People's Democracy

EU-INDIA FREE TRADE AGREEMENT

Threatening Our People�s Health Anew

Amitava Guha

IN the last few years India has at its own initiative signed free trade agreements (FTAs) with nearly 17 countries. But the ministry of commerce�s move for an FTA with European Union (EU) is a clandestine one. S Ganesan, chairman of the International Treaties Expert Committee, said, �India does not lead from the front and the EU is known for hegemony.� This process is done in a secretive manner, without any transparency, let alone involving the parliamentary system. Anand Sharma, the minister of commerce and industry, wants to complete the discussion soon, so that this FTA is signed by the year end.

EXPERIENCE

HITHERTO

Consequences of the FTAs, particularly for health and medicine, are already observable from our FTAs with several countries. Free trade is today being manipulated to inflict stringent terms on weaker countries. The stronger countries take full advantage of an FTA to kill certain flexibilities the WTO agreement provides, distorting in particular the clauses on intellectual property rights, data exclusivity and compulsory licenses through a binding agreement. Thus, FTAs are further endangering the access to medicines. The experiences of NAFTA and similar FTAs in Asia Pacific region show that national health systems are facing newer attacks through the FTAs.

The method adopted in FTA formulation is to extend the period of a patent beyond the WTO stipulated 20 years. This allows continuation of monopoly and a rise in medicine prices as a country is not able to produce or procure once-patented medicines even after international patent period expires. To bind it further, data exclusivity is also enforced, even though it is not an obligation under the WTO agreement. While asking for patent on a medicine, its inventor has to submit all test data to establish its novelty, superiority and safety. A company conducts such a test over a long period of 5 to 10 years, and such data are enormous as clinical trials are carried out on several thousands of people. Generic drug manufacturers wait for expiry of the patent period to start production of the earlier patented medicine; this ends monopoly and brings down prices. These generic drug producers do not need to perform any clinical trials or submit any test data; such trials are not only repetitive but involve huge cost too. But the simple precondition of submission of test data would block the production of generic drugs. One of the numerous post-TRIPS mischiefs of the drug MNCs is therefore to push the countries into FTAs.

Such is the objective of the rich countries, and multinational medicine companies spend large sums of money to lobby that their governments to impose FTAs on the weaker countries.  Despite the economic slump, the US pharmaceutical and health products industry spent a whopping 267 million dollars in 2009 on lobbying --- more in one year than any other single industry ever spent. Steven Findlay, health policy analyst for Consumers Union in Washington DC, says most of this extra expenditure --- 12 per cent more than the previous year --- stemmed from the health care reform bill. �All of these companies stood to gain or lose billions of dollars,� he says. �That lobbying started early, and it was intense.� All the organisations, and their subsidiaries dished out more than five million dollars in 2009, according to data from the Senate Office of Public Records, to gain access to Washington's power centres (from Nature Medicine).

EXTENSION OF

PATENT PERIOD

The eight rounds of discussion between the EU and Indian ministry of commerce and industry has produced the penultimate stage of an FTA, the officials engaged in the discussion are tight lipped. Recent exposure of the discussion�s outcome in an internet site (http://www.bilaterals.org/article.php3?id_article=14864) shows how India is inching towards incorporating harmful clauses regarding patents.

The Indian Patents (Amendment) Act 2005 does not allow a patent for more than 20 years; credit goes to the Left MPs who fought and pushed 13 amendments to the act. Thus, section 3d of the act does not allow extension or repatenting of any medicines on frivolous ground. Repatenting application by multinational Novartis for anti-cancer Imitinib Mesilate was rejected and Indian companies are now producing the same medicine, bringing the treatment cost down to Rs 8,000 a month from Rs 1,00,000 involving the Novartis medicine. Repatenting of many HIV-AIDS medicines were also refused, and MNCs are now filing court cases for removal of this section from our patent law.

In such a situation, the text of the proposed EU-India FTA says:

�1. The parties recognise that medicinal and plant protection products protected by a patent in their respective territory may be subject to an administrative authorisation procedure before being put on their market. They recognise that the period that elapses between the filing of the application for a patent and the first authorisation to place the product in their respective markets� may shorten the period of effective protection under the patent.

�2. The parties shall provide for a further period of protection for a product, which is protected by a patent and which has been subject to an administrative authorisation procedure�

�3. Notwithstanding paragraph 2 and the extension for a paediatric use for pharmaceutical products, the duration of further period of protection may not exceed five years.�

It is now clear that through an administrative authorisation, medicines patented by any company in any of the 27 EU countries would be extended by at least five years beyond the 20 years limit provided by Indian law. Global export of medicines by UK and German MNCs is next highest to the US�s. Thus the proposal upholds the interests of these companies.

