Civil society opposes stricter medicine monopolies at RCEP negotiations
The Regional Comprehensive Economic Partnership's draft negotiating text, which was leaked online, reveals that some countries are seeking 'TRIPS-plus' intellectual property measures that could delay price-lowering generic drugs from entering markets across the Asia-Pacific region. This commentary outlines key concerns that civil society groups, treatment providers and academics have regarding not only the intellectual property proposals but also the continuing lack of transparency in the RCEP negotiation process.
Belinda Townsend, Shailly Gupta, Patricia Ranald and Leena Menghaney
THE Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) currently under negotiation between the 10 members of the Association of South-East Asian Nations (ASEAN) and the six countries that have existing trade agreements with ASEAN: Australia, India, New Zealand, China, Japan and South Korea. The RCEP talks, which were launched in 2012, involve all aspects of intellectual property (IP), trade in goods and services, economic and technical investment and collaboration, dispute resolution, financial services, telecommunications and electronic commerce (Townsend et al. 2015).
While the RCEP's areas of negotiation are not as extensive as the 30 chapters in the Trans-Pacific Partnership (TPP) Agreement between the United States and 11 other Pacific Rim countries, there are seven areas that overlap between the two. Civil society groups have become concerned especially after draft negotiating texts for an IP chapter in the RCEP were made available online. According to the leaked documents, some countries, such as Japan, which are also a part of the TPP are including similar detrimental IP provisions in the RCEP that, if adopted, could affect millions of people across the region by delaying access to affordable and essential generic medicines.
It is also crucial to note here that the TPP's IP provisions undermine access to affordable medicines in several of the countries by creating additional monopolies that delay the entry of affordable generics in the market (amfAR: The Foundation for AIDS Research 2015).While ratification and implementation of the TPP is now increasingly in doubt, Japan together with its allies will increasingly focus on finalising an RCEP agreement which contains similarly damaging IP provisions for access to medicines.
Ever-increasing pressure on India to agree to harmful IP provisions in the RCEP is particularly concerning, as it would endanger millions of people globally who rely on life-saving generic medicines sourced from Indian generic manufacturers.
Concerns regarding access to medicines in the IP chapter
In 2015, two draft negotiating texts for an RCEP intellectual property chapter were leaked online (Knowledge Ecology International 2015a and 2015b). The documents show that Japan and South Korea are continuing to push for 'TRIPS-plus' IP provisions similar to those in the US-led TPP, which is considered the 'worst trade deal ever for access to medicines' (Stiglitz 2016).
In 1995, the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) had delivered a blow to growing generic competition by ensuring the introduction of the product patent system in key middle-income countries. This gave pharmaceutical companies 20-year patents and the opportunity to seek multiple 'evergreening' patents on essential medicines that would further delay low-cost generic versions from becoming available.
Global campaigns by public health organisations and developing-country governments achieved some 'flexibilities' for developing countries in the TRIPS Agreement in subsequent years. However, in order to become compliant with its obligations under WTO rules, India still had to amend its patent law in 2005. Pro-public-health legislators in India secured health safeguards in the Patent (Amendment) Act by referring to and interpreting relevant flexibilities in the TRIPS Agreement, all of which provide significant benefits to people in India and across the developing world. Legal safeguards include the public's right to challenge patent claims before and/or after patents are granted; examining patent claims strictly and rejecting patents on new uses and/or new forms of known medicines (as countries can define their own patentability criteria); the right to register generic versions of patented medicines; the right to issue compulsory licences (CLs) to locally produce more affordable generic versions of patented medicines; and the early working of patents to ensure immediate availability if a CL is granted or once the patent expires.
The impact was clearly felt with the early entry of generic antiretroviral drugs used for HIV treatment. This has succeeded in reducing the cost of first-line treatment drugs by 99% (MSF Access Campaign 2014). Countries like Indonesia, Malaysia and Thailand have also been able to import low-cost medicines, in spite of patent barriers, by applying compulsory licensing (Velasquez 2012).
Presently, as increasing patent barriers lead to dramatically higher prices for new drugs to treat hepatitis C, tuberculosis and cancer, the need for affordable generic medicines and the continued use of flexibilities is stronger than ever (Andrieux-Meyer et al. 2015, MSF Access Campaign 2016a, The Economist 2016). It is critical that countries continue to make use of public health safeguards in their national patent laws to enable access to affordable treatment for their most vulnerable citizens.
