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Published : May 08, 2010 | Author : faisal
Category : Company Law | Total Views : 3037 | Unrated


Trips & Right To Health With Regard To Access To Medicine : Indian Perspective

Ideas have never been commoditized to the extent witnessed in the present era through the medium of patents. The technological gap between the developed and developing countries presents a compelling call for some sort of action in order to alleviate the resource inequality. In this context, one of the most important is the apparent struggle between the large multinational pharmaceutical companies and developing nations with regards to access to medicines. This is because the question of health is one of the most important and contentious and evident indicators of poverty. In fact one cannot imagine a healthy nation without proper access to many treatments provided by pharmaceuticals. As Chetley points out, “modern drugs, used well, can help the less developed countries to speed improvements in health, but they cannot replace a lack of necessary infrastructure to sustain better health”[1]. It is really unfortunate to know that every day, 30,000 people die of preventable infectious diseases, bringing the total of those who die for those reasons to 11 million people per year.[2] Arguably, these are people who have a much greater chance of survival if they had access to the existing medicines that could potentially cure those diseases. Oxfam notes that in sub-Saharan Africa average life expectancy is 50 years- some 28 years less than the average for people in high-income countries. Treatable infectious diseases in the region account for 60% of deaths, while cancer and cardiovascular disease- the leading causes of illness-related death in the US accounts only 15%[3]. One of the reasons why these populations do not have access to the medicines that could save lives is because the price of health is high, as many medicines are owned by pharmaceutical corporations that either sell their products at high prices, or request that the developing countries purchase licenses to produce or import those medicines. The result of this system is an obvious discrepancy between the prices of the medicines and the possibility of those who need them to acquire these required medicaments.

Prior to TRIPS, patent laws varied across nation-states, with local laws formulated to suit the needs of each society. Countries like India and Brazil did not provide product patents for drugs as part of a public policy aimed at enabling citizens to access cheaper drugs, while other countries opted to under-enforce patent laws to achieve the same ends. But with the adoption of the TRIPS agreement, all member countries of the World Trade Organization (WTO) are duty bound to enforce minimum standards of patent protection and any non-compliance is liable to attract legal action.

In any debate there are at least two sides each of which believes its point of view has greater merit than the opposing side. This is true in the TRIPS and public health debate. The WTO, its supporters, pharmaceutical corporations and their supporters argue that there is adequate protection for public health in terms of safeguards provisions and transition time for developing countries. In this regard they point to the following provisions in the TRIPS:
1) Scope for parallel imports[4];
2) Provision for social and economic welfare[5];
3) Concerns for public health[6];
4) Compulsory Licensing[7]; and
5) TRIPS provide for national emergency actions.

On the other hand, Opponents of the WTO argue that TRIPS restricts access to medicine and promotes high cost of essential drugs. They argue that the TRIPS provisions do not provide as much flexibility as is being promoted by the WTO because of limitations, restrictions and ambiguities in the agreement. These allow considerable scope for interpretation and leave poor countries vulnerable to dispute action and legal harassment. In the case of article 6, though it allows parallel imports, there is a lack of clarity about the nature and scope of this. For example, the conditions for granting authorisation and the requirement to give reasonable remuneration to patent holder are not very well defined. Furthermore, Article 7 and 8[8] require that any measures taken by a state to be ‘consistent with the provisions of the TRIPS agreement’. Likewise, Article 31 requires that the patent holders be offered fair compensation if their products are made by non-licensed manufactures. But as noted by TRIPS experts, the agreement does not specify how such compensation should be determined if the two sides do not disagree, nor does it contain a definition for a public health emergency that would justify bypassing patent legislation. In the South African case, the PMA insisted on a narrow interpretation of TRIPS exception to patent-holders’ exclusive marketing rights. Lastly, many NGOs also argue that TRIPS allows companies to use tactics to enforce questionable patent ownership. It is interesting to note that the EU, a strong supporter of TRIPS, has also called for clarification of the compulsory licensing and parallel importing provisions of TRIPS. In the case of compulsory license and parallel importing, which are tools governments can use to increase access to medicines, there are number of open questions: Can the manufacturer who is granted the license be a foreign producer? What is adequate compensation? What are the limitations on the ‘exhaustion of intellectual property rights’? This requires clarification of article 6 as regards to articles 35 and 46. In the first case, experts disagree whether manufacturing must be domestic. This issue raises problems for small states that have limited market and lack production facility. In such event, can they license a company in another country to produce the drug? With regard to compulsory license, there are similar issues of adequate compensation, the exportation of the product and the restriction on discrimination of patent rights by field of technology[9] . Ultimately, all of these articles, but in particular Articles 6 and 31, under strict interpretation (of the US and the Pharmaceutical companies) give wide scope for dispute procedures.

