Problems with current U.S. policy.

Key Problems

* The inclusion of intellectual properly provisions in multiple-country trade agreements makes it much harder to advance public health priorities.

* Washington continues to work to limit developing countries' options to adopt intellectual property policies that could make HIV/AIDS drugs more affordable.

* The U.S. government is seeking to renege on commitments, made at the WTO Ministerial meeting in Doha, Qatar, to facilitate poor countries' access to essential medicines.

Despite the legality of compulsory licensing and despite the public health emergency enveloping much of the developing world, until mid-1999 the U.S. actively opposed developing country efforts to implement compulsory licensing or other measures to make HIV/AIDS drugs more affordable and available in low-income countries. The U.S. position suddenly changed in June 1999, following AIDS activist protests that disrupted the early presidential campaign of Al Gore. During the November-December 1999 WTO meetings in Seattle, the Clinton administration announced it would offer special treatment for health-related intellectual property disputes, taking into account health issues as well as commercial concerns. However, efforts to incorporate the new Clinton policy into the Africa Growth and Opportunity Act floundered and even threatened to impede passage of the act. So the Clinton administration issued an executive order stipulating that the U.S. would not challenge TRIPS-compliant policy measures to make AIDS medicines available anywhere in Africa.

In February 2001, with ever-heightening attention on the AIDS crisis and growing interest in what posture President Bush would adopt regarding controversial intellectual property issues, the new administration indicated that it would continue the Clinton administration's policy of permitting initiatives to make AIDS medicines more available, as long as those efforts were TRIPS-compliant. But Clinton's executive order is limited to sub-Saharan Africa and only covers AIDS medicines. This illustrates a pervasive problem in Washington's position, even after the 1999 policy shift: the treatment of compulsory licensing as an exceptional policy tool to be used only in emergency circumstances, even though the WTO TRIPS agreement considers compulsory licensing a standard part of the intellectual property regime.

Despite the executive order, both Clinton and Bush have exerted direct pressure on countries seeking to advance compulsory licensing and related policies. The mixed messages conveyed by U.S. actions, along with confusion fostered by the pharmaceutical industry over what is permissible under WTO rules, has intimidated most developing countries and left them wary of political consequences if they exercise their right to promote compulsory licensing.

In June 2001, African countries at the TRIPS governing body (known as the TRIPS Council) forced a historic discussion on intellectual property and access to health technologies. That meeting created momentum for a declaration on TRIPS and public health, which was eventually issued at the November 2001 WTO Ministerial meeting in Doha, Qatar. In the Doha Declaration, countries "affirmed that the [TRIPS] Agreement can and 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." The declaration specifically mentioned each country's right to pursue compulsory licensing.

The WTO also pledged at Doha to rectify an irrational TRIPS provision that would particularly undermine a developing country's ability to institute effective compulsory licensing. Although TRIPS rules permit a country to assign a drug import license to a manufacturer outside the country, the licensee must have both permission to produce the drug in the country where its factory is based and permission to export the drug from that country. Thus, even if Zambia were to issue a compulsory drug license to a manufacturer in Canada, the Canadian manufacturer would be blocked from producing and exporting the drug if a brand-name company had a patent for that drug in Canada.

The Doha Declaration obligates TRIPS members to address this problem in 2002. All parties recognize that some kind of exception to this irrational provision will need to be created through clarification, reinterpretation, or amendment of TRIPS rules. However, the U.S. is working aggressively to limit the scope of the exception, suggesting for example that it should only apply to the poorest countries or to those afflicted with the most extreme health care emergencies. If the ultimate resolution reflects the U.S. position, many developing countries will find themselves unable to make effective use of compulsory licensing. (The U.S. position, incidentally, would also inhibit the U.S. or any other rich country's ability to assign compulsory licenses overseas. This would, for example, have made it much harder for the U.S. to assign a license to Indian producers for the anti-anthrax drug Cipro, something Washington considered doing in the wake of September 11.)

The U.S. is also working in diverse international trade negotiating fora to increase the monopoly protections afforded by patents and to diminish the ability of countries to initiate compulsory licensing and parallel importing. For example, the U.S.-Jordan Free Trade Agreement, completed in fall 2000, sharply limits the grounds for compulsory licensing, and the published summary of the U.S. negotiating position for the intellectual property portion of the proposed Free Trade Agreement of the Americas (FTAA) contains a variety of measures that would effectively extend patent terms, interfere with compulsory licensing, and otherwise undermine efforts by poor countries to make medicines more accessible. Generally, the inclusion of intellectual property provisions in multiple-country trade agreements (like the FTAA) makes it much harder to ratchet down international patent protection obligations. Even if changes were made so that the WTO TRIPS agreement became less restrictive, for example, this move would have little impact on countries that had separate intellectual property obligations--if they were equivalent to or more severe than the WTO mandates--under the FTAA or other international trade agreements.