The Trans-Pacific Partnership: the death-knell of generic pharmaceuticals?

Author:Stimac, Alexander
 
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ABSTRACT

As global commerce continues to expand, many states find international trade agreements to be a useful tool to facilitate this continued expansion. Trade agreements permit developing or poorer nations to establish robust, mutually beneficial trade relationships with powerful economies such as the United States. In the face of regional competition from China, several nations bordering the Pacific Ocean, including the United States, have reached a far-reaching trade agreement called the Trans-Pacific Partnership (TPP). This Note will focus on one particular piece of the TPP: the pharmaceutical trade and the international availability of generic medicines. The TPP has the potential to dramatically alter intellectual property laws in the signatory nations and may have a disruptive effect on the availability of generic pharmaceuticals worldwide. This Note analyzes the potential for this problem and proposes an alternative mechanism in which signatory nations are granted automatic licenses for certain medicines they deem essential.

TABLE OF CONTENTS I. INTRODUCTION II. FACTUAL BACKGROUND A. Inception and Development of the TPP B. Confidential Negotiations, Missed Deadlines, and the United States' Response C. Points of Contention Among Signatories III. ANALYSIS A. The Proposed TPP as a "TRIPS Plus" Regime B. Potential Effects Upon International Medical Regimes C. An Outsider's Approach to Pharmaceuticals IV. SOLUTION A. The National Essential Medicines List B. Projected Benefits of the Proposed Alternative C. Projected Downsides of Proposed Alternative V. CONCLUSION I. INTRODUCTION

In 2008, the United States entered into negotiations with Chile, New Zealand, Singapore, and Brunei for a proposed free trade agreement called the Trans-Pacific Partnership (TPP). (1) Since then, the agreement has expanded to include several other nations with a significant trade presence in the Pacific region, including Australia, Peru, Vietnam, Malaysia, Mexico, Canada, and Japan. (2) A final agreement was reached on October 5, 2015, making the TPP one of the largest trade agreements in the world. (3)

The goal of this trade agreement was to expand industry in developing Pacific nations and stimulate trade between all signatory nations. (4) Many commentators have viewed this trade agreement as a strategic move to counter-balance China's influence in the Pacific region. (5) Negotiations for the TPP occurred privately, with the contents being accessible only to each nation's trade representatives and their advisors. (6) In the fall of 2013, the anti-secrecy organization WikiLeaks first leaked a negotiator's draft of the Intellectual Property Rights Chapter of the TPP. (7) In October of 2014, it leaked a new version of this chapter that was purported to be current as of May of that year. (8) Finally, on October 9, 2015, just four days after the final agreement was reached, WikiLeaks released what it claimed was the final Intellectual Property Rights Chapter. (9) The final official text was released to the public on January 26, 2016, revealing the accuracy of the final leaked version. (10) The leaked documents revealed the contentious nature of this agreement, particularly with regard to its intellectual property (IP) provisions. (11) In total, the leaked documents demonstrated at least nineteen points of disagreement between the United States and the other parties during the negotiations of the TPP's IP provisions. (12)

While the TPP's IP provisions largely track existing U.S. IP law, the final provisions expand upon it in several key areas. (13) Additionally, the TPP raises existing global standards created by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). (14) The IP areas most affected are copyrights, patents, and IP enforcement. (15)

One notable change in the IP realm involves the patentability of generic pharmaceuticals. (16) The TPP expands patentability of pharmaceutical products and permits their patent terms to be lengthened by up to five years. (17) This change will potentially reduce the availability of cheap generic medicines or increase the price of available medicines in the signatory nations. (18)

The IP enforcement regimes have also likely changed for many nations involved. (19) Member states have to bring their enforcement regimes in line with that of the United States, which mandates stiffer penalties for infringement, including criminal penalties. (20)

Proponents of the deal have pointed to the economic benefits that the agreement is predicted to bring to member nations. (21) In addition to denouncing the overall lack of transparency in negotiations, critics have expressed concern with the IP provisions, noting that the lion's share of the anticipated benefits will go to patent and copyright holders, resulting in greater restrictions on the public's freedom to access and use knowledge. (22)

Part II of this Note will describe the development of the TPP, focusing on the influential role that the United States played during negotiations. This Part will also discuss the main points of contention among signatories, describing the way this new treaty modifies the current state of global intellectual property law.

