Free Trade Agreements Should Promote Generic Competition, Speakers Say At WTO

The emphasis placed on the protection and enforcement of intellectual property for medicines in trade negotiations is ignoring the distorting effects of this emphasis, such as the lack of competition incentives which are key to reduce medicines prices, speakers on a panel of generic drug industries said at the World Trade Organization Public Forum last week.

The event, “Building Greater Inclusiveness into the Global Trading System for Medicines,” was organised by the International Generic and Biosimilar Medicines Association (IGBA) on 28 September.

Access to medicines is a global preoccupation, said Jody Cox, vice president for federal and international affairs, Canadian Generic Pharmaceutical Association. It is an acute issue in developing countries, but also a growing concern in developed countries, she said.

Incentives are needed to spur competition, more work is needed in this area, including reducing entry barriers, she said, warning against trade agreements which include patent term extension, and calling for more balance in intellectual property protection.

TRIPS Should Be Basis, Not Floor

Nawel Rojkjaer, senior director for international affairs at Mylan Pharmaceuticals, said IP standards related to pharmaceutical patents do not affect only trade, they are a monopolistic measure and have a direct and immediate impact on patient access to medicines.

Patent holders in innovation-exporting countries view the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as a floor, “which became a launch pad for many,” in particular the United States Trade Representative to negotiate TRIPS-Plus provision in trade agreements. “In many instances, that push has gone too far,” she said.

The US free trade agreement with Peru, Colombia, and Panama was reopened after civil society pushed back in the US Congress following conclusion of the agreement. That forced “for the first time in history the US to reopen a concluded trade agreement in order to roll back the extreme IP rights measures on pharmaceuticals,” she said.

It is to be noted that in the TPP discussions, “resistance to USTR measures came not only and not even mainly from the developing countries, but from Australia and New-Zealand and Australia, developed countries who fought to preserve their ability to manage escalading healthcare costs against ever increasing IP rights,” she explained.

The US is not alone is pushing for and meeting resistance, she said. The European Union has seen trade negotiations with India stalled over IP issues, she said.

“Today the generic industry supports IP rights, fair and balanced intellectual property measures,” she said. “There is recognition that one-sided trade policies which seem only to promote IP rights standards without balancing measures to ensure competition or reasonable limits to reduce or eliminate gaming or evergreening, is simply not viable,” according to Rojkjaer.

Stringent IP right provisions in trade agreements can prevent competition and delay the entry on the market of generics, and biosimilars medicines, she said. “From our perspective the starting point is the TRIPS agreement and all the flexibilities built in” the agreement, which should be the “true basis of negotiations,” she added. Provisions going beyond TRIPS and preventing competition should no longer be included in free trade agreements any longer, she said.

She said the industry welcomes the report of the United Nations Secretary General High-Level Panel on Access to Medicines. However, IP rights measures, which are the main focus of the report, are only one aspect of the issue of access to medicines in trade, she said and the report “completely overlooked” the need to promote the trade-off and competition in pharmaceuticals.

Policy Levers to Encourage Competition

Terry Creighton, vice president, Global Policy, Teva Pharmaceuticals, said generic and biosimilar drugs are critical to sustainability. “Several policy levers can encourage generic and biosimilar companies to challenge patents,” the result being lower costs for public drug programmes and affordable access to medicines.

Generic medicines ensure that patients can access the medications that they need but they also create more financial space for public health programmes to access new therapies, she said.

There are two key ways in which generic medicines provide savings to public health programmes, she said. The first one is lower prices created by generic to generic competition, she explained.

The generic market is completely different from the branded market, as it is a “hyper competitive” environment, she said. There are more and more entrants in the generic industry every year, competing on price, she said. When a patent expires in a mature market, there could be ten or more suppliers, she said. “The price erodes extremely quickly,” she added.

The second way is when a generic or biosimilar company successfully challenges a patent, and comes to market ahead of patent expiry, according to Creighton.

The US is the most competitive generic market in spite of its high level of intellectual property protection, she said.

“This did not happen by accident,” she said. “The Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments) was intended to balance and offset higher levels of IP protection, to encourage competition and provide market incentive against weak or frivolous patents, and prevent patent abuse, and the “result has been quite dramatic,” she said.

The US has the highest level of generic penetration in the world, she said, as almost 90 percent of prescribed medicines are generics, she added. “The US experience provides an example as to why incentives for generics or biosimilars to challenge weak or invalid patents should be part of a balanced IPRs regime and therefore should be part of any trade discussions that include pharmaceutical regulations,” she said.

Need to Include Regulatory Cooperation Initiatives

Sergio Napolitano, legal affairs and trade director at Medicines for Europe, said IP is only one of the elements of a bigger picture. Free trade agreements should include pro-competitive measures and some other aspects related to regulatory cooperation initiatives, he said.

“We are starting to see some positive elements included in trade agreements,” he said, and the group’s position in those negotiations can shift from defensive to a more positive one.

Including regulatory cooperation means that regulatory actors and regulatory agencies need to be included in the negotiations, he said.

There are two possible approaches to regulatory cooperation. One is bringing regulators at the table at the start of trade negotiations in particular between developed and developing countries, the other one is that free trade agreements and negotiations can focus on strengthening already ongoing regulatory cooperation initiatives.

The panel did not address the difference between generic medicines, which are identical to the branded version, and biosimilars medicines which are almost identical to the original biologic branded medicines, but not exactly the same. Biosimilars are very costly to develop and one of the open questions is whether developing countries will have the ability to enter the global market for biosimilars, and how to harmonise international regulations. (IPW, Public Health, 23 January 2015 and IPW, Public Health, 2 May 2016). According to the pharmaceutical industry, biosimilars prices cannot be reduced in the same way generic medicines prices are.

 

Image Credits: Catherine Saez