The TPP: For whom is the Law Made?

By Andrew Costello

On November 13^th, 2013 the USTR, the Obama Administration, and international negotiators were humiliated by a shocking revelation; yet, few have heard about it. The leak of the secret Trans-Pacific Partnership’s (TPP) IP Chapter by WikiLeaks and the consumer advocacy group Public Citizen has elicited little response. That is not to say that the leak did not garner some coverage by the press, the Post, US News, and Al Jazeera all wrote about the release; however, there was neither an openly public response by the government nor any serious accusations by public figures. Nonetheless, it is surprising to note the lack of attention paid to the leak, which shows the USTR pushing for the implementation of a stringent patent regime among other clauses that patent plants and animals. The degree of apathy with which I find people receiving this news is alarming; even worse, it may signal that those party to the negotiations are, in actuality, succeeding in their goal of keeping secret a trade pact that could affect hundreds of millions of lives.

The TPP, when originally conceived in 2005, was a small-scale free trade agreement (FTA) between Brunei, New Zealand, Chile and Singapore that included reasonable and equitable changes to each country’s trade laws and regulations, along with an eventual elimination of tariffs by 2015. However, when it grew to include far larger and more developed economies such as the US, Canada, and Australia, the TPP began to transform into what it is known as today. While the conditions of equitable concessions from each member remained the same, the goals of each player changed dramatically, as the developed economies wanted to protect what they already had, usually in direct competition with those who needed such discoveries to progress. The TPP has become a tool for the US’s foreign policy initiative under its “Pivot to Asia” ushered in by the Obama administration to counter a rising China. The goal of the policy change is to foster stronger ties, economically in the case of the TPP, with South East Asian countries; however, America’s goals for the TPP go one step further. In a region that the US generally views as soft on the IP protection, the enforcement of American IP standards through the use of the TPP is exactly the sort of remedy sought by the United States Trade Representative (USTR).

At its essence, “free trade” ought to provide equal economic ground through equal economic concessions by removing all barriers; however, it is difficult to encounter such an arrangement in actuality, if there were, the TPP would be its antithesis. The stated goals of the USTR in negotiating the TPP are to increase American exports while supporting American jobs, leading Asia-Pacific regional integration, and increasing American competiveness in the Asia-Pacific Region. Unfortunately, this would retard the growth of less-developed signatories, stifle innovation abroad, and, in the end, only benefit a select few within the wealthier nations party to the negotiations. All-encompassing and immensely restrictive, the treaty would hamper developing economies more than help them, merely binding them to America’s agenda, both politically and economically.

 On has only to take a cursory glance over the clauses stipulated by the USTR in the TPP’s IP chapter to begin to grasp its potential consequences. Through a series of patent-extension clauses, the US proposals in the TPP provide an agreement that has the potential to keep drug prices out of reach from the poorer people. One patent-adjustment clause stipulates that a patent owner “shall adjust the term of a patent to compensate for unreasonable delays… in the granting of the patent” (The TPP, Article QQ.E.XX). Moreover, any such extensions of the patent’s term would include “all of the exclusive rights of a patent… that would otherwise apply… absent any adjustment” (The TPP, Article QQ.E.XX). While it has been argued by the government and other institutions that patent extension clauses provide “financial incentives to develop new medicines” and their absence would “undoubtedly reduce the number of new drugs developed,” the credibility of these arguments falters when applied to the TPP (Manhattan Institute, Medical Progress Report).

Furthermore, the TPP includes clauses that aim to prohibit producers of biosimilars, generic drugs, from obtaining the costly clinical data, greatly damaging local innovation in developing countries. The IP chapter of the TPP states that a party looking to bring to market a pharmaceutical cannot use “the safety or efficacy information previously submitted” for marketing approval (The TPP, Article QQ.E.16). What this means for generics companies, which far less funding, trying to develop a competing product is that they must undertake timely and costly trials for the FDA despite the fact that such trials have already been performed. Furthermore, the assertion that extending patent periods in an effort to increase the profits of blockbuster drugs is questioned by many, including a study by the Kellogg School of Management which discusses “The Innovation Gap in Pharmaceutical Drug Discovery” in recent years in spite of the record profits being had. 

