TPPA affecting health policies?

The debate on the Trans-Pacific Partnership Agreement (TPPA) is part of the global discussion on how trade and investment treaties are affecting health, including access to medicines and tobacco control.

by Martin Khor

Are big companies making use of trade and investment agreements to challenge health policies?  Evidence is building up that they do so, with medicine prices going up and tobacco control measures being suppressed.  

This issue came up in the Malaysian Parliament in late June when International Trade and Industry Minister Mustapa Mohamed said the government would not allow the proposed Trans-Pacific Partnership Agreement (TPPA) to cause the prices of generic medicines to go up. He added that he would defend existing policies on patents and medicines, and if Malaysia did not agree with some of the terms, it could choose not to sign.

Malaysia is one of the countries participating in the TPPA negotiations, which are spearheaded by the United States.

Corporate interests

Trade agreements and health concerns are linked because some companies selling tobacco, medicines and food are using these agreements to sue governments that introduce new regulations to safeguard public health.

World Health Organization (WHO) Director-General Margaret Chan recently noted that corporate interests are preventing health measures.

The costs of treating non-communicable diseases are shooting up. The costs of advanced cancer care are unsustainable, even in rich nations, and some countries spend 15% of the health budget on diabetes.

“In the developing world, the cost of these diseases can easily cancel out the benefits of economic gain,” Chan said. It is harder to get people to adopt healthy lifestyles because of opposition by “unfriendly forces”.

“Efforts to prevent non-communicable diseases go against business interests. And these are powerful economic operators. It is not just Big Tobacco anymore. Public health must also contend with Big Food, Big Soda and Big Alcohol. All of these industries fear regulation and protect themselves by using the same tactics,” said Chan.

Those tactics include “front groups, lobbies, promises of self-regulation, lawsuits and industry-funded research that confuses the evidence and keeps the public in doubt”.

Drug access and tobacco control under threat

Many studies show how free trade agreements (FTAs) with the United States or Europe have raised the prices of medicines because of the constraints placed by the FTAs’ strict patent rules on the sale of cheaper generic medicines.  Patients have had to switch to much dearer branded medicines.  

One study estimated that Colombia would need to spend an extra $1.5 billion a year on medicines by 2030, or else people would have to reduce medicine consumption by 44% by that year.

Another study showed that the patent provisions in the US-Jordan FTA resulted in a hospital increasing its medicine spending sixfold, and medicine prices in Jordan have already increased 20% since 2001 when the FTA began. 

“Data exclusivity”, one of the features of the FTA, has delayed the introduction of cheaper generic versions of 79% of medicines launched by 21 multinational companies between 2002 and mid-2006 and ultimately the higher medicine prices are threatening the financial sustainability of government health programmes.

The tobacco industry is also making use of trade and investment agreements to challenge governments’ tobacco control measures.

According to an article by Professor Matthew Porterfield of Georgetown University Law Centre, the company Philip Morris has asked the US government to use the TPPA to limit restrictions on tobacco marketing.  

In comments submitted to the US Trade Representative (USTR), Philip Morris argued that Australia’s “plain packaging” regulations would be “tantamount to expropriation” of its intellectual property rights, and complained of the broad authority delegated to Singapore’s Minister of Health to restrict tobacco marketing. In order to address these “excessive legislative proposals”, Philip Morris urged the USTR to pursue both strong protections for intellectual property and inclusion of the investor-state dispute settlement mechanism in the TPPA.

The company has already instituted legal cases against Uruguay and Australia for requiring that cigarette boxes have “plain packaging” with the companies’ names and logos disallowed. These cases are brought under bilateral investment agreements.  The company claims that the packaging regulations violate its right to use its trademark, and also violate the agreements’ principle of “fair and equitable treatment”. It claims that a change in government regulation that affects its profits and property is an “expropriation” for which it should be compensated.

Under such agreements, companies have sued governments for millions or even billions of dollars.  An oil company was awarded over $2 billion in a recent case against Ecuador.

The provisions in the bilateral investment treaties are also present in trade agreements including the TPPA, including that companies can directly sue the governments in an international court, under an investor-state dispute system.

Having been sued by the tobacco company for its health measure, the Australian government has decided not to enter into any more agreements that have an investor-state dispute system. In fact, in the TPPA negotiations, Australia has asked that it be granted an exemption from that agreement’s investor-state dispute system.  So far such an exemption has not been agreed to.

The controversies over how trade and investment agreements are threatening health policies will not go away, because the rules are still in place, and in fact new treaties like the TPPA are coming into being. A Google search on this issue will yield hundreds or even thousands of documents.  And the number will go up as long as the controversy continues.                                            

Martin Khor is Executive Director of the South Centre, an intergovernmental policy think-tank of developing countries, and former Director of the Third World Network.

Third World Economics, Issue No. 549, 16-31 Jul 2013, p10