Lead Author: Chalermsak Kittitrakul
Organization: FTA Watch
Country: Thailand

Abstract

FTA Watch is a coalition of 25 organizations in Thailand, who are non-government organizations, civil society organizations, people living with HIV network, academics, patient and small-scale farmer groups, consumer group, and health activists, that has monitored and provided policy recommendation to the Thai governments on the impacts of free trade agreement negotiations since 2003.

We have grave concerns over bilateral and regional trade agreement negotiations, which include free trade agreements (FTAs) between Thailand and the USA & the EU, FTA between India and the EU, Trans-Pacific Partnership Agreement (TPPA), and Regional Comprehensive Economic Partnership (RCEP) between ASEAN and six countries (ASEAN+6) including Japan, South Korea, India, Australia, New Zealand, and China.

All of these agreements have incorporated or likely introduce intellectual property (IP) rules more stringent than the WTO’s TRIPs Agreement, which is the global IP standard, and also Doha Declaration on TRIPs Agreement and Public Health. These trade agreements, in addition, also introduced non-IP rules, like data exclusivity, investor state dispute settlement (ISDS), and the TPPA’s Transparency Chapter Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices.

Despite the fact that, new mechanisms were invented in the last few years with an intention to overcome a lack of lifesaving medicines at affordable prices like voluntary licenses and the Medicine Patent Pool, they have been distorted to encouraged a new type of monopolization and do not promote access to essential medicines for people who really need the medicines, especially patients in middle-income countries.

Such trade negotiations and the voluntary licensing mechanisms are undermining access to lifesaving medicines as well as R&D capacity of generic pharmaceutical industry in the developing countries, which would play a critical role in the competition leading to reduction in drugs’ prices and the promotion of access.

Submission

Impact of Bilateral and Regional Trade Agreements on Access to Essential Medicines

Thailand has at least 37 Bilateral Investment Treaties (BITs) that are in force and a party to 11 Free Trade Agreements (FTA). In June 2004 and March 2013, Thailand started FTA negotiations with the USA and the EU respectively. But due to the coup staged in 2006 and 2014, the US and the EU governments suspended the negotiations.

However, the past and current governments have shown their interest to continue and join other regional trade agreement negotiations including Trans-Pacific Partnership Agreement (TPPA) and Regional Compressive Economic Partnership (RCEP).

Intellectual property (IP) rules introduced in the trade agreement negotiations are more stringent than the WTO’s intellectual property standards, known as TRIPs (Trade Related Aspect of Intellectual Property Rights) Agreement, and violate Doha Declaration on TRIPs Agreement and Public Health. The trade agreements with stricter IP rules are a threat to access to lifesaving medicines at affordable prices, not just only for Thailand but for all the developing countries.

It has been a consistence intention of State officials to negotiate and accept agreements with IP conditions stricter than the WTO’s IP standard, which is known as “TRIPs plus” provisions. TRIPs plus provisions allow the pharmaceutical industry able to extend patent protection more than 20 years, undermine competition of generic medicines that play an important role in lowering prices of medicines, and also limit the use of public health safeguards under the TRIPS Agreement and Doha Declaration that have intention to ensure access to affordable medicines for all and emphasize importance of public health before trade. As a result, if the TRIPS plus provisions are accepted, lifesaving medicines will be extremely expensive.

In addition to TRIPs plus provisions in trade agreements, Investor State Dispute Settlement (ISDS) is also another major concern that has direct negative impacts on rights to health. Many FTAs and at least 33 BITs of Thailand included arbitration clause for investor-state dispute settlement (ISDS) that can be invoked only by investors against host States for alleged violation of investor’s benefits, even the States have laws and policies promoting health and public interest. The inclusion of ISDS would limit policy space and ability of State to protect and fulfil rights to health of its own peoples, as the investors can file lawsuit against State to the arbitration outside the country and require its government to revoke policies and/or pay enormous compensation .

