Changes to South Africa’s patent laws are long overdue

As it currently stands, South Africa’s intellectual property (IP) legislation arguably fails to uphold our government’s constitutional obligations to realise the right to health for its citizens. According to Section 27 of our constitution, government must take reasonable legislative and other measures to progressively achieve the right of access to health care services.

For over a decade, government has failed to uphold this constitutional duty. It has neglected to adopt many provisions and flexibilities that are allowed in the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘the TRIPS agreement’) to protect health. Adopting these provisions into our national law falls within what the constitution means by ‘reasonable legislative measures’. There can be no doubt that adopting these provisions would help South Africans to progressively realise their right to health by dramatically increasing access to life-saving medicines.

However, recent moves by government indicate some willingness to remedy this failure. During 2011, the Department of Trade and Industry announced it was developing an IP policy for South Africa. The outcome of this process would be substantive amendments to South Africa’s IP legislation.

Recognising a potentially significant opportunity to adopt pro-public health IP legislation in South Africa, the Treatment Action Campaign and Médicins Sans Frontières launched a campaign in November of 2011 calling on government to “Fix the Patent Laws”. Specifically, TAC and MSF have proposed a number of amendments to South Africa’s Patents Act 57 of 1978.

What is a patent?

A patent is an exclusive right granted to a company or individual by government that protects that company or person’s intellectual property. Patents are granted for new or inventive discoveries. However, what constitutes ‘new’ and ‘inventive’ can differ from country to country. Patents granted in one jurisdiction are often rejected in another.

During the period of patent protection, the patent holder is able to sell the patented product free of competition from other companies. Because of this, the company will generally keep the cost of its product extremely high in order to maximise profits. This practice can block access to life-saving medicines, by keeping the cost of these products artificially high.

IP and the NSP

In drafting the current National Strategic Plan for HIV, STIs and TB 2012–2016 (NSP), civil society recognised the barrier that South Africa’s patent laws would create to achieving the NSP targets.

Third-line ARVs, as well as many improved first- and second-line antiretroviral medicines remain under patent and are costly. Such drugs are therefore not provided through the public sector. Additionally, after decades without new TB medicines, innovative drugs now in the pipeline show significant potential for improved treatment of drug-resistant TB. It is essential that access to these new medicines is not blocked by patents.

In the final version of the NSP that was submitted to cabinet, SANAC had recommended reforming the Patents Act, “to the extent that various provisions – including but not limited to sections 4, 25, 56, 61 and 65 – may unconstitutionally limit access to medicines by providing patent protection in excess of what is required under international trade law, thereby preventing the market entry of generic competition necessary to bring medicine prices down and ensure sustainability of supply.” This recommendation was originally included in the human rights section of the NSP.

However, a number of commitments on human rights, including amendments to the Patents Act, were removed by Cabinet. The plan was finalised without explicit commitments to reform our patent laws.

Nevertheless, reform remains critical to achieving the right to health in South Africa. The IP Policy for South Africa, developed by the Department of Trade and Industry, thus provides a critical opportunity to achieve pro-public health reform of South Africa’s IP legislation.

Life-saving law reform

TAC and MSF have identified a number of key amendments that South Africa should make to its intellectual property laws in order to fulfill the constitutional requirement to progressively realise the right of access to health care services. We will be pushing for these amendments in the current policy process. If unsuccessful we will consider taking the matter to court.

1. Set stricter standards for granting patents.

Patentability standards differ widely from country to country. So, for example, it is comparatively easy to secure a patent on a pharmaceutical product in the United States, while it is much more difficult in India.

These differences are consistent with international law. According to the TRIPS agreement, countries have considerable flexibility to set their own standards of patentability. This is because although countries must grant patents on products that are ‘new’ and ‘involve an inventive step’, they have the right to determine what is meant by ‘new’ and ‘inventive step’.

A number of developing countries (including India, Argentina, Peru, Bolivia, Columbia and Ecuador) have used this flexibility to set high patentability standards. This is in part a recognition that the patent system should only grant exclusivity rights in return for meaningful innovation. It is also partly a response to abuse of the patent system through tactics such as evergreening.

Evergreening is a method by which pharmaceutical companies try to extend their market exclusivity on a product by patenting new versions of existing drugs. This is usually done by applying for ‘new use’ and ‘new formulations’ patents on existing medicines. A new use patent is an additional patent that is granted on an existing medicine found to be effective in treating a different illness than the one for which it was initially registered. A new formulation patent is an additional patent that is granted for making minor changes to an existing medicine or chemical entity.

