ISDS Case Study: Eli Lilly Pharmaceutical Corporation Uses NAFTA Foreign Investor Privileges Regime to Attack Canada’s Patent Policy, Demand $100 Million for Invalidation of a Patent

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In November 2012, Eli Lilly and Company initiated formal proceedings under the North American Free Trade Agreement (NAFTA) to attack Canada’s standards for granting drug patents, claiming that the invalidation of a patent violated three special investor privileges granted by the agreement. The investor privileges provisions included in NAFTA and other U.S. “free trade” agreements (FTAs) empower private firms to directly challenge government policies before foreign tribunals comprised of three private-sector attorneys, to claim that the policies undermine investors’ “expected future profits,” and to demand taxpayer compensation. Eli Lilly’s NAFTA investor-state challenge marks the first attempt by a patent-holding pharmaceutical corporation to use the extraordinary investor privileges provided by U.S. “trade” agreements as a tool to push for greater monopoly patent protections, which increase the cost of medicines for consumers and governments. Eli Lilly is demanding $100 million in compensation.