Lead Author: Burcu Kilic
Organization: Public Citizen
Country: USA


Achieving policy coherence between trade and health

Since 1994, the United States has signed 20 free trade agreements (FTAs) with both developed and developing countries. These agreements introduce substantive patent, data/market exclusivity, and enforcement rules, and each agreement updates the previous one and sets the bar higher for IP protection.

The World Health Organization’s resolution 59.26 on international trade and health underlines the lack of policy coherence between trade and health. Identifying the need for policy coherence is easier than producing such coherence. The problem of creating coherence in complex policy settings requires looking at specific problems.
Exclusivity rules delay generic medicine registration for a specified period of time by limiting the ability of generics manufacturers and regulatory authorities to make use of an originator company’s data submitted in the marketing approval process.

The implications of such measures could have far-reaching effects for access to affordable medicines. Marketing and data exclusivity rules are separate from patents. Even where there is no patent for a medicine, exclusivity rules will provide a monopoly for a set period.
The inbuilt flexibilities for compulsory licenses are not reflected under the exclusivity provisions of the FTAs. The increasing prevalence of public health interventions creates need to incentivize governments’ to take advantage of their policy space, using different tools to complement creatively the exclusivity provisions.

Thus, this submission aims to

- establish policy coherence between FTA commitments and national health objectives by focusing on the national policy-making process
- articulate the need for an explicit public health exception to address data/market exclusivity obstacles for access to medicines
- propose targets, policy measures and mechanisms that are designed to work towards improving global health architecture — and, in particular, achieving better health outcomes in FTA countries


Achieving policy coherence between trade and health

The Doha Declaration on the World Trade Organization’s (WTO) Agreement on Trade Related Intellectual Property Rights (TRIPS) and Public Health is a binding legal document, which clarifies and confirms flexibilities for protecting public health under TRIPS. According to Paragraph 4 of the Doha Declaration, Members can and should interpret and implement TRIPS in a manner supportive of their own rights to protect public health and, in particular, to promote access to medicines for all. The ‘spirit of Doha’ represents a broad and binding consensus of the international community that governments are not only entitled but have a duty to use public policy health safeguards to promote access to affordable medicines.

Since 1994, the United States has signed 20 FTAs with both developed and developing countries including Jordan, Morocco, Peru, Chile, Australia, and Singapore . The European Union concluded 34 trade agreements with 53 countries worldwide and is in the process of negotiating agreements with many more . These agreements introduce substantive patent, data/market exclusivity, and enforcement rules, and each agreement updates the previous one and sets the bar higher for IP protection, with a modest exception in the U.S. pursuant to the so-called May 10 Agreement .

The recently signed the Trans-Pacific Partnership Agreement (TPP) includes measures that are detrimental to access to affordable medicines.

Exclusivity Provisions
Article 39.3 of TRIPS covers the “protection of undisclosed information” and only requires protection of undisclosed test data on new chemical entities, the collection of which involved considerable effort, against disclosure unless steps are taken to ensure that the data is protected against “unfair commercial use.”

The North American Free Trade Agreement (NAFTA) includes a similar passage, but also specifically prevents regulators from relying on an originator’s data for a reasonable period. The U.S. sought a provision in TRIPS based on this NAFTA paragraph. This proposed provision was excised from the TRIPS Dunkel Draft in 1991 and was never restored to the TRIPS Final Act of 1994.

The TRIPS drafters’ refusal to adopt the NAFTA provision is one of several factors demonstrating their intention to provide for some level of data protection, but not data exclusivity, in TRIPS.

Nevertheless, all the recent free trade agreements include provisions on data & market exclusivity. Marketing and data exclusivity rules are separate from patents. Even where there is no patent for a medicine, exclusivity rules could provide a monopoly for a set period.

The US-model exclusivity provisions require governments not to permit third parties to market the same or similar product using the same test or other data concerning the safety and efficacy of the product .

Public Health Safeguards

All the recent U.S. FTAs including the TPP contain a provision providing safeguards for governments to take measures to protect public health in accordance with the TRIPS Agreement and Doha Declaration . The provision borrows the language from May 10 Agreement and the previous FTAs (Peru US FTA, Korea-US FTA). Those involved in drafting the provision say it was designed precisely to overcome data exclusivity and facilitate the use of generics when governments so choose. It was meant to be analogous to compulsory licensing for patents: a tool to introduce generic competition when an exclusive right poses an obstacle for health.

But are these safeguards specific enough to protect health? The increasing prevalence of public health interventions creates a need to analyze the scope of governments’ ability to supersede exclusivity provisions. The US-FTA style Doha safeguards provide little specific guidance. The inbuilt flexibility for compulsory licenses is not reflected under the exclusivity provisions.