A more recent leak of the RCEP IP chapter's consolidated draft negotiating text confirms that TRIPS-plus provisions are on the table (Knowledge Ecology International 2016a). These include demands for patent term extension (Article 5.13) that would extend the life of a patent on a medicine beyond 20 years, and for data exclusivity (Article 5.16), which would provide a monopoly on the clinical trial data submitted to a drug regulatory authority for a period of 'no less than five years', and could delay generic competition even for new medicines that are off-patent. Both these TRIPS-plus provisions should be continuously rejected by all other negotiators. Health groups are calling for the removal of patent term extension and data exclusivity from the negotiating text. A clear precedent for such removal exists in the EU-India FTA talks where the European Commission withdrew these provisions from future rounds of negotiations with India (MSF Access Campaign 2013).
Wide-ranging enforcement measures threaten access to affordable medicines
The consolidated draft RCEP text extends enforcement measures to cover all areas of IP and goes beyond the obligations of the TRIPS Agreement. Elevated levels of enforcement increase the likelihood of seizures and legal actions against legitimate suppliers of generic medicines. Provisions in the RCEP draft suggest that a broadened scope of IP enforcement could affect treatment providers and the generic medicines distribution and supply chain and put them at risk of litigation and court cases (Article 9bis.7). Such provisions are in contrast to judicial activism that is increasingly creating legal precedents towards remedies for IP infringement that provide the patent holder with royalties instead of enforcing monopolies that undermine access and competition.
The impact of overreaching IP enforcement border measures has already been documented in the past. For example, wrongful seizures by customs authorities in the EU of Indian generic medicines in transit to Brazil and of HIV drugs en route to Nigeria severely affected patients in those countries (Bridges 2009). The current RCEP text on border measures makes no reference to exceptions and safeguards which are critical in safeguarding legal shipments of generic pharmaceuticals in transit.
The draft RCEP text on enforcement omits several procedural guarantees, safeguards and protections provided by the TRIPS Agreement, with several proposals going beyond the TRIPS standards (Weatherall 2016). Even the controversial Anti-Counterfeiting Trade Agreement (ACTA) allows countries to exclude patents and test data from the scope of the civil and border enforcement provisions (Footnotes 2 and 6 of the ACTA final text).
In the RCEP negotiations on IP enforcement, ASEAN and India should continue to oppose TRIPS-plus enforcement measures and specifically seek exclusion of patents, test data and civil trademark disputes from civil remedies and border measures.
Failure to protect least developed countries (LDCs)
The consolidated draft IP chapter of the RCEP does not adequately protect the transition period available to 'least developed' member countries - Cambodia, Myanmar and Laos - that would enable them to delay the implementation of the TRIPS Agreement vis-a-vis pharmaceuticals.
Production of and access to low-cost generic medicines is possible in LDCs because they have been granted a specific pharmaceutical transition period under the TRIPS Agreement in recognition of their economic, financial and administrative constraints and the need to make or procure low-cost medicines. Under this transition period - which can be extended - LDCs do not have to apply or enforce TRIPS provisions concerning patents and test data protection for pharmaceutical products until 1 January 2033 (TRIPS Council Decision IP/C/73, World Trade Organisation 2015). This provision enables local production, technological advancements and the import of generic medicines, which would, in turn, smooth the transition process.
Moreover, there are signs that Cambodia will soon 'graduate' from LDC status to a middle-income state, which would require it to adopt the TRIPS provisions immediately (Kawamura 2014). It may then find itself compelled to adopt not only a product patent system under the TRIPS Agreement but also TRIPS-plus provisions under the RCEP, which would severely threaten the registration and supply of affordable medicines on behalf of treatment providers, health programmes and patients.
In light of these arguments, the RCEP should recognise and uphold the current transition periods and waiver vis-a-vis intellectual property granted to LDCs as well as preserve the ability to seek additional extensions of the LDC waiver under WTO rules (MSF Access Campaign 2016b). In fact, the RCEP text should encourage LDCs to fully utilise these transition periods and ensure that countries like Cambodia, when they graduate to middle-income status, have the flexibility to incorporate public health safeguards into their patent system.