According to the leaked text of the TPPA, CSOs in Thailand has also serious concerns over the Transparency Chapter Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices, as its implication will allow the multinational pharmaceutical industry to get actively involved and influence the government’s policy making process, including public policies and laws on price comparison, price negotiation, as well as price control in order to ensure that the country will be able to manage their limited resources to provide quality healthcare services and essential medicines to save lives of their own peoples in the most effective manner.

Thailand had a great success in promotion of rights to health by having the National Health Security Act B.E. 2545, which was a result of nationwide signature campaign in proposing the draft law to the Parliament. However, the trade agreements with TRIPs plus provisions and ISDS are threatening the Universal Coverage Scheme of Thailand, which is a fruitful outcome of the National Health Security Act and has been globally recognized as a best practice that it can provide quality healthcare services to over 80% of its citizens at no cost.

But the Universal Coverage Scheme will be at risk and not sustainable if the prices of essential medicines are exorbitant due to implications of TRIPs plus provisions . If Thailand accepts international trade agreements with TRIPS plus provisions, the spending on medicines will increase over 80,000 million Baht per year if the FTAs have condition of data exclusivity for 5 years .

Thailand was also recognized internationally about the use of the flexibility measures under TRIPs Agreement and Doha Declaration to address a lack of affordable medicines to treat AIDS, cardiovascular diseases, and cancers. People living with HIV and NGOs had actively advocated with the Ministry of Public Health since 1999 and it was successful in 2006 and 2007 that the government agreed to enforce the public health safeguards, known as compulsory licensing, in compliance with its Patent Act and the WTO’s TRIPs Agreement. Prices of ARVs, due to compulsory licensing, reduced 82 – 94% and over 90% in medicines for CVDs and cancers. It enhanced the government able to save costs approximately 6,000 million Baht in 2008 - 2011 and expand the health benefit package to cover kidney-failure disease .

Thousands of people living with HIV have accessed treatment with anti-retroviral drugs at no cost due to the Universal Coverage Scheme and the compulsory licensing policy; it is estimated that each 300 million Baht increased accessibility to anti-retroviral medicines for 10,000 patients. The impact of Thailand’s compulsory licensing also resulted in the worldwide price reduction of a number of original anti-retroviral drugs. Other developing countries like India and Indonesia followed Thailand’s footstep in issuing compulsory licensing on AIDS and cancer drugs.

However, the public health safeguards, as the flexibility measures in TRIPS Agreement, will no longer be enforced if a trade agreement with TRIPs plus provisions, particularly data exclusivity, border measures, and third party liability, is agreed.

Public health of the developing world is also under threat due to similar FTA that India is negotiating with the EU and in the RCEP. India is the “Pharmacy of the Developing World”, 70% of generic anti-retroviral drugs supplied to developing countries comes from India. If India signs TRIPs-plus FTA with the EU, it means that India has to amend its patent law and incorporate TRIPs plus provisions in their law, and India, the world’s major generic medicine supplier, will be shut down.

Impact of Voluntary Licenses and the Medicine Patent Pool to Access to Essential Medicines

Recently the treatment of hepatitis C (HCV) with the direct-acting anti-viral medicines (DAA), namely sofosbuvir, daclatasvir, ledipasvir, and the other HCV DAAs in the pipeline, has become a global controversial issue due to their exorbitant prices that the transnational drug companies introduced to the market (e.g. sofosbuvir USD 84,000 per 12-week treatment, sofosbuvir+ledpasvir USD 94,000 per 12-week treatment).

Gilead Sciences, Inc. has filed patent applications for sofosbuvir in many countries. However, it has been questioned about its patentability and was challenged in many countries. Patent oppositions have been filed against Gilead’s patents on sofosbuvir in India, Argentina, Russia, Thailand and the EU. And, patent applications for sofosbuvir in Egypt, China, and Ukraine were already rejected by those countries’ patent offices.

While the patents are not granted in India yet, Gilead reached agreements , known as voluntary licenses, with 11 big generic pharmaceutical manufacturers in India last year allowing those companies able to produce and sell generic versions of sofosbuvir at low prices to 91 countries. But these deals exclude a number of middle-income countries with very high burdens of hepatitis C, including Thailand. This leaves around 49 million people in such countries, representing more than 40% of the global hepatitis C burden, without access to this drug.

