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Open Access 01-11-2019 | Research

Analyzing the impact of trade and investment agreements on pharmaceutical policy: provisions, pathways and potential impacts

Authors: Deborah Gleeson, Joel Lexchin, Ronald Labonté, Belinda Townsend, Marc-André Gagnon, Jillian Kohler, Lisa Forman, Kenneth C. Shadlen

Published in: Globalization and Health | Special Issue 1/2019

Abstract

Background

Trade and investment agreements negotiated after the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) have included increasingly elevated protection of intellectual property rights along with an expanding array of rules impacting many aspects of pharmaceutical policy. Despite the large body of literature on intellectual property and access to affordable medicines, the ways in which other provisions in trade agreements can affect pharmaceutical policy and, in turn, access to medicines have been little studied. There is a need for an analytical framework covering the full range of provisions, pathways, and potential impacts, on which to base future health and human rights impact assessment and research. A framework exploring the ways in which trade and investment agreements may affect pharmaceutical policy was developed, based on an analysis of four recently negotiated regional trade agreements. First a set of core pharmaceutical policy objectives based on international consensus was identified. A systematic comparative analysis of the publicly available legal texts of the four agreements was undertaken, and the potential impacts of the provisions in these agreements on the core pharmaceutical policy objectives were traced through an analysis of possible pathways.

Results

An analytical framework is presented, linking ten types of provisions in the four trade agreements to potential impacts on four core pharmaceutical policy objectives (access and affordability; safety, efficacy, and quality; rational use of medicines; and local production capacity and health security) via various pathways.

Conclusions

The analytical framework highlights provisions in trade and investment agreements that need to be examined, pathways that should be explored, and potential impacts that should be taken into consideration with respect to pharmaceutical policy. This may serve as a useful checklist or template for health and human rights impact assessments and research on the implications of trade agreements for pharmaceuticals.

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The North American Free Trade Agreement (NAFTA) involving Canada, Mexico and the United States, which came into effect on 01 January 1994, also contributed to a new global standard for IP and became a model for subsequent US trade agreements.

Health impact assessment (HIA) and human rights impact assessment (HRIA) are two related but distinct approaches which can be used to assess the potential or actual impacts of trade agreements. Methods follow similar steps, but HIA identifies impacts on health, including distributional impacts, whereas HRIA explicitly references potential impacts to states’ legal obligations with respect to the Right to Health. [16]. Gleeson D, Forman L. Implications of trade and investment agreements for access to affordable medicines and the right to health. Canadian Yearbook of Human Rights, In Press.

It will come into force for the remaining five countries as their domestic approval processes are completed.

Side instruments from the TPP were not included in the analysis, except for those which have been incorporated into the CPTPP (as many of the original side instruments became defunct or were superseded and are no longer publicly available).

Although the New Zealand Ministry of Foreign Affairs and Trade is the official repository of the TPP and CPTPP documents, some CPTPP side instruments not relevant to New Zealand were not located there and were sourced from governmental websites of other CPTPP Parties.

Chapters that form part of the architecture of the agreement but which would not be expected to have an impact on pharmaceutical policy independently of other parts of the text were not included in the framework. These include dispute settlement chapters and exceptions chapters. Each agreement incorporates the Article XX(b) health exception from the General Agreement on Tariffs and Trade (GATT XX(b)) and applies it to the obligations in a limited subset of chapters. GATT XX(b) can be invoked by Parties who wish to defend a measure that would otherwise be in breach of the agreement as ‘necessary to protect human, animal or plant life or health’, as long as they can show that the measure ‘does not constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade’. The likelihood that a health measure will be determined by a dispute settlement panel not to be in breach of an agreement when the GATT XX(b) exception is invoked is difficult to predict and depends on the specifics of the measure and its application and context.

TRIPS-Plus provisions can also impact prices and access through other mechanisms such as restrictions on compulsory licensing and parallel importation, restrictions on patent opposition and revocation, limitations on exclusions from patentability, and supplementary protection certificates. While these types of provisions have appeared in other trade agreements (and some were originally proposed for the TPP), none of the four agreements studied include such provisions in the final text. Some trade agreements, including the TPP/CPTPP and USMCA, also expect countries to be members of the Patent Cooperation Treaty (PCT). PCT membership is likely to increase the volume of patent applications filed locally and, with increased workload for examiners, perhaps the grant of patents that might otherwise be rejected, increasing the likelihood that more drugs have single suppliers. As all members of the agreements reviewed in this article are already members of the PCT, this particular provision will not change the existing situation for them (though it may restrict options for subsequent leaders). More generally, analyses of IP provisions in trade agreements should consider wither PCT membership is required.

Based on our reading of the literature ([30]. Jung Y, Kwon S. The effects of intellectual property rights on access to medicines and catastrophic expenditure. International Journal of Health Services 2015;45:507–529; [31]. Jung Y, Kwon S. How does stronger protection of intellectual property rights affect national pharmaceutical expenditure? An analysis of OECD countries. International Journal of Health Services 2018;48:685–701; [32]. Park W. Intellectual property rights and international innovation. In: Mascus K (ed). Frontiers of economics and globalization. Elsevier Science Vol 1:289–327.), there is limited support for the thesis that stronger IP will lead to more pharmaceutical innovation or better health outcomes; therefore, we have not dealt with the possibility in our analysis.

The case was found in favour of Australia, based on jurisdictional grounds.

Philip Morris Asia was ordered to pay a proportion of Australia’s legal costs defending its legislation as well as 50% of Australia’s share of the arbitration fees, leaving the country to cover A$12 million.

While the provisions applying to pharmaceutical pricing and reimbursement programs in the TPP/CPTPP and USMCA are procedural in nature, it is clear that the pharmaceutical industry has (largely unsuccessfully to date) sought to undermine price controls and reference pricing (Lopert & Gleeson, 2013).

The procedural requirements in TPP Annex 26-A would also not have applied to Canada or Mexico.

Two provisions in the Government Procurement Chapter are suspended by CPTPP Annex Paragraph 6. These provisions concern labor rights and the timing of further negotiations on government procurement.

While nearly all WTO agreements are binding on all members, the GPA is an exception to the “single undertaking,” a plurilateral agreement within the WTO that countries may decide to join, or not.

There are exceptions for conduct pursuant to a public mandate, but these are complex and untested.

The CPTPP Annex, paragraph 11, suspends certain obligations in the Annex IV Schedule of Malaysia, but these changes are not relevant to pharmaceuticals.

Non-conforming measures included in TPP Annex IV Schedule of Viet Nam (https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Annexes/Annex-IV.-Viet-Nam.pdf) allow Vietnam to continue to provide some specific types of financial assistance under some circumstances. Other TPP countries have also used Annex IV to limit their obligations with respect to SOEs and designated monopolies.

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Title: Analyzing the impact of trade and investment agreements on pharmaceutical policy: provisions, pathways and potential impacts
Authors: Deborah Gleeson
Joel Lexchin
Ronald Labonté
Belinda Townsend
Marc-André Gagnon
Jillian Kohler
Lisa Forman
Kenneth C. Shadlen
Publication date: 01-11-2019
Publisher: BioMed Central
Published in: Globalization and Health / Issue Special Issue 1/2019
Electronic ISSN: 1744-8603
DOI: https://doi.org/10.1186/s12992-019-0518-2

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Analyzing the impact of trade and investment agreements on pharmaceutical policy: provisions, pathways and potential impacts

Abstract

Background

Results

Conclusions

Keynote webinar | Spotlight on sleep in brain health

Springer Medicine

Abstract

Background

Results

Conclusions

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