Mega trade blocs are imperiling India’s role as pharmacy of the world

In a kind of pincer movement, two mega trade agreements from two ends of the world are closing in on India, forcing it to reconsider many of the policies that were formulated to protect its vulnerable economy and its even more vulnerable population.

On one side is the Trans Pacific Partnership, or TPP, which was signed in February. It is a behemoth, bringing together the US, Canada, Japan, Australia, New Zealand, Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam – 12 nations that account for 40% of the world’s Gross Domestic Product and 26% of global trade. Many of these countries are amongst the most robust economies today.

On the other side is the Regional Comprehensive Economic Partnership, or RCEP, which has drawn the 10 members of the Association of Southeast Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six regional countries that have bilateral trade agreements with the bloc: Australia, China, India, Japan, New Zealand and South Korea.

The Regional Comprehensive Economic Partnership is still under negotiation and has just concluded its 13th round in Auckland. Together, these 16 countries – seven of whom are part of the Trans Pacific Partnership – have a combined GDP of $23 trillion (29% of world GDP) and account for 27% of global trade.

Shadow on Indian pharma

India is not a member of the Trans Pacific Partnership, yet its shadow looms over the country as it does over much of the world.

The agreement is setting new rules for trade, investment and standards across the board. From the public health point of view, it is considered the most lethal trade agreement signed so far and many of its provisions are being adopted by the Regional Comprehensive Economic Partnership too.

This is the single biggest worry for a host of organisations working in public health such as humanitarian organisation Médecins Sans Frontières, or MSF, which fears that India – as the world’s leading manufacturer of life-saving, low-cost generic medicines – is facing intense pressure in this proposed free trade agreement. “Many of the Intellectual Property provisions that have been tabled for RCEP are those in the TPP agreement, which is considered the worst trade deal ever for access to medicines,” said Brian Davies, East Asia head for MSF's Access Campaign.

The danger of secret negotiations

Utmost secrecy has marked both trade deals and the only way of knowing what is going on is through leaked documents. As the Auckland negotiations were underway, there was a barrage of statements and campaigns warning of what would happen if India were forced to accept the Intellectual Property draft text that is said to have been on the negotiating table.

This draft, finalised in October, was leaked by US-based non-profit Knowledge Ecology International, towards the end of April just as the 12th round of talks were starting in Perth.

Knowledge Ecology International is focused on social justice for the world’s most vulnerable populations, and is led by James Love who has been in the forefront of the campaign for access to cheaper medicines for two decades.

Releasing the draft, Love warned that the contents of the Intellectual Property chapter were important because it would bind India and China, two countries left out of the Trans Pacific Partnership, to strict new rules, particularly on pharmaceuticals.

China is the leading manufacturer of raw materials used to make medicines.

In a statement, the Knowledge Ecology International director said: “Japan and Korea are trying to push many of the worst ideas from ACTA [Anti-Counterfeiting Trade Agreement], TPP and other trade agreements into the RCEP. Some of the issues that negotiators did not understand in the TPP, such as the damages provisions, are also lurking in this text, creating risks that negotiators will do worse than they think, because the secrecy of the negotiations insulates the negotiators from timely feedback on technically complex issues.”

The Anti-Counterfeiting Trade Agreement has also been negotiated under a haze of secrecy by the US, Japan, the European Commission and other parties and is outside the ambit of the World Trade Organisation.

Japan and South Korea are reportedly pushing for patent extensions, restrictive rules on exceptions to copyright and test data monopolies. As Love pointed out, there are scores of proposals that circumscribe access to knowledge and will have a negative impact on the right to health. This is particularly worrying since Regional Comprehensive Economic Partnership countries are home to 48% of the world population, and among these are hugely impoverished and vulnerable communities.

The Intellectual Property rules put forward by Japan and South Korea go way beyond what is required under global trade rules embodied in the World Trade Organisation’s agreement that is known by its acronym TRIPS. As such, the stricter rules incorporated by rich countries in the newer trade agreements they have signed in recent years are called TRIPS plus provisions. India has consistently fought against these because they would choke its generics industry, which is the largest in the world.

End of cheap medicines?

India is described as the pharmacy of the developing world for its large-scale production of generic medicines that offer an affordable alternative to the high-cost patented drugs needed to treat communicable and non-communicable diseases in poorer countries. Two thirds of all the drugs that Médecins Sans Frontières buys to treat HIV, tuberculosis and malaria come from India.

If the current Intellectual Property provisions are accepted, access to essential medicines will be restricted for millions of people across Asia and Africa, points out Leena Menghaney, head of MSF's Access Campaign in South Asia.

What are the provisions causing so much apprehension?

Foremost is the provision to provide patent term extensions to compensate for delays in the marketing approval process. In effect, such a measure would extend the monopoly for patented medicines and delay entry of generics further.

So, too, the issue of data exclusivity. This is a mechanism to prevent governments from relying on the clinical trial data (provided by the patented drug manufacturer) to register generic versions of medicines – even if the medicines are off-patent, or even if the patent has been revoked. It is such a lethal provision that it even complicates the issuance of compulsory licences to override patents in case of a public health emergency. Data exclusivity is a prominent feature of the Trans Pacific Partnership and and it is not surprising that it is being sought to be incorporated in Regional Comprehensive Economic Partnership too.

Hobson's choice

The Union Ministry of Commerce has been getting uneasy over the implications of the Trans Pacific Partnership and, during the time of the previous United Progressive Alliance government, held a series of meetings to grapple with the issues that would keep Indian exports out of the largest trade bloc.

Some officials suggested that Indian industry should look at the Trans Pacific Partnership as an opportunity to raise its standards across the board to make exports more competitive. The bottom line is that the TPP rules will become the “gold standard” of global trade, making it a Hobson’s choice for India.

The Regional Comprehensive Economic Partnership is the focus of the ministry at present – it is primarily trying to ward off demands for a huge cut in import tariffs – the slew of heightened Intellectual Property protections being discussed should be causing acute unease.

The worst are weakened patentability criteria (making it easier for drug companies to patent their drugs) and diluted patent exceptions that would circumscribe how research and experimental exceptions to patent rights can be used by India.

Of concern too are what is known as border measures and enforcement. The former would result in the denial of medicines to patients in other developing countries since custom officials would be authorised to seize generic medicines that are being imported or exported, whereas enforcement measures could put third parties like treatment providers at risk of court cases and draw the pharmaceutical chain, from manufacturing, to distribution and retail of generics into litigation.

India's stand

The official Indian stand is that it will not accept TRIPS plus provisions. Health Minister JP Nadda had reaffirmed at the UN-High Level Meeting on Ending HIV/AIDS in early June that “India is committed to maintaining TRIPS flexibilities to ensure access to affordable medicines.”

However, there has been no specific statement with regard to RCEP negotiations. Nor has the usually forthright generics industry made any public comments on the Intellectual Property provisions in this agreement.

That could be on account of the altered situation in India. With an increasing number of companies entering into voluntary licences with patent holders, “the industry probably thinks it is politic not to rock the boat”, said an industry analyst.

Trade analysts believe India would be willing to make as many concessions as possible to join Regional Comprehensive Economic Partnership since it is left out of the Trans Pacific Partnership and other major groupings like the Asia-Pacific Economic Cooperation.

For Delhi, the RCEP allows it to reinforce its Look East policy that has not had much traction since it was initiated by Prime Minister PV Narasimha Rao in 1991. Even if the gains from the agreement are not all that significant – according to a study by the Asian Development Bank Institute, it will add just 2.4% to the GDP – it means India will be part of a powerful bloc.