Determining Adequate Remuneration and The Health Diseases for Compulsory Licensing Medicines Under Article 31 of The TRIPS Agreement: An Interdisciplinary Study Between Patent and Public Utility Laws The US-Egypt as a Cases Study

Mansour, Ahmed Hamza

Publication

Determining Adequate Remuneration and The Health Diseases for Compulsory Licensing Medicines Under Article 31 of The TRIPS Agreement: An Interdisciplinary Study Between Patent and Public Utility Laws The US-Egypt as a Cases Study

Mansour, Ahmed Hamza

Abstract

Compulsory licensing under Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS agreement) is an exception to the rights of patent holders. The TRIPS agreement allows access to this exception to address many situations, including health problems facing the WTO member nations, and other issues. However, the TRIPS agreement has two major problems that can significantly decrease the value of the entire system of compulsory licensing making it less useful to access essential medicines. First, even though Article 31 requires the payment of adequate remuneration to a patent holder for issuing a license, it does not require the application of a predictable calculation method for adequate remuneration, or identify the institution that has the capacity to make this determination. Second, the scope of health problems is never identified in the TRIPS agreement or other major modifications. As a result, this lack of clarity in the calculation process and in the scope of covered diseases leads pharmaceutical companies to oppose the invocation of compulsory licensing by member countries because they do not know how much remuneration they will get. Further, some members also wanted TRIPS to allow the use compulsory licensing to treat very few health problems such as HIV/AIDS and other similar diseases. This dissertation examines these two issues in the TRIPS agreement. In order to solve these problems, this dissertation reviews some core issues of the use of public utility doctrine in the U.S such as the definition of a public utility, regulatory commissions, and the utility rate setting process. The reason for reviewing the theory of public utility regulation is to use the utility rate setting process to solve the problem of calculating adequate remuneration for compulsory licensing under Article 31 of the TRIPS agreement. The public utility rate setting process has a predictable calculation approach to determine utility prices that is built on specific mathematical method, and can serve as a workable estimation approach to calculate adequate remuneration. This dissertation also argues that calculating this remuneration should be determined by a neutral institution that operates independently from the stakeholders of a compulsory license. This dissertation proposes that the TRIPS Council should establish an ad hoc stakeholder committee to calculate adequate remuneration. If TRIPS adopts a predictable calculation method for adequate remuneration such as the utility ratemaking approach, this allows the application of the compulsory licensing method to treat any disease without restrictions, and therefore, solves the current problem of the indefinite scope of diseases under the TRIPS agreement. Until the TRIPS agreement imposes it as requirement to calculate adequate remuneration, the public utility rate setting method is a system that is administered entirely through collaboration and common understanding between a patent holder and a member country. This explains why public utility commissions allow utility companies to co-determine utility rates charged to consumers. If there is no collaboration from the patent holder, a member country will unilaterally issue a compulsory license and perhaps give little or no remuneration to the patent holder. The only choice left for the patent holder is to litigate the compulsory license in front of the judicial authorities inside a member country. This is a process that will waste time and money for the patent holder and make the patent holder lose control over the distribution of generic units of its drug. In a similar context, without collaboration with a patent holder, after issuing a compulsory license, a member country exposes itself to economic and political pressures from the patent holder and its home country.