November 04, 2010

The crucial role India plays in supplying the developing world with affordable quality medicines is being threatened. The European Commission (EC) is currently negotiating a free trade agreement (FTA) with India that includes a number of harmful provisions that could seriously hamper access to medicines across the developing world. In response to growing criticism, the EC issued a Q & A defending its position.[1] But the EC misrepresents the FTA's potential impact.

In pushing an agenda that promotes the interests of its own pharmaceutical industry, the EC is ignoring the crucial role played by affordable quality generic medicines manufactured in India and is actively undermining patients’ access to newer essential drugs. The following briefing document highlights the truth behind the spin in the EC's Q & A.

SPIN: The EC says that its policies will not weaken India’s ability to produce and export affordable medicines. 

TRUTH: There are three main aspects of the agreement that will have a chilling effect on the ability of Indian generics companies to produce and sell affordable, life-saving medicines across the developing world. These are:

(1) Delaying the registration of generic medicines through so-called ‘data exclusivity’ (DE): If India introduces DE, it would allow a pharmaceutical company to stop others from referring to the data it generated on the safety and efficacy of a medicine for a period of up to 10 years. Currently, when a generic manufacturer applies to register and sell a version of an already-registered medicine, they only have to demonstrate that their product is equivalent to the original.[2] The drug regulatory authority relies on the efficacy and safety data provided in the registration file of the original manufacturer. But this system is under threat.

Data exclusivity would prevent the registration of generic versions of a medicine for up to 10 years. The only solution would be for the generic manufacturer to repeat the drug trials that the originator has done. This would not only be extremely costly, but repeating clinical trials for medicines already proven effective is also not ethical, as it means denying treatment known to be safe and effective from some patients, the control group, solely for the purpose of proving something that has already been demonstrated.

If accepted by India, DE provisions will apply to all drugs, essentially creating a new patent-like monopoly by blocking the registration of generic medicines. Competition would be stifled even on older drugs which are not under patent and on new drugs which have been found not to merit patent protection.  

For example, a patent on nevirapine syrup to treat children living with HIV/AIDS was rejected by the Indian patent office, allowing generic producers to begin manufacturing right away. If DE had been in place, they would have had to wait up to 10 years to be able to start producing this drug, even though it had not been granted patent protection.

Despite the EU’s assurances, studies from other countries show how harmful DE can be in terms of making medicines more costly. In Jordan, where data exclusivity was introduced as part of the US-Jordan FTA, a study found that of 103 medicines registered and launched since 2001 that currently have no patent protection in Jordan, at least 79 percent have no competition from a generic equivalent as a consequence of data exclusivity.[3] A study on the effects of DE in another FTA negotiated by the European Commission shows that in Colombia, the introduction of a 10-year period of test data exclusivity would lead to an increase in medicines expenditure of $340 million by 2030.[4]

For people who live without access to the medicines they need, a 6-to-10-year wait until the DE term has expired can mean the difference between life and death.   

The European Parliament in 2007 specifically directed the EC not to include requirements of data exclusivity and other TRIPS-plus (Trade-Related Intellectual Property Rights) measures in bilateral agreements with developing countries.[5] Yet the EC continues to ignore this specific directive and attempts to force India to choose between its ability to provide access to medicines and greater trade with the EU.

(2) Stopping the flow of generic medicines through border measures: In recent years, there have been nearly 20 incidents wherein legitimate generic medicines transiting through European ports were detained.[6] In each case, European customs officers, acting on the basis of European Customs Regulation (Council Regulation (EC) No 1383/2003) stopped the flow of medicines on the assumption that the drugs infringed a patent or a trademark. Now the EC is trying to impose these regulations on India.

(3) Killing generic competition through a stricter enforcement of intellectual property: The EC is pushing for greater enforcement of IP through various channels. The EU FTA text seeks to have India incorporate different types of enforcement measures for private intellectual property rights owners.

One of the EC’s demands is to introduce the mandatory use of court injunctions, or court orders. This would mean that when a patent or trademark dispute emerges between a generic and a patent-holding company, the generic manufacturer would have to halt production even before a case for infringement has been heard in court. The courts would therefore not be allowed to balance the constitutionally-enshrined right to health and the access to medicines against the economic harm and compensation due to the rights holder if the case is proved.

