TPP in Focus: Is TPP the Most Progressive Trade Agreement in History? Not If You Need Access to Affordable Medicines.

May 28, 2015

Originally posted to the Huffington Post. This blog post is part of a series about the Trans-Pacific Partnership trade agreement.

“There are two things that we at Oxfam can say for certain from what we know about the TPP: First, the TPP would do more to undermine access to affordable medicines than any previous U.S. trade agreement. Second, the intellectual property provisions in TPP reverse the positive step taken under the May 10th Agreement reached between congressional leaders and the Bush Administration in 2007, and thus are a step backward for public health.” – Oxfam America

“Our gains in reducing global HIV infections would never have been realized if the proposed provisions under the TPP were the intellectual property standard in 2001.” – amfAR: The Foundation for AIDS Research

“Leaked documents suggest that the U.S. is trying to get radically enhanced protection for patents and copyrights. … You might try to argue that there is a U.S. interest in enhancing IP protection even if it’s not good for the world, because in many cases it’s U.S. corporations with the property rights. … If pharma gets to charge more for drugs in developing countries, do the benefits flow back to U.S. workers? Probably not so much.” – Paul Krugman, Nobel laureate in economics

“[T]he TPP could block cheaper generic drugs from the market. Big Pharma’s profits would rise, at the expense of the health of patients and the budgets of consumers and governments. … The efforts to raise drug prices in the TPP take us in the wrong direction. The whole world may come to pay a price in the form of worse health and unnecessary deaths.” – Joseph E. Stiglitz, Nobel laureate in economics; former Chair of President Clinton’s Council of Economic Advisers

“[T]he U.S. government is pushing policies in the TPP that represent the most far-reaching attempt to date to impose aggressive IP standards in a trade agreement with developing countries – policies that further tip the balance towards strong IP regimes favoring commercial interests and away from public health.” – Medicins Sans Frontieres (Doctors Without Borders), Awarded Nobel Peace Prize 1999

“Some matters pushed by the business community have little or nothing to do with the interests of the vast majority of U.S. workers and should not be emphasized. These include [efforts to] extend and strengthen patent protections.” – Lawrence Summers, former Treasury Secretary and Harvard University professor

Back when trade deals mainly addressed import tariffs, the thrust of economic analysis, going back to David Ricardo and Adam Smith, was clear. … But since trade treaties have begun to focus on issues such as intellectual property rights, where new rules can retard economic activity as much as extend it, that is no longer the case. … No one can calibrate with a reasonable degree of confidence the impact of tighter intellectual property protections or harmonized regulations, which are likely to do more to transfer income from one group (consumers) to another (producers) than to affect the overall size of the economy.” – Alan Beattie, Financial Times

In 2007, House Democrats insisted on changes to four pending trade agreements with Peru, Panama, Colombia, and South Korea. Those changes, among other things, created the most progressive medicines provisions in U.S. trade agreements. Unfortunately, TPP is currently failing to live up to that standard.

The May 10th Agreement Got it Right on Medicines

Millions of people in developing countries currently lack access to life-saving medicines. According to an expert commissioned by the United Nations, improving access to existing medicines could save 10 million lives each year.

Generic medicines can improve access by dramatically lowering costs. For example, a decade ago, a year of antiretroviral treatment for HIV infections cost approximately $10,000 – roughly two or three times the per capita income in Peru. Once generic alternatives became available, the average cost of treatment dropped dramatically. Today, the cost can be as low as $200 per patient in developing nations with access to these low-cost generic drugs.

At the same time, pharmaceutical companies need incentives to invest in the research and development necessary to develop innovative products. There would not be a generic version of a medicine if an innovative drug company did not first develop a patented version of the product. Innovative drug companies are responsible for extraordinary advances in public health.

Thus, the health of millions of patients depends upon striking the right balance between access to medicines and innovation by drug companies.

