Health GAP comments submitted to the office of the USTR
www.globaltreatmentaccess.org | www.healthgap.org

Gloria Blue
Executive Secretary, TPSC
Office of the USTR
600 17th Street, NW
Washington, DC 20508

Re: Public Health and Access to Medicines and the Second Draft Text of the Free Trade Area of the Americas Agreement

Dear Ms Blue,

These comments are submitted on behalf of Health GAP (Global Access Project) in response to the U.S. Trade RepresentativeÕs request for public comments on the second draft consolidated texts of the Free Trade Area of the Americas (FTAA) Agreement, published in the Federal Register December 27, 2002.

Health GAP is an activist organization working for access to affordable HIV medicines in developing countries, where 95% of the worldÕs 40 million people with HIV live. We remain gravely concerned by provisions contained in the second draft texts, which we believe will seriously undermine efforts to increase access to affordable essential medicines in Latin America and the Caribbean if enacted.

1.8 million people are living with HIV disease in Latin America and the Caribbean; HIV is the second largest cause of death. The CaribbeanÕs rate of HIV prevalence is second only to sub-Saharan AfricaÕs. South AmericanÕs HIV epidemic, unfortunately, is only one of many examples of public health threats that are potentially treatable, but only if broader access to affordable generic versions of medicines that are patent protected becomes a reality.

In the case of HIV/AIDS, generic competition has had a consistent, downward pressure on the price of antiretroviral medicines, in some cases lowering prices of combination antiretroviral therapy from $15,000 per year per patient to $300-$150 per year per patient. This price reduction has meant that access to HIV therapy is finally becoming feasible in developing countries. Instead of supporting and furthering generic competition, the second draft FTAA texts makes clear that the U.S. intends to increase developing countriesÕ obligations to protect and enforce intellectual property rights.

We note with concern that all of the provisions regarding intellectual property protection which we believe will undermine access to life-saving, essential medicines have been carried over from the first to the second draft negotiating text.

* Access to affordable essential medicines and promotion of public health: imperatives that must direct FTAA negotiations

Access to affordable, essential medicines is an imperative that must guide the negotiation of trade agreements, especially agreements negotiated with developing countries such as the FTAA. The interests of developed countries, especially the United States, as well as the proprietary pharmaceutical industry, in creating stringent patent monopolies on essential medicines in developing countries has too often resulted in trade agreements that prioritize protection of intellectual property rights, no matter the public health costs.

The second draft negotiating texts continue to indicate that, without significant revisions, the FTAA could result in provisions that will build significantly on the obligations of expanding intellectual property rights of proprietary pharmaceutical companies. This will further undermine public health and jeopardize the progress made since the WTO Ministerial Meeting in Doha, where the Ministerial Declaration on the TRIPS Agreement and Public Health affirmed that WTO rules should not jeopardize countriesÕ abilities to protect the public health and promote access to medicines for all.

The U.S. and all other WTO Members expressly stated in paragraph 4 of that Declaration that"We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health and, in particular, to promote access to medicines for all." Unfortunately the clear, pro-public health interpretation of WTO intellectual property rules secured at Doha risks being superseded in FTAA-countries by the proposed draft provisions in the second draft text that would require Western Hemisphere Member States to exceed previously agreed-upon WTO standards.

By running roughshod over the legitimate and urgent public health interests of poor people with HIV and other serious treatable illnesses, an FTAA negotiated under the terms of the current draft text would have the direct impact of restricting access to affordable medicines for developing countries in Latin America and the Caribbean.

Moreover, because countries in South America have the capacity to produce generic medicines for export, an FTAA negotiated without prioritizing access to medicines would also impinge on the ability of developing and least developed countries outside of the FTAA to respond to HIV/AIDS and other unaddressed public health needs by importing high quality generic medicines produced for export.

Specifically, countries in hard-hit regions such as sub-Saharan Africa are poised to benefit from importing affordable life-extending medicines produced in South America. The FTAA will threaten these effortsÑunless negotiated with a prioritization of protecting public health.

Unfortunately the U.S. is seeking an FTAA that increases countriesÕ obligations to uphold intellectual property rightsÑabove and beyond the significant requirements set out by the WTO. However, both the WTO and the World Health Organization have jointly urged Member States not to seek to impose greater intellectual property requirements on countries with significant public health needs Ð in essence to treat the intellectual property rights and flexibilities granted in TRIPS as the international gold standard. Instead of keeping its promise made at Doha to allow other countries to abide by the new public health and intellectual property standard, the U.S. is breaking its word that it would respect Member StatesÕ sovereign rights to protect public health.

Current U.S. obstruction of a workable solution at the WTO on the issue of access to generic medicines for countries with pharmaceutical markets too small to permit efficient domestic manufacturing (set out in paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health) indicates that the U.S. is not committed to upholding its commitment at Doha, and the second draft FTAA text confirms that the U.S. intends to support an agenda which would prioritize the interest of U.S. pharmaceutical manufacturers over the public health needs of the 32 developing countries negotiating the FTAA.

* The FTAA must not expand countriesÕ obligations under TRIPS

The countries negotiating the FTAA are already members of the WTO; as such they are already bound to uphold the stringent intellectual property protection rules mandated by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Intellectual property holdersÑincluding the proprietary pharmaceutical industryÑas well as developing and developed countries agree that TRIPS is a strong agreement that favors the interests of intellectual property holders.

The"TRIPS-plus" draft provisions of the FTAA, which would use TRIPS as a floor upon which to increase countriesÕ intellectual property protection, rather than a ceiling, are a threat to efforts to increase access to medicines in developing countries.

