Given the lack of accessibility to such medicines will
ultimately deprive people’s right to life, so accessing to essential drugs as a
mean to survival falls into the realm of right to life. And the State’s duty of
assuring access to essential medicines is clearly could be originated from the
expanded notions of obligations on the right to life.37
2.3.2 Right to enjoyment the benefits of scientific
progress and its application
Comparing with the right to health and the right to life, access to
medicines’ legal basis on the right to enjoyment of benefits of science,
which was proclaimed in the Article 27 of UDHR and Article 15.1(b) of
ICESCR, is easily ignored within the human right framework. In fact “the
States Parties recognized the right of everyone to enjoy the benefits of
scientific progress and its applications”38 implies that the progress made by
medical research and development should be shared by public, which
especially can be measured by the accessibility to medicines.
Considering IPRs are protected under the Article 15.1 (c) of ICESCR
while the benefits deriving from the science and technology progress are not
shared equally because of the existence of poverty, the General Comment
No.17 articulates that “states parties have a duty to prevent unreasonable
high costs for access to essential medicines…from undermining the rights of
large segments of the population to health”.39 So access to medicines as an
indispensable component to the right to health and the right to life, which
are the fundamental human rights deriving the inherent human dignity, also
need to be promoted by realizing the right to the enjoyment of scientific
progress. The right to the enjoyment of scientific progress is one legal basis
to the access to medicines while accessibility to medicines is an indicator on
the practice of right to the enjoyment of scientific progress.
Over in all, the right of everyone’s enjoyment of the highest attainable
standard of physical and mental health which as a human right is one of the
fundamental goals to the state’s policies and programs, and access to
medicines is also recognized as one of the fundamental elements for
progressively achieving the full realization of the right to health by the UN
Human Rights Council. 40 However due to the obstacles to accessing to
37
Caidan Cao, Patent Right and Access to Medicine, Mater thesis, Lund University, Fall
2010, p47-48.
38
Article 15.1(b), International Covenant on Economic Social and Cultural Rights, United
Nations General Assembly, January 1976.
39
General Comment No.17 ( 2005), The right of everyone to benefit from the protection of
the moral and material interests resulting from any scientific, literary or artistic
production of which he or she is the author, Economic and Social Council,
E/C.12/GC/17, 12 January 2006, para.35.
40
Promotion and Protection of All Human Rights, Civil, Political, Economic, Social and
Culture Rights, Including the Right to Development, UN Human Rights Council,
A/HRC/10/24,17 November, 2008.
17
medicines of good quality, affordable and in a timely fashion, the full
enjoyment remains an illusive goal to millions of people around the world.
Where the medications are expensive, non-existent, inaccessible and low
qualities are mostly in the developing countries. In this regard, the states are
definitely the main duty holder to ensure the access to medicines under the
human rights regime while should provide sufficient legal protection to the
IPRs in corresponding to International Agreements.
2.4 Relationship between the medical
patent right and access to medicines
When talking about the relationship between the medical patent right
and access to medicines, the first thought is to place them into their
corresponding legal frameworks. There should be no dispute on that
medical patent right belonging to the IPRs. Regarding the access to
medicines, the question of whether which is considered as a human right
that from the above part of human rights instruments statement we have
reached the conclusion of access to medicines is indeed a human right.
Then the question of the relationship between the IPR and human right
comes to us. The World Intellectual Property Organization (WIPO) agrees
the opinion that IPRs are recognized as human rights backed by the UDHR
and other international and regional human rights legal instruments. 41
However the relationship between them is complex. So a full understanding
of the nature and purposes of the IPR system is important to be clarified in
order to ease the conflicts happens between the implementation of current IP
systems and other human rights, such as the right to adequate health care,
the right to free expression and access to information, the right to share the
benefits of scientific progress, and to participation in cultural life, etc.42 To
away from that theoretically analysis the thesis prefer discuss the issue of IP
and access to medicines from the factual and practical way.
2.4.1 The barriers to access to medicines
In 1975, half of the world’s population was without accessing to lifesaving drugs and other essential medicines. Although the proportion has
decreased to about one-third of the world population now, the absolute
number has remained constant at approximately two billion people.
According to the WHO, expanding access to existing interventions,
including medicines, for infectious diseases, maternal and child health, and
non-communicable diseases would save more than 10.5 million lives a year
by 2015.43 There are numerous barriers hamper the access to medicines so
that the challenge is multi-faceted.
41
Willem Grosheide, Intellectual Property and Human Rights: A Paradox, Vol. 21 No.3,
March, 2011, p128-131.
42
WIPO, Human Rights and Intellectual Property: An Overview, available at:
http://www.wipo.int/tk/en/hr/ (Search date: 23/10/2012)
43
Stephen P. Marks, Health: A human Access to Essential Medicines as a Component of
the Right to Health, Swiss Human Rights Book, VOL.3, 2009, p84.
18
Lacking of research investment and scientific knowledge could make
that medicines for their condition do not exist. In the case of the medicine
does exist, it may be too expensive for the patients to afford. Or it is not
available in the country where patients cannot receive them in time even at
all, due to the ineffective supply chains. It also may be without the high,
safe or effective quality, or may be formulated in the way making it difficult
to take appropriately. The packaging may make it difficult to understand
how to use the medicines as well. 44 The Working Group on Access to
Essential Medicines of the United Nations Millennium project has identified
six barriers of accessing the medicines: Inadequate national commitment,
inadequate human resources, failure of the international community to keep
its promises to developing countries, lacking of coordination of international
aid, obstacles created by the TRIPS Agreement, and the current incentive
structure for the R&D of medicines and vaccines to address priority health
needs of developing countries.45
Among those factors, pricing remains a fundamental obstacle issue,
putting medicines out of reach for millions of people in the developing
world where the treatments are available but only are simply unaffordable.
Most people in the developing countries pay put-of-pocket money for
medicines, and often in those countries the costs of the needed drugs are
higher than the affluent countries, not only in relation to the income levels
but also sometimes in absolute terms. 46 IPRs as one reason, under the
TRIPS Agreement protection, which is in name of as return for the costs of
R&D and incentives to innovation actually cause the monopoly high price
of medicines.
2.4.2 Medical patent’s impacts on the medicine price
Patent exclusive right provides short-term marketing monopolization
through restricting competition behavior. And such IPR incentives bring the
different development level countries different impacts on their medical
prices.
A study showed that to the developed countries, the impact of the
patent protection to their medical prices increasing is the least remarkable.
That is because with the existence of efficient competitions the drug price
can be reduced reasonably. The price competitions are mainly brought by
the replaceable medicines and the generics, which thanks to the advanced
technology and sufficient financial support in the pharmaceutical industry.
And governments also encourage the generics coming into the market as
soon as possible after the patent expiring by offering financial and policy
favorable measures supports. Such as the US, it issued the Hatch-Waxman
Act (Bolar Exemption) in 1984, which provided the Abbreviated New Drug
44
The Access to Medicine Index 2012, Access to Medicine Foundation, p12.
The Access to Medicine Index 2008, Access to Medicine Foundation, p29-31.
46
MDG Gap Task Force Report 2012, Millennium development goal 8, The Global
Partnership for Development: making Rhetoric a Reality, pxvi.
45
19
Applications (ANDAs) to encourage seeking the FDA approval of the
generics. This action made the generics taking part in the medical
prescriptions was increased from 19% in1984 to 47% in 2000.47
And in other developed countries such as UK, the percentage that
generic takes is even much higher. The statistics also shows that the
existence of the generic competitors would cause the price immediately
dropped as soon as the drug patent going expire. The more generic
producers coming to the market, the prices would be more reduced. In spite
of the medical patent protection brings the high price, the extent can be
restricted by the severe competition in the market. Besides, these
governments strictly control the drug price when it is necessary, which even
sometimes the price is restricted below the level of other comparable less
developed countries. So the rational market competition and properly
medical administrative policies actually can control the negative impact that
the medical patent on the drug price.
To the developing countries, medical patent right protection brings the
high price of drugs and the extent of which is different by different
medicines in different countries, which can be ranged from 12% to 200%.48
It depends on the marketing structures and the demands, especially the
degrees of the competition. In some countries with the well established
generics industries, the increase extent is not so big that actually can keep
the price being comparatively affordable, some of which can be cheaper
than some developed countries. However to other countries where are
without big market and lacking of manufacturing and managing capacities,
the drug price is always very high. According to an US research, the drug
price will be decreased when generics enter into the market and it needs at
least five competitors until the price dropping to the lowest.49 The number
and the speed of the generic producers entering into the market depends on
how expected profits big it is. And the profit can be realized only when the
market scale is big enough, otherwise generic producers are reluctant to
produce and the drug price usually still keep very high in these developing
countries.
Besides, many developing countries are with the centered or monopoly
drug sale system. Under the system, lots of patented medicines are
imported and sold by only a few distributors, who prefer to pursue the
monopoly high price through providing limited supplement, which
suppresses the competition dramatically. The different demand elasticity
also hinders the patent holders reducing prices, because the price decrease
does not cause the consumers who are with the strong purchasing capacity
to buy more. Rich people can always get the expensive drugs even if the
price is high and they are always the main customers to many
47
Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and
Development Policy, Report of the Commission on Intellectual Property Rights, London
September 2002, p 29-56.
48
Id.
49
Id.
20
pharmaceutical companies. The poor people with the weak purchasing
capacity cannot buy as much as before the price increased. So the drug
providers prefer the patented medicines with more profits deriving from the
rich customers. All those above factors finally make many developing
countries’ drug prices are even higher than developed countries.
According to the TRIPS Agreement to the least developed countries
they are not required to provide medical patent protection until 2016. Those
countries with insufficient manufacturing capacity used to depend on the
importation of the cheap drugs from the non-patent protection developing
countries such as South Africa, India and Brazil. However after 2005 along
with the TRIPS taken effect to more and more developing WTO member
states hence they must provide medical patent protection, there were less
unpatented medicines could be imported by these least developed countries.
What they can do is importing the high cost patented medicines to solve
their health issues, with limited amount of free drugs provided by the Nongovernmental Organizations (NGOs), international aids program and a few
pharmaceuticals donation. So even those least developed countries do not
have to provide the medical patent protection, it has already caused the drug
price increasing by importing the patented medicines, no more to say when
the TRIPS taken into effect after 2016.50
2.4.3 The debate on the impacts of patent protection
to the access to medicine
From the above part with the comparison of different market structures,
demand scales and the different degrees of competitions from economical
perspective, the outcome shows us that the medical patent right actually
brings the high price of drugs to the developing countries. At the same
time, some people are arguing that the IPRs protection are as the
indispensable elements to stimulate the Research and Development (R&D)
of the medical technologies, which assists to improve the health situation in
the less developed areas from the long term perspective.
To respond that argument, after checking all the evidences a study 51
shows that actually only less than 5% of the profit are invested worldwide
into the R&D of the diseases which predominantly affecting the developing
countries. The Commission on IPR concluded that IP protection plays
hardly any role at all on stimulating R&D of diseases that prevalent in the
developing countries, except for the diseases that also have a big market in
the developed world. 52 Pharmaceutical research by the private sectors is
50
Yang Li, Li Ye, Yue Chenyan, Patent System and Drug Price under Trade Related
Intellectual Property System, College of Business Administration, Shenyang
Pharmaceutical University, Shenyang 110016, China.
51
G-Finder, Neglected Diseases Research & Development: How Much Are We Really
Spending? 2008, p48.
52
Joint NGO response to US proposal on Intellectual Property Rights, Innovation and
Public Health at the 56th World Health Assembly, para3, available at:
http://www.msfaccess.org/resources/press-releases/498 (Search date: 23/10/2012).
21
totally driven by the expected profits. The businessmen usually do not
consider that devoting significant resources to address even such common
sicknesses, like tuberculosis and malaria, is commercially worthwhile. So
the heart of the problem is the lacking of market sufficient demand to
motivate the private sectors to commit resources to the R&D of the diseases.
In the report the Commission believes that the presence or absence of the IP
protection in the developing countries is of at best secondary importance in
generating incentives for research directed to diseases prevalent in
developing countries. The report shows that patents play a limited role on
providing incentives to develop new medicines for the “neglected diseases”
or “disease of the poor” in regions where they own small markets.53
Another argument standing for the medical patent right believes that
the most important constraints to access to medicines in the developing
countries are not the patent protection but the lack of spending on healthcare.
There usually have the absence of a suitable health infrastructure to
administer the medicines’ safety and efficiency, the improper national tax
system and tariffs system.54 All of those factors are truly important to the
access to medicines. Here it is not denying the existence of those factors
and would like to discuss them later under the national context. The
standpoint of the thesis is that the acceptance of those factors does not mean
that their effects naturally override the impacts of the patent protections.
There is no doubt of IP is not the only reason causing the lack of access to
medicines. IP as the incentive to innovation and legal interests granted to
the right holders deserves the respect and protection. It’s not only well
practice its good functions in the developed countries but also will assist the
development of the middle and low income countries. To the most
developed countries with the well structured IP protection regime and
welfare social system, IPRs do not bring such harmful influence. However
to the less-developed world countries, the over-extent IP protection is not fit
to their economic development level. Lacking experience of establishing an
appropriate extent of IP protection within different industries can result in
the reverse impact to the human right, such as access to medicines. The
point is that countries especially the developing countries need to adopt
appropriate IP legal protection to improve access to medicines but not harm
it, those IP policies and rules must be in harmony with fulfilling the right to
health as the objective. The IP regimes should not run to counter their
public health policies and they should be consistent with and supportive of
such policies. Find out the balance point of the two rights are the key to
solve the conflict.
53
54
Supra 47, p34-64.
Supra 47, p34-64.
22
2.5 States obligations on balance the
rights
Regarding how for a state to balance the protection extent on those two
rights, the statement by the Committee on Economic, Social and Cultural
Rights on HR & IP (2001) observes “International rules concerning
intellectual property should not necessarily be uniformed if this might lead
to forms of intellectual property protection inappropriate for development
goals”55. It also notes fundamental importance of integration HR norms into
enactment and interpretation IP law. In paragraph 12 it emphasizes “that
any intellectual property regime that makes it more difficult for a State party
to comply with its core obligations in relation to health, food, education,
especially, or any other right set out in the Covenant, is inconsistent with the
legally obligations of the State party”56 So it is important for state to make
official statement indicating need for IP standards it conforms with be
consistent with its HR obligations, to review and amend all national patent
laws to make them consistent with a human rights approach.
Besides of those states internal obligations, other concerning
obligations for other countries are also should not be overlooked.
Maastricht Principles on Extra-Territorial Obligations was drafted 2011 by
group experts in international law & HR convened by Maastricht centre for
Human Rights & International Commission of Jurists. The Central
provision of which is that all states must take action separately and jointly
through international cooperation to refrain from conduct which nullifies or
impairs enjoyment and exercise of economic, social and cultural rights.
Obligation for states is that take necessary measures ensure non-state actors
in position regulate, including transnational companies and business
enterprises not nullify or impair enjoyment economic, social and cultural
rights in other states. 57 Given the TRIPS-plus provisions are with the
danger of potentially restricting the generics entry into markets for the
developing countries, developed countries have the obligation of refraining
from imposing those provisions in Free Trade Agreements (FTAs) or
multilateral agreements to other countries, such as China.
55
Substantive Issues Arising the Implementation of The International Covenant of
Economic, Social and Cultural Rights, Human rights and intellectual property Statement
by the Committee on Economic Social and Cultural Rights, E/C.12/2001/15,14
December 2001, para15.
56
Id,s para12.
57
Maastricht Principles on Extraterritorial Obligations of States in the area of Economic,
Social and Cultural Rights, 28 September 2011, article 19-24.
23
3. Overview of Medical Patent
in China
Since China joined WTO in 2001, on one hand the country has made
an amazing progress in developing the intellectual property system at both
the domestic and international levels. As China prepared to join the WTO
in the late 1990s and early 2000s, it undertook a complete overhaul of its
intellectual property system, amending its copy right, patent and trademark
laws for conforming to TRIPS Agreement.58 The amendments achieved two
different goals. Internationally, they addressed the concern of the WTO and
many of its members, in particular the United States, over inconsistent
standards for the protection and enforcement of IPRs. Domestically, they
provide timely and much-needed updates to the Chinese IP system. They
enabled the country to make legislative and policy adjustments that directly
responded to the rapidly-changing economy while providing a platform for
enhancing technological and innovative capabilities. Today, the country is
already among the tops five countries filing patent applicants through the
Patent Cooperation Treaty. In 2011, the number of these applicants
increased by 33.4% to 16,406, earning China the fourth spot, behind the US,
Japan and Germany. On the other hand, China continues to struggle with
the protection and enforcement of IPRs. Every year, the country finds its
way onto either the Watch List or Priority Watch List in the Section 301
Report released by the United States Trade Representative. Given the
massive piracy and counterfeiting problems in China, in 2007 the US filed
its complaints against China on its measures affecting the protection and
enforcement of IPRs before the WTO Dispute Settlement Body (DSB).
