Bangladesh, a young nation burdened with overpopulation and poverty, is surprising the world with rapid development in multiple sectors including public health. On the auspicious occasion of celebrating its 50 years of independence in 2021, the country graduated from the least-developed countries group (“LDC group”), by fulfilling all three eligibility criteria, which is undoubtedly one of its biggest achievements. Generally, a country gets three years as a transitional period after being eligible for graduation. However, Bangladesh will get an additional two years due to the COVID-19 pandemic, which means it will graduate in 2026.
Being conferred the status of a ‘developing country’, various new windows of opportunity will open for Bangladesh. However, these advantages will come with significant costs. Bangladesh will lose a number of flexibilities and waivers in terms of international trade which the country is presently exploiting as a LDC. These flexibilities have played a vital role in the growth of different sectors of the economy including the public health sector. In particular, the pharmaceutical sector will face severe challenges because of patent issues. In exploring these challenges, this article will specifically look at the TRIPS agreement and the considerations therein.
Intellectual Property and Flexibilities Under the TRIPS Agreement
The TRIPS Agreement provides room for its member states to adhere to essential policies for safeguarding public health without contravening its provisions. Although patent rights shall be provided for inventions from any field of technology without any discrimination, member states are allowed to restrict the patentability of inventions on grounds of protecting public health. Member states are also empowered to take measures to prevent anti-competitive practices by exploiting patent rights.
Compulsory licensing is permitted, subject to some stipulations, under Article 31 to restrict the exploitation of patent rights. Further, Article 31bis permits member states to export generic drugs manufactured under compulsory licensing to LDCs having a shortfall of production capacity.
Recognising its distinctive needs, the TRIPS Agreement waived patent protection in specific fields of technology for ten years, as a transitional period, for LDCs which has been extended several times and is currently waived till 1st January, 2033 or until graduation from the LDC group, which ever takes place first. However, member states have the obligation to enable inventors to submit patent applications. Nevertheless, the country is not required to decide whether the patent will be granted or not till the expiration of the aforesaid waiver period. Accordingly, a mailbox has been created for collecting and storing patent applications with the view of tracking the date of filing which is essential to determine novelty of an invention (see here).
Subject to certain provisos, countries are allowed to provide limited exceptions to patent rights. Several countries permit the utilization of patented inventions for research purposes. Multiple countries permit the producers of generic medicines to exploit patent protected inventions, prior to the expiration of the patent protection and without the authorization of the patent holder, for attaining marketing permission from the concerned authority. This exception is widely known as the Bolar provision.
The TRIPS Agreement also allows the importation of patented products, without the authorization of the patent holder, from another country where the patent owner marketed its products. The underpinning legal principle here is exhaustion of rights, that is, when the patent owner sells a consignment of patented product, the patent owner’s rights are exhausted on that consignment.
Another exemption for LDCs is the waiver of the “no rollback clause” which prohibits granting lesser protection to intellectual property rights under domestic legislations than those provided under the TRIPS agreement. The TRIPS Council has withdrawn the restriction in 2013 to provide equal opportunity to LDCs to utilize the waivers given under the TRIPS Agreement.
Scope in Domestic Legal Framework
Bangladesh has taken advantage of the flexibilities provided in the TRIPS Agreement in order to ensure mass access to public healthcare. Under Bangladesh’s existing intellectual property protection regime, patenting of pharmaceutical products and processes is embargoed till the transitional period under the TRIPS Agreement expires or it graduates from the LDC group, whichever occurs first. Accordingly, Bangladesh has taken advantage of the waiver on “no rollback clause”. Domestic law also prohibits the manufacture of certain medicines, restricts the import of specific pharmaceutical raw ingredients, and imposes the requirement of approval and licensing on foreign manufacturers. Moreover, the definition of “invention” under domestic law includes improvement of an invention and thus, allows reverse engineering to get patent protection.
Section 21 of the Patent and Designs Act, 1911, partially incorporates the bolar exception by allowing the government to use any patented invention only after informing the patent holder. Further, subject to certain conditions, compulsory licensing is allowed in Bangladesh. The law also permits the granting of compulsory license if the patented products are manufactured outside of Bangladesh.
