Department of Health Comment on the Patent Amendment Bill

Commentary – Patents Amendment Bill


The Department has received a letter dated 04 April 2003 from the Standing Committee on Private Member’s Legislative Proposals and Special Petitions requesting comments on the Patents Amendment Bill. Apparently a previous letter dated 06 March was also sent but it is not known whether it was received in the Department.


The Bill consists in essence of the addition of two sections to the Patents Act, 1978 (Act No 57 of 1978). The first, section 56A deals with the subject of compulsory licensing for public non-commercial use. The second deals with the subject of compulsory licence in cases of national emergency.

Section 56A

Ad Subsection (1):

This section allows a petitioning Minister to apply for a compulsory licence. Possession of a compulsory licence by the Minister of Health would be of no use to the Department of Health if the implication is that the Department itself must manufacture the medicine that is the subject of the licence. The Department does not have the facilities to manufacture medicines and would have to contract a pharmaceutical manufacturer to do the work. It is not clear from subsection (1) whether the Minister may apply for a compulsory licence to be given to a third person directly, eg the pharmaceutical manufacturer who is to manufacture the drugs or whether the Minister may only apply for the licence to be awarded to the state. There is no provision in the section for a manufacturer or anyone else except a Minister to apply for the licence. Would the national Minister of Health be able, in terms of the Bill, to apply for a compulsory licence if only one province was in dire straits given the fact that paragraph (b) of subsection (1) refers to the "health…of the nation"? It is submitted that the Bill should be flexible enough to accommodate this type of situation.

Ad para (a) of subsection (1)

The Minister may only apply for the licence in circumstances were it is required for public non-commercial use. The phrase "public non-commercial use" is defined in the Bill as including all projects and provision of goods and services which are completely funded by government and/or donors for the benefit of the general public at large and no fee shall be payable by members of the public to benefit from such goods and services. This creates the impression that the Bill does tacitly contemplate the possibility that although it is the Minister who holds the licence, a third party may be involved in the supply of the patented invention. It is still not clear, however, whether it is the Minister who must be the licenceholder in all circumstances or whether someone else may do so in order to serve the purpose of the licence. The Department does not agree with the aspect of the definition that prohibits the charging of a fee payable for the goods and services. There is no distinction between cost recovery as opposed to profit in the Bill. The Department of Health is moving in the direction of servicing private patients at public hospitals for a number of different reasons not least of which is that medical schemes are becoming unaffordable for many people. The public health sector has a growing policy of cost recovery, even if only partially, from private patients and may in certain circumstances even require them to pay slightly more than cost in order to cross-subsidise other patients and increase access to health care services to the poor.

In the case of health care services, the medicine in question may be unaffordable in both the private and the public sector but nevertheless essential to deal with a national epidemic such as cholera or bubonic plague or a pandemic such as HIV/AIDS. In such a situation private and public sector patients would have to be treated in the public health sector. In the view of the Department it should have the power to charge a fee where it deems this necessary provided that the object is not to make a profit but to cover costs. This would also be in keeping with the fact that the state would still be obliged to pay the patent holder some remuneration in respect of the invention.

Ad Part (b) of subsection (1)

This section states that the circumstances must be such that the licence is required for the health, welfare or security of the nation and the threat faced by the nation is of such a nature that given the resources of the State, it cannot reasonably be dealt with by any other measures in the ordinary course of events.

The phrase ‘given the resources of the State" is too vague. Does it mean that the entire national budgetary allocation must be reviewed before this criterion is met? Does it mean that the resources of the national department and the manner in which they have been allocated must be reviewed in order to establish whether resources can be taken from other health programmes for the purpose of purchasing the drug in question? What about provincial resources? If the health emergency exists in only one province does must the entire resources of the state be considered or the resources of the relevant province? Does it mean that the state must first seek assistance from donor funders and try other similar avenues of alternative funding? A further problem is that the section raises a question as to whether the state can only use the provisions of section 56A if the situation does not constitute a national emergency as contemplated in section 56B.

