10 November 2002

POSSIBLE ELEMENTS OF A PARAGRAPH 6 MECHANISM

Note from the Chairman

Revision

This note is on the exclusive responsibility of the Chair and does not commit any delegation. The paper does not purport to be a reflection of what is agreed among Members. Rather, work is proceeding on the basis that nothing is agreed until everything is agreed. The paper is put forward in an effort to present a balanced basis for further work.

A. SCOPE AND COVERAGE

  1. Product and disease coverage

    Patented products, or products manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems referred to in paragraph 1 of the Doha Declaration on the TRIPS Agreement and Public Health. It is understood that these products include the active ingredients used in their manufacture as well as diagnostic kits needed for their use.

    1. Eligible importing Members

      Least-developed country Members would be considered automatically eligible. Other Members would be eligible following a once-off notification to the WTO of their intention to use the system as importers. It would be open to Members to notify that they would use the system in whole or in a more limited way, for example only in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. While such notification may be made at any time, it is noted that developed country Members not in transition have indicated their intention not to take advantage of the system as importing country Members.

    2. Assessment of manufacturing capacity

      Least-developed country Members would be automatically considered to have insufficient or no manufacturing capacities in the pharmaceutical sector.

      Before using the system for a given product(s), other eligible importing Members would establish insufficient or no manufacturing capacities for the product(s) in question. Insufficient or no manufacturing capacity could be established in any one of the following ways:

      1. if the Member has made a public invitation for tenders for the needed product(s) and no responsive offers have been received from domestic producers on reasonable terms and conditions;

        OR

      2. the Member in question has established that it has no manufacturing capacity in the pharmaceutical sector as a whole;

        OR

      3. where it has some manufacturing capacity in this sector, it has examined this capacity and found that it is insufficient for the purposes of meeting its needs on reasonable terms and conditions. Where domestic manufacturing capacity would take some time to meet the Member's needs on reasonable terms and conditions, it would be understood that the system would only be used for this period.

    3. Eligible supplying Members

      All WTO Members would be eligible to be supplying Members under the system.

B. NOTIFICATION AND TRANSPARENCY

In the importing Member

An importing Member seeking to secure supplies under the system would make a notification to the WTO Secretariat which would indicate the product for which supplies are sought and the expected amount and duration of the need as well as, in the case of eligible Members other than least-developed country Members, a statement to the effect that the Member has established that it has no or insufficient manufacturing capacity in one of the ways set out above.

This notification would be for information purposes; there would be no need for any prior approval by the WTO before the system could be used.

The notification would be put on a dedicated page on the WTO website.

In the supplying Member

The supplying Member would notify the WTO of the grant of a compulsory licence under the system, including the conditions attached to that compulsory licence. The information provided would include the name and address of the licensee, the product(s) for which the licence has been granted, the country(ies) to which the product(s) is/are to be supplied and the duration of the licence.

The notification would be made available publicly through the dedicated page on the WTO website.

C. SAFEGUARDS AGAINST DIVERSION

In the supplying Member

The supplying Member would attach to the compulsory licence granted to export under the system the condition that only the amount needed by the recipient country(ies) would be manufactured under the licence and that the entirety of this production would be exported to the eligible importing country(ies) which has/have sought supplies under the system.

The compulsory licence for export would also include the condition that products produced under it would be clearly identified as produced under the system. This could be done through specific labelling or marking. Suppliers would also be encouraged to distinguish such products through special packaging and/or special colouring/shaping of the products themselves. The notification by the supplying Member would indicate the website on which details of these distinguishing features, as well as quantities being supplied to each destination, would be posted by the licensee before shipment begins.

In the eligible importing Member

The eligible importing Member would be expected to take reasonable measures to prevent re-exportation of the product. It is understood that such Members would not be expected to take measures that are disproportionate to their administrative capacities as well as to the risk of trade diversion.

In other WTO Members

Other WTO Members, to which products might be diverted, would be expected to ensure effective legal means to prevent their importation and sale, using the means already required to be available under the TRIPS Agreement and, if they prove insufficient, such other legal means as may be necessary and proportionate to the problem.

D. LEGAL MECHANISM

The three main options for legal mechanisms on the table are:

Of these, the use of a long-term waiver to remain in force until an amendment can supersede it appears to be the most promising way forward. It would be understood that the waiver would be without prejudice to rights and flexibilities Members presently have under the TRIPS Agreement in conjunction with the Doha Declaration on the TRIPS Agreement and Public Health. It could further be agreed that Members would not challenge any measures taken in conformity with the provisions of the waiver under the dispute settlement mechanism of the WTO.

E. MEANING OF THE TERM "DOMESTIC MARKET" IN ARTICLE 31(f)

Where a developing or least-developed country WTO Member is in a regional trade agreement, the term "domestic market" used in Article 31(f) would be understood to include the markets of those other developing or least developed country members of the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question nor the way in which the term "domestic" will be understood in any other WTO agreement.

F. TRANSFER OF TECHNOLOGY/CAPACITY-BUILDING

Special attention will be paid to the transfer of technology and capacity-building in the pharmaceutical sector in the further work to be undertaken pursuant to Article 66.2, the outstanding implementation issues and concerns and in the Working Group on Trade and the Transfer of Technology.

MONITORING BY THE COUNCIL FOR TRIPS

The Council for TRIPS shall keep the functioning of the system under regular review with a view to ensuring its effective operation.

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