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Free Trade Threatens Affordable HIV Treatment

Ranjit Devraj

NEW DELHI, Oct 5 2010 (IPS) - With India’s role as ‘pharmacy to the developing world’ seriously threatened by a free trade agreement to be signed with the European Union in December, the fate of cheap or free antiretroviral treatment for people living with HIV and AIDS hangs in balance.

At the next EU-India free trade agreement (FTA) negotiations, due to be held Oct. 6-8 in the Indian capital, Europe is expected to push for TRIPS-plus provisions that major non-government organisations such as Medicins Sans Frontieres (MSF) have warned will put the lives of those on antiretrovirals at risk.

The seriousness of the problem was revealed by a detailed assessment published Sep. 14 by the Journal of the International AIDS Society (JIAS), that found India supplying 80 percent of the cheap antiretrovirals currently being bought by low and middle-income countries.

In niche areas, such as children requiring treatment, Indian antiretrovirals accounted for about 90 percent of the market, the study found.

During the 2003-2008 period considered in the assessment, the number of Indian firms supplying antiretrovirals rose from four to ten, and the number of drug types supplied rose from 14 to 53. An estimated four million people started antiretroviral treatment during that period.

Data for the JIAS assessment was gleaned from more than 17,000 donor- funded purchases of antiretrovirals by 115 low and middle-income countries, showing that Indian antiretrovirals used in the first line of treatment were “consistently and considerably” less expensive than branded drugs produced by other countries.

The assessment suggested that India, as well as its trade partners, international organisations, donors, NGOs and pharmaceutical firms ensure “sufficient policy space” for Indian drug firms to continue making cheap generic versions of antiretrovirals. Sub-Saharan African countries, and India itself, rely heavily on affordable, quality-assured Indian generic drugs.

Until India signed the World Trade Organisation’s trade-related intellectual property rights (TRIPS) agreement in 2005 it did not grant patents on a product, but only on the process by which it is made, thus helping local drug companies make cheaper versions.

Under TRIPS India must grant patents on products as well as processes for any drug patented after 2005. And any policy space left over will likely be constricted by the series of FTAs and bilateral agreements that India has been getting into.

India is due to sign an FTA with Japan during Prime Minister Manmohan Singh’s visit to that country later this month that also has an intellectual property (IP) component.

”FTAs that may create new IP obligations for India can increase antiretroviral prices, impede the development of acceptable dosage forms, and delay access to newer and better antiretrovirals. Such measures can undermine the international goal to achieve universal access to HIV/AIDS interventions and the 2001 WTO Doha Declaration on TRIPS and Public Health,” the JIAS study warned.

According to Leena Menghaney, project officer and legal expert with MSF- India, the danger lies in inclusion of intellectual property in the definition of investment in bilateral agreements such as in the Japan-Thailand Economic Partnership Agreement.

”These deals allow disputes concerning IP to be brought against the government by foreign investors,” Menghaney told IPS. ”The financial implications can be substantial, from the point of view of the costs of arbitration proceedings and the damages or awards rendered.”

A United Nations Council for Trade and Development document released in 2007 notes: “The impact of having IP included in the definition of investment is that it could potentially subject IP to the general guarantees afforded to investors under the BIT (Bilateral Investment Treaty)…and could provide a legal basis to foreign investors for a cause of action against the host country for failing to protect their IP.” Menghaney said that ”if IP is included in the definition of investment in the final agreement signed between EU and India, multinational drug companies would have the standing to sue the Indian government potentially in a bid to block sovereign actions for protecting public health and access to treatment.” While the issue of a compulsory licence can be TRIPS Agreement compliant, it is not immune to claims of expropriation under the investment chapter, Menghaney said. A compulsory licence allows a government to override a patent in emergencies such as epidemic with the holder given some royalties, either set by law or determined through arbitration.

”Undoubtedly pharmaceutical companies would like to argue that a compulsory licence to a competitor by the government is indirect expropriation and may wish to consider a claim in investor-state arbitration proceedings under the bilateral agreement,” Menghaney said.

A compulsory licence issued by Brazil in May 2007 to make or import a generic version of the patented antiretroviral Efavirenz, resulted in Merck, the patentee, issuing a statement focusing on foreign investment and characterising the Brazilian government’s move as an expropriation of its IP.