Brook K. Baker, Prof. Emeritus, Northeastern U. School of Law, Senior Policy Analyst, Health GAP
The MEEPA is a tentatively concluded trade agreement between Malaysia and EFTA (the European Free Trade Association of Iceland, Liechtenstein, Norway and Switzerland) that may soon be signed by the Malaysian government. Malaysian negotiators have accepted intellectual property (IP) protections above those required by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which will adversely and needlessly affect affordable and equitable access to medicines in Malaysia for generations. The Malaysian government should instruct its negotiators to reject all of the TRIPS-plus measures discussed below.
The TRIPS-plus demands of EFTA are in line with similar demands from the European Union and the United States in their trade agreements that seek to extend monopoly power for Northern biopharmaceutical companies. These companies seek to expand IP that prevents competition so that they can impose exorbitant (and often secret) prices on middle-income countries like Malaysia. The result is gross profiteering at the expense of governments, insurers, and patients, who are often priced out of the market.
Contrary to MEEPA Article 7.1, Malaysia Should be Permitted to Retain its Existing Right to Issue Compulsory Licences for Failure to Work a Patent Locally
Article 7.1 of MEEPA would prevent Malaysia from relying on Section 49 of its Patent Law to issue compulsory licences for failure to work the patent through local manufacture when such manufacture is feasible. Article 7.1 of MEEPA states:
‘In line with TRIPS Article 27 (1), importation and offering on the market shall be considered a way of exploiting the patent in the country of importation. Accordingly, a compulsory licence may not be granted on the sole ground that a product protected by a patent or a product incorporating a patented process is being imported and not locally produced or used.’
In contrast, Section 49(1) of the Malaysian Patents Act states:
At any time after the expiration of three years from the grant of a patent, or four years from the filing date of the patent application, whichever is the later, any person may apply to the Registrar for a compulsory licence under any of the following circumstances:
(a) where there is no production of the patented product or application of the patented process in Malaysia without any legitimate reason;
(b) where there is no product produced in Malaysia under the patent for sale in any domestic market, or there are some but they do not meet public demand without any legitimate reason.
Article 5A(2) of the Paris Convention, which is incorporated by reference into the TRIPS Agreement via Article 2.1, authorizes countries to provide for compulsory licences in case of failure by the patentee to work the patent domestically. [1] There are time limits affecting when such licences can be issued: the last of either four years from the filing of the patent application or three years after it grant. Although the scope of working rules is not without some controversy,[2] an interpretation that local working requires at least some degree of in-country manufacturing and is TRIPS compliant, at least with respect to the issuance of compulsory licences, has broad support.[3] India, Brazil, Malaysia itself, and other countries, including the Philippines, still have laws allowing compulsory licenses when a patent is not worked via local manufacture or licensed to a local producer.[4] Likewise, Malaysia should fight to retain the right to issue compulsory licences on the grounds that a patent is not manufactured locally even though it is economically feasible to do so. Allowing compulsory licenses for failure to manufacture locally enables Malaysia to secure technology transfer, to expand its biopharmaceutical manufacturing capacity, and to help ensure security of supply, including it cases like the COVID-19 pandemic when foreign producers preferentially supplied high-income country demand.
Contrary to MEEPA Article 7.3(a), Malaysia Should Maintain the Right to Have an Exception to Patent Rights for Therapeutic Uses of Patented Products.
Article 7.3(a) of the MEEPA IP Chapter permits excluding methods of treatment from patentability: “Each Party may also exclude from patentability: any invention of a method for treatment of the human or animal body by surgery or therapy or for diagnostic methods practised on the human or animal body.” But subsection (a) also adds a disabling exception to this exclusion that would ultimately require Malaysia to issue evergreening use patents on biopharmaceutical products: “This provision (i.e. the exclusion) shall not apply to products, in particular substances or compositions, for use in any of these methods.”
Article 27.3(a) of the TRIPS Agreement allows each WTO Member State, including Malaysia, to exclude from patentability: “diagnostic, therapeutic and surgical methods for the treatment of humans or animals.” This exclusion has been consistently interpreted to allow countries to disallow patents on uses, including new uses, of previously patented biopharmaceutical products. As a result, many countries limit patents on new or additional uses of known substances (in the pharmaceutical context new indications), and many experts and expert reports have recommended that low- and middle-income countries adopt per se exclusions for patents on new uses or methods of use.[5] Exclusion of new use or method of use patents is expressly permitted by Article 27.3(a) of the TRIPS Agreement, which permits exclusions of patents on “diagnostic, therapeutic and surgical methods.” Under this approach, “there is no real difference between patent claims relating to the use of a substance and those relating to a therapeutic method: in both cases a new medical activity is claimed, i.e. a new way of using one or more known products.”[6] Andean Community patent law explicitly stipulates that both products and processes already patented and included in the state of the art may not be the subject of a new patent on the sole ground of having been put to a use different from that originally contemplated by the initial patent. India explicitly prohibits patenting of all new uses and methods of use under section 3(d) of its Amended (2005) Patents Act as does Argentina, Pakistan, and the Philippines. Similarly, the East Africa Community has directly encouraged its Partner States to exclude patents on “new medical uses of known substances including micro-organisms … .”[7]
Regrettably, Malaysia’s Patent Act currently allow patents on any use of biopharmaceutical products, but it need not do so under the TRIPS Agreement and by strong precedence in developing countries. Malaysia should retain the policy space to disallow patents on all uses in the future rather than tie its hands going forward. Each use/new-use patent would otherwise result in a new 20-year patent term, adding to the length of monopoly control and extending the timeline of supra-competitive pricing that restricts access to medicines.
