[Ip-health] Oxfam handout on CAFTA and access to medicines

[Mike Palmedo]

CAFTA & Public Health:  Will poor people have access to medicines?

Oxfam America

Summary:  Intellectual property measures in the Central America Free
Trade Agreement (CAFTA) will limit the ability of Central American
governments to make affordable medicines available to their populations.

Background:  Chapter 15 of the CAFTA agreement requires Central American
governments to enact more stringent intellectual property laws related
to pharmaceutical products.  In general, the measures in CAFTA are
designed to delay or limit the introduction of generic competition and
shift the balance of intellectual property systems toward patent holders
and against broader societal interests and public health.

Generic competition has proven effective in reducing drug costs in a
sustainable way.  Cheaper drugs can mean life and death, most notably in
the case of AIDS medicines where prices in developing countries dropped
from $10,000 to $300 a year per patient over the past few years.  In
Costa Rica, where 85 percent of the population has formal health
insurance, the public health system relies on generics to keep costs
down and maintain widespread coverage.  In other Central American
countries, where less than one-fifth of the population has health
insurance, patients must buy drugs out-of-pocket.  For these patients,
patented drugs are too expensive and patent rules that limit the
availability of affordable generics prevent them from obtaining
life-saving medicines.  Even though these poor countries do not
represent a significant market for the pharmaceutical industry, the U.S.
has insisted on stringent new requirements that will limit poor people's
access to medicines.

All of the CAFTA countries are WTO members and are therefore signatories
to the intellectual property treaty known as the TRIPS Agreement, which
requires countries to institute high levels of intellectual property
rights.  The TRIPS Agreement's application to pharmaceutical products
has come under scrutiny in recent years; in some controversial cases,
the agreement threatened to prevent developing countries from providing
cheap AIDS medicines to patients.  In recognition of the potentially
devastating impact of higher prices on poor patients' access to
medicines, WTO members unanimously adopted the "Doha Declaration on the
TRIPS Agreement and Public Health" in 2001.  The Declaration affirmed
that TRIPS provisions should be interpreted so as to prioritize public
health over patent rights.

CAFTA undermines the Doha Declaration and public health:  In August of
2003, members of the WTO agreed to provide new mechanisms under the
TRIPS Agreement for countries to provide medicines for public health
purposes.  Unfortunately, CAFTA would extend patents beyond what is
required under TRIPS by eliminating or weakening the public health
safeguards contained in TRIPS.

Extending patents and limiting the government's ability to introduce
generic competition is particularly damaging to poor patients in
developing countries who buy medicines out-of-pocket.  When drug prices
rise, the poor make difficult sacrifices to buy drugs.  More often, they
do without and suffer or die unnecessarily.  Central America has the
second highest death rate from communicable diseases in Latin America.
Nearly 165,000 people are living with HIV/AIDS and 30,000 cases of
full-blown AIDS have been reported in the region.

The following provisions in CAFTA's Chapter 15 raise concerns:

"    Obstacles to the use of compulsory licenses.  Under the TRIPS
Agreement, governments may issue a compulsory license to obtain cheaper
generic drugs by temporarily overriding a patent.  Compulsory licensing
is an important tool for governments to protect the public interest or
to remedy anti-competitive behavior.  The threat of a compulsory license
has been used as negotiating leverage by developing countries such as
Brazil to negotiate price reductions with drug companies, and the US
uses it to regulate anti-competitive behavior.  Yet CAFTA includes a new
provision that appears to make compulsory licensing pointless by
prohibiting generic suppliers of patented drugs from obtaining marketing
approval at any point during the patent period.  As a result,
governments would be effectively forbidden from making cheaper versions
of patented medicines available to the public, even during a health
crisis.

"    Restrictions on use of test data to block the introduction of
generic products.  CAFTA requires governments to guarantee exclusive use
of test data for pharmaceutical products for five years.  This would
deny generic manufacturers critical information necessary to prove the
safety and efficacy of their products.  Usually generic producers simply
prove their product is bio-equivalent to an already approved, patented
product, relying on the test data of the original product to prove
safety and efficacy.  CAFTA would prohibit generic competitors from
relying on this data for five years from the time the data is first
submitted.  Furthermore, the agreement mandates protection of test data
that has been submitted in countries not covered under CAFTA.  A patent
holder could protect itself from generics competition for up to ten
years -- five years prior to entering a CAFTA-country market and an
additional five years following marketing approval in the CAFTA
country.  This provision would also impede the use of compulsory
licenses for public health.

"    Patent extension.  CAFTA requires extension of the patent term
beyond the standard 20 years under the TRIPS Agreement to compensate for
delays in granting the patent or regulatory approval.  Each additional
day a drug patent is extended is one more day in which drug prices may
be out of reach for poor people.

"    Obstacles and delay for generic competition.  CAFTA would forbid
generic producers from seeking approval for drugs in advance of the
expiration of a patent.  Generic producers often do this in order to be
ready to sell their product immediately upon patent expiry.  In
addition, drug regulatory authorities must notify the patent holder when
another company seeks approval for a generic version of its product.
Similar provisions in US law have been abused by the pharmaceutical
industry to block competition.  These provisions are likely to result in
delaying the availability of affordable generic medicines.

While the U.S. will have little trouble complying with the intellectual
property requirements of CAFTA, the Central American countries will be
forced to impose new, more stringent patent protections that could
seriously reduce or delay the availability of affordable generic drugs
and competition in the pharmaceutical market.  Oxfam believes that
Central American countries should be able to make full use of safeguards
provided under the TRIPS Agreement, assuring the primacy of public
health over patent rights.


Prepared by Oxfam America, March 22, 2004