Healthy Skepticism Library item: 8966

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Publication type: report

Oxfam International
All costs, no benefits: How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines
: Oxfam International 2007 Mar 21
http://www.oxfam.org/en/files/bp102_jordan_us_fta.pdf/download

Abstract:

The USA continues to impose TRIPS-plus rules on developing countries, thus preventing poor people from accessing inexpensive, generic medicines. Jordan was required under the terms of its WTO accession package and its free trade agreement (FTA) with the USA to introduce TRIPS-plus rules. Medicine prices have increased drastically, and TRIPS-plus rules were partly responsible for this increase. Furthermore, stricter levels of intellectual property protection have conferred few benefits with respect to foreign direct investment, domestic research and development, or accelerating introduction of new, effective medicines. Medicine prices will continue to rise in Jordan, but the country will be unable to use TRIPS safeguards to reduce their cost. Other developing countries implementing or considering FTAs with TRIPS-plus rules should consider the consequences for public health.

Summary
Since enactment of the TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement in 1995, the USA has imposed progressively higher levels of intellectual property protection (TRIPS-plus rules) on developing countries, which undermines access to affordable medicines. The US-Jordan free trade agreement (FTA) introduced a rigid framework of TRIPS-plus rules that the USA continues to impose on developing countries, although subsequent FTAs have even stricter levels of intellectual property (IP) protection. Jordan was also required to increase the level of IP protection under the terms of its accession to the World Trade Organization (WTO).

Medicine prices in Jordan have increased 20 per cent since 2001. Higher medicine prices are now threatening the financial sustainability of government public health programmes. TRIPS-plus rules contributed to the increase in medicine prices, and will delay or prevent use of public health safeguards to reduce the price of new medicines in the future. In particular, data exclusivity has delayed generic competition for 79 per cent of medicines newly launched by 21 multinational pharmaceutical companies between 2002 and mid-2006, that otherwise would have been available in an inexpensive, generic form. Data exclusivity is a TRIPS-plus rule that creates a new system of monopoly power, separate from patents, by blocking the registration and marketing approval of generic medicines for five or more years, even when no patent exists.

Additional expenditures for medicines with no generic competitor, as a result of enforcement of data exclusivity by multinational drug companies, were between $6.3m and $22.04m. These expenditures have required that both public health system and individuals pay higher prices for many new medicines that are needed to treat serious non-communicable diseases (NCDs), such as hypertension, asthma, diabetes, and mental illness. For example, new medicines to treat diabetes and heart disease cost anywhere from two to six times more in Jordan than in Egypt, where there are no TRIPS-plus barriers.

Furthermore, there have been no benefits from introducing strict IP rules in Jordan, despite positive assertions made by the United States Trade Representative (USTR) and other US government officials ever since the agreement was enforced. In particular, there has been nearly no foreign direct investment (FDI) by drug companies into Jordan since 2001 to synthesise or manufacture medicines in partnership with local generics companies, which also has serious implications for public health. Patients in Jordan pay from two to ten times more for some new medicines compared with patients in Egypt, where new medicines are manufactured locally through licensing agreements and partnerships. The only FDI into Jordan by multinational drug companies has been to expand scientific offices, which use aggressive sales tactics to ensure that expensive patented medicines are used instead of inexpensive generics.

Furthermore, stricter intellectual property rules have not encouraged Jordanian generic companies to engage in research and development (R&D) for medicines since passage of the FTA; these companies have not developed any new medicines. Finally, new product launches in Jordan are only a fraction of total product launches in the USA and the EU; many new medicines launched in Jordan are exorbitantly priced and unaffordable for ordinary people, and few or no units of these recently launched medicines have actually been purchased on the local market, due to their cost.

In the future, an increasing burden of non-communicable diseases will require even greater expenditure on health care and medicines. Higher medicine prices will put a strain on the public health system, and for those Jordanians without health insurance, the higher prices will require significant out-of-pocket expenditure that disproportionately harms the poorest. Yet Jordan has fewer options now that TRIPS-plus rules are in place, and the government will be unable to mitigate higher medicine prices through the use of public health safeguards.

To reduce the burden of the US TRIPS-plus agenda and its effects on access to medicines, Oxfam recommends:

Jordan

Resist entry into the Patent Co-operation Treaty (PCT);
Introduce exceptions to data exclusivity that reduce its impact on generic competition;
Severely restrict scope of patentability in its IP law, and in particular, consider replicating India’s definition of scope of patentability;
Repeal its stringent restrictions on parallel importation

USA

Stop coercing developing countries into adopting TRIPS-plus IP protections through bilateral and regional trade agreements and through other forms of pressure and inducement.
Other developing countries

Prevent introduction of TRIPS-plus rules in national legislation, and fully implement TRIPS safeguards to ensure production of generic medicines for domestic consumption and for export to other developing countries.