The TPP case just represents the tip of the iceberg for the underhanded tactics to ensure that countries accept IP clauses that go beyond the full extension they have a right to under the WTO’s TRIPS. This context entails that TPP involved governments should, as per MSF words, “….carefully consider before they sign on the dotted line whether this is the direction they want to take on access to affordable medicines and the promotion of biomedical innovation...”
by Daniele Dionisio*
TPP: Up with Corporate Profits Outweighing Equity in Health!
On 5 October 2015, ministers from Pacific countries clinched hard-fought, five-year Trans-Pacific Partnership, or TPP, trade agreement negotiations as the largest pact of its kind outside the World Trade Organization (WTO). The 12 countries involved – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (US), and Vietnam – are home, indeed, to almost 800 million people and represent nearly 40 percent of the global economy.
The talks were promoted by the US to enhancing free trade in the Pacific realm by addressing global trade issues (including piracy and counterfeiting) and raising standards by taking into account the implications for the multilateral trade system and the different economic levels and needs of participating countries.
Disappointingly, the negotiations were shrouded in unprecedented lack of transparency and unbalanced secrecy level, whereby, as reported [here] and [here], the public was frozen out, US Congress members were severely limited in their access to treaty-related documents at a time when pharmaceutical and content industries sat on the IP advisory committee as corporate representatives, while smaller innovators and generics companies did not.
As such, it is unexpected news that, under recent decision by the federal district court in Manhattan, the Office of the United States Trade Representative (USTR) has been ordered to provide justification for withholding from a Freedom of Information Act request the communications with its industry advisors as confidential commercial or financial information in the lead-up to TPP agreement completion.
On 5 November 2015, the full text of the agreement was released by TPP Parties. Now it will have to be public for several weeks or months before being considered by the domestic parliaments of participating economies for ratification, implementation and, finally, entry into force.
Yet, the road ahead remains an arduous one given allegations that the agreement serves the interest of the wealthiest, caters to the needs of big industry rather than the citizens of member nations, and protects monopolistic interests now that, on a world scale, corporate profits outweigh any commitment to the global human rights and equitable access to health [here] [here] and [here].
As argued, … The Obama Administration’s most important objective in this [TPP] negotiation was to raise the prices for drugs, vaccines and medical devices, worldwide, and they have no doubt achieved that objective, albeit not to the degree that meets every single one of the pharmaceuticals and medical device company asks….
A case in point, the minimum period for exclusivity data protection on biologic drugs was an harsh contention area in the final TPP negotiation days owing to the profit interests of a number of corporations (e.g., Pfizer Inc, Roche Group’s Genentech and Japan’s Takeda Pharmaceutical Co, among others) relevant to state-of-the-art vaccines, anti-toxins, blood or blood products for transfusion, gene therapies, and cellular therapies.
As contended …..the real truth to the matter is that biologics are in the TPP because they represent big money for pharmaceutical companies as new chemically synthesized drugs offer less of a chance for “blockbuster” drugs than biologics. The global biopharmaceuticals market was valued at US$161,851.6 billion in 2014 and is expected to expand at rate of 9.4 per cent to reach US$278,232.9 billion by 2020. Other studies believe the global market biologics will reach $386.7-billion by the end of 2019. Further, biologics are expected to account for approximately 17 per cent of total global spending on medicines by 2016 and reach an overall market value of $200 billion to $210 billion in 2016, up from $157 billion in 2011. Biologics provided roughly 22 per cent of the Big Pharma companies’ sales in 2013, will likely rise to 32 per cent by 2023. While promising in their potential to treat diseases ranging from cancer to rheumatoid arthritis, such drugs are significantly costly, with the Brookings Institution finding that these can cost up to 22 times the price of chemical drugs.
Unfortunately, though developing “biosimilars” (as “follow-ons” to an original biologic) would dramatically knock prices down, the US 12- year exclusivity data protection law currently makes that biosimilars cannot be approved during the period if they rely on the data used for the original biologic.
Relevantly, though the standing power of their counterparts has forced the US negotiators to fall short of demand and accept TPP rules that allow for a minimum five-year standard to eight years of data protection, regrettably, as stated,.… this is still the longest term of data protection ever enshrined by treaty, and will unquestionably hurt developing countries.
No surprise, the Big Pharma lobby and its Congressional supporters were unhappy with the TPP terms above. Does unhappiness explain why the US has opposed a LDC Group’s request for an indefinite exemption from trade rules on pharmaceuticals?
The TPP deal has been dubbed as being transformational not just for the Asia-Pacific region, but also for the global economy at a time when, with new membership requests seemingly in the offing, the TPP terms are feared to influence still underway trade deals such as, among others, the EU-US Transatlantic Trade and Investment Partnership (or TTIP), and the EU-Japan, EU-India FTA negotiations.
As for India case, the concerns definitely outweigh optimism now that an ongoing breakthrough of multinational drug corporations in the country couples with protectionist US and EU policies, with India’s obligations as a WTO member, and with pressures on India’s government towards adopting IPRs beyond the Trade-Related Aspects of Intellectual Property Rights Agreement (or TRIPS) and strengthened enforcement mechanisms as the keys to foreign investments and innovation.
Overall, these circumstances put India’s freedom in jeopardy as an independent provider of affordable medicines for domestic and resource-limited countries’ needs
Relevantly, the chapter 18 (Intellectual Property) in the agreement confirms that, in spite of some lip service, the US has been pursuing a TRIPS-plus, corporations friendly policy over TPP negotiators even though, just in the aftermath of the clinched pact, the USTR office stated that the IP chapter “reaffirms Parties’ commitment to the WTO’s 2001 Declaration on the TRIPS Agreement and Public Health, and in particular confirms that Parties are not prevented from taking measures to protect public health, including in the case of epidemics such as HIV/AIDS” .
