International law on parallel import and compulsory license of pharmaceutical products to ensure access to medicines – experiences and recommendations for vietnam

MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** -EXECUTIVE BOARD OF ADVANCED PROGRAMS QUÁCH YẾN NHI INTERNATIONAL LAW ON PARALLEL IMPORT AND COMPULSORY LICENSE OF PHARMACEUTICAL PRODUCTS TO ENSURE ACCESS TO MEDICINES – EXPERIENCES AND RECOMMENDATIONS FOR VIETNAM THESIS OF LEGAL PROFESSIONAL LAW Faculty: International Law Academic Year: 2013 - 2017 Science Instructor: LLM Ngô Kim Hoàng Nguyên Author: QUÁCH YẾN NHI Student‟s Code: 1353801014156 Class: CLC38B HO CHI MINH CITY ACADEMIC YEAR: 2017 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF LAW -*** -EXECUTIVE BOARD OF ADVANCED PROGRAMS QUÁCH YẾN NHI INTERNATIONAL LAW ON PARALLEL IMPORT AND COMPULSORY LICENSE OF PHARMACEUTICAL PRODUCTS TO ENSURE ACCESS TO MEDICINES – EXPERIENCES AND RECOMMENDATIONS FOR VIETNAM THESIS OF LEGAL PROFESSIONAL LAW Faculty: International Law Academic Year: 2013 - 2017 Science Instructor: LLM Ngơ Kim Hồng Ngun Author: QUÁCH YẾN NHI Student‟s Code: 1353801014156 Class: CLC38B HO CHI MINH CITY ACADEMIC YEAR: 2017 TABLE OF ABBREVIATION WTO : World Trade Organization WHO : World Health Organization WIPO : World intellectual Property Organization USA : United State of America EU : European Union p : Page v : Versus Pub : Publication Vol : Volume No : Number IP : Intellectual Property IPR : Intellectual Property Right EEA : European Economic Area EEC : European Economic Community MOH : Ministry of Health NT : National Treatment MFN : Most Favorable Nation DSM : Dispute Settlement Mechanism LDC : Low Develop Country IPA : Indian Patent Act IPAB : Intellectual Property Appellate Board DSB : Dispute Settlement Board STATEMENT OF GUARANTEE I hereinafter guarantee that this bachelor thesis is definitely attributed to my own research and are implemented under the supervisory guidance of LLM Ngo Kim Hoang Nguyen All of the information other than my opinions to be used or quoted has been acknowledged by means of complete references I am faithfully and completely responsible for this guarantee Ho Chi Minh City, July 18th 2017 The author Quach Yen Nhi TABLE OF CONTENT INTRODUCTION CHAPTER I: OVERVIEW OF PARALLEL IMPORTS AND COMPULSORY LICENSES FROM THE PERSPECTIVE OF INTELLECTUAL PROPERTY LAW 10 1.1 Parallel imports and the exhaustion doctrine 10 1.1.1 Parallel imports 10 1.1.2 The exhaustion doctrine and relationship between the exhaustion doctrine and parallel imports 13 1.2 Compulsory licenses 19 1.2.1 The concept of compulsory licenses for patent 19 1.2.2 Characteristics of the compulsory licenses 20 1.2.3 Purposes of compulsory licenses (non – voluntary licenses) 23 CHAPTER II: INTERNATIONAL LAW ON PARALLEL IMPORTS AND COMPULSORY LICENSES OF PHARMACEUTICAL PRODUCTS TO ENSURE ACCESS TO MEDICINES 29 2.1 International treaties on parallel importations and compulsory licenses of pharmaceutical products to ensure access to medicines 29 2.1.1 International treaties on parallel imports of pharmaceutical products to ensure access to medicines 29 2.1.2 International treaties on compulsory licenses of pharmaceutical products to ensure access to medicines 33 2.2 Concretization international treaties into domestic legislations on parallel import and compulsory license of pharmaceutical products to ensure access to medicines 49 2.2.1 The concretization international treaties into Malaysian domestic law in parallel import of pharmaceutical products 49 2.2.2 The concretization international treaties into Indian domestic law in the compulsory license of pharmaceutical products 52 CHAPTER III: EXPERIENCES AND RECOMMENDATIONS FOR IMPROVING VIETNAMESE LAW ON PARALLEL IMPORTS AND COMPULSORY LICENSES OF PHARMACEUTICAL PRODUCTS 64 3.1 Legal background on parallel imports and compulsory licenses of pharmaceutical products 64 3.1.1 Regulations on parallel imports of pharmaceutical products 64 3.1.2 Regulations on compulsory licenses of pharmaceutical products 71 3.2 Recommendations for improving Vietnamese Law on parallel imports and compulsory licenses of pharmaceutical products 76 3.2.1 Recommendations to improve Vietnamese Law on parallel imports of pharmaceutical products 76 3.2.2 Recommendations to improve Vietnamese Law on compulsory licenses of pharmaceutical products 81 CONCLUSION 89 INTRODUCTION Rational for research Martin Luther King, Jr once said: “Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress” Under the spirit and content of this statement, it is easily to ascertain that if justice does not existed in law, this law is meaningless Justice in relation to human rights is much more important than ever, especially when connecting to human lives, public