Leading members of the U.S. Congress today sent a letter to the Obama administration supporting the request by Least Developed Countries to continue their exemption from implementing TRIPS, which is set to expire at the end of next month, until they graduate from "least developed" status.
The letter was sent from the Ranking Members of the
- Energy and Commerce Committee
- Labor, Health, Human Services, and Education Appropriations Subcommittee and
- Africa, Global Health and Human Rights Subcommittee
- as well as the chair of the HIV/AIDS Caucus
Read more about the issue in our fact sheet.
by Prof. Brook K. Baker*, Policy Analyst Health GAP, Northeastern U. School of Law, Program on Human Rights and the Global Economy, Honorary Research Fellow, University of KwaZulu Natal
Invited Op Ed for Equilibri: A Simply New Perspective on Global Affairs
http://www.equilibri.net/nuovo/articolo/investors%E2%80%99-ip-rights-unbound-danger-investment-clauses-access-medicines (reprinted with permission of author)
April 20, 2013
Access-to-medicines activists have recently had much to celebrate. In India, the Supreme Court upheld India’s strict standards of patentability and rejected an “evergreening” patent on Glivec, an important cancer medicines that Novartis sells for $70,000 per year [i]. Earlier last year, the Indian Comptroller of Patents issued India’s first compulsory license on a Bayer cancer medicine, Nexavar, to Natco, thereby shaving the price by 97%. The Intellectual Property Appellate Board of India affirmed that decision which is now on appeal to the High Court [ii]. On the trade front, India health activists succeeded in convincing the Indian government to reject European demands in EU-India trade negotiations that would have imposed data monopolies and extended the length of patent monopolies [iii]. Fortunately, India is not acting alone; Indonesia also quietly issued compulsory licenses on seven hepatitis and HIV antiretroviral medicines last year [iv], and Argentina recently adopted proactive guidelines to restrain secondary patents on minor modifications to existing medicines[v]. Last summer, the over-reaching Anti-Counterfeiting Trade Agreement was rejected by the generally pro-IP European Parliament [vi] and Europe was forced to reconsider its draconian border measures that had resulted in the seizure of lawful in-transit medicines in the Netherlands and elsewhere [vii].Even the U.S. is reconsidering its willingness to patent isolated genes[viii] while Canada is accelerating its rejection of patents on medicines that fail to make required disclosures, e.g., Pfizer’s Viagra [ix].
We could wish that the tide was irreversibly turning against the excesses of patent and data monopolies on medicine that erect ever-higher and stronger exclusivity barriers that price poor people and poor countries from accessing life-saving public goods. But anyone who thinks that Big Pharma is sitting still and that their allies in European and US trade offices have found a new religion is dangerously wrong. We’ve know for a decade and a half that Big Pharma and its rich-country trade rep allies have been seeking to ratchet-up longer, stronger, and broader patent and data monopolies in a string of bilateral and plurilateral free trade agreements such as US-CAFTA and EU-Caricom [x]. Those efforts are intensifying in the TRIPS-plus demands that the US and EU are putting forth in current negotiations, e.g., the Trans-Pacific Partnership Agreement [xi] and the EU-India FTA. In these trade negotiations, the US and EU typically seek patent term extensions, eased standards of patentability, restrictions on patent opposition procedures and patent revocations, data exclusivity [xii], and greatly enhanced enforcement powers in terms of “deterrent” damages, mandatory injunctions, enhanced border enforcement, and expanded criminal enforcement [xiii]. This IP-maximalist agenda is pursued not only in secret free trade agreement negotiations, but through diplomatic pressure, threats of sanctions found in IP/trade assessments (like the U.S. Special 301 Watch List), biased technical assistance and training to IP examiners and judges, and a thorough-going disinformation campaign that casts intellectual property rights as irreducible and irreplaceable, as the only engine for innovation and creativity, and as the prime fount of foreign direct investment, technological advancement, and development more broadly [xiv].
Although access to medicines activists have been wise to focus our attention intently on convincing low- and middle-income countries to adopt and use all possible TRIPS-compliant flexibilities and to oppose the TRIPS-plus IP chapters in free trade agreements, we have neglected to interrogate another chapter in free trade agreements and bilateral investment treaties that perhaps pose an even greater threat to our collective access to medicines – investment chapters.
Under investment chapters, foreign IP investors, like Novartis and Bayer, are recognized as “investors” who have made “investments” involving expenditures and expectations of profit [xv]. Suddenly intellectual property rights, already hugely protected, are given another mantle of protection, namely protections as investments. In addition, investors are given rights to bring claims for private arbitration directly against governments whenever their expectations of IP-based profits are frustrated by government decisions and policies. Decisions of these private arbitral tribunals consisting of three international trade lawyers are not subject to judicial review, but are reducible into court judgments that can be levied against government property.