Finally China prevailed on the first claim concerning the threshold for
criminal procedures and penalties, the US won the last claim concerning the
denial of copyright protection to works that have not been authorized for
publication or dissemination within China. It is worth noting that China was
able to defend its position admirably before the DSB and following the
WTO panel decision it quickly amended both its Copyright Law and
Customs Regulations to bring them into conformity with the TRIPS. Even
though the WTO panel ultimately found some of Chinese laws inconsistent
with the TRIPS, it was important for China was able to score some
important points in the panel report, where underscored both the importance
of having minimum standards and flexibilities in the TRIPS and rejected the
use of bilateral, plurilateral or regional trade agreements to divine meaning
in the TRIPS language.59
In recent years, an increasing number of developing countries have
successful used the flexibilities, which provided by the TRIPS Agreement,
to lower the drug costs in order to improve the accessibility to essential
58
Peter K. Yu, From Pirated to Partners: Protecting Intellectual Property in Post WTO
China, American University Law Review, 55, p901-1000.
59
Peter K. Yu, The First Decades of TRIPS in China, p1-8.
24
medicines by facilitating the local production or importing the generic
medicines. However, many countries have not yet amended their national
laws to fully incorporate the TRIPS flexibilities provisions. Furthermore, an
increasing number of bilateral and regional FTAs include intellectual
property protection demands that exceed the minimum standards of the
TRIPS Agreement, which can hamper the performance of the flexibilities.
This chapter would review the legislation of Chinese patent laws and check
if they have adopted the TRIPS flexibilities already? The main aim of this
part is to see how the laws are provided and enforced by the authorities and
how much of the TRIPS flexibilities actually being practiced for improve
the Chinese public health situation.
3.1 Medical patent legislation
This part would focus on the legislation review of two patent-relevant
laws. They are Patent Law of People’s Republic of China60 and Measures
on Compulsory License for Patent Exploitation in China. 61 The most
common TRIPS flexibilities provisions and the significant changes of the
new versions would be presented in this part.
3.1.1 Patent Law
China has established a comparatively comprehensive intellectual
property rights laws system to protect the pharmaceutical industry,
including granting patent, trademark protection and trade secret etc. Within
those measures, the most effective way is by granting the patent protection.
Patent law in the modern mainland China began with the promulgation
of the Patent Law of the People’s Republic of China in 1984. Since then
China has amended its Patent Law for three times: first time was in 1992,
then again in 2000, and the most recently was in 2008.62 The 1984 Patent
Law amendment started granting patent protection on medical manufacture
process and the 1992 amendment started granting patent protection on the
medical products. The 2000 Patent Law amendment affected little on it.
Since China joined the WTO in 2001, it started to be a member of the
TRIPS agreement. To comply with its international obligation and adapt to
the changes brought by the Doha Declaration, along with the effects of
TRIPS Amendment brought to the member states and international
pharmaceutical industry, the 2008 Chinese Patent Law amendment adds
new provisions in order to carefully striking a balance between the interests
of patent holders and the public health. Concerning the medical patent the
60
Patent Law of the People’s Republic of China, Adopted at the 4th Meeting of the Standing
Committee of the Sixth National People’s Congress on March 12, 1984, amended on
December 27, 2008.
61
Measures on Compulsory Licensing for Patent Exploitation, promulgated on 15 March
2012 and implemented on 1 May 2012.
62
See “Patent law of the People’s Republic of China”, Wikipedia Website, available at
http://en.wikipedia.org/wiki/Patent_law_of_the_People's_Republic_of_China(Search
date: 23/10/2012).
25
main changes of these stipulations in the latest amendment can be found
below. And the problems or the flaws of the provisions would be also
discussed.
3.1.1.1 The restriction of using genetic resources
With the increasing number of patent applications of genetic
technologies, the 2008 Patent Law tries to regulate the patent right relating
using genetic resources to prevent the abuse of such rights. Article 5 of the
2008 Patent Law provides that no patent right shall be granted if an
invention is based on genetic resources obtained or used in violation of any
laws or administrative regulations.63 That provision is responding to Article
27.2 of the TRIPS Agreement, where provides that "Members may exclude
from patentability inventions, the prevention within their territory of the
commercial exploitation of which is necessary to protect public order or
morality…”. We can find that the 2008 Patent Law sets out a general
reference of "laws and regulations" instead of “public order and morality” in
the TRIPS, regarding which specific laws and regulations the further
clarification is in need for avoiding the misunderstandings.
Besides, Article 26 of the Patent Law requires the applicant to disclose
and to explain the direct and original source of the genetic resource. If the
applicant is not able to disclose the original source, the applicant must
provide the reasons.64 This obligation is in line with international trend of
introducing such disclosure obligations. For example, the Swiss Patent law
of 2008 includes such a disclosure obligation. In addition, 110 WTO
members, including China, had proposed in the Doha negotiations in July
2008, to consider including a disclosure obligation in the TRIPS Agreement.
The disclosure obligation is welcome at the same time for a better
transparency in the access and benefit sharing of genetic resources,
according to the Convention on Biological Diversity and the Bonn
Guidelines on Access and Benefit Sharing. It is also believed that this
disclosure obligation will improve the patent examiners' work performance.
However, Article 26 triggers many questions on its implementation. How
will the “direct source" and "original source" be defined? Which reasons
would be acceptable for not disclosing the original source? Such questions
may cause the implementation uncertainties and life sciences companies
need to keep a close eye on this issue to ensure these requirements are
complied with when they apply for a patent.65
Article 5, para2, Patent Law of People’s Republic of China (2008 Revision), Amended
for the third time in accordance with the Decision of the Standing Committee of the
Eleventh National People's Congress on Amending the Patent Law of the People's
Republic of China, adopted at its 6th Meeting on December 27, 2008, and shall enter into
force on October 1, 2009.
64
Id, Article 26.
65
Shruti Bhat, New Chinese Patent Law: What Does It Mean For Life Sciences
Companies?
February
6,
2011,
available
at:
http://pharmaceuticalpatents.blogspot.se/2011/02/new-chinese-patent-law-what-does-it.html (Search date:
26/10/2012).
63
26
3.1.1.2 Heightened patentability standard
Under the 2000 Patent Law, the novelty was not considered to be
destroyed if an invention had already been used in foreign countries, as long
as it had not been used in China or published anywhere in the world before
its filing in China. However according to Article 22 of 2008 Patent Law,
“novelty” means that the invention or utility model is not belong to the prior
art, which is also called “absolute novelty”. Meanwhile, prior to the date of
filing, there shall no other person filed an application for the identical
invention or utility model with the patent administration department under
the State Council, which was recorded in patent application documents
published after the said date of filing or in patent documents announced.66
This provision no doubt requires a higher pharmaceutical research and
development capability. When we see the issue in India, we can find that its
national patent law makes it is tougher to get a patent on new forms of
existing medicines. The famous Article 3 (d) of Indian Patents Act is aims
at fighting the “evergreen” of patents. 67 The law was designed with the
social objective of stopping drug giants from a common abusive patenting
practice in the pharmaceutical industry aimed at filing and then obtaining
separate patents relating to different aspects of the same medicine. The
requirement needs that the new version of the patented medicine must have
a big improvement on the curative effect. Otherwise the new version drug
cannot be granted by patent protection. Compare to India, Chinese medical
patentability is still not strictly enough which causes the foreign medical
patent right can keep longer time than it is supposed to be and hinders the
generics coming to the market. 68 So China should raise the medical
patentability standard to stop some medicines that are only with small
changes to be granted of patent protection, by which way to encourage the
generic drugs being produced and reduce the expenditure on patented
medicines.69
3.1.1.3 Compulsory licensing
According to Article 48 of the 2008 Patent Law, the State Intellectual
Property Office of the People’s Republic of China (SIPO) may, upon the
request of the entity or the individual which is qualified for exploitation,
grant a compulsory license to exploit a patent for an invention or utility
model, when the patentee has not or not sufficiently exploited the same,
without any justified reason, within three years from the grant of the patent
right or four years from the date of filing such patent. A compulsory license
can also be granted in order to avoid or eliminate the adverse effects caused
66
Supra 63, Article 22.
The Patents Act, 1970, as amended 2005 (15 of 2005), dt 4-4-2005,
availableat:http://nbaindia.org/uploaded/Biodiversityindia/Legal/14.%20The%20Patents
%20Act,%201970.pdf (Search date: 26/10/2012).
68
Hu Yuanqiong, Responses from China Access to Medicines Research Group, Informal
Interactive Hearing of the General Assembly with Non-June 14-15,2010, New York, p3.
69
Elliot Hannon, How an India Patent Case COULD Shape the Future of Generic Drugs,
Time World, August 21,2012, available at: http://world.time.com/2012/08/21/how-anindian-patent-case-could-shape-the-future-of-generic-drugs/ (Search date: 26/10/2012).
67
27
to the competition in cases that has been legally determined that the
enforcement of the patent right by the patentee constitutes a monopolistic
act.70 Besides, Article 50 for the first time allows the grant of a compulsory
license to manufacture medicine that has been granted patent rights in China
and export it to countries or regions that conform with the relevant treaties
which China is a signatory, with the aim to protect public health.71 It is the
application of the TRIPS flexibility to ease the conflict between the IPRs
and public health crisis. However there has no one compulsory license case
issued yet. And the thesis would discuss the reasons in detail later.
3.1.1.4 Bolar Exemption
In order to market a medicine product a manufacturer must first obtain
the regulatory approval by conducting clinical tests and trials to prove that
the product is safe and effective. Producers of generic medicines are able to
use the original manufacturer’s approval if they can demonstrate that the
generic version is bioequivalent to the approved medicine. However, the
generic producer runs the risk of patent infringement if they conduct clinical
trials on a patented drug. With the “Bolar” exemption these necessary
studies, tests and trials will not amount to patent infringement. 72 So
basically it is an exemption to a patent right that allows a third party to
undertake, without the authorization of the patentee, acts in respect of a
patented product that are necessary for the purpose of obtaining regulatory
approval for a product.
Bolar exemption is also called “FDA Exception” and originated in the
American case of Roche Products Inc. v. Bolar Pharmaceuticals. In that
case, carrying out activities for the purpose of obtaining regulatory approval
for the generic version of a patented drug was held as an act of patent
infringement. After that, the US patent law was amended to include the socalled “Bolar Amendment” as part of the Hatch Waxman Act, exempting
such activities from infringement. Following the US, the EU introduced a
similar provision in 2004 in Directive 2004/27/EC. It also introduced a
eight-year period of data protection plus a two-year period of marketing
protection, which means that a generic drug cannot be placed on the market
until 10 or more years have elapsed from the initial authorization of the
patented drug. This abridged procedures and the Bolar exemption provision
are established for compromising each other’s interests between
pharmaceutical industry and generic manufacturers.73
In Chinese Patent Law, “where for the purposes of providing
information needed for the regulatory examination and approval, any person
makes, uses or imports a patented medicine or a patented medical apparatus,
70
Supra 63, Article 48 (1)(2)
Id, Article 50.
72
The Bolar Exemption, Intellectual Property Office, available at:
http://www.ipo.gov.uk/pro-types/pro-patent/p-policy/p-policy-pharmaceutical.htm
(Search date: 26/10/2012).
73
Dr Gwyn Cole, Exemption from Infringement: the EU Bolar Directive, IP Europe
Quarterly, June 2012.
71
28
and where any person makes, imports the patented medicine or the patented
medical apparatus exclusively for such person”, which as the Bolar
exemption, is excluded from the infringement of patent right under the
Article 69 (5) of the Patent Law. Unlike the EU Bolar exemption clause,
which literally limits the purpose of the Bolar exemption to an abridged
application process for generics, the Chinese Bolar exemption is more likely
to be applicable for new drugs.74 And it is also interesting to note that the
Bolar Exemption in the new patent law is not combined with possibility of
extending the term for patent protection as it is usually provided for in the
patent legislation of other countries in order to balance the different interests
involved.75
This provision is also consistent with the Article 19 of the Drug
Registration Regulations (2007), which says that “for a drug patented in
China, applicants other than the patentee may submit the application for
registration two years prior to the expiry date of the patent. The State Food
and Drug Administration (SFDA) shall review the drug application in
accordance with the provisions, and after the expiry date of the patent, check
and issue the drug approval number, Import Drug License or a
Pharmaceutical Product License if the application conforms to the
provisions.”76 Before the establishment of the Bolar exemption by the 2008
Patent Law, when genetic producers was trying to utilize the Article 19 of
the Regulations (2007) handing the applications, the infringement lawsuits
were always brought up by the patentees. And the clearly legal basis can be
found and applied in such cases today. With shorting the application time
spent on clinical trial, the provision of the Bolar exemption can be seen as
encouraging the production of generics in order to reduce the price of the
patented medicines and improve the accessibility of medicines.77
3.1.1.5 International exhaustion of rights
The exhaustion doctrine, also referred as the first sale doctrine, means
once a patented product has been marketed either by the patentee or his
consent, the IP rights of commercial exploitation over this given product can
no longer be exercised by the patentee, as they are exhausted. International
exhaustion of rights means that the patent owners’ patent rights had
exhausted internationally once the product has been sold by the IP owner or
with his consent in any part of the world. The international exhaustion of
rights principle is the prerequisite of parallel importation. On the contrary,
domestically exhaustion principle as against the parallel importation does
not allow the IP owner to control the commercial exploitation of goods put
74
Id, Bolar Exception.
Third Revision of China’s Patent Law, Legal texts and documents on drafting process,
EU-China IPR2 Project, p5-6,available at:
http://www.lexisnexis.com/documents/pdf/20100211022732_large.pdf (Search date:
26/10/2012).
76
Article 19, Provisions for Drug Registration, available at:
http://www.shfda.gov.cn/gb/node2/node3/node2045/node2050/userobject1ai21290.html
(Search date: 26/10/2012).
77
Yafei Gao, The Conflict And Coordination Between Biological Pharmacy’s Intellectual
Property Protection And Public Health (In Chinese), Oct 2011, p20-30.
75
29
on the domestic market by the IPR owner or with his consent after the first
sale, but the IP owner (or his authorized licensee) could still oppose the
importation of original goods marketed abroad based on the right of
importation. 78 Accordingly, under the domestically exhaustion principle
parallel importers’ importation of patented products conduct constitutes an
infringement to the patent owners’ patent rights in the imported countries.
The doctrine of “international exhaustion” can be interpreted by both
theories of jurisprudence and economics. From the former perspective,
international exhaustion principle aims to balance the public and private
right in terms of the intellectual property right protection. Since the IPR is
with exclusivity and territoriality features, the private privilege right should
not overrule the public right development; from the latter perspective,
international exhaustion can be seen as a restriction of IPR to suppress the
negative side of IPR such as monopoly, which believes the principle is to
dissolve the conflict between IPR’s exclusivity and commodity’s free
circulation. While some interpretations of the interests reward perspective
that they consider the interest reward of the IPR has been realized after the
first manufacture of selling. The function of the IPR has been fulfilled so
the patentee could not continue controlling the intellectual product.
Otherwise it would hinder the commodity circulation and danger the public
interest.79
In China, Article 63(1) of the old Patent Law allowed “after the sale of
a patented product that was made or imported by the patentee or the
authorization of the patentee, or of a product that was directly obtained by
using that patented process, any other person uses, offers to sell or sells the
product”. 80 Nevertheless people hold different understandings on this
provision. Some believed this provision actually admitted the international
exhaustion while others argued that hereby “sell” meant within the country
and it adopts the domestically exhaustion. So at that time the old Patent
Law did not provide the certainty legal basis for international exhaustion
and parallel importation.
According to Article 69 of the new 2008 Patent Law which provides a
series of exemption of circumstances that shall not be considered as
infringing upon a patent right. Hereby parallel importation will not
constitute patent infringement after the product first entered into the
international market with the authorization or consent from the patent owner,
78
International Exhaustion and Parallel Importation, World Intellectual Property
Organization, available at:
http://www.wipo.int/sme/en/ip_business/export/international_exhaustion.htm (Search
date: 26/10/2012).
79
Principles of Right Exhaustion (权利用尽原则), available at : http://wiki.mbalib.com/zhtw/%E6%9D%83%E5%88%A9%E7%A9%B7%E7%AB%AD%E5%8E%9F%E5%88%
99 (Search date: 26/10/2012) (In Chinese).
80
Article 63(1), Patent Law of People’s Republic of China (2000 Revision), adapted at
the17th Session of the Standing Committee of the Ninth National People’s Congress on
August 25,2000, and announced by Order No.36 of the President of the People’s
Republic of China.
30
which can be found in Article 69(1). Such international exhaustion will
reduce the scope of the patent law protection in China because patent
holders’ rights will be exhausted once the product is sold in another country.
Regarding to the exportation, complying to the confirmation of crossboundary compulsory licenses provided in the TRIPS Amendment, Articles
50 and 53 of the 2008 Patent Law stipulates that for the purpose of
promoting public health where without a manufacture capacity, patented
medicines can be manufactured and exported with the compulsory license
granted by the patent administration department to the Least Developed
Countries (LDCs) and other WTO member states who express the need to
import the medicines according to the relevant provisions of the
international treaties.81 The concerning compulsory license regulations can
be found under Articles 13 and 23 of the Measures on Compulsory License
for Patent Exploitation.82 But the legislation is lacking of the provisions
regards how to regulate the parallel importation and exportation to avoid
that the imported medicines to be re-imported into other countries because it
would affect the interests of the patients who needs cheaper medicine in the
imported counties.
So we can conclude that 2008 Patent Law by legislation actually
confirms the international exhaustion of rights and provides the legal basis
of parallel importation.
