[Ip-health] EU Trade Agreements: Favouring Big Pharma over public health

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Wed May 29 18:07:51 PDT 2013

Trade Agreements: Favouring Big Pharma over public health
 28 Mag 2013 | Chalermsak Kittitrakul, Shailly Gupta
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*In recent years, the European Union (EU) has been aggressively pushing for
Intellectual Property (IP) provisions in bilateral trade agreements with
emerging economies such as India and Thailand.  These trade agreements are
designed to ensure that developing countries who sign these agreements
adopt more stringent IP laws that go much beyond the requirements of the
World Trade Organization’s Trade-Related Aspects of Intellectual Property
Rights agreement.*

*The Government of India and Thailand should ensure that negotiations that
affect public health must be conducted with adequate levels of transparency
and public scrutiny, and access to the negotiating texts must be increased.
They should also ensure that public interest does not get overshadowed by
commercial interest as failure to do so will cut have dire consequences for
access to medicines for millions.*

In recent years, the European Union (EU) has been aggressively pushing for
Intellectual Property (IP) provisions in bilateral trade agreements with
emerging economies such as India and Thailand.  These trade agreements are
designed to ensure that developing countries who sign these agreements
adopt more stringent IP laws that go much beyond the requirements of the
World Trade Organization’s Trade-Related Aspects of Intellectual Property
Rights agreement.

The intent behind this approach is clear: Proposed EU Trade agreements seek
to further consolidate and extend the monopolies of big pharmaceutical
companies by blocking the production, registration and supply of affordable
generic medicines.* *

The increased availability of affordable generic medicines played a key
role in scaling up treatment of HIV/AIDS around the world, allowing for nine
people to be on treatment today. Competition among generic producers
instrumental in bringing down the price of the first generation of ARVs,
and is one of the key reasons treatment could be scaled up to millions of
people. Today, first-line ART is available for as little as $100 per person
per year (ppy<http://d2pd3b5abq75bb.cloudfront.net/2012/07/16/14/42/23/52/UTW_14_ENG_July2011.pdf>),
which is a 99% decrease from 2000, when treatments still under patent were
priced at more than $10,000 ppy .

In particular production of low cost, quality generic drugs by Indian
manufacturers - in the absence of patent barriers - has made the country
the ‘pharmacy of the developing world’ with supply of affordable essential
medicines, vaccines and medical products reaching more than 100 countries.
Many large non-profit organisations that procure medicines for treatment
across the world, including UNICEF, UNFPA, PEPFAR, Global Fund, UNITAID and
IDA [1] , largely depend on generic medicines from India. For example, over
70 percent of all pharmaceuticals and 100 percent of paediatric and
second-line antiretroviral medicines (ARVs) bought by IDA are procured
from Indian
.*  *

But the situation today is different and the progress achieved is once
again under threat. With the WTO’s TRIPS agreement being implemented in key
manufacturing countries and several of the newest drugs for cancer, TB, HIV
and hepatitis are now patented in countries such as India and Thailand. The
sort of automatic generic competition that brought prices down so
dramatically for older generations of drugs will not be possible for these
newer drugs.

*For instance: Raltegravir, a patented HIV drug used in the needed
triple-drug cocktail by MSF in its Mumbai  (India) clinic to treat patients
who develop resistance to  first and then second regimens, costs about
1,330 euros per patient per year

At the same time, additional threats are now emerging in the form of
ongoing free trade agreement (FTA) negotiations that could choke off the
production and distribution of affordable generic medicines in developing
countries. The EU in particular, is currently negotiating trade agreements
with several developing countries including India, Thailand, ASEAN,
Malaysia and Ukraine. This article is an attempt to highlight the harmful
IP provisions being negotiated by EU bilaterally with India and Thailand.

*The EU India FTA *negotiations, now in their sixth year, continue to
include measures that could seriously restrict production of generic
medicines in India. Both European Union and India are keen to ink the deal
well before elections in EU and India in 2014. The draft texts of IP
chapter are not made available in public and the bilateral negotiations are
being carried out under complete secrecy. However, leaked draft text of
India-EU FTA available in public
domain<http://www.bilaterals.org/spip.php?article18960> reflects
presence of IP and investment provisions which would impact
access to medicines and greatly restrict India’s right to use TRIPS
flexibilities.* *

The negotiations on *Thailand and EU FTA* began in March this year with a
very short deadline for concluding the deal in less than two years.
Thailand is under extreme pressure to sign this FTA by end of 2014 as the
Generalized System of Preferences (GSP) for Thailand will be withdrawn by
EU January 2015 resulting in depletion of its exports to Europe. There is a
strong apprehension among civil society that the EU will use this pressure
to push Thailand to accept TRIPS Plus IP provisions that will further
undermine access to affordable generic medicines for people in Thailand.