Gilead’s registration of sofosbuvir was approved by the Food and Drugs Administration of Thailand in 2015, but it hasn’t been marketed in Thailand yet. Sofosbuvir and the other DAAs are recommended in the national treatment guideline. But, due to its exorbitant prices, the Thai government hasn’t included the medicines in the universal coverage scheme’s benefit package yet, while the country has approximately 1.2 – 1.7 million people who are living with hepatitis C virus and need the treatment.

It is expected that Gilead’s sofosbuvir will be launched in Thailand at the price of USD 3,600 per 12-week treatment, which is considered expensive when comparing to generic versions in India sold at USD 335 per 12-week treatment. Unfortunately Thailand is excluded from the Gilead’s voluntary license deals with the 11 Indian companies. Thailand is illegible to import the finished products and active pharmaceutical ingredient (API) for local production from India. Worsen than that, Gilead has filed many patent applications for sofosbuvir in Thailand. Therefore, people who have hepatitis C infection have no choice but to use pegylated interferon that can cause intolerable side effects. If the patients are untreated, it can cause liver cirrhosis and cancers. It is estimated that 150 million people globally are infected with hepatitis C, and 700,000 die from the liver cirrhosis and cancers due to hepatitis C each year.

In July 2011, Gilead Sciences, Inc. announced a great success in their contribution to the promotion of access to medicines by signing an agreement on licensing AIDS drugs to the Medicine Patent Pool (MPP). However, in reality this announcement was a bad news for millions of people living with HIV in the low and middle income countries excluded from the benefits of the Patent Pool. Such a divisive agreement contradicted the original intent of the Patent Pool, as a newly created mechanism to overcome IP barriers and promote access to essential medicines for all.

Although the Gilead agreement allowed medicines produced under its license to be shipped to excluded countries if they decided to use a public health safeguard, known as compulsory licensing, there were very few examples of developing countries being able to use this public health safeguard successfully. It required strong political will and massive public pressure to ensure that governments use compulsory licensing in the face of pressure and retaliation from the multinational pharmaceutical industry and its governments. Thailand and Brazil are examples of countries that faced massive backlash after issuing compulsory licenses on HIV medicines.

Whether or not such provisions were in the Patent Pool license, it makes no difference – eventually huge numbers of people remain without access to affordable essential medicines. Instead of pushing low and middle income countries to take the difficult option, Gilead should not limit the countries that can benefit from their licenses; unless they had a hidden agenda to weaken local production capacity and impede competitiveness of generic medicines.

As in Thailand, where there is no patent on tenofovir, many countries are also trying to impose strict patent standards and patents on tenofovir have been rejected in some countries or don’t exist in many countries. But Gilead has placed conditions before the generic companies can supply to those countries where patent is rejected or does not exist – so the license made it more difficult for excluded countries to get generic supply even if patent is rejected in their country.

In addition, Gilead claimed that the agreement with the Medicines Patent Pool has been made public to reflect the transparency of the process. However, the company did not provide reasons or the criteria used for selecting which countries could benefit from their licenses. For example, Thailand is included in the tenofovir license, even though tenofovir is not patented in Thailand, but Thailand is excluded from licenses for cobicistat and elvitegravir that may have patents in Thailand. What were the reasons for the Medicines Patent Pool to accept exclusion of Thailand for the new drugs? Is the primary objective of the Medicines Patent Pool (MPP) still to be a new mechanism to address the particular public health needs of developing countries?

Recently the MPP announced that it extended its target medicines to the HCV DAAs, the medicines for hepatitis C treatment. While the MPP cannot set non-negotiable standards in the licenses with the pharmaceutical corporations, especially geographical scope limit, the licenses under the MPP remain problematic and become barriers of access, rather than promotion of access.

