Info Service on WTO and Trade Issues (Oct15/16)
23 October 2015
Third World Network
EU commitment on access to drugs is an "empty gesture"
Published in SUNS #8114 dated 16 October 2015
Geneva, 15 Oct (Kanaga Raja) - The European Commission's current commitments
on access to medicines have proven to be empty words and gestures,
contradicted and undermined by a long history of including substantive
TRIPS-plus provisions in European Union free trade agreements (FTAs),
and other damaging EU trade policies.
This is one of the main findings of a joint report released by Medecins
Sans Frontieres (MSF) and the global network Health Action International
(HAI) on Wednesday.
The report called on the EU to develop a comprehensive access to medicines
policy that ensures that its trade policy is consistent with its development,
research and global health goals.
Amongst others, MSF and HAI called on the EU not to use FTAs with
low- and middle-income countries (LMICs) to introduce TRIPS-plus intellectual
property (IP) rules that extend monopoly protection, nor introduce
new IP enforcement rules or investment protection to the detriment
of access to medicines.
The two international CSOs further urged the EU to support the LDCs'
request for an extension of the TRIPS transition period until LDCs
graduate from being LDCs. The EU should also support LDCs' request
for a waiver of Article 70.8 and Article 70.9 of the TRIPS Agreement
for the duration of the TRIPS transition period.
The joint report was released as EU Trade Commissioner Cecilia Malmstrom
was due to publish on the same day a draft review of the EU's trade
and investment policies.
"The EU's long history on pushing LMICs to accept IP protection
that exceeds international (TRIPS) obligations shows that the Commission's
stated support for access to medicines have so far been empty gestures,"
said Tessel Meliema, Policy Advisor at HAI, in a press release.
"Instead of putting LMICs on trade watch lists and threatening
them with financial sanctions for making use of TRIPS flexibilities
to improve access to medicines, the EU should actively support these
countries in making effective use of these policy flexibilities,"
According to the press release, the European Commission's recent decision
to support the world's poorest countries in their request for an indefinite
extension from implementing IP rules on medicines until they are no
longer classified as a least-developed country could, however, promise
a new, more positive direction for EU trade policies under Commissioner
In their report, HAI and MSF commend the Commission for explicitly
recognising the need to address access to affordable, safe and effective
"However, looking at the Commission's current access to medicines
commitments in more detail, these have proven to be empty words and
gestures, contradicted and undermined by a long history of including
substantive damaging TRIPS-plus provisions in EU free trade agreements,
and other damaging EU trade policies."
The report identified the contradiction between the Commission's stated
commitments to ensure access to medicines and the EU's trade policy.
For instance, it noted that despite the clear negative consequences
that TRIPS had on access to medicines (such as HIV treatment in African,
Asian and Latin American countries), the EU has since pushed for low-
and middle- income countries (LMICs) to adopt even stricter levels
of IP protection (TRIPS-plus rules) through bilateral and regional
free trade agreement negotiations, IP dialogues and watch lists.
"TRIPS-plus rules exceed minimum WTO obligations and threaten
access to affordable medicines," it said.
It noted that the damaging public health consequences of TRIPS-plus
rules for people living in LMICs have been documented in numerous
studies. For example, an impact assessment study demonstrated that
an up to ten-fold price increase for key medicines occurred in Jordan
when the United States imposed the TRIPS-plus rule of data exclusivity.
In addition, said the report, the Commission has pushed for stronger
investment protection under EU free trade agreements since 2011, including
investor-state dispute settlement (ISDS). Using ISDS, pharmaceutical
companies can sue a government arguing that legitimate and WTO-compliant
government measures to promote access to medicines will damage their
The report underlined that the lack of access to medicines is no longer
just a problem in developing countries.
"European Member State governments currently face a looming access
to medicines crisis as they struggle to afford new medicines with
excessive price tags. Moreover, despite strong IP protection and continued
strengthening of market monopolies in Europe, there has been a striking
lack of medical innovation. Only few truly valuable medicines have
been brought to market over the last decade."
With this in mind, MSF and HAI stressed that "the EU should seriously
question whether strengthening IP protection and enforcement for pharmaceuticals
through bilateral trade agreements is truly in the public interest."
The report compared the commitments outlined in the Commission's Communication
on Trade, Growth and Intellectual Property - Strategy for the protection
and enforcement of intellectual property rights in third countries
(2014), against the substantive provisions in EU trade agreements
and policies to assess the validity of the claim that it promotes
and protects access to medicines.
