The Inaccessibility of Healthc

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How to cite this thesis
Surname, Initial(s). (2012). Title of the thesis or dissertation (Doctoral Thesis / Master’s
Dissertation). Johannesburg: University of Johannesburg. Available from:
http://hdl.handle.net/102000/0002 (Accessed: 22 August 2017).
THE INACCESSIBILITY OF HEALTHCARE: ARE SOUTH AFRICA’S
PATENT LAWS AIDING AND ABETTING PHARMACEUTICAL
COMPANIES?
by
RUTENDO CHAPWANYA
(Student No. 201213554)
A Minor Dissertation submitted in partial fulfilment of the Degree:
MASTER OF LAWS
in
INTELLECTUAL PROPERTY LAW
in the
FACULTY OF LAW
at the
UNIVERSITY OF JOHANNESBURG
SUPERVISOR: PROF. RW ALBERTS
November 2020
i
ABSTRACT
Access to essential drugs and medicines is a major determinant of health outcomes and the
ability of the State to meet its public health objectives and obligations. Several countries have
made substantial progress towards increasing access to essential medicines, but access to
essential drugs and medicines in developing countries like South Africa is far from adequate.
A major reason for South Africa’s lack of access to medicines is its present patent laws which
offer strong monopolies to patent holders, failure to adequately examine patent applications
thus paving way for “evergreening practices, and, also its failure to utilise the Agreement on
Trade-Related Aspects of Intellectual Properties flexibilities in a manner that ensures wider
access to health care services, particularly access to essential drugs and services. Noting that
the end result of a patent right is a restriction on the introduction of the patented product into
the market; prices of patented pharmaceutical products tend to increase. The effect of a patent
on the price of patented drug or medicine and coupled with the prohibition of the production
of cheaper generic versions without the license of the patent right holder, have been
associated with the problem of access to medicine, especially in developing countries.
This study seeks to address the question whether South Africa’s current patent laws constitute
a hindrance to access to medicine. This study argues that patent rights, in their current design,
hinder access to essential medicine and drugs. This study presents the South African scenario
in respect to availability and accessibility of essential drugs and medicines over last one
decade. It is proposed that to enhance the South African health care system, the procurement
of essential drugs and medicines has to be strengthened through government commitment
through reform of contemporary patent laws. This can be achieved through the balancing of
the interests of pharmaceutical companies and the public, by creating flexibilities under
which patented drugs and medicines can be made accessible to the public and reasonable
prices.
Keywords: Access to essential drugs and medicine, TRIPs Flexibilities, Patent Monopoly,
Ever-greening, Patent law reform.
ii
PLAGIARISM DECLARATION
iii
ACKNOWLEDGEMENTS
To God Almighty, I am grateful for the opportunity to have been able to pursue this research
and for your many mercies and interventions at times when I faced great challenges along the
way.
I would like to thank my family, friends and my supervisors. I am truly grateful for your
unyielding love, patience throughout this journey. It was indeed a long journey but very
fulfilling, as I had the opportunity to interact with dynamic academics, colleagues and
friends. I am grateful to them for allowing me to bounce off ideas and source out knowledge
from them.
iv
TABLE OF CONTENTS PAGE
CHAPTER 1: INTRODUCTION AND PROBLEM STATEMENT
1.1 Introduction 1
1.2 Problem statement and background to the study 4
1.3 Research question and research methodology 7
1.4 Aim of the study 8
1.5 Outline of the study 8
CHAPTER 2: THE INTERNATIONAL AND DOMESTIC PATENT

FRAMEWORK
2.1 Introduction 10
2.2 International instruments 12
2.2.1 The TRIPS Agreement and its impact on access to essential medicines 12
2.2.2 The Doha Declaration on TRIPS Agreement and Public Health 16
2.3 The TRIPS flexibilities discussed in the South African context 18
2.3.1 Compulsory licences 18
2.3.1.1. Compulsory licences in respect of dependent patents 20
2.3.1.2. Compulsory licences in respect of abuse of patent rights 20
2.3.2 Parallel importation 21
2.3.3 The controversy surrounding the implementation of Section 15C of the
Medicines and Related Substances Control Amendment Act 23
2.3.4 Regulatory (Bolar) provisions 24
2.4 Where does the contemporary patent system fail the most vulnerable? 24
2.4.1 Lack of substantive examination upon the grant of a patent 25
2.4.2 Non-disclosure of international non-proprietary names in patent applications 26
v
2.4.3 Markush claims 27
2.4.4 Opposition proceedings 28
2.5 Domestic jurisprudence on cases of patent induced excessive pricing 28
2.5.1 Hazel Tau & others v GlaxoSmithKline (“GSK”) & Boehringer Ingelheim (“BI”) 29
2.5.2 Treatment Action Campaign v MSD (Pty) Ltd and Merck 31
2.4 Other factors leading to excessive pricing on essential medicines 31
CHAPTER 3: BIG PHARMA AND HEALTHCARE IN SOUTH AFRICA
3.1 Introduction 33
3.2 Brief outline on patent protection 33
3.3 The rationale of pharmaceutical companies 35
3.4 Claims made by the Big Pharma 36
3.4.1 Stronger intellectual property protection will advance economic development 36
3.4.2 Stronger intellectual property protection protects local industries 38
3.4.3 A flexible intellectual property system will harm foreign direct investment 39
3.4.4 A flexible intellectual property system will harm trade 40
3.4.5 A flexible intellectual property system will harm health innovation 41
CHAPTER 4: HOW IS SOUTH AFRICA ADDRESSING THE LACK OF

