US's Proposed TPP Transition Period for Middle-Income Parties is Fools Gold

Nov. 27, 2013, By Brook Baker

Inside US Trade[1] and the USTR[2] have announced that the U.S. is floating new proposals on IP in its marathon Trans-Pacific Partnership Agreement negotiations. Although the U.S. touts its new proposals as being balanced, as prioritizing access to medicines, and as recognizing the interests of developing country negotiating partners, particularly, Peru, Vietnam, Mexico, and Malaysia, its actual proposals offer modest temporary respite at best from only a small fraction of U.S. demands.

The U.S. is essentially sticking by all of the demands revealed in the latest Wikileak disclosures, except with respect to its grudging acceptance of pre-grant oppositions (it had previously given up demands for mandatory patents on new forms of existing medicines). Required patents for new uses, required granting of patents on medicines even in the absence of improved therapeutic effects, data/regulatory monopolies on clinical trial data (data exclusivity), mandatory patents on virtually all medical, surgical, and diagnostic procedures, enhanced damages for patent infringement, mandatory injunctions, and stronger border measures will all be mandatory the minute the TPP is signed. Even more ominously, IP will remain in the investment chapter, meaning that drug companies will immediately be able to sue TPP members if the companies' expectations of IP-based profits are thwarted by fully lawful legislative, regulatory, or judicial decisions.

Even more ominously, as soon as countries cross a threshold of $12,616 GNI per capita - roughly fourth of the U.S. figure, they will be required to grant patent term extensions to compensate for regulatory delays, to allow ever-greening of data exclusivity without any explicit public health safeguards, and to require drug regulatory authorities to act as patent police through registration-patent linkage. Malaysia and Mexico are already nearing the upper-income thresholds with GNIs per capita of $9810 and $9740 respectively in 2012. Peru is half-way there with a per capita GNI of $5880. Only Vietnam will achieve any real temporal breathing room with a per capita GNI of $1400, barely lower middle-income. Accordingly, current middle-income country partners - as soon as they cross that World Bank threshold and become "upper-income" - will be bound by the highest level of patent and data monopolies ever proposed in trade negotiations.

In terms of actual "concessions", the U.S. has given very little except what was already on the books in the May 10, 2007 New Trade Policy that had been retrofitted into trade agreements with Peru and Columbia six years ago. Patent term extensions will not be mandatory nor will patent-registration linkage. Data/regulatory exclusivity will potentially have some clear public health safeguards. But each of these provision will loom on a fast-approaching horizon.

In exchange for these temporary concessions, the U.S. is proposing a ridiculously long period of biologic exclusivity - 12 years - far in excess of what other countries currently offer, if they offer biologic data exclusivity at all. Biologics are a growing element of total pharmaceutical expenditures and are particularly important with respect to certain chronic, non-communicable diseases such as diabetes and cancer that are of growing concern in low- and middle-income countries. The evidence justifying extended periods of biologic exclusivity is contested, even in the U.S., but the biotech industry has pushed its lobbying efforts at the USTR to historic levels to tie all TPP parties, even the U.S., to this unjustified period of monopoly control.

Don't be fooled. The U.S. is continuing to demand an IP straightjacket for all TPP members with respect to the IP terms that will become immediately effective to all parties. Moreover, the U.S. is fitting TPP middle-income countries for their future IP leg-irons. IP restraints will be a little looser in the short term, but highly constricting shortly thereafter. Monopolies on medicines will be longer, broader, and stronger. Generic competition and lower prices will be delayed. Patients will suffer and governments will face mounting costs for new medical technologies. The U.S.'s TPP transition period is fools gold.

[1] http://insidetrade.com.

[2] http://www.ustr.gov/about-us/press-office/blog/2013/November/stakeholder-input-sharpen-US-work-on-pharmaceutical-IP-in-TPP.

