Op-Ed: How a new trade agreement will hurt poor’s access to medicines

Guest Column by James Love, director of Knowledge Ecology International

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President Barack Obama, in his 2013 State of the Union address, referred to an international trade proposal called the Trans Pacific Partnership Agreement, or TPP for short. It’s a massive set of trade negotiations with a lot at stake, affecting about 40% of all global commerce from the use of the internet to the price of drugs.

drug money
Flickr, Brooks Elliott

Salon called the Trans-Pacific Partnership the biggest trade deal you’ve never heard of, and speculated it “could potentially be the most significant foreign and domestic policy initiative of the Obama Administration.”

So why haven’t you heard of it? Three reasons:

  • First, the negotiations of the TPP are held in secret, making it hard to report.
  • Second, trade agreements are perceived to deal with technical and obscure issues that news editors think would bore most readers to death.
  • Finally, the White House makes it sound as if the trade agreement simply imposes “our” norms on foreigners, making it seem less relevant to U.S. readers

The TPP, in fact, will be a game-changer for all of us and is woefully lacking in media coverage.

Enough is known by activists about the negotiations to paint a fairly clear picture of its impact on global prices for medicines. That’s what I’m focusing on here. In particular, the TPP is poised to reverse major concessions on intellectual property rights protection for medicines in developing countries that were put in place in 2007 by the Bush Administration.

I think it’s both surprising and worth reporting that the Obama Administration is actually more hostile to the interests of the global poor than was the Bush Administration. 

The membership of the TPP will include the U.S., Mexico and Canada, the NAFTA members, but also four additional high income countries (Australia, New Zealand, Singapore and Brunei Barussalam) as well as four developing countries with lower incomes (Chile, Malaysia, Peru and Vietnam).  Debating whether to join are Japan, South Korea, Thailand, the Philippines, and other countries, making this agreement even more significant.

As the 16th round of negotiation finished this week in Singapore, delegates were pressing the United States for details on its proposals for new intellectual property right and pricing norms for medical inventions (including pharmaceutical drugs, vaccines and medical devices).

While negotiations are shrouded in extraordinary secrecy as regards the general public (while big corporate lobbies have access to negotiating texts), the general contours are well understood.  The White House office of the United States Trade Representative (USTR) is pushing for rules that expand and extend monopolies on medical inventions and shrink the ability of governments to negotiate lower prices. Here’s how:

  • Low standards of patentability for pharmaceutical drugs, making it easier to extend monopolies beyond the initial patent protection for active ingredients.
  • Mandatory patents for new uses of old drugs.
  • Extensions of patent terms beyond 20 years.
  • Automatic monopolies on the scientific test data used as evidence that drugs are safe and effective.
  • Procedures for big pharma companies to contest state reimbursement levels for high priced medicines.
  • New rights for owners of patents to sue governments over the use of compulsory licenses.

Our government considers higher prices and stronger monopolies for medical technologies as a good thing because several big drug companies and medical device manufacturers have significant U.S. operations, and hence the assumption that anything that is good for these companies is good for the United States.

Ignored in this perspective is the fact that incomes are far lower in several TPP member countries, and what the U.S. biomedical industry wants simply translates into less affordable health care for the poor. In 2011, the United States per capita income was 3.3 times that of Chile, the best-off developing country in the negotiation. The ratio of US income was 4.8 for Malaysia, 8 for Peru and 34.2 times for Vietnam.

Figure 1:  2011 per capita income for U.S. and selected developing countries

The White House is using the TPP to reverse a policy announced by President Bush in May 10, 2007, which relaxed our trade policy as regards intellectual property right standards for  medical inventions in developing countries. Among other things, the 2007 Bush policy eliminated the U.S. Government’s demand that developing countries grant extentions of the term of patents for drugs beyond  20 years, and it made it easier to register generic drugs.

The reporting on the TPP typically has not highlighted the fact that  the Obama administration has taken a much harder line with developing countries than did President Bush, and that this is a source of considerable alarm among development and health NGOs trying to monitor and influence the negotiations.

Doctors without Borders/MSF, Oxfam, Public Citizen, HealthGap, the Third World Network, Health Action International (HAI), KEI and others have tried to engage the White House since the first day of the negotiation, to little or no avail as regards its positions.