ACCESS TO ESSENTIAL DRUGS AND MEDICINES?
4.1 Introduction 43
4.2 Implementation and enforceability of the Draft IP Policy 43
4.3 Substantive search and examination 44
4.4 Patentability criteria 45
4.5. Implementation of opposition proceedings 45
CHAPTER 5: CONCLUSION 47
BIBLIOGRAPHY 49
vi
CHAPTER 1
INTRODUCTION AND PROBLEM STATEMENT
1.1. Introduction
Section 7(2) of the Constitution of the Republic of South Africa (the Constitution) mandates
the state to “respect, protect, promote and fulfil the rights in the Bill of Rights” – rights of
which include the right to health care.1 Section 27(2) of the Constitution provides that the
state “must take reasonable legislative and other measures within its available resources to
achieve the progressive realisation” of the right to health care amongst other rights
guaranteed in section 27. The provision for access to essential medicines is necessary for
combating a wide range of infectious diseases that have plagued South Africa and without
access to these medicines, public health is gravely compromised. One of the reasons access to
essential medicines has been hindered in South Africa is the wide existence of strong patents
on essential medicines. More often than not, it is the less affluent members of society that
suffer the adverse consequences of an inefficient and underequipped public health system that
serves the vast majority of the population. The South African health system is chronically
underfunded and understaffed, which drastically affects the quality of treatment provided.2
The end result is that the health care system is constrained in its efforts to provide the general
public with access to adequate health care services.
The provision for access to essential medicines is guaranteed under the right to health and
access to these medicines is vital for the sustainment of human life and combating of
infectious diseases.3 Despite this guarantee, the majority of the South African population –
for whom private medical insurance is unaffordable and therefore inaccessible – are
principally dependent on the government-funded health sector for healthcare services which
lacks provisions of essential medicines. It has been reported that less than 20 per cent of
South Africans have private health insurance enabling them to access private sector care, but
1
of 1996.
2
The Nordic Africa Institute “Quality healthcare for all in South Africa – is it possible?” 2019. Available at:
https://nai.uu.se/news-and-events/news/2019-11-06-quality-healthcare-for-all-in-south-africa---is-it-
possible.html (accessed on 22-10-2019). Can use this for my research
3
Hogerzeil “Essential medicines and human rights: what can they learn from each other?” 2006 Bulletin of the
World Health Organisation 372.
1
even with this insurance, certain patented medicines are excluded from the prescribed
minimum benefits, thus enabling private insurers to refuse to cover the cost of providing
these medicines for the reason that it would become too expensive to cover the full treatment
cost.4
The costs of bringing a new drug to market today are often exorbitant. This situation is
further exacerbated by the fact that medicines control councils require vigorous testing before
a medicine can be marketed – a process that can take up to 15 years.5 When one considers
that patent protection is only extended for 20 years, this means that the patentee only has 5
years to recover the huge costs incurred to that point and to make revenue which will fund the
next generation of medicines.6 In order to recoup the costs incurred and to maximise on
profits for the duration of the patent, a patent holder will generally increase the price of the
patented medicines. The market accepts that this is a reality of healthcare today. Patented
medicines are expensive because they are, in effect, paying for tomorrow’s drugs.7
Governments around the world attempt to ameliorate this situation by buying in bulk from the
producers, and (or) negotiating other deals with patent holders. Governments have also
resorted to waiting for the patented drugs and medicines to come off patent so that they can
buy them at greatly lowered prices from generic manufacturers.
However, patentees look to extend their 20-year monopoly through any means possible.
Once patentees have a “blockbuster” drug in hand, they attempt to prolong the monopoly
around the new chemical entity (NCE) by subsequently patenting enhanced formulations,
methods of manufacture and even enantiomers of the active chemical entity in a process
4
Baker and Vawda “Why is it so difficult to understand whether medicines are under patent and when patent
monopolies actually expire?” in Tomlinson et al (Eds.) Patent barriers to medicine access in South Africa: A case
for patent law reform (2016) 14.
5
See generally Parliamentary Monitoring Group “Delays in Restructuring Medicines Control Council &
registering medicines such as CAPRISA 008” 2011. Available at:
https://pmg.org.za/committee-meeting/13779/ (accessed on 17-06-2020)
6
See generally Bodem “Pharmaceutical Patent Profits Facilitate Innovation” 2008. Available at:
https://www.mckendree.edu/academics/scholars/issue11/bodem.htm (16-06-2020).
7
McNeil “Prices for Medicine Are Exorbitant in Africa, Study Says” 2000. Available at:
https://www.nytimes.com/2000/06/17/world/prices-for-medicine-are-exorbitant-in-africa-study-says.html
(accessed on 17-06-2020).
2
known as “ever-greening”.8 To the extent that these “new” compounds, formulations and
methods are inventive, there is no harm in granting these patents; after-all, the main NCE will
be available generically as soon as the main patent expires. However, these new compounds,
formulations and methods of manufacture are usually mere “add-ons” that do not ordinarily
satisfy the novelty standard necessary for patent protection.
South Africa is particularly vulnerable to the abuse of ever-greening because it does not have
a substantive examination process for patent applications filed in the country. 9In more
developed nations, authorities vigorously examine ever-greening type patents and only
register those inventions that are genuinely patentable.10 The lack of a substantive
examination system for patents paves way for the possibility of otherwise invalid
pharmaceutical patents being filed in the country, leading to unwarranted monopolies over
essential medicines.11 The South African patents system is said to have checks and balances
to address this situation, through mechanisms such as compulsory licences and so-called
“Bolar provisions” or research exemptions, however, these mechanisms put an extensive
burden on the parties seeking to obtain licences to prove that attempts to obtain a license
under reasonable commercial terms must have failed over a reasonable period of time, abuse
of patent rights, research purposes; to name but a few salient requirements.
To address the challenges presented by the contemporary domestic patent framework, the
Department of Trade and Industry (DTI) collaborated with other governmental ministries to
compile the 2017 Draft Intellectual Property Policy (Draft IP Policy).The Draft IP Policy
seeks to remedy some of the problems that exist in the South African patent framework. For
8
Faunce “The awful truth about evergreening” 2004. Available at:
https://www.theage.com.au/national/the-awful-truth-about-evergreening-20040807-gdyero.html (accessed
on 15-10-2020).
The author provides that evergreening is any of various legal, business and technological strategies by which
producers extend the lifetime of their patents that are about to expire, in order to retain royalties from them,
by either taking out new patents (for example over associated delivery systems, or new pharmaceutical
mixtures), or by buying out, or frustrating competitors, for longer periods of time than would normally be
permissible under the law.
9
Vawda “After the Novartis judgment - 'Evergreening' will never be the same again!” 2014 Law, Democracy
and Development 314.
10
In line with the requirements of section 25 of the Patents Act 57 of 1978.
11
Vawda (n9) above 314.
3
example, Phase I of the Policy is targeted at the health sector. It aims to introduce substantive
search and examination (SSE) procedures to ensure that patents are only granted for
medicines with patentable inventions.12 The SSE procedure will play a great role in reducing
ever-greening practices in the pharmaceutical industry. Furthermore, Phase I of the Policy
aims to develop the patentability criteriain line with emerging international best practice in
measuring whether an invention meets the “novelty” and “inventiveness” criteria. However,
the Draft IP Policy is silent as to what will constitute novelty or inventiveness concerning
medical patent applications.
1.2 Problem statement and background to the study
South Africa’s high pharmaceutical patents grant rate stands out in comparison to other
developing countries with similar economic and social needs. It has been reported that in
2008 alone, South Africa granted 2,442 pharmaceutical patents, while Brazil granted only
278 pharmaceutical patents between 2003 and 2008.13 Correa submits that while Argentina,
Brazil, Colombia and India grant patents based on a prior substantive examination of the
applications, in South Africa “patents are simply registered without verifying a priori if they
meet or not the patentability requirements. This explains why South Africa appears with such
a comparatively large number of patents issued in one single year.”14
Studies indicate that South Africa is an anomaly with regard to its high patents grant rate and
that in a review of matching patent applications filed in multiple jurisdictions between the
years 2000 and 2002, South Africa granted 93 per cent of patents applied for, compared to 61
per cent in the US, 51 per cent in Europe and 29 per cent in Japan.15 Sampat and Shadlen
12
South Africa: Department of Trade and Industry “Draft Intellectual Property policy of the republic of SOUTH
Africa Phase I 2017” 2017 5. Available at:
https://juta.co.za/media/filestore/2017/08/Draft_Intellectual_Property_Policy_of_the_Republic_of_South_Afr
ica_Phase_I_2017.pdf (accessed on 17-02-2020)
13
Fix the Patent Laws “Why intellectual property reform in South Africa will help not hurt economic
development and innovation in the country”2019 3. Available at:
https://section27.org.za/wp-content/uploads/2019/11/Economic-Paper_Mythbusters_l.pdf (accessed on 16-
10-2020).
14
Correa “Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing” 2011 7. Available at:
https://thaipublica.org/wp-content/uploads/2011/12/RP-41-Pharm-CompLice-CCorrea.pdf (accessed on 16-
10-2020).
15
Fix the Patent Laws (n13) above 3.
4
submit that “since South Africa does not examine applications, the only applications not
granted there are those withdrawn during the examination process due to failure to pay issue
fees, and (a very small number) applications still pending.”16
Fix the Patent Laws17 has reported that South Africa’s intellectual property framework is
heavily tilted in favour of large foreign pharmaceutical companies (Big Pharma) and against
domestic industry and patients.18 As mentioned above, South Africa’s rate of approving
patent applications is currently much higher than most countries, developed or developing.
Many of the patents granted in South Africa, have been denied registration other countries for
failing to meet the patentability criteria of novelty, inventiveness and usefulness, which are
required for a patent to be granted.19 This granting of patents on applications with
questionable claims of novelty, inventiveness and usefulness “places high social, financial
and health costs on the country.”20 Ultimately, the contemporary South African patent
framework is allowing many patent monopolies to exist where no real innovation exists and
where there is no real addition to the drug and medicine knowledge database.
16
Sampat and Shadlen “The Effects of Restrictions on Secondary Pharmaceutical Patents: Brazil and India in
Comparative Perspective” 2016 17. Available at:
https://www.semanticscholar.org/paper/The-Effects-of-Restrictions-on-Secondary-Patents-%3A-Sampat-
Shadlen/45271e5d7c002400d4e3a8a6baff1fd75a9db583 (accessed on 16-10-2020).
17
Fix the Patent Laws is a joint coalition of the Treatment Action Campaign, Doctors Without Borders,
SECTION27, Cape Mental Health, Diabetes SA, Epilepsy SA, Health GAP, Marie Stopes South Africa, the Stop
Stock Outs Project, the Schizophrenia and Bipolar Disorders Alliance, the South African Depression and Anxiety
Group, the South African Federation of Mental Health, the South African Non-Communicable Diseases Alliance
and the Cancer Alliance including Advocates for Breast Cancer, amaBele Project Flamingo, Ari's Cancer
Foundation, Breast Course 4 Nurses, Breast Health Foundation, Cancer Association of South Africa, Cancer
Heroes, CanSir, CanSurvive Cancer Support, Care for Cancer Foundation, Childhood Cancer Foundation of
South Africa, Gladiators of Hope, Hospice Palliative Care Association, Lymphoedema Association of South
Africa, Look Good Feel Better, Love Your Nuts, Men's Foundation, National Council Against Smoking, National
Oncology Nursing Society of SA, Pancreatic Cancer Network of SA, People Living With Cancer, the Pink Parasol
Project, Pink Trees for Pauline, Pocket Cancer Support, Rainbows and Smiles, Reach for Recovery, South
African Oncology Social Workers’ Forum, The Sunflower Fund, VREDE Foundation for Young People with
Cancer and Wings of Hope.
18
19
20
5
South Africa is a middle-income country with the world’s largest HIV patient group and a
growing burden of communicable and non-communicable diseases, and as such it is has
become the optimal location for pharmaceutical companies looking to expand their markets.21
Over 26 years after its independence, the South Africa over-burdened public health system is
reflective of the stark levels of socio-economic inequality engineered and perpetuated by the
apartheid regime. Access to essential medicines and drugs has been significantly hampered
by the steep prices of same and the inability, or reluctance of government, to make use of the
Agreement on Trade-Related Intellectual Property Rights’ (TRIPS Agreement)22 flexibilities
to grant compulsory licenses, for example, on essential patented drugs and medicines, and to
amend its patent laws by setting higher standards for novelty.23
To illustrate the detrimental impact evergreening practices have on health care and the need
to implement the TRIPS flexibilities designed to ensure access to essential drugs, Ndlovu
reports that a patented version Novartis’ drug, Imatinib, used to treat a cancer costs R387 000
per year for a patient in the absence of generic competition.24 When the patent on the drug
expired in April 2013 in South Africa, a generic version of the drug could not be introduced
because Norvatis had meanwhile obtained an additional “new use” patent for the same drug,
and this patent is only scheduled to lapse in 2022.25 Even with a scheduled lapse date of
2022, there exists no guarantee that the Imatinib drug will be made available for generic
manufacture as the absence of an SSE procedure in the granting of patents allows for
pharmaceutical companies to exploit the weaknesses in the patent application system and
register minor variations of the drug, thereby extending their monopoly protection.
It is against this background that this study will investigate South Africa’s need reform its
patent laws given its major weaknesses that allow for evergreening practice to occur, its weak
provisions relating to requirements for patentability, its failure to provide for pre- and post-
21
Hill “Changes to intellectual property policy in South Africa: putting a stop to evergreening”2014 Expert
Opinion on Therapeutic Patents 839.
22
of 1994.
23
Ndlovu “South African Patent Law and Access to Medicines”2013 7. Available at:
https://www.researchgate.net/publication/264236381_South_African_Patent_Law_and_Access_to_Medicine
s (accessed on 16-10-2020).
24
Ndlovu (n23) above 5.
25
6
grant opposition to patents, its cumbersome provisions for compulsory licenses and its failure
to provide for parallel imports and the research and experimentation exceptions.26
1.3 Research question and research methodology
The study will investigate the following research question: Are South Africa’s patent laws
aiding and abetting pharmaceutical companies? In view of this research question, a number
of sub-questions can be identified and will be investigated in this study, namely:
a) How does the contemporary South African patent framework fail indigent persons
access to health care;
b) How does the Draft IP Policy seek to contribute to the protection of the right to health
care?; and
c) What reforms are necessary, if any, to ensure that South Africa’s patent framework
addressed the needs of patients whilst ensuring that pharmaceutical companies remain
incentivised to perform research on essential drugs and medicines?
With respect to the research methodology adopted, this dissertation is an analytical literature
and desk study exploring academic articles and other journals, various text books, policy
papers, hard and electronic sources exploring the possibility of patent law reform in line with
international standards dictating the primacy to be accorded to human rights over economic
interests. This study will also make use of intrusive research techniques in the form of
interviews to provide clarity on the purpose of and implementation of the Draft IP Policy.
1.4 Aim of the study
In view of the difficulty inherent to accessing essential medicines, this study will explore the
reasons why obtaining a compulsory licence is a cumbersome procedure and it is nearly
impossible to obtain compulsory licence in South Africa.27 This study will further explore
whether judicial oversight is necessary in overseeing compulsory license applications as this
tends to make the process of obtaining a compulsory licence lengthier and more costly. This
study aims to contribute to the understanding of the relationship between the regulations of
compulsory licences, both internationally and locally, and access to medicines. It will also
26
27
See generally Syntheta Pty Ltd v Jansen Pharmaceutica NV and Another 1999 1 SA 85 (SCA); and Atomic
Energy Corporation of SA Ltd v The Du Pont Merck Pharmaceutical Co 1997 BIP 90 (CP) at 93H.
7
explore possibilities at achieving the granting of compulsory licences and provide an
appraisal of Article 31 of the Agreement on Trade-Related Intellectual Property Rights, the
subsequent Doha Declaration,28 and answer the question whether these are effective policy
documents or whether they impose unnecessary, cumbersome and inoperable mechanisms
which deny access to the supply of cheap drugs and medicines to developing countries.
Lastly, it is evident from the Draft IP Policy that the drafters had a difficult time trying to
balance private interests against those of the public at large, that is, keeping the big
corporations incentivised to perform research and develop medicines by guaranteeing patent
protection and realising the constitutional guarantee to access to healthcare. This study will
explore the approach of the DTI to SSE procedures and determine whether the Draft IP
Policy, in its current design, is comprehensive enough to overcome the current legislative
shortfalls. In addition, the issue of constant overpowering by the countries which house
pharmaceutical companies against developing countries and the impact of political influence
on the lack of progress and access to such essential medicines will be considered, as well as
whether a balance can be struck between realising public health objectives and the rights of
the patent holders.
1.5 Outline of the study
This study is presented in 5 chapters as briefly outlined below:
Chapter 1 is an introduction to the study. It describes the purpose of the study, the research
methodology adopted and a chart of the study. The chapter also identifies the research
question and sub-questions guiding the study.
Chapter 2 discusses the implications of the TRIPS Agreement and the Doha Declaration on
patent protection and their effects on access to essential medicines, together with other legal
instruments which govern patent protection in South Africa. This chapter further examines
effects of domestic legal provisions on access to essential medicines and evaluates the
domestic patent framework in light of the international patent framework and ascertain
whether the former designed to further the right to health in the context of accessing
affordable essential medicines, including their generic equivalents. This chapter will also
address the criticisms of the domestic patent framework as provided by various authors and
offer solutions to the issues identified with primary reference to the TRIPS flexibilities.
28
of 2001.
8
Chapter 3 discusses the justifications made by pharmaceutical companies and countries
housing pharmaceutical companies for the need to ensure strong patent protection to
incentivise research and development of essential drugs and medicines. This chapter will also
investigate the challenges brought by pharmaceutical companies against patent the proposed
reform of South Africa’s patent laws.
Chapter 4 provides an appraisal of the Draft IP Policy and its stated objectives as well as its
proposed reforms to enable wider and cheaper access to medicines in South Africa.
Chapter 5 is the final chapter of the dissertation and it will summarise the findings of the
study and draw conclusions therefrom.
9
CHAPTER 2
THE INTERNATIONAL AND DOMESTIC PATENT FRAMEWORK
2.1. Introduction
The protection of the right to health in South Africa can be better understood within the
historical prism of apartheid, colonialism, deprivation, and discrimination.29 The apartheid
regime infringed on range of human rights, including the right to health as guaranteed in
many international human rights instruments.30 Health provisions were further skewed to suit
the apartheid regime’s agenda and aimed to discriminate based on amongst others; gender,
race, socio-economic status, and sexual orientation.31 Traces of the racist apartheid regime
were apparent when the HIV/AIDS pandemic necessitated an intensive discussion on access
to essential medicines, especially for the public health sector.32 In Minister of Health and
Others v Treatment Action Campaign and Others,33 the South African Constitutional Court
described the impact of the HIV and AIDS pandemic as:
“…’an incomprehensible calamity’ and ‘the most important challenge facing South
Africa since the birth of our new democracy’ and government’s fight against ‘this
29
The struggle against apartheid was a struggle for access to essential health care too. The Freedom Charter
(1955), adopted by African National Congress (ANC) and other liberation movements prioritized the enjoyment
of the right to health by all and sundry. The Freedom Charter, like a South African Magna Carter, became the
centrepiece of the Bill of Rights for the post-Apartheid South Africa. See Mbazira Litigating socio-economic
rights in South Africa: a choice between corrective and distributive justice (2009) 2.
30
Coovadia et. al “The health and health system of South Africa: historical roots of current public health
challenges” 2009. Available at:
http://depts.washington.edu/sphnet/wp-content/uploads/2013/01/Coovadia.pdf (accessed 25 September
2019).
31
Liebenberg “Human development and human rights South African country study” 2000 3 available at
http://hdr.undp.org/sites/default/files/sandra_liebenberg.pdf (accessed 25 September 2019).
32
Gumedze “HIV/AIDS and human rights: the role of the African Commission on Human and People’s Rights”
2004 African Human Rights law Journal 4 181.
33
2002 (5) SA 703 (CC).
10
scourge’ as ‘a top priority’. It ‘has claimed millions of lives, inflicting pain and grief,
causing fear and uncertainty, and threatening the economy’…”34
The difficulties that South Africa experiences in securing essential medicines has raised
further concerns about the effects of the TRIPS Agreement.
There are major challenges confronting the South African health system such as HIV/AIDS,
tuberculosis (TB), maternal mortality, infant and child mortality and neglected tropical
diseases (NTDs). What further compounds this crisis is the existence of patented medicines
developed by pharmaceutical companies for treating, preventing or eradicating many of the
diseases causing the epidemiological crisis. Although many of these essential medicines do
not cure these diseases, they have the potential to decrease the mortality rate emanating from
the high burden of diseases.
The recurring debates surrounding patent protection and access to medicine question whether
patents are a tool for promoting the development of medical treatments or whether they are
barriers to access to healthcare. A further question raised is whether the objectives of
protecting patent rights and the observance of the right to health care rights can co-exist or
are mutually exclusive of each other? Baker posits that patents appear to undermine the goal
of providing essential medicines at affordable prices because the exclusivity inherent to
patent rights incentivises the pursuit of profits.35 Langinier and Moschini on the other hand,
submit that there is no conflict as patents are the drivers of all innovation and will inevitably
benefit all of society, owing to the fact that they will eventually facilitate the genesis of low-
cost generic drugs.36
This chapter aims to further the discussion on the epidemiological health crisis caused by
patents by exploring the link between the lack of access to essential patented medicines and
patent protection. It will further consider the various intellectual property theories and
policies which lay the foundation for the justification on the extension of patent protection on
essential medicines as well as the challenges that the South African patent system currently
34
Minister of Health and Others v Treatment Action Campaign and Others (n33) above at par. 1.
35
Baker “Patents, Pricing, and Access to Essential Medicines in Developing Countries” 2009 American Medical
Association Journal of Ethics 527, 529.
36
Langinier and Moschini “The Economics of Patents: An Overview” 2002 2. Available at:
https://core.ac.uk/download/pdf/38919865.pdf (accessed on 17-09-2020).
11
faces. Furthermore, this chapter will consider the implications of the TRIPS Agreement on
patent protection and how this has affected access to essential medicines as well as other
legal instruments which have assisted in governing patent protection in South Africa, their
present status, and the effects these policies have on access to essential medicines. This
chapter aims to examine the domestic patent framework in light of the international patent
framework and ascertain whether it has led to the realisation of the right to health in the
context of accessing affordable essential medicines, including their generic equivalents.
2.2. International instruments
2.2.1 The TRIPS Agreement and its impact on access to essential medicines
The principal international agency for the protection of intellectual property is the World
Intellectual Property Organisation (WIPO). This is a specialised agency of the United
Nations and hosts the Patent Cooperation Treaty and others. It maintains a register of
international patents and is, also, the home of the Paris Convention for the Protection of
Industrial Property Applications (Paris Convention).37
South Africa became a member of the World Trade Organization (WTO) in 1995.38 The
WTO sets the minimum general standards of patent protection that all member countries are
required to adhere to under the TRIPS Agreement. The TRIPS Agreement was designed to
liberalise trade whilst protecting the statutory rights of intellectual property owners by
reducing piracy and misappropriation.39 It further prescribes international minimum
standards that relate to the protection and enforcement of intellectual property rights on a
non-discriminatory basis, as opposed to the overreliance on domestic law as provided for by
the Paris Convention. These minimum standards are legally binding on all WTO members.40
37
of 1883.
38
WTO: South Africa and the WTO. Available at:
https://www.wto.org/english/thewto_e/countries_e/south_africa_e.htm (accessed on 24 November 2020).
39
Article 7 and Preamble of the TRIPS Agreement (n22) above; Harris “TRIPS' Rebound: An Historical Analysis of
How the TRIPS Agreement Can Ricochet back against the United States” 2004 Northwestern Journal of
International Law & Business 105. The overarching ideology of TRIPS is to reduce trade barriers by protecting
intellectual property rights.
40
Article 1 of the TRIPS Agreement (n22) above.
12
Prior to the coming into force of the TRIPS Agreement, South Africa’s patent laws were
modelled along the lines of the Paris Convention. Under the Paris Convention, South Africa
had a compulsory licensing procedure for granting patents which catalysed the manufacturing
of generic medicines, which is not the case under the TRIPS Agreement.
The TRIPS Agreement provides a framework of how, inter alia, patents should be governed.
Article 7 of the TRIPS Agreement provides for the protection and enforcement of intellectual
property rights. It states that the protection and enforcement of intellectual property rights
should –
“…contribute to the promotion of technological innovation and to the transfer and

