Australia signs up to compulsory licensing of drugs for developing countries in need

The Federal Government has announced it intends to introduce legislation that will allow the granting of compulsory licences for the manufacture and export of pharmaceuticals to developing countries in crisis.

The legislation effectively signals Australia’s acceptance of Article 31b of the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Protocol).

This article provides for developing nations with a demonstrable need for pharmaceuticals – such as in the case of a pandemic outbreak – but which don’t possess manufacturing capacity, to apply to other nations to manufacture the drugs on their behalf.

This legislation sets up Australia as a potential manufacturer and exporter of these compulsorily licensed pharmaceuticals, and will potentially bring new business to Australian biopharma manufacturers.

The TRIPS Protocol came into effect in 1995 in order to protect the intellectual property rights in WTO countries.

However, Article 31 of the protocol enabled governments to authorise the manufacture and use of patented products in special circumstances only after negotiations with rights holders had broken down.

Article 31 enabled countries to manufacture the patented pharmaceutical itself, but didn’t allow provision for nations with no manufacturing capacity – such as many of those with the greatest need for pharmaceuticals in a crisis – to import the drugs from another country.

The revised Article 31b allows exporting countries to grant compulsory licences under strict conditions on behalf of importing countries in need.

Some nations had concerns that such a provision might be abused by some countries, or by some manufacturers in exporting nations. For example, a manufacturer would gain valuable experience producing a drug which could then be exploited for competitive advantage when that drug goes off patent.

Alternatively, the manufacturer could stockpile reserves of the drug and sell them domestically.

According to Sean Applegate, Assistant Director at IP Australia, Article 31b places tight restrictions on how such compulsory licences can be issued to prevent abuse.

In Australia the licenses will be managed by the courts, which will assess applications and mandate only the necessary export quantities are produced.

Innovation Minister Senator Kim Carr and Trade Minister Dr Craig Emerson have announced the legislation for compulsory licensing will be introduced to parliament, and the government aims to have the system up and running by the end of 2011.