Part III will analyze the projected effects of the TPP on the international pharmaceutical trade, focusing in particular on the likelihood that many citizens of Pacific nations will see dramatic, sometimes prohibitive, increases in the prices for prescription drugs. As a result of the increased protections offered to pharmaceutical patent-holders, nations that currently provide cheap pharmaceuticals as part of their national healthcare plans may see generics become more expensive or harder to procure. In analyzing this change in price and availability, this Note will analyze the effects that the TPP's changes will have on consumers in general, as well as focus on the varying ways that different nations will be affected. This Note will also compare the current state of U.S. intellectual property law to the IP laws of other nations and to the recommendations set forth by the TRIPS agreement. In comparing the various regimes, this Note will analyze some of the conflicts that the proposed changes will have with the current laws of the involved nations.

Finally, Part IV will propose an alternative version of the IP provisions that would expressly permit nations to distribute generic pharmaceuticals without fear of an infringement suit. This alternative provision would permit signatory nations to use their discretion and devise national "essential medicines" lists. Each signatory would have the discretion to grant compulsory licenses for pharmaceutical products found on that nation's list. This change would permit private or public entities within each state to devise generic alternatives to essential medicines that may then be cheaply distributed within that nation. In return, the pharmaceutical pioneer that invented the original medicine would receive a royalty as compensation for his or her research and development costs. This Note will provide details regarding how this royalty may appear, and will discuss whether and how this plan could be implemented, and the medical and monetary ramifications such a plan might have for signatory nations and pharmaceutical companies.

  1. FACTUAL BACKGROUND

    The TPP is a long-negotiated free trade agreement between twelve nations that border the Pacific Ocean, including the United States. (23) Once fully implemented, this will be the largest trade agreement in the world by trade-flow, affecting 40 percent of the world's GDP and 26 percent of the world's trade. (24) This Part will describe the events that led to the development of the TPP, focusing primarily on the United States' role, and will discuss the major points of contention among signatories.

    1. Inception and Development of the TPP

      The seeds for the Trans-Pacific Partnership were planted in 2002 when representatives of Singapore, Chile, and New Zealand entered into side negotiations while attending the Asia Pacific Economic Cooperation (APEC) Leaders Summit in Los Cabos, Mexico. (25) Their shared goal was to devise an agreement that would liberalize trade across the Pacific Ocean in order to foster economic development in each of the three nations. (26) By 2005, Brunei Darussalam had entered into talks with the original three parties, and on June 3, 2005, the "P4" nations announced that they had signed a trade pact. (27) The trade pact was called the Trans-Pacific Strategic Economic Partnership Agreement, or Trans-Pacific SEP, and represented the P4 nations' shared vision for a future trade expansion in the Asia-Pacific region. (28) Pursuant to the agreement, each party promised to eliminate trade barriers and facilitate the movement of goods among signatories, to promote fair competition, to increase investment opportunities in each party's territory, to establish a cooperative approach to IP rights, and to create an effective mechanism for resolving trade disputes. (29) In addition, this agreement affirmed the parties' commitment to encourage other nations to join the negotiations. (30) These original tenets of the Trans-Pacific SEP laid the foundation for the expansive set of multi-party negotiations known as the Trans-Pacific Partnership. (31)

      In January 2008, Susan Schwab, the U.S. Trade Representative at the time, announced plans for the United States to commence trade negotiations with the P4, suggesting it might join the actual Trans-Pacific SEP trade pact. (32) The introduction of the United States as a negotiating partner enticed several other Pacific nations to join subsequent rounds of negotiations. (33) According to David Skilling, the chief executive of the New Zealand Institute, the addition of an economic heavyweight like the United States gave the relatively small economies of the P4 members a seat at the global negotiating table. (34) Subsequently, the...

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