dissemination of technology, to the mutual advantage of producers and users of
technological knowledge and in a manner conducive to social and economic
welfare, and to a balance of rights and obligations.”
The three objectives mentioned above predominantly focus on technological development

and may exclude other forms of intellectual property. Article 8(1) of the TRIPS Agreement
provides member states allowance to –
“…formulate or amend their laws and regulations, adopt measures necessary to

protect public health and nutrition, and to promote the public interest in sectors of
vital importance to their socio-economic and technological development...”
Furthermore, such measures implemented are required to be consistent with the provisions of
the TRIPS Agreement.41
The major provision authorising patents on medicines is found under Article 27(1) of the
TRIPS Agreement. It obliges member states to make patents “available for any inventions
whether products or processes, in all fields of technology”.42 Article 33 further states that the
term of protection available for a patent is 20 years on products or processes deemed “new,
innovative and capable of industrial application” including new chemical entities that are
used to make medicines.43
41
Article 3(2) of the TRIPS Agreement (n22) above.
42
43
These are characteristics of an invention as stated in Article 27(1) of the TRIPS Agreement (n22) above.
13
Although the TRIPS Agreement provides for a 20-year monopoly, it further provides
safeguards that countries can adopt into their national laws to ensure that patents do not
restrict accessibility to essential medicines.44 However, the South African patent system does
not have the adequate safeguards that have been made available in the TRIPS Agreement for
the protection of public health, and this is clear from its public health crisis.45 The flexibilities
of the TRIPS Agreement, such as, regulatory review, compulsory licensing, or Bolar
provisions, are significant in incorporating mechanisms that are imperative for the protection
of public interests into the intellectual property system of a country, while simultaneously,
providing inventors with adequate incentives in order to achieve a balance of interests.
It is important to note that Article 30 of the TRIPS Agreement provides an exception to

patent rights. This provision allows member states to determine exceptions in which the:
“…exclusive rights conferred by a patent can be limited, provided that such

exceptions do not unreasonably conflict with the normal exploitation of the patent or
do not unreasonably prejudice the legitimate interests of the patent owner, of the
legitimate interests of third parties.”46
In addition to the above, Article 31 regulates the circumstances under which a country may
grant a compulsory licence. It provides a list of requirements which need to be met prior
granting a compulsory licence, that is, the person seeking a compulsory licence must first
attempt to obtain a voluntary licence from the patent holder on reasonable commercial terms
and conditions, prove that such efforts have not been successful within a reasonable period of
time.47Notably, each case will be determined on its own merits.48Article 31 further states that
once a compulsory licence is granted, such rights will not be transferable to a third party,49
the authorized use will be to supply the domestic market only,50 that the patent holder should
44
Articles 8(1), 27(1) and 33 of the TRIPS Agreement (n22) above.
45
See generally Forere “The compliance of South Africa's patents compulsory licensing regime to the TRIPs
Agreement” 2019 Queen Mary Journal of Intellectual Property 156-177.
46
Article 30 of the TRIPS Agreement (n22) above.
47
Article 31(b) of the TRIPS Agreement (n22) above.
48
Article 31(a) of the TRIPS Agreement (n22) above.
49
Article 31(e) of the TRIPS Agreement (n22) above.
50
Article 31(f) of the TRIPS Agreement (n22) above.
14
be adequately remunerated,51 and that “the legal validity of any decision relating to the
authorisation of such use shall be subject to judicial review” amongst others.52
Article 31of the TRIPS Agreement leaves very little room for discretion by the country
concerned in the sense that all the rules have been set out of when and how a compulsory
licence may be granted. However, when comparing the TRIPS Agreement to the Paris
Convention, the concept of compulsory licensing under Article 5A (2) of the Paris
Convention gives member states autonomy to determine how and when compulsory licences
should be granted.53 The Paris Convention was based on the principle of National Treatment,
which required rights in respect to compulsory licensing to be determined by the respective
domestic laws.54 This approach also highlighted the limitations of the Paris Convention and
the transition to multilateral rights and obligations as set out under the TRIPS Agreement.
The Paris Convention provided formal procedures for multi-jurisdictional registration and
required National Treatment to be applied. However, it did not deal with the substantive law
of intellectual property, which remained subject to national diversity. Furthermore,
enforcement was wholly dependent on national provisions, and the Paris Convention was also
silent with respect to compensation and it did not set out specific procedures or standards.
Under national legislation, countries generally have the right in certain circumstances to order
the grant of a compulsory licence of a patent if it can be shown that the patent owner has
failed to work the patent in the country and that there is a public interest in the country for the
patent to work.55 Despite the liberty given to member states to determine their own
intellectual property regimes, it must be acknowledged that the approach followed in the
TRIPS Agreement in regulating intellectual property is commendable, as it provides unity
51
Article 31(h) of the TRIPS Agreement (n22) above.
52
Article 31(i) of the TRIPS Agreement (n22) above.
53
Article 5(A) (2) of the Paris Convention (n37) above.
54
National treatment is the principle of giving others the same treatment as one’s own nationals. Article 3 of
The General Agreement on Tariffs and Trade of 1947 requires that imports be treated no less favourably than
the same or similar domestically produced goods once they have passed customs. The danger with National
Treatment is that a state can deprive foreigners of anything of which it deprives its own citizens.
55
Correa “Intellectual property rights and the use of compulsory licenses: Options for developing countries”
2000 3-4. Available at:
https://www.iatp.org/sites/default/files/Intellectual_Property_Rights_and_the_Use_of_Co.pdf (accessed on
12-07-2020).
15
and uniformity. Without such uniformity, it would be hard to operate and trade at an
international standard.
The balancing of interests in the implementation of the TRIPS Agreement has been of great
interest and importance when it comes to public health, particularly given the burden of
disease in developing countries. Despite the safeguards given in ensuring the right to health is
protected and advanced, it is quite onerous for developing countries to secure access to
medicines whilst being burdened by the bureaucracies of patent laws.
2.2.2 The Doha Declaration on TRIPS Agreement and Public Health
The Doha Declaration on TRIPS Agreement and Public Health (Doha Declaration) was the
response to the widespread concern regarding the TRIPS Agreement’s provisions and public
health.56 The TRIPS Agreement had a one-size-fits-all approach and the Doha Declaration
sought to remedy this approach. Many developing countries stated that the patent rules under
the TRIPS Agreement were an impediment to accessing essential medicines.57
The Doha Declaration aimed to clarify the ambiguity between the need for government to act
in the interests of public health and the need to abide by the TRIPS Agreement. Concerns had
arisen that patent protection would restrict access to patented medicines, especially in
developing countries. The Doha Declaration sought to address the obstacles that developing
nations encountered when they sought to implement measures to promote access to
affordable medicines in the interest of public health in general, without limitation to specific
diseases. Whilst acknowledging the role of intellectual property protection for the
development of new medicines, the Doha Declaration recognises concerns about its effects
56
The Doha Declaration on the TRIPS Agreement and Public Health was adopted by the WTO Ministerial
Conference of 2001 in Doha, Qatar, on 14 November 2001.
57
Correa “TRIPS Agreement and access to drugs in developing countries” 2005 International Journal on Human
Rights 25-26. The Doha Declaration (n55) above at par. 4. affirms that the TRIPS Agreement does not and
should not prevent members from taking measures to protect public health, and that it should be interpreted
accordingly. It provides that “… the TRIPS Agreement does not and should not prevent members from taking
measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we
affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO
members’ rights to protect public health and, in particular, to promote access to medicines for all. In this
connection, we reaffirm the right of WTO members to use, to the full, the provisions in the TRIPS Agreement,
which provide flexibility for this purpose.”
16
on prices: thus, reaffirming that the TRIPS Agreement’s aim not prevent member states from
acting in the public interest to protect public health.58
The Doha Declaration makes reference to numerous facets of the TRIPS Agreement,
which include the right to award essential licences and the freedom to evaluate the basis
for the granting of such licences;59 the right to evaluate a national emergency and the
conditions of extreme urgency;60 as well as the freedom to institute the system of
exhaustion of intellectual property rights.61 Critics of the TRIPS highlight the increasing
level of patent protection and the impact that it has had on the amounts that need to be
paid for patented medicines. The TRIPS Agreement has been modified to contain
provisions to resolve the harmful effects of patent protection and the potential exploitation
thereof. Even with the amendments, it remains unclear how countries that are still
developing can use the precautions when patents gradually present barriers to access
essential patented medicines and without deterring foreign investment.62
The Doha Declaration was imperative in order to highlight the use of compulsory licensing as
a choice to increase access to essential patented medicines. Many developing countries have
however not made use of compulsory licensing due to political pressure from developed
countries.63 This means that developing countries have been deprived of a pertinent tool
which could be utilised to improve access to essential medicines by giving manufacturers the
right to produce generic medicines.
The South African case of Pharmaceutical Manufacturers Association of South Africa and
Another: In re Ex Parte President of the Republic of South Africa and Others led to a global
58
59
Doha Declaration (n55) above, par. 5(b).
60
Doha Declaration (n55) above, par. 5(c).
61
Doha Declaration (n55) above, par. 5(d).
62
Hoen “TRIPS, Pharmaceutical Patents, and Access to Essential Medicines: A Long Way From Seattle to Doha”
2002 Chicago Journal of International Law 28.
63
Ooms and Hanefield “Threat of compulsory licences could increase access to essential medicines” 2019 BMJ
3. The Doha Declaration does not adequately address essential issues such as how to ensure that products
manufactured under a compulsory license could be exported to countries without domestic production
capacity. See Correa “Implementation of the WTO General Council Decision on paragraph 6 of the Doha
Declaration on the TRIPS Agreement and Public Health” 2004 1. Available at:
https://www.who.int/medicines/areas/policy/WTO_DOHA_DecisionPara6final.pdf (accessed 23-09-2019).
17
dialogue on the negative impacts of IP rights on health, more specifically access to essential
medicines such as antiretroviral drugs.64 At present, very little jurisprudence exists regarding
compulsory licensing in South Africa, as most cases are settled out of court due to pressure
from activist groups or government interventions. To date, there are no reports of compulsory
licences on essential medicines being granted in South Africa.65
In 2003, the WTO released a General Council Decision, as a follow up to the Doha
Declaration, known as the “Paragraph 6 Waiver.” This waiver makes provisions for
producers to export drugs produced under a compulsory licence to countries that have no
manufacturing capacity.66 This is due to the fact that many developing countries have
insufficient, to no capacity to manufacture their own drugs. Article 31(f) of the TRIPS
Agreement dictates that products made under compulsory licensing must be “predominantly
for the supply of the domestic market.” Without the waiver, many developing countries
would find themselves in a position where they are unable to make effective use of the
safeguards provided under the TRIPS Agreement.67
2.3 The TRIPS flexibilities discussed in the South African context
2.3.1 Compulsory licences
A compulsory licence is a non-voluntary authorisation to use an invention granted through a

