NGOs Detail Changes For Public Health In RCEP Asian Trade Pact

Concerns continue to grow among civil society about provisions in a major trade agreement in the Asian region. Of specific worry is the intellectual property chapter containing in particular a data exclusivity clause, and the linkage between the investment chapter and the IP chapter.

With the completion of the Trans-Pacific Partnership (TPP) negotiations and its uncertain fate following the withdrawal of the United States in January, other plurilateral trade agreements are still of concern for civil society groups, such as the Regional Comprehensive Economic Partnership (RCEP). Like the TPP, RCEP negotiations are conducted in a non-transparent manner, with no access to draft negotiating texts. The RCEP involves economies of all sizes.

The RCEP negotiations currently include 10 members of the Association of South East Asian Nations (ASEAN): Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, as well as Australia, China, India, Japan, New Zealand and South Korea. Civil society has warned that the RCEP drew a lot of text from the much-decried TPP, and goes beyond it.

The latest round of RCEP negotiations took place in Kobe, Japan, from 27 February-3 March.The next round of negotiations is scheduled to take place from 3-8 May in Manila, Philippines, followed by one in July in India.

According to a Médecins Sans Frontières (MSF, Doctors Without Borders) briefing note [pdf], the RCEP countries are home to nearly 50 percent of the global population, “including some of the world’s most impoverished and marginalised communities.”

Civil society has been very concerned, as they were for the TPP, about provisions in the intellectual property and the investment chapters.

The latest leaked draft texts on the IP and the investment chapters of the RCEP were published by Knowledge Ecology International in April 2016, and date back to October 2015 (IPW, Public Health, 20 April 2016).

Data Exclusivity Barrier To Generic Competition

According to Shailly Gupta of the MSF Access Campaign in India, Japan and South Korea have huge interests when it comes to IP provisions, and have been pushing for “TRIPS-plus” provisions, which describes provisions going beyond the rules of the 1994 World Trade Organization Agreement on Trade-Related Intellectual Property Rights (TRIPS).

The most potent threats to access to medicines described by Gupta are the 5 years of data exclusivity, the 5 years extension of the terms of patents, and border measures proposed in the draft IP chapter. Those provisions go beyond the TPP, she said, as the TPP sought market exclusivity, while RCEP is considering data exclusivity.

Market exclusivity does not prevent companies from starting the process for applying for the registration of generic medicines before the market exclusivity expires. However, data exclusivity grants a market monopoly status to medicines, even when patents no longer apply or exist, she told Intellectual Property Watch. “This gives companies a new way to keep prices high for longer periods of time and further delays generic competition,” she added.

Data exclusivity creates a barrier for entry of generic producers, as they will have to repeat clinical trials to generate a new set of safety and efficacy data if they intended to register before the data exclusivity period expires, she explained. That is a costly process and can take years. In addition, she said, “existing generics can be forced off the market when such backdoor monopolies are granted under the drug regulatory system.”

According to the MSF briefing note, “generic competition from India and the availability of affordable active pharmaceutical ingredients (API – the raw material needed to produce drugs) for these medicines from China have ushered in a treatment revolution in developing countries preventing drug safety regulators from using or relying on existing clinical data to grant market approval to generic drugs.”

Over the last few months, the issue of data exclusivity has grown, with Australia and New Zealand joining Japan and South Korea. “The question is for how long India and China will be able to push that request back,” Gupta told Intellectual Property Watch.

Enforcement, Border Measures

The draft IP chapter shows stringent IP enforcement measures, including border measures that could mean that if a company is trying to export or import drugs, the shipment can be stopped at the border and seized on presumption of IP infringement, Gupta said. Such measures go beyond the TRIPS agreement, as TRIPS only talks about goods in transit, and the agreement talks about goods going out and coming in.

“Elevated levels of enforcement increase the likelihood of legal actions against legitimate suppliers of generic medicines,” she said. “RCEP provisions could also widen the scope of IP enforcement and place the generic medicines distribution and supply chain, including treatment providers, at risk of litigation and court cases.”

“Such provisions are not only excessive in their scope, but also stand in contrast to judicial efforts to remedy IP infringements by awarding royalties to patent holders, instead of through enforcement measures that undermine access and competition. In addition, the current RCEP text on border measures does not adequately protect legitimate transport of generic medicines,” she said.

Investment Chapter, Private Tribunals

In a 24 February letter [pdf] addressed to RCEP members, the MSF Access campaign detailed its concern over the draft investment chapter, which they say would threaten to restrict access to affordable medicines for millions of people.

In conjunction with the proposed IP provisions of RCEP, the investment chapter could “potentially undermine a national government’s capacity to implement and execute policies to protect public health and ensure affordable access to medicines,” in particular in developing countries.

The letter explains that in the context of access to medicines, “countries and their courts have the right to seek a balance between the imperatives of the right to health with the IP system, often necessitating steps to limit the abuse of the patent system by multinational pharmaceutical corporations.”This is done through the use of TRIPS flexibilities,” they said.

However, under the draft investment chapter, foreign corporations would have the power to challenge any domestic regulation or judicial decision in “secret arbitration proceedings,” in the investor-state dispute settlement (ISDS) mechanism, “whenever they claim the regulation or decision, including those within the remit of TRIPS flexibilities, has affected enjoyment of the companies’ investments and expectations of potential profits.”

Companies could challenge domestic regulations or decisions even if they are meant to protect public health and access to medicines, they said.

The letter includes examples of ISDS cases or threats, which MSF says has been used by pharmaceutical corporations to pressure governments, afraid of the costs of arbitral hearings, and the risk of excessive damages if they lose.

Among those examples is the claim by US pharmaceutical company Eli Lilly against Canada to the amount of US$ 500 million at the North American Free Trade Agreement arbitral tribunal. This claim was made, according to the letter, against the decision of invalidation by Canadian courts on secondary patents related to the previously-known active ingredients atomoxotine and olanzapine. The case was brought under NAFTA’s investment chapter, not the IP chapter, MSF noted.

In January 2017, the letter says, “US pharmaceutical corporation Gilead Sciences threatened to use investment rights and ISDS provision under the US-Ukraine BIT [bilateral investment treaty] to launch a claim for more than US$800 million damages” from Ukraine.

According to the letter, Ukraine’s drug regulatory authority in the absence of patent barriers registered a generic version of hepatitis C medicine sofosbuvir, refusing to grant Gilead exclusive rights over test data (data exclusivity) on the drug. That exclusivity would have entitled Gilead to a market monopoly until October 2020, the letter said. Gilead first challenged the registration before a Ukrainian court, it said, but the company lost the case in the lower courts, after which Gilead linked the decision to not enforce data exclusivity on the drug sofosbuvir to the definition of investment and expropriation of its investment and profits under US-Ukraine BIT and threatened an ISDS claim. According to the letter, the Ukrainian government entered into a settlement with Gilead as a result, and “is facing the risk of cancelling the marketing approval granted to a generic competitor.”

Recommendations

The letter recommended that IP should be excluded from the definition of “investment” and other proposed definitions, including intangible property and related/other property rights in RCEP. MSF in the letter also asks that investment rights linkage be removed from any provisions under the IP chapter.

The ISDS mechanism, which according to the letter is not required under TRIPS obligations, should be removed from RCEP negotiations, to be replaced by a negotiation and consultation based and state-to-state dispute settlement mechanism, it argues.

“Parties should recognize and reaffirm that all domestic laws, policies and measures taken are at the discretion of RCEP governments, in compliance with their constitutional obligations, the Doha Declaration on TRIPS and Public Health,” the letter said, including patentability criteria, and examination procedures.

 

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