In addition, the EC has failed to clarify whether it is seeking to have IP included in the investment measures of the FTA. This would open a whole new arena for litigation as soon as India adopted any regulation, injunction, administrative decision, or legislation that favors patients over profits. A clear example of how companies can use a bilateral investment treaty to challenge government decisions related to public health on grounds of IP infringement exists. In February 2010, tobacco company Philip Morris filed a case against Uruguay under a Switzerland-Uruguay Bilateral Investment Treaty in order to challenge Uruguay's decision to increase the size of warning labels on cigarette packets. Philip Morris argues that these measures infringe their trademarks and hamper their competitiveness in the Uruguayan market. The case is ongoing.[7]

WHAT THE EC NEEDS TO DO:  The EC must stop pushing for data exclusivity to be included in the EU-India FTA; must stop interfering with the flow of generic medicines in transit; and must not include intellectual property in the definition of investment so that public health measures such as a compulsory license or the refusal to provide data exclusivity cannot be linked to either the definition of "investment" or be the subject of legal challenges by companies.

SPIN: The EC says data exclusivity is needed to compensate patent holders for their research and development, and that it is in line with existing international trade agreements. 

TRUTH:  India already compensates patent holders for research and development. In 2005, the country introduced patents for medicines as a part of its membership of the World Trade Organization (WTO), and the effects of this are already visible with newer medicines patented in India. Although this poses significant threats to access to medicines across the developing world, the EC is now demanding additional terms that go far beyond India’s obligations under the WTO TRIPS Agreement.

TRIPS neither states that countries should provide exclusive rights to the originator over test data nor includes data exclusivity. In fact, as the TRIPS Agreement was being negotiated, the idea of including DE provisions were specifically rejected.[8]  Rather, TRIPS simply refers generally to the need to protect "undisclosed test or other data" from "unfair commercial use" and "disclosure" (Article 39.3). The TRIPS language makes it clear that countries can determine what constitutes "unfair"
and that there are multiple approaches that countries can take to satisfy this mandate.[9] [10]

WHAT THE EC NEEDS TO DO: The EC must drop its demands for this backdoor monopoly protection.

SPIN: The EC says that it will guarantee that legitimate generic medicines are not unfairly delayed when in transit.

TRUTH: The EC is pushing for measures that do precisely the opposite. It is seeking to include civil trademark disputes in the FTA and elsewhere, not least in ACTA, the Anti-Counterfeiting Trade Agreement the EU is negotiating in secret.[11]  

Civil trademark disputes–when one company alleges that a competitor is infringing its trademark because, for example, its packaging is too similar–are common. It is crucial that they be differentiated from willful trademark infringements, instances when a company deliberately and fraudulently sets out to pass for something that it is not. But the European Commission is blurring that crucial difference and is pushing for provisions that include civil trademark disputes.

If the European Commission gets its way, customs officials could detain and even destroy allegedly infringing goods, without judicial review or even notification to the rights holder, on the mere basis of an assertion of a commercial trademark dispute. In practical terms, this could mean effective and safe medicines are stopped from being produced or are destroyed in order to protect company profits.  

Crucially, these have been grounds for the detentions of generic drugs before. In Germany, a drug using the internationally-authorized generic name amoxicillan was detained on the basis of an alleged trademark infringement because a customs officer deemed it too similar to the originator’s brand name Amoxil.[12]

The EC says it is reviewing its customs regulations, but it has yet to make the results of its consultation public or provide details of how they will be amended.

WHAT THE EC NEEDS TO DO: The scope of provisions in the EU's customs regulations, FTA, and ACTA must be limited to willful commercial scale trademark infringement, which is to say the fraudulent and exact copying of labeling and branding where there is a potential threat to public health. Any broader definition will hamper access to generic medicines.

SPIN: The EC says it is trying to stop fake medicines that pose a public health risk for consumers

TRUTH: The specter of harmful fake medicines is one of the concerns used to justify customs regulations and ACTA. Yet the real effect of such regulations and agreements is not to address fraudulent, unsafe, and ineffective medicines but rather to protect the commercial interest of multinational companies. Commercial trademark disputes (when companies argue over packaging that resemble each other, for example) do not pose a threat to public health. They are purely a commercial matter.