court order.68 The patentee is obliged to accept the exploitation of his invention by a third
person or by the government. Compulsory licences are seen as one of the key instruments that
may be used to limit monopolies of patent owners when certain objectives of public policy
need to be achieved. For example, when there is a state of emergency in the accessibility of
64
2000 (2) SA 674 (CC).
65
Vawda “Compulsory licensing jurisprudence in South Africa: Do we have our priorities right?” 2018 1.
Available at:
https://www.southcentre.int/wp-content/uploads/2018/12/RP90_Compulsory-Licensing-Jurisprudence-in-
South-Africa-Do-We-Have-Our-Priorities-Right_EN-1.pdf (accessed on 11-10-2020).
66
WTO “Compulsory licensing of pharmaceuticals and TRIPS” 2020. Available at:
https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm (accessed on 12-10-2020).
67
Knowledge Ecology International “WTO TRIPS Council (October 2020): South Africa issues clarion call urging
support for TRIPS waiver proposal” 2020. Available at:
https://www.keionline.org/34235 (accessed on 12-10-2020).
68
Kuanpoth “Compulsory Licences: Law and Practice in Thailand” in Hilty and Liu (Eds.) Compulsory Licensing
(2015) 63.
18
essential medicines and to ensure the availability of alternative sources for the supply of
medicines at lower prices.
Similar to the provisions of Article 31 of the TRIPS Agreement, South Africa has made
provision for compulsory licences under sections 55 and 56 of the Patents Act. These
provisions allow governments to grant compulsory licences in public health in order to
address, amongst other things, the “high prices of medicines, anti-competitive practices by
pharmaceutical companies, failure by pharmaceutical patent holders to sufficiently supply
the market with the needed medicines, and emergency health situations.”69 Reichmann and
Hasenzahl argue that public interest in terms of access to a patented invention is usually
given more weight than the private interest of the patent holder not to have his exclusive
rights infringed.70 Thus, compulsory licences can be granted to secure the production of
generic medicines or allow for their importation from foreign producers.
The Patents Act provides that a judicial process has to occur for the determination and use of
compulsory licences.71 Procedurally, applicants are required to first seek a voluntary licence
on reasonable terms and conditions from the patent holder, however, this provision can be
waived if one can prove a case of public non-commercial use as contemplated in Section 56
of the Patents Act.72 It must be noted that such licences are subject to termination when the
conditions giving rise to the grant are no longer present. 73 It is only after failing to obtain a
voluntary licence from the patentee that an applicant may then approach the court for an
order to grant a compulsory licence, in the case of a dependent patent74 or in the case of an
69
South Africa: Companies and Intellectual Property Commission “Submission by South Africa: Exceptions and
Limitations” 2017 at par. 2.1. Available at:
https://www.wipo.int/export/sites/www/scp/en/meetings/session_27/3rdparty_comments/south_africa.pdf
(accessed on 13-09-2020)
70
Reichmann and Hasenzahl “Non-voluntary Licensing of Patented Inventions: Historical Perspective, Legal
Framework under TRIPS, and an Overview of the Practice in Canada and the USA” 2003 Intellectual Property
Rights and Sustainable Development 1, 10.
71
Patents Act (n10) above, regulation 96. Regulation sets out the procedure for an application for a compulsory
licence, namely that such an application will be made by way of notice of motion and shall be served on the
patentee and any other person who appears from the patent register to have an interest in the patent.
72
Article 31(b) of the TRIPS Agreement (n22) above.
73
Peets and Young “Is the exception becoming the rule?” 2007 Patent World Issue 22.
74
Patents Act (n10) above, section 55.
19
abuse of the patent rights by a patentee.75 The Commissioner will hear evidence in support of
and against the grant of the compulsory licences and make an appropriate order.76
The provisions regarding compulsory licences aim to strike a balance by giving governments
a right to authorise compulsory licences whilst attempting to safeguard the patent holders’
rights where possible.
2.3.1.1 Compulsory licences in respect of dependent patents
Dependent patents are patents which as a matter of law cannot be worked without falling
within the scope of protection of another patent. To date, there has been only one compulsory
licence case in South Africa in respect of a dependent patent, that is, in the case of Atomic
Energy Corporation of SA Ltd v The Du Pont Merck Pharmaceutical Co.77
2.3.1.2 Compulsory licences in respect of abuse of patent rights
In cases of alleged abuse of patent rights, any interested person can approach the court for a
compulsory licence on the following grounds-
a) If the commissioner is of the opinion that there is no satisfactory reason for a local
non-working of a patented invention within four years of the date of the patent
application or three years of the date which the patent was sealed, whichever period
that expires later, the rights in the patent will be deemed abused; or78
b) when the demand of a patented article is not locally met to an adequate extent and on
reasonable terms; or79
c) when it seems apparent that the local trade, industry or agriculture or to the trade of
any person or class of persons or to the establishment of any new trade or industry in
the Republic, is being prejudiced, and it is in the public interest that a licence or
licences should be granted;80 or
75
Patents Act (n10) above, section 56
76
Patents Act (n10) above, section 56(7).
77
See Atomic Energy Corporation of SA Ltd v The Du Pont Merck Pharmaceutical Co 1997 BIP 90 (CP) at 93-95
where the court held that the applicant must show that the dependent patent is valid and that the royalty he
suggests is reasonable.
78
Patents Act (n10) above, section 56(2) (a).
79
Patents Act (n10) above, section 56(2) (c).
80
Patents Act (n10) above, section 56(2) (d).
20
d) when the demand in the country is met by importation and the local price is excessive
in relation to the price charged in the article’s country of origin.81
In line with the TRIPS Agreement, the substantive provisions of the Patent Act allow for the
patent holder to be remunerated once the licence is granted, and that such a licence will be
non-exclusive.82 Due to the nature and flexibilities granted in the international and domestic
legislation regarding compulsory licenses, compulsory licence applications are fast-tracked
which is especially important when essential lifesaving medicines are required.83 Due to the
fact that the process of obtaining a compulsory licence is generally time-consuming and that
there are high costs of litigation to be expected, obtaining a compulsory licence for generic
pharmaceuticals is an unattractive option and ultimately deters parties from making using of
the flexibility granted in the TRIPS Agreement and the Doha Declaration.
Although the Doha Declaration was important for drawing attention to the use of compulsory
licensing as an option for increasing access to essential medicines, most developing countries
have not made use of compulsory licensing due to political pressure from the developed
countries. Most citizens and residents of South Africa who are in desperate need of medicines
protected by patent rights have little to no access to these medicines due to financial
constraints, let alone access to the courts which must grant an order for a compulsory licence.
2.3.2 Parallel importation
Parallel importation, also known as the exhaustion of rights doctrine, is another of under the
TRIPS Agreement that may be used to foster access to essential patented medicines. This
flexibility allows for the importation and resale of patented products in a country, at a lower
price, and without the approval of the patent holder or his (her) licensees, to the extent that
the product was put on the market elsewhere in a legitimate manner.84
81
Patents Act (n10) above, section 56(2) (e).
82
Patents Act (n10) above, section 56(5); and Article 31(d) of the of the TRIPS Agreement (n22) above.
83
Musungu and Oh The Use of Flexibilities in TRIPS by Developing Countries: Can they promote access to
medicines? (2006) 28, 36 and 46.
84
Kleyn “Public health sector and the South African national policy on intellectual property” 2014
https://blogs.sun.ac.za/iplaw/2014/01/24/public-health-sector-and-the-south-african-national-policy-on-
intellectual-property/ (accessed on 30-10-2019).
21
The doctrine of exhaustion of rights imposes certain limits on the rights of the patent holder.
According to this doctrine, once a product has been placed on the market and sold, that sale
terminates all patent rights in that item.85 In other words, a patentee cannot prevent the resale
or re-distribution of the particular goods that have already been sold once.86 This principle
allows for importation to occur after the first authorised sale by the patentee, even if that sale
occurred in a different country.
The facilitation of parallel importation can result in significant cost-saving in order to secure
essential patented medicines which are important in resource-constrained countries. The
importation of patented medicines from a country where it is marketed at a cheaper price
enables greater access to the medicine, without depriving the patent holder of his
remuneration for the patented invention when the product was first sold. There are no
procedural or remuneration obligations under parallel importation.
Both the TRIPS Agreement and the Doha Declaration contain provisions regarding the
exhaustion of rights. Article 6 of the TRIPS Agreement allows member states to incorporate
the principles of exhaustion into their laws and determine the limitations thereof, as long they
do not violate the true spirit of the TRIPS Agreement.87 Broadly speaking, the principle of
exhaustion of rights was put forward with regard to health policy issues. Many lifesaving
drugs are extremely expensive and are beyond the reach of the average man’s pocket. The
parallel importation of such drugs makes them cheaper through grey market distribution
channels.88
2.3.3 The controversy surrounding the implementation of Section 15C of the