Professor Carlos Correa highlights this problem in his analysis of the TPP intellectual property chapter:

“..this language has little or no practical effect. It would not limit in any manner the obligations imposed by the agreement. The referred to Declaration only confirms the flexibilities allowed by the TRIPS Agreement in relation to public health matters (such as compulsory licenses and parallel imports), but it is unlikely to provide a sufficient legal basis to derogate from the obligations established by the TPP.”

The Doha Declaration confirms the flexibilities of the TRIPS agreement. Its protections may be interpreted by some as not relevant to the provisions going beyond TRIPS in FTAs. Multinational pharmaceutical companies could seek to take advantage of this.

In the absence of an explicit public health exception overriding data/market exclusivity in appropriate circumstances, a compulsory license on a patent could be rendered moot. Although the compulsory license would prevent patent obligations from standing in the way of needed domestic production or export of a patented drug, production of the drug would still be blocked by data/market exclusivity since generic firms must still obtain marketing approval.

Article 31 of TRIPS , which provides for compulsory licensing, is explicitly about patents. FTAs, like the TPP, do not explicitly require that compulsory licenses be effective or override any market/data exclusivity so that generics/biosimilars can enter the market. Article 31 just ensures that a compulsory license can be issued on the patent.
A European Commission communication from 20 February 2006 claimed that compulsory licenses on patents did not allow the overriding of data/market exclusivity as the exclusivity law did not allow it:

“However the Community pharmaceutical acquis does not currently contain any provision allowing the waiver of the rules on data exclusivity and marketing protection periods described above in the case of a national or an EU-wide emergency.

Before the expiry of the data exclusivity and marketing protection periods provided for by the European pharmaceutical legislation, applicants for a generic marketing authorization have to either (1) provide the relevant authority with the required documentation on pre-clinical tests and clinical trials or confirm that the marketing authorization holder has consented to the use of the required documentation by the applicant. “

There is an urgent need for expanded language to provide a clear operational path for health exceptions to data and marketing exclusivity under FTAs.

The ambiguous terms of existing US-FTA style Doha safeguards present a more serious problem for biologics. Biologic medicines are complex molecules such as proteins that are isolated from plants/animals/micro-organisms or made using biotechnology. They can include cancer medicines and therapies such as insulin. An AIDS vaccine would be a biologic. They are a growing share of medicines and can cost up to 569,000 per patient per year at monopoly prices, often for a lifetime .
Biologics may not be patentable in all cases as they are naturally occurring products such as insulin or components of human blood etc. The TPP Agreement requires countries to stop generic versions of biologic medicines (‘biosimilars’) from being available to patients, even when there is no patent or beyond the term of patent. If there is no patent on biologics drug (and hence no compulsory license), it is unclear whether Doha safeguards can be used to override biologics exclusivity .

In the TPP negotiations, only Chile has preserved the health and other exceptions in its law , which Chile can use to override biologics exclusivity. However, other TPP parties can only rely on a generic TPP provision with respect to the utilization of data for regulatory approval, which includes a boilerplate exception to “protect the public” . The general and vague language of this provision may not give countries the confidence to override exclusivity provisions with compulsory licensing-like mechanisms, in cases where there is a compulsory license on pharmaceutical patents. Above all, the provision does not address how these safeguards can be used to override exclusivity on an unpatented drugs.

There is thus a quest for an explicit public health exception to override data/market exclusivity obstacles for access to medicines. Such an exception will provide latitude for policy makers to issue licenses or create safeguards s to the effective marketing monopolies conferred by exclusivity provisions .


United Nations Secretary-General’s High-Level Panel on Access to Medicines can take a leadership role on trade and health policy to establish institutional mechanism transplanting right to health into a new area and ultimately extending its reach in some respects into the international trade arena.

• Right to health: The Panel should make the case for the power of human rights law to develop possible policy responses to minimize negative impact of FTA provisions. This would include revisiting long-established human right principles and revising long-held positions on trade. The Panel should promote a trade-health coherence agenda putting in place appropriate, public health and public interest policies to support progress towards achievement of the right to the highest attainable standard of health.

• Technical Assistance: TPP countries have not yet implemented the TPP. Countries might further need specific technical assistance for achieving more coherent policies at the intersection between trade and health. Institutional mechanisms of collaboration among TPP countries be led by the High Level Panel can achieve desired policy outcomes.

