April 30, 2004

Chair of the Committee of Government Representatives on the Participation of Civil Society
Secretaria del Área de Libre Comercio de Las Américas (ALCA)
8 Oriente N° 1006
Paseo San Francisco
Centro Histórico, Puebla 72000
México

To Whom It May Concern:

I am pleased to submit these comments on behalf of Doctors Without Borders/Médecins Sans Frontières (MSF) on the Third Draft Consolidated Texts of the Free Trade Area of the Americas (FTAA) Agreement in response to the open and ongoing invitation to civil society in FTAA participating countries for public comment. These comments focus entirely on the potential negative consequences of proposed intellectual property (IP) provisions in the FTAA on access to essential medicines in developing countries in the Americas. MSF is deeply concerned that such provisions threaten to undermine the historic World Trade Organization (WTO) Ministerial Declaration on the TRIPS Agreement and Public Health (“Doha Declaration”), resulting in devastating consequences in terms of access to medicines for millions of people in low- and middle-income countries in the Americas with life-threatening diseases.

In each of MSF’s past submissions to this body—on the First and Second Draft Consolidated Texts of the FTAA—we have highlighted the ways in which proposed IP provisions directly contradict and undermine the Doha Declaration. Unfortunately, this contradiction has not been resolved in the third draft, and we are therefore forced to reiterate the following comments.

The Doha Declaration—to which countries party to the FTAA Agreement¹ committed themselves in November 2001—states that the TRIPS Agreement can and should be interpreted and implemented in a manner “supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all.”² However, it is clear that certain proposed IP provisions in the FTAA Agreement threaten to make it impossible for countries in the Americas to exercise the rights that were reaffirmed in Doha. These “TRIPS-plus” proposals, which correspond with the FTAA negotiating objectives of the United States,³ would impose standards on pharmaceuticals that far exceed requirements set forth in the TRIPS Agreement, and would subject countries in the Americas to one of the most stringent IP regimes in the world.

In order to ensure that countries in the Americas can uphold the commitment they made in Doha to ensure the protection of public health and the promotion of access to medicines for all, MSF calls on FTAA negotiators to exclude IP provisions from the final FTAA Agreement altogether.

MSF is an independent, international medical humanitarian organization that delivers emergency aid to victims of armed conflict, epidemics, natural and man-made disasters, and to others who lack health care due to social or geographic marginalization. We operate over 400 medical relief projects in over 75 countries throughout the world. The organization was awarded the 1999 Nobel Peace Prize. MSF currently has a field presence in 10 countries in the Americas,⁴ and teams provide medical care for people with HIV/AIDS, Chagas’ disease, and other illnesses, as well as primary care, maternal and child health care, and other services for displaced and homeless populations and for indigenous peoples. MSF submitted official comments regarding the First and Second Draft Consolidated Texts of the FTAA Agreement to the Committee of Government Representatives on the Participation of Civil Society on May 1, 2002 and April 30, 2003, in accordance with the official procedures, which have been included in the 2002 and 2003 Report of the Committee of Government Representatives on the Participation of Civil Society to the Trade Negotiations Committee (TNC) (entry FTAA.soc/civ/27 and FTAA.soc/civ/85).⁵

According to the UNAIDS, there are currently more than 2 million people living with HIV/AIDS in Latin America and Caribbean.⁶ The Caribbean is the second-most affected region in the world, after sub-Saharan Africa. In several Caribbean countries, HIV/AIDS has become a leading cause of death. Hundreds of thousands of people with HIV/AIDS in developing countries in the Americas do not have access to antiretroviral therapy—which, in wealthy countries such as the U.S., has dramatically extended and improved the lives of people living with HIV/AIDS, reducing AIDS-related deaths by over 70%⁷—simply because they cannot afford it.

The effects of generic competition on drug prices have been well documented and widely recognized, particularly in the case of HIV/AIDS. Just three years ago, the average cost of a triple combination of antiretrovirals was between $10,000-$15,000 per patient per year, and today it is available for as little as $140 per patient per year. These price reductions were the direct result of international public pressure and generic competition, particularly from Indian and Brazilian manufacturers. Generic competition was possible because of the absence of patent protection in those countries.

AIDS drug prices help to illustrate what is to come by the end of 2005, when most WTO members will have to comply with the TRIPS Agreement,⁸ and patents will be granted on pharmaceuticals in key developing countries with manufacturing capacity. At this point, such competition will not be possible unless flexible conditions for granting compulsory licenses exist, and compulsory licenses are routinely issued to address public health concerns. Compulsory licensing of pharmaceuticals is one of the most important policy tools for ensuring generic competition and access to medicines. Yet, the use of compulsory licenses would be severely restricted as a result of numerous IP proposals in the draft FTAA text. If FTAA creates a system that blocks the use of equivalent but cheaper drugs, it will be a catastrophe for our patients and for all people in the Americas, because the difference in price can be the difference between life and death.