Admittedly, the chapter largely grounds on TRIPS-plus measures including patents for new uses (the so-called ever-greening), granting of patents on medicines even in the absence of improved therapeutic effects, data/regulatory monopolies on clinical trial data (data exclusivity), patent term extensions (supposedly to compensate patent holders for delays in getting regulatory approval), as well as enhanced mandatory injunctions for patent infringement and strong border measures.
As such, IP protection enforcement provisions, which make up a broad section of IP chapter, not only re-present but even exacerbate the provisions from the shelved ACTA treaty.
As would be the case for counterfeit trademark goods that are meant to be, for IP chapter purposes, .. any goods, including packaging, bearing without authorization a trademark that is identical to the trademark validly registered in respect of such goods, or that cannot be distinguished in its essential aspects from such a trademark;….
As regards the sectors to packaging and labelling of medicines, the impending threat of the definition above binds up with its potential to affect the patent holders’ access to the market at a time when the legislation against counterfeit and substandard medicines too often does not address quality issues, but instead is aimed at protecting the commercial interests of brand-name manufacturers.
Under these circumstances, it would make it easier for a claim to be lodged by the right holder against an infringer or alleged infringer for nullifying or eroding benefits by applying packaging and labelling models that, despite fair trading and full alignment with TRIPS requirements, are deemed to be insufficiently distinguishable or fraudulent.
The IP chapter enforcement provisions also contend that…. each Party shall provide that, in civil judicial proceedings concerning the enforcement of an intellectual property right, its judicial authorities have the authority, on a justified request of the right holder, to order the infringer or, in the alternative, the alleged infringer, to provide to the right holder or to the judicial authorities, at least for the purpose of collecting evidence, relevant information…. regarding any person involved in any aspect of the infringement or alleged infringement and the means of production or the channels of distribution of the infringing or allegedly infringing goods or services, including the identification of third persons alleged to be involved in the production and distribution of the goods or services and of their channels of distribution.
As such, TPP targets third parties by exposing them to the risk of punitive action also in trademark and patent infringement allegations. As regards non-discriminatory access to medicines, this could play as an unfair deterrent to anyone engaged in the production, sale and distribution of affordable, high quality generic medicines including treatment providers like MSF, suppliers of active pharmaceutical ingredients used for rolling out generic medicines, as well as distributors and retailers who stock generic medicines.
Moreover, as regards border measures and criminal procedures and penalties relevant to products under infringement allegations, IP chapter terms appear unreliably vague or extortionate when stating that:
-Each Party shall provide that its competent authorities may initiate border measures ex officio [i.e., without the need of a formal complaint from a third party or right holder] with respect to goods under customs control that are: (a) imported; (b) destined for export; or (c) in-transit and that are suspected of being counterfeit trademark goods…
– Each Party shall adopt or maintain a procedure by which its competent authorities may determine within a reasonable period of time after the initiation of the procedures…whether the suspect goods infringe an intellectual property right.
– If a Party requires identification of items subject to seizure….., that Party shall not require the items to be described in greater detail than necessary to identify them for the purpose of seizure….
Furthermore, the Damocles’ sword of an investor state system enforcement as regards access to medicines cannot be underestimated since USTR office terms clearly state that “the dispute settlement mechanism created in chapter 28 [of the agreement] applies across the TPP, with few specific exceptions”.
Consequently, being not explicitly excused from, the chapter 18 (Intellectual Property) is undoubtedly subject, as just argued, to the dispute settlement mechanism whereby private companies located in the territory of any TPP disputing Party are allowed to sue governments directly for policies the governments take.
In this regard, many forms of government regulations, including price cuts of medicines, could be argued not to conflict with the TRIPS agreement, yet to make pointless or erode the expectations of the patent owners. Relevant risk sectors also include tariffs on medicines, as would be the case should a country that has agreed to reduce tariffs on an imported product later subsidize home manufacturing of the same medicine. A complaint against this country under an investor state system would be allowed to re-establish the conditions of competition in the original transaction.
These prospects appear ominously alarming and compound fear that the afterglow from the TPP’s completion could lead other trade initiatives on a world scale to adopt “investor-state mechanism” friendly terms.
Last but not least, while TPP focuses on expanding IPRs and defends market-driven rather than needs-driven rules, it, as reported, …also fails to give attention to innovative approaches to stimulating R&D for new drugs, vaccines and medical devices that delink R&D costs from product prices. Such new approaches would ensure the development of needed new treatments at affordable prices.
Taken together, all insights here suggest that the TPP case just represents the tip of the iceberg for the underhanded tactics to ensure that countries accept IP clauses that go beyond the full extension they have a right to under the WTO’s TRIPS.
On these grounds, what expectations now that US pressure will certainly force through its position to allow the TPP to be ratified by the national parliaments, hence undermining access to care and lifesaving medicines for millions of people in resource-constrained settings?
This context entails that TPP involved governments should, as per MSF words, “….carefully consider before they sign on the dotted line whether this is the direction they want to take on access to affordable medicines and the promotion of biomedical innovation. The negative impact of the TPP on public health will be enormous, be felt for years to come and it will not be limited to the current 12 TPP countries, as it is a dangerous blueprint for future agreements.”
*Daniele Dionisio is a member of the European Parliament Working Group on Innovation, Access to Medicines and Poverty-Related Diseases. He is an advisor for “Medicines for the Developing Countries” for the Italian Society for Infectious and Tropical Diseases (SIMIT), and former director of the Infectious Disease Division at the Pistoia City Hospital (Italy). Dionisio is Head of the research project PEAH – Policies for Equitable Access to Health. He may be reached at firstname.lastname@example.org http://www.peah.it/ https://twitter.com/DanieleDionisio