TRIPS-Plus Provisions in EU FTAs Impact on Public Health and Access to Medicines

1. TRIPS-Plus Provisions in EU FTAsImpact on Public Health and Access to Medicines Mohammed El Said (UCLAN) IP and Access to Medicines UNDP, Kiev 22-23 June 2010

2. Overview • EU and IP protection • EU and bilateral trade agreements • Some TRIPS-Plus provisions under EU bilateral trade agreements

3. EU and IP • Major producer + comparative advantage • Main player during the Uruguay Round • Industry influence Pharmaceutical companies spent US $759 million to influence 1,400 congressional bills between 1998 and 2004; the pharmaceutical industry ranks top in terms of lobbying money and the number of lobbyists employed (3,000).Stiglitz 2006 • Internal and external policies

4. EU and Bilateral Agreements • Creator of TRIPS-Plus = The Barcelona Process in mid 1990s • Understanding TRIPS-Plus. • TRIPS-Plus emerge under 3 types of EU bilateral agreements: • EU-Association Agreements (AAs) • EFTA Agreements • EU-Free Trade Agreements (FTAs)

5. Some TRIPS-Plus provisions related to public health and access to medicines 1- Transition periods 2- Extending patent term 3- Data exclusivity 4- Parallel Importation 5- Compulsory Licensing and government use 6- Patentability of new use 7- Patentability criteria 8- Accession to TRIPS-Plus agreements 9- Exceptions and exemptions 10- Terminology issues

6. 1- Transition Periods - TRIPS awards transitional periods • FTAs may restrict this by applying these standards in advance. e.g EU-Jordan AA • Implications 1- Prevents countries from preparing 2- Facilitates entry of patented drugs earlier 3- High royalties

7. 2- Extension of patent protection term • TRIPS awards 20 years patent protection from the date of filing. (Art 33) • FTAs require a country to make available an extension of the patent termto compensate the patent owner for unreasonable curtailment of the patent term. e.g FTAs with Columbia and Peru • Implications 1- Extending patent the term monopoly 2- Impact on prices and generics 3- Pressure on patent offices

8. Patent term extension- Impact • A Korean study concluded that the extension of patent term is likely to cost the Korean National Health Insurance Corporation what amounts to US $529m for extending drug patents for 3 yrs and US $757m if it has to agree to a 4 yr extension as proposed under the FTA negotiations with the United States.Hankyore (2006) • If provisions in US-AUS FTA delayed by 24 months entry of generics of only top 5 PBS drugs (Aus Reimbursement Scheme), expenditure will increase by 1.5$ billion between 2006-09. Aus Institute

9. 3-DataExclusivityRequirements • Separate form of protection from patents • TRIPS awards countries considerable policy space • TRIPS-Plus introduces this protection form. e.g EFTA-Lebanon provides data protection for least 6 years for pharmaceutical products • Implications 1- Prolonging patent protection term 2- Delaying generic drugs entry into markets 3- Higher prices of medicines

10. Data Exclusivity- Empirical evidence The average price of generic drugs can fall by as much as 30% of the innovator drug price when the number of generic versions of the drug on the market increases(WHO) • In Jordan, Data exclusivity, independently prevented generic competition for 79% of medicines launched by 21 multinational pharmaceuticals since 2001. • Additional expenditures for medicines with no generic competitor, as a result of enforcement of data exclusivity, were between $6.3m and $22.04m Oxfam (2007) • 8 years of data exclusivity in Canada would have added 600$m to drug costs alone in the last 5 years. TWN (2008) • CAFTA’s Data Exclusivity rules are limiting access to some generic drugs in Guatemala. (Shaffer and Brenner, 2009)

11. 4- Parallel Importation • Under TRIPS, Countries have discretion to choose the regime (Art 6). • Reiterated under Doha Declaration:leave each Member free to establish its own regime for such exhaustion • FTAs are imposing restrictions. • Implications 1- preventing countries from benefiting from the variation in pharmaceutical prices 2- strengthens monopolistic position of companies 3- higher prices of medicines

12. Restricting parallel importation- Impact • Parallel importation reduced the price of first-line anti-retroviral medicines to one-third of the price of the patented version in Kenya. Oxfam (2006) • Glivec, an anti–blood-cancer drug, and Norvasc, a hypertension drug –which patent was expired in 2007-. While both drugs were cheaply available in their generic form in India, the drugs were being sold in their patented form in the Philippines with a 90% increase in the price on the Indian market. • Oxfam (2006)

13. 5- Restricting Compulsory Licensing and Government Use • TRIPS (Art 31) and the Doha Declaration reiterates members rights • FTAs may impose restrictions. • Implications 1- Market monopoly 2- Negative impact on competition 3- Diminish flexibilities and options

14. Compulsory Licensing- impact studies • Malaysia became the first country in Asia to issue a “government use” licence for the importation of generic ARVs in 2003. This reducing the average cost of the Malaysian’s MoH treatment per patient per month from US $315 to US $58, an 81% reduction. Khor • If the US-Thailand signed the proposed FTA, compulsory licensing that could have reduced the cost of second-line ARVs by 90% in Thailand would be severely restricted. The WB concludes that issuing compulsory licences for second-line ARVs would represent a saving of US $3.2 billion for the Thai national health budget over 20 years. WB • Ecuador latest country to issue one for ARVS in 2010. The License immediately reduced cost of drug by 27%

15. 6- Patentability of New Use • TRIPS sets the guidelines for granting patents, it contains no obligation to award protection to new use. • Increasingly, FTAs are awarding protection to new use, e.g Art 15.9 of US-Oman FTA states: • Each party confirms that it shall make patents available for any new uses for, or new methods of using, a known product, including new uses and new methods for the treatment of particular medical conditions.

16. New Use - Implications • According to a 2005 survey in France, it found that 68% of the 3096 new products approved in France between 1981 and 2004 brought “nothing new” in comparison to previous preparations. Prescrire (2005) • Implications 1- prolong monopoly and patent term 2- impacting innovation

17. 7- Defining Patentability Criteria • Art 27.1 TRIPS protects inventions as long as they are new, involve an inventive step and are capable of industrial application. • Some FTAs define these. e.g US-Morocco states: • Each Party shall provide that a claimed invention is industrially applicable if it has a specific, substantial, and credible utility. • Implications: 1- Restricting policy space 2- Imposing standards which may not be suitable

18. 8- Accession to TRIPS-Plus Agreements • TRIPS reference to IP agreements • No requirements to join any other agreement outside TRIPS • EU-FTAs, e.g EFTA-Morocco, Annex V: • PCT • Nice • Budapest • UPOV • Rome • Other agreements such as the WIPO Treaties • Assessment of the impact first is necessary

19. 9- Exceptions and Exemptions • Early working exemption • Exceptions from patentability, e.g Art 27.3 of TRIPS gives countries the option to exclude: • Diagnostic, therapeutic and surgical methods for the treatment of humans or animals; • plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. • FTAs may forfeit this

20. 10- Phraseology/terminology • Aim for clarity, avoid use of vague terminologies under FTAs, such as Provision of intellectual property protection in accordance with the “highest international standards” in a “fair and equitable” and ''effective'‘ manner.

21. Assessment too soon? • According to WHO predictions, the full impact of medicine price rises will not be felt until about 15 years after the FTA begins… WHO

22. Conclusions/recommendations • Assessment of impact • Collaborative effort • Negotiation teams • Strengths and weaknesses • Checks and balances

23. Thank you Mohammed El Said Mel-said@uclan.ac.uk