From a public health perspective there are at least three major problems with TRIPS:
1. First, it is piecemeal, ambiguous and it is difficult to administer public safeguards and exceptions[10]. Developing countries do not always have the infrastructure to examine patents and resolve issues of questionable patent ownership; this and other factors are resulting in a chilling effect on developing countries implementing the safeguard measures in these provisions. Many countries do not act because they fear legal challenges by MNCs and trade sanctions that may result from an adverse ruling by the WTO dispute panels.

2. Secondly, the TRIPS delay the introduction of generic drugs and leads to higher prices for essential medicines, especially those discovered after 1995.

3. Third, the TRIPS-public health debacle is fundamentally about the cost of medicines for infectious diseases such as HIV/AIDS, malaria, and tuberculosis where there is restricted access, inflexibility in drug pricing and pharmaceutical firms balk at issuing licenses to The exhaustion of an intellectual property rights (or ‘first sale doctrine) “the owner of intellectual property cannot control the resale of a legally purchased good.” generic manufactures. But there are potentially other public health aspects. For example, many women in developing countries die from gender specific illnesses for which the required medical drugs are very expensive and there may be no generic substitutes available. Though the numbers many not qualify as national emergency, it may be the case that a government may think the problem warrants governmental actions to provide cheaper drugs. Currently, there is a plethora of possible remedies for the TRIPS and public health problem. Some remedies aim at engendering systemic changes into the TRIPS agreement while others focus on measures to mitigate the most negative and often deadly impact of lack of access to affordable medicines.

Doha Declaration [11]
For removing the ambiguities of TRIPS provisions, Doha Declaration took place. The Doha Declaration addresses real and urgent problems faced by many developing countries in the area of public health. It is not intended to amend the TRIPS Agreement in any substantial manner. Rather, it aims to clarify the relationship between the TRIPS Agreement and Public Health policies of Member countries, and confirm the rights that Members have retained under the Agreement, particularly by defining the flexibility allowed in certain key areas. The Declaration addresses most of the concerns of developing countries on the issue of public health. The ambiguous wording used in some paragraphs – particularly in paragraph 4 – was the obvious price paid to build a consensus for the adoption of the Declaration. Despite such wording, the Declaration makes it clear that a conflict may exist between TRIPS standards and public health, and has reaffirmed the right of Members, particularly developing countries, to take measures necessary to protect public health. The Declaration has set the ground for a differentiation of intellectual property policies when necessary to protect health. Though an important political document, the Doha Declaration also has legal effects, equivalent to those of an authoritative interpretation under WTO rules. As the mandate given in paragraphs 6 and 7 illustrates, the Doha Declaration represents, rather than the end of a process, the initial step for rethinking the TRIPS Agreement in light of the public interest[12]. While many different legal approaches may be developed, an effective solution must create the right economic conditions for countries with no or insufficient manufacturing capacity to obtain pharmaceutical products at low cost. Likewise, the TRIPS Agreement will continue to create tensions in the public health area, if the case of countries where no patent protection exists is not also a part of viable legal and economic solution.

All WTO Members should, in due time, take the steps, as necessary, to implement the Doha Declaration. Amendments to national laws should be introduced in order to facilitate exports of needed pharmaceuticals under paragraph 6 of the Declaration. Developing countries should be encouraged (and the relevant technical assistance provided) to review their legislation in order to ensure that the flexibilities, as clarified in the Declaration, as well as other flexibilities allowed by the TRIPS.