*Proposed Intellectual Property Provisions in the EU draft text*

*Data exclusivity: extending monopoly status** *

Data exclusivity would prevent a drug regulatory authority from registering
a generic medicine for as long as exclusivity lasts over the clinical trial
data (usually five to ten years). In addition to bio-equivalence data that
is currently required, domestic producers will additionally have to submit
their own safety and efficacy data to register the generic medicines. This
will oblige them to repeat clinical trials—something that takes years and
involves costs that the generic companies usually cannot afford. But more
importantly, the repetition of clinical trials raises serious ethical

This could be applicable not just for a new drug but also for any new
formulation of an old medicine, even if it’s not patented. Big
multinationals can thereby enjoy market exclusivity on a large number of
medicines, charging exorbitant prices, even on drugs that do not deserve a
patent or where the patent has expired.* *

*A clear example of this comes from US, where the price of colchicine, a
drug that has been used to treat gout for thousands of years, rose more
than 5000 percent after data exclusivity was obtained by one company who
chose to take legal action to remove competitors from the market (Kesselheim,
A., Solomon, D., Incentives for Drug Development — Incentives for Drug
Development — The Curious Case of Colchicine, N Engl J Med 2010;

Public outrage at the impact EU proposal on data exclusivity would have on
the worldwide availability of affordable Indian generic medicines, has
contributed to the removal of this provision from the EU India FTA.

However, leaked documents from Thai negotiators seen by civil society
indicate that EU is going to demand five years of data exclusivity under
the trade agreement with

*Extending patent term durations*

A patent term extension - also known as a supplementary protection
certificate - would require a trading partner to extend a patent term
beyond 20 years if there is any delay in the granting of a patent or in
obtaining marketing approval for the medicine.  In case of the paediatric
formulations, patent protection could be extended for an additional three
to five years. The extra years added to the patent are years in which the
patent holder can maintain a monopoly position and continue to charge
artificially high prices for the drug, free from generic competition.

*A recent study in Thailand projected that if a 10 year patent extension
was granted as proposed under the Thai-US FTA, over the next 20 years, the
price index for medicines would increase by 32 percent; spending on
medicines would increase from baseline to approximately US$11.19 billion;
and the domestic generic pharmaceutical  industry would lose $3.37
.** *

While EU has withdrawn the text on patent term extension from the FTA
negotiations with India amid public pressure, it is expected to be part of
negotiation under Thai-EU FTA.

*IP Enforcement*

In the EU India FTA, there have been several rounds of negotiations on IP
and parties are currently finalizing provisions related to intellectual
property enforcement measures.

The provisions cover trade in generic medicines, as the border measures can
block legitimate medicines from leaving India on their way to people in
developing countries. The border measures tabled by the EU give companies
the right to lodge requests with Indian customs authorities to detain,
suspend the release, or destroy shipments of generic medicines on the basis
of allegations of IP infringement.* *

Further under this provision, multinational pharmaceutical companies based
on a mere allegation that their IP is being infringed upon, could claim and
instigate a number of actions. Third parties—such as treatment providers
like MSF— could become subject to legal action in Indian courts for simply
buying or distributing generic medicines. How the Indian courts handle
disputes over intellectual property rights will also be affected. The
judiciary will have its hands tied and will no longer be able to balance
intellectual property rights with people’s right to health.

The harsh enforcement provisions tabled by EU under India EU FTA are
similar to the ones given in Anti-Counterfeiting Trade Agreement (ACTA)
that was rejected by European parliament last year. EU is now trying to
bring in ACTA provisions through the backdoor through the FTA negotiations.

The same provisions are likely to be included in the IP chapter of the EU
Thailand FTA.

*Investment measures*

The draft investment chapter that the EU is now proposing in FTA
negotiations poses a direct threat to health-related regulation in India.
The investment provisions would expand multinational companies’ ability to
sue the Indian government when it regulates health in the public interest.
Investor-to-state dispute mechanisms hidden in the investment chapter can
be effectively used to sue governments outside of domestic courts, with
large sums of damages being claimed in investor-friendly arbitration forums
(such as the ICC, ICSID, UNCITRAL)[2] to generate rulings that favour the
claims of multinational companies over the government’s right and need to
regulate public health.* *

A pharmaceutical company could use this provision to sue the government if
it decide to override a medicine patent, control /regulate the prices of a
patented medicine or take any other action designed to boost access to more
affordable generic versions of a patented medicine.  Several disputes have
already been filed by corporations against developing country governments,
in order to force a reversal of governmental public health policies and
judicial decisions on patentability.

