The deal is the result of a retreat by the Bush administration; the US stood alone last year in blocking a similar deal closing at that time.
"This is a historic agreement for the WTO," said Director-General Supachai Panitchpakdi. "The final piece of the jigsaw has fallen into place, allowing poorer countries to make full use of the flexibilities in the WTO's intellectual property rules in order to deal with the diseases that ravage their people."
The decision waives countries' obligations under a provision of the WTO's intellectual property agreement. An Article of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement says that production under compulsory licensing must be predominantly for the domestic market. This effectively limited the ability of countries that cannot make pharmaceutical products from importing cheaper generics from countries where pharmaceuticals are patented.
In the decision, WTO member governments have agreed that the waiver will last until the article is amended.
Background
Flexibilities such as "compulsory licensing" are written into the TRIPS Agreement — governments can issue compulsory licenses to allow other companies to make a patented product or use a patented process under licence without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the patent holder.
But some governments were unsure of how these flexibilities would be interpreted, and how far their right to use them would be respected. The African Group (all the African members of the WTO) were among the members pushing for clarification.
A large part of this was settled at the Doha Ministerial Conference in November 2001.
In the main Doha Ministerial Declaration of 14th November 2001, ministers stressed that it is important to implement and interpret the TRIPS Agreement in a way that supports public health — by promoting both access to existing medicines and the creation of new medicines.
They therefore adopted a separate declaration on TRIPS and Public Health. They agreed that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health.
They underscored countries' ability to use the flexibilities that are built into the TRIPS Agreement, including compulsory licensing and parallel importing.
And they agreed to extend exemptions on pharmaceutical patent protection for least-developed countries until 2016.
On one remaining question, they assigned further work to the TRIPS Council — to sort out how to provide extra flexibility, so that countries unable to produce pharmaceuticals domestically can import patented drugs made under compulsory licensing.
The problem Article of the TRIPS Agreement says products made under compulsory licensing must be "predominantly for the supply of the domestic market". This applies directly to countries that can manufacture drugs — it limits the amount they can export when the drug is made under compulsory licence. And it has an indirect impact on countries unable to make medicines and therefore wanting to import generics. They would find it difficult to find countries that can supply them with drugs made under compulsory licensing.
Members were deadlocked over how to resolve this question, and the original deadline of 31 December 2002 was missed.
The decision
This 30th August 2003 agreement allows any member country to export pharmaceutical products made under compulsory licences within the terms set out in the decision. All WTO member countries are eligible to import under this decision, but 23 developed countries are listed in the decision as announcing voluntarily that they will not use the system to import.
A separate statement by General Council chairperson Carlos Pérez del Castillo, Uruguay's ambassador, is designed to provide comfort to those who feared that the decision might be abused and undermine patent protection. The statement describes members' "shared understanding" on how the decision is interpreted and implemented.
It says the decision will be used in good faith in order to deal with public health problems and not for industrial or commercial policy objectives, and that issues such as preventing the medicines getting into the wrong hands are important.
A number of other countries announced separately that if they use the system it would only be for emergencies or extremely urgent situations. They are: Hong Kong China, Israel, Korea, Kuwait, Macao China, Mexico, Qatar, Singapore, Chinese Taipei, Turkey and United Arab Emirates
The decision covers patented products or products made using patented processes in the pharmaceutical sector, including active ingredients and diagnostic kits.
The decision takes the form of an interim waiver, which allows countries producing generic copies of patented products under compulsory licences to export the products to eligible importing countries. The waiver would last until the WTO's intellectual property agreement is amended.