3.1.2 Measures on Compulsory License for Patent
Exploitation (2012) (the new Measures on CL)
Compulsory licensing (CL) is when a government allows a third party
to produce the patented product or process without the consent of the patent
owner. It is one of the flexibilities to the patent protection included in the
TRIPS Agreement.83
The new Measures on CL issued by the SIPO on March 15, 2012 and
came into force from May 1, 2012. Meanwhile the previous Measures on
Compulsory Licenses for Patent Exploitation were promulgated in 2003 and
Measures for Compulsory License on Patent Implementation concerning
Public Health Problems promulgated in 2005, both of which were expired
since then.84 With the higher and higher voice from the patients and NGOs
on asking for cheaper drugs, especially on the case of the unaffordable
expensive ARV second line drugs for curing HIV/AIDS of which the patent
rights are held by foreign pharmaceutical companies, the purpose of this
new Measures on CL is to promote the compulsory licensing in
pharmaceutical industry and trying to benefit the public health.
81
Supra 63, Article 50 and 53.
Supra 64, Article 13 and 23.
83
Compulsory Licensing of Pharmaceutical and TRIPS, World Trade Organization,
available at: http://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm
(Search date: 26/10/2012).
84
Supra 64, Article 43.
82
31
In the 2003 Measures, the circumstances where a person could apply
for a compulsory license were: (1) it had been unable to obtain a license
after a reasonable period of negotiation based on fair and reasonable terms,
if the implementation of an invention or utility model which constitutes a
significant progress had to rely on the implementation of a patent previously
granted; (2) in situation where public health is concerned; (3) in a states of
emergency.85 The 2012 Measures creates two more grounds : (1) the patent
has not been used for three years from the time of grant, or four years from
the time of application and (2) the act of claiming the patent right is
considered as a violation of anti-monopoly law. And regarding the public
health, the field is significantly widened. 86 In the 2005 Measures, it was
limited to contagious diseases. Under the new Measures on CL, the
contagious-disease restriction is gone.87
3.1.2.1 The changes in the new Measures on CL
Comparing to the old version, there are some important changes can be
found in the new Measures.
1) New Measures on CL cancels the charges of compulsory license
application fee and verdict fee for the compulsory license royalty.
That means there is no fee to be charged when applying compulsory
licenses and to some extent the cost for the requesters is reduced.
2) The SIPO should notify the requester and the patentee of its intention
to grant the compulsory licenses or not and the grounds for it before
it makes a decision, which is stipulated under the Articles 21 and 39
of the new Measures on CL.88 These new provisions give the two
parties a second chance to state their opinions and need SIPO to
make the decisions with the consideration of the parties’ adequately
through cross-examining the evidences.
3) Article 11 in accordance with Articles 48 and 51 of the Patent Law,
requiring the requester shall provide evidence to prove that or the
effective judgment or decision issued by a judicial organ or antimonopoly law enforcement agency determining that act of exercising
the patent right by the patentee is monopolistic behavior. 89 This
provision to some extent burdens the requester’s responsibility on
providing evidences. But on the other hand it shows the necessity,
rationality and legality when SIPO issue the compulsory licenses.
85
Article 4, Measures on Compulsory Licensing for Patent Exploitation, Oder No.31 of the
State Intellectual Property Office (Implemented on 15 July 2003).
86
Supra 64, Article 5.
87
Zhang Yan, New measures for compulsory licensing of patent, effective since
May1,2012, June 25 2012, available at:
http://www.lexology.com/library/detail.aspx?g=bef0d960-d8ae-4849-87502303eb70d982 (Search date: 23/10/2012).
88
Supra 64, Articles 21 and 29.
89
Id, Article 11.
32
4) Under the Article 26 (3) the SIPO shall not accept the request for the
adjudication of royalties on compulsory licensing if the two parties
have not conducted any negation or they have reached an agreement
through negotiation. 90 This provision highlights the private law’s
autonomy principle.
5) Respect to dismissing the request for compulsory licensing, the new
Measures adds the circumstance under Article 20 (5) that when the
reasons, information or the relevant supporting documents provided
by the requester are inadequate or untrue.91 It seems help requesters
to understand the standards of qualified application documents. But
meanwhile the requirement of “adequate” should be further clarified
by the SIPO to avoid the situation that application is refused by any
ambiguous interpretations.
6) The Articles 7, 23 and 24 add the regulations on patent compulsory
licenses concerning about the public health in accordance with the
Article 50 of the Patent Law. These provisions provide the detailed
description, such as the importing countries and areas, the quantity,
package and shipping of these compulsory licensed medicines and
the competent department under the State Council shall inform these
to the WTO.92 These provisions are pursuant the Implementation of
Paragraph 6 of the Doha Declaration on the TRIPS Agreement and
public health. The relevant definitions and procedures are mostly
complying with the decisions made by the General Council, which
indicates China’s willingness to practicing the international
obligations requested by the WTO.
7) Compared to the previous version of Measures on CL, the provisions
concerning about the requesters and terms in the new Measures is
more detailed clarified and with better enforceability. Such as
pursuant the Article 4 a foreigner or a foreign enterprise or any other
foreign organization having no habitual residence or place of
business in China shall entrust the matters to a legally established
patent agency when handling the compulsory licensing related
matters. 93 Article 9 clearly states the matters that should be
contained in filing a request for compulsory license by the entrusted
agency, which instead of the nationality or headquarter location
standard in the old Measures. The terms for requesters and patentees
to state their opinions can be found under the Articles 16, 27 and
35.94
Over all the new Measures on CL is more appropriate on the provisions’
structure arrangement and logicality. It also clarifies some questions existed
90
Id, Article 26 (3).
Id, Article 20 (5).
92
Id, Articles 7, 23, 24.
93
Id, Article 4.
94
Id, Articles 9, 16, 27, 35.
91
33
in the old version and is in line with the 2008 Patent Law, which can be seen
as the enforcement instruction on the compulsory licensing with providing a
better operability.
3.1.2.2 CL issued to promoting public health by other
countries
Compulsory licenses have previously been issued in the region by
Malaysia, Indonesia, Thailand and India. It has also been issued on multiple
occasions by the developed countries including the U.S. and EU member
countries.95
To battle the AIDS, Thailand government pursuant the Article 51 of
the National Patent Law promulgated the first order on compulsory license
in November 2006, which granted the governmental medical organization
right to produce Efavirenz (EFV, Merck patented medicine) generic and it
made the cost of AIDS treatment dropped by half. Following in January
2007, the government continue issued two more compulsory licenses, one is
the 2nd line drug to anti-AIDS and the other is for anti-heart disease, both of
whose patent rights were belonged to foreign pharmaceutical companies. In
the same year, the government signed four ministerial announcements to
compulsory license of Letrozole, a breast cancer medicine produced by
Novartis, the breast and lung cancer drug which is called Docetaxel by
Sanofi-Aventis and Roche's Erlotinib, which is used for treating lung,
pancreatic and ovarian cancer. 96 In March 2008, three more compulsory
licenses on cancer drugs were approved again by the government.
The similar cases are also easily found earlier in other Asian countries.
Facing the challenges of HIV/AIDS in terms of the provision of ARV drugs,
in 2003 Malaysia became the first country of applying the TRIPS
flexibilities, following the adoption of the Doha Declaration, to issue the
compulsory licenses and succeeded to import ARV generic from an Indian
producer Cipla and being used in governmental hospitals. The cheaper
generic drugs enabled the government to treat many more patients within
the same budget. Following this, Indonesia in 2004 also issued a
Presidential decree enabling the production of some HIV/AIDS drugs. The
news came out on 12, March 2012 and said that India generic produced
company Netco got the compulsory licensing on anti-cancer drug Nexavar,
patented right owned by Bayer. The price is decreased by 97%, from 5,500
USD for 120 tablets to 175 USD.97
95
Para3, China Revises Law to Facilitate Compulsory Licenses for Generic Medicines,
June 11, 2012, available at: http://infojustice.org/archives/26344 (Search date:
26/10/2012).
96
Compulsory licensing of cancer drugs in Thailand, TWN info Service on Health issues
(Feb 8, 2010) available at:
http://www.twnside.org.sg/title2/health.info/2008/twnhealthinfo20080201.htm (Search
date: 26/10/2012).
97
Indian Company Acquires Rights To Copy Generic Cancer Drug, FOLKS HEALTH,
Mar 14th,2012, available at http://www.folkshealth.com/blog/2012/03/14/indiancompany-acquires-rights-to-copy-generic-cancer-drug-indian-company-acquires-rightsto-copy-generic-cancer-drug/(Search date: 26/10/2012).
34
With the big HIV/AIDS patient’s population in Brazil, the government
was attempting to negotiate a price reduction with Merck since November
2006. It warned Merck that unless Brazil could buy Efavirenz at the same
price offered to the Thai government, otherwise it would issue a compulsory
license. Then in 2007 the Brazilian government rejected Merck’s offer of a
30% price reduction, and proceeded to issue a compulsory license allowing
the import of generic version of Efavirenz after the drug’s patent holder
failed to match the 60% price reduction requested. By reducing the price
from 1.56$ per day to 0.45$ by buying Indian generic products prequalified
by the WHO, the Brazilian government expected to save 30 million USD in
2007 and 237 million until 2012. Thanks for the generic the deaths of AIDS
has been reduced by half and the patients time in hospital has been
shortened by 75% due to the cheaper generic.98
From the above we can see, with the background of pharmaceutical
field monopolized by the developed countries’ pharmaceutical corporations
making use of the medical patent rights, their objectives of pursuing the
huge profits drives the medicines’ prices go much higher than the people
can afford, which is more obviously in developing countries. The way to
counter the disadvantageous effect of the patent right is that governments
should apply the compulsory licenses as adopted by the TRIPS and that was
also confirmed in Doha declaration. Raising that as a strategy can reach a
negotiated discount on the drugs in need. That can ease the negative impact
that the patent protection brings to the access to medicine. We can see the
results of a great improvement on promoting public health has been
achieved in the above countries.
In addition we should never forget the compulsory licensing actually
can not only be applied by the developing countries and LDCs. When
epidemics occurred in the developed countries, the governments also
threatened the foreign medical patent holders with issuing CL for the
cheaper and continuing provision. We can know that from the cases of
Canada and the US.
After the 911 in 2001, Canada found the terrorism event by
disseminating anthrax through mails. Under that circumstance, the demand
of drugs for anti anthrax virus-Cipro was greatly increasing. However the
patent of Cipro in northern America was hold by a German company Bayer.
Facing the high price and the big demand of Cipro, Canada government
decided to grant the compulsory license and commissioned a local drug
company to make Cipro. Bayer responded by donating a large amount of
Cipro to Canada, and promised to offer more in the case of an emergency,
which led the Canadian government to agree to acquire ciprofloxacin
exclusively from Bayer for the duration of the patent agreement. Sparked
by the Canadian case, the US government also threatened to override the
98
Keith Alcom, Brazil Issues Compulsory License on Efavirenz, May 07, 2007, available
at: http://www.aidsmap.com/Brazil-issues-compulsory-license-onefavirenz/page/1427206/ (Search date: 26/10/2012).
35
Bayer’s patent on Cipro. And finally the agreement of reducing price by
half, from 1.77 $ to 0.95$ per tablet, was reached between the government
and Bayer.99
In fact some experts believed the reason of the US’s compromise on
giving up issuing CL in the above case was because it was reluctant this
precedent to make other countries using CL to restrict IPRs. And it is not
hard to find that the US government’s action on Cipro is in stark contrast to
US trade pressure on asking the less-developed countries to limit their
exercises on CL and parallel importation. For example, in 1998, under the
US threat of increasing tariffs on imports of wood products and jewellery,
the Thai government limited its attempt to issue the compulsory licenses on
the pharmaceuticals.100 The US action of overprotecting IPR in the world
with the measures of trade sanction has been criticized by less-developed
countries, international and regional NGOs for long time.
3.2 Enforcement of the TRIPS flexibilities
The study from Commission on Intellectual Property Rights Innovation
and Public Health in 2005 found that the use of TRIPS flexibilities can
promote access to medicines in developing countries and most of the
developing countries their laws and practice actually had incorporated one
or more of the TRIPS flexibilities. There has been an increasing adoption of
the flexibilities such as CL for the public health purposes by the countries.
However the study also found there remain the big gaps in terms of
legislation and enforcement of the flexibilities, which need to be addressed
so that the TRIPS flexibilities could be used effectively across the
developing world.101 After exam the enforcement of the flexibilities we can
find that China is one of those countries without the efficient usage of the
flexibilities.
3.2.1 Transition periods
The TRIPS Agreement took effect in January 1st, 1995 and provides 10
years transition period on medical patent right protection to the developing
countries until January 1st, 2005.102 The 2001 Doha Declaration extended
the period for the least developed countries until January 1st, 2016 for the
pharmaceutical patents.103
99
Patent protection versus public health, The Lancet, Vol 358, p1563, 10 November 2001,
available at: http://www.lancet.com/journals/lancet/article/PIIS0140-6736(01)066338/fulltext (Search date: 26/10/2012).
100
Id.
101
Sisule F. Musungu, Cecilia OH, The Use of Flexibilities in TRIPS By Developing
Countries: Can They Promote, Access to Medicines?, CIPIH, study 4c, August 2005
102
Article 65.2 and 65.4 of the TRIPS Agreement.
103
Frequently asked questions about TRIPS in the WTO, available at:
http://www.wto.org/english/tratop_e/trips_e/tripfq_e.htm (Search date: 26/10/2012).
36
Take an example of India, before 2005 India only provides protection
on medical produce methods. Hence many Indian pharmaceuticals could
produce a number of foreign patented medicines. Although since 2005
India started providing patent protection on medicines, the approval
requirement was still very strict and many patent applications from the US
and the EU companies were being rejected. The generic price of only 1/10
of the original patented medicine in Indian was attributed by this measure.
And thanks for that, many developing countries’ governments, the United
Nations Children’s Fund and many other international organizations could
order the cheap efficient generic from India. Because of that India is given
a name as “the pharmacy of the developing countries”.
When we talk about this issue in China, same as a big developing
country China was also entitled with the 10 years transition period granted
by the WTO. However, the non-patentability of medicine provision was
cancelled as early as in 1992 Patent Law Amendment. That means China
started providing medical patent protection many years before its join of the
WTO in 2001 and it had satisfied the requirements set out by the TRIPS.
Because of this, Chinese generic producers could not manufacture the
generics and China lost the chance of enjoying the benefits granted by the
transition period on the medicines patent.
It is not hard to imagine that in order to join the WTO that China had
waited for 15 years since the first time application in 1986. So when facing
the potential economic development opportunity brought by joining the
WTO while the public health might be restricted through offering higher
medical patent protection, the Chinese government was reluctant to lose the
opportunity of joining WTO.
3.2.2 The difficulties on issuing CL
Regarding the CL provision in China, we have found the existence of
the specific legislation and the legal instruments concerning CL as reviewed
in the above part. The provision of compulsory licensing on patent was
promulgated as early as 2003, but until today there has not one successful
case of compulsory licensing issued by the Chinese government.
In March, 2008, 1,843 patients with HIV/AIDS and Hepatitis B
together with the AIDS and Hepatitis health organization sent a letter to the
State Health Ministry, the SIPO, the National Center for Disease Control
and Prevention, the SFDA and other sectors appeal for issuing the
compulsory license on Lamivudine (3TC), which is a drug recommended by
the WHO to use for 1st and 2nd line HIV/AIDS and HBV treatment. But it
did not raise the relevant departments’ sufficient attention on this issue and
the patients’ expectation for accessing cheaper drugs was in vain. In
November 2009, Guangzhou Bai Yun Shan Pharmaceutical General Factory
submitted an application to SFDA for an acceptance of registering in
advance and hoped to start the compulsory licensing procedure and produce
37
generic Tamiflu (patent right owned by Gilead Sciences, a Swiss company),
but they did not succeed in the end neither.104
Regarding the hurdles on compulsory licensing implement in China,
the thesis finds the below reasons can be summarized:
3.2.2.1 Local medical manufactures
In China, in order to legally produce generic, domestic manufacturers
should first submit the application of compulsory licensing to the SFDA and
the Ministry of Health (MOH), and then the MOH need to apply the license
from the SIPO with the advocacy of promoting public health. The
motivations of the domestic manufacturers to do so are inadequate. This
unwillingness is because they believe the application procedure would be
complex and the approval is time consuming. It might take a few years until
get it at the time of the patent expired date also coming soon.
The other reason is that the margin profit of producing generic is
smaller than exporting active pharmaceutical ingredients (APIs) to the
multinational pharmaceutical companies, even though afterward the
patented finished products are sold back to China with the prices that the
average Chinese citizen often cannot afford. Besides, as known that China
has a big market and the producers are so many so the cost of copying is
comparatively low while the cost of defending rights by the right holders is
too high. So some producers prefer to make illegal generics without any
licenses since they have the producing capacity than paying the royalty to
the patentees.105
3.2.2.2 Foreign medical patent owners
In 2011, Gilead Sciences has joined the Medicine Patent Pool which
allows pharmaceutical companies to produce the drugs at much lower
prices, and signed up for an agreement allowing for the production of
generic versions of Viread (tenofovir/TDF) on a small payment of royalty in
111 countries, which is the medicine used in combination with other ARV
medicines in 1st and 2nd line for HIV and HBV. However China was in the
excluding list which meant it had to continue paying high prices for TDF.106
The reason is because Gilead considered the big market of needing TDF for
lots of HIV/AIDS patients in China and it also excluded some other
developing counties who are with both a big number of patients living with
HIV and sufficient generic manufacturing capacity. Gilead also limits the
production of medicines to Indian generic firms in the agreement in order to
restrict the competition for avoiding the price of drugs getting reduced. By
Hongzhou Lu, Filling the gap, China’s fight against HIV/AIDS, 09 Sep 2012, available
at: http://www.equilibri.net/nuovo/es/node/2253 (Search date: 26/10/2012).
