World Trade Organization

World Trade Organization (Photo credit: Wikipedia)

By  Kajal Bhardwaj and Hans Löfgren

Indian firms are major global producers of relatively affordable generic medicines. Access to such drugs make the difference between life and death for billions of people in the Global South.

The Economist noted recently that ‘America should not use trade deals to swaddle drug makers in excessive patent protections’. Nor should the European Union (EU) impose obstacles to the supply of generic drugs by Indian firms beyond those already mandated by the World Trade Organization’s Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

Free trade negotiations between the EU (reported to be close to completion) constitute a clear threat to the role of India as the ‘pharmacy of the developing world’. From Independence in 1947 until the1970s, India relied on imports of highly priced medicines as a result of the patent regime inherited from the British.

In 1970the Indian Parliament changed the patent regime and till 2005 product patents were not issued on medicines in India. The Indian government in this period also put in place industrial policy measures in support of local industry. The result was a strong and vibrant generic industry producing safe, effective and affordable generic medicines.

The case of anti-retrovirals (ARVs) provides the most dramatic illustration of the global impact of Indian drug firms. In 2001 an Indian company, Cipla, introduced first line triple combination AIDS medicines at $350 per person per year, a stunning offer at the time.

The then GlaxoSmithKline CEO Jean-Pierre Garnier described Cipla as price-undercutting ‘pirates’. Other Indian firms followed Cipla’s model and today 80 per cent of the 8 million people living with HIV who are on treatment in developing countries are on Indian made generics.

As a result of competition from and between Indian generic producers, the price for first line AIDS medicines has come down from as much as US$15,000 in 2000 to less than US$120 per person per year for the current preferred first line triple combination in2012.

The TRIPS Agreement mandates minimum intellectual property rights (IPRs), including 20-year patent protection for products and processes in ‘all fields of technology’ including medicines.

With associated policy practices, rules, and trade agreements, TRIPS sustains a global regime of private monopoly rights which is widely recognized as impeding access to essential medicines in the Global south.

While TRIPS is not the only obstacle to public health, product patents complicate and delay the production and market entry of lower cost generic drugs.

In the sphere of global politics, a coalition of public health advocates, non-governmental organizations and governments, such those of India, Thailand, South Africa and Brazil, has sought to limit the impact of IPRs on access to medicines. The Declaration on the TRIPS Agreement and Public Health– the Doha Agreement – is the major achievement of this campaign.

Adopted at the fourth WTO ministerial conference in Doha in 2001, the Declaration confirmed and extended the right of WTO members to utilize a range of ‘flexibilities’ available under TRIPS, which make possible the circumvention of patent rights to meet pressing population health needs. It is fai rto say that several policies that challenge the norms, rules and basic political economy of the global IPR regime have attained legitimacy as a result of the widespread acceptance of human rights and public goods discourses to the field of health.

Many of these policies and ‘flexibilities’ were included in India’s new TRIPS-compliant patent regime by the Indian Parliament in 2005.

Health advocates, patient groups and the Indian government have effectively used these safeguards to ensure that only truly innovative medicines receive patents in India and where patented medicines are exorbitantly priced, generic production can be sanctioned to ensure access and affordability.

This was evidenced by India’s first compulsory license issued in March this year on Bayer’s cancer medicine sorefanib tosylate that Bayer was importing and selling in India for $5000 per person per month. The generic equivalents cost between $120and $160.

But in the same period of limited public health gains the governments of the North have pursued, with increasing vigour, bilateral and regional free trade agreements(FTAs). Many of these include so-called TRIPS-plus provisions (not required under TRIPS) which have the effect of entrenching and extending IPR protection and thus delaying the market entry of cheaper generic drugs.

Till recently, the European Union (EU) did not feature among the aggressive developed nations pursuing TRIPS-plus measures. But FTA negotiations with India, which started in 2007, raise serious concerns. Leaked negotiating texts of the IP and Investment Chapters show that the European Commission (EC), in a stark departure from its traditional model of trade negotiations, has demanded ambitious TRIPS-plus measures. After 11 rounds of negotiations, talks are now being held in smaller groups instead of full rounds of negotiation.

Both sides are aiming to conclude the deal by the end of this year or in early 2013.

There are three distinct areas of concern: Intellectual Property provisions, the Investment provisions and the Regulatory Standards provisions. The leaked chapters show that the EC has demanded longer patent terms, data exclusivity and TRIPS plus IP enforcement measures from the Indian government.

A key area is the EC push for aggressive IP enforcement, widely considered the latest front in the IP battle between the North and the South. Best reflected in the secretly negotiated ACTA which was recently rejected by the European Parliament, IP enforcement entails measures that significantly alter how IP holders like multinational pharmaceutical companies can use public resources, public money and public authorities to enforce their private rights.