Using loose and imprecise standards addressing “minimum standards of treatment,” “indirect expropriation,” and “national treatment,” multinational pharmaceuticals might claim that denying patents, granting oppositions, revoking patents, issuing compulsory licenses, and registering generics while referencing clinical data or doing so before patent expiration all violate their legitimate expectations for profit. Although the “minimum standards of treatment” clause was originally designed to prevent grossly abusive and discriminatory courtroom adjudications totally outside the bounds of normative due process, it has morphed to decisions with a much more lenient standard that rewards investors even when they have been given a full panoply of due process safeguards. The expropriation standard, originally adopted to deter nationalization of businesses and seizures of real property has similarly morphed to prevent indirect expropriations, what we call regulatory takings in the U.S., where changes in government regulations – many designed to protect public health, environment, and other legitimate public interests – are challenged as having diluted the investor’s expectations of profit. Finally, the national treatment standard, though originally adopted to ensure that foreign investors are treated equivalently to domestic investors, is also morphing in new directions.
Threats like these with respect to pharmaceutical IPRs used to be theoretical, but the theoretical has now become real. In November of 2012, Eli Lilly sued the government of Canada for $100 million under NAFTA's investment chapter because Canada invalidated a Bayer patent on a medicine used to treatment attention deficit disorders [xvi]. Courts in Canada, including its Court of Appeals, reviewed the patent in depth as part of an invalidation case initiated by Teva. The patent was declared invalid pursuant to requirements in Canadian patent law that an applicant must satisfy its “promise of utility” (more commonly called industrial applicability) by disclosing evidence pointing to a claimed benefit as an inventive medicine. Eli Lilly objected because the promise doctrine had been developed judicially and that it had been clarified only after Bayer had filed its common patent application in the format authorized by the Patent Cooperation Treaty, of which Canada was a member.
Eli Lilly didn't like this ruling, so it is seeking to greatly expand the accepted meanings of minimum standards of treatment, indirect expropriation, and national treatment to argue that Canada should not be able to modify any of its patent standards or even to have a patent standard on utility and disclosure of utility that is any higher than that currently practiced in the US and EU. It argues further that it should not have to disclose information needed to satisfy patent requirements in Canada that is above and beyond what is required in patent applications filed pursuant to the Patent Cooperation Treaty, even thought the PCT clearly covers procedures for filing patent applications, not substantive requirements of patentability enforced as a sovereign rights by each country. It is important to note that Eli Lilly is pursuing a patent invalidation claim despite an express provision in the NAFTA investment chapter that purports to exclude NAFTA-compliant patent granting, revocation, and compulsory license decisions from investor dispute resolution [xvii].
If Eli Lilly can file this kind of expansive, topsy-turvy claim in Canada with respect to its decision to revoke a patent, what would prevent Novartis and Bayer from filing comparable claims against India because it too has adopted strong protections against evergreening in section 3(d) of its Patents Act and has allowed compulsory licensing in section 84? India has international investment agreements with 82 countries and has been subjected to 17 known investor-state claims [xviii]. Although no claims to date have been brought based on pharmaceutical IPRs, these are exactly the kinds of claims that a major international corporate law firm, Jones Day, is urging companies to file under existing investment clauses that India has ill-advisedly entered into [xix].
Novartis and Bayer, and the rest of Big Pharma, are relentless in their search for monopoly rights and monopoly profits. The right to sue governments directly when their unquenchable thirst for profits is thwarted is a dangerous escalation of corporate power. These kinds of investor cases are expensive to defend (average cost to governments over $8 million/case) and have cost taxpayers globally nearly $3 billion and counting. Five hundred and eighteen known investor-state cases have been filed, of which only 244 have been concluded [xx]. The pace of new cases is escalating (62 new cases filed in 2012 alone), as is the rate of investor wins (70% of investors claims decided on the merits in 2012 were favorable to claimants). When investors win, they can win a lot, like the $1.77 billion, plus compounded interest, costs, and attorney’s fees, awarded to Occidental in its claim against Ecuador. But even when they don’t win, investors can coerce settlements on favorable terms (approximately 27% of case are settled). Once the pharmaceutical floodgate is unlocked, the number of claims and taxpayer exposure will expand as well.
