In 2002 the Egyptian
government repealed the 1949 law on Patents and Industrial Drawings and
Designs and replaced it with a new law for the protection of intellectual
property rights, namely Law no. 82/2002.
The new law is TRIPS
compliant in most of its aspects – it makes no distinction between process
and product patents and it extends patent protection to twenty years.
The 1949 law, which remained
in force for pharmaceuticals until 1 January 2005, granted patent protection
for fifteen years, which could be extended to twenty years in some
circumstances, and had a more restricted definition of an invention than
either the 2002 law or the TRIPS agreement.
The 1949 law did not protect product patents for pharmaceuticals and only
allowed a ten year period of patent protection for pharmaceutical process.
In addition to the
restricted protection of pharmaceutical patents, and the price control of
medicines, the Egyptian government restricted the importation of
pharmaceuticals in finished dosage form, and insisted on local licensing of
the patents, allowing local production and thus more control over pricing.
This appears to be in violation of the WTO agreements as price controls have
the effect of interfering with the free trade of goods (pharmaceuticals).
Egypt is likely to come
under increased pressure to liberalise its market because of its potential
for US pharmaceutical firms as evident from the following assessment by the
Pharmaceutical Research and Manufacturers of America (PhRMA)
Egypt is a significant
market - indeed one of the largest - in the Middle East/Africa region. Even
under current adverse circumstances, U.S. firms hold an estimated 18 percent
share of the Egyptian pharmaceutical market, in a market estimated at more
than three quarters of a billion dollars in 1997. If Egypt were to meet its
WTO obligations, the U.S. share of the market would likely rise increase to
at least 25%, and the market itself would likely show substantial expansion.
Until the present time, for example, PhRMA member companies have been unable
to move forward with an estimated 300 million dollars in planned investments
in Egypt's pharmaceutical sector. In addition, given its location and large
population, if Egypt were to adopt a modern patent law and market-based
pricing, it would become a likely regional center for multinational
pharmaceutical production. Accordingly, PhRMA estimates current losses in
Egypt as in excess of 100 million dollars.
From 1 January 2005
pharmaceutical patents started to be treated the same as other patents in
Egypt, at the same time as Egypt’s international obligations to be TRIPS
compliant have came into force. Pharmaceutical patents are now granted for a
period of twenty years and for product as well as process, making the
reverse engineering of drugs illegal.
However, as Egypt becomes
TRIPS compliant it may – indeed, it must – begin to utilize the
flexibilities in the TRIPS agreement under articles 30 and 31 as interpreted
by the Doha Declaration and the Ministerial Decision of 30 August 2003. This
would mean – as was noted above in detail – that the Egyptian government
will be entitled under TRIPS to issue compulsory licences for, inter alia,
health purposes (including, but not restricted to, emergencies such as
Hepatitis C and HIV/AIDS).
Indeed an interpretation of
ICESCR and the African Charter, with reference to General Comment 14,
implies that the Egyptian government has an obligation to take advantage of
the flexibilities in TRIPS to ensure access to essential medicines and to
protect their right to health.
While the new law appears
more compliant with WTO standards there are a number of articles designed to
allow flexibility,
such as section 17, which allows the Minister of Health to block the
registration of a patent if it represents a “health value.” This section
would appear to be in violation of TRIPS since it is not covered by either
Article 30 or 31 of the treaty. It is doubtful whether the Egyptian
government would be prepared to use this provision as it would cause direct
confrontation with developed countries.
Article 18 allows for the
creation of a fund for the subsidisation of medicines, which may also be
complained against by international drug companies as anti-competitive. The
Ministry of Health decided to establish the medicines subsidisation fund to
ensure the stability of the process of medicines away from sudden increases
in order to make it accessible to the poor. This fund will subsidise chronic
diseases drugs such as insulin, cancer treatments, cardiac diseases
medicines, as well as babies formulas.
However, as this fund has not been established at the time of writing, there
is no indication whether preference will be given to pharmaceuticals
manufactured in Egypt. If all
essential medicines are subsidised, regardless of source, this should not be
in violation of free trade agreements.
The most important
provisions of the new law for the purpose of this policy paper is in Article
23, which allows the grant of compulsory licences by the Patents Bureau
after approval by a ministerial committee set up under a decree by the Prime
Minister.
The ministerial committee will decide what compensation, if any, and the
amount of this compensation will be granted to the patent holder.
These licences may be for
public health utility purposes (article 23(1) first) or in emergencies or
“conditions of utmost necessity” (article 23 (1)second). In these
circumstances the licences may be granted without any negotiations with the
patent holder.
Under article 23 (2) the
Minister of Health may demand the issuing of a compulsory licence in a
number of circumstances, including high prices of medications or where
medicines are needed for “chronic, incurable or endemic diseases.”
Article 23 also allows
compulsory licences for non-use (which is a situation where the patent is
protected but the goods are not manufactured or sold in Egypt) and
anti-competitive practices by the patent holder (such as excessive prices,
failure to sell the products in Egypt, discontinuing or reducing production
or blocking the transfer of technology).
The executive statutes do
not deal with the procedure to be applied by the Minister of Health when he
declares that compulsory licences are necessary under article 23 (2) of the
Act, restricting itself to the procedure to be applied when a third party
applies for a compulsory licence. The Minister appears to have been given
the power to grant compulsory licences himself instead of through the
patents bureau and the ministerial committee on compulsory licences.
Article 24 (1) requires that
compulsory licences should “basically” (an equivalent here of
“predominantly”) provide for local needs – thus not taking advantage of the
Ministerial Decision of 30 August 2003 – discussed in detail above.
The rest of article 24 is
concerned with procedures for applying for a compulsory licence and the
conditions attached to it, such as requirements that compulsory licences
should not be transferable. Notably, the applicant for a compulsory licence
should show, under article 23(2) that an attempt has been made to apply for
a voluntary licence from the patent owner – but this should not apply to
compulsory licences under article 23(1), where it is specifically stated
that the Minister of Health can grant the patents without prior negotiation
with the patent holder.
Articles 36 to 43 of the
Executive Statutes set out the procedures for the granting of compulsory
licences, and these procedures are generally
straight forward; the application is brought through the patents bureau,
which gives its recommendation to the ministerial committee, which issues
the licence. The patent owner will be granted reasonable compensation in
terms of section 41 of the Executive Statutes and will have the right to
appeal all decisions of the ministerial committee to the complaints
committee established in terms of section 36 of the Law.
Thus the compulsory
licensing provisions of the new Law give the Egyptian government the
necessary legal authority to take advantage of the flexibilities under the
TRIPS agreement and this should be applied generously to allow and encourage
the granting of compulsory licences to keep medicines affordable to the
majority of Egyptians.
While the Act does not make
any reference to parallel importation it does not expressly disallow such a
scheme since it leaves the conditions of each compulsory licence to the
compulsory licence committee. Although article 40 of the Executive Statutes
stipulates that compulsory licences shall only be granted to entities that
can exploit the patent in Egypt, giving an indication that parallel
importation was not considered during drafting, the Executive Statutes
appear to refer to the situations where a private individual applies for a
licence on the grounds of non-working or anti-competitive acts by the patent
holder. In such circumstances parallel importation would usually not be a
logical solution.
But the Law allows very
broad powers to the Minister of Health to determine when compulsory licences
should be issued for unavailable or expensive medicines and it is logical
that these licences should include the power to import the medicines as one
of the terms.
