E-DRUG: Health GAP on Data Exclusivity, CAFTA, USA and Guatemala
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[Data exclusivity and CAFTA might be boring subjects only understood by lawyers, activists and big farma lobbyists, but they will have dramatic impact on our ability to get essential drugs in the future. So we will all need to start debating this strategy of the USA to slowly, country by country, put pressure to promote big farma products and remove affordable generics from the markets. Now it's Latin America and Asia; soon it will be Africa's turn. WB]
Health GAP Policy Brief
Response to USTR Fact Sheet on CAFTA and Access to Medicines
Myths and Realities:
U.S. Pressure on Guatemala
Regarding Data Exclusivity, CAFTA and Access to Medicines
Feb. 10, 2005
The Guatemalan Congress passed a law, Decree 34-2004, that came into force
December 24, 2004, which was designed to increase access to affordable
generic medicines by expediting registration or marketing approval of
generic equivalents of new medicines. Under Decree 34-2004, generic
manufacturers would be able to obtain market registration without repeating
the clinical tests conducted by brand-name manufacturers. Instead, if they
could show that their product was chemically equivalent and worked the same
in the body ("bioequivalent") as a brand-name product, they would be able
to obtain marketing authorization. In enacting Decree 34-2004, Guatemala
was exercising its rights under the Doha Declaration on the TRIPS Agreement
and Public Health ("Doha Declaration") to "take measures to protect public
health?and to promote access to medicines for all." This law, passed with
the overwhelming support of Guatemalan legislators, is fully compliant the
WTO TRIPS Agreement and minimizes the risk that the national drug
regulatory authority will be blocked from using originator companies'
previously submitted safety and efficacy data to approve marketing of more
affordable generic equivalents.
The Office of the U.S. Trade Representative (USTR) and the U.S. Ambassador
to Guatemala, John R. Hamilton, have attacked this new legislation. In a
recent op-ed ("The FTA and Generics Do Coexist," Diario Siglo Veintiuno, 9
Jan. 2005), Ambassador Hamilton insists that Guatemala revoke the
challenged legislation and that instead it grant "data exclusivity" rights
to drug makers that will bar any use of safety and efficacy data for at
least five years. This absolute bar, for which is there is no legal
recourse, will inevitably delay the sale of affordable generic medicines,
meaning that fewer Guatemalan consumers will have access to life-saving
medicines.
In support of its strong-arm tactics, the U.S. has launched a damaging
disinformation campaign culminating in its USTR CAFTA and Access to
Medicines Policy Brief , February 2005. As a result of U.S. free trade
"myths" and unrelenting pressure, 34-2004 is under threat: on January 28,
2005, the Guatemalan Congress received legislation that would repeal
34-2004. In addition, the Congress received the text of CAFTA, which, if
passed by all signatory countries, would require five years of protection
over pharmaceutical test data. With these developments, "We no longer have
any problem," assured Ryan Rowlands, U.S. Embassy spokesperson in
Guatemala. However people living with HIV and other sick people in Central
America do have a problem. The U.S.'s myths must be refuted with the
truth: Guatemala and other Latin American countries have a right, indeed an
obligation, to guarantee access to more affordable generic medicines in
order to address their multiple public health needs.
Myth 1: Data exclusivity does not bar entry of generic equivalents;
generic producers are free to submit their own test data.
Reality: The U.S. administration argues that it is incredibly
expensive for originator drug companies to discover and prove the
safety and efficacy of new drugs, but then it argues that those costs
would not bar entry of a generic competitor. To the contrary, not
only would it be too expensive and time-consuming for generic
companies to repeat clinical trials to gain access to small markets
like Guatemala, it would also be ethically improper since the safety
and efficacy of the underlying product (and its equivalents) have
already been established.
Myth 2: Big pharmaceutical companies must get higher profits from even
small, poor countries like Guatemala in order to have incentives to invest
in research and development.
Reality: Profits from sales in poor countries are insignificant in
creating incentives for future research and development. The U.S.
drug industry is already the most profitable industry in the world.