It found that the Commission has a long history of including TRIPS-plus
IP rules for pharmaceuticals in its bilateral and regional trade negotiations.
Examples include agreements with trading blocs (e.g., Central America
and the Andean Community), countries (e.g., India, Thailand, South
Korea, Vietnam and Canada) and EU neighbouring countries (e.g., Ukraine
Prospective and retrospective impact studies confirm that these TRIPS-plus
rules threaten access to affordable medicines and, over time, will
be detrimental to public health in developing countries.
The European Parliament has, on several occasions, opposed the inclusion
of TRIPS-plus measures in free trade agreements - most notably, in
its 2007 resolution on TRIPS and public health.
"Recently, the European Parliament reiterated that full EU support
for third countries' use of TRIPS flexibilities is essential."
According to the report, the inclusion of TRIPS-plus provisions in
the negotiating text has caused immense public outcry in the EU negotiations
for an FTA with India.
It said that more stringent IP rules in India would be particularly
harmful because India has an invaluable role as 'pharmacy of the developing
world' by producing quality, affordable generic medicines. As such,
India provides over 80% of the world's generic antiretroviral medicines.
While some damaging IP provisions, such as patent-term extensions
and data exclusivity, were removed from the negotiating text after
strong civil society pressure, excessive IP enforcement provisions
and the inclusion of IP in the definition of 'investment' under the
ISDS mechanism remain serious concerns.
"As reports about the resumption of negotiations have recently
emerged, the removal of the TRIPS-plus enforcement clauses and the
exclusion of IP from the scope of ISDS are imperative to safeguard
the lifeline of affordable generics from India for millions of patients
in developing countries."
The report noted that the WTO Ministerial Conference adopted the Doha
Declaration on TRIPS and Public Health in 2001. The Doha Declaration
affirms that WTO rules on IP (TRIPS) should not prevent countries
from taking the necessary measures to safeguard public health. Such
measures are known as 'TRIPS flexibilities'.
All EU free trade agreements include a standard reference to confirm
its adherence to the Doha Declaration in the preamble.
"Yet, such a reference is an empty gesture if, at the same time,
the substantive provisions of the agreement include TRIPS-plus provisions
that impact the price of medicines. In addition, the Commission uses
other areas of its trade policy to pressure countries to refrain from
making full and legitimate use of TRIPS flexibilities. This includes
placing third countries on trade watch lists for fully legitimate
exercise of TRIPS flexibilities."
TRIPS-plus measures, as they relate to pharmaceuticals, directly contradict
the spirit and intent of the Doha Declaration on TRIPS and Public
Health, said MSF and HAI.
The report cited some examples of Commission practices that show how
the EU interferes with other countries that attempt to use TRIPS flexibilities
to protect public health.
The Commission produces a 'priority country list' to assess third
countries' performance on IP protection and enforcement, which is
based on the EU's interpretation of TRIPS. These country-specific
reports outline the perceived deficiencies in these countries' IP
frameworks, which the EU believes should be remedied. These lists
put undue pressure on third countries to change their IP laws and
Closer examination of some countries' reports show that the Commission
actually denounces IP measures that are perfectly legal under TRIPS
and beneficial to public health, said the report, citing an example
of such a measure as being the use of compulsory licensing.
A compulsory licence, or the mere threat of issuing one, is an effective
tool to ensure a substantial decrease in the price of a medicine.
Many developing countries, including Thailand, Brazil and Ecuador,
have used this instrument to lower medicines prices to meet public
health needs. High-income countries, such as the United States, have
also used compulsory licensing as a tool to negotiate a lower price
Pointing to practices in Canada, Argentina, Brazil and India, the
Commission has also put countries on its 'watch list' for using different
and often stricter (but TRIPS-compliant) standards for granting pharmaceutical
These countries have adopted specific patent legislation aiming to
prevent a widespread commercial practice known as 'evergreening' in
which pharmaceutical companies obtain new patents for minor modifications
of existing medicines that offer no additional therapeutic advances.
"Preventing such a practice by introducing stricter patentability
criteria is perfectly legal under WTO law and very beneficial from
a public health perspective because cheaper generics can enter the
market faster," said the report.