• Model law: Model Law provisions can assist the design of complementary policies aimed at smoothing negative effects of exclusivity provisions to maximize public health outcomes.
A model law provision on overriding health exception among others can include legal exemptions (or research exemptions) from infringement for certain acts relating to the development and submission of testing data to a regulatory agency (so-called Bolar provisions, in reference to a US law enacted to overturn a prior court ruling holding that the US did not provide for a research exemption - Roche Products, Inc. v. Bolar Pharmaceutical Co., Inc., 733 F.2d 858 (1984), compulsory licensing and government use of safety and efficacy data whether there is a public health emergency or not.

• Policy Dialogue: Trade policy-making and implementation is embedded in a larger complex political process. A dialogue between trade and health and human rights officials at the national, regional and global level becomes key ensuring policy coherence. Coordinated action on overriding health exception would contribute to better health outcomes.

• Networking: Achieving policy coherence in the relationship between trade and health requires linkage of national policy making process to intergovernmental regimes (WHO, WTO, WIPO), regional trade-related bodies, such as ASEAN (Association of Southeast Asian Nations), APEC (Asia-Pacifi c Economic Cooperation) and Alianza del Pacifico and other transgovernmental networks. The Panel can create a working group or committee on trade and health for the implementation of FTAs. By integrating human rights approaches into national policy making process, the Committee can invoke the synergy and complementarity between the health and trade policies.

Impact on Public Health

A balanced public health approach would provide latitude for policy makers to issue licenses or create exceptions to the effective marketing monopolies conferred by exclusivity provisions.

The Doha Declaration recognizes countries’ rights to “promote access to medicines for all” and represented a significant victory for developing countries and global health. Ever since, health advocates and developing countries have worked to live up to Doha’s promise.

This submission aims to recalibrate TRIPs-plus provisions of FTAs and rekindle the Doha spirit. The increasing inclusion of TRIPS-plus provisions in FTAs illustrates that the status quo must change. Still, a great deal of latitude depends upon the political willingness of countries to set their IP policy in accordance with their own national needs and priorities. The integrity of the spirit at Doha must be preserved to minimize the social cost of any FTA provision adopted.

Health crises in the 21st century arise from the outbreaks of new, acute or re-emerging communicable diseases, which pose a threat of international spread. A global overriding public health exception appears to be a critical measure that would better prevent and respond to future health crises. The impact of this measure could be even greater as it would strengthen the global health architecture both in FTA and non-FTA countries. With the necessary legal infrastructure to protect public health, countries will be able to build an effective emergency preparedness and immediate response capacity.

The High Level Panel should undertake and sustain stronger global leadership for health within the trade arena. The Panel has an important role to play in engaging effectively with trade and health policies and be a catalyst for policy coherence.

Bibliography and References

1. The WHA Resolution 59.26 on International trade and health 2006 available at http://apps.who.int/gb/ebwha/pdf_files/WHA59-REC1/e/WHA59_2006_REC1-en.pdf
2. Free Trade Agreements, Office of the U.S. Trade Representative, available at http://www.ustr.gov/trade-agreements/free-trade-agreements.
3. Free Trade Agreements, European Commission, available at http://ec.europa.eu/trade/policy/countries-and-regions/agreements/#_customs-unions. http://apps.who.int/gb/ebwha/pdf_files/WHA59-REC1/e/WHA59_2006_REC1-en.pdf
4. On May 10, 2007, Democratic leaders in the U.S. House of Representatives brokered a deal with the George W. Bush Administration designed in part to reduce the negative consequences of U.S. trade agreements for global access to medicines. The May 10 Agreement placed limits on the new monopoly powers that would be granted to pharmaceutical companies in trade agreements, including those with Peru and Panama. This would facilitate the continued generic competition on which many people depend for access to affordable medicine.
5. North American Free Trade Agreement Art.1711.5, Dec. 8, 1993, 32 I.L.M. 289 (1993).
6. Carlos M. Correa, Trade Related Aspects of Intellectual Property Rights: A Commentary On the TRIPS Agreement 23 at 385-87 (2007).
7. Brook K. Baker, Ending Drug Registration Apartheid: Taming Data Exclusivity and Patent/Registration Linkage, 34 Am. J. Law & Med. 303,315-16 (2008).
8. Relevant Articles of Bilateral FTAs
• US-Jordan FTA Article 4(22)
• US-Singapore FTA Article 16.8(1-3)
• US-Chile FTA Article 17.10(1)
• US-Australia FTA Article 17.10(1), Article 17.10(3)
• US-Morocco FTA Article 15.10(1)
• US-Korea FTA Article 18.9.2
• US-Peru TPA Article 16.10.2
• US-Panama TPA Article 15.10.2

