The publication of the South African National Policy on intellectual property (SANIPP) in September 2013 has opened a proverbial can of worms and the Pharmaceutical industry is up in arms.
The SANIPP proposes the introduction of stronger IP rights through the introduction of, amongst others, pre-and post-grant opposition proceedings, and makes reference to the introduction of compulsory licensing provisions in the Patents Act. Whilst the focus is on various industries, the matter of public health and the pharmaceutical industry forms a central theme of the SANIPP.
The Innovative Pharmaceutical Association of South Africa (IPASA) voiced its dismay with the SANIPP and made it clear that it is adamant to do all in its power to prevent the SANIPP from being implemented. IPASA approached a Washington, DC-based, lobbying entity Public Affairs Engagement (PAE) which, amongst others, has as a goal “to shape public policy and opinions” (More information about PAE here).
PAE has proposed a campaign to delay the implementation of the policy. The Mail and Guardian published the campaign document in early January 2014 (available here).
Health Minister, Aaron Motsoaledi, defined and the criticized the campaign document by saying “This document can sentence many South Africans to death,” he said. “That is no exaggeration. This is a plan for genocide.” (Read the article here).
The temperature of the debate has unfortunately risen out of all proportion and what is required is that all parties should take time for sober reflection so that it can be pursued on a rational, calm and constructive basis. The IP Chair has reviewed the proposed campaign and, although we are in agreement that the SANIPP is vague and of poor quality and that it should not be rushed into implementation without proper public consultation with the relevant IP role players and experts, this is where it stops. The Chair has previously commented on the manifest shortcomings of the draft policy document. Regrettably the document is so flawed in many respects that it is susceptible to a variety of interpretations and it may well be that its ambiguity and incoherence has been the cause of the present contretemps. That said, the IP Chair does not agree with the PAE that the SANIPP is aimed at “justifying a weak IP regime that allows the government to abridge intellectual property rights that are well established in the developed world” or that the policy is aimed at scaring off foreign investment.
The broad objective of the SANIPP (as set out on p.4 of the Policy document) in general is to stimulate the economy of SA and to empower its citizens. A strong IP system with integrity and credibility of IP rights granted under the system, and a system which complies with the principles of international instruments, such as TRIPS, will assist in achieving and realising the objectives.
The SANIPP includes proposals for stronger patents through the implementation of examination systems and incorporation of pre-and post-grant opposition proceedings. Such a system, if viable for implementation in South Africa (a serious question mark must be raised in this respect), would result in patents granted that have passed the patentability tests of novelty, inventive step and industrial applicability. The current law already lays down these substantive requirement and an examination system will not alter this in any respect.
It must be accepted that the reason for protecting intellectual property in a competitive environment is mostly related to financial benefit. In the case of health care the subject matter requires substantial financial investment for research and development, inventions and exploitation and as such pharmaceutical companies would not make the required investment without assurance of intellectual property enforcement.
The patent system is designed to promote innovation and, at the same time, offer a mechanism ensuring that the fruits of that innovation are accessible to the general public. In the context of public health, the challenge for policy makers is to optimise the balance between the rights of patent holders, who provide technological innovations to improve health conditions, and the needs of the general public.
This challenge is an international one as health conditions and crises such as malaria, tuberculosis and HIV/AIDS continue throughout the world.
Through TRIPS certain flexibilities are provided for member countries which include the inclusion of provisions of compulsory licensing in patent legislation.
Compulsory licensing is not foreign to the developed world. There are some uniform regulations with regard to EU compulsory licenses where the EU considers the importance of granting these licenses in the interest of the community as a whole, such as compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems.[1] Almost all of the members of the EU provide for compulsory licensing in their legislation. Although the USA does not have compulsory licensing per se. the abuse or misuse of patent rights are provided for in US law through US Anti-Trust law[2].
Compulsory licensing does not affect the strength of IP, just the flexibility in invoking granted patent rights when such patent rights are abused. Such abuses can include a patentee’s refusal to grant a license on reasonable terms, which causes prejudice. A compulsory licence can serve the public interest. What terms are reasonable in any given situation can be assessed in the light of the conditions applicable to licensing in the relevant field.
Compulsory licensing is presently, and has been for quite some time, included in the South African patent law in S56 of the Patents Act. The facility has, however, just never been used.
South Africa has in the past taken steps to deploy TRIPS flexibilities in the face of genuine AIDS “emergencies.” In this context the Medicines and Related Substances Control Amendment Act No. 90 of 1997 was adopted. The objective of the Act was to reduce drug prices by allowing generic substitution of off-patent drugs, the parallel importation of on-patent drugs, as well as price transparency. This Act caused quite an uproar in February 1998 when the South African Pharmaceutical Manufacturers Association and forty Multinational Corporations (MNC) brought a law suit against the government of South Africa for its passage of this Act. The law suit was dropped as a result of immense international pressure in April 2001. The law is still intact and is available for use. This factor seems to have been overlooked by the writer of the draft policy document, the Minister of Health and IPASA.
In conclusion:
The SANIPP does not advocate weak IP protection. The specific aspects raised in the SANIPP that can impact on the pharmaceutical industry per se are in fact already part of South African law. Any delay of the implementation of these measures on account of the steps set out in the PAE campaign document can only be to the disadvantage of South Africa.
The success of the implementation of the SANIPP will depend first and foremost on the policy being formulated in a coherent, systematic and lucid manner, unlike its presentation in the draft document. Once the policy has been properly stated its success will depend on the manner in which the objectives of the SANIPP are to be achieved and whether the IP system is moulded to suit the developmental objectives of the country and be aligned with and appropriate to the level of development and innovation of SA. There is no implication that the level of IP protection should be lowered. This should not be the case. A strong IP protection system is generally viewed as a tool to enhance innovation, technology development and ultimately economic growth and this objective should be sought. However, it is not through IP alone that these objectives can be reached. In order to address public health and educational needs the role of other factors must be recognised, such as the availability and efficacy of health services, particularly public health services, the availability and pricing of essential foods, access to schools and educational institutions and the quality of the teaching and training.
The formulation and implementation of the IP Policy must take place through a civilized and properly orchestrated consultative process involving IP role players and experts in industry. We are a democracy after all. In this way destructive public confrontations can be avoided in the common good.
MM Kleyn
Fellow of the Chair of Intellectual Property Law
Stellenbosch
(Madelein is the Intellectual Property Manager of Oro Agri (SA) (Pty) Ltd and represent the Chair of IP of the University of Stellenbosch on patent related matters)
[1] See Regulation 816/2006 as adopted by the EC on 17 May 2006.
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