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Following is the speech (English translation) by the Secretary for Commerce, Industry and Technology, Mr Joseph W P Wong, in moving the second reading of the Patents (Amendment) Bill 2007 at the Legislative Council today (April 18):
Madam President,
I move that the Patents (Amendment) Bill 2007 be read the Second time.
The Bill aims to implement a Protocol adopted by the World Trade Organisation (WTO) which facilitates its WTO Members' access to generic versions of patented drugs for addressing public health problems. When implemented, the Protocol would enable Hong Kong to import the required drugs swiftly when dealing with public health problems in circumstances of extreme urgency.
According to the existing WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), WTO Members may, subject to certain conditions and requirements, issue a compulsory licence allowing a third party to produce and sell a generic version of a patented drug without the authorisation of the patent proprietor of the drug. However, the TRIPS Agreement has a provision requiring that the drug should be predominantly for the supply of the domestic market. As such, WTO Members lacking manufacturing capacities in the pharmaceutical sector face difficulties in making use of the compulsory licensing system to acquire generic drugs. In 2003, the WTO decided to temporarily waive the restrictions under specified circumstances, allowing WTO Members to export generic drugs to other Members. Subsequently, the WTO adopted the Protocol in December 2005 in order to make the temporary waiver a permanent arrangement.
The Protocol has not come into effect yet. It is open for acceptance by WTO Members until December 1, 2007 or such later date as may be decided by the Ministerial Conference of the WTO. The Protocol will take effect upon acceptance by two thirds of the WTO Members.
To implement the Protocol in Hong Kong, we have to amend the Patents Ordinance (Cap. 514). When drafting the Bill, we have ensured that our compulsory licensing system is in line with the requirements under the TRIPS Agreement and the Protocol.
We will only make use of the Protocol to import pharmaceutical products in circumstances of extreme urgency. We propose that the Chief Executive-in-Council may, on public health ground, declare a period of extreme urgency in Hong Kong. During such a period, the Director of Health may grant an import compulsory licence for the holder to import and distribute generic drug without the authorisation of the proprietor of the patent of the concerned drug.
Hong Kong may also make use of the Protocol to export generic drugs. If a WTO Member avails itself of the Protocol to import a generic drug, the Director of Health may grant a compulsory licence allowing a local drug manufacturer to make and export the generic drug to the Importing Member without the authorisation of the proprietor of the patent of the drug. If the Member importing the drug is not under circumstances of extreme urgency, the manufacturer applying for an export compulsory licence shall, before application, endeavour to obtain the patent proprietor's authorisation on reasonable commercial terms and conditions. If the Member importing the drug is under circumstances of extreme urgency, the foregoing requirement would not apply.
In line with the requirements under the Protocol, the Bill contains provisions providing for payment of remuneration to the patent proprietor. According to the Protocol, adequate remuneration should be paid to the patent proprietor at the Exporting Member. If adequate remuneration is paid at the exporting end, no remuneration is required to be paid to the local patent proprietor at the importing end.
In the Bill, we propose that when Hong Kong makes use of the Protocol to export generic drugs, the holder of an export compulsory licence should pay adequate remuneration to the local patent proprietor.
In general, Hong Kong is under no obligation to pay remuneration to the local patent proprietor when importing a pharmaceutical product under the Protocol. However, remuneration should be paid to the local patent proprietor if remuneration is not paid to the patent proprietor at the Exporting Member after the exhaustion of all legal remedies to recover payment of the remuneration at the exporting end. We envisage that this scenario will be extremely rare. Under such exceptional circumstances, we propose that the Government should pay the required remuneration since importing the generic drug is for containing an urgent public health problem in the community. We consider the proposed arrangement reasonable.
As for the amount of the remuneration, we propose that it should be determined on a case-by-case basis by the Director of Health, in consultation with the Director of Intellectual Property. The amount, however, should not exceed a cap. The Bill stipulates a cap equivalent to 4% of the total price paid for the drugs. In drawing up this 4% cap, we have taken into account the practices of other jurisdictions like the European Union, Canada and Switzerland. To allow for flexibility, the Secretary for Commerce, Industry and Technology is empowered in the Bill to vary the cap by way of notice in the Gazette. Where necessary, we will review the propriety of the cap, having regard to the prevailing international practice.
In order to safeguard the interests of the patent proprietors, we have also proposed a review mechanism for aggrieved persons to apply to the court for review. The court may make any order as it thinks fit, including determining a remuneration exceeding the aforementioned statutory cap.
Madam President, the implementation of the Protocol will help address public health problems in the world. We intend to notify the WTO of our acceptance of the Protocol after enactment of the Bill. I appeal for Members' support for passage of the Bill so that Hong Kong may work hand in hand with the international community on this public health issue. Moreover, the Bill will enhance our capacity in handling public health crises, in the overall interest of the community.
We have consulted the Panel on Commerce and Industry of the Legislative Council on the key proposals of the Bill. Members present expressed in-principle support for the proposals.
Madam President, with these remarks, I look forward to the early passage of the Bill.
Ends/Wednesday, April 18, 2007
Issued at HKT 12:06
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