Latin Times | Mar 03 2015
TPP free trade agreement would increase cost of medicine In Mexico, Peru, Chile, and other countries
By Cedar Attanasio
TPP — the Trans-PacificPartnership — is making waves from Peru to Australia, concerning public health officials and consumer advocates. TPP, which would expand trade in 11 Pacific Rim countries, includes draft provisions for unprecedented expansion of pharmaceutical patent protection that could drive up the cost of medicine. Strong patents encourage innovation, but if they’re too strong, they can make medicines prohibitively expensive. It’s a balance that that has severe implications for global health.
“[The] TPP will reduce or eliminate that balance by curtailing existing legal flexibilities, and limiting government discretion to negotiate medicine prices,” according to Doctors Without Borders, known by it’s French initials MSF. The nonprofit group provides healthcare services in many developing countries, including those in the Pacific Rim, like Mexico, Chile, and Peru.
As details were leaked from the negotiations over the past few months, member countries started to react the details of the plan. In the past month, Peruvian and Australian press in particular have picked up the story of a new health care reality that would affect their countries in different ways. According to an op-ed by Peruvian columnist Diego García Sayán, the effects of increased patent protection are “obvious, especially those used to treat complex diseases.”
“These will be more and more expensive, which will particularly affect the poor in emerging countries. [In poor countries] it’s estimated that the global market will send medicines prices up 10-13%, while in rich countries [that estimate] is only 1-4%.”
Higher costs wouldn’t be limited to poorer countries, according to a new study across the Pacific, where Australians are becoming increasingly concerned that about TPP. In addition to increased healthcare costs stemming from higher medicines, the report argues that TPP will inhibit Australia’s ability to regulate vices alcohol, tobacco, as well as unhealthy foods. Australian Trade Minister Andrew Robb downplayed those concerns.
"The government will not support outcomes that would increase the prices of medicines for Australians or adversely affect our health system more generally — end of story," he said in a statement.
Richer countries that sign off on TPP such as Australia, Japan, and the U.S. would have to comply with increased patent protections right away, while poorer countries would be exempt temporarily. That compromise could support cheap generics in emerging economies like Peru as until their purchasing power increases. However, groups like MSF claim that the delays aren’t enough, because they are based on “arbitrary” measure of average national wealth by the World Bank.
“The U.S. proposal draws an arbitrary and unfair line to determine which countries would have to comply with all TPP provisions right away. World Bank income classification is an inappropriate measure of a country’s or a population’s capacity to afford high-priced medicines.”
Opposition to TPP In the U.S.: Subsidies, Environment, and Labor
A few months ago, TPP was on the fast track in Congress, and legislators considered passing it without formal debate. In recent weeks, however, the trade deal has become the target of a bipartisan attack. An LA Times op-ed by former Labor Secretary Robert Reich and Richard Trumka, current head of the AFL-CIO, called out TPP for potentially weakening workers. They citing the detrimental impact of the last major deal like it, the North American Free Trade Agreement (NAFTA).
“We now know that NAFTA has cost the U.S. economy hundreds of thousands of jobs and is one reason why America’s workers haven’t gotten a real raise in decades,” they wrote. “It and agreements like it have also contributed to the huge U.S. trade deficits. We now import about $500 billion more in goods and services each year than we export.”
The conservative thinktank Cato Institute also came out against certain aspects of TPP, such as Investor-State Dispute Settlement (ISDS), a form of corporate arbitration that could undermine national laws and force countries to pay out millions to multinational corporations. A Cato blog post argued that it would unfairly subsidize overseas outsourcing.
“ISDS amounts to a subsidy to mitigate the risk of outsourcing. While outsourcing shouldn’t be denigrated, punished, or taxed – companies should be free to allocate their resources as they see fit – neither should it be subsidized.” The post went on to explain that local companies would enjoy no such subsidy.
Elizabeth Warren’s Op-Ed in the Washington Post raised another issue with ISDS: the weakening of national sovereignty.
“Imagine that the United States bans a toxic chemical that is often added to gasoline because of its health and environmental consequences. If a foreign company that makes the toxic chemical opposes the law, it would normally have to challenge it in a U.S. court. But with ISDS, the company could skip the U.S. courts and go before an international panel of arbitrators. If the company won, the ruling couldn’t be challenged in U.S. courts, and the arbitration panel could require American taxpayers to cough up millions — and even billions — of dollars in damages.”
All in all, the discussion of TPP has switched from an apolitical easy-pass to a controversial agreement. As much of the deal is still secret, future revelations are no doubt ahead, as well as arguments and speculation about the long-term future of 40% of the world’s economy.