Medicines and Related Substances Control Amendment Act
Section 45(2) of the Patents Act provides for the principle of exhaustion of rights. Despite the
statutory recognition of the doctrine, uncertainty still remains as to whether this flexibility
applies nationally or internationally, as this flexibility remains to be tested in a court of law.
85
Raghuvanshi “Parallel Import in relation to Patent and Trademark” 2017 2. Available at:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2912741 (accessed on 22-11-2019).
86
Heath “Parallel importation and international trade” 1999 2, 10. Available at:
https://www.wipo.int/edocs/mdocs/sme/en/atrip_gva_99/atrip_gva_99_6.pdf (accessed on 24-10-2019).
87
See also article 8(1) of the of the TRIPS Agreement (n22) above.
88
Wiser Market “EU Grey Market in Pharmaceuticals” 2020. Available at:
https://wisermarket.com/post/eu-grey-market-in-pharmaceuticals (accessed on 10-10-2020).
22
In an attempt to utilise this flexibility, South Africa enacted section 15C of the Medicines and
Related Substances Control Amendment Act (MRSCAA).89
Section 15C of the MRSCAA was aimed to ensure the supply of affordable medicines, either
through compulsory licensing or parallel importation. It provides conditions under which
such instances may occur. The enactment of this section came with numerous challenges as
various pharmaceutical companies, and their respective governments, strongly opposed it.
The aim of this section was to break the patent-related pricing monopoly on antiretroviral
medicines, and to ensure the supply of more affordable medicines. The Big Pharma argued
that the proposed enactment of section 15C was equivalent to the “complete annulment of
patent rights and that it violated the TRIPS Agreement.”90This highly contested section was
subsequently enacted into law in 1997.
Subsequent to the enactment of section 15C,91 the Big Pharma challenging the
constitutionality of this section in 1998 in the case of Pharmaceutical Manufacturers
Association of South Africa and Another: In re Ex Parte President of the Republic of South
Africa and Others.92 The Big Pharma received a stream of negative publicity that in turn
exposed their pricing and drug profiteering schemes. This eventually led to the Big Pharma
withdrawing the case.
Whilst there was sufficient justification for allowing parallel importation, there was a concern
around the danger of importing from countries where counterfeit medicines were available. It
was found that counterfeited medication often lacked the active pharmaceutical ingredients
that were needed to make the drugs work, which in turn made people sicker and increased the
mortality rate.93
89
90 of 1997.
90
Knowledge Ecology International “SCP25: South Africa’s Experience Related to the Topic of Access to
Medicines” 2016. Available at:
https://www.keionline.org/23235 (accessed on 01-04-2020).
91
This section allows the Director-General, after consultation with the Interim Pharmacy Council of South
Africa, to issue a permit to any person or organisation performing a health service, authorising such person or
organisation to acquire, possess, use or supply any specified Schedule 1-5 substance, and determine the
conditions that such permit may be used.
92
2000 (2) SA 674 (CC).
93
Fisher III and Rigamonti The South Africa AIDS controversy: A case study in patent law and policy (2005) 6.
23
2.3.4 Regulatory (Bolar) provisions
The Bolar provision allows a potential competitor to use an invention to undertake acts
necessary for obtaining regulatory approval and registration of a generic product before the
expiry of the patent term without the authorisation of the patent holder.94 This exception is
provided in section 69A of the Patents Act and Article 30 of the TRIPS Agreement.
Section 69A (1) provides that –
“It shall not be an act of infringement of a patent to make, use, exercise, offer to
dispose of, dispose of, or import a patented invention on a non-commercial scale
and solely for the purposes reasonably related to obtaining, development and
submission of information required under any law that regulates the manufacture,
production, distribution, use or sale of any product.”
This provision allows for a more rapid introduction of generic medicines to enter the market,
which will lead to rapid competition amongst the pharmaceutical companies and result in
lower prices. Although section 69A allows for the rapid introduction of generic medicines
into the market, the generic manufacturer is however not permitted to use the patented
invention other than for the purposes of obtaining regulatory approval. Furthermore, it is not
permitted for a generic manufacturer to mass produce a product prior to the expiration date of
the relevant patent, with a view to sell the manufactured medicines immediately after the
patent expires. Lastly, section 69A does not make provision for research exceptions. The
Draft IP Policy aims to provide exceptions for research and experimental activities with a
broader application than intellectual property.95
2.4 Where does the contemporary patent system fail the most vulnerable?
South Africa’s contemporary patent system has serious pitfalls that have adversely affected
access to affordable medicines that treat a wide range of diseases in both the public and
private health sectors. These flaws in our patent systems have allowed pharmaceutical
companies to unduly prolong their monopoly periods beyond the statutorily prescribed period
of protection to the detriment of millions of people in South Africa.
94
South Africa: Companies and Intellectual Property Commission (n68) above at par. 2.6.
95
South Africa: Department of Trade and Industry (n12) above 22.
24
To make real strategic gains in the public health system and ensure access to affordable
medicines, it is important to make attempts at correcting the many failings of patent law,
including its epistemic weaknesses and instrumental reasoning.96 Relying only on the right to
health indirectly undermines and may even militate against a radical correction of global
patent law. The challenges that the current legislation is faces, the Draft IP Policy, and the
latter’s intended changes will be discussed below.
2.4.1 Lack of substantive examination upon the grant of a patent
When a patent is granted, there is not much information regarding the practical or
commercial prognosis or other effects of the grant. The criteria established to determine
whether a patent should be granted is not intended to provide for the intricate analysis of the
commercial or social effects thereof. At present, the South African patent system is a
depository one in that there is no SSE procedure to examine the eligibility and quality of
patents prior to approval.97
For example, pharmaceutical companies are able to apply for multiple patents on individual
medicines overtime through the practice of ever-greening. Pharmaceutical companies engage
in ever-greening practices in order to prevent other companies from competing against the
latest “version” of the drug or medicine. When multiple patents are granted on individual
medicines, they often create overlapping patent rights that extend the patent protection
beyond the 20-year period. For example, it has been reported that Ritonavir, an antiretroviral
medicine, has over 800 related patents covering everything from the basic active ingredient to
variations of that chemical entity, to formulations, dosages, indicated uses for treating
particular diseases, and processes to manufacture.98 This strategy has resulted in the extension
of the patent monopoly and prolongs them considerably by secondary patents.
In the same vein, patents on essential medicines which do not encourage innovation have the
potential to impose costs on the public health needs. Moreover, the grant of these patents has
96
Thambisetty “Improving Access to Patented Medicines: Are Human Rights Getting in the Way?” 2018 5.
Available at:
http://eprints.lse.ac.uk/87540/1/Thambisetty_Access%20to%20Patented%20Medicines_Author.pdf (accessed
on 10-10-2020)
97
Tomlinson et al. “Reforming South Africa's procedures for granting patents to improve medicine access”
2015 South African Medical Journal 741
98
Landon IP Patent Landscape Report on Ritonavir (2011) 58.
25
the capability of impacting the production of generic medicines and in turn, increasing the
market prices of essential patented medicines. In terms of section 34 of the Patents Act, any
application accompanied by a provisional specification, is only formally examined, amongst
other things, to ensure that the documents lodged are legible and capable of reproduction. The
absence of an SSE procedure has resulted in the promotion of unwarranted patents which go
against the competition policy. A sound competition policy would condemn a patent system
that does not encourage innovation but instead conveys market power.
Lastly, the absence of an SSE procedure has been seen as the reason why South Africa is
considered as having one of the cheapest patent registration system in the world and this has
resulted in the granting of patents that are often rejected in other countries. Patents that are
usually overturned in other countries through opposition or legal procedures are often
unchallenged or upheld by courts in South Africa. The complexity of identifying when patent
monopolies actually expire in South Africa, and the conservative approach of the country’s
courts in ruling on patent challenges, disincentivises generic and biosimilar companies from
launching their products.99 These challenges are further heightened by the slow drug
registration procedures in the country that may delay and discourage generic and biosimilar
companies from bringing their products to market when patents have expired, or when an
opaque patent landscape exists.100
Therefore, the execution of SSE measures is imperative as this would curb ever-greening in
the pharmaceutical industry and lead to the reduction of invalid patents on the Register of
Patents. Furthermore, this will effectively result in a greater number of medicines becoming
available in a competitive market, which is likely to impact the prices positively.
2.4.2 Non-disclosure of international non-proprietary names in patent applications
It is difficult to identify the specific patents which a particular medicine is subject to because
in South Africa, there is no requirement for the international non-proprietary names (INNs) of
medicines to be reported in their patent applications. INN is the name of the active
pharmaceutical ingredient that has been determined by an expert committee and is
99
Tomlinson et al. Patent barriers to medicine access in South Africa: A case for patent law reform (2016) 8.
100
Tomlinson et al. (n97) above 8.
26
internationally understood.101 For example, paracetamol and chlorphenamine are the INNs,
whilst Panado ™ and Allergex™ are non-generic brand names of medicines incorporating
the drugs mentioned.102
However, this problem may be resolved by requiring the filing of patent applications using
their relevant INNs. If the assignment of a medicine’s INN is not done prior to the filing of an
application, companies should be required to retroactively do so within a given timeframe.103
2.4.3 Markush Claims
The term “Markush claim” refers to a type of patent claim that outlines alternate elements
that could be potentially included in the claimed invention. Markush claims are not required
to stipulate the definite lead compound with therapeutic functions. Moreover, an applicant
does not need to reveal all the variations of the invention thus making it difficult to evaluate
whether a certain chemical compound that is likely to be used as a medicine, is covered or
not. Patents that are awarded on the grounds of Markush claims disguise the real invention
claimed within a patent application.104 Furthermore, patents that are awarded due to Markush
claims contribute to challenges in prior art searches, and can possibly block R&D on, and
commercialisation of many medicines.105 These claims have been critiqued as they are
harmful to public health and fall short of the standards of disclosure required for
patentability.106
Therefore, recommendations point to the exclusion of Markush claims in countries’