*In 2012, US pharmaceutical company Eli Lilly & Co. started proceedings
against the government of Canada through the NAFTA investor-to-state
dispute mechanism (Chapter
It claimed that the decisions of a Canadian court to invalidate its patent
on the medicine atomoxetine, violated Canada’s obligations under NAFTA and
the WTO. The company is seeking $100 million in compensation.*

The intellectual property rules agreed at the WTO also lay down what
countries can do when patented life-saving medicines are priced out of
reach for governments and therefore the vast majority of patients. This
process is called issuing a compulsory licence (CL), which allows
manufacturers other than the patent holder to produce generic versions of
the patented medicines in question. Thailand and more recently India have
issued such CLs.*  *

Pharmaceutical companies have previously demonstrated their willingness to
threaten governments for issuing CLs on the grounds of “expropriation of
IP.” *For instance, in 2007, when the Brazilian government issued a
compulsory license for an HIV drug efavirenz, the originator company Merck
issued a press release expressing “profound disappointment” and calling
this an “expropriation of intellectual property

Globally, more and more foreign investors are challenging domestic
government policy measures, including changes to domestic regulatory
frameworks. UNCTAD has revealed that 62 new cases were initiated in 2012,
confirming that foreign investors are increasingly resorting to
investor-state arbitration to solve

Investment provisions that continue to hold governments to ransom over
health and other public interest regulations, and in particular the
investor-to-state dispute mechanism have drawn sharp criticism and
increasing calls for a global rethink and reform. As a result, many
countries including South Africa, Brazil and Australia have announced their
intention to exclude investor-to-state dispute mechanisms from future
international trade deals.

EU is going to push both India and Thailand to accept such harmful
investment provisions in its bilateral trade negotiations.

*Free Trade Agreements: Is it really a win-win situation for all?*

Several studies have been done to assess the impact of TRIPS plus
provisions in free trade agreements on access to medicines.  All of them
point to the negative consequences of such provisions on availability and
affordability of essential medicines.

*For example, a study forecasting the impact of the EU-ANDEAN FTA on access
to medicines in Colombia showed medicine prices would increase by 46
percent and health spending would increase by up to US$1 billion annually.
As a result, five million Colombians would lose access to medicines and
12,000 people living with HIV would see their life expectancy drop between
5.3 and 9.9 years<http://www.haiweb.org/04102010/29_Mar_2010_Report_IFARMA_Impact_Study_Colombia_EN_.pdf>

Such trade deals only add another layer of protection to existing patent
rights, which already impede access to medicines for people. Public health
advocates have long emphasised the negative impacts that can emerge from
FTAs and how they can damage a country’s ability to produce, import,
register and procure affordable generic drugs.* *

Both India and Thailand have played a huge role in providing quality,
affordable, lifesaving medicines in their respective countries. Public
health safeguards in Indian patent laws and policies have made affordable
drugs available not just in the country but to the other developing
countries.  Negotiators in the EU-India FTA should ensure that all harmful
IP and investment provisions that impact India’s role as a key supplier of
affordable medicines, are removed before signing of this agreement in the
coming months.* *

Thailand ensured access by first setting up public sector manufacturing
facilities in the late 1990s to meet the needs of its public health program
and then issuing a series of compulsory licenses for the procurement of
affordable versions of lifesaving drugs used in the treatment of HIV and
cardiovascular diseases. Signing the trade deal with EU having TRIPS plus
measures will result in escalated cost of medicines and will put the
country’s public health e program at risk of collapse.* *

The EU claims that it respects international agreements which balance IP
protection and access to affordable medicines such as the Doha Declaration
on TRIPS and Public Health. However, European Commission (EC)- the
negotiating wing of the EU on international trade deals- seems to be going
in completely opposite direction. EC Trade Commissioner Karel de Gucht and
his team continually place pressure on developing countries like India and
Thailand to accept IP provisions more stringent than internationally-agreed
standards.*  *

Aggressive IP proposals will in the long run undermine the constitutional
right to life; dismantle public health safeguards enshrined in national
laws, and significantly reduce the local capacity to produce price-lowering
generic medicines. Yet FTAs attract little public attention, as they are
negotiated in secret, despite repeated requests from public interest groups
to open them to public debate and parliamentary scrutiny.

The Government of India and Thailand should ensure that such FTA
negotiations that affect public health must be conducted with adequate
levels of transparency and public scrutiny, and access to the negotiating
texts must be increased. They should also remain firm in their resistance
to such proposals in negotiating FTAs, and ensure that public interest does
not get overshadowed by commercial interest as failure to do so will cut
have dire consequences for access to medicines for millions.


Notes:* *

*[1]United Nations Children’s Fund (UNICEF), United Nations Population Fund
(UNFPA), the Presidents Emergency Plan for AIDS Relief (PEPFAR), and the
International Dispensary Association (IDA)- world's largest non-profit
supplier of high-quality, low-cost generic drugs and medical supplies.*

*[2] International Criminal Court (ICC), International Centre for
Settlement of International Disputes (ICSID), United Nation Commission on
International Trade Law (UNCITRAL)**

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