THE US – JORDAN FREE TRADE AGREEMENT AND ACCESS TO

MEDICINES

ROHIT MALPANIOXFAM AMERICA

1)One of many mechanisms used to introduce stricter levels of IP protection.

2) There is broad-based opposition to US FTAs – but based on principle, not fact.

3) Some studies have predicted serious public health consequences for poor people in countries that introduce strict levels of IPRs.

US Free Trade AgreementsUS Free Trade Agreements

1)WHO/PAHO study in Colombia: A US-Colombia FTA would require an additional USD 919 million per year of expenditures to pay for medicines.

2)Peru Ministry of Health: In 10 years, Peru would incur additional medicine expenses of USD 199.3 million –USD 110 million falling upon Peruvian households.

3) World Bank (Thailand): A US-Thailand FTA would have prevented use of compulsory licensing, which could (and now is) reduce the price of second line ARVs by 90 percent – a savings of 3.2 billion USD.

Prospective consequences of Prospective consequences of FTAsFTAs

The US Government has consistently claimed that TRIPS plus rules are beneficial in developing countries.

They always cite the US-Jordan FTA – particularly:

1)No public health deterioration2)Increased local R+D3)Numerous new, innovative product launches4)Increased foreign direct investment

US-Jordan FTAUS-Jordan FTA

Oxfam hired three researchers to collect data to either verify or rebut US government assertions.

2 objectives:

(1) To measure actual public health consequences of US-Jordan FTA since 2002 (through mid-2006)

(2) To measure benefits

Oxfam study of US-Jordan FTA Oxfam study of US-Jordan FTA

1)Data exclusivity

2) Restricted use of parallel importation

3)Restrictions on the use of compulsory licensing

** Study only examined consequences of data exclusivity

Subsequent FTAs have imposed additional TRIPS-plus rules – e.g. linkage and patent extensions.

TRIPS plus rules in the US-Jordan TRIPS plus rules in the US-Jordan FTA FTA

Medicine prices have risen since 2002 and account for an increasing share of overall health care costs.

Many new medicines lacking a generic equivalent in Jordan from 2002-2006 were due to the imposition of data exclusivity (and not patent protection).

Few or no benefits due to US FTA – despite US claims.

Only looked at data exclusivity, although the FTA restricts use of parallel imports and compulsory licensing.

Overall findingsOverall findings

From 2000 – 2006, almost no patents were filed by multinational drug companies in Jordan.

Of 21 multinational drug companies, only three bothered to file any patents for medicines they launched onto the Jordanian market by mid-2006.

Drug companies satisfied with the use of data exclusivity to function as patent protection.

Data exclusivity in JordanData exclusivity in Jordan

Analyzed 108 medicines launched onto the Jordanian market since 2001 (42% of all new, branded medicines launched and more than 70% of sales).

Only 5 medicines (of 108) had patent protection.

Of 103 medicines without patent protection, 79% had no generic competitor (despite the existence of generic competition elsewhere) due solely to data exclusivity.

Verification of consequences of data Verification of consequences of data exclusivityexclusivity

• Heart disease and diabetes are serious problems in Jordan and Egypt.

•Direct comparison of end price for new medicines to treat both diseases show far higher prices in Jordan than Egypt for the same medicine.

• Must qualify that other reasons – costs of APIs, currency shifts and surcharges could be responsible for price increases or lack of a greater price differential.

• But each of these medicines had generic competition in Egypt, and no generic competition in Jordan.

Public health consequences?Public health consequences?

Prices for new medicines to treat cardiovascular disease and diabetes are two to ten times higher in Jordan than in Egypt.

These medicines had no patent in Jordan or Egypt – only data exclusivity in Jordan prevented generic competition.

Price comparison of new Price comparison of new medicines to treat diabetes and medicines to treat diabetes and

heart diseaseheart disease

Article 4 of FTA requires 3 additional years of data exclusivity for a new use of a previously known chemical entity

Multinational companies/US argue a new use includes trivial changes to existing medicines.

Jordan has argued a new use only extends to new indications for old medicines.

Data exclusivity for new usesData exclusivity for new uses

Despite narrow definition, study found at least 18 medicines received three additional yrs of protection.

This includes:

Humira (Psoriasis)Risperdal (mental illness)Diovan (myocardial infarction)Atacandtab (Heart failure)Exelon (dementia)Gonal F (severe hormone deficiency)

Public health consequences?Public health consequences?

Medicine prices & TRIPS-plus Medicine prices & TRIPS-plus rulesrules

20022003200420052006( first two

quarters)

Market Share)%(

3.05.37.29.19.4

Sales )US$( Thousands

29646192921713,69914,296

Many new medicines launched since 2002 have remained unsold due to high prices charged by multinational companies.

But, some new medicines with no generic equivalent have captured a large share of the local market.

Some new medicines provide significant therapeutic benefits compared to older medicines they replace (blood/tumor medicines).

Anti-thrombotic agents: 416% price increase of the average unit price for this therapeutic class.

Increased market share of clopidogrel (Plavix) – launched in 2001 - coincided with decreased market share of generic anti-thrombotic first registered in 1999.

Clopidogrel – no patent in Jordan but still no generic due to data exclusivity

Clopidogrel – 5 times more expensive than generic anti-thrombotic and at least 100 times more expensive than generic clopidogrel manufactured in India.

Medicine prices and TRIPS plus Medicine prices and TRIPS plus rulesrules

At least 81 medicines with no generic equivalent due to data exclusivity.

Generic competition would have reduced prices without imposition of data exclusivity.

Oxfam study crudely estimates data exclusivity responsible for 1.2% - 4.4% of overall total pharmaceutical spending.

Overall consequencesOverall consequences

Medicine prices are a serious burden on government and household health expenditures.

TRIPS plus rules limit policy flexibilities provided to the Jordanian government to reduce medicine prices.

Thailand and Brazil recently demonstrated importance of TRIPS safeguards to reduce medicine prices.

Public health under threatPublic health under threat

1) Our study found scant local R+D from 2000 onwards – local Jordanian industry devoting only a tiny percentage of sales revenue towards R&D.

2) Little or no FDI into Jordan since 2001 – only packaging and distribution agreements (only 5% of medicines produced via licensing agreements with multinationals)

3) Egypt – No TRIPS implementation until 2005 yet received 223 million USD of FDI (35% of all output due to licensing agreements with foreign manufacturers)

No benefits to TRIPS plus rules No benefits to TRIPS plus rules

4) There have been new product launches in Jordan, but only a fraction of total product launches in US/EU.

5) Even when launched, mostly unaffordable – IMS data indicates few or no sales of most medicines.

7) Scientific offices – promote irrational drug use via aggressive FDI to engage in unsavory marketing practices

No benefits due to TRIPS plus No benefits due to TRIPS plus rulesrules

1)2006 elections produced new Democratic majority

2) Colombia, Peru and Panama FTAs renegotiated – eliminated patent extensions and ‘linkage’ and circumscribed data exclusivity – but still includes 5 years (with Doha Declaration exception)

3) SR 242 – major Democratic Senate leaders have expressed full support for Doha Declaration and no TRIPS plus rules.

4) Trading partners must aggressively defend or demand to apply their rights under TRIPS.

New changes in US trade policyNew changes in US trade policy

Rohit Malpani

Trade and Private Sector Advisor

Oxfam America

Email: rmalpani@oxfamamerica.org

Mobile: +1 202 415 5533