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The TPPA: Implications for Access to Medicines and Public Health (UNITAID Analysis) Dear friends and colleagues, We are pleased to share the executive summary of a forthcoming analysis by UNITAID (which is hosted and administered by the World Health Organization) on the Trans-Pacific Partnership Agreement (TPPA) and the implications of its provisions on access to medicines in the 12 countries participating in the negotiations. The UNITAID analysis (which can be accessed at http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Executive-Summary.pdf) is based largely on the text of the proposals of the US that were leaked and made available in the public domain over the past three years. The most recent text that became publicly available in November 2013, through Wikileaks, was the August 30, 2013, version of the draft intellectual property chapter (IP). In particular, the analysis looks at proposals in the leaked texts relating to patents, data exclusivity and patent linkage, trademarks, copyright, enforcement, investment, and pharmaceutical pricing, financing and reimbursement of medicines. Among the notable findings of UNITAID’s analysis is the danger it highlights of the US’ proposal to remove bars against the ‘ever-greening’ of existing medicines by explicitly requiring that new uses, new forms and new methods of use of existing medicines be patentable in TPPA countries. If agreed to, UNITAID points out, such provisions would effectively allow patent holders, through successive and overlapping patents on new forms of old medicines, to enjoy longer periods of exclusivity on a medicine than the 20-year minimum period prescribed by the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (The ‘TRIPS’ Agreement). UNITAID also highlights the efforts to water down disclosure standards in TPPA countries for patent applications, such as the US proposal to weaken the disclosure requirement for the best mode of working a patented invention. Whereas higher standards of disclosure generally can help local manufacturers, researchers and others to adopt and learn from patented technologies, lowering such standards would prevent them from identifying, for example, the best mode for producing a medicine. This could lead to a generic medicine’s delayed entry into the market or its production through inferior and more expensive means. Also under the spotlight in the UNITAID analysis is the proposal by the US to ensure that patents can be extended (beyond the 20 years under TRIPS) in TPPA countries up to five years in case of delays by drug regulatory authorities, and that there are no explicit limitations to the extension of patents in the case of delays at the patent office. Such extensions can have a significant impact on the price of medicines, as seen in the difference between prices of first-line triple combination of antiretroviral (ARV) medicines by innovator companies – who charged $10,439 per person per year in 2001 – and those of generic companies which cost only $350 per person per year. UNITAID also says the US is proposing to prevent the use of the ‘Bolar provision’, which has been used to allow generic manufacturers to obtain provisional regulatory marketing approval (registration) in order to be able to enter the market as soon as the patent barrier to a medicine no longer exists. Since this means that a generic company would have to manufacture the medicine locally in every country where it wishes to seek early marketing approval, UNITAID points to the unlikelihood of this happening, as it would not be economically feasible for generic companies to establish quality-assured manufacturing sites in all developing countries. Alternatively, UNITAID points out, compulsory licences for import and export would have to be issued even for regulatory approval and in the case of every medicine, creating significant barriers to the rapid entry of generic medicines into export markets. UNITAID further warns that US efforts to impose the requirement of data exclusivity in TPPA countries would raise questions of ethics as well as costs. This is because while many countries currently do not require generic manufacturers to conduct clinical safety and efficacy trials of medicines already carried out by innovator companies (generics must only be proven to be the ‘bio-equivalent’ to the medicine already approved and on the market), the imposition of data exclusivity in TPPA countries would mean generic manufacturers have to conduct their own clinical trials to obtain market approval or wait until a specified exclusivity period is over before a generic product could be approved. The US’ proposal for data exclusivity in the TPPA, however, goes further than the data exclusivity requirement contained in some US free trade agreements. Whereas Peru, for example, is obliged by its FTA with the US to require that data exclusivity on a medicine commence from its first registration in the US, the latter’s TPPA proposal requires that the period should start from the point at which the medicine is registered in the country concerned. If agreed to, such a provision would substantially restrict TPPA governments from being able to limit the anticipated negative impacts of data exclusivity. On the US proposal to introduce patent linkage in TPPA countries, UNITAID says such a system – which creates an additional burden on medicine regulators and is not implemented in the European Union – enables patent holders in the pharmaceutical sector to use the health and regulatory mechanism to facilitate the enforcement of their patents – an advantage which patent holders in other areas of technology do not have. On trademarks, UNITAID says US proposals in the TPPA would increase the term of trademark protection, expand significantly the scope of trademark protection and possibly require TPPA countries to provide protection that includes colours, sounds, scent and other non-visual marks. In this way, such broad-ranging trademark protection could lead to IP protection for products that are not otherwise eligible for patent protection. In the pharmaceutical context, says UNITAID, concern would be whether the expanded trademark protection could be used to prevent generic producers from using colours or shapes identical or similar to those of the originator pharmaceutical product. The effects of these provisions could involve confusion and other adverse