## Facts

- TRIPS Agreement Article 31(f) limited production under compulsory licence to uses “predominantly for the supply of the domestic market,” restricting exports of medicines made under compulsory licence.
- WTO Members lacking sufficient pharmaceutical manufacturing capacity faced difficulty obtaining needed medicines through compulsory licensing because they depended on imports.
- The 2001 Doha Declaration on the TRIPS Agreement and Public Health affirmed that TRIPS should be implemented to support public health and access to medicines and directed a solution to the Article 31(f) constraint for such Members.
- On August 30, 2003, the WTO General Council adopted a decision under the WTO Agreement’s waiver authority to implement the Doha mandate by creating a mechanism for exports under compulsory licence.
- The decision defined “pharmaceutical product” broadly to cover patented products or products made through patented processes needed to address public health problems recognized in the Doha Declaration, including active ingredients and certain diagnostic kits.
- The decision defined “eligible importing Member” as any least-developed country (LDC) Member and any other Member that notifies intent to use the system as an importer, with an option to limit use to specified circumstances (e.g., emergency, urgency, or public non-commercial use).
- For non-LDC importers, the decision required establishing and notifying that the Member has insufficient or no manufacturing capacity for the product, using criteria in an annex.
- Importing Members using the system had to notify the Council for TRIPS of product names and expected quantities, manufacturing-capacity confirmation, and (if relevant) that a compulsory licence had been or would be granted domestically.
- Exporting Members granting compulsory licences for export had to limit licences to quantities consistent with importing needs, require distinguishing product features (where feasible without significant price impact), ensure public posting of supply information by the licensee, and notify the Council for TRIPS of licence details.
- The decision imposed anti-diversion expectations, including reasonable measures by importing Members (other than LDCs) to prevent re-export and measures by all Members to prevent imports of diverted products, consistent with WTO rules.
- The Council for TRIPS was tasked with annual review and reporting to the General Council to ensure the system is used for its stated purposes and to consider needed adjustments.

## Issues

1. How to permit WTO Members with insufficient or no pharmaceutical manufacturing capacity to obtain medicines through compulsory licensing despite TRIPS Article 31(f)’s domestic-market limitation.
2. Whether and on what conditions a waiver can authorize compulsory licensing for production and export of pharmaceutical products to eligible importing Members.
3. How remuneration and anti-diversion safeguards should be structured to avoid double payment and reduce risks of diversion while enabling access to medicines.

## Decision

- The General Council found exceptional circumstances justifying waivers from TRIPS Article 31(f) and, for importing Members using the system, Article 31(h), for specified pharmaceutical products.
- The decision waived Article 31(f) to allow compulsory licences in exporting Members “for the production of pharmaceutical products and their export to eligible importing Members.”
- The decision waived Article 31(h) for eligible importing Members using the system so that, where remuneration is paid in the exporting Member, no additional remuneration is due in the importing Member.
- The decision conditioned use of the system on transparency and notification requirements for importing and exporting Members and on specified licence limitations and product-identification measures.
- The decision required proportionate anti-diversion measures by importing Members (other than LDCs) and actions by all Members to prevent importation of diverted products, consistent with TRIPS and GATT 1994.
- The decision established TRIPS Council oversight through annual review and reporting and contemplated work toward incorporating the waiver’s substance into a TRIPS amendment.

## Legal Principles

- A WTO waiver may be granted where exceptional circumstances exist, allowing temporary suspension of specified treaty obligations within defined limits and conditions.
- TRIPS must be interpreted and implemented to support Members’ right to protect public health and improve access to medicines, consistent with the Doha Declaration.
- Compulsory licensing for export of pharmaceutical products may be permitted when the importer lacks sufficient manufacturing capacity, if the authorization is limited to quantities needed and accompanied by transparency and anti-diversion safeguards.
- Remuneration for authorized use under compulsory licence in an exporting Member must be adequate and reflect the economic value of the use in the importing market; when paid in the exporting Member under the system, importing Members owe no additional remuneration.
- Members retain discretion in domestic implementation, including adopting anti-diversion measures “within their means” and proportionate to administrative capacity and diversion risk, while remaining consistent with WTO obligations.
- Oversight and periodic review by the Council for TRIPS are mechanisms to monitor use and ensure the system operates for its stated public-health purpose.

## Conclusion

The WTO General Council’s August 30, 2003 decision implemented the Doha public-health mandate by waiving TRIPS restrictions that impeded exports under compulsory licensing, creating a conditional system that enables eligible importers lacking manufacturing capacity to obtain needed medicines while requiring notice, remuneration rules centered in the exporting state, product identification, anti-diversion measures, and TRIPS Council review.


Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, WTO Gen. Council Dec., WT/L/540 (Aug. 30, 2003)