The phrase ‘ordinary course of events’ is also vague. It gives no real indication as to degree. When does the course of events become extraordinary as opposed to ordinary? In the case of health care services for instance does it mean with regard to the manner in which the Department generally deals with outbreaks of disease as a whole or does it mean the ordinary course of events with regard to a specific disease? The Minister is in any event in an unusual situation in seeking to avoid to some extent the patent rights of the patent holder in order to obtain access to an invention that is necessary for a health intervention. In the ordinary course of events perhaps it may have been available – or should have been available. Can the State choose whether to use this section in circumstances of national emergency rather than the provisions of section 56B? What is the envisaged relationship between sections 56A and 56B? A further question is whether this section requires that the State must first have investigated the possibility of parallel importation of the invention in terms of the Medicines and Related Substances Control Act before it can invoke the provisions of the Patents Act concerning compulsory licensing. Does ‘ordinary course of events’ embrace parallel importation?

Another condition is that the threat cannot reasonably be dealt with by any other measures. What if the other measures available are effective in treating the disease but are not fast acting enough to curb the spread of the epidemic or have severe and undesirable side-effects that result in high levels of non-compliance with the treatment? The point is that in health care service delivery there are so many potential variables that it is difficult to ascertain what is the ordinary course of events and what is a deviation. There are many different ways of handling a disease not only in terms of different drug regimens but also in terms of nutrition, personal hygiene practices, the control of vectors, etc and often more than one method is employed in parallel with others in times of crisis that do not necessarily qualify as states of emergency. If this provision excludes the possibility of a compulsory licence on the basis that there are other measures that are being taken then it will be of extremely limited value to the Department of Health.

Ad paragraph (c) of subsection (1)

Is the licence referred to in this paragraph a compulsory licence or simply a licence such as the patentee has the power to grant at its discretion? This is a technical point but there is a different between the two. This fact is not evident from paragraph (c). Must the Minister negotiate the terms of an ordinary licence or the terms of a compulsory licence which can then be presented to the Commissioner for processing as a compulsory licence with the agreement of the patentee.

Ad subsection (2)

The Board of Trade does not have the power to consider representation from the petitioning Minister – only from the patentee. This is inequitable given the fact that the Board of Trade is to make a decision concerning the remuneration to be paid to the patentee by the State and in doing so must consider the "economic and financial position" of the State. The petitioning Minister’s representation should also be considered by the Board of Trade. The question of the Board’s consideration of the economic value of the licence is deceptively simple. In South Africa at present there are sharp distinctions in price between medicines sold in the private sector and medicines sold in the public sector, the prices of the same medicines sold in the latter being much lower than those sold in the former. Furthermore there is the question of international markets as opposed to local markets. Apart from questions of price there is the issue of the value of the drug to the South African population such that it can enable sick people to return to work for instance and to provide for their families.

What is meant by the ‘economic value" of the licence? Is it the economic value to the State or to the patentee? This kind of detail is important if the interested parties are to make representations to the Board of Trade because it dictates the nature and detail of the information to be supplied. Medicines are rarely sold exclusively in South Africa. The markets for pharmaceuticals tend to be global. There is no indication that the Board of Trade may consider the potential for the recovery of the cost of developing the drug from wealthier, less stricken countries.

The issues involved in a determination by the Board with regard to a drug or a medical device can become extremely complicated. Subsection (2) gives no indication of the levels to which the parameters of the determination will be taken.

Ad subsection (3)

The commissioner is bound by the determination of the Board of Trade except where the patentee can show that ‘the determination is not equitable in the circumstances’. This has the potential to delay the resolution of an already urgent health situation. Apart from this, however, it seems to be giving the patentee a second bite at the cherry since the Board of Trade and Industry already must consider representations from the patentee in making its determination. It also gives the commissioner the power to reverse a decision of the Board of Trade by which he is bound in terms of subsection (2). This carries the potential to significantly weaken the power of the determination of the Board of Trade to bind the commissioner and calls into question the role of the Board of Trade in the process since presumably in order to consider whether or not the determination of the Board of Trade is inequitable or not, the commissioner would have to consider much the same factors as are listed in subsection (2) for consideration by the Board of Trade. Moreover the kind of decision that is required is whether the interests of the nation should prevail over the individual commercial interest of the patentee. The question of whether the determination of the Board is just and equitable requires a balancing of interests of the State and the patentee yet the patentee is given the opportunity to show that the determination is just and inequitable without giving the State the opportunity to counter such representations to the commissioner. It is submitted that a decision should be made at one level within the system, whether by the commissioner or the Board of Trade whichever is the most appropriate, taking into consideration the representations of the petitioning Minister and the patentee and that decision must then stand. Needless iterations in the process simply delay a decision on a situation which, although not a state of emergency could nevertheless be urgent. The HIV/AIDs scenario is a good example. The Department of Health is regularly informed by activists and opposition politicians that some 600 people die a day from the disease.

