Are Free-Trade Agreements Good For Your Health?
IPN Opinion article
Wall Street Journal Asia
Last year, the World Trade Organization talks in Cancun broke down due to apparently irreconcilable differences between rich and poor countries. Yet almost a year later, things are moving ahead -- but by no means with the vigor and certainty required to assuage criticism. In the meantime, the U.S. is making much hay with bilateral and regional free trade agreements.
America now has FTAs with Jordan, Chile, Singapore, Morocco, Australia and a group of six Central American countries. The U.S. is in advanced negotiations with Thailand, Andean countries, Bahrain, five Southern African Customs Union, or SACU, countries and 34 Latin American and Caribbean countries.
But is there trouble ahead? Significantly, because they touch on the protection of pharmaceutical intellectual property, the U.S.-Thailand FTA and others were the subject of vitriol by activists at the recent Bangkok HIV/AIDS conference. Why? Because individual critics and anti-globalization organizations believe that U.S. FTA provisions impose unnecessarily stringent intellectual-property standards on poor countries. They claim that these go beyond existing pharmaceutical patent-protection levels required under the WTO's Trade Related Aspects of Intellectual Property Rights, or TRIPS, agreement, and so threaten public health by preventing or delaying access to affordable essential medicines.
Oxfam and other organizations worry that certain intellectual-property provisions in FTAs will prevent countries from making use of safeguards provided in the Doha Declaration on the TRIPS Agreement and Public Health. Signed by all WTO member countries, the declaration restated flexibilities in TRIPS that allow countries to take necessary measures, including the compulsory licensing of medicines, to protect public health. A further clarification in August 2003 ensured that third countries could also compulsory-license drugs for export to poor countries lacking manufacturing capability.
But activists' claim that FTAs kill by tipping the "public health versus private intellectual property" balance in favor of the commercial interests of American pharmaceutical companies is untrue. All the FTAs have language that expressly states that the FTA will not restrict any flexibility permitted under TRIPS, or the Doha Declaration, to protect public health. Where this language does not appear in the main agreement, the U.S. and its partner country (or countries) have signed binding "side letters."
Other activist scaremongering also merit rectification. Many activists raise the specter of patent terms that go beyond the TRIPS's minimum of 20 years, thus suggesting a situation where poor people would have to wait 20 years or more before they can get access to generic drugs. But 95% of drugs on the World Health Organization's essential-drugs list are off-patent and will remain so. Similarly, drugs patented in the U.S., but not in other countries, including many anti-retrovirals, cannot gain patent protection now.
In any case, no drugs have a de facto 20-year patent term. Normally, between 10 and 12 years elapse between when a patent is granted for a new molecule and when the drug on which it is based passes several phases of testing and gains regulatory approval. Therefore, most drugs have an effective patent term of eight to 10 years, and often less. Some FTAs do provide for patent term restoration, but only in the case of unnecessary delays in marketing approvals. In the U.S., where such legislation exists, this typically does not exceed two years. In other words, most drugs would still have far less than 20 years of exclusivity.
While TRIPS allows governments to protect public health, it is also designed to encourage them to respect intellectual property by refraining from copying existing drugs such as Viagra and other "lifestyle drugs." In doing so, they will attract investment and also help grow their own innovative industries.
And that's exactly why the Australian and Moroccan ambassadors to the U.S. are steadfastly defending their countries' agreements in the face of loud demands to abandon them. In both the case of Morocco and Australia, as with earlier FTAs with Jordan, Singapore and Chile, the patronizing activists apparently feel they know the interests of those countries better than the leaders of those countries.
By protecting intellectual property, FTAs encourage innovative product launches by local pharmaceutical industries. Since the U.S.-Jordan FTA, for example, there have been more than 30 new product launches in Jordan. If I were in Thailand, I would urge my government confidently to follow the lead of Morocco.
To be sure, FTAs are a second-best solution to free trade. Nevertheless, they are an improvement on the then-prevailing situation, freeing up trade and improving economic circumstances. In time, they might just enable some poor countries to raise their per-capita health spending to the threshold level of about $65, above which real population health gains can be made.
The crux of the current debate is this: Activists simply do not accept the vital role of intellectual property in the development and distribution of medicines. They are willing to distort the reality of existing agreements to match their own prejudices. For some, it seems, the status quo of less trade in poor countries and its inevitable consequence of poverty and more disease is preferable to higher living standards and better health. This is an attitude that is simply unconscionable.
Mr. Mejia-Vergnaud is director of the Instituto Desarrollo y Libertad in Bogota, Colombia. Mr. Irvine is director of health projects at the International Policy Network in London.