The framework of stringent intellectual property rights established by the TRIPS Agreement enables pharmaceutical manufacturers to charge prices above marginal cost of production. This affects the ability of governments to monitor and protect public health because of their obligations to protect IPRs of the manufacturers.
This means that Governments may find their capacity to ensure affordable access to medications restricted. In 2001, in response to concerns of developing countries regarding limited or no access to medicines at affordable prices, the WTO members agreed to issue the Doha Declaration to clarify the TRIPS Agreement in the context of Public Health.
The declaration states that the TRIPS Agreement would not prevent members from taking steps to protect public health and makes clear that each member has the right to create certain exceptions to its IPR laws to enable it to grant compulsory licenses for manufacture of essential goods such as life-saving drugs even if the consent of the holder of the IPR is not forthcoming.
Each member would be required to determine the grounds on which such compulsory licenses can be granted and shall have the right to determine what constitutes a national emergency.
Based on a decision taken by the WTO in 2003, Member states may also grant a compulsory license for limited export and import of medicines where the receiving country lacks manufacturing capacity.