The Trans-Pacific Partnership will cut accessibility to medicine for those that need it most

By Hector Sharp | 01 Aug 14

Last week Right Now attended the 2014 Global Ideas Forum (GIF) held at Melbourne University. One of the key issues at the conference was The Trans-Pacific Partnership Agreement (TPP). This article endeavours to bring you what you need to know about the TPP and its effects on the health sector in Australia and to encourage public discourse on this groundbreaking trade agreement. You can read an overview of the entire agreement written for Right Now by Stephanie Murphy.

The TPP is a trade agreement between 12 pacific nations: Australia, New Zealand, The United States, Japan, Singapore, Chile, Brunei, Vietnam, Peru, Malaysia, Canada and Mexico. Negotiations began in 2010 but their progress has been tightly sealed off from the media, prompting calls for greater transparency and an end to “secret dealings” behind closed doors.

The WikiLeaks saga has been keeping the media busy by bringing a broad range of issues to the surface but it seems the draft text of the TPP, leaked by the group, has largely slipped through the cracks, no doubt to a collective sigh of relief from the Department of Foreign Affairs and Trade (DFAT). Advocacy has been left to those in the affected industry: medical professionals. It follows that the TPP is an issue hot on the lips of many in the health profession and was on the minds of those in attendance at the 2014 GIF.

A February 2014 report published by leading health academics at the University of New South Wales explained the TPP posed the biggest threat to the affordability of medication and medicines in Australia. While governments of participating countries have been tightlipped on the details of the text, the leaks in December 2013 of a chapter on “intellectual property rights” and another chapter on “transparency” have shown that the TPP will likely lead to the cost of medicine increasing in each signature country. There are three main causes for this increase in price in Australia:

  1. New IP regulations will delay the availability of cheaper generic medicines.
  2. New regulation will alter the operation of Australia’s Pharmaceutical Benefit Scheme (PBS) and make it difficult to keep costs down.
  3. The TPP includes a clause that allows pharmaceutical companies to sue a government over its pharmaceutical policies, effectively meaning they will not be able to regulate the price of medicine unless in “emergency situations.”

Proposed Intellectual Property Provisions

The US proposed IP provisions seek to strengthen companies’ patent abilities. Dr Deborah Gleeson from La Trobe University believes that adopting the US proposals would undermine access to affordable medicines in Australia and the other participating countries, which include some of the worlds’ poorest countries. This would be a major setback for efforts to stem the tide of non-communicable diseases.

The leaked proposals seek to grant additional exclusive control over clinical trial data, necessary to have the drug approved for distribution in any country. The current Australian-US Free Trade Agreement provides at least five years protection for clinical data; the US is now seeking at least three extra years for existing drugs and up to 12 years for biological products.

“Australian consumers have been betrayed,” says Dr Matthew Rimmer, Associate Professor at the ANU College of Law. “The intellectual property chapter of the Trans-Pacific Partnership is a monster. The proposals in respect of copyright law, trademark law, patent law, and data protection would hit Australian consumers hard.”

The US is also seeking to prevent countries from refusing to grant patents for minor variations to existing products, even when there is no evidence of improved performance. This, according to the UNSW report, would encourage “Evergreening” – a strategy patent holders use to extend their monopolies on products by gaining additional patents for minor adjustments. This prevents competition from cheaper generic versions for much longer periods, essentially restricting the drug to only those who can afford it.

The possible fallout from this deserves some consideration and explanation. Antiretroviral drugs (ARVs) are used to treat Tuberculosis, Malaria, HIV & Aids and other diseases. In 2000 ARVs used to treat HIV & Aids were $10,439 per person per year for Triple Combination Therapy. By mid 2001 the exact same therapy was available from an Indian generic manufacturer for just $295 per person per year.

Generic drugs are utilised by low and middle-income countries. In 2008 UNAIDS reported that national governments of 94 per cent of countries with “generalised epidemics” and 61 per cent of countries with “concentrated epidemics” had national polices for using generic medicines to promote antiretroviral access.