105
Compulsory in china has no precedent (药品强制许可在中国无先例，有待测试),available at:
http://www.bioon.com/industry/mdnews/520253.shtml (In Chinese) (Search date:
26/10/2012).
106
Yan Ee Lyn, China changes patent law in fight for cheaper drugs, Jun 8,2012, available
at: http://www.reuters.com/article/2012/06/08/us-china-medicines-patentsidUSBRE8570TY20120608 (Search date: 26/10/2012).
104
38
excluding these countries, total five million people living with HIV would
be excluded from the Patent Pool.107 The above case shows that the profit
orientated multinational companies reluctant to give up their exclusive
rights especially for the country like China with a huge market.
3.2.2.3 The Chinese government
China is the same as India and other emerging economies who have
found compulsory licenses necessary. But surprisingly, so far China has not
officially used the flexibility in the TRIPS regime to produce low cost
generic version of patented drugs for the benefit of its people. It even
prohibits the Indian’s generic drugs marketing in China. In June of 2012, a
Chinese newspaper accused the government of pursuing a series of policy
measures in pricing, procurement, and reimbursement that had the effect of
‘protecting foreign firms and suppressing domestic firms’. One senior
Chinese government official said that the MOH did not have strong
incentives to push for issuing compulsory licenses because it did not want to
scare off the direct foreign investment concerning the pharmaceuticals in
China. Instead, the Ministry likely prefers directly and quietly negotiating
with them for the price discounts.
With the eager of attracting foreign investment into its life and science
industry which as one national economic development goal, Beijing is going
to be very careful and not sending the message to the big multinational
pharmaceutical companies that it intends to create market access issues,
mandatory technology transfer, or compulsory licenses.
Given the
slowdown of Chinese economic growth and growing social political
stability concerns, the incentives to encourage foreign pharmaceutical
investment continue to be strong and granting compulsory licenses does not
seem the government first concern regards public health issues.108
3.2.3 Public non-commercial use of patents and
Government use
Although the TRIPS Agreement does not refer specifically to the
government use of patents, it recognizes such use in its references to the
concept of public, non-commercial use and of patents “used by or for the
government”.109 From the negotiating history of the TRIPS Agreement we
could find that Article 31 is intended to cover the non-voluntary use of
patents in the form of both CL and government use provisions. The
distinction between the government-use provision and CL would primarily
107
Gilead granted license to medicines pool, devil is in details, SUNS No.7195, July 21,
2011, available at:
http://www.twnside.org.sg/title2/intellectual_property/info.service/2011/ipr.info.11070.
htm (Search date: 26/10/2012).
108
Benjamin, Why China’s Compulsory Licensing Might Not Be That Bad, October 3,
2012, available at: http://www.asiahealthcareblog.com/2012/10/03/why-chinascompulsory-licensing-might-not-be-that-bad/ (Search date: 26/10/2012).
109
Article 31 of the TRIPS.
39
lie in the nature and purpose of the use of the patent. In the case of
government use, it would be limited to “public, non-commercial purpose”,
whereas CL would also cover private and commercial use. The TRIPS also
leaves the developing countries the policy space to interpret the term of
“public, non-commercial use”. And many patent regimes provide for
government use of patents without the need to grant a CL. In such cases, a
determination by a government agency or minister is generally required to
attest that the government use is justified and is within the terms of the
national law. These government rights are usually framed in broad terms
and are often subject to less procedural requirements than are CL.110
3.2.3.1 Public non-commercial use
To China, Article 11 of the 2008 Patent Law grants patent right holders
the right to prohibit others from implementing their inventions or creations
for production on business purposes. However, manufacturing, using,
offering to sell, selling, or importing the patented products, which are not
for production or business purposes, does not constitute infringement of the
patent, nor does it require to acquire authorization by the patent right
holders. Besides no definitions have been given by the Chinese Patent Law
or Regulations to the “non-commercial”, “commercial” or “private”, nor to
“for production or business purposes” under Article 11 of the Patent Law. It
is generally understood that “for production on business purposes” means
for the purposes of industry or agriculture protection, or for commercial
purposes. It has a wide connotation, and has nothing to do with being
profitable or not, nor with the nature of the actor.111
3.2.3.2 Government use
Article 14 of the 2008 Patent Law provides that if an invention patent
of a State-owned enterprise or institution is of great significance to the
national or public interests, upon approval by the State Council, the relevant
competent departments under the State Council or the people’s government
of the provinces, autonomous regions, or municipalities directly under the
Central Government may decide to have the patent widely applied within an
approved scope and allow the designated units to exploit the patent, and the
said units shall pay royalties to the patentee in accordance with the
regulations of the State.112 This provision had already been expressed in the
Patent Law since 1985, however until today China has not issued it once at
all.
What should be noted is that in the applicable law, the grounds of
granting the government use do not include “national emergency” or
“circumstances of extreme urgency”. Besides the objective of government
110
Sisule F. Musugn, Cecilia Oh, The Use of Flexibilities in TRIPS by Developing
Countries: Can They Promote Access to Medicines? p20.
111
WIPO Program Activities, Exceptions and Limitations, State Intellectual Property Office
of the People’s Republic of China (SIPO), para4- 10, available:
http://www.wipo.int/scp/en/exceptions/replies/china.html (search date: 26/10/2012).
112
Article 14, Patent Law of PRC, Revision 2008.
40
use is only for an invention patent of a State-owned enterprise or institution,
which means that China gives up the right of issuing foreign patented
medicines through the government use.
3.2.4 Parallel importation
Parallel imports are imports of a patented or trademarked product from
a country where it is already marked. For example, in Mozambique 100
units of Bayer's ciprofloxacin (500mg) costs 740 $, but in India Bayer sells
the same drug for 15 $ owing to the local generic competition.
Mozambique can import the product from India without Bayer's consent.
So the practice often takes place when there is differential pricing of the
same product-either brand name or generic drugs- in different markets. The
TRIPS Agreement explicitly states that this practice cannot be challenged
under the WTO dispute settlement system and so it is in fact a matter of
national discretion.113
As one another important TRIPS flexibility, besides of CL, parallel
importation is also welcome to be applied by the states to restrain the
negative impact of medical patent on their public health. For example,
Sweden started practicing drugs parallel importation in 1995, when it
formally joined EU, which allowed the parallel importation within the
European Economy Area. A research showed that parallel importation case
application numbers was increasing from 1 in 1996 to 1,674 in 2005. The
drug’s price index was 175.5 in 1995 and went down to 171.7 in 2004, the
annual growth rate of which wasn’t been raised up but reduced by 0.24%.
Before the adoption of parallel importation, from 1980 to 1995, the annual
drugs price index was 3.8%. This case study of Sweden can reach such
conclusions: that parallel importation can always make a drug price
reduction; the market share rate and approval numbers of parallel imported
drugs makes little effect on the pricing by local producers; there is no
evidence showing that parallel importation can cause negative effect to the
R&D in pharmaceutical industry; and the drugs importation does could
dramatically reduce the individual medical expense growth rate.114
In Chapter 3.1 which is concerning the Chinese patent law legislations
we have found that, principle of international exhaustion of rights as the
legal prerequisite of parallel importation has been adopted. However, the
new Patent Law (2008) does not clarify how exhaustion will apply to
imported products sold outside of China under contractual restrictions. New
issues will require judicial interpretation. The relevant departments are
expected to clarify implementation of parallel importation, as it can be
113
Parallel imports, World Health Organization, available at:
http://www.who.int/trade/glossary/story070/en/index.html (Search date: 26/10/2012).
114
Yu Xiang, Wu Lanfen, The Study of Drug’s Parallel Importation in Sweden and its
inspiration to China, Science Research management, Vol.28, No.1 January 2007,
available at: http://file.lw23.com/8/87/87b/87bfccdd-ec40-4cc7-9d28-ac4c4564742e.pdf
(in Chinese) (Search date: 26/10/2012).
41
another important toll to improve access to medicines in China.115 It should
be also noted that the legality of parallel importation is not only decided by
the existence of international exhaustion principle. Whether a county allows
parallel importation finally depends on its economical trade policies and
their relevant legislations.116
3.2.5 Bolar exemption
Prior to the enactment of the 2008 amendment, the Chinese Patent Law
had not clearly stipulated whether using patented product or method for the
SFDA approval constitutes patent infringement. However, in practice,
Chinese courts had already established some Bolar exemption cases. The
first case was Sangong & Shanghai Sangong Pharmaceutical, Ltd. v.
Beijing Wansheng Pharmaceutical, Ltd, which was trialed by the Beijing
No.2 Intermediate People’s Court. 117
In that case, the defendant Wanshang used the plaintiff’s patented
technology in an application for SFDA approval of a new drug. The court
found that Wanshang used the patented technology only to make the drug
for the purpose of the clinical trials and the application for regulatory
approval, so Wanshang did not make the drug in dispute directly for the
purpose of selling the product. Thus, the court held that such activities were
not an infringement act of “exploitation of the production or business
purpose” under the Article 11of the Chinese patent law.
After the Sangong case, the same court trialed another five cases
involving similar fact patterns, two of which the Bolar Exception has been
affirmed. Nevertheless, because China is not a common law country, later
courts are not bound by these decisions. Furthermore, commentators have
expressed the concern that there is no legal basis for reading into Article 11
a distinction between direct and indirect exploitation for the purpose of
production and business, and that such distinction could create undesired
consequences if taken into other contexts. With the provision of the Bolar
Exemption in Article 69(5) of the 2008 Patent Law, there is now a clear
legal basis for applying it in China. However, the scope and reach of the
Bolar exemption remains to be determined. 118 Its scope has not been
interpreted in any cases.119 For example, the provision in the new Patent
Law does not explicitly exempt parties that “offer to sell” or “sell” patented
drugs or patented apparatus. This raises the question of whether an offer to
sell a patented drug to the approval would be exempt under the Chinese
115
Supra15, P8.
Principles of Right Exhaustion (权利用尽原则), available at: http://wiki.mbalib.com/zhtw/%E6%9D%83%E5%88%A9%E7%A9%B7%E7%AB%AD%E5%8E%9F%E5%88%
99 (In Chinese) (Search date: 26/10/2012) .
117
The Bolar Exception in China and the Latest legislative Developments, Sharon Qiao,
China Law and Practice.
118
Janet Xiao, Insider Analysis from Morrison & Foerster LLP: China’s Bolar Exemption
Beware of the Uncertainties of Its Reach and Scope, March 09, 2009.
119
Yan Hong, Qinghong Xu, Use the Right Patent Strategy, September 21, 2011, MIP
China IP Focus 2011.
116
42
Bolar provision. Furthermore, it is unclear which activities would be
considered as being conducted “in order to acquire information necessary
approval.” For example, would the Bolar Provision exempt preclinical
activities? Would post-approval activities be outside of the scope of the
exemption? Would stockpiling products prior to the SFDA approval be
exempt?120
At the moment, the SFDA as the governmental agency dealing with the
examination and approval of the medical application is lacking of the
relevant legislation to guide them to work on it. So the provision of Bolar
exemption should be further clarified and the governments need to issue
relevant administrative regulations in order to assist and monitor the
implementation of the Bolar Exemption.
3.3 Beware of the TRIPS-plus introduced
through FTAs
The TRIPS-plus health-related provisions have a direct impact on
public health, pharmaceutical production and the availability of and prices
of medicines. These provisions include the elimination and reduction of
transitional periods, data exclusivity protection, extension of patent
protection terms, restrictions on parallel importation, patentability of new
use of known medical substances, restrictions on compulsory licensing,
patenting of life forms, limitations on patentability criteria and accession to
a number of international TRIPS-plus agreements.121
In recent years, the US and the EU developed countries utilize the
flexibility clauses to introduce many TRIPS-plus provisions through the
FTAs. Although China does not have any TRIPS-plus issues since there has
no FTAs reached between China and the US or the EU so far, the potential
pressure from developed countries introducing TRIPS-plus is very possible
being confronted when signing the FTAs in the future. Even if there are no
FTAs with the TRIPS-plus yet, we can find that the Chinese domestic patent
laws have already incorporated some TRIPS-plus provisions under the
pressure from the Office of the US Trade Representative and multinational
pharmaceutical companies asking for stronger pharmaceutical IP
protection.122 Once China takes part in such bilateral or multilateral FTAs,
the freedom of choosing policies and amending relevant laws would be very
limited and hard. That is why China shall seriously beware of the TRIPSplus provisions incorporated in the FTAs.
Janet Xiao, Insider Analysis from Morrison & Foerster LLP: China’s Bolar Exemption.
Beware of the Uncertainties of Its Reach And Scope (Part 2 of 2), Pharm Asia News,
March 9, 2009.
121
Mohammed K El Said, Public Health Related TRIPS-plus Provisions in Bilateral Trade
Agreements, A Policy Guide for Negotiators and Implementers in the WHO Eastern
Mediterranean Region, p128.
122
Supra15, P4.
120
43
3.3.1 Patent linkage system
Patent linkage is the practice of linking marketing approval for generic
medicines to the patent status of the original product, in case of patent
infringement cases happens. Because the patent office has the jurisdiction
of deciding the patentability by checking the originality and innovation,
while the drug administration agency works only on the assessment of
whether the drug can be manufactured and marketing by examining its
quality, safety and effectiveness. In this case, sometimes even after a drug
gets the approval from the administration agency, the patent infringement
disputes could also happen. The patent linkage refers to the communication
process between the national drug regulatory agency and patent office to
prevent the patent infringement after the approval and marketing of generic
drugs. This system has two implications. One of them is the linkage
between the drugs registration application approval process and its
patentability examining procedure. The other one is the responsibility
linkage between the drug’s administration agency and patent office.
In the US, patent linkage system was first established in Drug Price
Competitions and Patent Term Restoration Act (Hatch –Waxman Act, 1984).
The system is created through several mechanisms – the Orange Book,123
the certification process, notice to the patent holder of a generic filing, and
automatic stay of drug approval, the patent holder reports patent information
and enforces its patent, the generic company certifies the reason the patent
(or patent status) is not applicable, the US FDA publishes information and
automatically stays the approval process once notified that the patent holder
has initiated an infringement lawsuit against the generic company. This
creates a set of overlapping mechanisms that reinforce one another and
prevent an accidental approval. More importantly, it does not rely solely on
the patent holder to enforce its rights, but presumes that the patent holders’
rights are valid until proven otherwise by the generic. So Hatch –Waxman
Act through its transparency, presumption and automatic stay mechanisms
provides business planning clarity and incentives for the patent holders, and
through an expeditious rout for approval of generic drugs, benefits the
consumer.
The patent linkage can be well practiced in the US where the good
communication between the national agencies with the integrated legislation
and enforcement mechanisms. But in the case of without the sufficient
mechanisms supporting, the situation and the effect of the patent linkage can
display a different picture in China.
China has adopted medical patent linkage in the absence of any treaty
obligations and became the first country to adopt this regulatory regime
outside of North America, despite with the presence of flourishing generics
123
Approved Drug Products with Therapeutic Evaluation Equivalents, available at:
http://www.fda.gov/cder/ob/ (Search date: 26/10/2012).
44
pharmaceutical industry and its developing country status.124 The system
was established by the Drug registration Regulation in 2002, which was
subsequently revised twice in 2005 and 2007 respectively. There are two
articles relating to the patent linkage system under the latest version. First
one is Article 18, as the public announcement provision, states that
“regarding the drug or its formula, production process, indication etc., the
applicant shall submit documents explaining the China patent status and
ownership rights. If other party holds patent in China, the applicant shall
submit a letter stating that the drug will not infringe on the patent rights of
others. Upon acceptance of the application, drug administration authorities
should publicly disclose the statement submitted by applicant. If an
infringement dispute occurs during registration application, the parties shall
resolve the matter according the relevant laws for patent administration.”125
The second relevant provision is about the generic, which is under the
Article 19 and also known as Bolar exemption, stating as “for a drug that
has obtained patent protection in China, another applicant may apply for
registration within two years prior to the patent expiration. SFDA shall
review the application according to this Regulation and, after expiration of
the patent, issue a drug approval number, imported Drug License or Drug
Product License for an application that meets requirements.”126
The problem and flaw within the above Chinese patent linkage system
appears when it is enforced. First is the reliability of the applicant’s
announcement is hard to guarantee. Although it requires the applicant to
submit about the patent status and non-infringement announcement, the
patent’s searching report which provides the patent’s explicit information is
not requested to be provided here. Besides, there is no specific functional
department to assess the announcement either. So the patent status and noninfringement announcement’s reliability could be doubtable if the applicant
does provide the patent related information sufficiently before applying the
registration. Secondly, the patent dispute resolution mechanism regarding
the drug registration needs to be improved. Even though under the Article
18 where states that “If an infringement dispute occurs during registration
application, the parties shall resolve the matter according the relevant laws
for patent administration”, the “relevant laws” is not clear enough regarding
what the responsibilities and obligations should be taken so it brings some
difficulties to the patent holders when they assert their rights.
