Info Service on Health Issues (Aug17/02)
We are pleased to share with you 2 analytical articles on the implications of the Regional Comprehensive Economic Partnership (RCEP) for access to affordable medicines. The most recent round of negotiations took place in Hyderabad, India from 17 to 28 July2017.
India must counter Japan’s U.S.-style pressure at the RCEP talks and ensure affordable generic medicines
Leaked texts are like leaked gases — you may never find the one responsible for it, but the mayhem caused by its release is hard to contain. Unsurprisingly, all public discussions on the Regional Comprehensive Economic Partnership (RCEP) are centred around leaked documents. As India negotiates the RCEP — a free trade agreement that looks remarkably similar to the now failed Trans-Pacific Partnership (TPP) but for the absence of the chief protagonist and dissenter, the United States — Japan now appears to be playing the role that the United States is known for: policing the intellectual property (IP) regimes of its trading partners. Unlike the TPP, where India and China were not parties, the RCEP will open two of the world’s fastest-growing economies to new standards of IP protection with some unforeseen consequences.
IP, investment and RCEP
One of the conditions that have been put forth both in the TPP as well as the RCEP is the formation of an Investor State Dispute Settlement mechanism and to include IP as an investment. Treating IP as an investment would allow private companies to raise investment disputes against the host country whenever they feel that the legal regime does not favour them. These disputes could be initiated by MNCs and especially the pharmaceutical industries that have until now had their hands tied in front of the Indian laws and the judiciary. Japan’s insistence on the inclusion of this clause comes as no surprise as it is the third-largest RCEP investor country. Countries like India and China, which will be the destinations for the investments, should include safeguards against these measures.
The IP chapter in RCEP is at risk of including provisions far stricter than those mandated by the World Trade Organisation (WTO) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The leaked IP chapter shows that both Japan and South Korea are mounting pressure to implement a TRIPS-plus regime in IP. Adhering to TRIPS-plus standards would be detrimental to developing countries that have benefited from generic competition and lower-priced medicines through the use of the flexibilities in TRIPS such as stricter patentability criteria and the absence of data exclusivity provisions. The few IP reforms discussed in the RCEP include data exclusivity, patent term extension, and much more lenient criteria for patentability.
This would mean delay in the entry of generic versions of medicines, extension of patent monopoly for a longer time, and exclusivity for drugs that should not be patented if strict patentability criteria were to be applied. The RCEP negotiations on these fronts spearheaded by Japan appear to be an extension of the arm-twisting that developing countries like India have been repeatedly subject to by the U.S. as reflected in the most recent Special 301 Report released by the U.S. Trade Representative.
The strong MNC lobby growing in Japan, especially on the pharmaceutical side, is a reason for its insistence on stricter IP rules. An example of this is the drug patented by Otsuka for the treatment of extensively drug-resistant tuberculosis (TB).
The company has been strategically withholding the registration of the patent in India, thereby preventing a generic version of the drug from being manufactured. In the event that a provision of data exclusivity is passed, the millions of TB patients in India would have to buy the high-priced drugs, which would have no cheaper generic alternative.
The WTO has a most-favoured-nation (MFN) clause that obliges the concessions offered to the MFN to be offered to others. In essence, if India has an agreement with Japan (through the RCEP), India will be obliged to offer the same concessions to the U.S. as well as the other members of the WTO. The negotiating pattern reflects the reality of international law making. It is evident that developed countries are using FTAs to expand the existing standards of IP.
the 19th round of the RCEP negotiations currently on in Hyderabad,
India must resist Japan’s U.S.-style pressure in this regard. Developing
countries like India which have taken the leadership in instituting
and using balanced intellectual property protection for pharmaceuticals
should not only proudly protect their laws in the RCEP negotiations,
they should also encourage other countries to adopt and use similar
measures that ensure generic competition. The international trading
system is not an end in itself and instead of adopting U.S. style
lobbying on behalf of multinational companies in the RCEP negotiations,
Japan would do well to recall its international commitments on health
care and sustainable development and support developing countries
in the region in their quest to ensure sustainable access to affordable
Feroz Ali is the IPR Chair Professor at IIT Madras. He is part of a Shuttleworth Foundation project on access to medicines.
