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Despite the widespread view that the flexibilities included in international trade rules are not often used, a new study found that countries make extensive use of those flexibilities.

The study titled “Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights [TRIPS], 2001-2016,” [pdf] was published in the latest Bulletin of the World Health Organization and authored by Ellen ‘t Hoen, Jacquelyn Veraldi, Brigit Toebes, and Hans Hogerzeil.

The study is highlighted by an editorial [pdf] in the same edition of the WHO Bulletin, written by Prof. Carlos Correa of the University of Buenos Aires, Argentina.

The study aimed to document the use of TRIPS flexibilities to gain access to lower-priced generic medicines, and more particularly focused on measures that can be directly applied to procurement and supply of medicines: compulsory licensing; the least-developed countries pharmaceutical transition measure; parallel importation; and the research exception.

“Parallel importation is the importation and resale of a product from another country (where the same product is legitimately on sale at a lower price) without the consent of the patent holder. The research exception refers the use of a patented product or process for research or experimentation without the consent of the patent holder,” the study explains.

The fact that countries made extensive use of TRIPS flexibilities between 2001 and 2016 was previously unreported, the study says, but governments have successfully used public non-commercial use licences and the least-developed countries pharmaceutical transition measure to procure patented medicines. These allowed them to provide suppliers of generic products with the required legal assurances, the study says.

According to the study, “several reports in the literature perpetuate the belief that, since 2001, the use of TRIPS flexibilities has been sporadic and limited.”

The study found 176 instances of possible use of TRIPS flexibilities by 89 countries between 2001 to 2016, 100 of which involved compulsory licences or public non-commercial use licences, and 40 involving the least-developed countries pharmaceutical transition measure. One of those instances was parallel importation, three were research exceptions, and 32 were non-patent related measures.

Some 152 out of 176 of those instances were implemented, the study says, adding that out of the 100 instances of compulsory licencing, 81 were implemented, but 19 were not because of different factor. These included: the patent holder offered a price reduction or donation; the patent holder agreed to a voluntary licence allowing the purchase of a generic medicine; no relevant patent existed that warranted the pursuit of the measure; and the application was rejected on legal or procedural grounds.

Compulsory licences, public non-commercial use licences, or the least-developed countries pharmaceutical transition measure were used mostly for HIV/AIDS medicines, the study found.

Most instances of TRIPS flexibility use documented in the study were “invoked and implemented as part of day-to-day procurement and took place without much publicity,” the study says. It added that the relatively unknown use of TRIPS flexibilities for regular drug procurement “is in stark contrast to the publicity attracted by some instances for their use by middle-income countries,” such as Brazil, India, and Thailand.

The study also underlines the use of TRIPS flexibilities for countries excluded from voluntary licences, such as the licences negotiated by the Medicines Patent Pool.

TRIPS-plus provisions in trade agreements are reducing the policy space of countries to bring down the price of patented medicines, the study warns. Such provisions “render the flexibilities in the TRIPS agreement less effective by placing restrictions on their use.”

One example of such restrictions is “that the grounds for compulsory licencing could be limited to emergencies, which would make their use in regular procurement nearly impossible.”

The use of TRIPS flexibilities will help create and sustain the generic competition that has been effective in bringing down the price of medicines, according to the study, adding that this could also help ensure universal access to new, essential medicines for all.

Correa: Continuous Effort Needed to Fully Exploit TRIPS Flexibilities

In his editorial, Prof. Correa works through issues around the use of the flexibilities, saying, “So far, the main impact of the Agreement on TRIPS has been on the prices of medicines.” He explains how prices can be fixed at what the market can bear, and that to minimize the problems caused by the TRIPS Agreement, stakeholders in low-income countries have followed the flexibilities.

He describes different flexibilities, noting for example that Germany has used a compulsory licence for commercialisation of a drug, highlighting the flexibility in the definition of standards of patentability that has led to evergreening by the pharmaceutical industry in some countries.

Correa also discusses determining the extent to which flexibilities are used. For instance, use could be overestimated if it was counted every time a patent application is rejected due to a rigorous examination, or” every purchase of generic drugs is made by the government of a low-income country in a situation where intellectual property rights could have been enforced to prevent generic substitutions.” He called for data to show whether the use takes place in low-, middle-, or high-income countries.

“The health of a large part of the world’s population depends on timely and effective action,” he said.

William New contributed to this report.