Written evidence submitted by Stop AIDS
THE FTAA TECHNICAL
The UK's critical role in securing a safe and sustainable
supply of affordable, essential medicines from the Indian generic
pharmaceutical sector for India and the developing world:
- India's generic pharmaceutical industry supplies
vital, life-saving medicine to its own people and the whole of
the developing world. It provides 80% of anti-retrovirals treating
people living with HIV in Africa,1 making the global
AIDS response possible.
- Free Trade Agreement negotiations between India
and the EC, which are nearing completion, threaten to ramp up
restrictions on intellectual property and strangle this industry
and its vital supply of life-saving drugs, putting millions of
lives at risk.
- Strong leadership from the UK government across
DFID, the FCO and BIS is essential to protecting the "pharmacy
of the world".
1. India is home to a third of the worlds
poor.2a Nutrition levels are worse than most Sub-Saharan
African countries.2b It is estimated that there are
2.4 million Indians living with HIV,2c the third largest
population of any nation. The country lies in 119th
place in the Human Development Indexjust two places above
Swaziland and only seven above the Congo.2d India has
incredible development challenges and the UK has a critical role
in tackling themparticularly through their support to effective
multi-lateral agencies such as the Global Fund to Fight AIDS,
TB and Malaria. However, this submission will focus less on the
detail of the problems facing India and more on the vital role
India's generic pharmaceutical industry has come to play in overcoming
public health challenges across the developing world through the
production of essential medicines.
2. The history of the expansion of access to
life-saving HIV treatment is defined by the impact of generic
competition, largely between Indian companies, on the price of
anti-retroviral drugs. In the case of HIV, that generic production
has forced prices from over $10,000 per patient per year down
to less than $70.3 This effect has been mirrored in
other diseases. India has worked hard to comply with international
trade laws and protect public health needs.
3. A recent study showed that at least 80% of
people on anti-retroviral (ARV) treatment for HIV across Africa
were taking high-quality, affordable generic drugs legally produced
4. Incredibly, a third of the world's entire
population lack access to the medicines they needrising
to 50% in parts of Asia and Africa. In developing countries, medicines
account for 60-90% of household expenditure on health.4
Supply of essential medicines is a critical public health issue,
and the only proven way of supplying low cost, high quality drugs
is through generic competition.
India and TRIPS
5. The production and sale of essential medicines
is shaped by the regulations of the World Trade Organisation (WTO).
When India joined the WTO, as a developing country, it was given
until 2005 to comply with a central aspect of WTO regulationsTrade
Related Aspects of Intellectual Property Rights (TRIPS). TRIPS
grants 20 year patents on all newly developed products, including
drugs. Before this time India's national law did not give patent
protection to pharmaceutical products and so India was able to
legally produce and supply generic versions of essential medicines
to its own people and people across the developing world, giving
rise to the title "the pharmacy of the world".
6. Competition between generic drug manufacturers
drove down the prices of essential medicines. The cost of AIDS
treatments which were produced before 2005 and so not affected
by TRIPS, reduced by more than 99% from US$ 10,000 per patient
per year in 2000 to under US$ 70 today.3 These dramatic
price reductions facilitated the huge increase in anti-retroviral
coverage across Africa and Asia. A recent study found that more
than 80% of donor-funded purchases of AIDS medicines from 2003
until 2008, were sourced from producers of affordable generics
COMPETITION AS A CATALYST FOR PRICE REDUCTIONS.
The fall in the price of first-line combinations
of stavudine (d4T), lamivudine (3TC), and nevirapine (NVP), since
2000. This dramatic price drop was possible because of competition
among multiple generic manufacturers in countries where these
drugs were not patented, such as Brazil, Thailand and India.3
Prioritising public health whilst respecting TRIPS
7. Generic drugs under manufacture in India before
2005 were not affected by the application of TRIPS. However, from
2005 and the enforcement of TRIPS, newer, more effective drugs
would not be made available to the world's poor through the Indian
generic industry as they would fall under the new patent regime.