Ad subsection (4)

It seems from this subsection that the need for a compulsory licence is regarded as temporary. In the context of health it is extremely difficult to predict the course of an epidemic or a pandemic. Drug interventions if commenced and then prematurely discontinued in a particular patient can sometimes cause more harm than if they had never been administered at all. In the case of AIDS patients antiretroviral drugs usually have to be taken for life once the patient’s condition deteriorates to the point where he or she requires them. The expiry of a compulsory licence in circumstances where a treatment regimen involving a patented drug is not for a discrete or limited period of time but is of necessity ongoing has legal, ethical and medical implications that go beyond commercial considerations.

The provisions of section 56A would be of extremely limited use to the State in dealing with the HIV/AIDS pandemic through the use of patented antiretrovirals, or any other high-tech antibiotics and antifungal treatments where the period of a compulsory licence is fixed. HIV/AIDS is used here merely as the most obvious example. There appears to be no provision for the extension of a compulsory licence once it has been given or the grounds upon which it may be extended. Presumably if the State desired to renew it, the process would have to begin de novo resulting in an interruption of treatment for potentially thousands of patients.

Ad subsection(5):

Section 55 of the current Patents Act states with regard to compulsory licences in respect of dependent patents that the commissioner may grant such a licence on such conditions as he may impose. Subsection (5) states the commissioner may issue the license under such terms and conditions relating to the remuneration and duration of the license as are just and equitable in the circumstances. Is it the intention to restrict the power of the commissioner to impose conditions to these two areas – remuneration and duration? It would seem that the commissioner’s power to impose conditions as to remuneration are at odds with the fact that he or she is bound by the determination of the Board of Trade concerning remuneration to be paid to the patentee and the manner in which the remuneration is to be paid. Once again the implication is that the same decisions must be taken at two different levels within the process. This creates the possibility for conflicting decisions which is likely to delay the process unduly.

Ad subsection (6)

The Department’s difficulties with this section have been alluded to earlier in this commentary. The State does not manufacture drugs. If the intention behind the prohibition of the assignment of the licence is that the State may not contract a third party to manufacture the drugs in terms of the licence then the proposed amendments hold no benefit at all for the State. The further problem with the provisions for the distribution of the goods for non-commercial public use is, as stated previously, that it prevents the State from requiring some kind of payment from users in order to recover costs. The Department of Health has long espoused the policy principle of subsidization of the poor by the wealthy as evidenced inter alia by the Medical Schemes legislation as much as by the fact that private patients are charged for services rendered by public health facilities. The definition of "non-commercial public use" runs contrary to this principle and to the extent that it does, it is unacceptable to the Department.

Ad subsection (7)

This subsection is highly problematic for the Department of Health for the reasons referred to under the comment on subsection (4). In the health field there are major medical ethical and legal implications in the sudden discontinuation of drug therapy. If a patentee is able, at any time during the duration of a compulsory licence to get it revoked this would negate to a significant degree any benefits the legislation might offer. There is no provision in this section for any discretion on the part of the Commissioner to delay the termination of the licence or to phase it out gradually so as for instance to take account of stocks that have already been purchased for the manufacture of the drug or contracts between the Department and a manufacturer for a specific period. This section is also problematic in the light of the fact that it once again empowers the commissioner to reverse a decision of the Board of Trade despite the fact that it is binding upon the commissioner in terms of subsection (2). The role of the Board of Trade is so weak in the proposed amendment as to call into question whether its participation in the process adds value. The subsection furthermore does not permit the State to respond to any application by the patent before the licence is revoked.

Ad subsection (8)

This subsection is unjust on administrative grounds. The State, as representing the interests of the nation in this matter, is not given the opportunity to respond to any application to vary the conditions of the licence. Since an application to vary the conditions is highly likely to relate to remuneration payable to the patentee the absence of provision for representation by the State is problematic. A further problem is that the subsection gives the commissioner the power to vary a determination by the Board of Trade. On reflection, the provision in subsection (3) that the Board of Trade’s determination is binding on the commissioner seems to be little more than a smoke screen. The entire section 56A is biased in favour of the patentee.