Contrary to MEEPA Article 7.3, Malaysia Should Retain the Freedom to Limit Patent Protections for Products Resulting from Microbiological Processes That Are Not Themselves Patented
Article 7.3 of MEEPA’s IP chapter states that “Each Party may also exclude from patentability: … plant or animal varieties or essentially biological processes for the production of plants or animals. This provision shall not apply to microbiological processes or the products thereof.” Article 27.3(b) of the TRIPS Agreement requires “micro-organisms” and “microbiological processes” to be patentable, and TRIPS Article 28.1(b) extends exclusive rights for products “obtained directly by” a process but only if that process is patent protected. Since Article 7.3 of MEEPA requires patenting of microbiologically produced products whether directly obtained by the process and whether patented or not, it is TRIPS-plus. Regrettably, Section 13.1(b) Malaysia’s Patent Act currently allows microbiological product patents without limitation. However, Malaysia should maintain the TRIPS-compliant freedom to change its law in the future rather than being excluded from doing so by MEEPA.
Contrary to MEEPA Article 8.2, Malaysia Should Reject an Impenetrable Data Exclusivity Rule Disallowing Use of Regulatory Data to Approve Bioequivalent Medicines and Extending Data Exclusivity to Existing Chemical Entities
Article 8.2 of the MEEPA IP Chapter contains a provision that undermines the Directive on Data Exclusivity in Malaysia. Article 8.2 states:
With regard to pharmaceutical products, the Parties shall:
(a) when requiring, as a condition of approving the marketing of agricultural chemical products which utilise chemical or biological entities, the submission of undisclosed test data or other data, the origination of which involves a considerable effort, protect such data against unfair commercial use. In addition, the Parties shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected from unfair commercial use; and
(b) process subsequent applications and grant marketing approval in marketing authorisation procedures only after a period of time as defined in the domestic laws and regulations or earlier where a written consent from the first applicant is presented.”
Subsection (a) is TRIPS-plus as it excludes TRIPS Article 39.3’s limitation that data protections only apply to “new chemical entities.” Subsection (b) could be interpreted to invalidate portions of Malaysia’s Directive on Data Exclusivity (Directive No. 2 of 2011) that include important safeguards to protect public health, including exceptions to data exclusivity in cases where compulsory licenses have been issued or for other public health and governmental interests.[8] This Directive was used by Malaysia when it issued a compulsory license on sofosbuvir for use with daclatasvir to treat hepatitis C.
Malaysia’s existing Directive is TRIPS-plus, as Article 39.3 of the TRIPS Agreement merely requires data protection against unfair commercial use, not data exclusivity that disallows regulatory authorities from referencing or relying on regulatory data previously submitted to establish the safety and efficacy of a pharmaceutical product. TRIPS Art. 39.3 merely requires protection against the “unfair commercial use” of “undisclosed” data that was required to be submitted to obtain marketing approval of a “new chemical entity.”[9] Moreover, commentators express alarm that the adoption of data exclusivity would require a generic producer to unethically reproduce clinical trial evidence in order to obtain marketing approval during the period of exclusivity. In sum, Malaysia should not only reject MEEPA article 8.2(b) to protect the data exclusivity exceptions contained in its existing Directive, it should retain the freedom to reject data exclusivity in its entirety as it is TRIPS-plus.
Contrary to MEEPA Article 9, Which Would Require 25 Years of Protection for Industrial Designs, Malaysia Should Retain the Freedom to Grant only 10 Years of Protection as Provided in TRIPS
Article 9 of the MEEPA IP Chapter locks in an extraordinary 25-year period of exclusivity for industrial designs (with an option for less time with respect to components needed for repairs), whereas TRIPS Article 26.3 only requires 10 years of such protection. Regrettably, unlike Australia which rejected a TRIPS-plus term,[10] Malaysia already improvidently provides for 25-years of exclusivity, but it should retain the freedom to revert to the TRIPS minimum whenever it so chooses. It should not lose this TRIPS-compliant option because of a binding commitment under MEEPA. Although this provision does not apply to biopharmaceutical per se, it could apply to medical devices, including devices that deliver medicines such as dosed inhaler, dosed injectors, diagnostic tests and devices, and other technologies important to health.