This is particularly important for people living with HIV, as
the virus becomes resistant to treatment over time and new drugs
are needed to keep the patient healthy. Several HIV/AIDS medicines,
including Etravirine ($913 per patient per year) and Raltegravir
($1,113 per patient per year) have already been patented in India,
blocking the production of more affordable generic versions.5
8. However, India prioritised public health through
the creation of legislation that respected the conditions of TRIPS,
but only granted patents on a drug when it was considered to be
truly innovative and showed improved therapeutic effect over existing
medicines. This meant that a new patent could not be licensed
on a new medicine just because of a change in dose or concentration,
or for combining two drugs into one pill. This is important for
two reasons. Firstly it ensures that incremental improvements
in the efficacy of HIV drugs can be accessed by people across
the developing world. And secondly, it protects against "evergreening",
the tactic employed by pharmaceutical companies to extend the
length of a patent on a drug by making small changes to its formulation
as it reaches the end of the original patent protection period.
9. This legislation has therefore ensured people
in the developing world, including India, have access to many
essential medicines they otherwise would not have done. This law,
however, has been attacked by originator pharmaceutical companies
who have been battling in the Indian courts to overturn Indian's
pro-poor patent laws.
10. Access to ARV treatment in India has substantially
declined since the introduction Trade-Related Aspects of Intellectual
Property Rights (TRIPS) in India in 2005, meaning many people
are already unable to access the medicines they require. The Delhi
Network for Positive People (DNP+) stated that they have already
noticed that the "patents in India on Cancer, HIV and Hepatitis
medicines are making treatment expensive for newer therapies for
11. As more time passes and increasing
numbers of drugs fall under the new TRIPS regime in India, the
supply of affordable medicines to the developing world will become
increasingly difficult to sustain. Despite this threat, further
restrictions on the ability of India to produce affordable generic
medicines are being pushed through in the EU-India FTA.
12. The term "TRIPS-Plus" is used to
describe constraints imposed upon a country which go beyond what
they are required to do under TRIPS. Generally these terms are
imposed in bi-lateral negotiations where the developing country
is in a weaker negotiating position and is forced to accept conditions
it would ordinarily reject.
13. Since late 2006 the European Commission,
representing the UK, has been in negotiations with India over
a Free Trade Agreement. The negotiations cover a raft of policy
areas and regulations including border controls, migration and
economic policies. The draft text also includes a number of clauses
related to intellectual property.
14. Negotiations are expected to conclude in
the coming months. The draft text, if implemented, would lead
to the imposition of additional "TRIPS plus" constraints
on India, threatening the vital supply of Indian medicines. Text
relating to Data Exclusivity and other terms are technical details
that could put the lives of millions at risk. In these negotiations
and across the UK's development, trade and diplomatic relations
with India, the protection of the supply of affordable, essential
medicines must be assured.
The EU-India Free Trade Agreement
15. The clause in the EC-India FTA which poses
the greatest threat to the generics industry is known as Data
Exclusivity, and has been defined by leading experts, including
the WHO, as being a "TRIPS-Plus" constraint. Indeed,
western governments pushed for its inclusion in TRIPS during the
original negotiations but it was explicitly rejected.
16. According to evidence given by the Centre
for International Trade and Sustainable Development to the UK
All-Party Parliamentary Group on AIDS, and included in their 2009
"Treatment Timebomb" report on the threats to a sustainable
supply of anti-retroviral HIV drugs, Data Exclusivity for pharmaceutical
products is the TRIPS-Plus term which has the worst impact and
represents about 90% of the medicine cost increases predicted
as a consequence of the imposition of TRIPS-Plus terms.7
17. Data Exclusivity is one of three main aspects
of the Free Trade Agreement between the EU and India that could
seriously affect access to essential medicines for the developing
world, along with injunctions and intellectual property in the
18. Inclusion of Data Exclusivity would lead
to monopolies of up to 10 years on medicines that do not qualify
for a patent under India's current legislation. Currently generic
manufacturers carry out relatively inexpensive bioequivalence
tests to prove that their product is the same as the original
drug. They can then point to the results of the original clinical
trials to prove the efficacy and safety of their product. Data
exclusivity prevents generic manufacturers from relying on existing
clinical trial data to register generic versions of medicines,
stating that those who pay for the data have the exclusive right
to use it. Without registration, a medicine cannot be marketed.
