[Ip-health] specific examples of IP dangers in investment clauses

Baker, Brook b.baker at neu.edu
Fri Apr 8 11:15:11 PDT 2011

If investment clauses in free trade agreements and economic partnership agreements are permitted to include patents and data rights as protected investments, then investment clauses present a grave danger to access to medicines for several reasons:

First, drug companies will be able to sue countries directly rather than having to depend on their governments making the political decision to pursue a trade complaint.  Even the threat of a lawsuit can coerce major payments (like a recent $100+ million payment by Canada) and can further deter governments from undertaking policy measures that might negatively impact investment expectations of Big Pharma.

Second, unless countries do everything exactly according to domestic law, TRIPS, and the FTA/EPA then even a minor slip-up in issuing a compulsory license could result in an investor suit.  Likewise, issuing compulsory licenses on more than a very occasional basis could be considered abusive or discriminatory and thus give rise to investor claims.

Third, companies will have additional leverage to argue for anti-generic policy reforms like patent-registration linkage and data exclusivity.

Fourth, countries could be inhibited in enacting other measures to lower drug costs, for example adopting price controls, therapeutic formularies, and even stricter registration standards.

Fifth, adopting local working and local content requirements as part of industrial policy or to incentivize technology transfer might be prevented.

Sixth, arguably countries that did not pursue aggressive enforcement measures against generics could be accused of violating IP enforcement measures and thus be subject to investor suits.

As emphasized by MSF and others with respect to the EU-India EPA, investment clauses are yet another issue to watch out for in EPAs and FTAs.


Professor Brook K. Baker
Health GAP (Global Access Project) &
Northeastern U. School of Law, Program on Human Rights and the Global Economy
Honorary Research Fellow, Faculty of Law, Univ. of KwaZulu Natal, SA
400 Huntington Ave.
Boston, MA 02115 USA
(w) 617-373-3217
(c) 617-259-0760
(f) 617-373-5056
b.baker at neu.edu

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