620. The European Union views critically a number of issues discussed in the communication from South Africa.
621. As previously stated in this Council, the work conducted by the United Nations SecretaryGeneral's High-Level Panel on Access to Medicines started from an assumption that "[a]n important factor behind the incoherence between trade, intellectual property laws, human rights and public health lies in the different accountability mechanisms and uneven levels of transparency."
622. This statement is recalled in the communication.
623. As the European Union already indicated in its written contribution to the UN Panel and in various interventions in the framework of this Council, we do not share that assumption. We do not subscribe to this point of view.
624. The Commission encouraged the Panel at that time to adopt a holistic approach to the problem of access to medicines that could result in a valuable contribution to the wider debate.
625. However, due to its limited mandate, unfortunately, the High-Level Panel has focused its proposals exclusively on addressing an alleged conflict between a R&D model that (partially) relies on IPR and the possibility of providing affordable medicines. In doing so, it has missed an opportunity to advance more balanced, comprehensive and workable solutions to the problem of access to health.
626. As we all know, IP-protected medicines are only a very small fraction of the medicines that patients in need in many developing countries lack access to.
627. As already stated at the TRIPS Council of November 2018, in general, we do not consider the TRIPS Council the appropriate forum to discuss competition policy regarding pricing of medicines and health technologies. There are other international fora, such as the International Competition Network, where such international exchanges and cooperation are taking place.
628. While the submission from South Africa seems to consider the use of competition policy a TRIPS flexibility, the EU would be cautious. While TRIPS is obviously compatible with the application of competition policy measures, it clearly does not allow for an "absolute policy space". As provided for in Articles 8.1 and 2, as well as in Article 40.2, these measures have to be consistent with the provisions of the TRIPS Agreement and cannot be used as tools in avoiding the obligations under the Agreement.
629. Generally, competition policy plays an important role in controlling and sanctioning anticompetitive market behaviour in any sector, including the pharmaceutical sector.
630. The examples concerning excessive pricing as a competition law infringement in the pharmaceutical sector in the EU show that competition law enforcement in the EU is done on a caseby-case basis.
631. Furthermore, compulsory licences to pharmaceutical patents as a remedy to excessive pricing would have a negative impact on innovation incentives and appear to be superfluous, because a competition authority, once it has established unlawful market behaviour, has the normal toolbox of competition policy remedies.
632. The EU seeks to ensure, on the one hand, that medicines are accessible to those in need and, on the other hand, to promote the financing of research in new and better medicines through effective IP protection.
633. The challenge is to strike the right balance between the need to promote and finance the R&D of new and better medicines, ensuring that medicines are accessible and affordable to those in need, while guaranteeing the sustainability of health systems. We believe that these goals are not contradictory and must be pursued jointly.
634. In order to be able to make innovative medicines available, these medicines have to be researched and developed in first place. The current innovation model has delivered consistent progress in global public health, continuously leading to important new and improved treatments as well as much extended life expectancy, both in developed and developing countries.
635. This model integrates a variety of tools, such as incentives for innovation based on IP, public and private financing and awards, or public research. This variety is necessary to address situations where there is a functioning market and those where there could be market failures.
636. Since, in a market economy, most medicines are created not by public authorities but by the pharmaceutical industry, which, as all industries, needs an adequate return on investments to finance innovation, the challenge is how to use all levers available to public authorities to promote affordable access to medicine without affecting negatively the investments of the pharmaceutical industry and therefore the availability of new and innovative medicines.
637. The development of new drugs requires very significant and long-term research, coupled with clinical trials and regulatory approval procedures. The exclusive right conferred by a patent is a critical incentive for innovator pharmaceutical companies to make the necessary investments into that research and development. The often-long time period of rigorous (clinical) testing for marketing approval, which is important to ensure the new medicines are safe, limits the economically effective time of patent protection.
638. It has to be noted that the shorter that time span becomes as a result, the higher the price for new medicines will have to be to recover the research cost in the remaining time of patent protection. The higher the price, the more it will limit access to the innovative medicines and their affordability.
639. Finally, evidence shows that there are many different and significant causes of lack of access to medicines, which renders it misleading to attribute the problem merely to, or even principally, IPR-related aspects.
640. In fact, IPR issues seem to play a minor role in the problem but a disproportionately large role in the debate. This has also been echoed in a joint-report from the WHO, WTO and WIPO stating that the "lack of access to medical technologies is rarely due to a single isolated factor".
641. Additionally, I recall that, currently, most medicines on the WHO list of essential medicines (i.e. more than 90%) are available in a generic format, either because they were never protected by a patent or because protection has expired.
642. Still these medicines do not reach all in need. In fact, many developing countries apply tariffs, taxes and substantial mark-ups to medicines and lack an efficient procurement and healthcare system, with the result that medicines are not available to the population or at least not at an affordable price.
643. I would like to recall also that, the Global Fund, distributing medicines to patients in need in developing countries with diseases such as HIV or malaria drugs, has been financed by the EU and its Members with over EUR 19 billion from 2001-2016. For the period of 2017-2019 the EU and its Members finance the Global Fund with around 17 billion (out of the EUR 29 billion pledged by all countries). According to the calculation of the Global Fund, this has allowed the Fund to save 22 million lives. The Global Fund also cooperates closely with the Medicines Patent Pool, which receives licences from some of the world's leading innovative pharmaceutical companies for free or at a dramatically discounted price. Hence, innovations such the world's latest HIV drugs can also reach patients in need in places where the countries' government are not able to provide universal health care.
644. Contrarily to the perception of some, international trade is vital for access to medical technologies, since no country can aim to be entirely self-sufficient, in particular not developing countries.
645. In trade negotiations, the EU always takes into consideration the development status and public health concerns of our trading partners. For example, we never have nor will we ever ask for provisions which would be contrary to or otherwise undermine the Doha Declaration on the TRIPS Agreement and Public Health.
646. The Declaration underlines the importance of public health measures and allows the granting of compulsory licences for the production and importation of generics where necessary and the freedom to determine the grounds upon which such licences are granted. To ensure this, the Commission proposes a legally binding provision in its trade agreements referring to the Doha Declaration to guarantee that these flexibilities granted by the TRIPS Agreement remain available.
647. In conclusion, questioning IPRs in trade for pharmaceutical products as a means to improve their affordability would not only be looking at the wrong target, but also have consequences opposite to the intended ones. It would reduce investments and the number of resulting new medicines and treatments or lead to higher prices of new medicines available worldwide.