Data exclusivity therefore acts as an effective ban on generics
until the period of exclusivity ends.
19. The only way around this ban would be to
require generic producers to generate their own clinical trial
data, which would not only be prohibitively expensive, but also
unethical, as it would mean repeating trials for drugs already
proven effective, and withholding life-saving medicine from the
"control group". Data exclusivity is particularly dangerous
because it can apply to drugs that do not merit a patent under
India's lawif the final text of the FTA includes Data Exclusivity,
even if a drug was not found to merit a patent, only the originator
company would be allowed to produce for a period of up to 10 years,
thereby maintaining the monopoly and completely undermining the
public health flexibilities in India's patent law.
20. As an example, a patent on Nevirapine syrup
to treat children living with HIV/AIDS was rejected by the Indian
patent office, allowing generic producers to begin manufacturing
right away. If Data Exclusivity had been in place, they would
have had to wait up to 10 years to be able to start producing
this drug, even though it did not deserve a patent.
21. One of the EC's demands is to introduce the
mandatory use of court injunctions. When a patent or trademark
dispute emerges between a generic and a patent-holding company,
this would mean that the production of drugs by the generic manufacturer
would have to stop, even before a case for infringement has been
heard in court. The courts would therefore not be allowed to balance
the constitutionally-enshrined right to health and access to medicines
against the economic harm and compensation due to the rights holder
if the case is proved.
Intellectual Property (IP) in the Investment Measures
22. The EC has failed to clarify whether it is
seeking to have IP included in the investment measures of the
FTA. This would open a whole new arena for litigation as soon
as India adopted any regulation, injunction, administrative decision
or legislation that favours patients over profits. In February
2010, Philip Morris, the tobacco company, filed a case against
Uruguay under a Switzerland-Uruguay Bilateral Investment Treaty
in order to challenge Uruguay's decision to increase the size
of warning labels on cigarette packets. Philip Morris argues that
these measures infringe their trademarks and hamper their competitiveness
in the Uruguayan market. The case is ongoing. This is a clear
example of how companies can use a bilateral investment treaty
to challenge government decisions related to public health on
grounds of IP infringement.
23. These measures, in particular Data Exclusivity,
would clearly act as barriers to affordable essential medicines
produced in India. The impact has already been seen in other countries
following similar FTAs. Although the results of an FTA between
the EU and India cannot be predicted without using an effective
economic model, studying the impact of TRIPS-Plus measures on
other developing countries demonstrates what are highly likely
to be the consequences of such an agreement.
24. Jordan is, like India, a Lower Middle Income
Country. A study conducted by Oxfam in 2007 called "All costs,
no benefits: How TRIPS-plus intellectual property rules in the
US-Jordan FTA affect access to medicines" sets out the impact
of this FTA, which introduced five years of Data Exclusivity onto
any medicines filing for a licence in Jordan. The impact has been
- Medicine prices increased by 20% since 2001.
- Data exclusivity delayed generic competition
in 79% of medicines newly launched by 21 multinational pharmaceuticals
between 2003 and 2006.
- Anti-diabetes medicines are now up to 800% more
expensive than in neighbouring Egypt where no FTA has been agreed
and generic competition is not restricted.8
25. In 2004-05, the International Health Policy
Program (IHPP) and the Ministry of Public Health, Thailand, with
support from the Fiscal Policy Research Institute Foundation,
Ministry of Finance, carried out a study on the impact of the
Thai-US Free Trade Agreement on health expenditures and access
to essential medicines in Thailand. The magnitude of the impact
and additional expenditures was calculated by comparing the prices
of innovative, patented drugs with that of generics. This study
found that the inclusion of Data Exclusivity, which essentially
acts as an additional patent, would have significant impacts on
health expenditure in Thailand and access to essential medicines
in the country. The main findings from the study concluded:
- Competition between generic drug manufacturers
with TRIPS plus measures would be 35% lower, drastically increasing
the overall price of essential medicines.