No logic in extending length of patents by Feroz Ali and Roshan John (28 July)
Granting a longer term for pharmaceutical patents will result in delays in the entry of generic versions and could adversely affect access to medicines
A patent is an exclusive right granted for an invention which is new, useful, and non-obvious. In developed countries, IP protections incentivise individuals for their creativity and public disclosure of technical information, which aid the promotion of new knowledge and increased innovation. In several developing countries, IP protection was either introduced through colonial-era laws or when they joined the World Trade Organisation (WTO), of which the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is a part. Patents are now granted for inventions across technologies—from kitchenware to biologics—each having the same term of protection. The protection grants the applicant a right to exclude others for a 20-year period—the length of a patent. After this period, it enters the public domain and can then be accessed and used by anyone.
Term of exclusivity
The term of a patent is a maximum time period during which it is valid and can be enforced. The longer the patent term, the greater the exclusivity for the invention and the greater the time taken for the technology covered by the patent to enter the public domain, thereby creating a technological lock-in. A patent could have a shorter term than the specified 20-year period for a variety of reasons: A challenge to a patent may result in its early invalidation, and non-payment of renewal fees could result in its lapse.
Historically, the Crown in the UK granted patent-like privileges for a 14-year period, as it usually took seven years each to train two apprentices in a new technology that came from continental Europe through migrants. Thus, the UK capped the term of a patent at 14 years. Despite the influence of Common Law, many erstwhile colonies legislated shorter terms of protection after independence. For instance, India had a five- to seven-year patent term for pharmaceuticals before becoming a member of the WTO.
The present 20-year patent term was mandated by the TRIPS agreement. Though there was some logic in English Law as to how it arrived at the 14-year patent term, the present patent term that countries agreed to during the TRIPS negotiations did not have any sound logic other than protecting the interests of particular industries.
The common term of protection that applies to all technologies regardless of the pace of technological development came from a provision of the TRIPS agreement. However, in some sectors like information technology and electronics, where technology is ever-changing, granting 20-year protection does not make sense. In industries where prices gradually decrease within the first few years of the introduction of the new technology, such an extensive period of protection without an economic basis is unwarranted. Moreover, having a technology-agnostic patent term creates an unnecessary deadweight loss where a shorter protection is required for an invention. Thus, considering the evolving nature of technology, it is imperative to have a technology-specific patent term—differential period of protection across different industries, so as to foster knowledge and innovation in the market.
Copyright, the other form of IP right that protects artistic and literary works, went through a similar phase in the US, where the term was extended just to prolong market exclusivity. Lobbying by the entertainment industry to keep Mickey Mouse, an artistic work, from falling into the public domain resulted in the extension of copyright term for corporate authorship to its present term of 95 years from first publication or 120 years from creation. In contrast, the term of a copyright in India for similar works is 60 years from publication.
countries, on behalf of their pharmaceutical companies, seek a term
extension arguing that it is necessary to recoup the research and
development (R&D) costs. The proponents also argue that patent-term
extension could make up for the loss of effective patent term—time
lost in getting regulatory approval or owing to delays at the patent
office. However, these arguments are untenable. Consistently, major
pharmaceutical companies report profits that are many times more than
the costs involved in R&D. Any further extension in the term of
the patent will result in corporate welfare at the cost of social
welfare. Given India’s strength as a world-class supplier of affordable
generic medicines, granting a longer term for patents will result
in delays in the entry of generic versions and could adversely affect
access to medicines.
Feroz Ali and Roshan John are, respectively, the IPR chair professor at IIT, Madras and part of a Shuttleworth Foundation project on access to medicines, and research associate with the IPR Chair, IIT, Madras.