CAFTA Raises Prices, Limits Availability of Life Saving Drugs for US Trade Partners

For Immediate Release

Center for Policy Analysis on Trade and Health (CPATH)
Contact: 

Massey Media, 202-518-6186; Anne Singer, 202-271-4679

CAFTA Raises Prices, Limits Availability of Life Saving Drugs for US Trade Partners

Pioneering Study of Guatemalan Drug Market Shows Costs of PhRMA-driven Policies

WASHINGTON - In a report
published online today in the peer-reviewed journal Health Affairs, researchers for the first time demonstrate how the
U.S. - Central America Free Trade Agreement (CAFTA) keeps lower-priced generic
versions of life-saving drugs off the shelves and out of the hands of some of
the poorest people in our hemisphere. Guatemala is increasingly unable to
produce or import affordable medicines because of intellectual property
provisions in the trade deal that were demanded by the U.S. pharmaceutical
industry and have been aggressively enforced by the U.S. Trade Representative
(USTR).  As a result, the cash-strapped
Guatemalan public sector faces higher prices - up to 846 percent higher - for important
drugs to fight diseases such as diabetes and HIV/AIDS. People with HIV/AIDS
report cutbacks in access to needed drugs. The study's authors call on
President Obama's new administration to reverse trade agreements that drive up
the price of medicines in poor countries like Guatemala, as well as here at
home.

"A doctor who knowingly denied
lifesaving treatments to a poor patient to protect profits would face ethics
charges," said Ellen Shaffer, co-author of the study. "The same should be true
for our national policies."  Shaffer and
Joseph Brenner are co-directors of the Center for Policy Analysis on Trade and
Health (CPATH), and co-authors on the report. In the report they document that
competing demands by the U.S. pharmaceutical industry and U.S. officials to
enact data protection, on one side, and patients-rights groups who opposed
these rules on the other, caused Guatemala to reverse its laws on data
protection five times between 1999 and 2005. Groups such as Mujeres Positiva,
representing women with HIV/AIDS, are currently demanding that the domestic
laws imposing data protection be repealed. Shaffer and Brenner interviewed
public health officials and activists in Guatemala for their study, and note
that while there has been no indication of a change in U.S. policy, a signal of
support from the new Administration would be influential in changing
Guatemala's domestic laws.

In the article, "A Trade
Agreement's Impact on Access to Generic Drugs," the authors focus on data
exclusivity rules and patents that are among the intellectual property
provisions of CAFTA and other free trade agreements. Particularly alarming is
that the rules not only keep affordable new generics from entering the market;
they also function retroactively to remove existing medicines from the shelves.
While patents already allow brand name drug manufacturers like Novartis and
Merck to suppress competition from generic drug makers in the U.S. and abroad,
data exclusivity is an additional bonus for this multi-billion dollar industry.
Securing data exclusivity is a simple process for these companies, but it
places insurmountable bureaucratic burdens on generics manufacturers. Generic
drug makers typically rely on the clinical trial data already generated by
brand-name manufacturers to demonstrate the safety and efficacy of their
products. But CAFTA prohibits generic drug manufacturers from using the
brand-name clinical trial data for a fixed period of years, sometimes even
after the brand-name drug is no longer under patent. Without these data,
generic versions cannot be approved for market.

"We are talking about insulin,
antibiotics and drugs for cancer and AIDS that are literally the difference
between life and death," says co-author Brenner. "The drug industry is already
recovering its investments - and then some - from American consumers who pay
the highest prices in the world. These data exclusivity rules serve no
scientific or safety purpose and they crush competition abroad. It's an
economic double-dip for these companies."

Brenner and Shaffer examined a
total of 77 data-protected drugs. Detailed tables in the article illustrate the
ways in which both patent and data exclusivity protections influence Guatemalan
health officials to purchase brand name pharmaceuticals, often at hundreds of
times the cost of their generic counterparts. They also provide examples of
generic drugs that were blocked from being marketed in Guatemala in the first
place.

Example: The insulin made by
Sanofi Aventis U.S., brand named Lantus, cost $50.31 per 100 ml in 2007 while a
therapeutically equivalent generic insulin made by Drogueria Pisa de Guatemala
cost $5.95 per 100 ml. Because Lantus is protected by data exclusivity until
2016, Guatemalans will continue to pay 846 percent more for this product than
they would pay for its locally manufactured equivalent.

Example: Omnicef is an antibiotic
which treats infections including pneumonia, and is made by the Illinois-based
company Abbot.  Because the process for
formulating this drug is patented in Guatemala, a generic version was prevented
from being produced or sold.

Example: The leukemia treatment
named Gleevec, made by Novartis, also enjoys patent protection, although its
expiration date could not be determined. 
Until it expires, affordable generic alternatives cannot be developed or
sold in Guatemala.

Example: In some cases, data
protection bestowed on a brand name is retroactive, resulting in removal from
the shelves of a generic that had already been in use. This was the case with
the brand name drug Plavix, made by New Jersey based Sanofi-Aventis. Plavix is
prescribed to prevent heart attacks and is currently protected under patent and
data exclusivity in Guatemala until 2019. Two Guatemalan companies that had
been producing its generic version have had their registrations revoked.

The entire article can be viewed
at the Health Affairs website: http://content.healthaffairs.org/cgi/content/full/hlthaff.28.5.w957/DC1

CPATH's research demonstrates
empirically that CAFTA and similar trade agreements come at a high cost to all
U.S. trade partners. As Brenner points out, trade agreements can override
domestic laws that permit reimportation of lower-price drugs, preferred drug
lists and other measures that lower prices. The pharmaceutical industry is
involved in legal contests internationally against a range of provisions that
lower prices, including patent laws and countries' rights to license, produce
and export generic drugs.

According to CPATH's
Congressional testimony earlier this summer, there are currently 27 representatives
from the pharmaceutical industry on the various U.S. trade advisory committees,
compared to 20 in 2005, and four sit on the top Advisory Committee for Trade
Policy and Negotiations (ACTPN). Brenner and Shaffer also note that the U.S.
has several times listed Guatemala among the countries on its watch list for
intellectual property violations in the USTR's Special 301 Report, published
annually in May. They say trade rules and pressure from the U.S. turn
governments like Guatemala's into police for the pharmaceutical industry, and
undermine their mandates to protect public health. Says Brenner, "the idea of
free trade is to create open, competitive markets that ultimately bring down
everyone's costs and protect national sovereignty. This is clearly not the case
for Guatemalans - or Americans - when it comes to pharmaceutical products."

CPATH is making the following
three requests of the Obama administration:

1) First, do no harm. The
President should immediately suspend enforcement of intellectual property
provisions in CAFTA (data exclusivity, patents and linkage) which keep
lower-priced, life saving generic medicines out of sick people's hands. The
Administration should proactively cooperate with Central American governments
that move to suspend these provisions. In 2007, Congress recognized the life
threatening impact of these very provisions and successfully removed them from
President Bush's Peru Trade Promotion Agreement.

2) Second, prioritize public
health in U.S. trade policy. The President should instruct the Trade
Representative to include health experts and advocates in all levels of trade
policy development, effective immediately. In addition, the Administration
should move to create a Tier 2 Public Health Advisory Committee on Trade
(PHACT) as called for by two bills currently before Congress: HR 2293 and
S.1644. The President should give this legislation his full support.

3) Third, craft trade policy
consistent with U.S. foreign policy. President Obama has repeatedly articulated
his intention to implement a foreign policy more collaborative than his
predecessor's, and this should also apply to international trade. The World
Health Organization (WHO) has proposed a comprehensive framework for trade that
balances the need for pharmaceutical innovation with the needs of developing
countries to access affordable medicines. The President and his Trade
Representative should take their lead from that organization.

###

The Center for Policy Analysis on Trade and Health (CPATH) is a project of the Center for Policy Analysis, a nonprofit organization dedicated to improving population health in the United States and internationally. CPATH is a widely recognized leader and a reliable resource in the debates on global trade and health. CPATH has encouraged public health leaders to articulate their stake in protecting public accountability.

CPATH conducts multi-disciplinary research, analysis and advocacy about the impact of international trade and increased privatization, deregulation, and decentralization of vital human services on health. Focusing on the relationship between trade and health, CPATH has assessed the impact of trade agreements and proposals, including NAFTA, GATS, FTAA, and World Trade Organization disciplines, on the health care system in the United States, including "safety net" services such as community clinics and public hospitals, and on domestic regulations in the United States that protect population health which might be subject to challenge as unnecessary barriers to trade.

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print, with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web Exclusives are supported in part by a grant from the Commonwealth Foundation.

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