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
EU Trade Agreements: Favouring Big Pharma over Public Health
Chalermsak Kittitrakul* and Shailly Gupta**
*Coordinator, AIDS ACCESS Foundation (Thailand)
**Policy Advocacy Officer, Médecins Sans Frontières Access Campaign (India)
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 million people to be on treatment today. Competition among generic producers was 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), 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 companies.
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 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 concerns.
This could be applicable not just for a new drug but also for any new formulation of an old medicine, even if itâs 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 â Incentives for Drug Development â The Curious Case of Colchicine, N Engl J Med 2010; 362:2045-2047).
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 Thailand.
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 billion.
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 11). 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 disputes .
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.
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 countryâs 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 Indiaâs 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 countryâs 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.
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Notes:
[1]United Nations Childrenâs 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)