health, From past to present, food and medicines are both important elements to maintain people‟s lives because without health, it is impossible working, studying and performing any social and family responsibilities The right to health is one of the most important human rights That is the reason why essential medicines are recognized as part of the right to health under international law The right to the progressive realization of the highest attainable standard of health first emerged as a social right in the World Health Organization (WHO) Constitution , Article 25.1 of the Universal Declaration of Human Rights (UDHR) and the binding International Covenant on Economic, Social and Cultural Rights (ICESCR) Regulating the right to health into each country‟s constitution is obligation when they ratified international treaties related to this one The USA does not regulate about the right to health into the Federal State Constitution, but thirteen state constitutions specifically mention health Mississippi‟s provision is one of the oldest on the books (adopted in 1869), and thus could be a source of well-developed judicial interpretation Article IV, section 86 of Mississippi Constitution 1890 provides: “It shall be the duty of the legislature to provide by law for the treatment and care of the insane; and the legislature may provide for the care of the indigent sick in the hospitals in the Constitution of the World Health Organization, 1946 – 1948, preamble S Katrina Perehudoff and Hans Hogerzeil (2008), “Essential Medicines in National Constitutions” [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5070687/] (accessed on 15/7/2017) 2 State” Besides, Philippines ruled the right to health under Section 15 Philippines Constitution 1987 that ensures to protect and promote the right to health of the people and instill health consciousness among them To effectively enhancing this right, medicines for human health is the most necessary element, especially when diseases and pandemic are more and more complex and dangerous Particularly, globally, at the end of 2015, an estimated 36.7 million people were living with HIV In 2015, there were an estimated 212 million malaria cases globally In the same year, there were an estimated 10.4 million new TB (Tuberculosis) cases and 1.4 million TB deaths.5 This is a paradox issue for many countries, especially developing countries and LDCs Because creating a new drug is highly expensive, wasting many years and this is really difficult for the developing countries due to their limitation of technologies and financial capabilities In the USA, research-based drug companies outlay at least $110 million and up to $880 million to create and test one new drug.6 Therefore, the patent – holders always want to earn as much money as possible to make profit for their business That leads to the developed countries also protect strictly their patents to make profit for their economies It hurts seriously to citizens of developing countries and LDCs because they have to buy expensive pharmaceutical products for treatment It is nonsense to put private benefit beyond community interest, especially relating to public health If this situation still extends, this will be a “dangerously structured dams that block the flow of social progress” The Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full of the provisions in TRIPS regarding SOS.ms.gov, “Mississippi Constitution 1890” [https://www.sos.ms.gov/Education-Publications/Documents/Downloads/Mississippi_Constitution.pdf] (accessed on 15/7/2017) HR Library, “Philippines Constitution 1987" [http://hrlibrary.umn.edu/research/Philippines/PHILIPPINE%20CONSTITUTION.pdf] (accessed on 15/7/2017) World Health Organization (2017), World Health Statistic 2017 – Monitoring Health For The SDGs (Sustainable Development Goals), Printed in France, p 40 – 41 Julia A Moore (2006), Parallel Trade, Unparallel Laws: An Examination Of The Pharmaceutical Parallel Trade Laws Of The United States, The European Union And The World Trade Organization, Richmond Journal Of Global Law & Business, Vol 6:1:2006, p 04 flexibility to protect public health, and, in particular, provide access to medicines for all Doha Declaration is seen to be the “victory” of developing countries because the weaknesses of developing countries are financial capacity and technology so that they have to depend on developed countries so much, especially in the pharmaceutical sector and the way lead to abusing monopoly of patentees is really short Recognizing the importance of pharmaceutical products for human health and the dangers of monopoly to increase drug prices can have a serious impact on public health, although the TRIPS Agreement has strict regulations to protect the interests of