from Asia Unbound and Global Health Program

TPP and its Implications for Global Access to Medicines

May 4, 2016

Blog Post
Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

Mi Lin is an intern for Global Health Governance at the Council on Foreign Relations.

On March 9-10 and March 16-17, two sections of the United Nations Secretary-General’s High-Level Panel on Access to Medicines (UNGSAM) were held in London and Johannesburg, respectively. These two conventions were launched in response to UN Secretary-General Ban Ki-moon’s call last November to “find solutions to the lack of access to medicines.” This was the first time such a high-level panel on access to medicines was made open to the public.  Though the two dialogues, one in a developed country and the other in a developing country, had different conversational dynamics, issues surrounding intellectual property (IP) rules in free trade agreements (FTAs) were frequently raised in both sections. Health advocates have long argued that stricter IP provisions in FTAs is a main barrier to access to essential medicines for populations in developing countries. As the recently signed Trans-Pacific Partnership (TPP) adds the latest development to this decades-long debate on trade and health, issues around TPP and its potential effects on global access to medicine also arose frequently at the panel.

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The IP chapter has long been a key part of international free trade agreements. The World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) requires a patent life for inventions of at least twenty years (art.33), which applies to both products (e.g., medicines) and processes (e.g., methods of production). TRIPS also specifically recognizes the protection of test data (art.39.3), which is deemed essential to discovering new drugs and proving them safe and applicable. However, such data protection will delay the marketing of generics, which are much cheaper than their patented counterparts. In order to protect public health, developing countries are allowed to have certain exemptions to the free trade agreement’s IP provisions. Still, many countries have found it difficult to exercise TRIPS flexibilities, as the language in TRIPS is vague and general.

To the extent that the TRIPS agreement emphasizes the protection of undisclosed test data, the final TPP text also subjects participating countries to protection of disclosed data if it is used for new compounds or for new clinical information (e.g., a new use of a known medicine or its use in a new population, such as children). Marketing exclusivity—banning generic drug-makers from entering the market to compete with pharmaceutical companies who own patents—for new uses of old medicines could be considered a form of evergreening, defined as the strategies used by producers to extend their patents over products that are about to expire. The TPP requires countries to choose one of two possible evergreening models to incorporate into their laws—either extend marketing exclusivity at least three years for new clinical information, or extend it for at least five years for known pharmaceutical products combined with new chemical entities that have not been approved previously. In many cases, such new combinations render little clinical effects but serve to help pharmaceutical companies get patents so that they can sell their products at higher prices.

Off-label drug use, or new uses of known medicines to treat another disease, offers an alternative to the access to medicines problem, because it allows doctors to prescribe equally or relatively effective, but cheaper off-label drugs to low-income patients.  However, according to the final TPP text, countries will have to make off-label drug uses illegal within the extra three years of patent period. This law, in practice, will only affect developing countries whose internal patent laws are looser than TPP’s requirements. If the agreement is implemented, low-income patients in developing countries will either have to pay more for the same drugs they had been getting previously, or will no longer be able to afford them during those three patent period years.

That said, the concern that TRIPS-plus FTAs might drive up essential drug prices is a prediction based more on logic than on evidence. As CFR’s Tom Bollyky recently pointed out, new data drawing from fifteen of the seventeen countries that have bilateral TRIPS-plus FTAs with the United States shows that drug prices have not increased significantly due to the implementation of these trade deals. One reason for this unexpected finding, he explains, is that countries implement trade agreements in their own manner to protect public health, differing from outside analysts’ interpretations. Indeed, back in the negotiations of TPP, many developing countries raised “exceptions” or “leeway” to full compliance with TPP’s IP policies according to their national conditions. For example, five TPP countries currently have no patent protection for biologics at all. Vietnam and Peru are granted a ten-year grace period and Mexico is granted a five-year period to change legislation in compliance with TPP provisions; Malaysia and Brunei are granted the “access window” system. “The ‘access window’ system,” explains Mr. J Jayasiri, Malaysia’s chief TPP negotiator, “means that our patients will have earlier access to new innovative drugs. Otherwise the innovator can wait until almost the last day of his patent and then come and file for data protection and he can get a much longer period of protection.”

While some developing governments did try to exercise TRIPS flexibilities to protect public health, as exemplified by some TPP countries, a group of Asian voices at the Johannesburg Dialogue raised practical difficulties to putting flexibilities into effect. They also pointed out the inefficiency of current mechanisms such as voluntary licensing—big patent-holding pharmaceutical companies voluntarily give away their market exclusivity privileges and allow generic drug-makers to compete with them—in controlling drug prices. A Thai speaker noted that flexibilities were traditionally underutilized—between 1995 and 2003, only thirteen compulsory licenses were issued in middle-income countries due to lack of mechanisms and fear of retaliation. Another speaker said that Thailand’s issuance of compulsory licenses in 2006 and 2007 for HIV/AIDS, heart disease, and cancer medications led to resistance and pressure from large pharmaceutical companies and Western governments, and as a result, Thailand was placed on the United States special 301 report, an annual report by the Office of the United States Trade Representative (USTR) identifying countries that do not provide "adequate and effective" protection of intellectual property rights. In light of these realities, they called for a more holistic impact analysis in assessing the legitimacy of IP chapters in FTAs.

More on:

Trade

Health

Economics

Treaties and Agreements

Development

As far as trade policy is concerned, there are four leading principles: health, human rights, trade, and IP. IP is important, but the pursuit of IP should not sacrifice health and human rights. As noted by health economists William Hsiao and Peter S. Heller, market failures in the health sector could frequently occur and pose tremendous hazard if due caution is not held. In the pharmaceutical and medical-device markets, though patent protections have been established for sound social and economic reasons, they have nonetheless impaired the competitiveness and efficient operation of markets. As the UN has transitioned the Millennium Development Goals to the Sustainable Development Goals, the future of global governance is heading towards a more equitable world. In the current development framework, it is unrealistic to expect developed and developing countries to be on an equal footing when it comes to enforcing IP. Standing with the weak might harm some rights of the strong. However, if we are going to achieve the SDGs, it is always wise to be wary more of the claims of the strong.

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