World Trade Organization (WTO) accession and implications for public health

1. World Trade Organization (WTO) accession and implications for public health Sanya Reid Smith Third World Network Kiev 22 September 2009

2. The effects of generic competition on ARV prices Doctors without Borders, ‘Untangling the Web of Price Reductions’

3. How TRIPS+ provisions can occur • Bilateral pressure, eg • USA’s Special 301 • Bilateral/regional trade agreements (FTAs) with developed countries, eg • European Union: eg PCAs with Armenia, Azerbaijan, Georgia, Kazakhstan, Russia • EFTA (Iceland, Liechtenstein, Norway, Switzerland): eg Ukraine’s negotiations and possible negotiations with Russia • USA: • Japan: • Regional patent offices, eg Eurasian Patent Organisation (which includes Armenia, Azerbaijan, Kazakhstan, Russia) • WTO accession • Bilateral investment treaties (BITs)

4. Analysis possible with World Health Organization (WHO) model • The model can analyse the individual and combined effects of TRIPS+ provisions such as: • Allowing patents for new uses of existing medicines • Removal of the regulatory review (‘Bolar’) exception • Patent term extensions • Data exclusivity • Linkage of medicine marketing approval to patent status • The model examines the effects of these TRIPS+ provisions on: • Medicine prices • Spending on medicines • Consumption of medicines • The market share of domestic generic medicine manufacturers • The model can quantify these effects over the short, medium and long term

5. Application of WHO model to Colombia Analysing the impact of the Colombia-USFTA’s TRIPS+ provisions found • Allowing patents on new uses: • would cause an 8% increase in medicine prices in Colombia by 2020 resulting in an additional cost of US$181million per year by 2020 and US$265million per year by 2030 • would also cause the Colombian medicine manufacturers to lose up to 13% of their market share by 2020. • The overall impact of the patents provision: • would cost Colombia an extra US$401million per year by 2020 and an extra US$657million per year by 2030. • if this additional amount is not spent, the consumption of medicine by Colombians would have to fall by 18% by 2020 and 20% by 2030. • would cause the Colombian medicine manufacturers to lose up to 31% of their market share by 2030

6. Application of WHO model to Colombia (continued) • Data exclusivity: • would require Colombia to spend an additional US$675million per year by 2020 and US$989million per year by 2030 • if this is not spent, Colombians will have to reduce their medicine consumption by 30% by 2020 • would cause the Colombian medicine manufacturers to lose 47% of their market share by 2020. • Linkage of medicine registration to patent status: • would require increased spending of US$53million per year by 2030 • would cause Colombian medicine manufacturers to lose 3% of their market share by 2020. • The total effect of Colombia’s USFTA provisions: • would require an extra US$1.5billion to be spent on medicines every year by 2030, • if this is not spent, Colombians will have to reduce their medicine consumption by 44% by 2030 • would cause Colombian medicine manufacturers to lose 64% of their market share by 2030 (‘Intellectual property in the FTA: impacts on pharmaceutical spending and access to medicines in Colombia’, MisionSalud and Fundacion IFARMA, Miguel Ernesto Cortes Gamba, Bogota, 2006 available from http://www.ftamalaysia.org/article.php?aid=153).

7. Other analyses of possible effects of TRIPS+ provisions • A study of the impact thus far of the TRIPS-plus provisions of the Jordan-USFTA found that: • one hospital alone has increased its medicine spending six-fold, • medicine prices in Jordan have already increased 20% since 2001 when the FTA began, • over 25% of the Ministry of Health’s budget is now spent on buying medicines, • data exclusivity has delayed the introduction of cheaper generic versions of 79% of medicines launched by 21 multinational companies between 2002 and mid-2006 and • ultimately the higher medicine prices are threatening the financial sustainability of government public health programs. • (http://www.oxfam.org/en/files/bp102_jordan_us_fta.pdf/download). • It was recently estimated that eight years of data exclusivity alone in Canada would have added $600 million to prescription medicine costs alone in the last five years. • ( http://www.canadiangenerics.ca/en/news/nov_14_06.shtml)

8. Other analyses of possible effects of TRIPS+ provisions continued • World Bank estimated that if Thailand uses compulsory licensing to reduce the cost of second-line antiretroviral therapy to treat people living with HIV/AIDS by 90% (eg by issuing compulsory licences), the government would reduce its future budgetary obligations by US$3.2 billion discounted to 2025. • http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/09/26/000310607_20060926124315/Rendered/PDF/374490TH0Economics0aids01PUBLIC1.pdf • The extension of patent terms alone has been calculated by the Korean National Health Insurance Corporation to cost US$529 million for having to extend medicine patents for 3 years and US$757 million if it has to agree to a four year extension in its USFTA negotiations. • (http://english.hani.co.kr/arti/english_edition/e_business/165065.html)

9. WTO accession • Extent of TRIPS+ commitments undertaken by countries in their WTO accession varies: • None < information < binding but loosely worded < binding and tightly worded • If the commitment is less binding and/or quite loosely worded, the impacts on public health of a TRIPS+ commitment in WTO accession may be able to be mitigated during its implementation.

10. WTO accession continued Example of quite tightly worded and binding, China’s data exclusivity obligation: • ‘The representative of China further confirmed that China would. . . [introduce and enact] laws and regulations to make sure that no person, other than the person who submitted such data, could, without the permission of the person who submitted the data, rely on such data in support of an application for product approval for a period of at least six years from the date on which China granted marketing approval to the person submitting the data. During this period, any second applicant for market authorization would only be granted market authorization if he submits his own data. This protection of data would be available to all pharmaceutical and agricultural products which utilize new chemical entities, irrespective of whether they were patent-protected or not. The Working Party took note of these commitments.’ • Paragraph 284, WT/ACC/CHN/49 and locked in in paragraph 342 which mentions paragraph 284 and is referred to as a commitment in the Protocol of Accession

11. WTO accession continued Eg contrast China’s DE with the DE in Peru-USFTA. Peru-USFTA has more loopholes: • ‘no person other than the person that submitted them may, without the latter’s permission, rely on such data in support of an application for product approval during a reasonable period of time after their submission. For this purpose, a reasonable period shall normally mean five years from the date on which the Party granted approval to the person that produced the data for approval to market its product, taking account of the nature of the data and person’s efforts and expenditures in producing them.’

12. Investment provisions in FTAs and BITs Bilateral investment treaties (BITs)/the investment chapter of FTAs may lead to infinite data exclusivity and/or an effective prohibition on compulsory licensing if they have: • A broad definition of ‘investment’ that includes: • intellectual property such as patents or the data used to give marketing approval to a medicine explicitly and/or • A ‘catch-all’: ‘any tangible/intangible, moveable/immoveable property and related property right • And an expropriation provision without exceptions • (or with only a GATT Art XX exception) • And investor-state dispute settlement • Government-government dispute settlement • Eg BITs between: Armenia-UK, Azerbaijan-Belgium, Georgia-Greece, Kazakh-Swiss, Russia-Japan, Ukraine-Netherlands

13. Thank you For more information and questions: sanya@thirdworldnetwork.net