Today, 29 September, Cecilia Malmström will be auditioned by the European Parliament (EP) to confirm if she is to become the European Commission’s (EC) new Trade Commissioner. This is a very timely moment for the release of a joint paper by Oxfam and Health Action International Europe (HAI) on the impact of European Union (EU) trade policies on access to medicines, both in Europe and far beyond.
Stakes are high for Ms. Maelstrom who will be leading the EC Directorate-General for Trade’s (DG-Trade) agenda for the next five years. This will include negotiating Free Trade Agreements (FTAs) with other countries on behalf of EU Members States. She will be especially in the spotlight over the negotiation of the controversial FTA between the EU and the US that will affect millions of people: the Transatlantic Trade and Investment Partnership (TTIP).
Leaked documents clearly show that the TTIP is a huge threat to European public health systems, due to its clear favouring of pharmaceutical companies’ commercial interests. One objective of the Pharmaceutical lobby is patent harmonization based on US law. This would mean more patents and less generic competition, thus more monopolies and unaffordable medicines. Another item on Pharma’s negotiating wish list is a ‘voice’ in EU Member States’ pricing and reimbursement policies. Increased companies’ voice in medicine would challenge Member states’ ability to take measures, such as price control, to control expenditure on medicines. Moreover, the Pharma lobby is seeking to restrict public access to clinical trials data, undermining the EU’s recent efforts to foster transparency in this area.
One of the TTIP’s most controversial elements is the inclusion of an Investor-State Dispute Settlement (ISDS) mechanism. ISDS gives foreign investors the right to sue governments for compensation if laws, policies, court decisions or other actions interfere with expected profits from investments. Governments’ actions such as price control or patentability standards could be challenged in court. While it may seem extreme, this threat is far from hypothetical. Following the legitimate invalidation of two of its patents, the American pharmaceutical company Eli Lilly is suing Canada for 500 million Canadian dollars compensation under the North American Free Trade Agreement ISDS provision.
More worryingly still, the impact of the TTIP will not stop at EU or US borders. The TTIP would set a new global standard for strict intellectual property (IP) protection around the world, which could be imposed on developing countries through other trade deals.
FTAs have regularly been used by DG-Trade to introduce strict investment and IP rules (so-called “TRIPS-plus” measures), which go beyond the internationally-agreed IP standards set by the World Trade Organization. Such standards promote the commercial interests of the pharmaceutical industry even at the expense of public health. (See the EC’s latest document on the pharmaceutical industry).
The EC’s brand new strategy on IP enforcement in third countries explicitly describes IP as a means to boost Research and Development (R&D) and economic growth in the EU, ignoring how IP can also hinder innovation and competition. The proposed measures to enhance the enforcement of IP rights include FTAs and the identification of “priority countries”, as per the notorious US Special 301 report. The EU list includes India and Thailand, two countries which have sought to balance IP rules and public health needs. The list foresees possible financial sanctions for countries repeatedly “infringing” IP rights. Sanctions could include restricting third countries’ participation in, or funding from, specific EU-funded programmes.
India and Thailand have bitter experiences of the EC heavy-handed approach to IP rights. Negotiations for a FTA between the EC and India started in 2009 and are currently on hold. India’s progressive IP law only grants patents for ”real” innovation (i.e. it rejects patents on products too similar to an existing product). This has allowed the country’s vibrant generic pharmaceutical sector to play an important role in driving the prices of medicines down in developing countries. As “the pharmacy of the developing world”, India provides over 80 percent of the world’s generic anti-retroviral medicines to treat HIV/AIDS. The EC’s attempt to impose TRIPs-plus provisions in the EU-India FTA caused a great outcry throughout the world, thankfully forcing the EC to backtrack on some of the most controversial provisions.
Yet, despite the EC’s commitment to stop pushing for TRIPS-plus measures in subsequent FTAs, the FTA being negotiated with Thailand since March 2013 (also currently on hold due to the military coup) contained similar controversial provisions. Instead of supporting Thailand’s good track record of pro-public health policies and its use of TRIPs flexibilities to improve access to medicines, the EC tried to stop Thailand’s use of these legal, internationally-agreed measures.
Negotiations with both countries will resume in the near future.
DG Trade – aligned with the pharmaceutical industry- portrays IP as the panacea to boost investments in R&D, thus justifying the inclusion of TRIPs-plus provisions in FTAs. However, it is clear that the current R&D system, which relies heavily on the profits generated by expensive, unaffordable medicines to provide incentives for innovation, fails to meet public health needs.
The current Ebola crisis and the controversy surrounding wildly unaffordable new medicines to treat Hepatitis C, clearly illustrate the R&D crisis. No medicines or vaccines are currently available to deal with the Ebola virus due to the lack of a market incentive; Ebola only affects some of the world’s poorest countries, where no company could ever make a profit. In the meantime, the pharmaceutical company Gilead priced its new and highly-effective medicine to treat Hepatitis C (marketed as Sovaldi) at $84,000 for a 12-week course. Even the discounted price that Gilead offered to some countries is still too high to treat all patients.
This raises serious questions about a system based on monopoly that keeps effective medicines from reaching the people that need them. Clearly alternative R&D models which are geared to address health needs must urgently be explored.
The coming five years represent an important opportunity for the EU to lead on trade and R&D policies which meet health needs, and which don’t favour commercial interests over patients’ needs.