The US patent linkage system provides explicit information of the
relevant patent that needs to be clarified by the applicant. And the generic’s
cataloged announcements are substantial and concrete with which the
operability is high. The system is in fact encouraging the patent disputes
can be solved before the generic registration getting approved. That can
both improve the patent protection to the patentees and reduce the
124
125
126
Benjamin P. Liu, Fighting Poison with Poison? The Chinese Experience with
Pharmaceutical Patent Linkage, 11 J.MARSHALL REV. INTELL. PROP. L. 623
(2012), p623.
Article 18, Drug Registration Regulation (2007), Order of SFDA of the PRC (No.28).
Id, Article 19.
45
possibilities of the infringement sues coming after the generics marketing.
On the contrary, the Chinese patent linkage system is lacking of certainty
regarding the announcement content which is always misused by the drug
manufactures to hamper the generics marketing through reporting varies
patent rights and it actually cause the patent’s over-protection. That’s why
there are scholars criticize the patent linkage as one TRIPS-plus provision
involved in the medical registration procedures is a practice by the national
regulatory authorities of denying approval of generic drugs that are ‘linked’
to an existing patent. The similar viewpoint claims that the US-style patent
linkage provisions may provide excessive protection for foreign medicine
patents, encourage ‘evergreen’ patents through repeated small modification
to extend patent term, and delay entry of generic drugs.127
We can see that a professional administration and a practical legal
regime are indispensable for making good use of the system. With those
prerequisites are absent currently in China the patent linkage system can
neither reduce infringement litigation nor the risks of infringement and it
has exceed the scope of the SFDA’s competence, as criticisms being
heard.128 Regarding how to deal with the patent linkage in China, on one
hand we must aware of its disadvantages that hinders generics accessing to
market, on the other hand revise the legislation and improve its
enforceability while learning from the US to establish a well-functioned
mechanism to balance the patent rights and generic manufactures interests.
As scholars suggested it must revise the current rules towards greater
administrative feasibility.129 Firstly, the applicant shall submit the relevant
patent’s search report when applying for the registration, since the patent’s
searching report is an efficient method to avoid the patent infringement
dispute. The law should also provide explicit description of the searching
report’s format and content, which can keep the right holder to be informed
by a public and transparent way at the same time it can facilitate to establish
the drugs patent data base. The second suggestion is improving the dispute
resolution mechanism, which as the supplement to the public announcement
system. It can provide substantial protection to the right holders. And
currently the administration agency’s capacity should be improved
regarding checking whether the applicant’s drug is violating the patent
rights or not and it needs the cooperation with the national patent office.
3.3.2 Data exclusivity
Data exclusivity refers to protection of clinical test data that must be
submitted to a regulatory agency to prove the safety and efficacy of a new
drug, and prevention of generic drug manufacturers from relying on this
data in their own applications. Because testing data is so time and cost
consuming to produce, without relying on these data the generic cannot
Thomas, A.F and Joel, L. ‘Linkage’ pharmaceutical evergreening in Canada and
Australia, Australia and New Zealand Health Policy 4(6) (2007), p22.
128
Zhang, L., Song, R. and Chen, C. Solving patent problem in the registration and
approval of drugs, China Pharmacy 17(9) (2006), p644-650.
129
Supra 124, p 672.
127
46
enter into the market even long time after the patent expired. So countries
grant different years of data exclusivity periods for the patentees, and after
the period the drug regulatory authorities can rely on this data to approve
subsequent applications on generics. Generic manufacturers only need to
prove their product is chemically identical with the original product and
they are bioequivalent by using of the originators’ test data. Pharmaceutical
companies argue that since those data is so expensive to produce, it is an
unfair advantage to let other companies rely on that data without cost, while
critics charge that it can act as a restriction on producing a generic which
would prevent prices from falling due to lack of generic competitions.
Some academics allege that data exclusivity protection unfairly restricts the
rapid public dispersal of knowledge that is supposed to be the trade-off for a
grant of a patent or intellectual monopoly privilege.130 They allege that is
really a form of evergreen pharmaceutical patent protection that may even
restrict the capacity of governments to benefit from the granting of a CL on
the patents of a medicine, since the data monopoly will still prevent the
marketing of generics, even though the patent licenses have been granted by
the government or a court.131
Article 39.3 of the TRIPS requires WTO members to protect the test
and clinical trial data submitted by innovative companies against unfair
commercial use,132 but does not explicit the scope of the obligation placed
on countries so it makes a dispute. For the proponents of the higher
standards of protection argue the originators of the data deserves a return on
the significant investment in conducting tests. Such as the US and the EU
grant data exclusivity period of 5 years and 10 years respectively.133
While the other side argues that WTO members have considerable
discretion to define the “unfair commercial use” in the context of national
laws. The grant of the marketing approval to second entrant, based on the
second product’s similarity to a previously approved first product, is not a
proscribed “use” under Article 39.3. They also argue the analysis of the
negotiating history of Article 39.3 provides the supporting evidence that the
TRIPS negotiators had rejected proposed language requiring provision of
data exclusivity.134 So countries have no need to protect test data, except
the cases of where a competitor derives a commercial advantage by use of
data through fraud, breach of confidence, or other dishonest practices or
130
Faunce TA, Vines T, Gibbons H. New Forms of Evergreening in Australia: Misleading
Advertising, Enantiomers and Data Exclusivity (2008) 16 Journal of Law and Medicine,
p220-232.
131
Id.
132
Article 39.3, Agreement on Trade-related Aspects of Intellectual Property Rights,
available at: http://www.wto.org/english/tratop_e/trips_e/t_agm3d_e.htm (Search date:
02/11/2012).
133
EU Directive 2004/27/EC on the Community Code Relating to Medicinal Products for
Human Use in 2004, Official Journal of the European Union No. L. 136/34.
134
Watal, J, Intellectual Property Rights in the WTO and Developing Countries, Kluwer
Law International, The Hague/London/Boston, 2001, p204.
47
uses. 135 Furthermore, the rule of interpretation on Paragraph 4 of Doha
Declaration dictates that the provision 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”.
Thus, it is clear that the TRIPS Agreement does not require of data
exclusivity, the obligation is only to protect data against the unfair
commercial use. Developing countries should allow drug regulatory
authorities to approve equivalent generic substitutes in the basis of reliance
on the originator data. They should implement data protection legislation
that is consistent with public health objectives to facilitate the entry of
generic competitors. 136 So data exclusivity is seen as a TRIPS-plus
provision for many countries refusing to incorporate it into the national
legislation when it is introduced by signing the FTAs with the US and EU
countries. Like India did not adopt the provision into its national patent law
after a fierce argument on this issue.137 That was because they worry that
data exclusivity would bring a big negative effect to the Indian local generic
manufacturers.
China, as a developing country, already promised a 6 years period of
data exclusivity protection for pharmaceutical drugs containing a new
chemical entity (NCE) under The Provisions for Drug Registration in order
to join the WTO in 2001.138 The protection can be excluded under the two
situations. One is for the need of pubic interests and the other is where steps
are taken to ensure the data are protected against the unfair commercial
use.139 In order to evaluate the provision’s effect in China, we can the US
and Japan as the examples of how do they design and implement this system.
Take a look of US, where the administrative exclusivity system is
consisted by the marketplace exclusivity and data exclusivity. Marketplace
exclusivity means when the new drugs get the approval by the FDA, within
the certain period the FDA would not approve any generics referencing
from that new drug. Data exclusivity is the protection of the undisclosed
test data provided by the new drug applicant, through which within the
certain time FDA would not accept the generic applications referencing
those data. Under such period the generic cannot access to the examination
and approval procedure. Under the system, different kind of drugs is
granted different period of exclusivity, such as 5 years exclusivity to the
NECs, the application or a supplement to a new drug application can receive
3 years of exclusivity, 7 years protection to the orphan drugs and 6 months
after the patent expired to the pediatric drugs. Besides, the 180 days of
135
World Bank, HIV/AIDS Medicines and Related Supplies: Contemporary Context and
procurement –Technical Guide, 2004.
136
Sisule F. Musugn, Cecilia OH, The Use of Flexibilities in TRIPS by Developing
Countries: Can They Promote Access to Medicines? p38-39.
137
FTA: India fights back over its generics, published: 04.01.2012, available at:
http://www.alliancesud.ch/en/policy/trade/fta-india-fights-back-over-its-generics (Search
date: 02/11/2012).
138
Article 20, Provisions for Drug Registration (SFDA Order No.28).
139
Article 35, Regulations for Implementation of the Drug Administration Law of the
People’s Republic of China, Decree of the State Council of the PRC No.36.
48
exclusivity granted to the first generic applicant is encouraging the generic
manufacturers to enter into the market. So this system can balance the
interests between the drugs’ originators and generic manufacturers,
facilitating the R&D on the new drugs and the generics’ initiative in the
US.140
As the member state of WTO, Japan also grants the data exclusivity to
the new drugs. However Japan does not totally copy the system from the
US and EU but according to TRIPS and its national context creatively
established the system which incorporates the data exclusivity into the PostMarketing Surveillance (PMS) process. By using with a set of the medical
insurance and the drug pricing mechanism, Japanese government has both
complying the obligation under the TRIPS and successfully encourages the
innovation of the pharmaceutical companies, ensuring the new drugs’
securities and accessibilities while providing a great extent suppression to
the side effects on its generics entering into. Basically, Japan has PMS
system that practically affects the timing of generic entry. The PMS period
is set for most of new drug approvals, and until this period is over, generic
companies cannot submit their applications for drug approvals. It is
primarily intended to monitor efficacy and safety after commercialization of
patented drugs and not to protect data. During the PSM period the new
drug’s applicant can enjoy the data exclusivity.141 So the data exclusivity is
imposed with the responsibility to the drug’s applicant on ensuring its safety
and efficacy. And the data exclusivity period varies from 4 years (for
medicinal products with new indications, formulations, dosages, or
compositions with related prescriptions) to 6 years (for drugs containing a
NCE or medicinal composition, or requiring a new route of administration)
to 10 years (for orphan drugs or new drugs requiring pharmacoepidemiological study).142
Now let’s turn our eyes back to China, an estimated suggest that data
exclusivity increased China’s health expenditure by 45.55% on average per
year from 2007 to 2009, while reducing the accessibility to 267 types of
medicines by 27.14%- a great negative impact on public health in China.143
The 6 years of data exclusivity for all the drugs and relevant policies are too
simplicity and some points need to be revised and clarified. Regarding the
Article 20 of the Provisions for Drug Regulation and Article 35 of the
140
Small Business Assistance; Frequently Asked Questions for New Drug Product
Exclusivity, US Food and Drug Administration, available at:
http://www.fda.gov/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/ucm
069962.htm (Search date: 02/11/2012).
141
Japanese Drug Regulations Related to Data Exclusivity (Excerpts), Kitamural Law,
available at: http://kitamuralaw.com/publications/J_data_exclusivity_provisions.pdf
(Search date: 02/11/2012).
142
Jonathan de Ridder, Data Exclusivity; Further Protection for Pharmaceuticals, Find Law
Australia, available at: http://www.findlaw.com.au/articles/1576/data-exclusivity-furtherprotection-for-pharmaceut.aspx (Search date: 02/11/2012).
143
Wu, S., Hang, S., Chen, J. and Shi, L. (2012) Impact of medical data protection on drug
Expenditure and accessibility in China, Chinese Journal of New Drugs 21(20), p23532355.
49
Regulations for Implementation of the Drug Administration Law, the term
of “NCEs” need to be defined clearly in case of the divergence of opinions
between China and developed countries; there needs a more detailed
requirements of the experiment data otherwise the protection scope on the
objective of data exclusivity is hard to perceived. Furthermore, the 6 years
exclusivity is too general and need a differential protection period to the
different kind of drugs, like the US and Japan. The Provisions should add
corresponding terms to NCEs, orphan drugs and pediatric drugs etc,
separately.
Overall, the TRIPS Agreement leaves a considerable flexibility to
interpret the extent on protecting data, which only requests providing
protection on the data “which involves a considerable effort”. There was
some Latin America countries were forced to accept the TRIPS-plus when
signing FTAs with the US, however they set up the limitations on data
exclusivity protection. China shall also utilize the flexibility to limit the
data exclusivity’s potential impact on harm the public health and access to
medicines; making full use of the exceptional situations to promote the
public health;144 setting different exclusivity periods to different drugs in
order to both protect the patent rights and encourage the generic’s entry into
markets; also beware of the unfair patent extending protection by misusing
the data exclusivity which need the effective legislation and administrative
tools to monitor and regulated.
144
Article 35, Regulations for Implementation of the Drug Administration Law of the
People’s Republic of China, Decree of the State Council of the PRC No.36, available at
http://former.sfda.gov.cn/cmsweb/webportal/W45649038/A48335997.html(Search date:
02/11/2012).
50
4. Other
Factors
Impeding
Access to Medicines in
China
The above parts mainly analyzed that the access to medicines, in terms
of the high prices of drugs, from the IP perspective. It focused on reviewing
the compliance of the domestic patent legislation to the TRIPS flexibilities
to check whether China has adopted those flexibilities for limiting the
reverse impact on accessing to medicines brought by the patent right
protection. This part would from other perspectives to analyze what other
reasons, except patent right, can be the barriers to the access to medicines in
China. Through looking in to the governments, which as the public actor,
pharmaceutical industry both domestic and foreign, NGOs and civil
societies as the private actors, those three primary actors’ responsibilities to
see what and how their influence on access to medicines in China.
4.1 Government responsibility
As a contracted member of the ICESR, the government is under the
obligation of respect, protect and fulfill the people’s right to health. The
modern Chinese legal system has not been constructed since the new
Chinese government established in 1949. In the recent decades, Chinese
government always emphasizes ruling the country in accordance with laws.
As the legal construction steps coming into the right path, the citizen's the
right to health is gradually drawing the attention, and at present, China has
already tentatively set up the comprehensive legal security system for the
right to life and health, including the Constitution, Civil Law, Criminal Law
and Administrative Law and etc. 145 Besides the legislations established
complying with the international human rights obligations, Chinese
government also takes other policies approaches to promote right to health.
China’s the 12th Five-Year plan (2011-2015) (FYP) as the guideline to
direct the government current economic and social development, the key
topic of the Plan is located in the quality rather than the quantity of the
economic growth and investment. The directives for the healthcare sector
focus on reinforcing the realization of the objectives that establishing an
affordable and accessible healthcare system and infrastructure for the entire
population. The plan’s outline covers six main goals and they include:
strengthen public healthcare infrastructure; strengthen healthcare service
network, develop a comprehensive medical insurance system, improve drug
supply system, reform the public hospital system, support the development
of Chinese medicine.146 With the publish of the 12th FYP, for enhancing
145
Zhang Yue, Legal Guarantees to the Right to Health in China.
146
China’s 12th Five Year Plan: Healthcare sector, May 2011, KPMG.
51
human rights and ensuring rapid development of the human rights cause, on
the basis of earnestly summing up past experience, the Chinese government
has worked out the National Human Rights Action Plan of China (20122015) (NHRAP) to specify its aims on tasks in promoting and protecting
human rights. Regards to the right to health, China would establish initially
a basic medical and health system that covers the entire nation, improve the
medical insurance system, public health service system and medical care
system to protect the citizen’s right to health.147 However meanwhile many
people believe that the main purpose of enacting NHRAP is to show the
international society that China is a country that does respect and protect
human rights and the function of the plan is not so optimistic.
The Health Care Reform Leading Group was established in 2006 and
after three years of deliberation, in 2008 the Chinese government announced
its national healthcare reform plan. The main objective is to provide
universal healthcare coverage by 2012. 148
The initial three-year
implementation plan for 2009-2011 emphasizes several programs, including
improving the social health security system (urban employees, urban
residents, rural cooperative medical services, and medical assistance
programs); establishing an essential medicines system; strengthening
primary level healthcare facilities; reducing disparities in public healthcare
between regions; and piloting reforms in public hospital financing by
reducing the reliance on drug sales for operational costs and salaries. An
earlier effort at health sector reform enacted in 1997 was seen as largely
ineffective due to a lack of financial and political support. The bureaucratic
politics associated with the multiplicity of agencies involved in planning
healthcare reform has also hampered the situation improvement. Most of
the budget allocations are dedicated to the costs on the infrastructure of
building medical cooperatives and refurbishing existing facilities, while less
dedicated to medical workers’ financial needs and compensation. The
healthcare reform still has a long way to go.
Although the above recent national plans literally do give a bright side
of China’s dedication on improving the public’s right to health, when we
look into the details it is not hard to find out there are many defected polices
established and implemented within the healthcare system.
4.1.1 Finance expense on public health
There are many flaws on the finance input to the healthcare sector. The
first problem is the central government financial support is so limited. In
2010 and 2011, the share of central government annual expenditure on the
sector of public healthcare took only 3.1% and 3.2% respectively of the
total expenditure. While in the contrast Chinese government spend more
than 10% of the finance expenditure every year on the national security
147
National Human Rights Action Plan of China (2012-2015), Information Office of the
State Council.
148
Supra 146, p67.