patentability criteria and examination procedures.107A study on pharmaceutical patents in
South Africa disclosed that Markush claims contribute to a significant portion of granted
patents.108
101
Thakkar and Billa “The concept of: Generic drugs and patented drugs vs. brand name drugs and non-
proprietary (generic) name drugs” 2013 Front Pharmacol 1.
102
Botha “Pharmacology and the nurse – Part 2: Naming and classifying drugs” 2007. Available at:
http://www.edoc.co.za/modules.php?name=News&file=article&sid=1365 (accessed on 22-11-2019).
103
Baker and Vawda (n4) above 14.
104
105
106
107
108
27
2.4.4 Opposition Proceedings
As it stands, the Patents Act does not provide for any opposition proceedings and only
provides procedures for post-grant revocation, which may be heard in the High Court.109 The
lack of opposition proceedings prevents generic companies or any other interested parties
from challenging undeserving applications and patents via pre- and post-grant opposition
procedures. When compared against the American, European Union or Indian pharmaceutical
markets, litigation in South Africa is relatively rare.110 This is likely because opponents to
patent applications are disincentivised by the fact that the South African market is smaller
than where patent disputes are common, and that the courts commonly do not apply a strict
bar for patentability in their judgments.111
The complexity of patent documents is a further barrier that prevents the general public from
being able to understand, engage with, and challenge granted patents. The complex and
technical features of patent documents make it difficult for the general public, including
health practitioners, to identify the patents which block entry of generic competitors’
products to the market.112 The lack of transparency in the current system hinders the ability
for the layperson to assess and identify the expiration of the patent. Moreover, South Africa’s
online public search does not always contain the full text of patent applications, thus making
it difficult to look into the specific claims in order to assess the scope of protection.113
2.5 Domestic jurisprudence on cases of patent induced excessive pricing
Below is an overview of cases that our courts have decided with regard to drug prices,
compulsory licences, and collusion by pharmaceutical companies. Some of the cases have
brought about much needed change in respect of access to essential medicines, such as
antiretroviral drugs, especially at a time when HIV/AIDS related death cases were extremely
high. The provisions of the Competition Act114 were considered in determining the outcomes
of the court cases discussed below.
109
110
111
112
113
114
89 of 1998.
28
2.5.1 Hazel Tau & others v GlaxoSmithKline (“GSK”) &Boehringer Ingelheim (“BI”)115
In this case, the complainants alleged that GlaxoSmithKline South Africa (Pty) Ltd (GSK)
and Boehringer Ingelheim (Pty) Ltd (BI) charged excessive prices for their patented
antiretroviral medicines. Other complainants included healthcare practitioners, trade unions
and non-governmental organisations. Upon bringing the matter to the Competition
Commission, it was alleged that the two companies had violated section 8(a) of the
Competition Act by charging excessive prices for their patented antiretroviral medicinesto the
detriment of consumers.
Upon receiving the complaint, the Competition Commission expanded its investigations and
found that GSK and BI had also violated the provisions of section 8(b) and (c) of the
Competition Act, by refusing to grant competitors access to an essential facility when it was
economically feasible to do so, and by engaging in exclusionary conduct. The antiretroviral
medicines in respect of which excessive pricing was alleged were on Lamivudine, Combivir,
and Nevirapine. The complainants also alleged that in so far as these ARVs are concerned,
the respondents were dominant firms as contemplated by section 7 of the Competition Act.
The complainants argued that even if the costs of research and development were considered,
the incentive to develop new essential medicines, higher profits and licensing fees, the prices
of these patented medicines remained excessive and unjustifiable.
The complaints made were based on allegations of the failure by the pharmaceutical firms to
put systems in place for free and non-discriminatory access to their patents upon reasonable
commercial terms, that is, royalties. At the time of the investigation, GSK held patents in
South Africa on AZT (branded as Retrovir), Lamivudine (branded as 3TC) and
AZT/Lamivudine (branded as Combivir) whilst BI held patents in South Africa on
Nevirapine (branded as Viramune). At the conclusion of the investigation, the Competition
Commission announced that it was referring the matter to the Competition Tribunal for
adjudication in the belief that the firms had indeed abused their dominant position in the
marketplace,116 that they had charged excessive prices, refused to give competitors access to
essential facilities, and engaged in exclusionary behaviour in which the anticompetitive effect
outweighed technological, efficiency or other pro-competitive gains.
115
Competition Commission Case Number: 2002 September 226.
116
Competition Commission, Media release No. 29 of 2003, 16 October 2003: Competition Commission finds
pharmaceutical firms in contravention with the Competition Act.
29
Upon assessing the case, the Competition Commission utilised section 8(a) of the
Competition Act to determine whether the two firms indeed were charging exorbitant
amounts for essential medicines to the detriment of consumers.117 The Competition
Commission expressed the view that the mere existence of a patent does not justify charging
high “prices that bear no reasonable relation to the economic value of the particular medicine
concerned”.118
Before the referral and prosecution of the case, GSK and BI negotiated a settlement
agreement in terms of which they admitted no liability. GSK and BI agreed to:
a) grant licences to generic manufacturers;

b) permit licensees to export the relevant ARV medicines to sub-Saharan African
countries;
c) where the licensee did not have manufacturing capability in South Africa, permit the
importation of the ARV medicines for distribution in South Africa only, provided all
the regulatory approvals were obtained;
d) permit licensees to combine the relevant ARV’s with other ARV medicines; and
e) not require royalties in excess of 5 per of the net sales of the relevant ARV’s.119
By challenging the high prices of essential medicines, the complainant sought to ensure that
people living with HIV/AIDS could afford to buy medicines that can save their lives, ensure
that treatment is easily accessible, and that employers are able to pay for the treatment of
employees on a maintainable basis.
117
Section 1 of the Competition Act (n98) above defines an excessive price as “a price for a good or service
which bears no reasonable relation to the economic value of that good or service; and higher than its market
value.”
118
Hazel Tau & others v GlaxoSmithKline (“GSK”) & Boehringer Ingelheim (“BI”) (n113) above at par. 46.
119
South Africa: Competition Commission “Affordable and accessibility of A.R.T. in South Africa: Changing the
pricing and licensing of essential medicines in South Africa” 2014 15. Available at
http://compcom.co.za.www15.cpt4.host-h.net/wp-content/uploads/2014/09/15-Years-of-Competition-
Enforcement.pdf (accessed on 15-10-2019).
30
2.5.2. Treatment Action Campaign v MSD (Pty) Ltd and Merck120
In 2007, the Competition Commission received another complaint from the Treatment Action
Campaign (TAC) alleging that Merck and its South African subsidiary, MSD, had abused
their dominant positions in the markets for the antiretroviral medicine efavirenz (EFV) by
refusing to licence other firms to import and (or) manufacture generic versions of this
medicine on reasonable and non-discriminatory terms.
MSD held a 20-year patent on EFV that expired in 2013. The TAC case resulted in MSD and
Merck reaching an agreement with multiple licensees on reasonable terms to bring a wide
range of generic products containing EFV, an essential drug used as part of first-line ARV
treatment in South Africa to market. While the Hazel Tau case was settled only after the
Competition Commission had taken a decision to refer the matter to the Competition Tribunal
for adjudication, the TAC case was resolved before the Commission completed its
investigation on the matter and did not appear before the Competition Tribunal.
2.6. Other factors leading to excessive pricing on essential medicines
Over the years, the TRIPS Agreement has been criticised for increasing levels of patent
protection and negatively impacting the prices of essential medicines. Although, the TRIPS
Agreement was amended to include provisions to remedy the negative effects of patent
protection, it has however, become evident that patents on essential medicines are not the
only reason why prices on essential medicines are excessive. In order to monitor and combat
anti-competitive practices in the manufacturing and distribution of essential medicines,
national legislation needs to be implemented.
As it stands, patents create a monopoly which ultimately starves the market of competition
and eventually threatens the sustainability of supply. Research has shown that when there is
no competition and no strict price regulations, prices of medicines tend to increase and stay
high.121 This is especially problematic when the product concerned is an essential drug which
has no alternative. The inelasticity of prices of essential medicines is caused by the fact that
the demand for such medicines does not change, regardless of how high the price is. It is
120
Competition Commission Case Number: 2007 November 3328.
121
de Sousa “Excessive Prices in Pharmaceutical Markets: Background Note by the Secretariat” 2018 4, 27.
Available at:
https://one.oecd.org/document/DAF/COMP(2018)12/en/pdf (accessed on 10-10-2020).
31
because of this unwavering demand for medicines that pharmaceutical companies tend to take
set high prices and ultimately take advantage of their monopolies.
Admittedly, there are other factors which contribute to the high prices charged on essential
medicines, from the manufacturing to the distribution thereof including profiteering in the
supply chain which contributes to the prices of medicines and the taxes and levies charged on
patent holders.
CHAPTER 3
BIG PHARMA AND HEALTHCARE IN SOUTH AFRICA
3.1 Introduction
In the year 2001, it was reported that more than 40 pharmaceutical companies, many of them
being the world’s largest and most powerful companies, would be taking the South African
government to court in an attempt to stop it from enacting legislation aimed at reducing the
price of medicines for South Africans, that is, the MRSCAA.122 123
Big Pharma vehemently
fought the passing of the MRSCAA, and when it was eventually passed, the industry gave
notice of its intention to have the law overturned.124 With the ever increasing demand for
cheaper generic drugs, particularly in developing countries that are most affected by diseases
and public health crises, it becomes necessary to investigate the reasons why many drug
companies refuse to make any major concessions and insist on tightening patent laws. This
chapter will examine the rationale of the Big Pharma in opposing patent law reform in South
Africa, provide an appraisal of key claims made by the Big Pharma about the detrimental
impact of having a flexible patent system and propose solutions for the reform of patent laws
in South Africa from comparative jurisdictions.
3.2 Brief outline on patent protection
Patents are important assets, not only for individuals and companies, but also for national
governments. They serve a crucial socio-economic function in society by incentivising
122
n89 above.
123
Sidley “Drug companies sue South African government over generics” 2001 BMJ 447.
124
Sidley (n120) above 447.
32
growth in the economy. They further function as a bargain between an inventor and society:
that in return for inventing something new and disclosing it to the world, the inventor gets the
reward of a temporary monopoly over that invention.125 The rationale behind patent
disclosure is that the general population should be able to enjoy and make use of the value
that an invention brings. Thus, patent protection acts as an incentive for inventors to keep
creating, by ensuring that they enjoy the benefit of the stream of revenue generated through
the exploitation of their work. The scope of protection given to the patent holder serves a
vital purpose in preserving the trade and commercial interests of the individuals or corporate
entities involved.
Although the Patents Act does not define what an invention is, it does, however, provide
exclusions from patentability.Section 25(1) and (2) of the Patents Act provide that –
“(1) A patent may, subject to the provisions of this section, be granted for any new
invention which involves an inventive step and which is capable of being used and
applied in trade or industry or agriculture.
(2) Anything which consists of—
(a) a discovery;
(b) a scientific theory;
(c) a mathematical method;
(d) a literary, dramatic, musical or artistic work or any other aesthetic

