Global Trends by Martin Khor

Monday 27 August 2012

FTA may cause drug prices to sky-rocket

Many health, medical and patient groups around the world are protesting against proposals in the Trans Pacific Partnership Agreement to boost patent rights and severely limit generic medicines, which will make medicines for life-threatening diseases unaffordable to many people.


Public health and patients’ groups around the world have been protesting against free trade agreements that the United States and European Union are negotiating with developing countries, because of their effects on raising the prices of medicines including for life-threatening diseases.

These bilateral or regional agreements would make it very difficult or even impossible for governments and patients alike to have access to the much cheaper generic versions of the medicines.  As a result, millions of patients could be deprived of life-saving drugs since they, and their governments, cannot afford to buy the branded products.

Their most recent concerns are focused on the Trans-Pacific Partnership Agreement (TPPA), which is being negotiated by the US, Australia, Malaysia, Brunei, Vietnam, Singapore, New Zealand and Peru. 

For the TPPA’s chapter on intellectual property, the US is proposing that the rights of patent holders (mainly big drug companies) should be tremendously elevated.  This would be at the expense of generic drug producers, governments which often prefer to buy the generic drugs for their hospitals and clinics, and most of all patients.

In the World Trade Organisation’s TRIPS Agreement, governments have the right to set their own standards for patents and to reject applications that they do not consider to be real inventions. 

Successful applicants can obtain patents for 20 years, and they can provide commercial licenses to other companies to produce generic versions. 

But the rules also allow governments to provide “compulsory licenses” to other drug companies to produce generic versions of the patented medicines, on several grounds, including if the patent holder does not enable others to produce on reasonable terms, if there is an anti-competitive situation, and if the license is in the public interest. 

In some countries, like India, people are allowed to raise objections before and after a patent is granted. 

All these are termed “flexibilities” in the patent system, allowing governments to take measures to guard against abuse of patent monopoly and to promote health and the public interest. 

In the TPPA negotiations, the US has proposed that the TPPA requires the countries to have patent laws that stricter than the WTO’s TRIPS agreement. They would increase the privileges given to drug companies that own the patents, and to curtail the ability of the governments to make use of the “flexibilities” that are allowed under the WTO.

An interesting paper by Médecins Sans Frontières (MSF), the Nobel prize-winning medical group, explains various ways in which the US proposals, if accepted in the TPPA, would threaten health interests.

It points out the importance generic drugs.  The first generation of HIV drugs have come down in price by 99% over the last decade, from U.S.$10,000 per person per year in 2000 to roughly $60 today, thanks to generic production in India, Brazil and Thailand, where these drugs were not patented. This dramatic price drop enabled HIV/AIDS treatment to be scaled up for over six million people in developing countries. 

According to MSF, the US proposals in the TPPA would cause the following problems.

First, it would broaden the scope of patentability: the U.S. wants to make it easier to patent new forms of old medicines that offer no added therapeutic efficacy for patients. 

The WTO rules allow governments to decide what type of “innovation” deserves to be protected by patents.

However, the U.S. proposal limits this ability to define what is ‘patentable’ by requiring the patenting of a “new form, use, or method of using” an existing product - even if there is no increase in efficacy.

This “ever-greening” technique allows the drug company to extend monopoly protection for old drugs simply by making minor changes.  It thus delays the arrival of cheaper generic drugs.

Second, the US wants countries to allow patents for plants and animals, and diagnostic, therapeutic and surgical methods for the treatment of humans, although the WTO’s TRIPS Agreement allows countries to exclude patents for these.

Third, the US proposes restrictions on pre-grant patent oppositions, even though the WTO rules allow for this.

Fourth is the proposal to have new forms of IP enforcement, such as allowing customs officials to seize shipments of drugs, even if they are in transit, on mere suspicion of that they are counterfeit products, and to increase damages for IP infringement.

In 2008 and 2009, at least 19 shipments of generic medicines from India to other countries were impounded while in transit in Europe on grounds that they may be counterfeit. 

Fifth and most seriously, is the US proposal on “data exclusivity”.   This would prevent generic drug companies from using existing clinical research data (that had been submitted earlier by the originator drug company) to gain regulatory approval of their medicines, forcing them to perform duplicate clinical trials or wait for the “data monopoly” period to end.

At present, many countries do not have such data exclusivity measures.  Thus, when a generic manufacturer applies sell a version of a previously-registered medicine, it only has to provide data showing that their product is equivalent to the original.

The drug regulatory authority relies on the clinical trial data provided by the original manufacturer to evaluate the safety and efficacy of the generic drug.

The introduction of such data exclusivity provisions creates a new system for granting monopolies by blocking registration of generic medicines until the data exclusivity period ends, even if the patent term has ended, or the patent is overcome by a compulsory license, or even if there is no patent.

According to MSF, under these terms, generic competition is stifled not only for old medicines no longer under patent protection, but also for new medicines that don’t warrant patent protection.

It would be very costly for the generic manufacturer to repeat the clinical trials and also unethical, as it forces duplication of clinical trials for patients and animals in order to prove something that is already known, says the MSF paper.

Sixth, the US would like the term of the patents to be more than the 20 years in the WTO rules. The U.S. is expected to seek to extend the patent period to compensate for administrative delays in the regulatory process.

Seven, the U.S. is seeking to link patents with drug safety regulation, thus turning drug regulatory authorities into ‘patent police’, according to MSF.   This proposal would prevent drug regulatory authorities from approving new drugs if they could potentially infringe existing patents, thus requiring drug authorities which look after drug safety and quality to also take on the duty of policing patents.

In Malaysia, several patient and medical groups have issued a joint statement opposing the US proposals, which they say will reduce access to medicines.

“We categorically oppose US demands for longer and stronger patents on medicines and medical technologies that are essential to save Malaysian lives,” said leaders of six groups including the National Cancer Society Malaysia, Breast Cancer Welfare Association, Malaysian AIDS Council, MTAAG+, Malaysian Thoracic Society and Malaysian Mental Health Association.

They said that breast cancer, similarly to other cancers, requires affordable chemotherapy medicines. HIV second line medicines like Kaletra are required to save lives, and are often out of reach to persons living with HIV. Many other conditions depend on generic medicines: cancer, tuberculosis, malaria and diabetes.

They added that patented medicines are very expensive, for example, Glivec (for treating gastro-intestinal cancer) medicine costs RM 10,000 per patient per month.  Sorafenib Tosylate (for treating liver and kidney cancer) costs RM 9865 per person per month, whereas the generic version can cost RM 370-501 per person per month.

They asked that the US proposals, including for patent extension, data linkage, and border control measures, be rejected.

This is in line with the MSF’s own demands, which are that the US withdraw its proposals on scope of patentability, limits on patent oppositions, new forms of enforcement, data exclusivity, patent extensions and patent linkage.

Moreover, the TPP is being negotiated entirely in secret.  These negotiations affect public health and must be conducted with adequate levels of transparency and public scrutiny, according to many organisations.

The issues raised by the health and consumer groups are literally life and death matters. 

They deserve to be debated in public.  The situation is urgent, because the TPPA negotiations are taking place at rapid pace and are scheduled to end this year.