Referred to as anti-counterfeiting measures, the rhetoric around IP enforcement uses the different meanings of counterfeit (i.e. fake in GOVERNMENT GAZETTE OCTOBER 2012 97EU – India Trade Relationseveryday parlance and trademark violation under the TRIPS Agreement) to argue that such measures are required to ensure that patients have access to safe and good quality medicines. However, the safety and quality of medicines requires investment in drug regulatory frameworks, not IP enforcement.

In fact, there is increasing evidence that aggressive IP enforcement hampers access to medicines. The clearest impact of this has been seen in 2008 and 2009 when generic medicines on their way from India to Africa and Latin America were seized at European ports.

Several IP enforcement provisions that were in the now rejected ACTA appear to still feature in the EU-India FTA negotiations. These provisions empower patent holding companies to seek measures against generics producers that are not limited to damages. The freezing of bank accounts, the seizure of properties and documents and several other harsh penalties are proposed as measures to strengthen the arsenal of patent holders.

Other provisions would drag the whole supply and distribution chain into potential litigation, creating a strong disincentive for chemists to stock generic medicines, truckers to transport them or even those building machines for generic companies to continue working with the generic industry and could pose a serious threat to the work of humanitarian organisations.

In 2011, the EC received a mandate from the European Council to include an ‘investment ‘chapter in EU-India FTA negotiations. The investment chapter would contain provisions designed to protect the interests of European investors in India and would be similar to provisions contained in bilateral investment treaties (BITs).

These provisions would allow multinational companies to sue the Indian government in secret international arbitration over laws and policies that benefit health or the environment including for the protection of their intellectual property. For instance, Australia’s tobacco control and plain packaging laws are being challenged under such provisions on the grounds that they violate the trademarks of big tobacco companies.

Resolutions passed by the European Parliament in April and May 2011 directed the EC to ensure that these investment provisions do not hamper generic production or the use of TRIPS flexibilities or other health policies.

The inclusion of regulatory standards in FTAs seems to be a relatively recent phenomenon. In February 2011, news reports suggested that the EC was demanding that India harmonize its drug regulatory standards with the standards set by the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH).

Developing countries (also known as then on-ICH countries) have argued against the adoption of ICH standards as they are too burdensome and expensive not only for developing country regulators but also for companies in these countries.

According to critics of the ICH standards, public health should be the first concern in non-ICH countries and higher technical standards must be justified by public health needs.

According to the EC it is no longer demanding that the Indian government agree to longer patent terms or data exclusivity. But it appears to be still pursuing demands for TRIPS-plus IP enforcement, investment measures and regulatory harmonization. In April 2011, the Indian Prime Minister’s Office issued a press release stating that nothing in the EU-India FTA would go beyond TRIPS or India’s domestic law.

Sources indicate that the EC has now shifted negotiation tactics to argue that several of their demands (like data exclusivity) are within the TRIPS framework or are already present in Indian law (like TRIPS-plus IP enforcement).

In February 2012, the 11th EU-India Summit was held in Delhi.
According to news reports, both India and the EC stuck to their stands on various contentious issues in the FTA.

As the negotiation texts continue to be secret, it is difficult to ascertain the actual shift in the position of the EC. Even if the EC drops its demand for EU-style data exclusivity, it may still argue that data exclusivity is required by the TRIPS Agreement.

The European Parliament has repeatedly issued resolutions directing the European Commission to ensure that access to medicines not be affected by the FTA. In May 2011, the European Parliament specifically asked the EC not to demand data exclusivity of the Indian government and recognized the importance of the use of TRIPS flexibilities by India.

Several of the health safeguards included in the Indian patent regime are at risk of being overturned or undermined by TRIPS-plus provisions demanded in the negotiation for a FTA with the EU. If accepted, these demands would have an impact not only in India but on patients across the developing world.

The EU’s FTA negotiations have drawn concern from UN agencies and international organisations such as UNITAID, the Global Fund on AIDS, TB and Malaria, Oxfam, MSF and many others. As recommended by the UN Special Rapporteur on the Right to Health, ‘developed countries should not encourage developing countries and LDCs to enter into TRIPS-plus FTAs and should be mindful of actions which may infringe upon the right to health’. Several other developing countries (such as Thailand) are engaged in FTA negotiations with the EU and reports indicate that the EC is demanding TRIPS-plus measures of these countries as well.

If so, the global protests sparked by India’s FTA negotiations will only intensify and the already weakened position of European countries as the promoters and defenders of human rights is likely to be further eroded.
Kajal Bhardwaj is a lawyer working on issues of HIV, health and human
rights in New Delhi.

Hans Löfgren is Associate Professor of Politics and Policy Studies, Deakin University ,Melbourne, Australia. He is the editor of The Politics of the Pharmaceutical Industry and Access to Medicines: World Pharmacy and India (Social Science Press, New Delhi, forthcoming 2013)

EU-India Free Trade negotiations in Government Gazette, October 2012