title – holders, the Doha Declaration “open a door” by stating that “TRIPS Agreement does not and should not prevent Members from taking measures to protect public health” to “promote access to medicines for all”7 Compulsory license and parallel import are two effective solutions detailed by not only Paris Convention but also the TRIPS Agreement and the Doha Declaration to solve the problem of access to medicines for public health Compulsory licensing is a “magical wand” of Government to force the patentees to decrease the price of products and determine in affordable for community access In the pharmaceutical field, the patent owners have the right to prohibit others from using the invention Compulsory licensing is also a useful mechanism to help underprivileged and developing countries can access to pharmaceutical products to ensure the social benefits in emergency situations However, compulsory licenses are applied only in certain cases in accordance with regulations and must follow strict application procedures Therefore, compulsory licensing in pharmaceutical sector only satisfied partially the need for accessing to pharmaceutical products by the community Parallel import came into existence and resolved the weakness of compulsory license for countries where people cannot access medicines due to high prices and limitation of quantities because it helps consumers access to cheap products in the same characteristics with the original and high – price products that they want to buy Especially with pharmaceutical products, the same ingredient, name of manufacture and usage are really World Trade Organiztion (2001), “Declaration On The TRIPS Agreement And Public Health” [https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.pdf] (accessed on 17/06/2017) ideal for patients and doctors because the patients will be effectively cured with cheap price and doctors will be assured about their treatments Both, therefore, are two powerful tools for balancing the public and private between the parties It is worthwhile and basic for people to have access to medicines to protect their health Experiences of concretization international treaties about parallel import and compulsory license into domestic laws of India and Malaysia are suitable for improving Vietnamese laws The reasons why the author chooses two countries are: (i) India and Malaysia are developing countries so that there are similarities to Vietnam, such as economic capabilities, technology, low GDP, polluted environment, crowded population in low – salary (ii) Due to Asian countries, the weather of three countries is high temperature, humid and seriously suffered affections of climate change due to affecting the transmission of many infectious diseases (especially water, food and vector-borne diseases) and regional food productivity (especially cereal grains).8 Therefore, Malaysia, India, and Vietnam suffered many pandemics, especially flu pandemic 2009 , so that affordable pharmaceutical products are needed for residents in these areas; (iii) In 2017, India is likely to be among the top three pharmaceutical markets by incremental growth and sixth largest market globally in absolute size India‟s cost of pharmaceutical productions is significantly lower than that of the US and almost half of that of Europe and could supply 20% of global generic medicines market 10 The success of India‟s generic medicines market is the result of applying compulsory licenses to develop domestic pharmaceutical industry and encourage manufacturing generic medicines However, the weakness of applying Indian experience in compulsory license for WHO, “Climate Change And Human Health – Risk And Responses” [http://www.who.int/globalchange/publications/climchange.pdf] (accessed on 15/7/2017) Wikipedia, “2009 flu pandemic in India” [https://en.wikipedia.org/wiki/2009_flu_pandemic_in_India] (accessed on 15/7/2017); Wikipedia, “ 2009 flu pandemic in Malaysia” [https://en.wikipedia.org/wiki/2009_flu_pandemic_in_Malaysia] (accessed on 15/7/2017); Wikipedia, “2009 flu pandemic in Asia” [https://en.wikipedia.org/wiki/2009_flu_pandemic_in_Asia] (accessed on 15/7/2017) 10 IBEF, “Inndia Pharmaceutical Industry” [https://www.ibef.org/industry/pharmaceutical-india.aspx] (accessed on 15/7/2017) 86 that, specifying content of official guiding document about enforcing competition provisions in the IP field is a very important work to help apply for compulsory license when existing abuse of patentees to be easier, more effective and appropriate in the reality.165 Besides, improving Vietnam‟s pharmaceutical industry, enhancing legal awareness of not only competent authorities but also enterprises about compulsory licenses and creating an international network of cheap pharmaceutical