India and other trade negotiators should heed the entreaties of trade, IP, and health activists who are warning against the inclusion of an Investment Clause in the EU-India FTA [xxi], the Trans-Pacific Partnership Agreement, and in the many other trade agreements that are underway or soon-to-be initiated. Preferably, investment chapters will be rejected in their entirety, as they are becoming a corporate sword of Damocles that hangs over the head of rich and poor governments alike. At the very least, IP should be totally defined out of “investments” and no investor claims whatsoever should be available for alleged frustration of IP-based expectations. IP right holders already have multiple forms of enforcement including private lawsuits, border seizures, criminal prosecution, and state-state dispute resolution. Enough is enough. Expanded and unbound investment rights for Big Pharma under the cover of underscrutinized investment chapters is a grave threat – a threat with deadly consequences to millions of patients who rely on governments’ rights to regulate IPRs and to use any and all TRIPS-compliant flexibilities to ensure affordable access to medicines for all.
[i] Novartis cancer drug patent bid rejected by Indian court in landmark ruling, The Guardian (April 1, 2013).
[ii] Patent board rules in favour of Natco in cancer drug case; Bayer to challenge decision, CNN-IBN Live (March 5, 2013).
[iii] India-EU FTA won't hit generic drugs industry: EU envoy, Business Standard (April 13, 2013).
[iv] Indonesia to override patents for life-saving medicines, IRIN News (March 25, 2013).
[v] Argentina adopts new guidelines to examine patent applications for pharmaceuticals, Don’t trade our lives away (May 31, 2012).
[vi] European Parliament rejects ACTA piracy treaty, The Telegram (July 4, 2012).
[vii] India Ministry of Commerce and Industry, India EU Reach an Understanding on the Issue of Seizure of Indian Generic Medicines in Transit (July 28, 2011); see Brook K. Baker, Settlement of India/EU WTO Dispute re Seizures of In-Transit Medicines: Why the Proposed EU Border Regulation Isn't Good Enough, PIPIF Research Paper Series (2012).
[viii] Justices Consider Whether Patents on Genes are Valid, New York Times (April 14, 2013).
[ix] Canada’s Supreme Court strips Viagra Patent from Pfizer, Reuters (Nov. 8, 2012).
[x] Baker, B. and Avafia, T., (2011), The Evolution of IPRs from Humble Beginnings to the Modern Day TRIPS-plus Era: Implications for Treatment Access. Working Paper prepared for the Third Meeting of the Technical Advisory Group of the Global Commission on HIV and the Law, 7-9 July 2011.
[xi] Sean M. Flynn, Brook Baker, Margot Kaminski & Jimmy Koo, The U.S. Proposal for an Intellectual Property Chapter in the Trans-Pacific Partnership Agreement, 28 Am. U. Int’l L. Rev. 105, 149-184 (2012).
[xiii] Id. at 183-200.
[xiv] Brook K. Baker, Debunking IP for Development: Africa Needs IP Space, Not IP Shackles (draft 2013).
[xv] Trans-Pacific Partnership, Intellectual Property Rights Chapter September 2011 Draft (Selected Provisions), available at http://www.citizenstrade.org/ctc/wp-content/uploads/2011/10/TransPacificIP1.pdf. See Brook K. Baker, Corporate Power Unbound: Investor-State Arbitration of IP Monopolies – Eli Lilly and the TPP (draft 2013).
[xvi] The investor-state claim is Eli Lilly and Company v. The Government of Canada, Notice of Intent to Submit a Claim to Arbitration under NAFTA (Nov. 7, 2012), available athttp://italaw.com/sites/default/files/case-documents/italaw1172.pdf. See Public Citizen, U.S. Pharmaceutical Corporation Uses NAFTA Foreign Investor Privileges Regime to Attack Canada’s Patent Policy, Demand $100 Million for Invalidation of a Patent (2013).
[xvii] NAFTA, Article 1110(7).
[xviii] Biswajit Dhar, Reji Joseph & T.C. James, India’s Bilateral Investment Agreements: Time to Review, 52 Economic & Political Weekly 113-122 (2012).
[xix] Jones Day Commentary, “Treaty Protection for Global Patents: A Response to a Growing Problem for Multinational Pharmaceutical Companies,” 3 (October 2012).
[xx] UNCTAD, Recent Developments in Investor-State Dispute Resolution (2013).
[xxi] Does the EU/India free trade agreement spell the end of cheap drugs for poor countries?, The Guardian (February 10, 2013).
*Brook K. Baker is a law professor at Northeastern University School of Law (US) and an affiliate of its Program on Human Rights and the Global Economy. He is also an honorary research fellow at the University of KwaZulu Natal, Faculty of Law, South Africa. He is a policy analyst for Health GAP (Global Access Project) and writes frequently on IP, trade, and access to medicines issues.