52
defense. 149 Secondly, the high increasing healthcare spending in recent
decades mainly came from private out of pocket payment. Private parties
actually took the most part of the health spending while the government
only shared a small part of it. The Government financial share on health
spending was dramatically decreased from 25% in 1990 to 14.9% in 2000
while the private spending as a share increased reaching almost two thirds
of spending (64.43%) in 2001. Since 2002, with the beginning of
government-subsidized health insurance for rural Chinese, the private
share of health spending started to have a gradually decline, reaching
45.94% by 2010. 150 Given the relatively small market for commercial
insurance in China, private spending is overwhelmingly “out-of-pocket”
directly paid by patients. Out-of-pocket spending increased from 20.43%
in 1978 to a peak of 59.97% in 2001 and then declined to 35.52% in
2010.151 Thus, public spending now constitutes a little over half of China’s
total health spending, much higher than many low and middle income
countries which close to the proportion in the US and South Korea, but
significantly lower than the average of 72% for OECD countries.152
Furthermore, China’s public health finance mainly come from the
local financial budget, the central government takes small part of it. It is
not hard to see that the local financial ability on the public health sector
crucially depends on the local economic capability, so the poorer the areas
have the less healthcare expenditure allocated by the local government.
Since China is a big and diverse country, with regions varying significantly
on the economic developments and social-demographic profiles, plus
China’s health financing system is quite decentralizes, such as the
financing of many public services, the regional and urban-rural disparities
is exacerbating rather than mitigating. So that is why lots of people,
especially in the remote and resource-poor areas in the western and interior
regions, still have consumption levels below a dollar a day, often without
access to clean water, arable land, or adequate health and educational
services. Illness treatment continues to be a contributor to poverty, and
out-of-pocket medical expenses remain high. Poor economy provinces
receive some financial support from central government, but such the
amount of redistribution is rather limited. For example, the ratio of urban
to rural per capita health spending was less than 2 in the early 1990s, then
continually increased to 3.63 in 2000, then declined to 2.67 in 2010
contributed by the implementation of New Rural Cooperative Medical
System (NCMS) and the recent reforms. This big urban-rural gap is not
caused by the health spending in rural areas stagnated, in fact in rural per
149
Statistics from Chinese Government website, available at:
http://www.gov.cn/2011lh/content_1817775.htm (2010) and
http://www.gov.cn/2011lh/content_1817835.htm (2011).
150
China National Health Development Research Center, 2011, Table 5, p9.
151
Id, Table 3, p6.
152
Karen Eggleston, Health Care for 1.3 Billion, An Overview of China’s Health System,
Stanford University, Asia Health Policy Program working paper #28, January 9, 2012,
p4-5.
53
capital health spending increased 17 times over the last two decades. The
gap is because urban spending increased even faster.153
The above paragraphs generally pointed out the problems existing in
the public healthcare financial system, which are the insufficient financial
allocation on the healthcare sector, the unreasonable distributing structure of
the health spending and recourses between the public and private sectors,
central and local governments. Besides, the efficiency of financial
allocation should also be improved. According to a WHO evaluation report
of the overall performance on healthcare sector in 2000, among 191 member
states China only took the place of 144. Scholars pointed out that the
problem is that even thought the health spending is dramatically increasing,
the equality of healthcare service and the using efficiency of resources are
still at a very low level. The next part will focus on the medial regulation
institutions, healthcare system and relevant policies and their impacts on the
access to medicines.
4.1.2 Pricing privilege of the original drugs
The conception of original drugs cannot be found in other countries,
where usually have only patented medicines and generic medicines. But in
China, original drugs are defined as the imported medicines that their
patents are expired. While in other countries after the patented drugs
expired, the price of which would be reduced in order to compete with the
cheap generic medicines and some companies even choose to stop
producing with the worry of failure in the coming pricing war. But these
off-patent medicines in China can enjoy the privilege of separately pricing
and their prices can be sold even as ten times higher than the domestic
generic medicines. As an administrative protection measure, this retroactive
policy was introduced and applied on the medicines that entered into China
before 1993, when China did not provide legal patent protection on the
medicines. This privilege works as a financial compensation to encourage
foreign companies brought new drugs to China
The legal ground of this privilege can be found in the Governmental
Pricing Measures on Drugs issued by the former State Planning and
Development Commission in November, 2000, which allows for off-patent
original drugs pricing higher than domestically produced equivalent generic
drugs. Noting that the Measures actually explicitly stimulates the maximum
price difference should not be over 35% for the injection and 30% for other
forms, however it is found that in reality the difference is far beyond than
this limitation. Taking the Ciprofloxacin injection as an example, the
original drug of it produced by Bayer is sold of 80 RMB while the local
generic’s price is only 4-5 RMB, where the price is twenty times than the
generic indeed.
153
Karen Eggleston, Health Care for 1.3 Billion, An Overview of China’s Health System,
Stanford University, Asia Health Policy Program working paper #28, January 9, 2012, p5.
54
Statistics shows the off-patent original drugs take 30% of the medicine
market in China and they do not compete with the generic medicines in the
same path under the local medicine purchasing tender provisions. Besides,
the National Development and Reform Commission (NDRC) has issued
nearly 30 times drug price reduction adjustments, but the original drugs
have been seldom included in the list. They are given the privilege of not
competing with the generics and it makes the patients spend much more on
medicines than they are supposed to do. This national medical regulation
measure is unequal and has received many criticisms. Since 2010 the
NDRC drafted the Measures on Drug Price Regulation and tried to cancel
the original drugs’ privilege of pricing. But there is no updated news came
out yet.154 When China joined the WTO it promised to provide national
treatment to the foreigners’ economic and trade activities in China. But we
can see from the policies offered actually are beyond the national treatment
in the pharmaceutical industry. The price should be dominated by the
market. The better quality and safety drugs of course can be marketed with
higher prices, if the original medicines do have, for the customers to freely
choose. But it should not be reflected and controlled by the authority’s
pricing policies.
4.1.3 Combination of prescriping and dispensing
policy adopted by public hospitals
The NDRC issued the list of reducing drugs prices for many times in
the past decades, but we find the benefits of the price reduction in fact do
not reach to the patients. One of the important reasons is within the
healthcare system. Unlike the most developed states, in China, doctors both
prescribe and dispense drugs in hospitals, and hospitals are permitted to earn
revenue from selling drugs.
The service fee charged by the public hospitals cannot afford the
hospitals’ daily expenditures and the employees’ salaries. So in China
public hospitals relying on their owned pharmacy selling drugs is a very
important income source. Prescribing expensive drugs to the patients can
increase the public hospitals’ and doctors’ income. The reason patients do
not go to other pharmacies to buy the medicines is because some medicines
that cannot be found there and only hospitals can sell them. And another
important reason is the medical reimbursement system that motivates the
patients to buy them directly from hospitals even the price is higher than it
should be. Because under the current healthcare insurance system, some
private pharmacies are qualified for people to get the reimbursement while
some are not. So for the people who are enjoying the reimbursement right if
the medicine is in the reimbursable medicines list, the higher price of
154
The price privilege of foreign original drugs makes it is expensive to accessing
medicine, China Youth News, Aug,13, 2012 (In Chinese), available at:
http://zqb.cyol.com/html/2012-08/13/nw.D110000zgqnb_20120813_1-05.htm ( Search
date: 03/11/2012).
55
medicines do not matter them so much because they need only to pay the
little part of the price.
The combination of prescription and selling drugs by hospitals is
serious increasing the drugs’ expenditure and it is also the root of many
drawbacks existing within the medical distribution and sales system. For
example, pharmaceutical representatives provide the commissions to the
hospitals and doctors as a return for their prescribing the medicines, which
is seen as a way of sharing the profits. The commissions actually existing
within the whole distribution procedure that makes the drugs’ final price are
much higher than they should be. So in this case some pharmaceutical
company also cannot away from its accused business misconducts which
would be talked about in the next part. And all of those unreasonable costs
are ultimately paid by the common patients.
The necessity of separation the medical services and pharmaceutical
sales within the public hospitals is confirmed by the healthcare reform plan
and public hospitals reform plan with the aim to promote public health. The
central government selected 16 cities as the pilot cities, where they attempt
to work on separating medical services and pharmaceutical sales and some
places have implemented this reform for a while. The main actions of this
reform include the delegation of pharmacies and establishing independent
drug distribution organizations. But the cost of medical services are still
comparatively very low, brutally separating the services and the
pharmaceutical sale while abolishing the drug price markup policy will exert
a great financial burden on hospitals and hamper their development. If the
government takes the entire responsibility to support the hospitals’ financial
problem, the government will bear the heavy financial burden. So there are
many challenges and the reform is in the dilemma.155 One suggestion on
this issue is to increase the hospitals’ services fees and cooperate with the
private insurance companies to relieve the public’s economic pressure of
healthcare.
4.1.4 Other policies issues
Besides the above problems which cause the high drug price, there are
other medical policies leading to undermine the accessibility of medicines.
For example, centralized purchasing and tiered bidding implemented by the
public hospitals, which established with the original aim to reduce the drug
prices. They are the policies for public hospitals when their inner
pharmacies purchase drugs through bidding. The government-oriented
centralized purchase procedure, which adopting the tiered bidding measure
to different quality of drugs, in fact makes the minority’s foreign
companies’ drug price competition only happening between themselves but
not with the majority’s domestic companies because the bidding is tiered by
qualities. It increases the chance of the foreign companies to win while the
155
Implementing Health Care Reform Policies in China, Challenges and Opportunities, A
report of The CSIS Freeman Chair in China Studies, December 2011, p29-32.
56
competition of the pharmaceutical industry is discouraged. Moreover
another purchasing measure by the public hospitals also reverses the
competition equality. According to the Measures for the Administration of
Prescriptions156, hospitals can order two products for every generic named
drug. However during the implementation this measure is evolved to
ordering two products of one is from foreign or joint venture companies and
the other is from domestic companies. So those policies indeed provide
more protection to the foreign and joint venture pharmaceutical companies.
The drugs’ prices of them are little affected and they can win the bid with
the higher price. The price reducing measure actually only brings its effects
on the domestic produced drugs. All those policies in fact cause the unfair
competition between the foreign and local pharmaceuticals.
In addition, the State Council released the 12th Five-Year Plan on drug
safety and standards and it asked for the evaluation of the generics quality
with the compliance of the respective original drug standard. 157 If the
quality cannot meet the compliance standard, the generics would be
deregistered. The quality gap might exist between the original medicines
and local produced generics so it is dispensable to have the quality
compliance evaluation. However take the original medicines as the
evaluation standard is considered not appropriate. Because the national
legal standard legally is the Pharmacopoeia of the People’s Republic of
China and if the Pharmacopoeia standard is not high enough then it should
be revised but not take original drugs as the reference. Even if the generic
reach the quality of the original drug, the price of the generic is still a
problem since the original drugs enjoy the pricing privilege. If the same
quality generics can enjoy the same price of original drugs, which means the
generics price would be generally increased. But if generics are not allowed
to share the same price, then whether the competition is equal would be
questioned. 158 The consequence is hospitals usually prefer purchasing
expensive original drugs as they can make more profits on prescribing them.
Anyway eventually the public takes the burden on paying the bills.
4.2 Pharmaceutical industry
Even though under the international human rights regime states have
primary responsibility for enhancing access to medicines, pharmaceutical
companies’ Corporation Social Responsibility as a shared responsibility
plays an indispensable role to enhance the access to medicines.
156
Measure for the Administration of prescriptions, Ministry of Health, Order of the
Ministry of Health No.53, Effective date: 1st May, 2007, available at:
http://www.lawinfochina.com/display.aspx?lib=law&id=5971&CGid= (Search date:
03/11/2012).
157
Reed Smith LLP, State Council releases the 12 th Five-Year Plan on drug safety and
standards, March 13, 2012, available at:
http://www.lexology.com/library/detail.aspx?g=42328492-384f-4ee9-b84c34717567ee9b (Search date: 03/11/2012).
158
Hongzhi Wang, From Doha Declaration to Review the National Drug Policies,
Healthcare Executive, 27,Sep, 2012 (In Chinese), available at: http://www.hecn.com/article.asp?id=41279 (Search date: 03/11/2012).
57
Millennium Development Goals (MDGs), including those connected to
sexual and reproductive health such as reducing, and combating HIV/AIDS,
malaria and other diseases, depend upon improving access to medicines.
Indeed, one of the MDG targets is to provide, “in cooperation with
pharmaceutical companies, access to affordable essential drugs in
developing countries.”159 And as confirmed by the United Nations Global
Compact, the Special Representative of the Secretary General on Human
Rights and Transnational Corporations and Other Business Enterprises, the
Committee on Economic Social and Culture Rights, the Business Leaders
Initiative on Human Rights, and many others, the private business sector has
human rights responsibilities.
Pharmaceutical companies, including
innovator, generic and biotechnology companies, have human rights
responsibilities in relation to access to medicines. They should contribute
through various ways to the realization of the right to the highest attainable
standard of health, such as providing individual and communities with
important information about public health issues. Enhancing access to
medicines, however, has the central place in the society mission of
pharmaceutical companies. For this reason, these non-exhaustive, interrelated Guidelines focus on the human rights responsibilities of
pharmaceutical companies in relation to access to medicines.160
According to the Human Rights Guidelines for Pharmaceutical
Companies in Relation to Access to Medicines, the company should adopt a
human rights policy statement which expressly recognizes the importance of
human rights generally, and the right to the highest attainable standard of
health in particular in relation to the strategies, policies, programs, projects
and activities of the company; and whenever formulation and implementing
its strategies, programs, projects and activities that bearing upon access to
medicines; the company should give particular attention to the needs of
disadvantaged individuals, communities and populations, such as children,
the elderly and those living poverty; it should also give particular attention
to the very poorest in all markets, as well as gender-related issue and should
be as transparent as possible; in conjunction with other pharmaceutical
disclosure of companies, the company should agree to standard for the
systematic disclosure of company information and data bearing upon access
to medicines, thereby making it easier to evaluate the performance of one
company against another, as well as the performance of the same company
over time; the company should also take responsibilities on its management,
monitoring, accountability and publicly adopt effective anti-corruption
policies and measures; disclosure all current advocacy and lobbying
positions, and related activities, at the regional, national and international
levels, that impact or may impact upon access to medicines; regarding the
company, the company should manufacture medicines that comply with
current WHO Good Manufacturing Practice Guidelines, as well as other
appropriate international regulatory requirements for quality, safety and
159
160
Millennium Development Goals 2000, Target 17 of Goal 8.
Rajat Khosla, Paul Hunt, Human Rights Guidelines for Pharmaceutical Companies in
Relation to Access To Medicines, p13, h,i,l.
58
efficacy; the clinical trials should observe the highest ethical and human
rights standards, including non-discrimination, equality and the
requirements of informed consent; it should engage constructively with key
international and other initiatives that are searching for new, sustainable and
effective approaches to accelerate and enhance research and development
for neglected disease; especially, it should respect the flexibilities of
provisions in the TRIPS Agreement and respect the letter and spirit of the
Doha Declaration, so it should make and respect a public commitment not to
lobby for more demanding protection of intellectual property interests than
those required by TRIPS; should issue non-exclusive voluntary licenses
with a view to increasing access to all medicines and they should also
include any necessary transfer of technology; for ensuring the medicines as
affordable to as many people as possible, the company should consider all
the arrangements of pricing, discounting and donations.161 In China, for
promoting access to medicines there is no doubt to both of foreign and
domestic pharmaceutical industries are indispensable actors to this issue.
The following part is reviewing how about their practices.
4.2.1 Foreign pharmaceutical companies
To the pharmaceuticals there are still several areas where all companies
could improve their approaches significantly, such as making their drug
donations to be more needs-based and allowing developing country
regulators to use their clinical trial data to accelerate the approval of generic
medicines. According to the Access to Medicine Index, Novo Nordisk is
the leader when it comes to allowing its clinical trial data to be used in the
approval process for generic medicines, which is an important indicator of
competition behavior focus to access to medicine. It is the only company
that states it does not apply data exclusivity in countries covered by the
Index, nor does it apply for patent rights in more than 97% of focus
countries. Several other companies have become more transparent in this
area, disclosing a conditional commitment, for instance not to apply data
exclusive for specific diseases or under specific conditions.162
However, with the continually controlling on the core patent expired by
the foreign companies it is common to see that impedes the domestic
generic come into market. Lacking of competition makes the price still high
even though after the patent being expired. The case of 3TC can show us as
the instance. Lamivudine, patent held by GlaxoSmithKline (GSK), also
known as 3TC, is a drug recommended by WHO to use for 1st and 2cd line
HIV/AIDS treatment, and also treat Hepatitis B in different formulation.
China is the biggest supplier of Active Pharmaceutical Ingredient (API/ raw
material) of 3TC to the world, but Chinese patients have no access to
generic 3TC due to patent protection. GSK introduced the drug to China in
161
Rajat Khosla, Paul Hunt, Human Rights Guidelines for Pharmaceutical Companies in
Relation to Access To Medicines, p14-21,
162
The Access to Medicine Index 2012, Access to Medicine Foundation, p35, Available at:
http://www.accesstomedicineindex.org/sites/www.accesstomedicineindex.org/files/2012access-to-medicine-index-full-report-clickable.pdf (Search date: 03/11/2012).
59
1990 before China started granting patent on medicines, so only
manufacture process of 3TC can be patented at that time. However, GSK
got a number of exclusive protections on 3TC in China against the
background of bilateral trade negotiation between China and US. In 2007,
the main exclusive protections of 3TC expired which means in theory,
Chinese company can produce 3TC by using other synthetic process.
