MON, 23 JAN 2012 1:14P.M.
By James Murray
Click on the video tab here to listen to an interview with Professor Kelsey – she talks about the impact TPP could have on pharmaceuticals and tobacco control and whether the agreement will bring any benefits to New Zealand
Free trade with America!
Sounds exciting, doesn’t it? It’s made up of two great words; “free” and “trade”, and when you put those words together they are even better. That’s literally a trade you’ve got there, all shiny in your sweaty little hands, and it was free!
But of course, there’s no such thing as a ‘free trade’ and the current negotiations surrounding the Trans-Pacific Partnership (TPP)* have many worried about the US’s intentions regarding intellectual property laws.
Laws which, if agreed to by the New Zealand Government in their present form, could have a negative impact on the lives of New Zealanders and an even more drastic impact on people living in developing countries.
Negotiations surrounding the TPP are held in secret and have been ongoing since 2010. They are supposed to conclude this year, but then again they were also supposed to conclude in 2011.
Most of the information we know about the TPP is derived from leaked documents.
Last February a leak of the TPP’s Intellectual Property Chapter revealed the USA is taking what Auckland University Professor of Law Jane Kelsey describes as “an extremely aggressive position on intellectual property that contrasts starkly with the New Zealand proposal”.
Medication may be out of reach
In a nutshell, patent law regarding pharmaceuticals runs like this.
Drug company spends money researching and producing new drug.
They are given a patent for a certain period of time allowing them the sole rights to sell this drug at whatever price they see fit.
The patent, and ensuing profits, provide the incentive for the drug company to keep on inventing new and better medication.
No patent, means anyone can use the drug company’s work and the incentive to spend money inventing new products is lost.
Once the patent has run out, others are able to produce the drug. This ‘generic’ medication, is sold for a much lower price as the pharmaceutical company’s monopoly position no longer stands.
But there is an ethical problem here, the drug company has an artificially created monopoly and this means some countries are unable to afford the latest medication and those in developing countries can miss out on health care that people in richer countries take for granted.
Pharmaceutical companies often make concessions to third world countries and provide them with cheaper or free medication but this is not always equitable. (You can read more about the whys and wherefores of that here – but this blog is not the place for that argument).
Once a patent has run out, other companies are allowed to create generic versions of the drug and sell them at a much lower price. That is why you were probably given non-branded paracetamol the last time you went to the emergency department with a killer headache. It’s why Nurofen is so much more expensive than a non-branded product despite being essentially the same thing.
Critics of the TPP point out that the agreement spelled out in the leaked document would lead to a situation where pharmaceutical companies would be able to extend patents on medicines more easily and also delay generic drugs from hitting the market.
Firstly, there are provisions that allow a company to put a new patent on a drug if they can find a new use for it. As patent law stands the new use for the product must “involve an inventive step and [be] capable of industrial application”.
In the leaked TPP documents the wording is quite different saying that new patents for known products can be granted “even if such invention does not result in the enhancement of the known efficacy of that product”.
In other words, if the inventor of loratadine, an effective antihistamine that used to be extremely expensive but is now eminently affordable, discovered his product also turned horses purple he would be able to apply for a further patent and have exclusivity in selling the product.
This practice is part of what is known as evergreening, where pharmaceutical companies take out new patents on drugs which are soon to come out of patent for different uses of the drug but also for things as seemingly trivial as packaging and delivery systems.
The wording of this part of the agreement goes against law in “TPP negotiating countries, including Australia, Malaysia, and Vietnam” but according to the authors of the infojustice.org analysis the real target is India, a country which is obviously not a signee to the deal.
India is a major producer of generics and has a huge population, which in turn needs a huge public health system. Their own patent legislation is carefully worded to reduce the potential for pharmaceuticals to engage in evergreening practices.
The 2005 Amended India Patents Act does not allow the “granting of patents for ‘the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such process results in a new product or employs at least one new reactant’”.
The TPP as it stands will make it harder for India to export generic medication to TPP member countries, something that hardly promotes free trade in a wider sense of the term. It’s the sort of protectionism that artificially raises prices and distorts markets, again contrary to the general aims of free trade worldwide.
Making it harder for developing countries like India to get hold of generic medication has obvious public health implications as well – India has a huge population, many of whom live in poverty. Anything but the cheapest medication is out of the reach of most, and despite a massive public healthcare system it is estimated that it would need billions of dollars of extra investment over the next five years to reach international standards.
The leaked TPP document also contains a proposal on patent/registration linkage – another technique that comes under the evergreening umbrella. This goes further than the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which makes no specific mention of this.
Patent/registration linkage essentially forces regulatory bodies, who are charged with approving generic medicines as being safe for the market, with checking whether there are any patents on the product still in existence.
This offers pharmaceutical companies the option of stalling the launch of a generic medicine while the issue goes through the courts.
Australia is a good example of a country that has legislation to avoid this.
As part of the AUSFTA agreement the US required amendments to their patent legislation which required “applicants for marketing approval to certify their product would not infringe a valid patent claim, or that the patent holder has been notified of the application”.
The Australian Government stood up to this though and passed anti-evergreening measures, which prevent patent-holders from using court process to delay the marketing of generics.
Australia’s Chief Negotiator Stephen Deady said:
“We are not importing the Hatch-Waxman legislation into Australian law as a result of the free trade agreement…[Article 17.10.4] will not extend the time of the marketing approval process, and it does not add or provide any additional rights to the patent holders in that process…there is no injunction that can be applied under this article…it will be clear in the legislation tomorrow….we are establishing a measure in the marketing approval process that will fully meet the commitments under this article.”
The presence of patent/linkage in the leaked TPP document is a clear sign the US are still determined to push this issue.
So the Australians have already had a taste of what the TPP could mean for pharmaceuticals in their own country, but what about the effect of the agreement on New Zealand.
Professor Kelsey had this to say:
“One of the most interesting responses to the launching of these negotiations was the quite aggressive positioning by what we call ‘Big Pharma”, which is the large pharmaceutical lobby base in the US.
“For the US generally, the whole area of intellectual property is hugely lucrative, whether you are thinking about Hollywood, whether you are thinking about Microsoft, or companies that patent seeds like Monsanto or you talk about the pharmaceutical companies.
“They have pushed really hard for the Obama administration to demand provisions that go well beyond the intellectual property agreement in the World Trade Organisation, which has created enough problems for access to pharmaceuticals and beyond existing US Free Trade agreements, but they want to go even further.
“[The provisions in the leaked TPP document] are in a way designed to lock up their control and monopoly for longer and restrict the production of generics.
“But what they also want is to change the processes by which decisions are made by drug purchasing companies, [such as Pharmac].
“They really hate the Pharmac process. Pharmac has a cap on how much money the Government will spend on meds each year and that gives a lot of leverage to Pharmac in negotiating down prices of the drugs that will be subsidised. When I have been at events with big Pharma – they say ‘oh we are just talking about due process and decision making, we just want a fairer process and more transparency’, and what they really want is to be able to force Pharmac to disclose all the ways that they are making their decisions so they can challenge them more effectively and they want a guaranteed right of more of a seat at the table of the decision making process.”