9. TPP Article 18.50: “1. (a) If a Party requires, as a condition for granting marketing approval for a new pharmaceutical product, the submission of undisclosed test or other data concerning the safety and efficacy of the product,51 that Party shall not permit third persons, without the consent of the person that previously submitted such information, to market the same or a similar52 product on the basis of:
a. that information; or
b. the marketing approval granted to the person that submitted such information, for at least five years53 from the date of marketing approval of the new pharmaceutical product in the territory of the Party.”
10. TPP Article 18.50.3 “Notwithstanding paragraphs 1 and 2 and Article 18.52 (Biologics), a Party may take measures to protect public health in accordance with: (a) the Declaration on the TRIPS [Agreement] and Public Health (WT/MIN(01)/DEC/2) (the “Declaration”); (b) any waiver of any provision of the TRIPS Agreement granted by WTO Members in accordance with the WTO Agreement to implement the Declaration and in force between the Parties; or (c) any amendment of the TRIPS Agreement to implement the Declaration on TRIPS and Public Health that enters into force with respect to the Parties.”
11. The United States – Colombia Trade Promotion Agreement Implementation Act, P. 30, http://waysandmeans.house.gov/UploadedFiles/COLOMBIA_Statement_of_Administrative_Action.pdf.
“For pharmaceutical products, Article 16.10.2(e)(i) of the Agreement provides an exception to the data exclusivity obligations for measures to protect public health in accordance with the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2) (the “Doha Declaration”). Thus, where a Party issues a compulsory license in accordance with Article 31 of the TRIPS Agreement and the Doha Declaration, the data exclusivity obligations in Chapter Sixteen of the Agreement will not prevent the adoption or implementation of such a public health measure. In addition, in a case in which there is no patent on the pharmaceutical product, and, therefore, no need to issue a compulsory license, the data exclusivity obligations in Chapter Sixteen will not prevent the adoption or implementation of such a measure.”
12. Carlos M. Correa, Intellectual Property in the Trans-Pacific Partnership: Increasing the Barriers for the Access to Affordable Medicines, South Centre Research Paper 62 (Sep 2015), available at http://www.southcentre.int/wp-content/uploads/2015/08/RP62_IP-in-TPP-Increasing-the-Barriers-Access-to-Affordable-Medicines_EN.pdf.
13. Article 31 of the TRIPS Agreement (other use without authorization of the right holder): Compulsory licensing is only part of this since “other use” includes use by governments for their own purposes.
14. Terberger M, Tamiflu applications and data exclusivity in an emergency compulsory license situation, Letter to the European Generic Medicines Association, Brussels: Enterprise and Industry Directorate-General, European Commission (2006), available at https://www.google.ch/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwiz1OCUqozLAhUsJpoKHflCAyYQFgglMAE&url=https%3A%2F%2Fwww.wcl.american.edu%2Fpijip%2Fgo%2Feu02202006&usg=AFQjCNHb_3sp23argriMcYCo1qbL-iaZ9w.
15. Tracy Staton, Why does Alexion’s Soliris cost $500K-plus? U.K. gatekeepers want to know, FiercePharma (Mar 2014), available at http://www.fiercepharma.com/story/why-does-alexions-soliris-cost-500k-plus-uk-gatekeepers-want-know/2014-03-04; See Preliminary analysis of biologics exclusivity, Third World Network Info Service on Intellectual Property Issues (Aug 2015), available at http://www.twn.my/title2/intellectual_property/info.service/2015/ip150802.htm.
16. UNITAID, The Trans-Pacific Partnership Agreement: Implications For Access To Medicines And Public Health (2014), available at http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf.
17. Chile Law No. 19.039: For example, in addition to health, for non-commercial public use, national emergency, other circumstances of extreme urgency declared by the competent authority and national security, termination of the exclusivity is allowed. Compulsory licenses, anticompetitive practices by the originator company, failure to commercialize it in Chile for more than 12 months after getting marketing approval in Chile etc result in the protection under this paragraph not applying,, available at http://www.wipo.int/wipolex/en/text.jsp?file_id=270135
18. Roma Patel, A Public Health Imperative: The Need for Meaningful Change in the Trans-Pacific Partnership's Intellectual Property Chapter (2015), available at https://conservancy.umn.edu/bitstream/handle/11299/172106/Patel.pdf?sequence=1&isAllowed=y.
19. Pedro Roffe, Geoff Tansey and David Vivas Eugui, Negotiating Health: Intellectual Property and Access to Medicines, (Earthscan London, 2012).
20. Jerome H. Reichman, Undisclosed Clinical Trial Data Under the TRIPS Agreement and Its Progeny: A Broader Perspective, UNCTAD-ICTSD Dialogue on Moving the pro-development IP agenda forward: Preserving Public Goods in health, education and learning, Bellagio, 29 November – 3 December 2004, at p.3.