Agreement, are incorporated in national laws and effectively used to address public health concerns. The situation of LDCs received special attention at the Doha Conference, but the paragraph 7 action item did not represent any significant improvement for the great majority of them. Hence, the problems faced by LDCs to gain access to needed pharmaceuticals are likely to require further consideration by the WTO Members, in order to accomplish the objectives sought by the Doha Declaration.

Issues not covered in the Declaration
The Doha Declaration does not cover all the areas where flexibility of the TRIPS Agreement exists, such as the exceptions to patent rights[13] and the protection of data submitted for the registration of pharmaceutical (and agrochemical) products[14]. Nor does it refer to the room left to Members to determine the patentability standards in ways that prevent patenting strategies aiming at expanding or temporally extending the protection conferred in the pharmaceutical field.

Proposals made in the pre-Doha negotiation phase by different Members included, inter alia, language on the need to prevent diversion of drugs sold at discounted prices in developing countries to high-income markets, and to ensure that data protection requirements of Article 39.3 do not become a barrier to the registration and introduction of generic drugs and the use of compulsory licensing. The USA proposed a five year moratorium on dispute settlement action in relation to “non-violation” complaints, which was limited to sub-Saharan African countries. The EC regretted that this issue was not dealt with by the Conference[15].

Acceptance of this proposal would have implied that Article 64 of the TRIPS Agreement on “non-violation” complaints could be immediately applied to any other Member, something that most Members rejected since the scope and modalities of such complaints have not been determined yet by the Ministerial Conference.

Legal status of the Doha Declaration

The Doha Declaration is a strong political statement that can make it easier for developing countries to adopt measures necessary to ensure access to health care without the fear of being dragged into a legal battle. The Declaration is also a Ministerial decision with legal effects on the Member States and on the WTO bodies, particularly the Dispute Settlement Body (DSB) and the Council for TRIPS. It states the purpose of the TRIPS Agreement in the area of public health, interprets the TRIPS Agreement with regard to some important aspects, instructs the Council for TRIPS to take action, and decides on the implementation of the transitional provisions for LDCs.

A “declaration” has no specific legal status in the framework of WTO law; it is not strictly an authoritative interpretation in terms of Article IX.2 of the Marrakesh Agreement Establishing the WTO. However, given the content and mode of approval of the Doha Declaration, it can be argued that it has the same effects as an authoritative interpretation. In particular, in providing an agreed understanding on certain aspects of the TRIPS Agreement in paragraph 5, Members have created a binding precedent for future panels and Appellate Body reports. According to the European Commission, “in the case of disputes (e.g. in the context of WTO dispute settlement procedures) Members can avail themselves of the comfort provided by this Declaration. Panelists are likely to take account of the provisions of the TRIPS Agreement themselves as well as of this complementary Declaration, which, although it was not meant to affect Members’ rights and obligations, expresses

It should be noted that the Ministerial Conference rejected proposed language[16] that would have suggested that the Declaration would only clarify provisions of the TRIPS Agreement. The WTO adopted several “declarations”[17] prior to the document examined here. Hence, the Declaration is part of the context of the TRIPS Agreement, which, according to the rules of treaty interpretation, has to be taken into account when interpreting the Agreement”. Moreover, the Declaration can be regarded as a “subsequent agreement” between the parties regarding the interpretation of a treaty or the application of its provisions, under Article 31.3 (a) of the Vienna Convention on the Law of the Treaties. Any WTO Member could bring a complaint under the DSU on issues covered by the Doha Declaration, and it would be theoretically possible for a panel or the Appellate Body to find an inconsistency between the Doha Declaration and the TRIPS Agreement itself. This is unlikely, however, since in adopting the Declaration, Members have exercised their exclusive competence to interpret a WTO agreement, and it would be extremely difficult to challenge the adopted interpretation. It should be stressed, however, as mentioned above, that the Doha Declaration is not self-executing and both developed and developing countries should adopt the legal amendments necessary to implement it. Developing countries, in particular, should ensure that they are using to the full extent possible the flexibilities allowed by the TRIPS Agreement to protect public health and facilitate access to health care by all.

