THE US – JORDAN FREE TRADE AGREEMENT AND ACCESS TO MEDICINES ROHIT MALPANI OXFAM AMERICA

1)One of many mechanisms used to introduce stricter levels of IP protection. 2) There is broad-based opposition to US FTAs – but based on principle, not fact. 3) Some studies have predicted serious public health consequences for poor people in countries that introduce strict levels of IPRs.

1)WHO/PAHO study in Colombia: A US-Colombia FTA would require an additional USD 919 million per year of expenditures to pay for medicines. 2)Peru Ministry of Health: In 10 years, Peru would incur additional medicine expenses of USD million – USD 110 million falling upon Peruvian households. 3) World Bank (Thailand): A US-Thailand FTA would have prevented use of compulsory licensing, which could (and now is) reduce the price of second line ARVs by 90 percent – a savings of 3.2 billion USD.

The US Government has consistently claimed that TRIPS plus rules are beneficial in developing countries. They always cite the US-Jordan FTA – particularly: 1)No public health deterioration 2)Increased local R+D 3)Numerous new, innovative product launches 4)Increased foreign direct investment

Oxfam hired three researchers to collect data to either verify or rebut US government assertions. 2 objectives: (1) To measure actual public health consequences of US-Jordan FTA since 2002 (through mid-2006) (2) To measure benefits

1)Data exclusivity 2) Restricted use of parallel importation 3)Restrictions on the use of compulsory licensing ** Study only examined consequences of data exclusivity Subsequent FTAs have imposed additional TRIPS-plus rules – e.g. linkage and patent extensions.

Medicine prices have risen since 2002 and account for an increasing share of overall health care costs. Many new medicines lacking a generic equivalent in Jordan from were due to the imposition of data exclusivity (and not patent protection). Few or no benefits due to US FTA – despite US claims. Only looked at data exclusivity, although the FTA restricts use of parallel imports and compulsory licensing.

From 2000 – 2006, almost no patents were filed by multinational drug companies in Jordan. Of 21 multinational drug companies, only three bothered to file any patents for medicines they launched onto the Jordanian market by mid Drug companies satisfied with the use of data exclusivity to function as patent protection.

Analyzed 108 medicines launched onto the Jordanian market since 2001 (42% of all new, branded medicines launched and more than 70% of sales). Only 5 medicines (of 108) had patent protection. Of 103 medicines without patent protection, 79% had no generic competitor (despite the existence of generic competition elsewhere) due solely to data exclusivity.

Heart disease and diabetes are serious problems in Jordan and Egypt. Direct comparison of end price for new medicines to treat both diseases show far higher prices in Jordan than Egypt for the same medicine. Must qualify that other reasons – costs of APIs, currency shifts and surcharges could be responsible for price increases or lack of a greater price differential. But each of these medicines had generic competition in Egypt, and no generic competition in Jordan.

Prices for new medicines to treat cardiovascular disease and diabetes are two to ten times higher in Jordan than in Egypt. These medicines had no patent in Jordan or Egypt – only data exclusivity in Jordan prevented generic competition.

Article 4 of FTA requires 3 additional years of data exclusivity for a new use of a previously known chemical entity Multinational companies/US argue a new use includes trivial changes to existing medicines. Jordan has argued a new use only extends to new indications for old medicines.

Despite narrow definition, study found at least 18 medicines received three additional yrs of protection. This includes: Humira (Psoriasis) Risperdal (mental illness) Diovan (myocardial infarction) Atacandtab (Heart failure) Exelon (dementia) Gonal F (severe hormone deficiency)

2006 (first two quarters) Market Share (%) 14,29613, Sales (US$) Thousands Many new medicines launched since 2002 have remained unsold due to high prices charged by multinational companies. But, some new medicines with no generic equivalent have captured a large share of the local market. Some new medicines provide significant therapeutic benefits compared to older medicines they replace (blood/tumor medicines).

Anti-thrombotic agents: 416% price increase of the average unit price for this therapeutic class. Increased market share of clopidogrel (Plavix) – launched in coincided with decreased market share of generic anti-thrombotic first registered in Clopidogrel – no patent in Jordan but still no generic due to data exclusivity Clopidogrel – 5 times more expensive than generic anti- thrombotic and at least 100 times more expensive than generic clopidogrel manufactured in India.

At least 81 medicines with no generic equivalent due to data exclusivity. Generic competition would have reduced prices without imposition of data exclusivity. Oxfam study crudely estimates data exclusivity responsible for 1.2% - 4.4% of overall total pharmaceutical spending.

Medicine prices are a serious burden on government and household health expenditures. TRIPS plus rules limit policy flexibilities provided to the Jordanian government to reduce medicine prices. Thailand and Brazil recently demonstrated importance of TRIPS safeguards to reduce medicine prices.

1) Our study found scant local R+D from 2000 onwards – local Jordanian industry devoting only a tiny percentage of sales revenue towards R&D. 2) Little or no FDI into Jordan since 2001 – only packaging and distribution agreements (only 5% of medicines produced via licensing agreements with multinationals) 3) Egypt – No TRIPS implementation until 2005 yet received 223 million USD of FDI (35% of all output due to licensing agreements with foreign manufacturers)

4) There have been new product launches in Jordan, but only a fraction of total product launches in US/EU. 5) Even when launched, mostly unaffordable – IMS data indicates few or no sales of most medicines. 7) Scientific offices – promote irrational drug use via aggressive FDI to engage in unsavory marketing practices

1)2006 elections produced new Democratic majority 2) Colombia, Peru and Panama FTAs renegotiated – eliminated patent extensions and linkage and circumscribed data exclusivity – but still includes 5 years (with Doha Declaration exception) 3) SR 242 – major Democratic Senate leaders have expressed full support for Doha Declaration and no TRIPS plus rules. 4) Trading partners must aggressively defend or demand to apply their rights under TRIPS.

Rohit Malpani Trade and Private Sector Advisor Oxfam America Mobile: