One of the world's top experts on the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS agreement), Jerome Reichman, Duke’s Bunyan S. Womble Professor of Law, is also a man with a mission: facilitating access to essential medicines in the world’s poorest countries. These countries are also plagued by some of the world’s worst public health epidemics; HIV/AIDS alone is estimated to afflict more than 40 million people in developing countries and those the United Nations designates as “least-developed.”

Patent-protected medicines have long been out of reach for the vast majority of people in these countries, Reichman explains, partly because their governments agreed to abide by minimum intellectual property guarantees as a condition of membership in the World Trade Organization (WTO). However, through a legal process put in place by a 2001 WTO ministerial declaration issued in Doha, Qatar (the Doha declaration), and finally perfected in 2005 as an amendment to the TRIPS agreement, it became possible to circumvent some of those standards in the interest of facilitating access to essential medicines in the poorest nations.

As an external consultant to the Geneva-based United Nations Conference on Trade and Development (UNCTAD), Reichman is contributing his expertise to a reference guide for developing countries to help them use these TRIPS agreement flexibilities effectively. After its completion this summer, UNCTAD will hold training courses for officials in those countries to promote the advantages gained from pooling compulsory licenses, and offer guidance in negotiating and using them. An initial regional training course on TRIPS flexibilities involving Botswana, Ethiopia, Kenya, and Tanzania was held in Addis Ababa in March.

Reichman credits the 2005 amendments with sparking new prospects for pharmaceutical procurement policies by poor countries and, in particular, for giving “legal feasibility” to his scheme for establishing regional pharmaceutical procurement centers in the poorest nations. This was initially conceived in 2002, he says, on the promise of the Doha declaration’s acknowledgment that WTO members have a right to take full advantage of “flexibilities” in the TRIPS agreement in order to address public health crises.

One such flexibility allows governments to grant compulsory licenses to address national public health problems, Reichman explains. Over the objections of a patent rights holder, a government can authorize licensees to produce the patented goods, such as pharmaceuticals, in return for “adequate remuneration,” which Reichman suggests should be the marginal cost of production plus four or five percent. Under the 2005 amendment, a developed country can issue a second compulsory license to support a first compulsory license in a developing country – one to supply drugs domestically, and another to produce medicines for export to a developing country that lacks manufacturing capacity. One payment is imposed in the developed country, at rates based on conditions in the developing country, and the goods can’t be re-exported. “We can now actually supply these goods – these essential medicines – assuming developed countries enact enabling legislation,” he says, noting that Canada, Norway, Korea, and India have already done so, with Switzerland and the EU expected to follow suit.

Other amendments gave the least-developed countries an exemption from some of their TRIPS obligations until 2013, and a further exemption from patenting pharmaceuticals until 2016. Significantly, says Reichman, if a regional group of these countries associated themselves in a trade association, 50 percent of members of which are among these least-developed countries – “the poorest of the poor” – they could re-export goods imported under double compulsory licenses, including essential medicines, throughout the entire affiliated regional trade group. That, says Reichman, would make it possible to establish regional pharmaceutical supply centers with considerable economies of scale and scope.

One scenario he presented to UNCTAD last October proposes the creation of a loose trade agreement between 12 countries in sub-Saharan Africa and their subsequent establishment of a regional pharmaceutical supply center in a member country exempt from patent protections until 2016. The center’s board of directors, composed of member countries’ health ministers, would decide which essential medicines were needed regionally, grant the necessary compulsory licenses under the TRIPS agreement, and then endorse the licenses over to the central pharmaceutical supply center.

“Suddenly the directors find themselves in a very strong negotiating position vis-a-vis the pharmaceutical companies,” Reichman says. “The ministers, acting jointly, holding this bundle of compulsory licenses, can go to the original patent holder and offer the possibility of supplying the entire regional market, if it agrees to supply the drugs at truly affordable prices,” he says. “One of the things we have learned is that under the existing set of incentives, the manufacture of these drugs in developed countries is not being induced by markets in developing countries. So … if in these markets they get the marginal cost of production plus a genuine royalty of five or six percent, they are receiving rewards that go far beyond their original investment calculus.” Through this arrangement, the patent holders would also be preserving their trademark and market share in the entire region against future competition, Reichman adds.

The ministers could offer “an even better deal” to the patent holder if the latter set up a regional factory, supervised production quality, and supplied the member states from the regional facility, says Reichman. “The manufacturer then becomes a power in the region, we get exchanges of know-how, we get spillovers, we get capacity building in these countries.” The certain spillover benefits to the region would justify a more generous royalty, he adds: “marginal price plus 10 or 12 percent.” He is passionate in insisting that the opportunity to build pharmaceutical production and capacity in Africa should not be missed. “Africa, as a continent, should not be dependent on foreign supply forever.”

Helping to build regional manufacturing capacity would also help satisfy a little known provision in the TRIPS agreement that imposes obligations on developed countries to encourage transfers of technology to the least developed countries in order to give them a viable technological base, Reichman points out. And if the original patent holder declined such an offer, the directors could approach countries with experience producing generics, such as India, China, or Brazil, offering them a chance to develop a robust generic industry in Africa, which could subsequently convert to research.

Reichman has devised scaled-back alternatives to his original proposal, involving just two or three countries. “South Africa, for example, could join with two least-developed countries and still have the same capacity. You could do it with two countries, as long as one is a least-developed country, and still get all the advantages.”

His plan also has promise for countries still bound by TRIPS’ intellectual property guarantees – the poorest of the developing countries, such as Bolivia, where he spoke in January. “It isn’t possible in these countries to manufacture the drugs in one country and ship them to a second importing company, and re-export them to all other participating countries. But pooled procurement with separate deliveries, by country, still offers the advantages of economies of scale. Three or four licenses could be pooled to make sure the demand for a specified pharmaceutical is of a sufficient scale from the beginning to justify the investment in producing it for export to these countries, or setting up production in one of these so that it could then be sold to the others under pooled compulsory licenses.”

In addition to creating economies of scale and scope, pooling compulsory licenses facilitates standardized procedures for their issue, cuts transaction costs, and raises the possibility for joint distribution facilities. “So long as each country singly goes through the process of issuing a compulsory license, it’s up against ‘big pharma,’ the repeat player,” he says. “But three or five countries working together have the advantage of numbers. It will be harder to threaten them with lawsuits in local courts, and they can pool the costs of defending themselves if they need to.”

While Reichman observes enormous political will in certain quarters to help developing nations establish manufacturing capacity – he calls Germany particularly supportive – he acknowledges that his plans are vulnerable to other political pressures, to incompetence, or even to corruption. Some countries, he notes with frustration, have bargained away their TRIPS flexibilities pertaining to pharmaceuticals in favor of free-trade concessions elsewhere. Other challenges pertaining to quality standards and obtaining the active ingredients for drug manufacture he characterizes as solvable problems. “Bangladesh and Colombia have been able to meet pharmaceutical quality standards set by the WHO, and I have no doubt that if we have turnkey projects, we could do it in these countries.”