Giant multinational drug companies are increasingly taking over the Indian generic-drug industry - since 2008 multinational pharmaceutical corporations have already taken over six drug companies in India. India is recognized as the supplier of low-cost generic drugs to the world. To confine manufacturing to only India and to limit supply sources of active pharmaceutical ingredients (API) in the agreement is a strategy to control the Indian pharmaceutical industry and undermine its capacity to supply affordable generic medicines to other developing countries. The control of API also makes it difficult for manufacturing to take place in other countries. That includes R&D capacity in the production of fixed-dose combination and other formulations in the developing countries.

Generic competition is the most effective mechanism to make significant reduction in drug prices. The licenses given to the MPP with such restriction will jeopardize the competition of generic medicines by selectively giving license to Indian manufacturers only and limiting countries who can buy the medicines from India. Therefore, the drug prices cannot be reduced as much as they should be, and this will further limit the number of people who can access to these medicines.

We recognize such a business practice is a way to monopolize the world’s pharmaceutical market and a strategy to maximize and protect their profits, rather than to overcome the access to medicines issue as they claim. Without the free competition of the generic medicine industry, it is impossible that the drug prices will sustainably reduce and all people can equally access to essential medicines at affordable prices as they need.

Due to TRIPs plus provisions in bilateral and regional trade agreements as well as problematic conditions in voluntary licenses of the MPP and the multinational pharmaceutical industry, it discourages and undermines R&D capacity of the local generic pharmaceutical industry which play an important role in promoting competition and lowering prices of essential medicines that will lead to promote access for all.

Recommendation
1. The governments of the USA and the EU must stop pressuring the developing countries to accept bilateral and regional trade agreements with TRIPs plus provisions (e.g. data exclusivity, patent term restoration, extensive patentability criteria, patent linkage, border measures, third party liability, etc.), investor state dispute settlement (ISDS), and the TPPA’s Transparency Chapter Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices.
2. Leading international organizations, including UN’s agencies, WHO, and UNITAID, should not support voluntary licensing that has conditions limiting production and distribution of essential medicines and active pharmaceutical ingredients to a certain number of countries. Instead, they should be more active in encouraging and supporting all the countries to effectively use public health safeguards under the WTO’s TRIPs Agreement and the Doha Declaration to promote access to affordable medicines and rights to health.
3. Relevant UN agencies, WHO, and UNITAID should encourage and meaningfully support developing countries to have capacity in R&D and local production of generic medicines. Collaboration on R&D and technology transfer between developing countries should be initiated and supported.
4. The Working Group on Intellectual Property of ASEAN should not be influenced by the US and EU governments to introduce a unified patent system in the region with TRIPs plus provisions.

Bibliography and References

1) https://www.oxfam.org/sites/www.oxfam.org/files/all%20costs,%20no%20benefits.pdf, and http://www.doctorswithoutborders.org/sites/usa/files/Access_Briefing_TPP_ENG_2013.pdf

2) https://www.ag.gov.au/tobaccoplainpackaging, http://www.twn.my/title2/health.info/2015/hi151002.htm

3) Akaleephan C, Wibulpolprasert S, Sakulbumrungsil R, et al. Extension of market exclusivity and its impact on the accessibility to essential medicines, and drug expense in Thailand: Analysis of the effect of TRIPS;Plus proposal. Health Policy (2009), doi:10.1016/j.healthpol.2008.12.009(2009),doi:10.1016/j.healthpol.2008.12.00

4) Nusaraporn Kessomboon, Jiraporn Limpananont, Vidhaya Kulsomboon, Usawadee Maleewong, Achara Eksaengsri and Prinya Paothong. Impact on Access to Medicines from TRIPS PLUS: A CASE STUDY OF THAI;US FTA. Southeast Asian J Trop Med Public Health 2010; Vol 41(3)

5) National Health Security Office (information about universal coverage scheme and CL policy)

6) https://www.gilead.com/news/press-releases/2015/1/gilead-expands-hepatitis-c-generic-licensing-agreements-to-include-investigational-pangenotypic-agent