On May 10, 2007, shortly after taking the majority, House Democrats insisted that trade agreements negotiated by the Bush Administration be renegotiated to address several deficiencies, including the need for balance between creating incentives for innovation and access to medicines (as well as the inclusion of strong and enforceable labor and environmental protections). The Bush Administration acquiesced, leading to the “May 10th Agreement” of 2007.

There were four provisions in the then-pending trade agreements that required changes in the May 10th Agreement: patent extensions, “linkage,” data exclusivity, and the public health “side letter.” (Read more about these provisions here). Not only was it necessary to strike a new balance between access to medicines and innovation by pharmaceutical companies, in some cases these changes could better achieve both objectives.

TPP is a Major Step Backwards

U.S. negotiators in TPP are attempting to roll back some of these provisions and to introduce still further protections for patent applicants or patent holders, at the expense of access to medicines. Consider the following examples:

  • Graduation.” The May 10th Agreement recognized that developing countries could not afford to take on the same high-level intellectual property commitments on pharmaceutical products that developed countries are expected to take. After years of battling the Administration on this, other TPP countries, stakeholders, and Members of Congress persuaded the Administration to carry this principle forward in the TPP negotiations. However, there is now talk about requiring developing countries to “graduate” to the developed-country standard within a fixed period of time. This approach is problematic, given how difficult it is to estimate when a country like Vietnam will become developed. Even worse, the time periods may not even attempt to reflect projections as to when a country will become developed. A country like Vietnam, which is not expected to become high-income for more than 30 years, may be required to take on more restrictive obligations in some fraction of that time. Such an outcome would be clearly inconsistent with the May 10th Agreement.
  • Biologics. The May 10th Agreement provides for five years of ‘data exclusivity’ (i.e., a period of time in which a generic medicine cannot market its product because it cannot rely upon the safety and efficacy data submitted by the maker of the name-brand medicine), running concurrently with the period in the United States where a developing-country relies on U.S. marketing approval. In TPP, U.S. negotiators are pressing for twelve years of exclusivity for biologic medicines for both developed and developing country parties. While that is the length of protection in U.S. law under the Affordable Care Act, the President has proposed reducing the term to seven years in his budget. No other TPP country provides such a long period – in fact, some provide no period of data exclusivity at all for biologics. Indeed, that is consistent with the Federal Trade Commission’s position – that no period of exclusivity for biologics is necessary.
  • “Evergreening.” “Evergreening” describes a strategy of seeking to extend the life of a patent by tweaking the product and obtaining a new patent. For example, a drug might be modified so that it protects against stomach discomfort, or a time-release version may be introduced. Some countries are taking steps to prevent the evergreening of patents. In TPP, U.S. negotiators are pressing for new language regarding the scope of patentability that may make it more difficult to address evergreening.
  • Mandatory Patent Extensions. Before the May 10th Agreement, our trade agreements required countries to extend the life of a patent to compensate for delays in the issuance of the patent. The May 10th Agreement found a better way to deal with delays. Rather than lengthening the term of the patent, the May 10th Agreement required countries to “make best efforts to process patent applications and marketing approval applications expeditiously with a view to avoiding unreasonable delays.” This provision, if properly enforced, improves access to medicines both by ensuring that government agencies process applications more quickly – and by avoiding delays that would result from patent extensions. Unfortunately, the TPP Agreement is expected to revert to the pre-May 10th provision requiring patent extensions.

The May 10th Agreement struck the right balance between the need to promote innovation and the need to protect public health. TPP must meet the standards set in the May 10th Agreement. Right now it does not. It should not be loaded up with new anticompetitive provisions when governments struggle to manage health care costs.

TPA Provides No Guidance

The Hatch-Ryan-Wyden bill includes additional language on access to medicines that was not part of the 2002 bill, possibly as a nod to the May 10th Agreement.  But it is unclear what this language means.  Even if the language is intended to support the May 10th Agreement, it is only a “negotiating objective” and can be ignored – indeed, it clearly is being ignored – by our negotiators.    

114th Congress