The Obama Administration appears largely indifferent to the impact of these policies on poor persons living in developing countries But it should be noted the Administration is also creating standards that will have a negative impact back home, particularly as the U.S. seeks to control spending on health care.

These costs are not mere abstractions. 

My wife is billed $7,861 every 21 days for an injection of trastuzumaba product sold by Roche under the brand name of Herceptin to control the spread of metastasized breast cancer.  I work for a small organization with precarious financing, and if we lose our health insurance we are looking at $137,000  per year just for this drug, a potentially ruinous situation. Even with insurance, we still have to negotiate for coverage.  In considering the possiblities, I’m anxious to see that cheaper biosimiliar products can enter the U.S. market.

At present, Roche has a global monopoly on the sale of Herceptin.  Herceptin was first brought to market by Genentech, a company that only invested in the development of the drug after Revlon and other charities raised money to show that it might work.

Today Genentech is owned by Roche, and Herceptin generates more than $.5 billion per month for the Swiss company. Before a biosimiliar drug can enter the U.S. market to compete, it must overcome tough regulatory hurdles include a twelve year monopoly on the use of drug registration test data.  Roche and other big drug companies are lobbying to push these types of  barriers to entry into the TPP, and both lock-in the worst features of the U.S. rules and apply them to all the TPP members, including very poor countries that have just a fraction of our income.

Deadly monopolies

The WHO estimates that 175 thousand women die from breast cancer every year in developing countries. Today there is virtually no access to trastuzumab in developing countries, despite the fact that roughly 20 percent of the women with breast cancer can potentially benefit from the drug.  The World Health Organization is just now considering two petitions (one co-sponsored by my organization, KEI) to place trastuzumab on its Essential Medicines List (EML), something that has been put off for years because of its high price.

Prices for cancer drugs are now so expensive that no country can afford to provide the coverage  for medicines that would be justified by the medical benefits of the products.   This has increasingly become a trade issue, as the United States and the European Union try to force tough intellectual property right standards and pro-drug company drug pricing rules around the global.

When governments are asked to cut off access to new cancer drugs and other life-saving medicines, they demand something in return, so the United States is paying for these demands in other ways — many of them will lead to losses in other parts of the U.S. economy, particularly from businesses that are not politically active enough to influence the trade negotiations.

Here it is worth noting that the while the United States has an impressive pharmaceutical industry, so do other countries.  More than half of the 15 largest drug companies are foreign owned.  Pfizer, currently the largest U.S. drug company, has more than 70 percent of its employees working in other countries.   According to the World Intellectual Property Organization (WIPO), the three largest holders of patents mentioning cancer are the european firms Novartis, Roche and Astrazeneca.

This dismal picture can be changed.  The White House has been urged to embrace more constructive trade policies that deal with both innovation and access to new medicines.

The most important idea is to begin to consider medical R&D as the objective rather than high drug prices.   Once trade negotiations focus on R&D as the end, there are plenty of creative ways to share the global costs of R&D for new medicines that don’t so directly harm consumers in general and poor persons in particular.

A 2008 proposal by Barbados and Bolivia in a World Health Organization (WHO) negotiation over intellectual property rights and innovation is particularly relevant to the cancer examples.

They proposed the creation of a multicountry prize fund for cancer.  The idea, first proposed by a Thailand health official, is to radically demonopolize cancer drugs in developing countries, permitting competition among generics suppliers to drive prices down.  In return, the developing countries would devote a share of their cancer treatment budgets to a prize fund to reward innovations in new drugs and better diagnostics.    The cancer prize fund would delink R&D costs from drug prices — something the WHO now considers a promising way forward.

If both innovation and access count, we can and must do something different in the TPP negotiation.

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James Love
James Love
KEI

James (Jamie) Love is director of Knowledge Ecology International, an organization in Washington, D.C., that monitors and advocates for the social justice implications of intellectual property and knowledge resources. He grew up in Bellevue, son of the first elected mayor of that fair city, and has for decades been working as an advocate on these wonky, technical matters to ensure commercial, government and multilateral organizations like the UN agencies adopt policies that also serve the interests of the poor.

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