products are extremely important and necessary as well as adjusting the legal framework so as to suitable and catch up with the pace of society SUB – CONCLUSION FOR CHAPTER III Vietnam is a Member State of WTO so that its legislation shall be bounded by the TRIPS Agreement TRIPS Agreement has many flexible provisions to promote access to medicines of community Under Vietnam‟s commitment toward WTO in the pharmaceutical sector, from 01/01/2009, foreign pharmaceutical companies have the similar rights to domestic companies in importing and exporting medicines But not implied their rights to distribute medicines Towards importing pharmaceutical campaign, Vietnam still applies quota for importing medicines in order to protect domestic pharmaceutical manufacturers Article 125 (2) (b) IP Law 2005, amendment 2009, allowed owners of industrial property objects as well as organizations and individuals that are granted the right to use or the right to manage geographical indications may not have the right to prohibit other persons from circulating, importing or exploiting the use of products that are legally marketed, including legally foreign market, except for products not owned by the trademark owner or the licensee of the trademark owner on foreign markets In addition, Article 21 (2) Decree 103/2006/NĐ – CP dated on 22/9/2006, detailing and guiding the implementation of some of articles of the IP Law on 165 Read more: Nguyen Thanh Tu , “Compulsory License For Intellectual Property Rights And Competitive Law” [http://www.hcmulaw.edu.vn/hcmulaw/index.php?option=com_content&view=article&id=349:bbcgqsdvqshttvplct &catid=103:ctc20061&Itemid=109] (accessed on 06/7/2017); Le Thi Nam Giang (2013), Compulsory licenses and the problem of protecting public health, Pub National University, p 255 – 257 87 industrial property, has a clear definition of “products that are legally marketed” Pursuant to this article, “products that are legally marketed”, including foreign markets shall be construed as the products of the owner or the licensee, including transfer the right under compulsory decisions, the person having the right to prior use the IP objects were put on the market in the country or abroad Therefore, parallel importation is officially admitted and international exhaustion doctrine is applied in Vietnam On May 28, 2004 the Minister of Health has issued Decision No 1906/2004/QĐ-BYT on parallel import of preventive pharmaceutical products and treatment for people administered by the Drug Administration of Vietnam under the Ministry of Health shall be considered and licensed parallel pharmaceutical products At present, compulsory license is ruled by IP Law and implementation guidelines of IP law 2005, amendment 2009 Particularly, non – voluntary license is regulated under Article 132, 133, 136, 137, 145, 146, 147 IP Law 2005, amendment 2009 In addition, compulsory license is ruled under Article 22, 23, 24, 25 Consolidate text No 02/VBHN BKHCN of Decree detailed regulations and guidelines for implementing a number of articles of the law on intellectual property on industrial property dated on 31/12/2014 and section Chapter of Consolidate text No 04/VBHN – BKHCN of Circulars guiding the implementation of the Government's Decree No 103/2006/ NĐ-CP of September 22, 2006, detailing and guiding the implementation of a number of articles of the Law on Intellectual Property on industrial property dated on 31/12/2014 Hereinafter, “compulsory transfer usage right of invention” is use to replace “compulsory license From experiences of Malaysia and India, combining Vietnamese legal background on parallel import and compulsory license of pharmaceutical products, improving Vietnamese law needs to be assured that: (i) compliance with international treaties of IP and effectively exploitation regulations on restrictions and exceptions of IP rights in international treaties; (ii) Clearly specification about purposes of applying parallel imports and compulsory licenses of pharmaceutical products because it could affect seriously to national interest and socio- economic issues such as attracting foreign investment, international relationship between countries, ; (iii) Thoroughly performance 88 of obligations about protecting IP rights on the basic of balancing with public interest in specific cases ruled by law; (iv) Assuring Vietnamese law is used in respectable, synchronous, public and transparent way 89 CONCLUSION Patent protection of pharmaceutical products motivates research and development, and develops new pharmaceutical products The patent regime encourages creative activity by giving the proprietor a limited period of time to exploit the invention With this right, patent owners have the opportunity to exploit the invention in