European Commission[18], who notes that “the Declaration provides comfort to Members in the case of disputes…A Member whose legislation is being challenged by another Member because of alleged incompatibility with the TRIPS Agreement can refer to the contents of this Declaration in support of the measures under dispute, where relevant…and panelists are likely to take account of this complementary Declaration as well as the provisions of the TRIPS Agreement in their decisions” (p. 8)

Panels and the Appellate Body can only “clarify” the provisions of the WTO agreements; they “cannot add or diminish the rights and obligations provided in the covered agreements”[19].

Indian Scenario
Pre- Patent Act, 1970
The rise and growth of MNCs after the Second World War worldwide saw the consolidation of their position in India too. In the patent regime before 1972, the monopoly power of the MNCs resulted not only in high prices but the MNCs holding the patents often delayed the introduction and production of essential drugs[20]. In fact they filed a patent case against Cipla when it tried to produce and market it. It is only after the revision of the patent law in 1972 that Cipla could introduce it[21]. By 1970, MNC dominated with more than two-thirds market share in India.

Post- Patent Act, 1970

However, the share of MNC declined consistently over the years till the early 2004. After the introduction of the Patent Law in 1972 which eliminated the monopoly status enjoyed by the MNCs and the indigenous firms were quick to respond to the favourable provisions in the Patent Act of 1970 and started generating processes for manufacturing the latest drugs and putting them in the Indian market within a few years of their introduction abroad. The legislation disallowing the existence of product patents had two different effects on the Indian pharmaceutical market. Firstly, local generic production of pharmaceuticals increased considerably, and secondly, foreign pharmaceutical companies decreased the amount of patents they had as they deemed that it was not worthwhile to manufacture under the existing legal conditions in the country. In fact, by 1991, Indian companies produced 70% of the drugs available in the national market. The drug policy in India also emphasized some price control policies, with at least 74 different medicines protected by government pricing restrictions. The justification for this policy is to ensure wider access to and availability of essential drugs within the country.

These policies so far have been very successful in keeping the prices down when compared to other countries[22]. Another important achievement of the Indian drugs policy is its potential for exporting cheap drugs to developing countries. Therefore, since the implementation of the 1970 Patent Act, various health indicators have improved. In 1970 the child mortality rate was 137.2 deaths per thousand births, and in the year 2001 it had fallen to 67/1000. The average life expectancy in 1970 was 49.4 years and by the year 2001 it had increased to 63.3[23].This substantial improvement of health statistics cannot be attributed solely to the country’s pharmaceutical policy, and it is impossible to measure just how effective the policy has been in providing cheap medicines, but there cannot be any doubt that wider access to drugs has been one of the factors that have allowed India to improve these figures

Post – Trips (1995)
After the TRIPS came into force lot of changes took place which affected India in several ways. Firstly, since 1995 the new drugs were stored in the mail box, as India got a window of 10 years. That is the provisions of TRIPS were applicable in India from the year 2005 but the drug patented from 1995 shall not be produced generically as the mail box has retrospective operation. Secondly, India had amended its patent law and had to grant patent for both process as well as product for a period of 20 years for all inventions including pharmaceutical products. Thirdly, consequent to second, today India is facing some terrible problem as far as access to medicine is concerned as the Indian companies like Cipla can no more produced the generic version of drugs in violation of TRIPS provisions. Recently, a number of cases[24] have been filed by the foreign pharmaceutical companies against Indian companies for infringing the patent law. Moreover, the Indian manufactured drugs are also seized[25].

Thus, it seems that if situations go on like these; then the developing countries like India and under developed countries will find it tough to meet the demand of their citizens even for the basic medicines as they lack the necessary infrastructure to invent drugs.

Suggestions & Recommendations
The suggestions inter alia includes the following :
1. TRIPS to be reviewed to ensure that its provisions support access to essential medicines—the countries of the south should seek to retain the right to produce market and import affordable medicines. Particular attention should be paid to clarify, and if necessary, revise Article 28 (can be interpreted to limit parallel importing), Article 31 (can be interpreted to limit compulsory licensing), article 39.3 (requires that pharmaceutical R&D should be protected against disclosures); and article 41 (member countries must enforce Intellectual Property Rights)[26].