 


AIDS Activists Applaud Unanimous Passage for Five-Year Extension of Global AIDS Program and Bipartisan Letter Urging White House to Adopt New HIV Treatment Goals

CALL ON OBAMA TO DOUBLE TREATMENT SUPPORT: AIDS DRUGS FOR 12 MILLION BY 2016

by, Paul Davis, Director of Global Campaigns for Health GAP

AIDS campaigners from Health GAP cheered for unanimous passage in the U.S. Congress of a bill reauthorizing the popular President’s Emergency Plan for AIDS Relief (PEPFAR) for another five years. The bill improves PEPFAR’s reporting and accounting for patients on HIV/AIDS treatment, while building confidence worldwide that the U.S. commitment to an “AIDS Free Generation” announced by President Obama last December is here to stay. Advocates also cheered for a bipartisan, bicameral letter signed by 40 members of Congress that helped move the PEPFAR bill, and was delivered to the White House late last week. The letter urged President Obama to extend PEPFAR’s treatment target and commit to getting anti-AIDS drugs to at least 12 million people by 2016. The program’s current goal of six million will lapse by the end of this year.

“When so much seems to be broken in Washington, people with HIV around the world can take heart from the loud and clear message of support for AIDS treatment programs coming from Congress,” stated Paul Davis, Health GAP’s Director of Global Campaigns. “President Obama should heed the strong call issued jointly by progressives, independents and conservatives of every party to both renew PEPFAR and extend life-saving medication to at least 12 million people by 2016.”

Maureen Milanga, Health GAP’s lead staffer in Nairobi reported “Certainty that PEPFAR is continuing to support expanded treatment helps us leverage our own governments in hard-hit countries like Kenya to step up and contribute more. We are grateful to the U.S. Senators and Representatives for pushing PEPFAR III through, even though many activists thought it couldn’t be done. Now we need President Obama to finish the job and commit to getting 12 million people on AIDS treatment by World AIDS Day.”

Health GAP applauds in particular the hard work by the staff of the Chairs and Ranking Members of the Senate Foreign Relations and House Foreign Affairs Committees, as well as House and Senate Leadership. “Staffers for Senators Menendez and Corker, Representatives Royce and Engel and the Chair of the Congressional AIDS Caucus Congresswoman Lee led the way,” stated Student Global AIDS Campaign Coordinator Amirah Sequeira. “The strategic leadership of these Members of Congress over the last three months continuously turned obstacles into opportunities, and brings us to the verge of passing crucial legislation that, in the past, needed more than a year of struggle the last two times it came to Congress.”

The PEPFAR program has been without a coordinator, who stepped down earlier this month. Noting the looming Dec 1-3 dates for World AIDS Day and a U.S.-hosted donor conference to replenish the coffers of the Global Fund to fight AIDS, Tuberculosis and Malaria, Health GAP’s Senior Policy Analyst Matthew Kavanagh comments that “Congress has demonstrated stronger support for global AIDS programs than ever before. On this World AIDS Day, the Obama Administration should follow up last year’s landmark ‘Blueprint for an AIDS-Free Generation’ and the renewal of PEPFAR by appointing and empowering a new Global AIDS Coordinator to implement the bipartisan demand to get anti-HIV medications to 12 million people by 2016.”

Activists have also called on the Obama Administration to commit to at least continue the current level of funding for the Global Fund to fight AIDS, Tuberculosis and Malaria already approved by Congress this year for two additional years, totaling $5 billion by 2016.

See the NY Times Editorial Calling for a White House Treatment Target on World AIDS Day, 2013


Op-Ed: What Patent Reform In Brazil And South Africa Can Mean

by Health GAP Senior Policy Analyst, Brook Baker

In recent months, two countries with large economies and large populations both took steps to rework their patent laws, in part, to expand access to medicines. The moves come amid increasing concerns that treatments for certain ailments, such as AIDS and cancer, are out of reach for many people. Their actions also underscore growing tension with the pharmaceutical industry over pricing policies and an increasing willingness among some governments to rely on international trade agreements to consider compulsory licenses as a work-around solution. Brook Baker, a professor in the Program on Human Rights and the Global Economy at the Northeastern University School of Law, and a member of Health Gap, Global Access Project, suggests other countries may be emboldened to do the same.