South Africa is currently implementing a much-needed patent law reform
process and has published a new draft patent policy. The Commission
has submitted its comments to the South African government and has
argued in favour of introducing TRIPS-plus measures and against the
use of TRIPS flexibilities as proposed in this draft policy.
The report said the proposed South African draft policy could play
a key role in ensuring that the five million HIV-positive people in
South Africa can access the latest generation of anti-retroviral medicines.
"Yet, the EU argues in its submission that South Africa should
consider TRIPS-plus measures, including patent term extensions, stronger
IP enforcement and the introduction of data exclusivity. The South
African government is under no legal obligation under TRIPS to implement
any of these measures, which would increase medicine prices."
The EU also uses technical assistance programmes as a way to export
European IP standards, even to least- developed countries (LDCs),
which are not obliged by WTO law (TRIPS) to implement these IP standards.
When the EU combines technology transfer with a package of IP-related
technical assistance, it pushes countries to implement levels of IP
protection that are wholly inappropriate for their level of socio-economic
For example, in Bangladesh, an LDC with an average income of little
over US$3 a day, the Commission implemented an IP programme worth
1.2 million euros. Given its LDC status, Bangladesh is not obliged
by the WTO to do so, and should therefore not spend scarce resources
on implementing TRIPS IP provisions.
"It may be difficult for LDCs to refuse IP-related technical
assistance, particularly if it is bundled with a large package of
much-needed technology transfer. Unfortunately, the EU provides little
transparency about the content of its IP programmes," said MSF
In 2010, they noted, the EU funded the drafting of Uganda's controversial
IP Enforcement Counterfeit Goods Bill. This proposed law caused an
outcry because it threatened access to life-saving generic medicines
by defining counterfeiting so broadly that it criminalised the production
and importation of generic medicines.
The financing of this project was part of Uganda's implementation
of the economic partnership agreement (EPA) between the EU and East
Uganda, being an LDC, was (and still is) under no obligation to implement
TRIPS, let alone implement TRIPS- plus IP enforcement standards as
envisaged in the (now rejected) draft Counterfeit Goods Bill.
According to the report, these examples show that there is a need
for greater transparency in the EU's IP-related technical assistance
programmes, as well as an urgent need to align EU trade policies with
"It is important to clarify whether the EU IP support programmes
also include training in the full use of all TRIPS flexibilities,
including transition periods available to LDCs, compulsory licences,
public health friendly patentability criteria, patent oppositions
and limitations and exceptions to patents."
The report also highlighted that pharmaceutical companies increasingly
use 'tiered pricing' strategies to show their commitment to access
to medicines. This refers to the practice of selling drugs to different
countries at different prices depending on their economic status.
"However, it is a misconception that tiered pricing is the most
effective access to medicines strategy. It is first and foremost a
commercial strategy that allows pharmaceutical companies to maximise
their profits in all countries, because prices are determined according
to the highest price a country, or a segment within a country, is
prepared to pay. Moreover, for many medicines, including cancer medicines,
pharmaceutical companies do not provide any access programmes."
While emerging upper-middle classes are now firmly on the pharmaceutical
industry's radar as promising growth markets, tiered pricing strategies
that target these discrete populations of high-income patients are
particularly harmful when deployed in middle-income countries.
Under tiered pricing regimes, these countries, home to 73% of the
world's poor, are being charged prices that only a fraction of the
population can afford, while the poorest and most vulnerable people
are left behind.
The Commission states that it is a major contributor to health-related
aid. However, policy coherence for development is clearly lacking
between EU health-related development goals and trade policies, said
The conflicting interests between supporting and protecting public
health in partner countries and promoting the European pharmaceutical
industry's interests in free trade agreements and European partnership
agreements have largely proved to favour the latter.
"While health-related aid from the EU can provide substantial
benefits to public health systems and capacity building around the
world, high medicine prices can seriously undermine the benefits that
such assistance may create."
According to the report, the EU urgently needs a comprehensive, overarching
access to medicines policy that encompasses all relevant policy areas,
including public health, international development, research and trade.
"This will ensure that the economic interests of the EU do not
undermine, or take primacy over, the protection of public health in
developing countries and beyond."
It is worrying to see that the Commission interprets sound policy
coherence as restricting or ending participation or funding in specific
EU-funded programmes if a third country consistently "breaches"
IP rights. Moreover, it is doubtful whether such a unilateral penalty
system is supported under WTO rules.
