354. I would like first to thank Bolivia, Chile, China and South Africa for cosponsoring document IP/C/W/639.
355. In the session of this Council held in May of last year, Brazil, China, Fiji, India and South Africa circulated document IP/C/W/630, with the goal of expanding the discussions on the complex interplay between intellectual property and public interest. With a view to continuing discussions on the topic, the sponsors of the agenda item invite delegations to share their experience regarding the existence and use of the regulatory review exception, also known as "Bolar exception", under their national or regional frameworks.
356. The issue before us relates directly to the core goal of intellectual property: to promote technological innovation in a manner conducive to social and economic welfare. The attainment of such goal is a constant concern of policy makers and demands an unceasing and careful analysis of the boundaries of IP rights.
357. As a rule, companies invest in innovation to obtain a competitive edge in the relevant market, in the form of increased productivity of its industrial processes or by developing new products. Countries grant patent protection with the goal of incentivizing innovation by avoiding free-riding behaviour of competitors, since this could lead to sub-optimal investment in R&D. At the same time, the strong market power granted by a patent allows the right holder to exclude competitors from manufacturing the patented invention, thus restricting competition during the term of the patent.
358. In economic terms, the temporary exclusivity on the market granted by a patent is expected to generate long-term dynamic procompetitive innovation at the cost of short-term anticompetitive effects. Considering this theoretical background, policymakers strive to design an efficient and balanced patent system, avoiding a situation in which patents lead to inefficiencies, high prices or the under-provision of goods.
359. In the field of medical products, it is of particular importance to assure that the exclusive right granted to the patent holder is not extended beyond what is intended in the patent legislation and becomes itself a hindrance to technological innovation and access to medicines.
360. If patents become barriers, the development process of new medicines is slowed and other manufactures may refrain from entering the market, generating increased costs for patients and uncertainty in the market.
361. Under this framework, the Bolar exception provides a valuable tool for stimulating competition and ensuring adequate treatment for those suffering from diseases.
362. Data from a study by the United States' Congressional Budget Office indicate that the average delay in generic entry after patent expiration fell from more than three years to less than three months after the approval of a Bolar-like exception in that country. The average number of generic entrants in the market also increased, stimulating competition.
363. In other words, without the Bolar exception, generic entry would be delayed by three or more years in economies with generic pharmaceutical manufacturing capability, affecting the supply of life-saving medicines. The exception thus guarantees that the term of protection of a patent produces the optimal effect, in terms of creating incentives to both innovation and competition.
364. Now turning to the guiding questions listed in our communication, I would like to provide a brief overview of the regulatory review exception under Brazilian legislation.
365. The Industrial Property Law, in its article 43, paragraph 7, provides that acts carried out by unauthorized third parties related to a patented invention are safeguarded from enforcement, if the goal of such acts is the production of information, data and test results necessary for obtaining marketing registration after the expiration of the patent.
366. The provision covers any act by third parties, such as making and using the invention. It also allows such acts if the end purpose is to obtain regulatory approval in other countries. Our legislation does not limit the use of the exception to the health industry, as other technological sectors may also benefit from the expeditious entry of new competitors. Furthermore, third parties may rely on the exception at any time during the length of the patent protection.
367. Reports from manufacturers, both in Brazil and abroad, indicate two potential challenges for its full implementation. The first one, not related to intellectual property, is access to precursors, that is, the chemical compounds necessary for the production of the active pharmaceutical ingredient.
368. Another potential challenge is the insufficient disclosure of the invention as contained in the patent application, creating an obstacle for the reproduction of the invention even by an expert in the field. The solution for this lies in adequate implementation of the disclosure requirement in the course of the patent examination by industrial property offices.
369. The Bolar provision is one of the key tools to ensure an efficient and balanced patent system by safeguarding against the artificial extension of patent protection. It is a very useful health-related patent flexibility for promoting public health objectives and maintaining dynamic competition between companies.
370. The undue extension of such privilege would go against the very goal that justifies the existence of patent protection. Past Government reports in the pharmaceutical sector have shown that the anti-competitive use of patents not only reduces the welfare of society by restricting access to off-patent medicines, but also affects innovation activities in the pharmaceutical sector, damaging the generation of new life-saving medicines.
371. The recent entry into force of the Protocol of Amendment to the TRIPS Agreement demonstrates the need to have mechanisms that ensure adequate remuneration to intellectual property rights holders while allowing governments to adopt measures necessary to protect the public interest.
372. Yesterday the Directors-General of WTO, WIPO and WHO joined together to discuss challenges and opportunities to ensure that innovative technologies are developed and reach patients in order to realize the fundamental human right to health. During those discussions, intellectual property had a prominent role, underlining the importance of a balanced IP regime for promoting the public interest.
373. Let me conclude by inviting other delegations to the debate, enabling a rich exchange of views and experiences that enhances the mutual understanding of the matter. The discussion would also benefit from the comments of international organizations here with us today, such as WIPO and WHO.