It is no coincidence that the governments of Brazil and South Africa have concurrently launched patent law reform projects designed to increase affordable access to medicines of assured quality.  On October 9, the Brazilian Center for Strategic Studies and Debates formally launched its 363-page report “Brazil's Patent Reform: Innovation Towards National Competitiveness,” which included proposed legislation (read here). The report addresses patent law reform in Brazil taking into account the core standards of the WTO TRIPS Agreement, TRIPS flexibilities, public health imperatives, and industrial development.

And two months ago, the South African Department of Trade and Industries launched its long awaited Draft National Policy on Intellectual Property (here it is). Although the South African reform process is not as advanced as the Brazilian, the Draft Policy also proposes reforming South African patent law to take advantage of TRIPS flexibilities.

Brazil has historically played an important role in responding to the global AIDS pandemic and in shaping market dynamics affecting access to antiretroviral medicines. Brazil was the first developing country to offer universal free access to antiretroviral therapy for people living with HIV and AIDS in 1997. The country also used lawful flexibilities to manufacture pre-1995 antiretroviral domestically thereby reducing the costs of treatment by nearly 75 percent.

Relying on domestic production and sourcing key inputs from India helped to create economies-of-scale for active pharmaceutical ingredients, and those savings have in turn been utilized by Indian generic manufacturers, who have further reduced prices to a tiny fraction of their former cost. In addition, Brazil has used compulsory licenses and the threat of compulsory licenses to obtain lower prices on key ARVs and to accelerate technology transfer. In international forums, Brazil has consistently defended the rights of developing countries to adopt and safeguard TRIPS flexibilities.

Although South Africa lost a decade in its HIV response because of AIDS denialism, civil society was proactive in campaigning for cheaper AIDS medicines through intervention in drug company lawsuits, use of competition law, and promotion of voluntary licenses. More recently, the South Africa government has accelerated from ground zero in 2004 to providing public-sector treatment for over 2.2 million people living with HIV in 2012 and has achieved global best prices in its procurement of first-line antiretrovirals. Like Brazil, South Africa too has championed preservation of TRIPS flexibilities, particularly in African forums.

Now both countries have taken their global and regional stances further by proposing patent law reform that would make it much harder to gain and maintain IP monopolies on medicines.  For example, following on the leadership in this area set by India, Brazil is now undertaking to erect stricter standards of patents to eliminate evergreening (lengthening of patent monopolies) via secondary patents on new uses and new forms of existing medicines.

To help improve the quality of its patent examination, Brazil proposes to adopt pre-grant opposition procedures with broad standing for both competitors and others to provide relevant information; it is reconfirming its drug regulatory authority’s beneficial role in reviewing pharmaceutical patents. The proposed patent law reform in Brazil also precludes patent term extensions for regulatory delays and provides for easier-to-use government-use licenses. Finally, the Brazilian reform confirms that Brazil will not allow monopolies on regulatory data to block registration of therapeutically equivalent generic medicines. 

Similarly, the South African government has recently issued its own draft IP Policy that proposes many of the same reforms that are being pursued by Brazil. Like Brazil and India, South Africa proposes to restrict unwarranted patenting and re-patenting medicines by adopting higher standards with respect to patentable subject matter and inventive step. Even more importantly, South Africa is for the first time willing to consider operationalizing a patent examination system, at least on medicines, instead of relying on the blind-trust depository system it currently has that results in more patents on medicines than virtually any country in the world.

Like Brazil, South Africa will adopt opposition procedures to enhance the quality of its patent determinations and it is proposing to broaden its grounds for compulsory licenses and to ease procedures for their issuance. Under the permissive language of Article 39.3 of the TRIPS Agreement, South Africa is confirming its opposition to data/regulatory exclusivity that thwarts early registration/marketing approval for generic equivalents of previously registered medicines.