The manufacture and export of generic drugs has helped revolutionalise treatment by simplifying HIV & Aids treatment. In 2001 an Indian manufacturer produced a combination of three ARV’s (patented by three different pharmaceutical companies) into a single pill. This was only possible because India is not a member of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Both the World Trade Organization and the World Health Organization have affirmed the importance of balancing IP demands and public health interests when negotiating trade agreements. Doctors Without Borders (MSF) has said that they rely on generic medicines to treat Tuberculosis, Malaria, HIV and Aids. The group, not known for its political activism, has launched a rare online campaign against the TPP. MSF indicated that the worrying aspect is that the agreement is slated to further expand its membership to all 21 Asia Pacific APEC nations, including some of the poorest nations in the world.

International support for the use of generic drugs has been widespread; former UN Special Envoy for Aids in Africa, Stephen Lewis, has said of generic drugs:

“…we wouldn’t have this extraordinary run of treatment in Africa now if it weren’t for the generic drugs.”

The Effect on Pharmaceutical Reimbursement Programs

Australia has a pharmaceutical reimbursement program called the Pharmaceutical Benefit Scheme. Currently the price paid by consumers to pharmaceutical companies for medicines under the PBS is determined by a comparison with the lowest price for similar drugs with the same effectiveness and safety. However a clause included in the chapter on “transparency and procedural fairness” specifies that prices paid to drug companies must be based on “competitive market derived prices in the parties territory.”  Dr. Gleeson believes this will undermine the ability of the PBS to set medicine prices that are affordable because the “lowest price” standard will be replaced with a “competitive market price” standard, which has the potential to be far higher than the current benchmark.

The chapter also provides for an extensive appeals process for manufacturers to challenge reimbursement decisions in domestic courts. This allows for legal action to be brought against the Australian Government for breaches of the TPP.

Mitigating These Costs

The cost of some medication has already risen as a result of the 2005 Australia-US Free Trade Agreement. But the proposed provisions from the leaked TPP would constrain the operation of Pharmaceutical reimbursement schemes to a much greater extent while at the same time restricting the production of low-cost generic versions.

The UNSW report, published in February, points to increased cost-sharing mechanism strategies to mitigate the price increase. The most obvious of these is a “patient co-payment.” In light of this, the 2014 Budget and its introduction of a $7 co-payment for health services released over a month after the report would have come as little surprise to its authors.

Patient co-payments can be a barrier to the use of medicine. In a 2005 survey 22 per cent of Australians reported skipping a dose or not filling a prescription due to cost. In a 2008 survey on patient behaviour, more than 75 per cent of respondents said a price increase in co-payments would cause financial difficulty.

Where to from here?

US President Barak Obama said in June that he aims to have a complete draft of the TPP to take to leaders by November 2014. But it is clear there are still many issues to resolve. Senior legislators in seven of the 12 countries have called for the release of the TPP; legislators in Australia, New Zealand, Canada, Japan, Malaysia, Mexico and Peru, are all calling for more transparency in the multi-national negotiations.

Australian Senator Penny Wong, the ALP shadow trade minister, put forward a motion which passed in the Senate last December. The motion called for a release of the draft text of the TPP and all other trade agreements before they are signed. This would change the current process in which Cabinet signs a treaty agreement before it is released for public and parliamentary scrutiny. As a result parliamentary review cannot change the text. The Government has refused to comply with the Senate motion to release the text before it is signed.

Community action hasn’t fared any better; consumer advocacy group CHOICE presented a petition to the Liberal Government in February of last year asking for the TPP text to be released. The petition, signed by 14,119 Australians, seems to have fallen on deaf ears in Canberra.

“We believe such and important document and binding trade agreement must be open for public scrutiny,” the group said in an online statement.

Under current legislation, treaties must be tabled in Parliament for a minimum of 15 days before it is ratified. For such a large and important agreement, many fear just 15 days will not be enough time to mobilise public discourse and opinion in order to influence parliamentary decision-making.

Follow the progress of the campaign to have the TPP text released on Twitter under the hash tag #releasethetext.

Read more from Right Now on the TPP here.

Hector Sharp is a member of Right Now’s editorial team. He has worked as a journalist in the Middle East and currently studies law at Melbourne University. He is also managing editor for the Australian Institute of International Affairs’ Quarterly Access magazine.

A version of this article appeared in The Huffington Post on July 31st 2014