order to recover their investment, make a reasonable profit, and reinvest in the creation of new inventions However, IP right has certain limitations and exceptions to serve the public interest and protect public health Thus, the TRIPS Agreement, as well as the Doha Declaration on the TRIPS Agreement and Public Health in 2001, affirmed that WTO Members can take the necessary measures to limit IP rights to protect public health and promote access to pharmaceutical products for people, including parallel imports of pharmaceutical products and compulsory licenses Thus, the provisions of the TRIPS Agreement and the Doha Declaration imply that parallel import and compulsory license in pharmaceutical field are exceptions of IP rights However, these rules are not consistent depending on the views and policies of each country The current TRIPS Agreement incorporates strict patent protection and strict licensing restrictions on pharmaceutical products In relation to patents, the liberalization of parallel imports of pharmaceutical products allows developing countries access to pharmaceutical products at a reasonable price, making poor patients able to afford pay The use of compulsory license has a good effect on developing countries in the context of high prices and low availability of essential pharmaceutical products However, comparison for compulsory license and parallel import, parallel import may be seen as a better solution for developing countries to deal with the problems of inaccessible pharmaceutical products due to their affordability Vietnam is a member of the WTO, which means that Vietnam has to comply with the TRIPS Agreement for protection of patents But as a developing country, Vietnam has the right to make reasonable arrangements to protect its interests and to protect the public interests Therefore, Vietnam's regulations on the import of pharmaceutical products are in line with the TRIPS Agreement With the aim of ensuring the balance of 90 interests of intellectual property rights holders and the interests of public in terms of access to medicine, the Ministry of Health only permits parallel importation of medicines However, the parallel import of pharmaceutical products in Vietnam is quite new, the legal provisions are not tight, lack of combination with other measures of price management, so it did not bring efficiency It is necessary to require policy makers to reform the legislation on parallel pharmaceutical imports and integrate in a coordinated manner any other new drug management measures that have long-term effects Parallel drug imports cannot be achieved if it stands alone Besides, compulsory licensing needs to be considered carefully about applying it in reality in an effective way Because, up to now, Vietnam has not once issued the decision to apply compulsory license due to a variety of reasons However, this does not mean that Vietnam does not have the demand for non - voluntary licensing as a tool to exploit the benefits of the patent system and reduce the negative effects of its system In the meantime, in order to be able to effectively use compulsory licenses, the conditions of law, technology, socio-economy, human resources and capacity of the competent authorities, need to be synchronously improved and co – operated with reasonable solutions to develop the pharmaceutical industry, improve the law, build an international information network to find cheap sources of pharmaceutical products To sum up, allowing parallel imports of pharmaceutical products and compulsory licenses should be balanced interests of pharmaceutical companies and public interest in order to access to pharmaceutical products with affordable prices Moreover, parallel import of pharmaceutical products to solve the problem of drug prices and compulsory licensing need to be strictly managed from a legal perspective and must be combined with other management measures to bring long-term efficiency 91 TABLE OF AUTHORITIES Cases Apollinaris Co v Scherer 15 BDR Pharma v Bristol Myers Squibb (BMS) 66 Betts v Willmot [1891] LR Ch 238 57 Emcure Pharmaceuticals v Roche 65 Incandescent Gas Light Co Ltd v Cantelo 12 R.P.C 262 57 Lee Pharma v AstraZeneca 66 Natco v Bayer 59 National Phonograph Co of Australia Ltd v Menck [1911] A.C 336 57 Silhoueett International v Harlauer 17 Smith Kline French Laboratories v Salim (Malaysia) Sdn Bhd 56 U-Bix Corporation v Ariancorp International Inc (1995) 19 United State v Besser Mfg Co, 343 U.S 26 United State v General Electric Co, 115 F Supp 835, 843-46 (1953) 26 Yu v Court of Appeals (1993) 19 Materials in English Bryan A Garner (2009), Black‟s Law Dictionary, 9th Edition, West – A Thomson Reuters Business 15 Christopher B 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