creation;
(e) a scheme, rule or method for performing a mental act, playing a game or
doing business;
125
Section 45 of the Patents Act (n10) above, provides for the monopoly discussed as follows –
(1) The effect of a patent shall be to grant to the patentee in the Republic, subject to the provisions of
this Act, for the duration of the patent, the right to exclude other persons from making, using, exercising,
disposing or offering to dispose of, or importing the invention, so that he or she shall have and enjoy the whole
profit and advantage accruing by reason of the invention.
(2) The disposal of a patented article by or on behalf of a patentee or his licensee shall, subject to other
patent rights, give the purchaser the right to use, offer to dispose of and dispose of that article.”
33
(f) a program for a computer; or
(g) the presentation of information,
shall not be an invention for the purposes of this Act.”
Where an invention falls outside the scope of the prohibitions on patentability, the inventor
can only obtain a patent if he or she fulfils the patenting criteria, that is, that the invention
must be “novel” and “non-obvious.”126 The Patents Act further provides that the invention
concerned must be capable of being used in “trade, or industry, or agriculture”.127 A patent
holder is granted exclusive rights, for a limited time,128 to make, use, dispose or offer to
dispose of, and (or) to import his (her) product.129
The territorial nature of patents informs one that patents may only be granted by the national
governments of a country in which a patent is applied, and that a patent owner may only
enforce his or her rights in the country in which it was granted.130 This monopoly, however,
is subject to certain limitations and exceptions set by the laws of various states in order to suit
their socio-political objectives.131
3.3 The rationale of pharmaceutical companies
South Africa has the largest pharmaceutical sector in Africa and this sector is chiefly
dominated by multinational companies.132 Many of these multinational pharmaceutical
companies are attracted to South Africa due to the availability of cheap raw materials and its
126
127
128
Section 46(1) of the Patents Act (n10) above, further provides that the “duration of a patent shall, unless
otherwise provided in this Act, be 20 years from the date of application therefore, subject to payment of the
prescribed renewal fees by the patentee concerned or an agent.”
129
130
Doi “The Territoriality Principle of Patent Protection and Conflict of Laws: A Review of Japanese Court
Decisions” 2002 Fordham International Law Journal 383.
131
WIPO Standing Committee on the Law of Patents Exclusions from Patentability and Exceptions and
Limitations to Patentees’ Rights (2010) 9.
132
Parliamentary Monitoring Group (n5) above.
34
favourable geographical location.133 The country is located close to major shipping routes
which make it convenient for pharmaceutical companies to transport their products using
low-cost sea transport. It is because of these considerations that many multinational
pharmaceutical companies have constructed permanent manufacturing facilities in South
Africa whilst others have their headquarters and distribution centres within the country. This
evidences that South Africa has the capacity to manufacture essential medicines including
their generics. Currently, generic medicines are manufactured by pharmaceutical companies
such as Adcock Ingram Ltd, Aspen Pharmacare (Pty) Ltd, and CiplaMedpro (Pty) Ltd,
amongst others. These companies currently manufacture medicines including, antiretroviral
drugs, antibiotics, and pain killers.
The Big Pharma argue that they incur huge costs in the research and development (R&D)
needed to develop drugs, and thus patent protection is necessary to ensure that they can
recover the expenses incurred. The general mind set when it comes to these corporate entities
is that they are not charitable research organisations and that they are primarily driven by the
desire to make a profit from their efforts through the marketing of the products or processes
derived from the research.134 Pharmaceutical companies that are capable of shouldering the
financial burden for the bio-medical research seldom attempt to mitigate the conflict between
the observance of patents and human rights, more specifically the right to health care. 135 With
a “bottom-line” mentality, it becomes difficult to negotiate with the corporations to reduce
their excessive prices on essential medicines. Even more so, the gaps in our patent laws allow
them to exploit the systemic shortcomings to ensure that they can profit more from their
products through practices such as ever-greening.
3.4. Claims made by the Big Pharma
The Big Pharma have argued that intellectual property incentives are necessary to stimulate
and reward innovation and that strong intellectual property systems will advance economic
development, through fostering local innovation, local industry and attracting foreign direct
133
Naudé and Luiz “An industry analysis of pharmaceutical production in South Africa” 2013 South African
Journal of Business Management 33.
134
United Nations Conference on Trade and Development Investment in Pharmaceutical Production in the
Least Developed Countries: A Guide for Policymakers and Investment Promotion Agencies (2011) 21.
135
Millum “Are Pharmaceutical Patents Protected By Human Rights?” 2008 Journal of Medical Ethics 1.
35
investment.136 This section investigates 5 of the major claims made by the Big Pharma with
the aim of determining whether the arguments made against patent law reform can be
sustained.
3.4.1 Stronger intellectual property protection will advance economic development
Despite claims that intellectual property protections will advance economic development,
intellectual property historians and economists have shown that this claim is not supported by
empirical evidence.137 The United States and Europe for example, provided weak intellectual
property protections while transitioning into highly industrialised, developed economies.138
Baker et al., explain that “by the standards of today’s global rules, every advanced
industrialised country would have been classified as an intellectual property violator at the
early stages of development when they freely used ideas and technologies generated
elsewhere.”139 What is more, rrelatively small levels of intellectual property protection prior
to the adoption of the TRIPS Agreement allowed for rapid technological and economic
development in Japan, South Korea and Taiwan.140
The technological capacity acquired and absorbed during periods of weak intellectual
property protection was critical to transitioning key industries in Asia from “imitative to
innovative production” and countries like Japan “absorbed substantial amounts of
technological learning under weak IPR protection regimes during the early phases [of
development]. These patent regimes facilitated the absorption of innovation and knowledge
generated abroad by their indigenous firms.”141
Given the empirical evidence that weaker intellectual property protection and enforcement
aided industrial and economic development in developed economies, Fix the Patent Laws
argues that the Big Pharma and wealthy countries are attempting to “kick away the ladder”
136
137
138
139
Baker et al. “Innovation, Intellectual Property, and Development: A Better Set of Approaches for the 21st
Century” 2018 30. Available at:
http://ip-unit.org/wp-content/uploads/2017/07/IP-for-21st-Century-EN.pdf (accessed on 16-10-2020).
140
141
Kumar “Intellectual Property Rights, Technology and Economic Development: Experiences of Asian
Countries” 2003 Economic and Political Weekly217.
36
that would allow developing countries to catch up by pressuring these countries to tighten
intellectual property protections that restrict the use of knowledge and technology.142
It is recommended that South Africa should adopt a more flexible patent law system that
permits borrowing, absorption and copying of technologies developed elsewhere in order to
facilitate growth in South Africa, particularly its capacity to manufacture its own drugs and
medicines.
3.4.2 Stronger intellectual property protection protects local industries
The Big Pharma have also argued that strong intellectual property protection is necessary to
protect and grow local industry, however there is limited evidence to support this claim in
context of developing countries.143 On the contrary, empirical evidence suggests that weaker
levels of intellectual property protection can play a role in growing local industry in countries
with the ability to creatively absorb, imitate and produce existing technologies. 144 It is widely
accepted that the lack of patent protection for pharmaceutical products, was a key to the
growth of the generic medicine industry in India.145 The patent laws adopted in India in 1970
prohibited patenting of pharmaceuticals and India maximised on the extension periods for
TRIPS implementation in not providing patents on pharmaceuticals until 2005. During this
period, India’s generic pharmaceutical industry flourished.146India was net importer of
medicines before 1988, but by the mid-90s India reversed this deficit, generating a large trade
surplus. Today, India is a dominant generic supplier and is commonly referred to as “the
pharmacy of the developing world.”147
It is submitted that the existence of strong patents on essential drugs and medicines have
hampered the growth of South Africa’s local pharmaceutical industry, which chiefly develop
finished generic products, “by preventing local companies from entering the market during
142
Fix the Patent Laws (n13) above 5-6.
143
144
145
146
147
MSF Access Campaign “Don’t shut down the pharmacy of the developing world” 2017. Available at:
https://msfaccess.org/dont-shut-down-pharmacy-developing-world (accessed on 09-11-2020).
37
extended patent monopoly periods.”148 Notably, efforts by patient groups to overcome patent
barriers to medicine access have aided the growth of local industry as seen inTreatment
Action Campaign v MSD (Pty) Ltd and Merck (discussed in paragraph 2.5.2 above). The
generic companies licensed as consequence of the TAC’s complaints included the local
pharmaceutical producer Aspen, which won 100 per cent and 30 per cent of South
Africa’s2008 antiretroviral tender for nevirapine and EFZ, respectively.149
The African Union Commission (AUC) has recognised the potential of TRIPS flexibilities to
facilitate local production has stated that:
“[t]he AUC firmly believes that the TRIPS flexibilities present the same opportunity
for African pharma as did the Indian Patent Act of 1970 for Indian industry. The
Commission is convinced that full exploitation of the flexibilities would lead to a
transformation of local industry.”150
The adoption and use of the TRIPS flexibilities to enable industry growth is further
recommended in the AUC’s Pharmaceutical Manufacturing Plan for Africa (PMPA).151
3.4.3 A flexible intellectual property system will harm foreign direct investment
Baker et al., note that:
“…the literature on [foreign direct investment] has consistently found that factors
such as market size, infrastructure and effective governance (in the form of better
business regulation) have been much more important in determining flows of
investment and therein, flows of information and know-how”152
Smith et al., point to the shortcomings of seeking to attract foreign direct investment through
tightening intellectual property protections, stating that the:
148
149
150
African Union Commission and United Nations Industrial Development Organization “Pharmaceutical
Manufacturing Plan for Africa: Business Plan” 2012 79. Available at:
https://www.nepad.org/publication/pharmaceutical-manufacturing-plan-africa (accessed on 17-10-2020).
151
152
Baker et al. (n136) above 30.
38
“…promise of increased foreign direct investment seems elusive and the
comparative advantage of adoption of stronger intellectual-property rights tends to
last only as long as the next developing country does not adopt them; once these
rights are harmonized globally, no advantage accrues to one country compared with
another”153
Fix the Patent Laws reports that South Africa has attracted far less foreign direct investment
than other countries whose intellectual property systems appear to offer potential foreign
investors weaker protection.154 In South Africa, intellectual property protections were met
with substantial disinvestment in the country, as pharmaceutical manufacturing plants,
belonging largely to originator producing pharmaceutical companies, were shut down in
South Africa between 1994 and 2007.155
Naudé and Luiz further state that intellectual property issues had little effect on the decisions
made by multinational corporations to withdraw their manufacturing presence from South
Africa.”156 Instead these multinational pharmaceutical companies consolidated their
operations in regions with “skilled labour, low costs of labour and production and other
economic incentives.”157 This is evident in India, which has attracted significant foreign
investment in its pharmaceutical sector, despite not making provision for patents on
pharmaceutical products until 2005 and progressively adopting TRIPS flexibilities
thereafter.158
It is submitted that there exists no empirical evidence supporting the Big Pharma’s contention
that the adoption and use of the TRIPS flexibilities will hamper foreign direct investment into
South Africa.
3.4.4 A flexible intellectual property system will harm trade
A key goal of the DTI key Africa’s is to reduce South Africa’s trade deficit. However, strict
intellectual property protection can contribute to this trade deficit by “preventing or delaying
153
Smith et al. “Trade, TRIPS, and pharmaceuticals” 2009 The Lancet 684.
154
155
156
Naudé and Luiz (n130) above 38.
157
158
39
local generic producers from entering the market.”159 Fix the Patent Laws has shown that
secondary patenting in South Africa has generally blocked local manufacturers from
producing generic products long after they are already available in India, and this ultimately
forces patients to import high-cost originator products.160 The result is that local consumers
incur higher prices for drugs and medicines and there is a greater outflow of money for
originator procurement which contributes to South Africa’s pharmaceutical trade deficit.161
It is submitted that it is be expected that Big Pharma and their housing countries, who
eventually benefit from these outflows of money, will oppose South Africa’s proposed patent
law reforms as they would negatively affect their economic interests.
3.4.5 A flexible intellectual property system will harm health innovation
Empirical evidence gathered by Fix the Patent Laws has demonstrated that the global
expansion and harmonization of intellectual property protections under the TRIPS Agreement
has failed to stimulate genuine and needed health innovations.162 Mazzucato opines that by
incentivizing R&D towards maximising profits rather than health benefits, intellectual
property incentives fail to deliver genuine needed innovation.163 Mazzucato further argues
that the profit driven patent approach has led to investment in R&D with predictable
profitability, such as the development of “me-too products able to benefit from existing
profitable markets, rather than investing in chancy early stage research towards the
development of truly innovative, new drugs.164
Fix the Patent laws has further submitted that profit driven R&D investment by industry has
led to a myriad of “me-too” products that offer only minor improvements over existing
drugs.165 The pursuit of “me-too” products by industry serves to frustrate innovative progress.
What is more, empirical evidence shows that the patent system incentivises R&D towards
159
160
161
162
163
Mazzucato “Op-Ed: How taxpayers prop up Big Pharma, and how to cap that”2015. Available at:
https://www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-big-pharma-prices-20151027-story.html
(accessed on 18-10-2020).
164
Mazzucato (n160) above.
165
40
incremental innovation in pursuit of secondary patents that extend market monopolies beyond
the prescribed period of 20 years through evergreening practices.166As alluded to earlier,
South Africa commonly grants secondary patents rejected in other jurisdictions and court
challenges on secondary patents are rare. This lack of challenges on secondary patents has
been attributed to the South African courts’ tendency to apply a low bar for novelty and
inventiveness, and lean in favour of upholding the patent holder’s protections over public
interest.167
It is submitted that the existence of weak secondary patents granted in South Africa and held
by foreign pharmaceutical corporations, serve to hamper access to more affordable generic
products in South Africa long after they enter the global market.
166
167
Tomlinson et al. “How patent law reform can improve affordability and accessibility of medicines in South
Africa: Four medicine case studies” 2019 South African Medical Journal 388.
41
CHAPTER 4
HOW IS SOUTH AFRICA ADDRESSING THE LACK OF ACCESS TO ESSENTIAL