- Data Exclusivity would create an additional cost
of $260million for the 42 top selling medicines in Thailand in
- Data Exclusivity would create a three to seven
fold increase in total expenditure on ARV treatment specifically.9
26. The introduction of TRIPS-Plus provisions
in India would have serious implications for the public health
of the sub-continent. We can expect to see the price of essential
medicines drastically increase due to the lack of competition
between generic drug manufacturers and access to appropriate medicines
reduce. The National AIDS Control Organisation (NACO) in India
has demonstrated that the price of ARV drugs for one patient for
one year is reduced by Rs 2,000 with the presence of competing
drug manufacturers.10 With nearly 2.5 million people
in India living with HIV, this is a saving which could run into
tens of millions of pounds.
27. A study by Waning et al in 2010 measured
the role of Indian generic manufacturers in supplying antiretroviral
medicines to developing countries. This study found that Indian
generic manufacturers "dominated the ARV market, accounting
for more than 80% of annual purchase volumes." For specific
forms of ARV treatment, the Indian generic manufacturers accounted
for between 89% and 91% of the global purchases in 2008. Furthermore,
96 out of 100 countries purchased generic medicines produced in
India in 2008, including many countries in sub-Saharan Africa
with a high prevalence of HIV. This is because Indian-produced
generic ARVs were significantly less expensive than non-Indian
generic medicines. The conclusion of this study was simple:
28. Indian generic producers supply the majority
of ARVs in developing countries. Rather than agreeing to inappropriate
intellectual property obligations through free trade agreements,
India and its trade partnersplus international organizations,
donors, civil society and pharmaceutical manufacturers - should
ensure that there is sufficient policy space for Indian pharmaceutical
manufacturers to continue their central role in supplying developing
countries with low-priced, quality-assured generic medicines.1
29. It is critical India is able to continue
supplying high-quality, affordable medicines to the developing
world. This study clearly demonstrates the impact the FTA, including
Data Exclusivity, would have on India and its role as the pharmacy
of the developing world. This agreement would not only impact
India's public health or people in need of ARVs, but also millions
of people in the developing world in need of live-saving medicines
that they can only access through India's generic drug industry.
30. The EC has claimed that it will ensure that
the details of the FTA will not harm access to medicines, however
no impact assessments have been conducted to show how the new
rules being proposed would affect generic production or medicine
prices and availability. Furthermore, as was seen in the case
of Jordan, and other countries that have agreed to Data Exclusivity,
the evidence points to extremely negative outcomes.
31. The EC Trade Commissioner, Karel de Gucht,
has claimed they are taking a number of steps to protect the generic
production of medicine, but MSF have clearly highlighted how these
moves simply will not address the problems created by the inclusion
of TRIPS-Plus terms such as Data Exclusivity in a briefing entitled
"The Truth Behind the Spin".11 Specifically,
the EC has claimed that the FTA will not impact on the issuing
of compulsory licences for patented medicinesa right India
has under TRIPS. However, this ignores the fact that Data Exclusivity
would have the greatest impact on the medicines which are not
granted a patent. India's patent law protects only truly innovative
medicinesData Exclusivity is specifically designed to counteract
this and would block generic production even if the medicine doesn't
warrant patent protection. Data Exclusivity is a direct attack
on India's public health-protecting patent system.
32. There is a track record of western governments
reassuring developing countries that TRIPS-Plus terms will not
have a negative impact. The US stated that TRIPS-plus measures
would have a positive impact on access to medicines in Jordan
in a variety of ways. The US claimed it would encourage foreign
direct investment (FDI), spur local research and development and
encourage pharmaceutical companies to launch innovative products.
None of these things have come to pass.
33. The reality of the FTA is that the EC is
pushing intellectual property rights restrictions on India far
beyond what India is required to accept under international law.