Flexibilities Exploited by Bangladesh
The public health care system in Bangladesh has benefited immensely due to the waivers given under the TRIPS Agreement. Specifically, the local pharmaceutical industry has grown exponentially in the last couple of decades which has allowed them to meet ninety percent of the market demand and has helped to decrease the dependence on import. Further, local drug manufacturers in Bangladesh have exported their medicines to more than a hundred countries by utilizing the flexibility given in the TRIPS agreement. Several locally produced drugs also enjoy patent protection in other countries, despite most of them being generic whose patents have expired in Bangladesh. The comparatively lower and affordable price of the locally manufactured drugs have enhanced public access to medicine significantly. For example, the locally produced medicines for a full course treatment of Hepatitis C costs about 13 times less than that of patented medicines.
Bangladesh is also increasing its capacity to manufacture medical devices and instruments to meet local demands partially. This industry is mainly dependent on reverse engineering the imported medical devices and manufacturing only small and medium appliances. Therefore, the country has to still rely on importing major supplies of medical equipment. Unfortunately, as a LDC, Bangladesh has not utilized the opportunity to cooperate with and transfer technology from developed nations. However, Walton, a local electronics manufacturer, has finally taken the initiative and started manufacturing ventilators locally during the COVID-19 pandemic in collaboration with a globally renowned brand in the field of manufacturing medical devices. As a result, the locally made ventilator costs far less than the imported ones.
Foreign cooperation has also played a pivotal role in the public health sector in Bangladesh. International assistance in public health research, for example, ICDDR, Bangladesh, has significantly contributed towards the research on diseases as well as providing treatment to underprivileged groups. It is funded and supported by several organizations and scientists from developed countries who have shared their knowledge with local health professionals. Several foreign organizations and donors are also assisting by funding or sharing technical information for improving public health quality in Bangladesh. For example, USAID is working to bolster the public health system through various initiatives.
Ramifications of LDC graduation
Graduating from the LDC group is much awaited and is a matter of dignity for the whole nation. However, after graduating from the LDC group, Bangladesh will face several challenges in the public health sector. Most importantly, Bangladesh will no longer be eligible for waivers and flexibilities under the TRIPS agreement. As a result, the local pharmaceutical industry will face patent issues and the price of several medicines will rise consequently. This will create a barrier for mass access to medicine. Further, Bangladesh will not be able to avail assistance and cooperation from developed countries easily. This could create a gap in the public health sector if organizations such as the ICDDR stop functioning in Bangladesh or if foreign donors stop funding the public health sector. Further, developed countries will no longer be obliged to incentivize companies to transfer their technology to Bangladesh. This will increase the challenges for local manufacturers who are not prepared to compete with their foreign counterparts under the intellectual property protection regime envisaged in the TRIPS agreement. Moreover, local manufacturers will not be allowed to reverse engineer imported devices which would inhibit their ability to manufacture medical equipments at lower prices.
Possible Choices Available for Bangladesh
Graduation from the LDC group will not necessarily be disadvantageous for the public health sector in Bangladesh. However, it would depend on the measures taken prior to the graduation. The government should take properly planned steps to make best use of this transitional period. First, the government needs to incentivize foreign direct investment in the pharmaceutical sector. New policies should be formulated to encourage foreign manufacturers to tie up with local companies. It will create fair competition in the market and consequently, the price of patented medicines will remain affordable. Second, the existing law related to compulsory licensing needs to be amended to provide scope for compulsory licensing in the event of national crisis or for non-profit making use in the interest of public welfare. Third, the government should encourage local drug manufacturing companies to increase investment in the research and development of products which will create a strong technological base in Bangladesh while promoting innovation. In this regard, Bangladesh can leverage the provisions allowing cooperation and technology transfer under the TRIPS Agreement.
In the last 50 years, Bangladesh has achieved significant advancements in the public health sector by controlling several viral diseases and improving healthcare facilities at the grassroot level, which has been globally recognised. However, the coronavirus pandemic brought devastating and long-lasting ramifications for the public health sector in Bangladesh. In such a situation, the introduction of intellectual property related issues will significantly hinder mass access to health care, which is already strained due to the COVID-19 pandemic. The upcoming five years transitional period is a ray of hope for Bangladesh. Therefore, a well-researched scheme is now direly needed to safeguard mass access to healthcare after the much-awaited graduation.
Farhan Masuq is a final year law student at Bangladesh University of Professionals.
Image: Annelise Capossela for NY Times (‘Does Anyone Really Love Private Insurance?). See here.