DRUGS AND MEDICINES?
4.1 Introduction
In 2017, the DTI published a Draft IP Policy that is aimed at improving accessibility to
essential medicines by reining in the pharmaceutical industry and its profiteering objectives.
Furthermore, this policy seeks to strike a balance between the protection of intellectual
property rights and to attainment of public health objectives. It further proposes a range of
reforms that aim to promote national development imperatives such as boosting local
manufacturing, promoting innovation, and ensuring equitable access to medicines amongst
others. This chapter will provide an analysis of the Draft IP Policy and its objectives. In
pursuance of these aims, the Registrar of Patents, Mr. Trod Lehong, and the Draft IP Policy
contributor, Mr. Marumo Nkomo, were interviewed to provide clarity on the objectives and
implementation process of the Draft IP Policy.168
4.2 Implementation and enforceability of the Draft IP Policy
South Africa is reputable for drafting noteworthy policies and legislation. However, the main
concern is transforming what laudable policy intentions to tangible outcomes. In an interview
with Mr. Nkomo, he emphasised that it is important to consider whether what is being
proposed is workable and implementable. He stated that the Draft IP Policy is a product of
extensive deliberations and consultations, not only with political representatives or
bureaucrats, such as the Registrar of Patents, but also with the pharmaceutical industry and
concerned activist groups. Therefore, every aspect of the Draft IP Policy was extensively
168
This interview took place on the 25th of September 2019 at the CIPC Offices in Pretoria, South Africa.
42
deliberated upon and all the affected stakeholders were consulted about the changes that are
yet to come.
It is noteworthy that there was a concurrent process in motion wherein the regulations and
implementation guidelines were drafted in order to guarantee compliance with the incoming
legislation. This was done with the intention of ensuring that the Draft IP Policy will not be a
mere reflection of laudable policy intentions, but also to ensure that there is a strategy in
place to realise and execute the policy. The DTI aims to enforce Phase I of the Draft IP
Policy first. Phase I focuses on intellectual property and public health, and it aims to change
aspects of the current Patents Act, namely: the SSE procedure; patentability criteria; patent
opposition; disclosure requirements; exceptions; voluntary licensing; compulsory licences;
intellectual property and competition law; rule of law; and legal certainty.169
4.3 Substantive search and examination
The Draft IP Policy intends to eliminate the depository system currently in place and
introduce the SSE procedure. One of the biggest downfalls of a depository system is that
there is no legal certainty. A patent may be granted and be found to be invalid during
opposition proceedings; therefore substantial examination becomes paramount to prevent the
premature and unwarranted granting of patents.
The introduction of a SSE procedure would ensure that a patent is only granted for an
invention that meets the patentability criteria.170 As alluded to earlier, the lack of an SSE
procedure in the current patent legislation has resulted in South Africa granting many
unworkable patents and has also created a loophole that has made ever-greening possible.
The adoption of an SSE procedure will also ensure that when a patent is entered onto the
Patents Register, it is a valid patent that has been tested, and searched for locally and
internationally. This, in turn, will protect the quality of the drugs and medicines placed on the
market. It is also important to recognise that due to the limitation of resources at the Patents
Office, a phased approach to the implementation of the policy will be taken.171 This means
169
South Africa: Department of Trade and Industry (n12) above 14-33.
170
Adams & Adams “Intellectual Property Consultative Framework: Comments from a legal perspective” 2016
15.
171
South Africa: Department of Trade and Industry (n12) above 4.
43
that not all industries will be subject to the SSE procedure as yet, however this position will
change with time and with the increase in governmental capacity.
Mr. Lehong emphasised that local innovations will be closely guarded and will go through
the SSE procedure to ensure that they are truly workable and to avoid wasting a lot of money
on patents that could later be invalidated. Furthermore, greater emphasis will be placed on
local companies to ensure the success of their inventions.
4.4 Patentability criteria
The Draft IP Policy further seeks to adopt stricter patentability criteria. For example,
“novelty”, an absolute ground for patentability, is required for an invention to be patented.
The Draft IP Policy seeks to codify the assessment used to determine the novelty of an
invention. What is also interesting to note is that an exception exists to the novelty rule when
it comes to the patenting of pharmaceuticals. This exception allows for ever-greening to
occur as NCE originators can claim minor modifications in the composition of a drug and
apply for a new patent accordingly, essentially obtaining a new monopoly on the same drug.
Under the TRIPS Agreement, countries are authorised to adopt stricter patentability criteria to
combat issues such as ever-greening.172 This would include limiting the granting of patents
on new uses of, and minor modifications to existing medicines.
4.5 Implementation of opposition proceedings
At present, opposition proceedings in the form of revocation may only take place after a
patent has been granted, and not prior. This is problematic as some inventions may well be
patented despite not meeting prevalent patentability criteria. As stated above,
opposition/revocatory proceedings are generally time-consuming and costly. The change in
procedure allows for the public to inform the Patents Office, by providing evidence, if there
are any problems with the invention prior to granting the patent. The inclusion of third-party
observations will also combat the need for lengthy and costly revocation proceedings as the
public would have the opportunity to present evidence that the invention is not patentable
during the application phase. What is more, the inclusion of third-party observations is a form
of acknowledgment by the DTI that it is under-resourced. This allows the DTI to have access
to information that it would not ordinarily have during the assessment stage.
172
Musungu and Oh (n82) above 12.
44
The Draft IP Policy recommends that patent revocation should move from a judicial system
to an administrative system. Vawda argues that the judiciary has developed a system wherein
it tends to favour patent holders.173 There are however very few patent revocation
proceedings in South Africa as many cases are settled out of court.
Lastly, the Draft IP Policy understands the importance of striking a balance in a society like
ours in that it recognises the need to ensure access to medicines for the indigent people who
are unable to afford essential patented medicines, and at the same time, recognising the
importance of keeping pharmaceutical companies incentivised to continue to invest in R&D
on new medicines to address future needs.
173
Vawda (n9) above 315-316.
45
CHAPTER 5
CONCLUSION
The topic of this dissertation was inspired by the gaps in literature that fail to recognise the
shortcomings of the public-health system in as far as access to patented medicines is limited.
This dissertation has discussed how the international and South African patent framework
contribute to the limited access of patented essential medicines, as well as the various
loopholes that exist in the contemporary patent system. The main objective of such an
extensive discussion is to highlight the way forward in terms of improving access to essential
patented medications. The patent rules as enforced by the TRIPS Agreement have effectively
strengthened the IP framework and such reinforcement of the IP framework has, in turn,
resulted in exclusivity within the pharmaceutical industry and ever-greening practices.
Pharmaceutical companies have argued that the sale of medicines is part of their business and
as such, they are driven primarily to make profits. This increase in the price of medicines has
negatively impacted on the wider public’s chances of accessing much-needed medication.
One of the main criticisms advanced against South Africa’s patent framework is the inability
of the Patent Act to expressively utilise the flexible mechanisms that are intended to ensure
that the public accesses essential medication. South Africa’s patent laws are largely inspired
by the TRIPS Agreement and they have been heavily critiqued due to their heralded
shortfalls. The loopholes that exist have allowed pharmaceutical companies to exploit and
cause further barriers to accessing patented medication. It has been contended that the patent
laws facilitate the awarding of weak patents which have harmful consequences as they limit
access to essential medicines. Moreover, the Patents Act does not regulate the pricing of
46
medicines; however, it relies on other legislation such as the Competition Act to help close
this gap.
Despite the legal gaps in the patent framework, infrastructural problems are the main
contributing factors to the inaccessibility of essential medication. Without adequate
equipment or staff to attend to patients, many patients will suffer from not having access to
adequate medical attention including essential medicines.
It must be noted that the amendments to the TRIPS Agreement, do not necessarily effect
modifications in domestic laws. Therefore, any resolution or clarification that is made needs
to be included in the domestic legislation of a country for it to be operational. The
enforcement of such resolutions is dependent on the circumstances under which obligatory
licences are generally awarded. It is suggested that the compensation made to patent holder
should not have the effect of invalidating the objective of the licence as reasonable
remuneration will result in the low cost of pharmaceuticals. Additionally, article 31(g) of the
TRIPS Agreement should be implemented such that it does not weaken the incentives for the
application of essential licences.
The Draft IP Policy is to be welcomed as it a critical step towards improving equitable access
to essential medication in South Africa if its recommended changes are employed. The policy
has however been criticised for proposing reforms that may be detrimental to the
development of the economy and inventions within the country. Opponents of the Draft IP
Policy have called for the expansion of the scope of existing patent protections beyond the
requirements of the TRIPS Agreement. This study has argued that the claims made by these
opponents are without basis and should therefore not stand in the way of implementing the
necessary and long overdue patent law reforms. This approach finds support from the United
Nations Sub-Commission on the Promotion and Protection of Human Rights’ resolution
which calls for states to prioritise their human rights duties instead of economic programmes
and agreements. 174 This resolution requires governments to incorporate and protect the social
174
United Nations Sub-Commission on the Promotion and Protection of Human Rights “Intellectual property
rights and human rights”2000 at par. 3. Available at:
https://www.aaas.org/sites/default/files/SRHRL/PDF/IHRDArticle15/E-CN_4-SUB_2-RES-2000-7_Eng.pdf
(accessed on 09-11-2020),
47
function of intellectual property into legislative provisions and policies, in a manner
consistent with international human rights obligations.175
175
United Nations Sub-Commission on the Promotion and Protection of Human Rights (n71) above atpar. 5.
48
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THESIS AND DISSERTATIONS
55. Makore S “Expanding access to essential medicines through the right to health: A
case study of South Africa” (LLM Dissertation, 2015) University of Fort Hare
55
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How to cite this thesis

(Student No. 201213554)

A Minor Dissertation submitted in partial fulfilment of the Degree:

INTELLECTUAL PROPERTY LAW

SUPERVISOR: PROF. RW ALBERTS

CHAPTER 1: INTRODUCTION AND PROBLEM STATEMENT

1.2 Problem statement and background to the study 4

1.3 Research question and research methodology 7

1.4 Aim of the study 8

1.5 Outline of the study 8

CHAPTER 2: THE INTERNATIONAL AND DOMESTIC PATENT

2.2 International instruments 12

2.2.2 The Doha Declaration on TRIPS Agreement and Public Health 16

2.3 The TRIPS flexibilities discussed in the South African context 18

2.3.1 Compulsory licences 18

2.3.1.1. Compulsory licences in respect of dependent patents 20

2.3.1.2. Compulsory licences in respect of abuse of patent rights 20

2.3.2 Parallel importation 21

2.3.3 The controversy surrounding the implementation of Section 15C of the

Medicines and Related Substances Control Amendment Act 23

2.3.4 Regulatory (Bolar) provisions 24

2.4.1 Lack of substantive examination upon the grant of a patent 25

2.4.2 Non-disclosure of international non-proprietary names in patent applications 26

2.4.4 Opposition proceedings 28

2.5 Domestic jurisprudence on cases of patent induced excessive pricing 28

2.5.2 Treatment Action Campaign v MSD (Pty) Ltd and Merck 31

2.4 Other factors leading to excessive pricing on essential medicines 31

CHAPTER 3: BIG PHARMA AND HEALTHCARE IN SOUTH AFRICA

3.2 Brief outline on patent protection 33

3.3 The rationale of pharmaceutical companies 35

3.4 Claims made by the Big Pharma 36

3.4.1 Stronger intellectual property protection will advance economic development 36

3.4.2 Stronger intellectual property protection protects local industries 38

3.4.4 A flexible intellectual property system will harm trade 40

3.4.5 A flexible intellectual property system will harm health innovation 41

CHAPTER 4: HOW IS SOUTH AFRICA ADDRESSING THE LACK OF

4.2 Implementation and enforceability of the Draft IP Policy 43

4.3 Substantive search and examination 44

4.4 Patentability criteria 45

4.5. Implementation of opposition proceedings 45

INTRODUCTION AND PROBLEM STATEMENT

1.2 Problem statement and background to the study

1.3 Research question and research methodology

1.4 Aim of the study

1.5 Outline of the study

This study is presented in 5 chapters as briefly outlined below:

THE INTERNATIONAL AND DOMESTIC PATENT FRAMEWORK

2.2. International instruments

“…contribute to the promotion of technological innovation and to the transfer and

The three objectives mentioned above predominantly focus on technological development

“…formulate or amend their laws and regulations, adopt measures necessary to

It is important to note that Article 30 of the TRIPS Agreement provides an exception to

“…exclusive rights conferred by a patent can be limited, provided that such

2.2.2 The Doha Declaration on TRIPS Agreement and Public Health

2.3 The TRIPS flexibilities discussed in the South African context

2.3.1 Compulsory licences

A compulsory licence is a non-voluntary authorisation to use an invention granted through a

2.3.1.1 Compulsory licences in respect of dependent patents

2.3.1.2 Compulsory licences in respect of abuse of patent rights