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Testimony from Health GAP's Jennifer Flynn at Congressmember Ellison's Inclusive Prosperity Act Reintroduction
Good morning! My name is Jennifer Flynn and I am the Managing Director of Health GAP, an international AIDS advocacy organization dedicated to eliminating the barriers to lifesaving HIV treatment for all people around the world. Thank you for this opportunity to speak and thank you to Congressmember Ellison and to Congressmember Lee the Chair of the HIV/AIDS Caucus and a fierce AIDS activist.
What I love about Congressmember Ellison’s bill, besides the $350 billion that it will bring into the public sector to spend on the things we all need, is the name-the Inclusive Prosperity Act! This includes all of us!
For far too long, people living with AIDS have been stigmatized and shunned. People living with AIDS have faced drastic budget cuts at the federal, state and local levels stripping away much needed services.
Despite the budget cuts, there is hope. We now know, that we can end the AIDS pandemic, literally never have to worry about AIDS again, within the next 30 years if we simply increase, very slightly, the amount of money going towards getting people onto treatment and to maintain prevention and services.
With less than $2 billion a year from the Robin Hood Tax, within the next 25-30 years, we will actually have brought about an end to the AIDS pandemic for everyone, around the world.
How could we not pass this tiny tax on big banks. How could we not move this money from the silk lined pockets of Wall Street to our schools, to our hospitals. How could we not implement this tax on Wall Street COMPANIES so that we can have jobs and so that we can end AIDS.
No More Budget Cuts on OUR Backs. End AIDS with the Robin Hood Tax! #HR1579, #rht, @healthgap, @fightGlobalAIDS, @robinhoodtax
SGAC COORDINATOR AMIRAH SEQUEIRA, HEALTH GAP'S JENNIFER FLYNN,
CONGRESSMEMBER KEITH ELLISION AND ROBERT TOLBERT FROM VOCAL-NY
Washington, D.C. – Today, Congresswoman Barbara Lee (D-CA) issued the following statement at a press conference on the Financial Transaction Tax Bill:
“I want to thank Congressman Keith Ellison for his remarkable work on this important legislation and for his excellent leadership of the Progressive Caucus. Let me also thank all the incredible advocates here today and across the nation who have been organizing and working on this bill including National Nurses United. Thanks for beating the drum!
“It is long past time for Wall Street to pay a financial transaction tax like they did in the 1950’s and 60’s when both the economy and the middle class were growing. More recently though, Wall Street traders gambled the economic future of our entire economy and then they were bailed out by the American people.
“Their out-of-control tactics spread across the world and nearly collapsed the global economy. A small tax on financial transactions will help bring some much-needed fairness to a system that can easily absorb it.
“Not only do we need the revenue from this small tax to make critical investments in the economic future of all Americans, but specifically, revenue from this tax would also go a long way to increasing our health and development assistance, including securing AIDS medications for the millions of people who still wait in line for access.
“It's past time for Wall Street to pay their fair share.
“Again, thank you Mr. Ellison for your leadership on this critical issue and I hope that all my colleagues will join us in support of this critical legislation.”
WASHINGTON –Rep. Keith Ellison (D-MN), Co-Chair of the Congressional Progressive Caucus and Chief Deputy Whip, reintroduced the Inclusive Prosperity Act (H.R. 1579) today, which adds a tax of a fraction of a percent on transactions done by Wall Street firms and stock traders. Ellison was joined by leaders of National Nurses United, former Goldman Sachs investment banker Wallace Turbeville, Friends of the Earth President Erich Pica, and activists George Goehl and Jennifer Flynn.
“A lot of people in Washington like to talk about reducing the debt and deficits. Well if you really care about reducing the deficit, how about asking Wall Street speculators to pay their fair share?” Ellison said. “This bill will add a tax of a fraction of a percent on transactions made by the same Wall Street firms and stock traders who crashed our economy in 2008. This tax alone will generate up to $300 billion a year in revenue, stabilizing the deficit and allowing us to invest in the things that matter—education, roads and bridges, and health care for our seniors and veterans.”
The tax would reduce harmful financial market speculation, discourage high-volume, high-speed trading, and slow down the proliferation of ever more complex derivatives.
In 2011, 40 countries had a similar tax, as did the U.S. until 1966. A financial transaction tax has been recommended by business leaders and economists including Bill Gates, Warren Buffett, Paul Krugman, Joseph Stiglitz, Jeffrey Sachs, Robert Pollin, and Larry Summers. After the 1987 Wall Street crash, a financial transaction tax was endorsed by Bob Dole and President George H.W. Bush.
You can find photos from the press conference here.