Commissioner Karel De Gucht European Commissioner for Trade European Commission BE-1049 Brussels
Student Stop AIDS Campaign 7 Wootton Street London SE1 8TG United Kingdom
31 July 2014
Dear Commissioner De Gucht, Thank you for your letter of April 24th in response to our concerns about the EU’s trade policy on Intellectual Property Rights and its impact on access to medicines in developing countries. We recognise that the EU has made a significant commitment to fighting HIV, alongside other neglected diseases - through your financing of the Global Fund to fight HIV, TB and Malaria; funding of late-stage clinical trials for new drugs and for the research and development of an HIV vaccine – that you outline in your letter. It shouldn’t be understated how proud we are that the EU recognises the impact of these diseases, which disproportionately affect people in the developing world. However we are concerned that the importance of protecting global public health is deteriorating as a consequence of the EU prioritising the interests of private business in trade agreements. For this reason we felt it was important to consult civil society groups in Thailand and India and to reply to your letter highlighting the inconsistencies in some of your assertions. In your letter you outline how ‘the EU does not negotiate in its bilateral free trade agreements any measures that could hinder access to health care and medicines’ – however despite the European Parliament resolution of 12 July 2007 on the TRIPS Agreement and access to medicines that calls on the Council to ‘prevent it from negotiating pharmaceutical-related TRIPS-plus provisions affecting public health and access to medicines’1 these clauses remain present within the Indian, Thai and US trade negotiations. Please see the following breakdown of these provisions and details of how they will negatively impact access to medicine. Within the EU – India FTA there are: -
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TRIPS-plus Intellectual Property enforcement provisions. These would allow drug producers, sellers and health care providers to be served an injunction for a
European Parliament resolution of 12 July 2007 on the TRIPS Agreement and access to medicines available at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-20070353+0+DOC+XML+V0//EN
suspected infringement of patent rights. It would also allow for medicines suspected of infringement to be immediately seized even when the infringement hasn't been proven. Both these incidences would result in delayed access of affordable medicine. -
Investment provisions such as the ISDS (Investor to State Dispute Settlement). This means a private company could sue a government for passing a law that interrupts their ability to make profit, even if that law was tabled to protect public health, welfare or the environment. For example a Swiss cigarette manufacturer sued the Uruguayan government for passing a law that wanted to put bigger warning labels on cigarette packets to discourage people from smoking and promote public health. 2
Your letter mentions that the ‘The EU is fully committed to support the use of the flexibilities as set out in the TRIPS Agreement (allowing e.g for compulsory licensing)’ however the ISDS would allow a pharmaceutical company to sue the Indian and Thai, governments for issuing a compulsory license if they felt it was going to compromise their ability to make profit in that market. The EU – Thailand FTA draft includes similar IP enforcement and Investment provisions and additional clauses: -
Patent term extension. The length of a patent can be extended by up to 5 years to compensate for the time the originator has had to wait whilst that patent was being processed. This means that countries can be punished for investigating the efficacy of a patent or disputing it if they feel it doesn’t count as a new invention. The extension of the patent means there is no generic drug competition and as a result the price of medicine remains un-affordably high.
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Data Exclusivity. This prevents drug regulators from relying on clinical trial data of drugs to approve generic versions of those drugs. This means that the generic producer will have to wait a further 5-10 years to produce a generic version as they cannot legally sell a drug without drug regulatory approval. They have the option of performing their own trials and submitting this data to drug regulators but this takes time, is expensive and is unethical. Data exclusivity applies to patented and nonpatented drugs and creates a monopoly separate from patents. For example data exclusivity provisions included in the 2001 Jordan-U.S. Free Trade Agreement resulted in the delay of registration of generic versions of 79% of
2 Medicine Sans Frontier, How a Free Trade Agreement between the European Union and India could threaten access to affordable medicines for millions of people worldwide, available at http://www.msfaccess.org/sites/default/files/MSF_assets/Access/Docs/Access_Briefing_HowFTAthreatensme ds_ENG_2012.pdf)
medicines that were not patented between 2002 and mid-2006. Without generic competition, Jordan spent an additional sum of between US$6.3 and $22.04 million on drugs during this time period.3 Data exclusivity remains within the draft text of the Thai FTA despite its removal from the Indian FTA, a move which was made in response to criticism of the risk posed to public health by its inclusion. To withdraw this term from one FTA draft due to its negative impact but retain it in another whilst still claiming there is no public health threat is contradictory and seriously undermines faith in the sincerity of your assertions. -
Restrictions on parallel import. Parallel importation is a key mechanism that “in the context of medicines, allows procurement agencies and treatment providers or third-party importers to import medicines from other countries where the prices are lower than the prices set in the local market.�4 TRIPS allows governments to determine the regime of exhaustion they want to follow, with the international exhaustion regime considered optimal for public health as it allows governments to access lower priced drugs from anywhere in the world. However, the draft of the EU-Thai IP chapter requires the parties to adopt either a national or a regional system of exhaustion thus greatly restricting the ability of the Thai government to take full advantage of the parallel import flexibility.