2. Review of patent period of 20 years and consider shortening patent protection period for essential medicines.

3. Substantive review of Article 27.3 (b) to exempt a list of patented drug. Clarity by WTO as to whether parallel import is challengeable[27].

4. Free use of public health safeguards such as compulsory license and parallel imports when there is a health crisis.

5. Compulsory license should be enforced and not be restrictive nor subject to threats.

6. Public health concerns should have priority over commercial and industrial concerns.

7. Measures to promote the genuine transfer of know-how and technology in the areas of pharmaceuticals to the developing countries.

8. TRIPS need to provide incentive to develop new drugs.

9. Reconciliation of TRIPS with the public health aspects of the International Covenant on Economic, Social and Cultural Rights (especially, article 12.1, 12.2c and the right to health).Civil society’s and some governments’ recommendations, actions and possible measures to offset the negative impact of TRIPS on access to medicines include:

10. Medicine on the Essential Drugs List produced by the WHO should be exempted from the TRIPS provision. WHO list should be amended to include all essential medicines not just cheap ones.

11. Global public fund to support the rational use of medicines and the research and development of medicine, which address public health needs.

12. Differential pricing (companies charge different prices in different market such as lower prices for drugs in poor countries) should be widely promoted and encouraged[28]. However, differential pricing is not a panacea since it is based on certain conditions such as the idea that companies must recover R&D costs, so consumers in richer countries might face even higher prices. Many observers note that differential pricing is already practised by firms who segment markets to maximise profit. In this case it might only increase prices to consumers in rich countries and will have a negative impact on poor consumers in those countries. Furthermore, as pointed out by TAC and other NGOs, differential pricing in small African markets may only work to dampen the demand for generic drugs from countries such as India and Brazil who can manufacture these drugs. This will further reinforce the monopoly power of the pharmaceuticals.

13. Greater resort to non-public use measures by developing countries. This is an alternative to compulsory licensing which does not require negotiation with patent holder. Additionally, as noted by Love (2001), “there is no right to injunctive relief; but companies may seek compensation as an eminent domain taking.”

14. Developing countries must be more aggressive about issuing licenses.

15. Developing countries should adopt article 30 patent exceptions for product that are produced for humanitarian use (this will overcome the problem of exporting under compulsory license.)[29]

Several studies have demonstrated that without patents the amount of innovations in pharmaceuticals would be greatly reduced. For example, a study of British pharmaceutical industries concluded that patents were vital for pharmaceutical industries because expenditure in research and development of new drugs would be reduced by 64% if there were no patents[30]. However, it is important to note that the amount of money spent on research and development does not seem to match the profits earned by the pharmaceutical industry. Representatives from the industry calculate that the amount of money invested in research and development totals 30 bn USD globally per year, being only 7.3% of the total estimated income for 2002[31]. Given the proposition that the occurrence of newer and newer diseases is always on the card because of environmental and other disturbances, proper access to medicine is inevitable to save the generation. However, in current setup of exploitation by the developed countries, the fulfilment of the definition of health like the one given by WHO as a “state of complete physical, mental and social well being and not merely the absence of disease or infirmity” would remain a distant dream.