Despite previous statements by FTAA negotiators indicating the importance of ensuring transparency in the negotiations and a renewed commitment during the Miami Ministerial to conduct negotiations in a transparent and consultative manner, the text of the third draft is still bracketed, and all footnotes have been omitted, making it impossible to know which proposals are attributable to which governments. We therefore urge FTAA negotiators to insist on the inclusion of footnotes that would clearly indicate the various negotiating positions advanced by the 34 countries that are parties to the Agreement. The inclusion of footnotes would increase the level of transparency in the negotiations and greatly enhance efforts to engage in an informed public debate about crucial issues in the FTAA Agreement.

The Chapter on IP rights of the FTAA Agreement must not eliminate the gains achieved in Doha, namely the acknowledgment of the primacy of public health over private commercial interests. Should the final text of FTAA provide for stronger protection to patent owners than is required by the TRIPS Agreement, this agreement will be binding on all 34 FTAA countries and could have primacy over the TRIPS Agreement and the Doha Declaration as well as national and regional IP legislation. Once the final agreement is signed, FTAA Member States will not be able to invoke the Doha Declaration to remedy patent abuses and take TRIPS-compliant measures to protect the public health of their populations.

One of the most important paragraphs of the Declaration, paragraph 4, is quoted in Chapter XX IPR, Article 1 [1.4] of the third draft FTAA Agreement:

[1.4. No provision of this Chapter prevents, and should not prevent, any Party from adopting measures to promote and protect public health, and it should be interpreted and implemented in a manner that takes into account each Party’s right to protect public health and, in particular, to promote access to existing medicines and to the research and development of new medicines.]

Nothing more is required in reference to IP as it relates to public health technologies. However, the third draft text of the FTAA includes the following proposals for IP that directly contradict and undermine the above statement.

1. Dramatic limitations on the circumstances under which compulsory licenses on pharmaceuticals may be issued

A compulsory license is a public authorization, consistent with TRIPS, to ignore a patent that is in force in a country. Although the Doha Declaration has reaffirmed the right of WTO Member countries to issue a compulsory license for whatever reason (not only in cases of emergency), proposals in the third draft text of the FTAA Agreement would dramatically limit the circumstances under which compulsory licenses on pharmaceuticals may be issued. MSF urges FTAA negotiators to reject the inclusion of any clause Subsection B.2.e. Article 6 that would impose more stringent conditions than the TRIPS Agreement requires for the granting of compulsory licenses. In particular, MSF brings to your attention to Subsection B.2.e. Article 6, Other Use Without Authorization of the Right Holder:
[6.1. Where a Party permits use of the subject matter of a patent without the authorization of a patent owner by the Government of the Party or by a private entity acting on behalf of the Government of the Party, such authorization shall comply with the following conditions:
a) The authorization shall be granted only for public non-commercial purposes or in situations of a declared national emergency or other situations of extreme urgency.
b) The authorization shall be limited to the making, using or importing of the patented invention solely to satisfy the requirements of the Government use, and shall not entitle a private party acting on behalf of the Government to sell products produced pursuant to such authorization to a party other than the Government, or to export the product outside the territory of the Party.]

Should this proposal be adopted, it would eliminate the possibility of granting compulsory licenses to remedy patents abuses, such as excessive pricing, and to foster competition in the private sector to increase access to essential patented medicines. Moreover, limiting the granting of compulsory licenses to emergency situations severely restricts the “freedom” of FTAA countries that are also members of the WTO “to determine the grounds upon which such licenses are granted,” as clearly acknowledged by the Doha Declaration in paragraph 5(b). Furthermore, the above proposal prevents FTAA countries from exporting medicines produced under a compulsory license to address public health problems of other countries with insufficient or no manufacturing capacity, in accordance with the recently adopted WTO decision of August 30, 2003.

Finally, a compulsory license is useless if the national drug regulatory authority (NDRA) cannot register any generic drug during the life of the patent. The proposals related to data exclusivity and linkage of drug registration to patent status, outlined below, negate this critical public health safeguard. By barring NDRAs from registering generic versions of drugs, the US is blocking the ability of countries to make use of compulsory licenses to ensure access to medicines for their people. FTAA negotiators should reject all proposals that limit the grounds for issuing compulsory licenses.

2. Extensions of patent terms on pharmaceuticals beyond the 20-year minimum in TRIPS

The TRIPS Agreement obligates WTO members to provide patent protection on medicines for 20 years. Proposals in the third draft text provide for an unjustifiable extension of patent terms. Extensive literature⁹ has shown that twenty-year patents are more than enough—indeed they may be considered excessive—to allow the pharmaceutical industry to recoup investments made in research and development. Subsection B.2.e. Article 9. Term of Protection states:
[9.2. Each Party, at the request of the patent owner, shall extend the term of a patent to compensate for unreasonable delays that occur in granting the patent. For the purposes of this paragraph, an unreasonable delay shall at least include a delay in the issuance of the patent of more than four (4) years from the date of filing of the application in the Party, or two (2) years after a request for examination of the application has been made, whichever is later, provided that periods of time attributable to actions of the patent applicant need not be included in the determination of such delays.]

