Trade Agreements: Our Concerns, and What We Are Doing

In many countries, issuing compulsory licenses or otherwise speeding generic competition is being deterred by the rules contained in bilateral or regional free trade agreements.

With developing country opposition firm to any expansion of patent rights or undermining of flexibilities at the World Trade Organization level, the United States is pursuing a strategy of what it calls competitive liberalization — entering into bilateral and regional trade deals that ratchet up patent and other IP protection for pharmaceuticals (via “TRIPS-plus” provisions). The U.S. goal is three-fold: force an increasing number of countries to live under TRIPS-plus provisions, limit the number of countries that object to U.S. demands for TRIPS-plus (since they have already acceded to them), and establish TRIPS-plus provisions as an effective global standard that can ultimately be ratified at the World Trade Organization and imposed on those countries that have not yet succumbed to U.S. demands.

Essential Action is working to educate the public and policymakers — in the United States and developing countries — about the public health damage caused by such provisions, focus attention on alternative proposals (particularly related to the “data exclusivity” issue, described below), provide technical assistance to country negotiators, and suggest best practices for implementing TRIPS-plus provisions.

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The U.S. is pushing for a long list of TRIPS-plus demands in bilateral and regional trade negotiations. The most important include:

– Extension of the patent term to offset delays in patent or regulatory approval;
– Requirements that drug regulatory approval be linked to patent status (“linkage”), meaning that FDA-like agencies cannot give approval to a generic version of a product if a patent is claimed on it;
– Restrictions on parallel importation; and
– Investment agreement protections for patents and related IP rights.

All of these provisions are very dangerous. But probably the most worrisome of the TRIPS-plus demands, and certainly the top priority of Big Pharma, is yet another — “data exclusivity.”

As a condition of selling pharmaceuticals, countries require pharmaceutical sellers to submit data showing their drugs are safe and effective. This data is commonly referred to as registration data, or marketing approval data.

Generating the data, based on animal and human testing can be relatively expensive, costing in some cases tens of millions of dollars.

To gain regulatory approval to sell generic versions of drugs already approved for market, generic companies generally do not repeat these studies, which are very time consuming and, from the perspective of the relatively low-capitalized generic industry, costly. Instead, they typically show their product is chemically equivalent and bioequivalent (meaning it will work the same in the body as the brand-name drug). Then the generic companies simply rely on the drug regulatory agency’s approval of the patented product to earn approval for the generic version of the product.

If the generics are not able to rely on approvals granted based on the brand-name data, in many cases they simply will not enter the market.

Trade agreements’ data exclusivity provisions specify that countries must maintain a five-year prohibition (and often longer) on the right of a generic firm to use or rely on the clinical test data submitted by brand-name drug companies. This amounts to a guaranteed five-year marketing monopoly for brand-name drug makers, distinct from the patent monopoly.

A data exclusivity provision thus means that generics will effectively be barred from entering the market — even if patent terms have expired, and even if countries have issued compulsory licenses that would otherwise point them to sell on the market while a product is on patent — until the monopolies on use of the data expire.