It is true that studies, including some mentioned in this post, have proven that patent extensions incentivize the production of new drugs; however, this has been proven only in wealthier nations such as the US or Canada. In industrialized countries the higher price and monopoly periods for blockbuster drugs are seen as a “transfer from drug payers to drug patent holders to support R&D” (NIH, Effect of Pharmaceutical Patent Term Length). Indeed, many would perceive these clauses as fair because they allow innovators to recoup profit that they lost to the exigencies of the bureaucratic process that can be used for new drug development; rather, the extension clauses, when applied to such a disparate group such as the TPP signatories, can have disastrous effects.  First, the aforementioned “transfer” from drug payers to patent holders is financially destructive, if not impossible, for the average citizen in Vietnam or even Peru, two signatories of the TPP. Perhaps the most devastating consequence of the patent term adjustment clauses, coupled with data exclusivity clauses, is the damage to the production of affordable, generic medicines. The extension of a company’s monopoly over a pharmaceutical and the concealment that drug’s manufacturing process, causes consumers to suffer from a lack of competition while local innovators suffer from an absence of information.

To impose strict, corporate-friendly patent regimes upon countries that are still undergoing growing pains, like Vietnam, is to exacerbate existing inequalities and mire those nations in years of struggle due to prohibitively priced medicines. Although Vietnam’s healthcare system has steadily improved its resources since privatization beginning in 1986, these resources have not spread equally, as the “main beneficiaries of commercialization continue to be affluent social groups” (Marriot, Global Health Check, 2011). If you are lucky to be included in the 60% of Vietnamese who have health insurance, you will have to use drugs that, while covered by insurance, are “at least 30% over the market price” (Marriot, Global Health Check, 2011). This differential is particularly a blow to the poor, who comprise the 35 million uninsured in Vietnam, and live overwhelmingly in rural areas, half of which have no clean water and often little access to medicines. Thus, to introduce the provisions stipulated in the TPP would be disastrous for those 35 million Vietnamese who are already having a tough time; moreover, the country would be unable to introduce or develop generics to alleviate the problem. It is clear that no immediate good and, perhaps, no eventual good can be had from forcing the TPP on the Vietnamese people, or others like them, in its current form.

Free trade and the treaties which aim to espouse it should benefit all parties involved and not impose restrictive rules on its adherents, not liberalize trade. The reality of the Trans-Pacific Partnership is that, like the vast majority of the treaties that preceded it, it is not a set of clause that embody free trade; rather, the agreement is a collection of laws that benefits once set of people within one or more countries. The clauses that allow for patent term extension and data exclusivity were not designed with the intention of spreading wealth between countries or classes, but to increase the wealth already held by a small amount of companies and individuals: the innovators, the patent-holders. Written under the guise of equality, these potential laws are exclusionary in their nature, and their results would be devastating to the burgeoning Pacific economic zone. It is with this thought in mind that those negotiating the TPP should return to their debates and ask each other plainly, for whom is the law made?

Bibliography

             Hu, Michael, Karl Schultz, Jack Sheu, and Daniel Tschopp. The Innovation Gap in Pharmaceutical Drug Discovery & New Models for R&D Success. Publication. Evanston: n.p., 2007. Print.

Grootendorst, Paul, and Livio Di Matteo. "The Effect of Pharmaceutical Patent Term Length on Research and Development and Drug Expenditures in Canada." PMC. NCBI, 3 Feb. 1007. Web. 2 Dec. 2013.

Lichtenberg, Frank R., and Gautier Duflos. The Effect of Patent Expiration on U.S. Drug Prices, Marketing, and Utilization by the Public. Rep. New York: n.p., 2009. Print.

Marriott, Anna. "Vietnam’s Healthcare System Suffers on Policy Failure." Global Health Check RSS. Global Health Check, 24 Oct. 2011. Web. 1 Dec. 2013.

The TPP. US/AU Proposal. QQ.E. Location: 2013

Kilic, Burcu. "What's New in the Wikileaks Text?" Citizen.org. Public Citizen, 13 Nov. 2013. Web. 15 Nov. 2013.