In order to curb evergreening, a number of countries now explicitly exclude ‘new uses’ and ‘new formulations’ of existing medicines from patentability in their national laws. South Africa should follow suit to prevent abuse by pharmaceutical companies. In this way we could ensure that patents are only granted on products which are truly ‘new’ and ‘involve an inventive step’.

2. Require that all applications undergo examination to ensure that they meet patent standards

South Africa currently has what is called a depository patent system. This means that when someone applies for a patent the validity of that patent is not examined against the patentability criteria described in the previous section. As long as you fill in all the application forms correctly, pay the very low fee, and as long as your application appears to be credible, you will be granted a patent. This is different from the examination systems in most developed, and some developing countries. Under examination systems all patent applications are scrutinised and tested against the country’s patentability criteria.

Because South Africa has both weak standards of patentability and no substantive examination of applications, the country grants an excessively high number of patents compared to other developing countries. For instance, South Africa granted 2,442 pharmaceutical patents in 2008 alone, while Brazil granted just 278 between 2003 and 2008. (Correa, 2011)

Furthermore, a recent study by the University of Pretoria found that if South Africa used the examination system 80% of existing patents would not have been granted. (Pouris, 2011)

Introducing an examination system in South Africa would dramatically reduce the number of weak or frivolous patents. This would make for an altogether more robust patent system. In addition, far from being costly, examination systems typically provide a source of income for government in the form of patent examination fees.

South Africa should review its system for granting patents. A proper examination system will ensure that patents are only granted for real innovations, thus considerably reducing the number of patents granted. Examination can be phased in, focusing initially on applications that have an impact on public interest.

3. Allow for opposition to patents by third parties

In addition to granting patents without examination, the Patents Act currently contains no provisions for third parties, such as civil society organisations or manufacturers of generic drugs, to oppose patent applications or to appeal against existing patents through an administrative process.

As a result of this shortcoming, the only way to challenge a patent in South Africa is through lengthy and expensive court proceedings. This severely limits who is able to challenge patents. As a result many patents of poor quality simply go unchallenged.

Hand-in-hand with a patent review system, South Africa could also set up a system of procedures for patent opposition. This would allow anyone to oppose an application simply by submitting evidence to the patents office about why the patent should not be granted. Botswana recently amended their laws to allow opposition to patent applications. Currently, India allows opposition while a patent is pending and for one year after it is granted.

Indian activists have successfully used these procedures to oppose a number of low quality patents on medicines, including paediatric formulations and fixed-dose combinations of antiretroviral medicines.

South Africa should amend its Patents Act to allow for both pre- and post-grant opposition of patent applications. This should be coupled with disclosure requirements to allow third parties to monitor patents that are pending or granted.

4. Amend the grounds and procedure for granting compulsory licenses

The fundamental aim of the patent system is to serve the public interest by encouraging innovation. However, as all major patent systems since the late 1800s recognise, it is essential to build into the patent system mechanisms that can balance public interest against the business needs of patent holders.

The most important of these balancing mechanisms is a compulsory license. Essentially, most legal systems set up terms and procedures that allow for a patent to be overridden in the public interest. So for example, if a life-saving medicine is prohibitively expensive, the state could step in and allow generic manufacturers to make the medicine at a lower cost.

South Africa’s Patents Act does technically provide for compulsory licenses. However the terms and procedures for granting these licenses are overly restrictive and do not utilise flexibilities in international law. It is thus not surprising that South Africa has never issued a compulsory license on a pharmaceutical medicine. A number of other developing countries have streamlined their intellectual property legislation and utilised compulsory licenses to improve access to affordable medicines.

Even though it is allowed under international law, South Africa’s Patents Act does not explicitly provide for compulsory licenses to protect health or in cases when the cost of medicines is too high. Also, the procedure and conditions for issuing a compulsory license in South Africa are unclear and overly complicated. Applications can only be made through expensive and time-consuming legal procedures. Also, critical issues such as timelines and royalty rates remain unclear in our laws.

South Africa should amend its laws to allow for compulsory licenses to protect health. It should also establish a simple, swift administrative procedure with clear guidance for granting compulsory licenses.

By Catherine Tomlinson,  a senior researcher with the Treatment Action Campaign.

www.fixthepatentlaws.org

Sources: Correa C. ‘Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing’, Research paper 41, South Centre (2011); Pouris A, Pouris A. ‘Patents and economic development in South Africa: Managing intellectual property rights’, S Afr J Sci.;107(11/12), Art. #355, 10 pages (2011), http://www.sajs.co.za/index.php/SAJS/article/view/355.