However, GSK announced publically on its website that infringement will
occur if any company in China is to produce 3TC as its process patent
covers all products of 3TC. Under such circumstance, no locally produced
generics of 3TC is available in China; although this is a drug invented in last
century and has been widely used in generic version in many other
developing countries.
Both Chinese patients and Chinese generic
manufacturers are not benefited from such broad patenting.163
Besides of controlling on the off-patented medicines as the above way,
foreign companies also have the advantage on their generics research and
development. Because the most medical patents are hold by those big
pharmaceuticals so that after the core patent being expired, they can utilize
their advantaged competency to avoid the dependent patent in order to make
generics faster and take over the market. And the case of Gilead who joined
the Medicine Patent Pool and allowed 111 countries to produce the generic
which used with other ARV medicines for the treatment of 1st and 2nd line
for HIV and HBV, but china was excluded, which maybe can show us that
profit orientated big foreign pharmaceutical companies are reluctant to give
up their exclusive rights especially to the country like China where with a
huge market.164
Another big pharmaceutical industry’s scandal was exposed in summer
2013 in China. The GSK China has been accused of using travel agencies
and other middlemen to tunnel billions RMB to bribe doctors and officials
in order to boost sales - and prices - of its products. As the news reported
“that medicine that cost 30 RMB to make could be sold to patients for as
much as 300 RMB. Some Chinese say the revelations explain why medical
care has become so expensive and why many doctors are so insistent on
prescribing particular brand name drugs…the GSK case as a demonstration
of the Chinese government's resolve to further improve the investment
environment to provide a fair and level playing field. Corruption involving
multinationals in China has made headlines before.”165 From that we can
see the foreign pharmaceuticals illegal conduction that practiced in China
163
Responses from Hu Yuanqiong, China Access to Medicines Research Group, Informal
Interactive Hearing of the General Assembly with Non-Governmental Organizations,
Civil Society Organizations and the Private Sector Regarding Unites Nations Millennium
Development Goals (MDG), United Nations Headquarters, New York, June 14-15, 2010,
164
Gilead granted license to medicines pool, devil is in details, SUNS No.7195, July, 21,
2011, available at:
http://www.twnside.org.sg/title2/intellectual_property/info.service/2011/ipr.info.11070.
htm (Search date: 03/11/2012).
165
Chen Weihua, Pharma bribery scandal in China just the tip of the iceberg? Available at:
http://usa.chinadaily.com.cn/opinion/2013-07/18/content_16795071.htm
(Search date: 15/08/2013).
60
with the direct effect on the high price of drugs that undermines the
accessibility to medicines in China.
4.2.2 Domestic pharmaceutical companies
Chinese domestic pharmaceuticals mainly produce generics and after
the years of developing, the general generic manufacture capacity is in the
front of the world. Meanwhile because of lacking the investment and ability
on the R&D and inadequate policy support, Chinese pharmaceutical
industry still remains at low position within the whole producing chain,
which mainly depends on the API exportation to foreign countries, basic
types of protein and antibiotic drugs production. The competition between
the domestic companies themselves is severe, which leads the domestic
companies actually take the small market share comparing to foreign
pharmaceuticals. Except the unreasonable provisions of Chinese medical
regulatory policies and institutions as the external actors, the domestic
pharmaceutical companies have their own internal problems that causing the
situation today.
Although since 2011 to 2014 it is the time for a large number of
medicines to be off patented, which should be a great opportunity to the
generic companies, Chinese pharmaceuticals however cannot catch the
chance as easy as expected. Actually, one foreign patented medical product
is usually protected by both core patent and dependent patents. The “offpatent” we talk about here is the core patent. That means the core patent
expired drugs that are still under the protection of dependent patents and
they could not be completely copied. Under this circumstance, the
competency of avoiding patent technology plays an important role to the
generic producers, because this technology also needs R&D strength.
However, Chinese pharmaceutical industry put little income into the R&D,
along with insufficient investment and support from government, academic
universities and other organizations. According to the statistical data of
2011, only less than 5% of the income was invested into the R&D, which
was far less than average level of 10% that European and American
countries did. So for domestic generic producers to capture the opportunity
of many core patents being expired and take over the market still meets
obstacles.166
Besides, the motivation for applying the compulsory licenses is not
strong enough to the domestic pharmaceuticals. Comparing to the longterm application and dealing with the governmental department, as the
biggest API exportation country that take over 30% of API provision
globally they prefer rather on selling API to make profits. The quality of
domestic produced drugs is also an issue that many patients worry about, so
that if their financial affordability is good they prefer choose foreign or
joint-venture companies’ products. And in case of medical disputes
166
Industry Review, China Credit Rating, Vol. 22, May, 2012, available at:
http://pg.jrj.com.cn/acc/Res/CN_RES/INDUS/2012/6/19/fa457930-8c32-42be-875cffde0cd666f3.pdf (In Chinese) (Search date: 03/11/2012).
61
happening, hospitals prefer prescribe foreign patented drugs because of the
quality are considered more trustable.
4.3 Impact of other actors
Besides of the states and pharmaceutical industries, other actors like
NGOs, media, consumer advocacy groups and public opinion in general
carefully watch the steps taken by pharmaceuticals. And their movements
often share the same broad goals when it comes to improving access to
medicines. They represent the needs and goals of different populations and
their public opinion and information provided are very important with
regard to access to medicine.
Recent progress in a number of countries shows that access to essential
medicines can be improved through stronger partnership among
governments, pharmaceutical companies and the civil society, including
consumers, working together to ensure universal access to medicines. 167
The case of the WHO-HAI Africa Regional Collaboration for Action on
Essential Medicines shows that the achievements were built on the
collaboration partners. Different partner should be defined different roles,
responsibilities and expectations since the existence of ‘different interests
among the diverse stakeholders’, but emphasis ‘that all are working to the
same objectives’, and ‘the benefit of harmonizing strategies and action
plans’. In Uganda and Ghana, Health Action International members
developed increasingly independent capacity as civil society groups, with
the independent budget lines which contributed to the results.168 Foreign
civil groups always widely engage and actively participate in this issue.
Take an example, the Malaysian AIDS council, an umbrella group of 49
civil society groups, asked the Malaysian Minister of Health to begin a
government sponsored program to provide second line treatment to people
with HIV/AIDS. In order to make this feasible, the Council requests that
the Ministry grant a compulsory license for government use under Section
84 of the Patents Act for patents related to Lopinavir+Ritonavir, and
important antiretroviral sold under the brand name Kaletra by Abbott.169 So
lacking of strong and collaborated calling from concerning civil groups is
also a reason for why China has not issue any compulsory license yet. In
China the good governance environment for the NGOs and civil group’s
development has not been established. Independent status is not encouraged
by policies supporting and there are different kinds of obstacles always
167
Access to affordable essential medicines, WHO, available at:
http://www.who.int/medicines/mdg/MDG08ChapterEMedsEn.pdf (Search date:
03/11/2012).
168
Nel Druce, Government, Civil society and WHO partnership: A catalyst for better access
to medicines, External Document, August 2008, available at:
http://apps.who.int/medicinedocs/documents/s16565e/s16565e.pdf (Search date:
03/11/2012).
169
Malaysian Civil Society Groups Seek Compulsory License for Second Line HIV/AIDS
medicine, May 22,2012, available at: http://infojustice.org/archives/25595 (Search date:
03/11/2012).
62
coming up during their practice. There is a long way for Chinese civil
groups to grow and develop since civil society is built under the democratic
social mechanism, which hasn’t been realized in today’s China yet.
63
5. How can China Improve
Accessing to Medicines?
Regarding to address the issues related to access to medicine, China
has made efforts in such measures, for example, expansion of medical
insurance coverage, free distribution and administration of preventive
vaccines in China and building a national essential drug system, some
initiatives were drafted in promoting drug innovation and new drug
development, new treatment options are researched to meet the unmet
medical needs of citizens.170 Government is used to taking those actions to
present its commitment in protecting and promoting the health of its citizen.
The previous parts of the thesis have discussed the flaws that existing
among the legislation and enforcement of relevant patent law and public
healthcare policies. Obviously, the issue is not attributed by a single actor,
and all stakeholders should take their responsibilities so can ensure and
enhance access to medicines. State as the primary duty bearer on respect,
protect and fulfill human rights for its citizens should take the responsibility
to promote right to health, encourage domestic and imported generic
product coming into the market, providing a sound and fair competition
market environment, making efforts on the negotiation with foreign
pharmaceutical companies to reduce the drug price and bewaring of any
reverse effects of over-protection on medical patent through FDAs. Other
actors’ efforts on enhancing this issue and their corporation also built on the
common view, which needs the government policies supporting and
protecting.
5.1 Improve access to medicines under the
medical patent system
Under the medical patent system and the TRIPS Agreement, on the one
hand China as “copy country”, that usually be criticized by western
countries, is working on protecting its and foreign intellectual property
rights though joining international agreement and amending domestic
legislations, on the other hand, with the big population and a big number of
patients, China is also bear a big burden on improving its public health
situation, which needs the caution of no over-protection on the medical
patent rights. The balance of the IPR development and properly limiting the
IPRs for protecting the public interests should be considered by the
concerning departments when the statutes and regulations are being drafted
and implemented.
170
Zhang Wei, Facilitating the Access to Medicine: China’s Perspective and the Role of
SFDA, The 13the International Conference of Drug Regulatory Authorities Workshop H
“Regulator’s Contribution to Access”, Bern Switzerland, September 16-19, 2008
64
Through review the legislation about medical patent in Chapter 3 of the
thesis, it is not hard to find that China has adopted the TRIPS flexibilities
into the patent law and other relevant regulations. The flexibilities are such
as compulsory license, parallel importation and Bolar exemption etc. The
issue is on enforcing the provisions. And because of the different interests
of stakeholders, the enforcement of these flexibilities such as compulsory
licensing has not been granted by the government. Under this situation the
patients, such as with AIDS/HIV, must spend much more on buying the
patented medicines and also increase the financial burden on the relevant
NGOs and government when they purchase the drugs for the treatments to
the patients. Some flexible provisions, such as Bolar exemption and parallel
import, need be more detailed regulated and a further interpretation with
consideration of the different parties’ interests in hence to be implemented
in an appropriate way.
Furthermore, China has also adopted some TRIPS-plus provisions such
as data exclusivity which by other countries, like the US it can be played
useful role on balance the patents’ protecting and encouraging generics
come to the markets. However on the opposite, in China those TRIPS-plus
bring more difficulties for generic medicines coming into the market. So
China should revise those flaws within the provisions so that making them
be feasible on balance the rights. Besides it should be aware of more
TRIPS-plus to be adopted in future when negotiate with western developed
countries in terms of signing FTAs until it is ready and mature enough to
accept. Comparing to the neighbor country India, both of them are big
developing countries and in a great need of generic medicines to meet the
local patients demand. India stipulated a tough standard on granting patent
protection in its national patent law and the government encouraged the
generic producing through issuing compulsory licenses. These measures
benefit the public to enjoy their right to health through increasing the
accessibility to cheap medicines and it is also save the government financial
allocation on purchasing drugs. The following are the other two points that
specially can be suggested to work with.
5.1.1 Issuing medicine compulsory licenses
As the Chapter 3 has talked we know that patent CL has been allowed
and written into the statute since 2003,171 the reasons why after so many
years China still has no movement to grant the first CL case while other
countries use it commonly to protect their national public health, has been
discussed earlier in the thesis. So far, even though there are many callings
to the government for issuing medical patent CL, the difficulties of applying
and issuing are exiting. The circumstances of applying CL can be patent
holders not implementing the patent without legal reasons; practicing patent
right is decided as monopolistic conduct; when the national emergency
situation happens or for the public interests; when a big technical
171
It means the Measures on Compulsory Licensing for Patent Exploitation, Order No.31 of
the State I intellectual Property Office (Implemented on 15 July, 2003).
65
improvement and significant economical benefits of the new patent right
relies on the previous patent’s carrying out to be realized. 172 The above
conditions are not easily can be used. Take example, although the numbers
of patients with hepatitis B, AIDS/HIV and cancers is very big, when asked
whether it has reached the extent of public health crisis, the answer is not
easy to be given. Chinese government should take movement to make the
conditions are less hard to applied so that increase the CL provision’s
feasibility, but not only consider the foreign pharmaceuticals investment
interests so reluctant to challenge the patent protection over-offered. The
circumstances of “where the national emergency occurs and where the
public interest requires” need the further and more detailed interpretation for
clarifying when and how the generics manufactures could apply and
allowing the exception of applying and CL for the public health interests.
To assist the implementation of CL, the channels for patients to appeal their
need should be established as well and the government should take the
applications seriously on making the decision.
If CL cannot be issued in short term by the government, there is also a
method of taking granting CL as a threat when government negotiates with
foreign pharmaceuticals so that get the drug price reduced, just like other
countries do, which is also a way to reach the aim of enhancing citizen’s
access to medicines.
5.1.2 Revise and be awre of TRIPS-plus provisions
Facing pressures come from the Office of the US Trade Representative
and multinational pharmaceutical companies demand on the stronger
pharmaceutical IP protection, China has added TRIP-plus provisions within
its IP laws and drug regulatory framework, such as patent linkage and data
exclusivity. Those systems are advocated by the pharmaceutical advanced
developed countries, where can be functional practiced on protecting the
IPR while the patent disputes can be solved timely, which can encourage the
generics producers apply for the approval. At the same time to many other
countries from the certain extent, they also admit their positive functions,
such as the importance of the communication between the administrative
agency and patent office’s that imposed by the patent linkage system.
However in case of the provisions’ inappropriate stipulation and practices
which could build the obstacles to the generics entering into the market,
they reject to adopt those provisions into domestic laws since those are not
explicitly stipulated by the TRIPS.173 In China those provisions need a great
effort to be revised in order to increase their positive effects of solving the
patent disputes and avoid bringing the hurdles to the generics for their
coming into market.
172
Article 5-8, Measures on Compulsory Licensing for Patent Exploitation, Order No.64 of
the State Intellectual Property Office (Promulgated on 15 March 2012 and implemented
on 1 May 2012).
173
Anqi Hu, Increase the Accessibility to Medicines Within the Patent Regime (在专利制
度下增加药品的可及性——以公共健康为视角)(In Chinese), p7.
66
Regarding the patent linkage, promote transparent and open
examination and approval information and procedures as a principle should
be applied. SFDA could list all drug applications on its website for the
patent holders to track information and bring a timely infringement action.
The judicial remedies for patent infringement should also be strengthened.
China should emphasize judicial procedures, intensify punishments upon
patent infringements, and increase violation costs for patent infringements.
Regarding the data exclusivity, allowing for protection only to NCE, not to
new indications, new dosage forms, new combinations, crystalline forms,
isomers and so on. And assure data protection for traditional medicines to
encourage innovation, because for most of traditional medicines already in
the public domain there is no patent protection under the patent law. While
allowing a compulsory license under some circumstances to be issued under
the data exclusivity protection term and confirm the Bolar exemption
applications for marketing approval even during the period of data
exclusivity. 174 Furthermore, the relevant law and regulations should also
resist the extension of patent terms and the ‘evergreening’ patent. Beware
of any TRIP-plus provision that restricting the promotion of generics to be
imposed by the FTAs. The US Hatch-Waxman Act is a complex regulatory
regime that balances fostering innovation with accelerating generics entry.
Without expertise of IP China should not totally copy the system from the
US or simply abandon the provisions that had adopted, we can take a lesson
from Japan that created its national suitable IP regime to balance the
different parties’ interests. On one hand complying with the TRIPS
minimum obligations and on one the other hand using the TRIP plus to
impose both obligations and rights to both patent holders and generic
applicants is the way for China to go.
5.2 Improve access to medicines through
public hospital reform
As we have concluded that the problem of hard to access to medicines
in China is not attributed by the single reason. The medical patent right
protection brings the adverse impact on this issue, meanwhile the national
healthcare system and medical regulatory policies also have many flaws that
should not be ignored. And this part would provide some recommendations
on how to improve accessing to medicines regarding the national healthcare
reform.
5.2.1 Separate prescription and dispensing function of
public hospitals
As the Chapter 4 has introduced that the combination of prescription
and dispensing system in the public hospitals has motivated the prescription
of expensive drugs to patients, which actually increases the difficulty of
accessing to medicines in terms of bearing high cost of medicines. Since
174
Supra 18, p6-8.
67
the government and people have been aware this problem for long time, the
national action of separating these two functions in the public hospitals has
started since last year, which is also confirmed by the New Healthcare
Reform Plan through public hospitals reforms. The first measure of
separating is to cancel the rule of offering15% reimburse, which means that
public hospitals are used to getting 15% of drug cost reimbursement from
government subsidy.175 That rule is also called “none mark-up” policy and
since last year it has carried out in some pilot cities.
Take Xiamen City as an example, after carrying out the “none markup” policy the expenses on medicines has reduced of 15 million RMB for
only one month. However the outcomes of the policy are that both of the
percentage of selling drugs taking the total hospital income and the total
hospitals’ income had been deceased. In order to keep the hospitals
running, the medical services fees must be raised up so that to pay the
personnel, facilities and other costs. And the government needs to allocate
more financial subsidy to the hospitals. Many people are criticizing the
policy actually does not benefit the public so much, because of the financial
subsidy provided by the government also coming from the tax paid by the
public, besides the public hospitals income is largely reduced. However this
policy could force the public hospitals to be more reasonable on the
prescription and rational on the administration and management to improve
its efficient.176 Establishing the system of hospitals de-link of dispensing
drugs is definitely a task that should be fulfilled by the healthcare reform as
soon as possible.
