Lead Author: Fifa Rahman
Additional Author: Kajal Bhardwaj
Organization: Malaysian AIDS Council
The contribution describes concerns with TRIPS+ provisions contained in the TPP, contextualised to Malaysia. The document provides key facts about the Malaysian healthcare system, and refutes the innovation excuse for increased IP protection. It asks the UNSG, to urge governments against ratification of the TPP, and denounce and discourage the adoption of TRIPS+ provisions, among other recommendations.
‘Maximalist IP on a false premise: the Trans-Pacific Partnership (TPP) and threat to access to medicines in Malaysia’
For four years now, the Malaysian AIDS Council has been leading the campaign for access to affordable medicines in regard to the TPP. We have attended four rounds of negotiations as a stakeholder, during which we made presentations to negotiators regarding the ineffectual public health exceptions and the impact of extended exclusivities on Malaysian health. The intellectual property (IP) chapter of the TPP, while less maximalist than it was at the beginning of the negotiation process, incorporates market exclusivity for biologics, patent term adjustments if there is an ‘unreasonable curtailment’ or ‘unreasonable delay’ of registration, patent terms for new indications, and grants corporations rights to sue for unlimited damages if decisions are made to invalidate patents, or other actions taken by the government. Provisions similar to these have been shown to delay access to generic medicines in Guatemala , Canada , Thailand , and Jordan , among others.
Key facts about Malaysia and Malaysian public health
• In 2016, RM4.6 billion (USD$1.04 billion) was allocated for the supply of medicines, consumables, vaccines and reagents to all Government hospitals and clinics. This equates to 1.51% of GDP.
• The median monthly household income in Malaysia is RM4585.00.
• Malaysia relies heavily on generic medicines with data showing that pharmacists recommend generic substitution for 84.7% of all brand name requests of medicines in Malaysia.
• The George Institute study ASEAN Costs in Oncology longitudinal mapping project involving 10,000 cancer patients states about 45% of Malaysian cancer patients suffer from ‘financial catastrophe’ where medical costs exceed 30% of household income 12 months after diagnosis.
• Data from Andrew Hill et al. indicate that Malaysia pays up to 8 times more for the HIV drug lopinavir-ritonavir when compared to countries in the same income bracket, and while the TPP is not responsible for these prices, access to generic version would bring these prices down.
• Malaysia, as a middle-income country, is not included in the Gilead voluntary licence for Sofosbuvir. Sofosbuvir is priced at RM357000 (USD$84,000) for 12 weeks treatment . It has been shown that it treatment with generic versions can be provided at US$171-360 for 12 weeks treatment without genotyping.Given that there are several patents already granted in Malaysia, patients are not able to access the generics.
IP provisions in the TPP
Exclusivity for Test (or other) Data
The TPP contains exclusivity ‘for at least five years from the date of marketing approval of the new pharmaceutical product in the territory of the Party.’ While Malaysia already has 5 years data exclusivity (DE), there are several concerns, notably that Malaysia did not grant DE for all products under its own law. This would change after the TPP. Secondly, while negotiators have assured that data exclusivity, market exclusivity, and the 20-year patent term would run concurrently rather than consecutively, pharmaceutical industry litigation elsewhere have shown that similar provisions have been used consecutively, especially where there is a new indication.
Market Exclusivity for Biologics
Market exclusivity for biologic medicines was first proposed in the U.S. with proposals ranging from 5 to 15 years, with the Obama administration advocating for 7 years. In 2009 a 12-year period was ultimately agreed on. Financial modeling to determine the amount of exclusivity needed to provide a typical pioneer biologic a return on investment was utilised by supporters of the provision. Supporters posit a range of 13 to 16 years as a breakeven period for typical pioneer biologics and cite innovation as the key justification for biologics exclusivity. Lybecker (2014) elaborates: ‘the intellectual property rights protection is of particular importance to biopharmaceutical innovators, given that without these measures innovators would have little incentive to invest in new technologies that suffer from several market failures’.
Senator Orrin Hatch (R-Utah) has been particularly vocal in pushing for biologics exclusivity in the TPP. In a speech at the American Enterprise Institute on 30 January 2015, he stated that he fully expected the TPP to reflect high intellectual property standards as per U.S. law, including twelve years of exclusivity for biologics. Academics have cited value of biologics exports as justification for twelve-year exclusivity in the TPP.
On 5 November 2015, the final texts of the TPP were released, and therein the finalised language for biologics exclusivity, including a loose definition of what constitutes a biologic (‘… at a minimum, a product that is, or alternatively contains, a protein…’) and either 5 or 8 years market exclusivity, depending on whether there is ‘effective market protection’.
From the public health perspective, there have been numerous concerns, including from Nobel prizewinning humanitarian organization Medécins Sans Frontières that it would delay access to lifesaving medications. In addition, there is no definition in the text of what constitutes ‘effective market protection’, and there is a fear that this could be decided later via the investor-state dispute settlement system (ISDS) where a pro-investor international tribunal would decide. Additionally, this would provide a window for Congress during the TPP certification process to state that Malaysia does not have ‘effective market protection’, and thus have to agree to the longer term of 8 years market exclusivity for biologics. Studies are gradually emerging on market exclusivity.
Wang et al. (2015), in a study on market exclusivity in the U.S. found that ‘a uniform increase in the minimum period of regulatory exclusivity would disproportionately benefit drugs that are likely to be of less clinical importance’. At present, it is unclear whether Malaysian implementing agencies had access to these data and/or whether they had similar concerns.
Given that the TPP is considered to be the new norm in trade agreements, that this is the first time that biologics market exclusivity has been explicitly included in a US free trade agreement, and that we know via Special 301 submissions that the Pharmaceutical Research and Manufacturers of America (PhRMA) have been actively campaigning for biologics exclusivity , there is a real need for the UNSG High-Level Panel on Access to Medicines urgently consider the impacts on access to biologics in the future, and caution against its inclusion in future trade agreements.
Debunking the Innovation argument as a false premise
There are a number of studies that debunk the innovation argument of IP maximalists. Ho (2015) points out that manufacturers are confronted with an ‘innovation crisis’ and increasingly are patenting minor modifications of existing products. In addition, studies have found that some innovation is actually hampered by stronger intellectual property or that IP does not stimulate innovation. By way of illustration, Italy increased intellectual property rights and this has had little or no impact in its rate of invention. A second example is the European Union, which is the most protected pharmaceutical market in the world, but has become less innovative than other regions. In August 2015, it was noted in The Economist that ‘When changes in the rate of innovation do occur, they seem to have little to do with patents… Patents were a result of successful innovation; its cause was competition.’
Recommendations to the UNSG High-Level Panel on Access to Medicines
• To urge nations against ratification of the TPP
• To urge the US not to seek stronger IP protection during the free trade agreement certification process, including in the TPP.
• To denounce the advancement of maximalist IP through trade as based on a false premise – that IP is necessary to promote innovation when the evidence is to the contrary.
• To commence an in-depth analysis and restructuring of current R&D models.
• To monitor closely the PhRMA-driven biologics exclusivity campaign in trade.
• To denounce and discourage adoption of TRIPS+ provisions generally.
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