Comments by Doctors Without Borders/Médecins sans Frontières on Third Draft of FTAA Text (4/30/04)

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

Sent Via E-mail to soc@ftaa-alca.com

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.

Introduction

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 Agreement All
FTAA countries, with the exception of the Bahamas, which was not a WTO
member at the time, adopted to Doha Declaration in Doha. 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.”  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, U.S. negotiating objectives on
IP rights have been made public and 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.

Background: MSF

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, Bolivia, Brazil, Colombia, Ecuador, Guatemala, Haiti,
Honduras, Mexico, Nicaragua & Peru, with additional offices in Argentina,
Canada & the U.S. 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).

Patents, Prices & Patients: The Example of HIV/AIDS

According to the UNAIDS, there are currently more than 2 million people
living with HIV/AIDS in Latin America and Caribbean. 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%—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, and
patients will be granted on pharmaceuticals in developing countries with
manufacturing countries.  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.

Transparency of FTAA Negotiations

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.

Comments on Intellectual Property Provisions in the Third Draft
Consolidated Texts of the FTAA

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 literature 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.   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.

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.

Conclusion

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.

As a medical humanitarian organization, MSF cannot accept the subordination
of the health needs of our patients and millions of others in the Americas
to commercial interests.  We have repeatedly called upon FTAA negotiators
to ensure that the Doha Declaration remain the ceiling in international,
regional, and bilateral trade agreements, See also upcoming MSF publication
on common TRIPS-plus provisions and their impact available at
www.accessmed-msf.org and continues to call on all FTAA negotiators to
abandon the pursuit of TRIPS-plus provisions in the FTAA and exclude IP
from the final Agreement altogether.  Instead, developing countries should
narrow to an absolute minimum the type and scope of pharmaceutical patents,
least developed countries should delay the granting of pharmaceutical
patents for as long as possible, and all countries should vigorously
support and implement the Doha Declaration.  This is the only way to ensure
that governments uphold their right – and obligation – to protect public
health and guarantee access to essential medicines for their people.

Sincerely,


Nicolas de Torrente
Executive Director, MSF USA