Chapter I
Economic Commission for Latin America and the Caribbean (ECLAC)
Table I.10 Provisions included in modern trade agreements with possible effects on national pharmaceutical policies Type of provision
Possible effects
Possible effects on pharmaceutical policies
Stronger intellectual property protection than provided in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS-plus)
Long exclusivity periods for patented drugs, along with other market entry barriers applied to generic medicines and biosimilars, can reduce competition and force governments and consumers to pay monopoly prices for lengthy periods.
Affordable access to medicines may be reduced.
Investor-State dispute settlement mechanisms
Investment disputes can cause pharmaceutical policy decisions to be reversed or even give rise to “regulatory chill” situations. This can result in long periods of exclusivity, relaxation of regulatory standards or inability to support local producers.
Affordable access to medicines may be reduced. Local production, rational use of medicines and health standards could be compromised.
Government procurement rules
Governments / hospitals may pay lower prices as a result of open tenders. Medicines could become more affordable. The viability of the domestic pharmaceutical industry may be compromised unless preferences can be granted to local suppliers. Local production could be compromised.
Regulatory requirements for assessing the safety, efficacy and quality of drugs
National standards can be influenced by pressures from pharmaceutical industry trade partners (for example pressure to speed up regulatory approval processes could lead to increased safety risks). Cooperation on pharmaceutical inspection issues can improve drug quality and consumer safety.
Procedural requirements with respect to national pharmaceutical pricing and reimbursement programmes
Pharmaceutical policy-making may be subject to pressure from business Affordable access to medicines and partners with large pharmaceutical industries, including the possibility of their rational use could be either pharmaceutical companies challenging the decisions of health authorities. enhanced or compromised.
Rules on State-owned pharmaceutical companies and designated monopolies
The viability of domestic industry in developing countries may be affected if State-owned enterprises have to operate as commercial entities, cannot receive financial support or preferential treatment, or cannot give preference to local suppliers. Pressure to reform State-owned enterprises can lead to increased competition and lower prices.
The safety, efficacy and quality of medicines could decrease or increase.
Local production and health safety could be either enhanced or compromised.
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of D. Gleeson and others, “Analyzing the impact of trade and investment agreements on pharmaceutical policy: provisions, pathways and potential impacts”, Globalization and Health, vol. 15, No. 78, 2019.
The impact of FTA provisions on a country’s capacity to promote the local production of medicines can be either positive or negative, depending crucially on the structure of its pharmaceutical industry (in particular, the share of innovative drugs relative to generics). The following provides a conceptual assessment of the three types of provisions considered most relevant.
(a) Intellectual property8 The pharmaceutical industry in Latin America and the Caribbean consists mostly of producers of generic drugs. Accordingly, “TRIPS-plus” provisions that extend the period of exclusivity enjoyed by patented drugs beyond the 20 years stipulated in the TRIPS Agreement harm local industries that manufacture generic versions, by delaying the market entry of their products. The main provisions of this type included in the FTAs signed by the countries of the region with the United States are the following: (i) Changes in the duration of pharmaceutical patents to compensate for the “unjustified curtailment” in the effective patent term, as a result of the marketing approval process of the patented drug; (ii) At least five years’ exclusivity over the test data used to support the marketing application for a drug; and (iii) Linkage mechanisms (making the granting of a marketing authorization for a generic drug subject to the patent status of the original drug).
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This analysis is based only on the FTAs signed with the United States, since they contain the most detailed provisions on intellectual property and are the most ambitious (in other words the furthest removed from the TRIPS standard).