Oxfam and HAI Europe urge the future Trade Commissioner Cecilia Maelstrom, to resist the pharmaceutical lobby and to ensure trade policies are aligned with the EU’s development and (global) health objectives. To reach this aim, DG Trade should ensure better coherence and coordination of work with other DGs. The newly elected parliament must ensure that EU trade and R&D policies prioritise access to medicines for all citizens around the world.
 For a detailed analysis, see: Commons Network, HAI et al. (2014) ‘The Trans Atlantic Trade and Investment Partnership (TTIP): A Civil Society response to the Big Pharma Wish list’, joint position paper, http://www.prescrire.org/Docu/DOCSEUROPE/20140324CivilSocietyResponseBigPharmaWishList_final.pdf
 C. Gerstetter, M. Mehling, A. Eberle and K. Salès (2013) ‘Legal implications of the EU-US trade and investment partnership (TTIP) for the Acquis Communautaire and the ENVI relevant sectors that could be addressed during negotiations’, EP Directorate General for Internal Policies, http://www.europarl.europa.eu/RegData/etudes/etudes/join/2013/507492/IPOL-ENVI_ET(2013)507492_EN.pdf
 See USTR website: http://www.ustr.gov/about-us/press-office/press-releases/2014/April/USTR-Releases-Annual-Special-301-Report-on-Intellectual-Property-Rights
 In 2001, the WTO ministerial conference adopted the Doha Declaration on TRIPS and Public Health. It affirms that the WTO rules on IP should not prevent countries from taking measures to protect public health.
Doha Ministerial Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/W/2, 14 November 2001, http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm
Question: What do the following have in common?
One answer might be that these projects are not designed to deliver health services for the poorest sections of the population. The Lagos insurance scheme excludes all informal sector workers, while one IVF cycle at The Bridge Clinic costs $4,600.
A second might be that both projects make a deeply questionable contribution towards a country’s attainment of Universal Health Coverage (UHC), given their provision of services to small, predominantly urban, and comparatively wealthy elite.
A third is that they have both benefited from investments made as part of the International Finance Corporation’s (IFC) Health In Africa Initiative.
Health In Africa is a $1 billion investment project launched by the IFC in 2008, which aimed to ‘catalyze sustained improvements in access to quality health-related goods and services in Africa [and] financial protection against the impoverishing effects of illness’, through harnessing the potential of the private health sector. Specifically, it sought to improve access to capital for private health companies, and to help governments incorporate the private sector into their overall health care system. Health In Africa would do this through three mechanisms: an equity vehicle, a debt facility, and technical assistance. Perhaps of most importance, the initiative would make extra efforts to ‘improve the availability of health care to Africa’s poor and rural population’.
Emanating from the World Bank Group, Health In Africa’s focus on delivering health care for people living in poverty makes sense. Anything contrary would be at odds with the Bank’s mandate and overarching goal to end extreme poverty by 2030. Oxfam welcomes World Bank President Jim Kim’s emphasis on the centrality of achieving Universal Health Coverage (UHC) to see this goal attained, and the Bank’s target to deliver health care for the poorest 40% by 2020.
However, it seems that with the Health In Africa initiative, the IFC may be working deeply at odds to these stated World Bank aims. Today, Oxfam launched Investing for the Few, analysing the investments made as part of Health In Africa to date. Oxfam’s assessment of the sporadic investment information available finds that far from delivering health care for the poorest, Health In Africa has favoured high-end urban hospitals, many of which explicitly target a country’s wealthy and expatriate populations. The initiative’s biggest investment to date has been in South Africa’s second largest private hospital group Life Healthcare. This $93 million endowment no doubt supported the company in its subsequent expansion (Life Healthcare acquired a 26% stake in one of India’s largest hospital groups in 2011), but there is no evidence it has used this investment to expand access to health care for the 85% of South Africans without health insurance.
Oxfam’s findings show that Health In Africa has also failed to deliver expansion of health care at any sufficient scale or pace to meaningfully contribute towards UHC. Instead the initiative has supported high-cost, low-impact investments. The Lagos health insurance scheme mentioned above cost triple the annual Nigerian government per capita health expenditure for example, and took over five years to secure fewer than 9,000 enrolees. In Nigeria, scaling up to reach UHC at this rate would take over 100,000 years.
Another major concern is the absence of sufficient attempts by Health In Africa to measure its performance. The initiative’s own mid-term evaluation found Health In Africa had failed to define and assess its anticipated results, and that the performance indicators it has used are inadequate to measure any development impact. Whilst an equity fund employed by Health In Africa boasts of its success at reaching patients at the so-called ‘base of the pyramid’, one of the annual income targets used to define this group include all but the top five per cent of earners in sub-Saharan Africa. It is likely Health in Africa’s use of financial intermediaries contributes to this failure to effectively measure impact on poor women and men. Such an arms-length approach to investment brings inherent problems around oversight and transparency.
Oxfam is clear that the IFC must improve the transparency and accountability of the Health In Africa initiative. Our report calls on the IFC to cease all Health In Africa investments until a robust, transparent and accountable framework is put in place to ensure that the initiative is pro-poor, and geared towards meeting unmet need. In addition, it calls on the World Bank Group to conduct a full review of the IFC’s operations and impact to date in the health sector in low- and middle-income countries, to investigate how they are aligned with, and are accountable to, the overarching goals of the World Bank Group: to end extreme poverty and promote shared prosperity.
The IFC needs to fundamentally rethink its activities in health, and ensure any potential projects are aligned with the Bank’s goals. The World Bank Group should focus on supporting African governments to expand publicly provided health care – a proven way to save millions of lives worldwide.