BLOCKING GENERIC

MEDICINE PRODUCTION

So far, our laws do not ask for submission of test data for licensing of any medicine whose patent period is expired. A generic medicine can be registered if the manufacturer shows that it is therapeutically equivalent to an existing medicine. There is no requirement for a generic company to perform lengthy clinical trials to establish that it is safe and effective; reliance on the original product�s data is sufficient for the drug authority to approve its marketing. Generic medicine producers thus produce medicines immediately after expiry of its patent and sell them cheaper all over the world. India is the fourth largest producer of medicines in the world. Many poor countries having no medicine production capacity immensely benefit from cheaper Indian medicines.

But the EU wants data exclusivity introduced in India. If companies are required to generate their own test data to register a generic medicine, this will impose huge costs on them. Given that generic manufacturing relies on low profit margins, this may even have the effect of killing competition altogether. Article 10 of the proposed agreement says:

�The parties will enact and implement legislation ensuring that any information submitted to obtain marketing approval, i.e. registration of pharmaceutical products will remain undisclosed to third parties and�.. that during this period of protection, no person or entity (public or private), other than the person or entity who submitted such undisclosed data, rely directly or indirectly on such data in support of an application for medical product approved/registration.�

It further says during this period, �any subsequent application for marketing approval or registration would not be granted, unless the subsequent applicant submitted his/her own data (or data used with authorisation of the right holder) meeting the same requirements as the first applicant. Product registered without submission of such data would be removed from the market until the requirements were met.�

It is obvious that the purpose is not only to block the production opportunity for Indian companies but also force many countries to buy medicines from the MNCs at much higher prices.

Further, data exclusivity could effectively block compulsory licenses, which are a legal means to overcome a monopoly. Even if a company is given authority to produce the generic version of a drug under compulsory license, it still needs to register the drug with the DCGI in order to market it in or export it from India. Data exclusivity would prevent such registration for the period of exclusivity, thereby preventing the use of a compulsory license in that period. This is another method to allow the pharma multinationals� monopoly to continue.

PERIPHERAL

MEASURES

But our government is not bothered about adverse impacts on Indian pharmaceutical exports. New barriers are being created through peripheral measures to curb export of Indian generic medicines. All of a sudden, EU customs officials are seizing Indian medicines exported to Latin American countries for suspected infringement of intellectual property rights under the European Commission�s Customs Regulation No. 1383/2003. Though the destination were the Latin American countries, EU countries are halting our exports� movement en route though their regulations go beyond the TRIPS obligations. While India has challenged this intrusion, the proposed FTA has a clause of a similar nature. Article 27 says:

�The parties shall, unless otherwise provided for in this section, adopt procedures to enable a right holder, who has valid grounds for suspecting that the importation of goods infringing an intellectual property right may take place, to lodge an application in writing with competent authorities, administrative and judicial, for the suspension by the customs authorities of the release into free circulation or the retain of such goods.�

Here the term �importation� would mean, for the EC, exportation or re-exportation.

Agreeing to such a clause would be detrimental to the export of Indian medicines.

ABROGATION OF

COMMITMENTS

In its haste to finalise an FTA with EU, our government has forgotten its commitments to international agreements. Mention-worthy here is the Doha declaration of WTO, clearly stating that all care should be taken to safeguard public health before entering an agreement:

�We agree that the TRIPS agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS agreement, we affirm that the 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 (ministerial conference, fourth session, Doha, November 9-14, 2001).

The WHO assembly on Global Strategy and Plan of Action (GSPA) on intellectual property, held in May 2008, made a similar statement: to ��take into account, where appropriate, the impact on public health when considering adopting or implementing more extensive intellectual property protection that is required by the agreement on trade related aspects of intellectual property rights.�

The United Nation Special Rapporteur on the Right to Health has cautioned the nations about the problems emerging out of such FTAs:

�These agreements are usually negotiated with little transparency or participation from the public, and often establish TRIPS-plus provisions.

�These provisions undermine the safeguards and flexibilities that developing countries sought to preserve under TRIPS.

�Studies indicate that TRIPS-plus standards increase medicine prices as they delay or restrict the introduction of generic competition.

�As FTAs can directly affect access to medicines, there is a need for countries to assess multilateral and bilateral trade agreements for potential health violations and that all stages of negotiation remain open and transparent.�

Our presentation shows that our FTA will keep everything open for EU multinationals and impose a stronger patent regime than what the WTO agreement requires. Without considering the Indian people�s interest and ignoring the international commitments on the people�s health, the government is hurrying to finalise it. The ministry said, �India and EU agree to give mandate to their negotiators to intensify talks and sort out the contentious issues in the next few months.� It appears that, excepting for some hiccups relating to child labour and climate change, the government is all set to sign on the dotted line before the year end.