Jurisdiction – India and International
Yes, a compulsory license can be obtained for exportation of pharmaceutical products. However, such a license can only be granted for exportation to eligible importing WTO members. These members are –
- Least developed countries (LDCs); and,
- Other countries with insufficient or no manufacturing capacities of the particular product. Such countries are required to notify the TRIPS Council of their intention to use the country. LDCs are exempted from the requirement of making a notification.
Article 31 of the TRIPS Agreement allows compulsory licensing and lays down conditions that such a license must satisfy. Clause (f) of Article 31 stipulates that a compulsory license can be granted only when the use is “predominantly for the supply of the domestic market of the Member authorizing such use”. Since drugs could only be exported in extremely limited quantities, countries that lacked manufacturing capability faced public health crises.
The Doha Ministerial Conference adopted a Declaration on the TRIPS Agreement and Public Health (Doha Declaration) to address public health problems. The Declaration recognized that WTO members with insufficient or no manufacturing capacities face difficulties in using compulsory licensing provisions. The TRIPS Council was instructed to find a solution to this problem.
This led to the General Council’s 2003 decision in Implementation of Paragraph 6 of the Doha Declaration on TRIPS Agreement and Public Health. The decision waived the requirements under Article 31(f), allowing members to export pharmaceutical products to LDCs and countries with insufficient or no manufacturing capacities.
Certain countries such as Australia, United Kingdom and United States of America have opted out of using the system as importing members (full list here). Some other members have stated that they would only use the system in national emergencies (list on this page).
Requirements for Importing Countries
The importing member country needs to make a notification to the Council for TRIPS containing the following details –
- The names and expected quantities of the product(s);
- If the importing member is not an LDC, it must establish that it has insufficient or no manufacturing capacities in the pharmaceutical sector for the product(s) being imported;
- The country must confirm that it has granted, or will grant, a compulsory license in accordance with Article 31 of the TRIPS if the pharmaceutical product being imported is patented in the country.
Requirements for Exporting Countries
The exporting country must ensure that the compulsory license meets the following requirements –
- The amount of pharmaceutical product manufactured under the license should be limited to amount required by the importing country. Furthermore, the entire production must be imported.
- The products being produced under this license need to be marked/labelled for identification. The supplier must also distinguish such products by using special packaging and/or special shapes for them.
- The licensee must post on a website (own website or WTO website) the quantities being supplied and the distinguishing features of the product
Additionally, the exporting country must notify the TRIPS Council of the grant of the license with the following details –
- Name and address of the licensee
- The product(s) and quantity of the product(s) for which the licence has been granted
- The countries to which the product(s) is to be supplied
- Duration of the license
- Website on which the details of the product have been posted (iii, paragraph above)
Payment of Remuneration to Patentee
Article 31(h) provides for adequate remuneration for the patentee when a compulsory license is granted. The remuneration is to be calculated by taking into account the economic value of the compulsory license.
The decision waives this obligation for the importing country. However, the exporting country is required to pay remuneration to the patentee as per Article 31(h). The remuneration must take into account the economic value of the license to the importing country.
Apart from the specific requirements mentioned above, the decision also lays down additional conditions to ensure that the compulsory license is used for public health purposes effectively.
- Importing members need to take reasonable measures that are within their means and administrative capacities to prevent re-exportation of the product. If an importing country is unable to implement this requirement, developed countries shall provide technical and financial cooperation for implementation on mutually agreed terms and conditions.
- All members are required to ensure availability of legal means to prevent diversion of products into their markets in breach of this decision.
- Members are encouraged to engage in transfer of technology and capacity building.
Therefore, exportation of pharmaceutical products is permitted as long as it is done in a manner consistent with this decision.
Position in India
Section 92A of the Patents Act, 1970, allows grant of compulsory licenses for export of patented pharmaceutical products in certain exceptional circumstances. A compulsory license can be granted for manufacture and export of a patented pharmaceutical product to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product in case of a public health problems. The license will, however, only be granted if the receiving country has –
- Granted a compulsory license for the pharmaceutical product being imported by it; or,
- Allowed importation of the patented pharmaceutical products from India.
The terms and conditions of the license will be specified by the Controller while granting the license.
It is important to note that no compulsory license has been granted for export by India so far.
The General Council Chairperson’s Statement on the principles behind the decision is available here.
A detailed analysis of the judgment is available here.
Image from here.
 LDCs are deemed to have insufficient or no manufacturing capacities, directly by the virtue of them being LDCs. For other importing members, insufficiency or absence of manufacturing capacities of the product in question can be proved by the member establishing that –
i. It has no manufacturing capacity in the pharmaceutical sector; or,
ii. The capacity is insufficient to meet its needs.