Ad subsection (10) (sic)

This should be subsection (9). The Department has no objections to this subsection except to say that it is likely to increase the costs of litigation for the State if the commissioner’s decisions are consistently challenged in the manner contemplated. The Department further notes that the decision of the Board of Trade is not apparently subject to appeal or review – only that of the commissioner. Since the commissioner is bound by the determination of the Board of Trade in terms of section (2) this might be seen as depriving the patentee of the right to challenge a decision of the Board in court.

Section 56B

Ad subsection (1)

This section does not use the same language as section 37 of the Constitution which provides for the declaration by the President of a state of emergency. Section 56B uses the term "national emergency". Is it the intention, in the use of this different terminology, to distinguish between the "state of emergency" envisaged by the Constitution? If so it is submitted that the two terms are sufficiently close that the provision for the declaration of a "national emergency" could be attacked as an attempt to subvert the provisions of the constitution concerning states of emergency. If it is intended to mean the same thing as a state of emergency envisaged by the Constitution then it is suggested that the same language is used. The State of Emergency Act No 64 of 1997 provides that the President may declare a state of emergency in the Republic or any area within the Republic. The term ‘national emergency’ by contract suggests that the emergency must be on a national scale.

This section apparently does not take into account the provisions of section 37 of the Constitution which stipulate the conditions under which the President may declare a state of emergency. The Constitution is very strict about when the President may declare an emergency. It is only in terms of an Act of Parliament and only when-

(a) the life of the nation is threatened by war, invasion, general insurrection, disorder, natural disaster or other public emergency; and
(b) the declaration is necessary to restore peace and order.

The provisions of sub-paragraph (b) may not necessarily be read to include the preservation or protection of the health of the nation.

Whilst this may not itself be seen as a major problem because it could be argued that health issues are implied in the wording of the Constitution, the provisions of the State of Emergency Act No 64 of 1997 could be a problem. This Act was passed with the object of providing for the declaration of a state of emergency in terms of section 37 of the Constitution and to empower the President to make regulations in pursuance of any such declaration. Section 2 of the Act states that -

"(1) (a) The President may, in respect of the Republic or of any area in which the state of emergency has been declared and for as long as the proclamation declaring the state of emergency remains of force, by proclamation in the Gazette make such regulations as are necessary or expedient to restore peace and order and to make adequate provision for terminating the state of emergency, or to deal with any circumstances which have arisen or are likely to arise as a result of the state of emergency."

(writer’s italics)

Ad subsection (2)

The proposed provisions of the Patents Amendment Bill in subsection (2) do not take into account the provisions of the State of Emergency Act. The former requires a notice to be issued by the President, the latter requires that a proclamation must be published in the Gazette. The former requires that the nature and extent of the emergency are set out in the notice, the latter requires only that the reasons for the declaration of the state of emergency are briefly stated. This is likely to cause unnecessary confusion in a situation of emergency where confusion is already likely to be rife. It will lead to unnecessary and delaying debates and disputes as to which Act should apply when the state of emergency relates to a health issue.

If the President proclaims a state of emergency in the Government Gazette why is it necessary to make provision for the proclamation to be delivered to the patentee whose patented article may be required to deal with the emergency? This is overly solicitous of the rights of the patentee. Furthermore it implies that every potential patentee, and there may be many, whose patented article may be required to deal with the emergency, will have to be identified and located. This process could well be extremely time consuming and unnecessarily wasteful of human and other resources that could be better deployed in dealing directly with the emergency. It also opens the door for others whose rights may be affected by a state of emergency to demand that the notice is delivered to them. The whole object of publishing something in the Government Gazette is to notify the general public of it. This is the raison d’être of the Gazette. This provision is consequently rejected by the Department.

Ad subsection (3)

Subsection (3) of the Patents Amendment Bill require the petitioning Minister who is responsible for dealing with the national emergency to lodge with the Registrar of Patents a copy of the notice to be published by the President. Section 2(2) of the State of Emergency Act states –

"(2) Without derogating from the generality of the powers conferred by this section, regulations may provide for-

(a) the empowering of such persons or bodies as may be specified therein to make orders, rules and bylaws for any of the purposes for which the President is authorised by this section to make regulations, and to prescribe penalties for any contravention of or failure to comply with the provisions of such orders, rules or bylaws;

the imposition of such penalties as may be specified therein for any contravention of or failure to comply with the provisions of the regulations or any directions issued or conditions prescribed by or under the regulations, which penalties may include the confiscation of any goods, property or instruments by means of which or in connection with which the offence has been committed."

