Global Trade and Healthcare

Timothy F Christian, MD,MPA

• Established from GATT in 1994 • With the recent addition of Russia, almost all

countries now belong to the WTO• Ministerial Conferences every two years.• General Councils• Councils for goods, services and Trips.• Decision Making by Consensus.• Each member = one vote.

WTO Function and Operation.

Forum for negotiation.

Administer Rules.

Settle Disputes.

Review Trade Policies.

Cooperate with other organizations.

Core Agreements of the WTO

• Agreement establishing the WTO• The General Agreement on Tariffs and

Trade.• General Agreement on Trade in Services.• Agreement on Trade-Related Aspects of

Intellectual Property Rights.• Understanding on Settlement of Disputes.• Trade Policy Review Mechanism

How the WTO Works.

• The parties seek to achieve their goals “by entering into “reciprocal and mutually advantageous arrangements (italics added) directed to the substantial reduction in tariffs and other barriers to trade and to eliminate discriminatory treatment in international trade “. (WTO Introduction.)

Reciprocity: The Guiding Paradigm.

• “ The principle of reciprocity in GATT refers to the “ideal” of mutual changes in trade policy which bring about changes in the volume of each country’s imports that are of equal value to changes in the volume of each country’s exports.” (Kyle Bagwell, Kyle and Robert Staiger)

Rules for Fair Trade.

• Anti-dumping and Countervailing duties. (Art VI) (unfair trade by firms and governments)

• Dispute Settlement• Preservation of intellectual property• Preservation of Trademark

WTO is Stacked Against LDCs

• WTO membership implies MFN status to all countries (elimination or marked reduction of trade tariffs)

• To settle disputes (such as IP), countries can bring a complaint (301) to the WTO

• If there is merit, the dispute settlement can be either compensation to the offended country or reinstitution of tariff barriers between them

• For US, tariffs by an LDC are of no consequence but trade tariffs with US are devastating to LDCs

Tale of Two TRIPSTrips 1

• Pratt and Open have idea aproach USTR

• Provide resources.• Set up Intellectual Property

Committee• Expert Staff (IBM Gorlin)• Draft 1988 position paper.• US threatens Uruguay Round• LDCs agree to TRIPS in exchange

for Agriculture trade agreement• 1984 Trade Act: IP Actionable

Under Section 301.

Trips 2• Health Action International organize

1996 meeting.• 1998 Action at WTO: USA and EU use

TRIPS to reject WHO resolution on Drug Strategy.

• MSF generate articles in medical journals. Campaign on Access to essential medicines.

• 1999 Geneva conference on compulsory licensing (HAI, MSF Consumer Project).

• Partner with HAI Oxfam, Consumer Project on Technology

• Use of internet. Web-letter: IP health.• Article 31 adopted, MSF wins Nobel

prize

Declaration on the TRIPS Agreement and Public Health.

• 4. We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.

• (b) Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.

• (c ) Each Member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency,

• (d) The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each Member free to establish its own regime for such exhaustion without challenge,

The TRIPS Interface

WTO

✖

LDCsPharma

-Dominated by US/EU-Imbalance in DSU-Consensus run

-Consensus denial is only option in WTO-Chronic infections-Poor regulation IP

-For-profit entity-Major source of medical innovation -IP is key factor

Parallel Imports.

• Goods brought into a country without authorization of the Patent, Trademark or copyright holder.

• “National exhaustion”. Rights end with first sale in country—so IPR holders can prevent parallel imports.

• “International Exhaustion” Cannot prevent rights end with first sale anywhere.

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Parallel imports of Drugs: LDCs

• Doha round allows LDCs to produce generics for public health

• A majority of LDCs do not have infrastructure to do manufacture generics

• Parallel imports to LDCs from India and other generic producers allowed under waiver of Art. 31F

• US finally accepted waiver in 2003 with caveat it cannot be expanded to other industries

Remaining Issue: Parallel Imports• IMPORTING UNDER COMPULSORY LICENSING.(‘PAR.6’) 31(f) of the

TRIPS Agreement says products made under compulsory licensing must be “predominantly for the supply of the domestic market”. This applies to countries that can manufacture drugs — it limits the amount they can export when the drug is made under compulsory license. And it has an impact on countries unable to make medicines and therefore wanting to import generics. They would find it difficult to find countries that can supply them with drugs made under compulsory licensing.

• The problem was resolved on 30 August 2003 when WTO members agreed on legal changes to make it easier for countries to import cheaper generics made under compulsory licensing if they are unable to manufacture the medicines themselves. The decision waives exporting countries’ obligations under Article 31(f) — any member country can export generic pharmaceutical products made under compulsory licenses to meet the needs of importing countries, provided certain conditions are met.

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Codex Alimentarus and the WTO• The science branch of the WTO• Regulates trade in food products• This includes residual drugs in meat etc• Tightly linked to the WTO to provide standards for

Agriculture trade• However, they do not regulate trade in drugs or

devices for human use• Each country is responsible for its own policing of

drug quality though WTO rules dictate contents

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Counterfeit Drugs in LDCs

Western Countries

LDC/BRIC Online India Generic0

10

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%counterfeit

%counterfeit

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Scope of the Problem• Counterfeit medicines constitute between 40 and 50 per

cent of total supply in Nigeria and Pakistan• In China, authorities have found that some products

have a counterfeit prevalence ranging between 50 and 85 per cent.

• 36.5 per cent of antibiotics and anti-malarials on WHO essential drugs list in Thailand and Nigeria are substandard (Shakoor et al, 1997).

• A recent survey by the WHO of seven African countries found that between 20 and 90 per cent of all anti-malarials failed quality testing.

Counterfeit Drugs

• Only 20% of countries have agencies to regulate drugs• Senegal: 12/22 random doses ampicillin=no drug

Thailand, 40% artesunate inactive, Vaccines etc• Most fake generics originate in India, China, online• It is WTO Art 31 waiver that allows them to produce

w/o regulation• $Billions Industry, cheap price, no insurance• OECD combat threat: seize both real and fake generics

under “trademark” infringement during transit• Some see this as suppression by West to protect

Pharma

Essential Medicines

• 30-50% of world pop lacks access to medicines• Differential pricing helps but subject to

corruption and selectivity• Lack of Insurance• Most countries have a model list but insufficient

infrastructure/wealth to purchase and distribute

• WHO program: Generic formularies and donations but no solution

Competition reduces prices:Evidence from HIV/AIDS

Local production of drugs in LDCs

Pro• Security thru

independence• Draw to bring in

expertise• Creates Jobs• Potential for export

Con• No comparative

advantage• Duplicative• Requires infra-structure• Regulation for

corruption/counterfeits