The Monopoly Enforcement Agenda: A Global Overview Peter Maybarduk Essential Action 29 May 2009 Peter Maybarduk Essential Action 29 May 2009

Patents and public health  Patents facilitate monopoly power in medicines  Brand-name companies lock out competition from generics firms  Cost of patented medicines vastly higher than generics  High prices create a terrible access to medicines problem  Patents facilitate monopoly power in medicines  Brand-name companies lock out competition from generics firms  Cost of patented medicines vastly higher than generics  High prices create a terrible access to medicines problem

Access to medicines  Generic competition has fueled a revolution in HIV/AIDS treatment  98+% cost reduction over ten years: From $10k to near $100  3 million globally on ART  Treatment programs  Generic competition has fueled a revolution in HIV/AIDS treatment  98+% cost reduction over ten years: From $10k to near $100  3 million globally on ART  Treatment programs

Competition  Price drops average 40-80% with first generic entry, continue to fall with time  Competition between branded and generic, and between generics firms  Competition key to implementing vision of access to medicines for all  Price drops average 40-80% with first generic entry, continue to fall with time  Competition between branded and generic, and between generics firms  Competition key to implementing vision of access to medicines for all

A global monopoly enforcement agenda  Many new measures worldwide protect patent and copyright monopolies under guise of fighting counterfeits and “piracy.”  See Susan Sell, “The Global IP Upward Ratchet.”  See Kevin Outterson, “Import Safety Rules.”  See Essential Action, “Survey.”  Many new measures worldwide protect patent and copyright monopolies under guise of fighting counterfeits and “piracy.”  See Susan Sell, “The Global IP Upward Ratchet.”  See Kevin Outterson, “Import Safety Rules.”  See Essential Action, “Survey.”

Table: How PHrMA confuses monopoly enforcement and public health needs

Venn diagram: The actual relationship between drug quality, fake medicines and the enforcement agenda MSF: “the majority of poor drugs [are] genuine, but substandard drugs, and not the result of counterfeiting” (2008)

Enforcement agenda  Serious anti-competitive effects and public health costs  Seeks to confuse public, reduce confidence in generics  Can chill investment, international trade  May snare non-infringing competitors in its net  Places enforcement burden on public  More aggressive patent enforcement generally  Seize-and-destroy rather than damages  Yet, some anti-counterfeiting measures may protect public health.  Question for today: How do we respond?  Serious anti-competitive effects and public health costs  Seeks to confuse public, reduce confidence in generics  Can chill investment, international trade  May snare non-infringing competitors in its net  Places enforcement burden on public  More aggressive patent enforcement generally  Seize-and-destroy rather than damages  Yet, some anti-counterfeiting measures may protect public health.  Question for today: How do we respond?

Global IP enforcement initiatives  Major international organizations:  WHO, INTERPOL, WCO, APEC, Postal Union, more  Accords and Associations:  ACTA, G8, Global Congress, Rome Declaration, more  National legislation:  Kenya, Uganda, US, EU  National enforcement:  US exec branch initiatives, DG Trade, Trainings worldwide  Major international organizations:  WHO, INTERPOL, WCO, APEC, Postal Union, more  Accords and Associations:  ACTA, G8, Global Congress, Rome Declaration, more  National legislation:  Kenya, Uganda, US, EU  National enforcement:  US exec branch initiatives, DG Trade, Trainings worldwide

International organizations  IMPACT (WHO’s International Medical Products Anti-Counterfeiting Taskforce)  Seeks coordinated global response to counterfeits.  Data not well-developed.  Joint venture with IFPMA.  IMPACT (WHO’s International Medical Products Anti-Counterfeiting Taskforce)  Seeks coordinated global response to counterfeits.  Data not well-developed.  Joint venture with IFPMA.

International organizations  World Customs Organization: “Secure”  Proposed standards to coordinate “a global effort to suppress all kind of intellectual property rights infringements”  “TRIPS-plus-plus”  Universal Postal Union (UN Postal Agency)  Proposal to control “counterfeit and pirated items sent through the post”  Are customs/postal agents qualified to judge quality or rights infringement?  World Customs Organization: “Secure”  Proposed standards to coordinate “a global effort to suppress all kind of intellectual property rights infringements”  “TRIPS-plus-plus”  Universal Postal Union (UN Postal Agency)  Proposal to control “counterfeit and pirated items sent through the post”  Are customs/postal agents qualified to judge quality or rights infringement?

International organizations  Anti-counterfeiting and piracy initiatives:  Asia-Pacific Economic Cooperation Forum  SPP (US, Canada, Mexico)  US-EU Summit (ACTA precursor)  OECD report  Anti-counterfeiting and piracy initiatives:  Asia-Pacific Economic Cooperation Forum  SPP (US, Canada, Mexico)  US-EU Summit (ACTA precursor)  OECD report

International organizations  Pharmaceutical Security Institute  2002, now 21 major pharmaceutical companies  To “collate their fake drug information to cooperate in fighting the racket”  IFPMA is President  PSI recorded 76 cases of counterfeiting in 2004; FDA knew of only 58  PSI database thought to be world’s best, but is “not accessible to the WHO, health authorities or the public.”  Pharmaceutical Security Institute  2002, now 21 major pharmaceutical companies  To “collate their fake drug information to cooperate in fighting the racket”  IFPMA is President  PSI recorded 76 cases of counterfeiting in 2004; FDA knew of only 58  PSI database thought to be world’s best, but is “not accessible to the WHO, health authorities or the public.”

Accords and Associations  ACTA  G8 declaration  technical assistance pilot programs  4th Global Congress Combating Counterfeiting and Piracy  INTERPOL, WIPO  Visiongain conference  major international industry information conference, chaired by IFPMA.  Three annual anti-counterfeiting conferences so far.  Andean-EU FTA, other FTAs  ACTA  G8 declaration  technical assistance pilot programs  4th Global Congress Combating Counterfeiting and Piracy  INTERPOL, WIPO  Visiongain conference  major international industry information conference, chaired by IFPMA.  Three annual anti-counterfeiting conferences so far.  Andean-EU FTA, other FTAs

ACTA: Anti-Counterfeiting Trade Agreement  Objective:  “Establish, among nations committed to strong IPR protection, a common standard for IPR enforcement to combat global infringements of IPR particularly in the context of counterfeiting and piracy.”  Really an IP enforcement treaty  3 areas: International Cooperation, Enforcement Practices, Legal Framework  Objective:  “Establish, among nations committed to strong IPR protection, a common standard for IPR enforcement to combat global infringements of IPR particularly in the context of counterfeiting and piracy.”  Really an IP enforcement treaty  3 areas: International Cooperation, Enforcement Practices, Legal Framework

ACTA  Especially brazen; simply treats social interests in preventing counterfeits and intellectual property rights as the same.  Formula: Trade in counterfeits has increased (alleged), hence IP enforcement must increase.  Fallacious (assuming enforcement can be effective, does more to block competition than protect public safety.)  Especially brazen; simply treats social interests in preventing counterfeits and intellectual property rights as the same.  Formula: Trade in counterfeits has increased (alleged), hence IP enforcement must increase.  Fallacious (assuming enforcement can be effective, does more to block competition than protect public safety.)

ACTA terms  Provisional measures to allow authorities to destroy goods without hearing both parties  Border measures; suspend entry of goods  Criminal penalties  Technical assistance  Provisional measures to allow authorities to destroy goods without hearing both parties  Border measures; suspend entry of goods  Criminal penalties  Technical assistance

National legislation  US laws:  Stop Counterfeiting in Manufactured Goods Act, AntiCounterfeiting Amendments of 2004, etc:  increase counterfeiting penalties and enforcement powers  PRO-IP Act: Creates IP czar position (still waiting on Obama appointment)  US proposed legislation:  IP Enforcement Act, Safeguarding America’s Pharmaceuticals Act, Counterfeit Drug Prevention Act  US laws:  Stop Counterfeiting in Manufactured Goods Act, AntiCounterfeiting Amendments of 2004, etc:  increase counterfeiting penalties and enforcement powers  PRO-IP Act: Creates IP czar position (still waiting on Obama appointment)  US proposed legislation:  IP Enforcement Act, Safeguarding America’s Pharmaceuticals Act, Counterfeit Drug Prevention Act