Going even further than Brazil in certain areas, South Africa proposes limiting IP-enforcement mechanisms to disallow border interference with lawful trade in generic medicines and to make proactive use of competition law to regulate IP-related voluntary licenses.  In the same vein, South Africa will undertake to make its existing parallel importation regime more useable. 

It is a positive signal to low- and middle-income countries more broadly that Brazil and South Africa join India and other countries like Uganda, Zambia, Botswana, and Malawi that are also taking proactive steps to incorporate lawful TRIPS compliant flexibilities, including stringent standards of patentability, pre- and post-grant opposition procedures, easier-to-use compulsory and government use licenses, and restrictions on data/regulatory monopolies among others. Hopefully the leadership of powerful middle-income countries on three continents will create a groundswell of IP reform in the Global South designed to enact and then use all available measures to ensure affordable access to medicines for all.

The pharmaceutical industry and its supporters in the offices of US and EU trade negotiator will not sit quietly while these reforms are undertaken. Both countries have already seen a counter-offensive mounted in the media and behind the scenes with government officials by pharmaceutical company lobbyists and spokespersons – academic or otherwise, who present the same tired litany of responses:  less IP in developing countries will ruin the monopoly profits needed to incentive research in the next generation of life-saving medicines; patents aren’t the problem, the problem is weak health systems; and the absence of IP is thwarting innovative activity by domestic inventors, creators, and artists.  Each of these responses has been discredited over and over again by unrebutted evidence, but that doesn’t prevent the pharmaceutical industry from seeking to preserve and expand its monopoly empires, especially in so-called pharmerging countries like India, South Africa, and Brazil.

Success in the proposed reforms is by no means certain. Threats of pharmaceutical Armageddon, trade losses, and domestic disinvestment will be made.  Domestic political and economic elites might be more satisfied with obtaining sweetheart deals and private concessions than with prioritizing the public health needs of the broader population. Fortunately, the reform efforts in Brazil and South Africa have not come out of a social vacuum.  Both countries have strong civil society and health activist campaigns that have fought for the requested reforms for many years.

The Treatment Action Campaign first addressed these needed reforms in the early 2000’s but then launched a much more concerted campaign along with Doctors Without Borders and Section 27 in 2011. Brazilian activists have similarly challenged their government to be more proactive and to adopt the mainstream reforms that have now been put forward.

The aspiration to achieve the right to health in Brazil and South Africa, and in low- and middle-income countries more broadly, cannot be achieved under the yoke of IP fundamentalism and the continuing threat of longer, stronger, and broader IP monopolies on medicine. Leading countries need to claw back their policy space – the policy space they fought for in the TRIPS and Doha Declaration negotiations. Instead of sticking their necks out sporadically and individually, it makes sense for them to collaborate in adopting and operationalizing TRIPS flexibilities.

Once they amend their laws, then they can approach the more daunting task of implementing the flexibilities so as to achieve robust generic competition in broad markets. This will undoubtedly require coordination in the review of patent applications and in the issuance of compulsory licenses on strategic medicines. At the end of the day, such strategic alignment could embolden BRICS and other countries to question to wisdom and morality of allowing IP monopolies on essential global public goods like medicines and encourage them to pursue broader investigation of proposals to design a better incentive and market system that promotes and rewards therapeutically important innovation and affordable access to the resulting medical technologies.

 


With One Exception Current Trade Agreements Do No Appear to Include Biologic Medicines in their Data Protection/Data Exclusivity Provisions – Implications for TPP Negotiation

The U.S., acting on behalf of the U.S. biologics industries, will soon be trying to convince parties to the TPP that they should adopt extended data exclusivity for biologics (at least 12 years) as part of the intellectual property chapter.  As part of its marketing strategy, the U.S. is trying to convince parties behind the scenes that biologic data exclusivity is already included in US FTA and indeed in some of the FTA's already binding certain TPP parties.  Contrary to this assertion, there is no precedent for data protection for biologics at all in existing US FTAs, let alone for for the extended data exclusivity that the US will be seeking.  TPP parties should reject the US data exclusivities as TRIPS-plus, both for chemical entity pharmaceuticals and biologics.

