US President Donald Trump’s administration stands accused of deploying bullying tactics to promote greater market access for American pharmaceutical companies by stifling the production and distribution of more affordable, and usually totally legal, generic versions of drugs.
India, Malaysia, South Korea, China, Indonesia, Japan, Australia, United Arab Emirates, New Zealand, Saudi Arabia and Turkey are among the nations cited by the United States Trade Representative in its recently released 2018 Special 301 Report for ostensibly violating pharmaceutical intellectual property (IP) rights.
Most have fallen afoul of the US for using compulsory licensing to override patents, a move which is allowed under World Trade Organization (WTO) rules so that public health takes precedence over trade protections.
Compulsory licensing is used in some countries to ensure access to cheaper generic versions of medicines for treating diseases like HIV/AIDS, cancer, and tuberculosis.
Nongovernmental organizations (NGOs) have charged that the USTR is allowing American firms to set its agenda on the distribution of pharmaceuticals.
“At a time when people all over the world are struggling to afford their medicines, it’s outrageous that the US government is doing pharma’s bidding and bullying other countries into taking actions that would restrict generic competition and limit access to affordable, lifesaving drugs,” said Leonardo Palumbo, US advocacy adviser for French-based humanitarian organization Médecins Sans Frontières.
The USTR frequently uses Special 301 reviews to negotiate improved access for American goods and services in foreign markets. Countries that fail to respond to charges are put on a watch list and could face trade sanctions or a WTO disputes procedure.
China, Russia, India, Indonesia and Kuwait are among 12 nations included on the 2018 priority watch list, the highest level of transgressions. Vietnam, Thailand, Pakistan, Turkey, Saudi Arabia, Uzbekistan, Tajikistan, and Turkmenistan are on the lower watch list of 24 targeted countries. Nations such as Malaysia and Australia are still in the negotiating phase.
Thailand, which has produced HIV/AIDS drugs under compulsory licensing, was moved from the USTR’s priority watch list after an out-of-cycle Review in December concluded progress had been made on reforms. Malaysia will also undergo an out-of-cycle review later in the year.
Despite recent reforms, China is cited for issues ranging from its failure to protect trade secrets to counterfeiting and low market access. Apart from pharmaceuticals, the USTR also has intellectual property concerns over software, information technolocy and publishing in China.
India, an important supplier of generic drugs to developing countries, is described by the USTR as “one of the world’s most challenging major economies with respect to protection and enforcement of IP.” The report says India does not protect against the “unfair commercial use” of drugs and has patent controls that hinder innovators from trying to access markets.
India issued its first compulsory license in 2012 for the generic production of a cancer treatment drug patented by Bayer, a move cheered by NGOs and public health groups.
Indonesia is also cited in the USTR report for pharmaceutical piracy and counterfeiting and for not offering ”fair and equitable market access.” In the pharmaceuticals industry, there are concerns over requirements for local production and technology transfers.
Trump’s demand for more favorable terms from trade partners has led to claims that his administration is trying to reinterpret WTO rules, especially the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS. The accord allows for the use of compulsory licensing to produce generic versions of pharmaceuticals.
Since January last year, TRIPS has allowed countries producing generics to export them to least-developed countries that lack any manufacturing capacity themselves; previously drugs produced under compulsory licenses could only be sold domestically.
Critics of the Special 301 Report argue it is designed to advance corporate interests rather than seek a level trade playing field, even if it means interfering in the national policies of other countries.
In some cases large corporations have been able to influence policies by having their lobbyists appointed as “consultants” on panels tasked with drawing up a country’s IP regimes.
Predatory trade tactics by the tobacco and pharmaceutical industries have had their biggest impact on public health. The USTR threatened several countries in Southeast Asia with Special 301 sanctions in the early 1990s for trying to curb tobacco imports as part of anti-smoking measures.
A 2017 report by the South Center, an NGO, warned that the inclusion of IP clauses in free trade agreements by developed countries was jeopardizing one of the key objectives of the United Nations Sustainable Development Goals, adopted in 2015: reducing “inequality within and among countries.”
US demands for stronger intellectual property protections, including for pharmaceuticals, were a sticking point in the Trans-Pacific Partnership (TPP) multilateral trade pact’s earlier negotiations. Trump withdrew the US from the free trade deal upon assuming office but has recently said America would consider joining if it got a “better deal.”
The South Center report said more restrictive intellectual property clauses were often accepted in exchange for foreign direct investment and technology transfers, as well as better trade balances, but in fact “they may allow right-holders to block competition and charge high prices in monopolistically controlled markets.”
“This may lead to particularly serious effects in the area of public health, where unsustainably high prices have become an issue of global concern.”
Private Citizen, a US advocacy group, said the Trump administration was using a flawed rationale for its attack on licensing systems that assumed drugs were expensive in the US because they were too cheap elsewhere.
“There is no reason to believe that raising prices abroad will lower them at home. We should be learning from the example of countries that have managed to make medicines more affordable, not fighting them,” it said.
“Early in the AIDS epidemic, the US badly damaged its international credibility by standing with prescription corporations against people living with HIV and AIDS. Millions of people died for lack of access to existing treatment. We must learn from our mistakes,” the group added.