U.S. National enforcement / Executive Branch initiatives  US Chamber of Commerce: Coalition Against Counterfeiting and Piracy  Industry groups  Want powers to Customs agents, technical assistance to train other governments, IP attaches at American embassies, public awareness campaign  FDA and Dept. of Justice: enforcement cooperation  US Chamber of Commerce: Coalition Against Counterfeiting and Piracy  Industry groups  Want powers to Customs agents, technical assistance to train other governments, IP attaches at American embassies, public awareness campaign  FDA and Dept. of Justice: enforcement cooperation

U.S. enforcement initiatives  USTR Special 301 Watch list  Special section on counterfeiting this year; push to empower customs officers to seize goods without court order  National Intellectual Property Rights Coordination Center  Run jointly by Homeland Security and FBI  STOP! Initiative: White House  Not yet clear if continues under Obama  Global Intellectual Property Academy  International training program for judges, enforcement officials  USTR Special 301 Watch list  Special section on counterfeiting this year; push to empower customs officers to seize goods without court order  National Intellectual Property Rights Coordination Center  Run jointly by Homeland Security and FBI  STOP! Initiative: White House  Not yet clear if continues under Obama  Global Intellectual Property Academy  International training program for judges, enforcement officials

A global industry IP enforcement strategy  Industries uniting for IP enforcement  Conflating distinct rights (TM, ©, patent)  Counterfeiting historically applies to trademark alone; piracy an emotive term for copyright infringement - no real application to patents, data protection or trade secrets  Broadly apply “counterfeit,” “piracy”  No longer just, “is consumer confused?”  Emotionally compelling; effective cover  Misleading agreement names; IP as equal set of rights  Sell IP enforcement as solution to public threats posed by counterfeits  Industries uniting for IP enforcement  Conflating distinct rights (TM, ©, patent)  Counterfeiting historically applies to trademark alone; piracy an emotive term for copyright infringement - no real application to patents, data protection or trade secrets  Broadly apply “counterfeit,” “piracy”  No longer just, “is consumer confused?”  Emotionally compelling; effective cover  Misleading agreement names; IP as equal set of rights  Sell IP enforcement as solution to public threats posed by counterfeits

A global industry IP enforcement strategy  Change nature of patent, copyright, TM  Change private rights to public rights  Historically, violation occurs, rightsholder seeks financial compensation, sometimes injunction in court  Place burden on taxpayers to enforce industry monopolies  Prevent alleged violations, deter competition, rather than financial remedies after the fact  Very dangerous for medicines: stops legitimate generics, also chills financial incentives to trade in generics  Change nature of patent, copyright, TM  Change private rights to public rights  Historically, violation occurs, rightsholder seeks financial compensation, sometimes injunction in court  Place burden on taxpayers to enforce industry monopolies  Prevent alleged violations, deter competition, rather than financial remedies after the fact  Very dangerous for medicines: stops legitimate generics, also chills financial incentives to trade in generics

Industry’s evolving global strategy  Sell: “Forum shopping”  Push each new global opportunity to raise IP enforcement to its limit, then, when challenged, find a new forum.  So far:  IP treaties  WTO  Regional & bilateral trade agreements  Counterfeiting and piracy enforcement  What’s next?  Sell: “Forum shopping”  Push each new global opportunity to raise IP enforcement to its limit, then, when challenged, find a new forum.  So far:  IP treaties  WTO  Regional & bilateral trade agreements  Counterfeiting and piracy enforcement  What’s next?

How do we respond?  Industry efforts are more than a piecemeal; there’s a global design  How much deeply planned vs. evolved hard to know  Concerted industry strategy requires concerted, big-picture public interest response  Cross-sector  Strategy to match.  Industry efforts are more than a piecemeal; there’s a global design  How much deeply planned vs. evolved hard to know  Concerted industry strategy requires concerted, big-picture public interest response  Cross-sector  Strategy to match.