It is submitted that to the extent that the Patents Amendment Bill purports to restrict or ignores the powers of the President as contemplated in the State of Emergency Act to make regulations as are necessary to make adequate provision for terminating a state of emergency, it is unacceptable. The need for the intervention of the petitioning Minister to lodge with the Registrar of Patents a copy of the notice is questionable. The Registrar of Patents is a government official and the notice is to be published in the Government Gazette.

Ad subsection (4)

The provisions of subsection (4) have the potential to interfere with the powers of the President in terms of the State of Emergency Act. The power of the Minister of Trade and Industry and the Minister of Finance to make the determination contemplated in subsection (4) should be subject to the President’s power to decide how to handle a state of emergency in terms of the State of Emergency Act. The President may decide that such a determination is inappropriate in certain circumstances.

Ad subsection (5)

The requirement that the Minister must lodge an application with the Registrar in terms of subsection (5) after the President has declared a state of emergency is unacceptable. It is not for the Registrar or, with respect the Ministers of Trade and Industry and Finance, to decide what must happen in a state of emergency. In such an event, the President takes control and issues regulations by proclamation in the Gazette. The Constitution lists what are the non-derogable rights in a state of emergency. Economic or commercial rights do not appear on the list.

Ad subsection (6)

The Constitution in section 37(3) makes provision for a competent court to decide on the validity of a declaration of a state of emergency, any extension of a declaration of a state of emergency or any legislation enacted or other action taken in consequence of a state of emergency. In section 37(5) it states that –

"No Act of Parliament that authorises a declaration of a state of emergency, and no legislation enacted or other action taken in consequence of a declaration, may permit or authorise-

(a) indemnifying the state, or any person, in respect of any unlawful act;

(b) any derogation from this section; or

(c) any derogation from a section mentioned in column 1 of the Table of Non-Derogable Rights, to the extent indicated opposite that section in column 3 of the Table."

It is submitted that the provisions of subsection (6) are superfluous to the extent that they repeat these provisions. To the extent that they deviate from them they are unconstitutional.

Ad subsection (7)

It is entirely unacceptable to the Department of Health, that it must rely on the Commissioner, in circumstances where the President has declared a state of emergency, to determine the lawfulness of its actions. The Constitution expressly awards this power to a court. Whilst the Commissioner in terms of section 17 of the Patents Act has all such powers and jurisdiction as a single judge has in a civil action before a provincial division of the Supreme Court of South Africa having jurisdiction at the place where the proceedings before the commissioner are held, it is submitted that this does not make the Commissioner a court for the purposes of the Constitution.

Ad subsection (8)

The same objections are applicable to this subsection as have been raise with regard to preceding subsections, notably with regard to the powers of the President to make regulations by proclamation and the comments on subsection (8). The Commissioner in this subsection is given the power to subvert the regulations made by the President in terms of the State of Emergency Act insofar as he can confirm a licence ‘under such terms and conditions are just and equitable’. This subsection puts the Commissioner on a potential collision course with the President.

Ad subsection (9)

This provision is an unnecessary repetition of section 34 of the Constitution which provides that –

"Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum."

Ad subsection (10)

The top line of the fax that was sent to the Department is difficult to read but it seems to provide that where officials are found to have abused their discretion by a competent court of law they shall be liable for damages, including punitive damages. If this is the gist of the provision, the Department rejects it outright. It is for a court of law to make such decisions and to deal in its discretion with abuses of administrative power in accordance with the well established principles of administrative law and the Promotion of Administrative Justice Act. Such a provision is an unnecessary attempt to provide the utmost reassurance that the rights of patentees will be protected. It does not belong in legislation. It gives the impression that government officials are inclined to abuse their powers and break the law and promises to deal with them severely if they do. There are already sufficient legal safeguards in place to deal with officials who act improperly.

Ad subsection (11)

The Department has no objection to this section.