Sales to CAFTA countries comprise less than .5% of global drug sales
(and all of Africa only 1.3%). U.S. drug companies make most of
their sales (80%) and an even higher portion of their profits from
the rich markets of North America, Europe, and Japan. They don't
need to squeeze blood from poor consumers in Guatemala in order to
bring a new medicine to the market.
Myth 3: Big drug companies won't bother to register their new products in
countries like Guatemala unless they are given data exclusivity (U.S.T.R.
cites Jordan in this regard).
Reality: Even with small quantity sales, drug companies still have
incentives to sell drugs at a profit to middle-class and rich elites
in smaller markets. Moreover, Big Pharma has been registering and
selling its brand-name drugs in dozens of countries without data-
exclusivity for the past 25 years. In addition to seeking data
exclusivity monopolies, drug companies typically have underlying
patent-based monopoly rights to their newest medicines, which already
erect strong barriers against generic competition. The jury is still
out whether Jordan and other countries will gain earlier access to
new medicines because of data exclusivity.
Myth 4: Only a few drugs are affected (25 out of 13,000) so Guatemalans
should not be worried.
Reality: Although it is true that data exclusivity will not apply to
all drugs, it does apply to the newest medicines, many of which
represent therapeutic breakthroughs, and, if implemented in the
manner wanted by the U.S., will apply to most new medicines brought
to market in Guatemala in the future. There's no reason that
Guatemalans should not have access to affordable versions of the
newest and most effective medicines even if those drugs are
relatively few in number.
Myth 5: The World Trade Organization's TRIPS Agreement requires Guatemala
to adopt data exclusivity provisions.
Reality: The U.S. administration is misrepresenting the standards
required by the TRIPS Agreement. The relevant portion of the TRIPS
Agreement, Art. 39.3, only requires protection of undisclosed data
against "unfair commercial use" ? basically theft or commercial
espionage. Nowhere does it state that exclusive rights must be
provided for a given period. In fact, TRIPS makes clear that
countries may decide for themselves what constitutes "unfair
commercial use" and that there are many possible approaches to
satisfy this requirement. Permitting a drug regulatory authority to
do its job ? assuring the quality, safety, and efficacy of medicines
? is not unfair commercial use; it is a mandated public service.
Prior to 1994, the U.S. tried to get its strict interpretation of
data exclusivity into the TRIPS Agreement and failed ? negotiators
simply rejected its proposal. The TRIPS Agreement, as clarified by
the Doha Declaration, ensures the primacy of public health and
further ensures that intellectual property rules do not interfere
with promoting "access to medicines for all." Furthermore, the Trade
Promotion Authority Act of 2002, '2102(b)(4)(C) requires the U.S. to
uphold the Doha Declaration. The USTR is defying this requirement.
Myth 6: CAFTA permits Guatemala to take measures it considers necessary to
protect public health, particularly with regard to the epidemics of
HIV/AIDS, TB, and malaria.
Reality: The exact language of CAFTA creates ironclad protection for
pharmaceutical test data with no textual exceptions for registering
medicines produced pursuant to compulsory licenses. While patents
that block access to medicines can be remedied through compulsory
licenses and other TRIPS-compliant safeguards, there is no such
recourse for data exclusivity. The U.S. is using vague assurances
about rights to protect public health for "epidemics such as
HIV/AIDS, tuberculosis and malaria to offset explicit language that
takes away such rights. "Sign this contract, but rely on my good
intentions" doesn't work when you buy a used car and it shouldn't
work in trade agreements either.
Myth 7: The "side letter" to CAFTA on public health[1] should give legally
sufficient assurances about U.S. intentions and residual flexibilities to
protect public health.