consequences for patients due to differences in the appearance of generic and originator products, reduce adherence and increase prescription/dispensing errors. Patients often rely, for example, on the colour, size and shape of medication for reassurance that they are taking the right pill. The US’ proposal to prevent the exercise of parallel importation in TPPA countries of copyrighted works raises the possibility that some medicines could be prevented from being exported or imported even when patents have expired, on the grounds that a component of the product contains copyrighted material, said UNITAID. On enforcement of IP rights, UNITAID points to the problems and concerns that arise from the presumption of validity of patents and trademarks, premised on the expectation that patent and trademark offices are sufficiently successful in ensuring the quality of registrations, that is being proposed in the TPPA’s IP chapter. Even in developed countries, the quality of patents granted by patent offices have come increasingly under question, and this is compounded by the reliance of patent offices in the developing countries on the findings of the US Patent and Trademark Office and the European Patent Office. With the introduction of the presumption of validity of patents and trademarks, UNITAID says it will - be considerably more difficult to challenge IP rights on medicines, - increase the risk to generic competitors of infringement proceedings, - make both patent challenges and defence in infringement proceedings more difficult, - deter generic competition, - increase the likelihood that provisional measures such as interim injunctions will be imposed. In the case of trademarks, the presumption principle would apply also in criminal proceedings, thus increasing the likelihood that a criminal penalty or fine could be imposed on a generic competitor to innovator companies. The creation of an IP regime that tilts overwhelmingly in favour of innovator companies against the possible welfare of public health is made more obvious in US provisions to empower patent-holders to seek information in infringement proceedings regarding the entire supply and distribution network of generic companies. As UNITAID points out, this information could then be used against the other players in the network. In addition, the US has proposed provisions that allow for the seizure of generic medicines that are subject to trademark disputes, while the case is still pending in court, as well as materials and implements used for generic manufacture such as machines, active pharmaceutical ingredients and packaging. In the event that a trademark has been found to be infringed, the medicines, materials and implements may be destroyed or otherwise disposed of outside commercial channels. Also proposed are harsh enforcement measures, high and/or debilitating damages for infringement and criminal penalties beyond what had been agreed under the TRIPS Agreement. All of the measures proposed, if agreed upon by TPPA countries, could have the effect of significantly hampering the ability of a generic company to continue manufacture, drive it out of business, and have a chilling effect on other generic companies from producing or providing cheaper alternatives to innovator medicines, said UNITAID. Recounting the 2008 detention of shipments of legitimate generic medicines on transit from India and China by customs authorities in Europe on allegation of patents and trademarks infringement, UNITAID said US proposals to bolster border measures as part of greater enforcement of IP protection in TPPA countries raises the spectre of more such incidents occurring as such measures are applied to the import, export and transit of ‘confusingly similar’ trademarks. In addition to concerns that customs officials may not be in the best position to judge trademark violations and trademark disputes, UNITAID also highlighted US proposals to provide for the destruction of even legitimate, safe and effective medicines suspected of IP infringement. Life-saving or life-prolonging medicines should be allowed to be donated, or even returned to the manufacturer, instead of being destroyed, said UNITAID. On US proposals to require TPPA countries to comply with obligations relating to pharmaceutical pricing and reimbursement schemes, UNITAID said the probable effect of the proposed provisions would be to limit and determine therapeutic formularies, reimbursement policies and other price-moderating mechanisms irrespective of the countries’ specific national public health context and priorities. The proposals, contained in the leaked US proposal on “Transparency and procedural fairness for healthcare technologies”, would also cut across IP protection and encroach into TPPA countries’ domestic health regulation- and policy-making space. To conclude, UNITAID says provisions proposed by the US may serve to erode strategies and tools that have been successfully employed to meet treatment goals relating to HIV/AIDS in developing countries. The TPPA’s provisions may even undermine further progress in meeting such treatment goals. Given the increasing number of bilateral and regional trade agreements such as the TPPA, it is imperative that a corresponding level of analysis be carried out from the economic and public health perspectives. More generally, more discussions and deliberations should be carried out on the relationship between IP rights and competition law. While IP protection effectively vests exclusive control of IP production and supply in the IP-holder, competition law seeks greater multiplicity of suppliers in order to ensure effective competition in the market place. But while most developed countries have evolved higher standards of IP protection together with the development of effective regimes against anti-competitive practices related to IP rights, the situation is lopsided in many developing countries, where there has been the expansion and strengthening of IP rights but a noticeable lack of competition laws or effective mechanisms for their implementation. Therefore, says UNITAID, a balance needs to be brought about between IP rights and competition that is appropriate to developing countries’ domestic contexts. The executive summary is available at http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Executive-Summary.pdf With best wishes, Third
World Network
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