Conclusion
The Malaysian Government should not rush to judgment to approve MEEPA provisions that will undermine the right to health and ultimately cost the country options to support technology transfer, to build its biopharmaceutical manufacturing capacity, to ensure adequacy of supply, and minimize IP protections that make medicines unaffordable both for the government and other buyers and patients themselves. If Malaysia does accept these unwise provisions, it will not just be granting those protections to the EFTA countries but to all TRIPS Members as well. It might also be subject to state-to-state dispute settlement or crippling investor-state dispute settlement claims as well. The international IP regime is already unbalanced and unfair to developing countries. The burdens of biopharmaceutical monopolies should not be made even more onerous by a lack of due diligence in considering the adverse health impacts of free trade agreements.
[1] Article 5A(4) of the Paris Convention: “A compulsory license may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of the grant of the patent, whichever period expires last; it shall be refused if the patentee justifies his inaction by legitimate reasons.” See Article 2.1 of the TRIPS Agreement, incorporating the Paris Convention by reference.
[2] Those who argue against the legality of local working requirements, like the EFTA, point to Article 27.1 of the TRIPS Agreement which prohibits discrimination against imports in the granting of patents or enjoyment of patent rights. But the enjoyment of patent rights is itself subject to the right of limited exceptions under Article 30 and compulsory and government use licences under Articles 31 and 31bis and the freedom to define grounds for compulsory licenses and to assure access to medicines for all is confirmed in paragraphs 4 and 5 of the Doha Declaration the TRIPS Agreement and Public Health and implied in Articles 7 and 8 of the TRIPS Agreement.
[3] Michael Halewood, Regulating Patent Holders: Local Working Requirement and Compulsory Licenses at International Law, 35 Osgoode Hall L.J. 243-287 (1997); Bryan Mercuriio & Mitali Tyagi, Treaty Interpretation in WTO Dispute Settlement: The Outstanding Question of the Legality of Local Working Requirements, 19 Minn. J. Int’l L. 275-326 (2010); Chia-Ling Lee, The Legality of Local Patent Working Requirements under the TRIPS Agreement, 2 N.T.U.T. J. of Intell. Prop. L. & Mgmt. 39-48 (2013); Melat Arega, Defending Local Working,” 10 Am. U. Intell. Prop. Brief 28 (2019), available at: https://digitalcommons.wcl.american.edu/ipbrief/vol10/iss2/2; Althaf Marsoof, Local Working of Patents: The Perspective of Developing Countries, In Multi-dimensional Approaches Towards New Technology (Bharadwaj, A., Devaiah, V., Gupta, I. eds, Springer, Singapore 2018), available at https://doi.org/10.1007/978-981-13-1232-8_15;Paul Champ and Amir Attaran, Patent Rights and Local Working Under the WTO TRIPS Agreement: An Analysis of the Brazil Patent Dispute, 27 Yale J. Int’l L. 365-293 (2002).
[4] Indonesia previously had such a provision but improvidently amended its law recently to drop this option. https://www.efta.int/sites/default/files/documents/legal-texts/free-trade-relations/indonesia/efta-indonesia-record-of-understanding-concerning-patents.pdf
[5] Carlos Correa, Integrating Public Health Concerns into Patent Legislation in Developing Countries, 21 (2000) (Correa, Integrating Public Health); Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy, 45 (2002) http://www.iprcommission.org/papers/pdfs/final_report/CIPRfullfinal.pdf; UNDP, Good Practice Guide: Improving Access to Treatment by Utilizing Public Health Flexibilities in the WTO TRIPS Agreement, 20-21 (2010) (UNDP Good Practice Guide).
[6] Resource Book on TRIPS and Development: An Authoritative and Practical Guide to the TRIPs Agreement, UNCTAD-ICTSD, 368, 387 (2005) (italics supplied).
[7] Regional Intellectual Property Policy on the Utilization of Public Health-Related WTO-TRIPS Flexibilities and the Approximation of Intellectual Property Legislation, Policy Statement No. 3(a)(iii), at 14 (2013).
[8] ‘Nothing in the Data Exclusivity shall:
a) Apply to situations where compulsory licences have been issued or the implementation of any other measures consistent with the need to protect public health and ensure access to medicines for all; or
b) Prevent the Government from taking any necessary action to protect public health, national security, non-commercial public use, national emergency, public health crisis or other extremely urgent circumstances declared by the Government.
[9] See Carlos Correa, Protecting Test Data for Pharmaceutical and Agrochemical Products under Free Trade Agreements, in Negotiating Health: Intellectual property and Access to Medicines (2006) (explaining that, under TRIPS, the reliance on prior reviewed data by a regulation authority to approve a generic version of the same drug need not be considered a “commercial use” of the data); Brook K. Baker, Ending Drug Registration Apartheid: Taming Data Exclusivity And Patent/Registration Linkage, 34 Am. J. Law & Medicine 303-44(2008).
[10] The Australian government noted in 2003 that ‘TRIPS provides a minimum registration for industrial designs of 10 years. As such it would not be in Australia’s interest to provide a period of registration in excess of its international obligations as Australia is a net importer of intellectual property.’ https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr1700_ems_b3efc81c-1544-4a92-aaab-f99e7bb1ec9e%22.