The sad truth is that provisions such as those the EC is pursuing would inhibit generic competition and increase drug prices. This in turn would actually encourage the introduction of fake medicines. The WHO has recognized that high drug prices are a cause of counterfeit medicines. Patients demand low-cost alternatives, and counterfeiters respond.[13]

WHAT THE EC NEEDS TO DO: If the EC is serious about acting against unsafe medicines, it requires a public-health-focused global solution developed through a legitimate process in which all countries are involved. Developing countries have asked that such discussions take place at the WHO and other multilateral institutions, rather than through a one-sided commercially-focused agreement negotiated by a few countries behind closed doors. Adequate definitions of fake medicines and strengthening of drug regulatory authorities in developing countries would be important aspect to address the public health problem.[14]

SPIN: The EC says it supports the use of TRIPS flexibilities that ensure access to medicines and that the FTA will not hamper the effective use of a compulsory license.

TRUTH: TRIPS flexibilities are lawful mechanisms that countries can use in order to ensure that patents and other IP rights do not block access to medicines. In today’s post-TRIPS era, when medicines are increasingly patented globally, the production, registration, supply, import, and export of generic medicines will depend on countries’ ability to use TRIPS flexibilities, such as defining a patent law that protects public health and using compulsory licenses to overcome patent barriers.

India has sought to limit abusive patenting by not giving patents to companies that have made small changes to an existing drug that do not improve its therapeutic effect. But the EC is now seeking to remove to undermine this policy through the FTA. 

DE is specifically targeted at undermining India’s patent law. Claiming that harm will be limited because DE can be lifted if a compulsory license is issued ignores the fact that DE would have the greatest adverse impact in cases where there are NO patents on a medicine.

The EC continues to claim it respects the Doha Declaration on Public Health, which allows the use of TRIPS flexibilities, but this is meaningless rhetoric given the TRIPS-Plus provisions that the EC continues to demand. 

WHAT THE EC NEEDS TO DO: Stop pushing DE in the EU-India FTA.  Stop giving the misleading impression that access to medicines is only dependent on the use of compulsory licenses and  stop undermining the right under TRIPS for countries to set own patent criteria.

SPIN: The EC says it is working to promote access to medicines in developing countries.

TRUTH: Yes, the EC is involved in a number of important initiatives, not least providing support to the Global Fund for AIDS, TB and Malaria (GFATM), and financing research and development globally. But the trade policies being pursued by the EC through the FTA and ACTA will entirely undermine the impact of these other initiatives. 

Donor-funded treatment initiatives such as the Global Fund are dependent upon access to affordable generic medicines. A recent study in the Journal of the International AIDS Society finds that since 2003, 80 percent of donor-funded HIV medicines purchased for developing countries were supplied by Indian generic manufacturers.[15]  Given the funding shortfall resulting from the latest GFATM replenishment round, there is a genuine fear that donor-funded programs may not be able to maintain their current levels of treatment for 5.2 million people who are currently receiving care, let alone expand access to the nearly 10 million people still on the waiting list who will die without access in the next two to three years. 

WHAT THE EC NEEDS TO DO: The EC must stop undermining the very industry that, by providing quality medicines at an affordable cost, makes the global health initiatives the EC supports viable.




[2]World Health Organization, (2004). Multisource (generic) pharmaceutical products: guidelines on registration requirements to establish interchangeability. Geneva. http://www.who.int/medicines/services/expertcommittees/pharmprep/QAS04_093Rev4_final.pdf

[3]Oxfam, (2007): All costs, no benefits: how TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines.

[4]Oxfam and Health Action International, (2009), "Trading away access to medicines. How the European Union’s trade agenda has taken the wrong turn."

[5]European Parliament resolution of 12 July 2007 on the TRIPS Agreement and access to medicines.

[6]Letter from Netherlands Ministry of Finance to Health Action International. 7 May 2009. 

[7]Uruguay: Philip Morris files first-known investment treaty claim against tobacco regulations. March 3, 2010.

[8]The Use of Flexibilities in TRIPS.  Musungu S, South Centre, and Oh C, World Health Organization.  p65

[9]WHO Commission on Intellectual Property Rights, Innovation and Public Health (2006). Public health, innovation and intellectual property rights: report of the Commission on Intellectual Property Rights, Innovation and Public Health. WHO, Geneva. Available here.

[10]Correa C (2002). Protection of Data Submitted for the Registration of Pharmaceuticals: Implementing the Standards of the TRIPS Agreement. South Centre. Available here.

[11]Anti-Counterfeiting Trade Agreement. Informal Predecisional/Deliberative Draft: 2 October 2010.

[15]Waning, Diedrichsen and Moon, (2010), ‘A lifeline to treatment: the role of Indian generic manufacturers in supplying antiretroviral medicines to developing countries’, Journal of the International AIDS Society.

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