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Requirement for Thailand to mandatorily encourage negotiation with patent holders undermining compulsory licences The leaked text of the EU-Thai IP chapter also contains a provision mandating that the Thai government encourage negotiations between public entities and patent holders. As the EC is in no doubt aware, a key flexibility in relation to compulsory licences is that governments do not have to negotiate with patent holders in situations of national emergencies, extreme urgency and public non-commercial use as well as where [anti-competitive]. In effect the EU proposal threatens to undermine this critical flexibility of compulsory licences. It further mandates that the
3 All costs, no benefits: how TRIPS-plus intellectual property rules in the US-Jordan FTA affect Access to Medicines, Oxfam, 2007, available at http://www.oxfam.org/sites/www.oxfam.org/files/all%20costs,%20no %20benefits.pdf
4
DOHA+10 TRIPS flexibilities and access to antiretroviral therapy: lessons from the past, opportunities for the future, UNAIDS Technical Brief, 2011 available at http://www.unaids.org/en/media/unaids/contentassets/documents/unaidspublication/2011/JC2260_DOH A+10TRIPS_en.pdf
Thai government encourage projects by the industry on access to medicines. As we note below the record of such voluntary mechanisms has been questionable at best and it is critical that governments are not bound by obligations to encourage such mechanisms. We are aware that current trade negotiations with Thailand are suspended but we would like to ask about the criteria in which these talks will be resumed as we have strong concerns, outlined above, over the current provisions included in the FTA. In connection to this we would like to ask whether there will be any formal or informal negotiations with the Junta Government while public participation and basic human rights are still limited. Aside from the assertions you make about the EU’s IP policy not affecting access to medicines, we also have a number of other concerns relating to other details included in your letter. In regard to your statement that the ‘EU has had since 2003 legislation in order to encourage lower (i.e tiered) pricing by pharmaceutical companies in developing countries’ it is important to highlight that tiered pricing initiatives have not proved successful in improving access to medicines for the most marginalised. Studies have shown that the voluntary price reductions generated by tiered pricing do not come close to matching the reductions achieved by a competitive generic market. Middle Income Countries are increasingly excluded from voluntary generic competition based approaches and pay a higher premium than Low Income Countries despite the fact that 75% of the world’s poorest people reside in the former. You also mention that ‘…most of the medicines (i.e 98.6%) on the WHO list of essential medicines are already off patent’. Whilst we support the WHO’s EDL as an initiative to ensure that diseases affecting a disproportionate amount of the population are made readily available, the list is in no way a reflection of the medicines essential to a strong health system. Predominantly this is due to the screening criteria of medicines to make the list, which includes ‘cost-effectiveness’, ironically meaning the high prices charged for medicines by pharmaceutical companies keep them off a list the pharmaceutical companies, and the EU, use to justify blocking reforms designed to help reduce prices. In the same paragraph you write:
‘The reason why 2 billion people worldwide have no access to essential medicines goes far beyond any clauses contained in EU free trade agreements. For instance, many developing countries apply tariffs, taxes and substantial mark-ups to medicines and lack an efficient procurement system as well as healthcare system, with the result that they are unable to provide the required prevention and care to their population’.
Whilst we recognise that inefficiencies within national health systems in some developing countries are contributing obstacles to people accessing essential medicines, it is important to say that tariffs and taxes do not play a significant role in this. A recent report by the World Health Organisation highlighted that ‘…with respect to tariffs, the data show that in general tariffs are zero per cent or rather low, with a few exceptions. Overall, tariffs are not likely to be a major price driver. 5 Although the report states that countries should consider abolishing taxes on essential medicines and control mark ups - without generic competition the originator price for drugs is still overwhelmingly high for the majority of people living in developing countries to afford. For instance a 3 rd line HIV regiment is $2006 in the poorest countries and over $25,000 in some middle income countries. We may also point out that Thailand, in this regard, has a globally acclaimed universal healthcare system and it was in the course of ensuring universal access to the best standard of care for their citizens by using its right to issue compulsory licenses for 7 drugs for HIV, heart disease and cancer. A study of the impact of these compulsory licences over a five year period from the dates of the licenses (2007 and 2008) found that, ‘an additional 84,158 patients were estimated to have received access to the seven drugs over five years. Health gains from the use of the seven drugs compared to their best alternative accounted for 12,493 QALYs gained, which translates into quantifiable incremental benefits to society of USD132.4 million”6 Generic competition has proved to be the most efficient and sustainable way of driving down the prices of drugs evident in the fact that 1st line HIV medications that cost $15,000 per person per year in the late 1990s now cost under $100. It is the best system we have for ensuring that even the most marginalised people can gain access to the essential health care, which is human right. We urge you as the Trade Commissioner for the EU to recognise, in light of the evidence supplied in this letter, to not allow any Free Trade Agreements to contain provisions that put profit ahead of public health. Whilst we are concerned about the effects of TTIP - on access to medicines considering the inclusion of ISDS and the fact that TTIP is supposed to set the global standard for all future trade agreements – we are grateful for the EU granting an online public-consultation to discuss the impact of Investor-State Dispute Settlement. We firmly believe all aspects of all
5 World Health Organisation Increasing access to HIV treatment in middle-income countries: Key data on prices, regulatory status, tariffs and the intellectual property situation, available at http://www.who.int/phi/publications/WHO_Increasing_access_to_HIV_treatment.pdf?ua=1
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Yamabhai et al, Government use licenses in Thailand: an assessment of the health and economic impacts, Global Health. 2011; 7:28, available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3176479/
FTA negotiation texts should be opened up to similar levels of public scrutiny to ensure the rights of EU and developing country citizens are respected. Finally, I ask that you make time to meet with representatives of our network to discuss these challenges. I hope you find this letter useful and we look forward to hearing how we can move forward with the EU championing international public health. Yours Sincerely,
Student Stop AIDS Campaign