Last weekend’s massive protests against the Trans-Atlantic Trade and Investment Partnership (TTIP) have once again put into the spotlight this “free trade” deal negotiated between the EU and the US. Citizens are worried about democratic deficits and the potential detrimental impact the treaty could have. Don’t trade our lives away explains how TTIP could restrict access to medicines and health care in Europe and beyond.
In the biggest demonstration that Germany saw since the Iraq war in 2003, more than 250,000 people went on the streets of Berlin, asking the European parliament to stop the negotiation of a free-trade agreement with the US. Among the most important reasons for this unprecedented resistance are the lack of transparency and democratic decision making – negotiators meet behind closed doors, “consulted” by business lobbyists. Civil society, NGOs and even parliamentarians(!) have no access to the treaty’s drafts and only recently –in the wake of public outcry – the EU made some of their negotiating texts publicly available.
What evokes special opposition are the so called Investor State Dispute Settlement (ISDS) mechanisms. These are transnational courts where corporations can claim compensation when they think national governments’ decisions could jeopardize their future profits. Sessions in ISDS are usually held in camera and run by judges that are generally more sympathetic to corporations than to the public interest. Famous examples of ISDS in bilateral treaties include Swedish energy giant Vattenfall suing Germany for its nuclear phaseout and tobacco multinational Philipp Morris taking Australia to court for a law on plain cigarette packaging.
There is a notorious case by Big Pharma, too: Eli Lilly wants $500 million from the Canadian government, claiming that patents on its blockbuster drugs Straterra and Zyprexa had been unrightfully revoked. The company had been granted several patents for various applications of the two medications, without providing studies that demonstrated the drug’s utility for these health problems – an approach referred to as “shotgun-patenting”. An ISDS is possible in this case as Canada is part of the North American free trade zone NAFTA. The US-based Eli Lilly alleges that it is discrimintaed against Canadian generic manufacturers and that the patent revocation contitutes an expropriation.
Further investment treaty claims were recently brought by major US, Canadian and French pharma companies. The grounds on which pharmaceutical companies could sue governments are diverse: price controls, reimbursement and therapeutic formulary decisions, marketing approvals and pharmacovigilance decisions, or stronger patentability standards. The devastating effects these court cases could have are not confined to the money demanded: in order to avoid ISDS trials, countries could seek to adapt their pharmaceutical policies – to the detriment of drug prices and safety.
Higher prices for medicines are one of the major threats of TTIP, especially for countries undergoing austerity measures such as Greece or Spain. Public expenditure on pharmaceuticals in the EU already shot up by 76% between 2000 and 2009 and thus outpaced overall economic growth by far. Some countries reacted to this by adapting their reimbursement policy, e.g. Germany now examines all new patented medicines regarding their costs/benefit ratio in relation to existing treatments. The US does not have such a system of drug price control and consequently, patients and insurers have to pay more to get their medicines.
TTIP now calls for harmonization in the pharmaceutical sector, which raises the fear that it could be the often lower US standards that will be agreed upon. Big Pharma’s leaked TTIP wishlist proves that companies want to have a voice in EU Member states’ pricing and reimbursement policies, undermining their negotiating power.
Furthermore, the US calls for “lower barriers” to patentability, enabling pharma firms to get IP protection even for minor changes in the formulation of a medicine or “shotgun patenting”, as in the Eli Lilly case. Adding patent linkages and patent term extensions to the bill (which are on Pharma’s wishlist), the number and duration of medicine monopolies would increase – and thus the time in which the industry can charge astronomical prices.
Harmonization could also endanger high European standards in two other fields: the public availability of clinical trial data and the prohibition of direct-to-consumer advertising (DTCA) of prescription drugs. The open access to all clinical trial data is a recent success in Europe, preventing pharmaceutical companies from obscuring undesired study results such as hazardous side effects. In the US, these data are considered property of the corporations and seen as a trade secret. Furthermore, the US is one of only two industrialized countries (the other being New Zealand) that allows DTC advertising – an approach that has been shown to foster over-prescription of drugs to patients that do not really need them – including all their side effects. Fortunately, the EU so far assured that it is not going to negotiate on clinical trials and DTCA regulations.
But the US does not only aim at harmonizing regulatory details on pharmaceuticals in TTIP – in fact the very core of European public health systems is in the firing line, with companies pushing for privatization of health services. The detrimental consequences of such privatization on access to medicines can be well studied in the US where many remain without any health insurance and high out-of-pocket payments are common. In combination with extraordinarily high drug prices, this prevents many patients from getting the medicines that they need.
Advocates of TTIP often claim how important such an agreement between these two “lighthouses of freedom and democracy in the world” would be, in order to set high standards that can serve as role models for other treaties. However, a bad TTIP could likewise set new global norms – such that excessively protect IP rights and companies’ profits. These standards will surely be seeked to impose on developing countries through future trade deals – TTIP would then have catastrophic effects on access to medicines far beyond the EU and US.