Subsection B.2.j - Article 1. Protection of Undisclosed Information states:

if the product is subject to a patent in one Party as well as in another Party, the second Party shall extend the term of the patent within its territory to expire no earlier than the date of expiration of the patent in the first Party.

This is not required by the TRIPS Agreement and a WTO panel expressly stated that such patent extensions do not constitute a “legitimate interest” of patent owners.¹⁰ From a public health perspective, it is critically important that the terms of pharmaceutical patents not exceed what is required in TRIPS and not allow for possible extensions as they would further limit or delay generic competition. In addition, it is well known that patent offices worldwide, especially small ones with limited resources, are overwhelmed with an increasing number of patent applications. Article 9.2 will penalize small patent offices, and may result in the granting of invalid patents for lack of necessary time of examination. Both proposals should be rejected by FTAA negotiators.

3. Abusive powers to regulatory authorities to enforce patents

Proposals in the third draft text include provisions that would require NDRA to refrain from registering a generic version of a patented product unless the patent owner gives its consent. This is clearly going beyond the traditional role and function of NDRAs, which only have the expertise to evaluate the safety, efficacy and quality of medicines. When assessing whether a generic drug should be registered, NDRAs do not need to take patent status into consideration, as this is simply not their job – just as it is not the job of patent offices to assess the quality, safety and efficacy of a drug. But this provision effectively means that NDRAs will function as patent enforcement agencies and will potentially result in the enforcement of “bad quality” patents, which could be revoked if challenged before courts through the common judicial means available to patent owners. Valid claims receive adequate protection through normal judicial processes.¹¹

Subsection B.2.j. Undisclosed Information states:
[1.4. Where a product is subject to a system of marketing approval pursuant to paragraphs 1.2 or 1.3 and is also subject to a patent in the Party:
a) the Party shall not approve an application to market a product on the basis of information in an earlier marketing approval for the same product where that application has been filed by a party other than the recipient of the original marketing approval or with his consent, and shall not otherwise authorize a third party to market the same product, prior to the expiration of the patent;]

FTAA negotiators should reject this proposed provision.

4. Exclusive rights over pharmaceutical data

Although the TRIPS Agreement only requires WTO Members to protect clinical information that is generally required by NDRAs to approve the marketing of a new medicine (“undisclosed test or other data”) against “unfair commercial use” and “disclosure” in the framework of unfair competition law, proposals in the third draft text would grant exclusive rights on these data for at least five years.
Subsection B.2.j. Article 1. Protection of undisclosed information states:
[1.2. If a Party requires the submission of information concerning the safety and efficacy of a pharmaceutical or agricultural chemical product prior to permitting the marketing of such product, such Party shall not permit third parties not having the consent of the party providing the information to market the same or a similar product on the basis of the approval granted to the party submitting such information for a period of at least five (5) years from the date of approval.]
[1.3. If a Party provides a means of granting approval to market products specified in paragraph 1.2 on the basis of the grant of an approval for marketing of the same or similar product in another Party, the Party shall defer the date of any such approval to third parties not having the consent of the party providing the information in the other Party for a period of at least five (5) years from the date of approval in the Party or the date of approval in the other Party, whichever is later.]

This kind of exclusive protection over pharmaceutical test data are often referred to as “data exclusivity” and prevent a NDRA from registering a generic version of a medicine solely on the basis of therapeutic equivalence with the original medicine. Data exclusivity therefore prevents generic competition for a given period unless the generic manufacturer provides its own safety and efficacy data to the DRA. It is unethical to require generic manufacturers to conduct their own efficacy trials with proven effective compounds.

Moreover, data exclusivity provides a de facto monopoly for the originator company when the medicine is not protected by a patent. Unlike patents, which can be remedied through compulsory licensing, “data exclusivity” does not allow for legal recourse. In addition, data exclusivity could block the use of compulsory licenses if they are issued during the time of exclusivity because the NDRA could not register the drug even if the patent barrier were overcome. We urge FTAA negotiators to reject these proposed provisions.

The proposals outlined above in the third draft text of the FTAA Agreement aim to strengthen IP beyond what is required in TRIPS, and reduce the use of TRIPS safeguards to the detriment of public health. If the FTAA creates a system that undermines and contradicts the Doha Declaration, blocking the use of affordable generic medicines, it will be a catastrophe for millions of people in the Americas with HIV/AIDS and other life-threatening illnesses.

Sincerely,

Nicolas de Torrente