In addition to other forms of intellectual property protection, TRIPS requires all WTO Members to implement and enforce 20-year patent protection on inventions including essential medicines. This obligation, however, includes provisions designed to remedy unintended consequences of patent monopolies. An important public health provision is compulsory licensingÑlicensing the manufacture of an invention such as a medicine without the permission of the patent holder. Compulsory licensing eliminates patent monopolies and as a result reduces prices. TRIPS rules already permit a country to issue a compulsory license to a generic drug company for the production of an on-patent medicine within their borders. TRIPS sets out several specific requirements and obligations that must be respected when a WTO Member issues a compulsory license, including, for example, provisions for compensation of the patent holder where appropriate.

* Limits to Compulsory Licensing

The WTO Ministerial Declaration on the TRIPS Agreement and Public Health states "Each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted." However, bracketed provisions of the second draft FTAA negotiating text would circumscribe this right in a manner that could have a dire impact on public health and medicines accessÑin FTAA countries and beyond. As in the first draft text, bracketed provisions in the intellectual property chapter (Article 5.1 (a) and (b) on page 9.31) would limit compulsory licensing only to three cases: to allow government non-commercial use, to redress anticompetitive activities, and to respond to national emergencies. Instead of abiding by TRIPS, which permits countries to make their own determinations regarding the circumstances that would trigger the suspension of a patent monopoly, the FTAA is being negotiated so as to restrict the right of countries to use compulsory licensing except in extremely limited cases.

TRIPS should constitute a ceiling, not a floor for trade agreementsÕ provisions regarding intellectual property rights. Countries should be encouraged and supported in employing compulsory licensing whenever such licenses will promote access to life extending medicine; they should not be subjected to preclusive restrictions and burdensome criteria on their use.

We are troubled to see that a bracketed provision which would prohibit compulsory licensing for export (Article 5.1(c) on page 9.31) has been held over from the first to the second draft text. The countries with the most acute need for affordable medicines are typically countries with the least capacity for pharmaceutical production at efficient economies-of-scale. Clarifying TRIPS to permit exporting drugs manufactured under compulsory license to countries with little to no capacity for local production is a problem the WTO is currently debating, and widely documented U.S. obstructionism has resulted in an impasse regarding this issue. An effort by U.S. FTAA negotiators to sabotage pro-public health interpretations of TRIPS that would otherwise permit the most rational, pro-public health solution to countries obtaining exported, low-cost medicines is morally and legally unacceptable. In addition, the second draft text would block a countryÕs recourse to compulsory licensing until four years after a patent was granted (Article 5.3 on page 9.31), an unnecessary obstruction which could realistically result in many needless deaths for people living in an FTAA Member country where compulsory licensing was necessary to obtain a lower price for a needed patent protected medicine.

* Extension of the Patent Term

Bracketed draft FTAA text would still set standards for extending a countryÕs patent term beyond twenty years (To offset regulatory delays (Article 8.2, page 9.33), and to match extended terms in other countries (Article 1.5 on page 9.41)). There is no justification for extending already lengthy monopolies on medicines and other essential health products. Instead this extension would increase an already dangerous imbalance between patients and intellectual property rights holders, intensifying benefits to drug manufacturers with no foreseeable benefit to developing countriesÑonly increased harm. Twenty years of patent protection is sufficient; the U.S. support for this extensionÑin the FTAA as well as bilateral trade agreements currently under negotiationsÑis unjustifiable.

* Linking Marketing Approval to Patent Status

Draft bracketed text would also link a drugÕs marketing approval to its patent status (Article 1.5 on page 9.41). This TRIPS-plus provision within the United States has consistently resulted in price gouging of consumers; drug companies routinely exploit this link to obstruct the rapid entry of quality generics to the market once a patent expires.

Exporting the United StatesÕ link between drug marketing approval and patent status is bad for public health. The enforcement provisions of TRIPS are sufficient to protect a patent holder from infringement; linking marketing approval with the patent status of a drug only invites illegitimate patent claims.

* Data Exclusivity Requirements

Another TRIPS-plus provision still contained in the draft FTAA text would require five years of protection for data submitted by a company used to show a drugÕs safety and efficacy (Articles 1.2 and 1.4 on page 9.41). TRIPS, on the other hand, does not set out an explicit time limit for countries to protect pharmaceutical test data nor does it preclude use of test data to register medicines produced for government use or under a compulsory license.

The draft FTAAÕs requirement of five years of data exclusivity would potentially prevent the introduction of generic medicines manufactured under compulsory licensing, as companies producing medicines under compulsory license require access to test data in order to establish bio-equivalence and to obtain marketing approval.

Countries should be afforded the ability to protect pharmaceutical test data as they see fit, interpreting the TRIPS requirement of "reasonable" protection, rather than expand on their TRIPS obligations by establishing an automatic five-year requirement.

* Public health must come first in the FTAA

The second draft FTAA text reveals that critical considerations regarding public health and access to medicines are being disregarded in negotiation of this sweeping regional trade agreement. Provisions of the second draft text are certain to undermine progress achieved by the WTO at Doha while potentially eliminating other poor countriesÕ access to generic medicines produced in FTAA countries both for their own use and for export to other countries. While the U.S. apparently intends to use the FTAA to bypass its promises at Doha and to expand developing countriesÕ obligations to protect intellectual property rights, we feel there is no justifiable reason that intellectual property provisions in the FTAA should exceed countriesÕ pre-existing TRIPS obligations and the flexibilities clarified at Doha.

The imperative of access to medicines and the promotion of public health must figure foremost in negotiations of the FTAA; civil society will not accept provisions that jeopardize the lives of people with HIV or other life threatening conditions, that limit access to essential medicines, and that undermine public health.

Sincerely,

Asia Russell
Director, International Policy
Health GAP (Global Access Project)