Download the latest paper by Health GAP Senior Policy Analyst, Brook Baker for more information 


South African Draft IP policy finally with Cabinet, but the public needs access too

by Brook Baker, Senior Policy Analyst

As reported in the story below [accessible here], South Africa is at long last taking positive steps to reform its overly generous patent law that grants an excessive number of patent on medicines, thereby adversely affecting both affordability and accessibility. This very positive development, largely resulting from a national campaign to Fix the Patent Law launched by the Treatment Action Campaign and Doctors without Borders in 2011, takes place twelve years after the historic Doha Declaration on the TRIPS Agreement and Public Health.

Although the news story reports that S. Africa will adopt a patent examination system and that examination will reduce the number of secondary/evergreening patents, it is hard to assess the depth of the proposed reforms in the absence of access to draft intellectual property policy that was promised months ago. In an earlier draft, the inputs of industry and pharmaceutical-affiliated lawyers were replete, but civil society and independent experts have had not true opportunities for access and input for nearly two years.

TAC and MSF put out a comprehensive release on patent reform on the eve of an IP event hosted by South Africa, WHO, WTO, and WIPO [http://www.fixthepatentlaws.org/?p=630]. The report laid out the essence of the reforms that access-to-treatment activist feel are needed to ensure realization of the right to health. The news report does not address many of their most pressing concerns including tightening up of patentability standards, allowance of opposition procedures, and simplification of compulsory licensing mechanisms among others. Activists would be fully justified demanding immediate release of the draft policy to the public so that informed input can ensure optimal outcomes.

Regrettably Prof. Dean is acting as an apologist for a system that is completely broken and that grants a higher percentage of pharmaceutical patents than even the US and Europe. As a result, S. Africans are burdened not just with patents granting 20-year monopolies on new, break-through medicines, but stacked, successive 20-year monopolies on virtually every kind of minor modification to an existing medicines - new uses/indications, new forms/dosages/formulations, etc. In the absence of a patent examination system in S. Africa, if you file out the applications properly and pay your fees, you can get a patent on peanut butter and jelly sandwiches, then peanut butter and grape jelly, then peanut butter and apricot jelly ad infinitum.

These excessive secondary patents are not cost free - they drive up the cost of medicines and extend the period of monopoly pricing by preventing generic competition. Higher prices, in turn, result in medical apartheid, where the vast majority of patients might be denied access to life-saving, but overpriced, medicines as both medical aides and the government deny coverage because of resource constraints.

South Africa's move to amend its patent laws is not occurring in a vacuum. Brazil will soon launch patent law reforms that are also designed to heightened patent standards and reduce the evergreening of pharmaceutical patents. Zambia and Uganda too are currently considering patent reforms in line with reforms enacted in India in 2005 that have succeeded in greatly reducing the number of secondary patents.

At the same time that countries are belatedly reforming their laws to maximize use of flexibilities allowed under the WTO TRIPS Agreement, which sets forth minimum patent and data protection standards but also allows for nationally-derived flexibilities and exceptions, the US and EU are aggressively pursuing trade policies that would expand intellectual property rights and their enforcement and narrow the use of permitted flexibilities. IP maximalist, often with the support of elements of government, are also supporting a glamour campaign for intellectual property, falsely selling it as the engine of an Africa renaissance.

Contrary to this claim, most credible economic studies show that IP in the continent, and in poorer countries more generally, does not lead to increased foreign direct investment, technology transfer, indigenous innovation, or development.

So a two front battle is being waged - one to enact and then use the limited flexibilities granted under international law for accessing more affordable medicines and another being waged against Big Pharma and Big Power interests that are trying to reshackle African with IP constraints. We must also begin to explore options like those being discussed at the WHO that recognize the failures in research and development and access that are a result of innovation policies wholly reliant on privatizing monopolies on essential public goods like medicines.


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