Reality: As in other recent free trade agreements, the U.S. has
drafted a "side letter" to CAFTA, which it says grants adequate
flexibilities to Central American countries to address their public
health needs. However, there are multiple inadequacies in the
proposed side letter including:
7 the side letter is subordinate and it does not supercede the
exact, contradictory language in CAFTA on intellectual property. If
the U.S. were serious about clarifying public health exceptions to
data exclusivity, it would include such language in the body of CAFTA
itself;
7 the side letter references HIV/AIDS, TB, malaria, and other
epidemics and/or matters of extreme urgency or national emergency,
suggesting that other public health concerns might not be covered by
the alleged public health exception. Guatemala has a larger AIDS
epidemic than any country in the region. But a carve-out for specific
diseases undermines efforts to increase access to medicines for all
public health problems, and recalls relentless U.S. efforts to
restrict the scope of the Doha Declaration over the past three and a
half years;
7 the side letter suggests that CAFTA countries will only be free
to use the August 30, 2003 Decision[2] when in fact countries have
additional and pre-existing flexibilities under the TRIPS Agreement
and the Doha Declaration (e.g., ordinary compulsory licenses
permitting domestic production or importation, parallel importation,
competition-based compulsory licenses, and even limited exceptions);
7 the side letter's total reliance on the August 30 Decision
system inappropriately suggests that using that system will be easy
when in fact there are multiple substantive and procedural barriers
in that system
7 the side letter limits countries to take only measures that are
"necessary," a term that is interpreted extremely rigidly in
international trade law, permitting exceptions only when there is no
other alternative whatsoever or only when such an exception is the
least obtrusive option;
7 despite the side letter, investment clause provisions in CAFTA
might permit pharmaceutical companies to sue Guatemala if it were to
grant an exception to data exclusivity in contradiction to the
language of Art. 15.10;
7 the side letter provides insufficient legal certainty to
generic companies to undertake efforts to formulate, test, and
register a bio-equivalent generic drug ? those efforts are too costly
and time consuming to undertake lightly, and they will not be
attempted if there is any residual uncertainty about the legality of
such efforts.
Myth 8: Letters from USTR to Congress give additional assurance about
public health flexibilities in FTAs.
Reality: The U.S.T.R. sent a "clarifying" letter to Congress on July
19, 2004, about a public health side letter to the U.S.-Morocco FTA.
In that letter, the General Counsel to the U.S.T.R. argued that data
exclusivity provisions would not "stand in the way" of compulsory
licenses necessary to protect public health and to effectively
utilize the August 30 decision. This letter contains some of the
same deficiencies discussed above. Moreover, a letter clarifying a
letter hardly creates the legal certainty necessary to embolden
developing countries to issue compulsory licenses or to motivate
generic companies to undertake costly and risky investments in
product formulation and drug registration only to serve relatively
small and poor markets. Congressional leaders should not be fooled
by the "fool's gold" of non-binding, after-the-fact, and deceptively
crafted written or oral assurances.
Conclusion
The U.S. is attempting to impose its will, and the interests of its
pharmaceutical industry, on weaker neighbors to the south, like Guatemala.
Guatemala exercised its sovereign right to try to ensure access to newer
and more effective medicines to meet its citizens' public health needs.
Rather than let Guatemala exercise the legal freedom it and other WTO
members had gained in the Doha Declaration to guarantee access to
affordable medicines, and rather than let Guatemala interpret the public
health side letter as having any legally binding effect, the U.S. is
instead threatening dire consequences to Guatemala and its neighbors.
There may be many reasons to oppose the proposed CAFTA text other than its
enhanced monopoly protections for the world's richest drug companies, but
the provisions on data exclusivity and U.S. actions against Guatemala are
enough to justify opposition both in the U.S. and in Central America.
Contacts:
Asia Russell 267-475-2645
Brook K. Baker 617-373-3217
Endnotes:
1 The second paragraph of the "Understanding Regarding Certain Public
Health Measures" states: "The implementation of provisions of Chapter 15
of the Agreement does not affect the ability of either Party to take
necessary measures to protect public health by promoting access to
medicines for all. This will concern, in particular, cases such as
HIV/AIDS, tuberculosis, malaria and other epidemics as well as
circumstances of extreme urgency or national emergency."
2 The Paragraph 6 Implementation Decision of 30 August 2003 addressed the
sourcing problem faced by countries with insufficient domestic
manufacturing capacity which therefore had to rely on export/import of
generic medicines to meet their public health needs. Because certain
provisions in TRIPS prevented large-scale export of medicines produced
pursuant to an ordinarily compulsory license, poorer and smaller countries
like Guatemala needed to have a system permitting such
production-for-export/import.