Ad subsection (12)

The power of the patentee to apply to the Commissioner to vary the conditions under which the licence is granted during a state of emergency and for the purposes of dealing with it is unacceptable to the Department. In any event in terms of section 37 (2) of the Constitution a declaration of a state of emergency may be effective for no more that 21 days from the date of the declaration unless the National Assembly resolves to extend it. Even then it may be for no more than three months at a time. Any argument that the Commissioner should have the power to take a decision which could materially impact on the power of the State to deal with a state of emergency is indefensible.

Ad subsection (13)

This subsection also has the power to interfere with the President’s power to make regulations in terms of the State of Emergency Act. It loses sight entirely of the fact that it is a state of emergency that is involved. In a state of emergency, the rights of individuals except those listed in the constitution as non-derogable, take second place to the need to end the state of emergency and restore a situation of normality. It is in the best interests even of patentees that normality is restored so that normal trade can resume as quickly as possible.

Ad subsection (14)

This provision may restrict the power of the State to enter into agreements with neighbouring countries or to comply with international conventions to co-operatively deal with transborder states of emergency involving the control of serious health threats. To the extent that it does it is unacceptable.

Conditions in a neighbouring state – especially health conditions- have the potential to rapidly spread into South African territory. Outbreaks of haemorraghic fevers such as ebola in a border town in a neighbouring country which does not have the resources to deal with them could pose an extremely serious threat to South Africans living in adjacent areas as well as further inland and may well necessitate South African assistance from the point of view of containing the threat to South Africa.

Ad subsection (15)
This subsection refers to a ‘certificate of emergency’ and so is inconsistent with earlier provisions referring to a ‘notice’. It is also unnecessary and contrary to the provisions of section 37 of the Constitution.

General Observations

Whilst the intentions of this proposed legislation are commendable it is highly unlikely that it will be suitable for use by the Department of Health in dealing with pandemics such as HIV/AIDS or in dealing with health crises generally. If the amendment as proposed is accepted in its current form then it is likely that the Department of Health will be compelled to resort to other more effective legislative provisions and measures to deal with the issue of access to medicines and other inventions relating to health service delivery. The constitutional concerns around the Bill are real. The Department is not convinced as to the constitutionality of some aspects of the Bill.

It is a pity that the Bill leans too far in favour of the patentee and allows for too much uncertainty in the utilisation of a compulsory licence. It seems that the provisions of the Bill would allow the licence to be removed or its conditions altered precipitately enough that the Department could be left facing a number of legal and ethical problems relating to abrupt cessation of treatment. This poses an unacceptably high level of risk in a number of areas, not least of which, in the case of HIV/AIDS and also TB is widespread drug resistance.

The provisions relating to compulsory licences in non-emergency states could have been much more useful in dealing with crises in the health sector than even those relating to licences in states of emergency since it is only on very limited legal grounds that a state of emergency may be lawfully declared and then only for limited periods of time. States of urgency, rather than emergency, could have been dealt with more successfully under the principles contemplated in section 56A were it not for the clear bias in favour of the patentee.

It is not the submission of the Department that the rights of the patentee must be discarded completely of even partially but rather that the most urgent needs of the nation as contemplated in section 56B are accommodated rather more proficiently by the patents legislation than this Bill proposes. The Bill does not achieve the necessary balancing of rights and interests.

The international community is coming increasingly to the realization of the importance of this need for balance especially in the case of public health issues. In the Doha Declaration on the TRIPS Agreement and Public Health adopted on 14 November 2001, article 4 states:

"We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the 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."

Article 5 provides:
"Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the TRIPS Agreement, we recognize that these flexibilities include:
In applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles.
Each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.
Each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency.
The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment provisions of Articles 3 and 4.
The proposed Bill does not by any means take sufficient congnisance of the spirit behind the declaration in general and the abovementioned flexibilities in particular. Rather it chooses to steer very close to the legal status quo in terms of which the rights of the patentee must be protected at all costs and that, should the system err, it must err in the favour of the interests of the patentee rather than those of public health.

The proposed Bill ignores the problem posed in article 6 of the Declaration to the effect that:

"We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002."

The provisions of section 56B relating to states of emergency are generally too restrictive and do not take into account the extreme urgency of the needs that may be involved. They are overly biased in favour of the patentee given the fact that in a state of emergency the nation is in desperate circumstances. The Bill is inherently mistrustful of State initiatives to address urgent and emergency public health needs and the propensity of the State to respect the rights of patentees generally.

In view of the foregoing, the Department cannot support the Bill in its present form.

Director-General: Health