These terms will be detrimental to the health of the people of
India and the whole developing world in order to protect the interests
of European companies. Simply put, the EC must drop its demands
for inclusion in the FTA of all TRIPS-Plus terms, including Data
"Reducing the costs of drugs could enable savings
that could fund access to life-saving treatment for an additional
one million people every year, even without new resources. DFID,
Achieving Universal Access"
"The UK's Strategy for Halting and Reversing
the Spread of HIV in the Developing World" 2008.
"In these difficult, economic times donors have
a double duty, a responsibility to achieve maximum value for money:
not just results but results at the lowest possible cost."
Andrew Mitchell, speech given at Carnegie Endowment, Washington
DC, Friday 25 June 2010
34. The current economic climate means there
is more pressure than ever to prove our development aid is being
spent effectively and efficiently. It is critical, therefore,
that we are getting value for money in our investment in treatment
for people in the developing world. Without the price reductions
generic competition has generated, we would not have been able
to scale up coverage to HIV medicines. Supporting steps which
will demonstrably lead to increased prices of essential medicines,
putting them out of the reach of poor people across the world
is in total contrast to our government's stated development aims,
aside from being completely inhumane.
35. Generic competitionlargely
driven by Indian companieshas forced down the price of
generic ARVs from $10,000 in 2000 to just $70 today.3
If we spent our money buying the lowest priced originator first
line ARV available todaya price which has only been driven
down to its current level because of generic competitionwe
would still treat five times fewer patients than we could if we
spent our money on the best priced generic version.3a
36. Beyond India the imposition of TRIPS caused
much controversy as the reality of the restraints it placed on
countries' ability to access the drugs their people needed became
clear. In 2007, Thailand came under extreme pressure from the
USA and Abbott to retract a compulsory licence for a vital heat-stable
ARV, Kaletra. Thailand were acting perfectly within their rights,
but, in part, it took the support of then Secretary of State for
International Development, Hilary Benn, who spoke out in defence
of Thailand's actions, to get the USA and Abbott to back down
and allow Thailand to utilise its legal rights. DFID has historically
played a vital role in speaking up for the rights of countries
to access the medicines their people need. Such a voice is crucial
37. Without a sustainable supply of high-quality
generic medicines from India the prospect of achieving the health
MDGs, already vastly under-funded, will quickly become fantasy.
38. Whilst protecting generic medicine production
in India is clearly in the best interests of the people of the
developing world and key to efficient development interventions,
it is in the interests of pharmaceutical corporations to shut
it down as much as possible.
39. In February 2011, the Department for Business,
Innovation and Skills announced that it would focus the UK's economic
recovery on expanding trade with the developing world, with Business
Secretary Vince Cable specifically highlighting how crucial the
EU-India FTA was to their plans.
40. The government are yet to clearly state their
position on the inclusion of TRIPS-Plus terms in the FTA, but
have emphasised the need to balance public health needs with the
rights of businesses to protect their intellectual property, and
that the UK will do so on a "case-by-case" basis depending
on the level of development of the country.13 This
however, gives the government a large amount of room to manoeuvre.
41. Recent revelations in the Wikileaks cables
suggest that, whilst the UK has in the past been publically opposed
to TRIPS-Plus conditions, there are internal differences of opinion
between departments. Notes from a meeting in 2007 between US officials
and officials from the UK Department of Health and the Intellectual
Property Office indicated that the UK "broadly agrees with
the US position" on Intellectual Property and health. They
had sought to keep IP issues off the agenda of the World Health
Organisation, but that the third member of the UK delegation to
the WHO, DFID, who were not represented at the meeting, "might
have differing views".12 This internal dissonance
could clearly be a factor in the formation of the UK government's
current position on IP issues with India.
Key questions must be answered by the government:
- What is the UK's formal position on the inclusion
of TRIPS-Plus conditions in bi-lateral agreements? Will the government
use its position within the EC to make a strong stand against
conditions which will impact the supply of affordable generic
- Have they confirmed that the UK position is understood
by the EC negotiators and what steps have they taken to ensure
it is adhered to?