Concerns on inclusion of IP in investment chapter
There are 13 mentions of the term 'intellectual property' in the current leaked draft of the RCEP investment chapter (Knowledge Ecology International 2016b). It is obvious that the degree to which IP measures are included or excluded in the RCEP text is crucial since this will determine whether multinational pharmaceutical companies will be able to exact costly damages from countries like India whose patent law and its application have been constantly challenged and criticised by industry pressure groups.
As in the TPP text, if an investor-state dispute settlement (ISDS) mechanism was agreed to in the RCEP, pharmaceutical companies could sue governments in secret arbitration tribunals and claim huge financial compensation if any IP-related law, policy, rule, regulation, court decision or other action is deemed to interfere with their profits, even when these government actions are in accordance with national law and the TRIPS Agreement.
For example, in 2012, the US pharmaceutical firm Eli Lilly & Company started proceedings against the government of Canada through the ISDS mechanism of the North American Free Trade Agreement (NAFTA) and claimed $500 million in compensation (Eli Lilly 2012, Palmer 2013). The proceedings were triggered by the routine decisions of a Canadian court to invalidate evergreening patents on two of Eli Lilly's medicines: Strattera for attention-deficit hyperactivity disorder (ADHD) and Zyprexa for schizophrenia. In this case, the Canadian court invalidated the two patents because they were found not to deliver the promised health benefits and thus failed the test of efficacy (Hakert 2013). This ISDS case filed by Eli Lilly challenges a legitimate legal practice of testing the validity of a granted patent before domestic courts of law and ensuring a higher level of legal scrutiny in determining whether a patent is worth enforcing.
RCEP countries should resist the inclusion of ISDS in the investment chapter. Broader concerns about ISDS have been articulated by several countries particularly India and Indonesia in recent years, and these countries have intensified the review and termination of previous bilateral investment treaties containing problematic provisions (Kollamparambil 2016).
'Pharmacy of the developing world' threatened
Since India is one of the countries included in the RCEP negotiations, the proposed TRIPS-plus measures are all the more alarming. India - often known as the 'pharmacy of the developing world' for its wide-scale production of generic medicines - supplies affordable life-saving medicines needed to treat communicable and non-communicable diseases in developing countries. Two-thirds of all the drugs Medecins Sans Frontieres (MSF) purchases to treat HIV, tuberculosis and malaria are generic medicines from India. To ensure an uninhibited supply of generic medicines which MSF along with so many people in developing countries rely upon, the authors have been urging RCEP negotiators to make sure that the trade agreement does not impose any TRIPS-plus barriers on India.
SDG commitments undermined
In 2015, all RCEP negotiating countries signed the United Nations Sustainable Development Goals (SDGs) (United Nations 2015). These goals included a commitment to 'provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full the provisions in the Agreement on Trade Related Aspects of Intellectual Property Rights regarding flexibilities to protect public health, and, in particular, provide access to medicines for all'.
The TRIPS-plus provisions in the leaked RCEP IP chapter draft contradict the spirit of the SDG agenda by potentially delaying access to affordable medicines in low- and middle-income countries.
Suggested RCEP-TPP convergence
After the signing of the TPP in February, RCEP negotiating countries began to publicly frame the RCEP as a 'stepping stone' towards a convergence with the TPP and towards an all-encompassing 'Free Trade Area of the Asia-Pacific' (Reuters 2015). There are seven countries that are common to both the TPP and the RCEP - Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam.
However, it is crucial to keep in mind that the TPP's IP provisions favour multinational pharmaceutical companies by providing increased monopolies on medicines. These stringent provisions will possibly delay generic competition in several of the TPP countries (Intellectual Property Watch 2015).
According to the recent draft consolidated RCEP text, India and ASEAN appear to be seeking to maintain the status quo in accordance with the TRIPS Agreement. Nonetheless, with seven of the 16 negotiating countries having already accepted TRIPS-plus provisions in the TPP such as data exclusivity and patent term extension, non-TPP signatories may be pressured to adopt TRIPS-plus IP provisions in the RCEP. It remains to be seen if India and ASEAN will be able to sustain a position that does not go beyond TRIPS standards.
Reflections on the RCEP public engagement process (or the lack thereof)
During the negotiations for the TPP, even though the discussion texts remained secret, some countries hosted stakeholder consultations that enabled substantial presentations by academics and civil society to the negotiators. Official public engagement in the course of the RCEP negotiations, however, has been much more limited.
Stakeholder consultations were not organised by India, South Korea and Malaysia when they hosted the RCEP negotiating rounds. The 12th round of negotiations, held in Perth, Australia, did provide some space for academics and civil society to voice their views on IP and investment. The 'consultations' held in Auckland, New Zealand, during the 13th round were much more limited, with stakeholders given two minutes each to present their concerns to negotiators. This contrasts sharply with the RCEP's engagement with the business community, which have been granted regular access to share their views since the negotiations began (Asian Trade Centre 2015).
In Auckland, in addition to concerns about the impact of proposals for increased medicine monopolies on public health, stakeholders also raised questions regarding the lack of transparency in the negotiations and the need for access to the document text. However, it again seemed that the consultation process was substantially lopsided towards industry, insofar as industry groups had far more involvement before and during the negotiations.
No public stakeholder consultations were held in the next two negotiating rounds, held in Vietnam and China. Indonesia, which is hosting the next round of negotiations in December, has organised a stakeholder consultation.
While efforts to engage the public through some stakeholder consultations are welcome, it is essential to remember that as the document text becomes more detailed and complicated, especially as negotiations proceed, access to this draft text is crucial so as to enable meaningful consultation and input from civil society groups and academic experts. Such input would improve the quality of the text and help to ensure that it does not negatively impact on public health or have other unforeseen consequences. Secrecy is the surest sign that negotiators are faced with decisions that could adversely affect the public interest, including public health.
For the December round of negotiations in Indonesia, it remains to be seen whether texts will be released and whether there will be a greater effort to allow civil society and academics to engage meaningfully with negotiators.
If the RCEP negotiations proceed without publication of draft texts and meaningful consultation with civil society groups and academic experts, the RCEP, if and when it is concluded, is likely to face the same strong public opposition and political barriers to implementation as the TPP today.
To summarise, some countries in the RCEP negotiations are seeking to not only extend patent monopolies beyond the TRIPS-mandated 20 years but also require stronger IP enforcement measures, without weighing the long-term impact on access to medicines. If these TRIPS-plus proposals were incorporated into the RCEP agreement, they would likely delay the market entry of cheaper generic medicines in several low- and middle-income member countries, which are already facing crippling cost burdens that hinder affordable treatment (Low et al. 2014).
In parallel, the likely withdrawal of the US from the TPP (The Guardian 2016) and that agreement's impending collapse could trigger a strong political push from governments such as Japan (The Japan Times 2016) to speed up the RCEP negotiations and resolve differences in the upcoming negotiating rounds. Health organisations following the developments in the RCEP IP negotiations are concerned that, having seen its plans to increase market monopolies for pharmaceutical corporations through the ambitious TPP thwarted, Japan with the help of its allies will increase pressure on Indian and ASEAN negotiators to ensure TPP-like IP provisions are included in the RCEP agreement.
Against this backdrop of heightened RCEP negotiations, the report of the UN Secretary-General's High-Level Panel on Access to Medicines was released in September. The Panel had been mandated to recommend solutions to, among others, remedy the growing 'incoherence' between the right to health and trade agreements. Its report clearly recognises that today all countries - developed and developing - face challenges in ensuring the availability and affordability of pharmaceutical products that people need to live healthy lives. The report recommends that countries undertake rigorous public health impact assessments of proposed trade agreements as an imperative to inform the negotiations. It also encourages countries to better use the legal flexibilities available under the TRIPS Agreement to ensure affordable medical products. Most importantly, the report advises that future trade agreements should not include patent rights without true innovation, and other measures that lengthen monopoly rights (United Nations Secretary-General's High-Level Panel on Access to Medicines 2016).
So far, India and ASEAN negotiators have pushed back on accepting any IP provisions in the RCEP agreement that go beyond TRIPS rules and undermine the future of generic manufacturing and supply of low-cost medicines.
Developing countries and treatment providers who depend on affordable generic medicines will be watching the RCEP talks closely and pushing to support India's decision to continue its longstanding tradition of placing the interests of patients first in trade negotiations.
Belinda Townsend is at the School of Humanities and Social Sciences, Deakin University, Australia. Shailly Gupta is Deputy Head (India) of the Medecins Sans Frontieres (MSF) Access Campaign. Patricia Ranald is Convener of the Australian Fair Trade and Investment Network. Leena Menghaney is Head (South Asia) of the MSF Access Campaign.
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