We may sum up on the basis of the above discussion that TRIPS Agreement is somewhat anti human rights because right to health as human rights has been recognised by various Conventions, Covenants[32] and Declarations[33] and judicial pronouncements[34] and the present scheme of the TRIPS is not clearly in favour of access to medicine to a developing countries like India which in turn implies violation of right to health. Thus, the attempt should be made to balance the legitimate interest of the pharmaceutical companies and the public interest with regard to access to medicines. We must not forget that the process of trade liberalisation is not an end in itself, but has the ultimate and fundamental objectives of raising standards of living, ensuring full employment and economic growth, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development.
[1] Chetly A (1990), A Healthy Business? World Health and the Pharmaceutical Industry, Zed Books, London, P. 15
[2] Oxfam, “Where is the Money?” Oxfam petition to the G8 meeting in Genoa, July 20, 2001.
[3] Oxfam, “Oxfam International Report: Debt Relief Still Failing the Poor”, July 19, 2001,
[4] Article 6 permits parallel importing
[5] Article 7, which says that the agreement should be conducive to social and economic welfare and should contribute to a balance of rights and obligations
[6] Article 8, which provides that government can take public health, nutrition and other public interest concerns into account in formulating their IPR laws and can prevent abuse of IPR
[7] Article 31 which allows national legislation to give government the right to grant compulsory licensing to third parties to manufacture a generic version of a product without authorisation of the patent holder
[8] It deals with objectives and principles
[9] Article 27.1. In the case of the EC versus Canada, article 27.1 was used as one of the justification for attempting to prevent a country from issuing compulsory licenses that dealt specifically with pharmaceuticals (WT/DS/114/R).
[10] CPT 2001, Love 2001, TAC 2001
[11] Doha Declaration on the TRIPS Agreement and Public Health, WORLD TRADE ORGANIZATION WT/MIN(01)/DEC/W/2 (14 November 2001 (01-577
MINISTERIAL CONFERENCE Fourth Session Doha, 9 - 14 November 2001
[12] Paragraph 6 aims at addressing a problem created by the extension of patent protection for pharmaceutical products to all WTO Members, irrespective of their level of development and of their pharmaceutical manufacturing capacity.
[13] See Article 30 of TRIPS
[14] See Article 39.3 of TRIPS
[15] European Commission, 2001, p. 6
[16] Desiring to clarify the provisions of the TRIPS Agreement, while preserving the rights and obligations of Members under the Agreement.
[17] “Declaration on the Contribution of The World Trade Organization to Achieving Greater Coherence In Global Economic Policymaking”; “Declaration on the Relationship of the World Trade Organization with the International Monetary Fund”; “Declaration on the Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing Measures”.
[18] European Commission, 2001, p. 2. Se also Vandoren (2002)
[19] article 3.2 of the Dispute Settlement Understanding
[20] For example, ICI developed the cardiac drug, propranolol, in 1961 and marketed it worldwide during 1963-1965 but not in India because the conditions did not suit them.
[21] Parliamentary Standing Committee on Commerce, 1993, evidence of Y.K. Hamied.
[22] The antacid drug ranitinide can be found in the West as the patented drug Zantac, but in India it is produced generically. The drug is 26 times more expensive in the UK than in India, and 56 times more expensive in the United States. The antibiotic ciprofloxacin is also produced generically in India, and it is up to 15 times cheaper than in the UK and the United States.
[23] UNDP, Human Development Index, 2003, op cit
[24] See Roche vs. Cipla. In this case Cipla produced a generic version of patented drug “Tarceva”, though the matter is still pending in the Apex Court, the chances is that Cipla may have to compensate Roche.
[25] Dr. Reddy’s consignment of drugs to Brazil by Dutch custom on the charge of patent infringement.
[26] See PMA case. In this case, These were the particular articles at the heart of the PMA case against the South Africa Medicine Act.
[27] According to WTO Director General Mike Moor this cannot be challenged at the WTO - International Herald Tribune, cited in SEATINI vol. 4, no. 5
[28] This is sanctioned by WHO, the EC and some NGOs
[29] Love (2000).
[30] Silberston A (1987), The Economic Importance of Patents, The Common Law Institute of Intellectual Property, London
[31] PhRMA (2001), “The Value of Medicines”, (http://www.phrma.org/publications/publications/value2001/value2001.pdf)
[32] Article 12(1) of the International Covenant on Economic, Social and Cultural Rights provides that the States Parties to the Covenant recognize the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.
[33] Article 25(1) of the Universal Declaration of Human Rights recognises that everyone has the right to a standard of living adequate for the health and well being of himself and his family. In fact, the Declaration being recognised as Customary International Law, its provisions are binding on all States unless they are contracted out by treaties.
[34] In India a Directive Principles of State Policy casting a duty upon the State to implement adequate healthcare measures has been expanded under Article 21 to include Right to Health : Parmanand Katara vs. Union of India (AIR 1989 SC 2039)

Authors contact info - articles The  author can be reached at: faisal@legalserviceindia.com

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