In general, said MSF and HAI, no country can, nor should, impose penalties
on other countries based on a unilateral interpretation of TRIPS.
The Commission's claims that IP enforcement is an effective tool for
removing falsified and substandard medicines from the market, however,
is a misconception, the report said.
"IP enforcement does not address health and safety concerns of
substandard and falsified medicines. It can, however, create unnecessary
barriers to access to affordable generic medicines."
It is important to clarify that 'falsified medicines' refer to mis-labelling
of ingredients, while 'substandard medicines' are medicines that do
not meet applicable safety, efficacy and quality standards. Neither
of these two categories have anything to do with IP infringement.
The report said, 'Substandard medicines' are genuine medicines that
are produced by authorised manufacturers, but do not meet quality
specifications. They can therefore be both originator and generic
medicines and an IP enforcement framework has no relevance or use
for combatting substandard medicines.
Crucially, the term 'counterfeit', which may involve commercial trademark
disputes, should not be used in relation to medicines because it is
an overly-broad term that conflates IP issues with quality assurance
and regulatory problems.
The Commission's conflation of the various categories wrongly asserts
the relevance of IP enforcement when addressing the problem of 'substandard'
and 'falsified medicines'.
"Unfortunately, the Commission uses its trade relations with
LMICs to push them to embrace the flawed argument that stricter IP
enforcement is the best remedy to protect patients from poor-quality
Instead, said the report, the Commission should use more accurate
and precise terms, such as 'falsified' or 'substandard', for medicines.
It should also address the problems they separately pose through improved
regulatory measures in exporting and importing countries.
The conflation of categories has also been instrumental for the introduction
of new and stronger TRIPS-plus IP enforcement rights (e.g., in the
in-transit area at the border) on medicines in the EU, which increases
the risk of abuse and over-enforcement by rights holders and potentially
deters generic competition.
EU customs officials have previously seized medicines in transit in
the EU on the grounds of alleged patent (or in one case in Germany,
trademark) infringement in the EU, even though both the sending country
(particularly, India) and the receiving country did not have patents
on the relevant product.
"Such seizures of goods-in-transit represent an unacceptable
expansion of the territorial enforcement of a patent (or trademark)
that limits the free movement of generic medicines and generic competition.
IP enforcement on goods in transit - even if limited to criminal trademark
infringement (counterfeits) - bears the risk of impeding generic competition
and does not address the real problem of falsified and substandard
The report said that in the upcoming revision of its Trade and Investment
Policy, the EU must ensure that its public health, development, research
and trade policies are consistent with, and beneficial for, access
to affordable medicines for citizens in the EU and low- and middle-income
It called on the EU to develop a comprehensive access to medicines
policy that ensures that its trade policy is consistent with its development,
research and global health goals.
To achieve this, the EU should:
* Support generic competition to allow broad access to medicines in
LMICs. In particular, the EU should actively support governments that
use available legal measures, including TRIPS safeguards and flexibilities,
to protect and promote public health. The EU should immediately stop
targeting countries, like India, that have implemented progressive
TRIPS-compliant IP policies that promote access to medicines through
its watch list of 'priority countries'.
* Refrain from implementing financial sanctions, as envisaged in its
new strategy on IP Enforcement in Third Countries, upon countries
that make use of WTO-compliant rules.
* Engage in meaningful technology transfer that allows developing
countries to build a sound technology base. It must not offer these
programmes in tandem with IP-related technical assistance.
* Provide full transparency of the content of its IP-related assistance
programmes for LMICs. It should also ensure that parallel IP assistance
efforts do not undermine health-related development projects.
* Avoid using the term 'counterfeit' when discussing concerns about
the quality, safety and efficacy of medicines. The EU should instead
focus upon the categories of substandard and falsified medicines and
ensure the right tools are used to combat concerns with these categories.
* Ensure transparency in the development of its trade and investment
agenda. If public interest and consumer organisations are not aware
of what is negotiated, they cannot engage in public debate and scrutinise
the EU trade and investment agenda. Without real transparency of negotiations,
EU trade agreements are pieced together in an undemocratic and opaque
process and lack real representation of public interests and consumer
* Generate more data of better quality on the economic and social
impact of IP protection and enforcement - particularly, on the potential
negative impact of high levels of IP enforcement on generic competition
and public health.