5.2.2 Attack drug kickbacks by legal means
The overuse and the high expenses of drugs through the public
hospitals’ prescription is also caused by another very “Chinese” reason –
drug kickbacks, which means that the commissions or the bonus offered to
the doctors and hospitals by the drug providers. This action is considered as
a public secret commonly happening within the hospital industry, which is
an illegal conduction. A survey shows 54% Chinese doctors takes drug
kickbacks from pharmaceutical dealers, another 39% receive subsidy for
attending medical meetings, while most citizens believe the actual figure is
much higher. The kickbacks among the drug circulate chain is even seemed
as a Chinese culture that has its own history and reasons to assist it
develops. The thesis is not going to put more word on the background of the
phenomenon, but the importance of attacking this “cultured” is what to be
emphasized here.
175
IMS Health, Healthcare Reform in China, available at:
http://imshealth.com/imshealth/Global/Content/Pharmerging/Document/China_Healthcar
e_Reform.pdf (Search date: 15/05/2013)
176
The “Non Mark-Up” Policy Implemented for One Month Makes the Patients’ Expenses
on Drugs to be Reduced 15 Million RMB (药品“零加成”实施满月减轻患者医药负
担 1500 万元) (In Chinese), April,3,2013, available at:
http://news.xmnn.cn/a/xmxw/201304/t20130403_3221422.htm (Search date:15/05/2013)
68
One of the sounds that question the actual effect of non-mark up policy,
which was talked about earlier, actually comes from the people inside the
industry who believe the medicines final high price actually mainly caused
by the kickbacks received by the hospitals and doctors. The 15% markup,
comparing to the big amount of kickbacks, brings less impact on increasing
the final drug price paid by the patients. Take an example, if a drug win the
bid as 100 RMB, 20 RMB of which is privately returned to the hospital and
another 20 RMB paid to the doctors as kickback by the drug providers. Plus
the 15 RMB, the 15% markup received as governmental reimbursement,
hospitals and doctors can get about 55 RMB from the drug. That is
basically the mechanism called as “affording doctors by medicines”.177 The
way finally ending this phenomenon should be back to the independence of
hospitals prescription and dispensation. Those unnecessary extra payments
secretly increase the cost of medicines and finally convert the burden to the
citizens.
For the new hospital reform can be fulfilled, taking strictly legal
measure to restrain and punish the kickback conduction is essential and it is
the government responsibility to control the drug price for guarantee its
citizen can financially access to medicines. The legal ground of the bribery
crime conviction can be found in the domestic Criminal Law.178 In fact, the
cases involving moral degeneration among doctors have been reported a lot.
The Vice dean of Beijing Oriental Hospital Shang Xianrong held as much as
600,000 RMB within several months through accepting and even requesting
kickbacks directly from drug providers. Last August, courts in Shenzhen,
Zhuhai and other cities convicted tens of doctors and hospital administrative
staffs.179 It is also should be noted that in some cases, the cash bribery is
being instead by non-cash return as invisible. Such as hospitals are allowed
to delayed transfer the purchase payment, sometimes one year of transfer
period is offered by the drugs providers. As we know hospitals as the sector
holding big amount of cash and the interests through banks or other
investment methods can be huge, which actually as the economical return
given by their agreement on the delayed payment. The scandal of GSK
China bribery shows that the multinational pharmaceutical also participated
in the medical industry corruption. Other foreign pharmaceutical companies
are also under the investigations with the suspect of business bribery.
Through legal means to attack those business and administrative bribery and
corruption activities are indispensable to reduce the drugs’ price, in terms of
saving the huge unjustified costs within the industrial chains.
177
Abandon drug markup policy could not change the high price of drugs and excessive
prescription phenomenon (取消药品加成改变不了药价虚高和大处方现象)(In
Chinese), February 8, 2012, available at:
http://www.315jiage.cn/html/c62/100483p2.htm(Search date:15/05/2013).
178
Article 163, 164, Criminal Law of the People’s Republic of China (Adopted at the
Second Session of the Fifth National People’s Congress on July 1979, revised at the Fifth
Session of the Eighth National People’s Congress on March 14, 1997 and promulgated
by Order No.83 of the President of the People’s Republic of China on MARCH 14,1997)
179
Chapter 19- Health Care, Great Wall Numbers, March 20, 2013, available at:
http://www.ofnumbers.com/2013/03/20/chapter-19-health-care/(Search date:
15/05/2013).
69
5.2.3 Open the healthcare service market
For improving access to medicines, opening the healthcare sector to
private service providers is as important as the healthcare system internal
reform. Government should encourage the medical services to develop as
private business institution form. The fair competition environment should
be built up between the public and private service providers, as it will assist
the citizens accessing the good and reasonable health treatment. 180 By
purchasing generic cheaper drugs to weaken the patients’ financial burden
for the treatment and who can provide better service and ask for reasonable
service fees can win more patients’ choices. With the aim of promoting the
public health situation, the establishment of this workable competition
mechanism is greatly relied on the government policy’s and relevant
regulations’ supports.
5.3 Lessons learnt from India
Before 2005, only manufacturing processes could be patented in India,
not molecules. The result was a strong generic industry could be built up
with the skills of chemists who developed new ways to make drugs without
infringing process patents. Product patents were introduced in when India
jointed the WTO and complied with the TRIPS Agreement. However,
numerous western pharmaceutical companies show their struggle for
patenting their drug molecules in India. For example, Pfizer was granted a
patent for anticancer agent Sutent in 2007, but this was revoked last year.
Merck & Co is currently also suing Indian firm Glenmark over genetic
versions of its diabetes treatment Januvia and Janumet. The high court in
Delhi has allowed the suit to proceed, but denied Merck an injunction to
prevent Glenmark from selling its generic versions in the meantime. And
even when patents are granted, India’s government can override them by
issuing a ‘compulsory license, as happened with Bayer’s anticancer drug
Nexavar last year.181
In the early April this year, India’s Supreme Court has denied the
Novartis’ appeal against the decision to refuse patent protection for its
anticancer drug Gilvec. The court says the new polymorph of Glivec does
not enhance its efficiency enough to warrant a patent, despite Novartis’
assertion that the new form is thermodynamically more stable and less
hygroscopic and thus is easier to process and more stable on storage. That
decision met widespread dismay of the pharmaceutical industry that claims
that in order to solve the real health challenges of India’s patients, it is
critically important for India promote a policy environment that supports
180
Abandon drug markup policy could not change the high price of drugs and excessive
prescription phenomenon (取消药品加成改变不了药价虚高和大处方现象) (In
Chinese), February 8, 2012, available at:
http://www.315jiage.cn/html/c62/100483p2.htm (Search date: 15/05/2013).
181
India Green Lights Production of Patented Cancer Drug, March 20, 2012, available at:
http://www.rsc.org/chemistryworld/News/2012/March/india-generics-natco-nexavarcompulsory-licence.asp (Search date: 15/05/2013).
70
continued research and development of new medicines for the health of
patients in India and worldwide. However, that decision was welcomed by
humanitarian organizations such as Médicins Sans Frontières (MSF), which
said that Indian law is designed to prevent drugs’ patent protection being
extended through formulation modifications, and this was a ‘major victory’
for patient access to affordable medicines. India as the “pharmacy of the
poor” makes a huge relief for the millions of patients and doctors in
developing countries that depend on affordable medicines from India. 182
Compare to India, in terms of the challenges to the patent protection, the
competency of the generic production, innovation of the drugs and
international market development, Chinese domestic pharmaceutical
industry is far behind of India.
Actually, China and India share the commons in their pharmaceutical
industries. In India, there are about more 20,000 registered companies and
more than 90% of them are small companies. In China, small and medium
sizes pharmaceutical companies took the part of 86.8% among the 6000
companies. 183 As the capacity of R&D is limited, both of the industries
depend on the generics production, so the new innovation drugs take little
part of the production. However, although they are similar in certain extent,
India after the decades’ development has established the international
influential pharmaceutical companies, such as Dr. Reddy’s and Cipla, who
are not only simply work on the generics and also invent the innovation
drugs and entered into the western developed countries market through
acquisitions. And that change is caused by the differences among the two
counties judicial context. As earlier said, India started to grant patent
protection to medicines was much later than China so it could to develop its
generic industry under the circumstances. And even after complying with
the TRIPS Agreement, Indian attitude to the medical patent is always as
cautions as possible and made use of the TRIPS flexibilities as fully as they
can, like compulsory license, to improve the financial accessibility to
medicines.
The biggest difference, besides of India is more likely to challenge the
western medical patent protection, is that the generics can be also involved
with the innovation steps by the Indian pharmaceutical manufacturers. That
is why India pharmaceutical industry is important in the world. If China
would like to change its current industry situation, giving up the mode of
simply copying meanwhile put more efforts on the innovation and research
the picture must be changed from today.
182
Sarah Houlton, India Rejects Novartis Patent Appeal, April 8, 2012, para1-7, available
at: http://www.rsc.org/chemistryworld/2013/04/india-novartis-glivec-gleevecpatent(Search date: 15/05/2013).
183
Chinese Pharmaceutical Industry is 10-15 years far behind of Indian ( 中印制药龙象之
争,中国药企落后印度 10 至 15 年) (In Chinese), August 22, 2006, available at：
http://finance.sina.com.cn/chanjing/b/20060822/02262842182.shtml (Search
date:15/05/2013).
71
5.4 Protect Chinese traditional medicines
by IPRs tools
On one hand, China has provided patent right protection which reached
the international level with complying obligations imposed by the TRIPS.
On the other hand, the domestic manufacturers’ innovation and R&D
abilities are still at the developing country’s level. This incompatibility can
be understood as China provides more protection to the foreign companies
while the local industry is hard to take get benefits from the IPR protection.
Actually, the traditional Chinese medicine as the indigenous knowledge is a
national treasure that should be protected and promoted through the IPRs.
In the early 1990s, China signed the Agreement 184 after the
negotiations with the US and promised to revise the patent law to provide
patent protection to medicines. At that time, the traditional Chinese drugs
were considered to be also protected by the IPRs. However, as the local
advantage Chinese traditional medicines is slowly developing under the IPR
protection. One reason behind of this phenomenon is that, during the long
time, many traditional medicines are being used as the API and are
considered without high technology involved, so the development of them
are gradually marginalized and being ignored by the local Chinese people
and industry. The interesting thing is that many traditional medicines as the
Chinese wisdom after the chemical treatment processed are turned to the
chemical medicines, which being as the foreign patented products. One
example is that in March, 2001, the PHY906, as known as the four herbs
Chinese medicine, and its application in the chemotherapy was applied to
the patent protection by the Yale University respectively in China and the
US. The PHY906 actually is the four herbs formulation which can be dated
back to 1800 years ago in the ancient Chinese medicine book that called
Treatise on Cold Pathogenic and Miscellaneous Diseases, 185 written by
Zhang Zhongjing in the 3rd century. The formulation of the four herbs later
to be clinical used as the treatment of dysentery, acute enteritis, infantile
diarrhea, enteritis, the digestive tract viral cold, ulcerative colitis, etc. The
name of this formulation in the ancient book is called “Huang Qin Tang”
which was not mentioned in the Yale University’s patent application, where
proved the formulation’s new function on treating colorectal cancer,
pancreatic cancer and liver cancer.186
The development and application of the traditional Chinese medicines
and its patent protection have changed from the new formulation protection
184
The Memorandum of Understanding with the United States, 1992 and the Sino-US
Agreement on Intellectual Property Rights, 1995.
185
Zhang Zhongjing, Treatise on Cold Pathogenic and Miscellaneous Diseases (伤害杂病
论), available at: http://en.wikipedia.org/wiki/Zhang_Zhongjing (Search date:
15/05/2013).
186
Huang Qin Tang (PHY906) (黄芩汤), available at:
https://sites.google.com/site/survivinggastroparesis/disclaimer/herbal-remedies/huangqin-tang-phy906 (Search date: 15/05/2013).
72
at the beginning to the today’s new function discovered and described by
the new scientific technology. This movement has already made a big
economical benefit in the market. Considering the growing generic
manufacture demands the supplement of the APIs, if China can control the
supplement of exporting the low-end APIs but turn eyes to the traditional
medicines protection with the IPR tools, the local pharmaceutical industry
could be more competitive and have a bright future.
73
6. Conclusion
Under the background of the paradoxical relationship existing between
patent law and access to medicine, the exclusive patent rights restrict the
affordability and accessibility of the patented medicines in the developing
world. The international community has realized the need of limiting the
patent over-protection in those countries in the case of the people’s right to
life and health are violated, in terms of the high price of the life-saving
medicines, through reaching the concerning international and regional
agreements. Such as the Doha Declaration it reaffirmed the TRIPS
flexibilities that can be utilized by developing world countries. It is no
doubt that IPRs with the aim of encouraging the inventions and innovations
are indispensable to the right holders and the world development. However,
comparing to other entities under the IPRs protection, medicines products
need to be treated different. 187 Because after viewed the context of
international, regional and national human rights human rights law
instruments, the access to medicines is obviously one human right issue as
they have concluded it as one important approach to right to health, right to
life and right to enjoyment the benefits of scientific progress and its
application.
From the domestic IP legislation review, we find that China has
adopted both TRIPS flexibilities, such as CL, Bolar exemption and parallel
importation as to comply with the Doha Declaration, and TRIPS-plus
provisions to show its willingness on providing more protection on the
IPRs, such as data exclusivity and patent linkage system. In addition, the
enforcement of the TRIPS flexibilities has not been actively being taken use
by authorities. The reasons behind of it can be multi-facial. Different
stakeholders has own interests and the flaws exits in the legislation that
hamper the feasibility, all of which actually impeding the utilizing of
flexibilities. On the other hand, evidences indicating the impact of TRIPSplus provisions on public health and access to medicines. Their impact is
potentially grave if a state does not have the expertise on the IP-related
judicial and administrative aspects. Such as China where has a large market
of generic drugs while lacks adequate basic health services for the public,
the current provisions of the TRIPS-plus are hindering the generics entering
into market and dramatically hurt the domestic pharmaceutical industry that
mainly depends on producing generics. Therefore, China must revise the
TRIP-plus provisions for eliminating its negative on restring the generics
and through establishing the appropriate administrative regulation and
efficient communication with the patent office’s to provide a clear and
feasible channel for both patent holders and generic applicant to understand
the respectively responsibilities and rights and facility the patent disputes
can be solved efficiently. At the same time, China needs also to resist more
TRIPS-plus provisions might be introduced by the FTAs with other country.
187
Caidan Cao, Patent Right and Access to Medicine, Master thesis, Lund University, Fall
2010, p88.
74
Because China is still lacking of the expertise and experiences on the IP
issues both on the legislation and its implementation, the accelerating
movements is beyond its ability and the situation would be hard to correct if
after adopted them. Furthermore, make full use of TRIPS flexibilities, such
as issuing CL and parallel importation, build positive relationships with
countries, including India and Brazil will help to resist TRIPS-plus pressure
and promote medicines affordability
Although IP laws and policies limit accessing to medicines, there are a
number of other factors causing the high price of drugs. The thesis
examined the current hospital administrative system and healthcare policies,
and found that in order to change the current situation, the healthcare
reform, especially the hospital reform is very necessary. The separation of
health services and medicines dispensable together with relevant health
insurance mechanism assists the establishment of rational healthcare system
so that citizens’ right to health can be protected and fulfilled gradually. The
State’s financial allocation on the public healthcare sector also needed to be
increased.
In the past 20 years, China has established a complex IPR legal
framework. Since joined into the WTO for complying with the obligations
imposed, it has made a great amendment on the pre-existing IPR legal
regime. However after the analysis we can find that the current regime puts
over attention on reaching the international level. The imbalance between
the IP protection and facilitating the national development has exposed.
There is a big contrast between the strictly IPRs stipulations and more
infringements cases happening. On the other hand, Chinese pharmaceutical
sector has been growing rapidly for recent decades. However because of
lacking innovations, most of China's drug companies focus on
manufacturing generic drugs. In 2010, the SFDA approved 886 domestic
drug registration applications which include 651 generic drugs and it takes
73%. 188 From this fact, we can conclude that efforts on IPRs protection
provided by China actually only benefits the foreign pharmaceuticals, the
domestic generic producers’ development and the accessibility to affordable
drugs for the public are seriously harmed. The approaches to improve the
accessibility to medicines, under the Chinese context, are keeping the
reform on the current system, revising the relevant laws which are
inconsistent with the aim of promoting public health, making sure the
factual enforcement of TRIPS flexibilities’ and the TRIPS-plus provisions’
potential negative impacts. All of them should be practiced by the
corresponding authorities and the realization cannot be reached if without
the government, relevant authorities, foreign and domestic pharmaceutical
industries and civil organizations’ cooperation towards the same goal of
promoting access to medicines in China.
188
Yearbook of Statistics, SFDA, 2010, (In Chinese), available at:
https://www.sda.gov.cn/WS01/CL0108/66530.html para.2.
75
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