- In the specific case of India, what is the UK's
position on Data Exclusivity, and how have they assessed its potential
impact on health across the developing world?
- Is there any internal difference in policy across
Whitehall to these issues?
- Which department has seniority in such matters?
How are differences of opinion resolved, decisions reached, and
what evidence is used to inform a government wide opinion?
- Have the UK considered how the global community
will meet the increased cost of supplying essential medicines
to the developing world if this FTA is signed with terms that
shut down generic supplies of medicines?
42. Without urgent leadership from the UK the
ongoing EU-India Free Trade Agreement negotiations will be finalised
with the inclusion of text which will block access to essential
medicines for millions of people in India and across the developing
world. These terms are being included for the good of pharmaceutical
profits at the expense of the lives of the world's most vulnerable.
They are unnecessary and immoral and should be resisted.
43. DFID's role in protecting the production
of generic medicines in India is vital.
44. It has a significant international leadership
role to play in speaking up for the rights of developing countries
to fully utilise their rights to exploit legal flexibilities in
international IP law for the good of their people's public health.
45. DFID must lead the resistance against the
imposition of TRIPS-Plus terms on developing countries.
46. DFID must ensure that the public health of
millions of people across the developing world is at the centre
of the UK Government's trade, development, and diplomatic relationship
with, and policies towards, India.
This paper was prepared utilising the extensive
resources of key partners including MSF and Oxfam.
1 Waning, B, Diedrichsen,
E, Moon, S, (2010): "A lifeline to treatment: the role of
Indian generic manufacturers in supplying antiretroviral medicines
to developing countries." Journal of the International
AIDS Society: 13: 35.
2a World Bank
2b Deaton, A and
Dreze, J 2008, Nutrition in India, Fact and Interpretations.
3 Medecins Sans
Frontieres. 2010. Untangling the Web of Antiretroviral Price
Reductions. [Online] Available at http://utw.msfaccess.org/
[Accessed 11 February 2011].
using figures taken from the above reportlowest available
first line generic ARV in June 2010 was $67, lowest available
originator $331. The originator is 4.94 times more expensive than
4 DFID Factsheet,
Jan 2006 http://www.aidsportal.org/repos/atm-factsheet0106.pdf
6 Don't Trade
Our Lives Away. 2011. DNP + letter to WHO on impact study on
IP provisions in the India-EU FTA. [Online] Available at
[Accessed 11 February 2011].
7 Treatment Timebomb
Report of the Inquiry of The All Party Parliamentary Group on
AIDS into long-term access to HIV medicines in the developing
world. July 2009
8 Oxfam International.
2007. All costs, no benefits: How TRIPS-plus intellectual property
rules in the US-Jordan FTA affect access to medicines. [Online]
[Accessed 11 February 2011].
9 World Health
Organisation Regional Office for South-East Asia (WHO), (2006)
Impact Assessment of TRIPS Plus Provisions on Health Expenditure
and Access to Medicines in South-East Asia. Bangkok. Available
[Accessed 11 February 2011].
10 AIDS Support
Group. 2011. HIV Vaccines and ART Therapy. [Online] Available
[Accessed 11 February 2011].
11 Medecins Sans
Frontieres. 2010. The Truth behind the spin: How the Europe-India
Free Trade Agreement will harm access to medicines. [Online]
Available at http://www.msfaccess.org/resources/key-publications/key-publication-detail/index.html%3ftx_ttnews%5Btt_news%5D=1651&cHash=34b8fda4d1
[Accessed 11 February 2010].
12 The Telegraph.
2011. UK Agrees with US approach to upcoming WHO intergovernmental
working group on public health, innovation, and IP. [Online]
Available at http://bit.ly/h2dZ1z [Accessed 11 February 2011].
13 Letter from
DFID Parliamentary Under Secretary of State for International
Development, Stephen O'Brien MP, to the Stop AIDS Campaign January
30 March 2011