CDM's Report on the Trans-Pacific Partnership

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Report on the Trans-Pacific Partnership (TPP) and its Implications for Canada's Public Health Care System
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Trans-Pacific Partnership Report Outline

Canadian Doctors for Medicare (CDM) calls on the federal government to undertake a comprehensive and transparent health impact analysis of the Trans-Pacific Partnership (TPP) agreement during the consultative period leading to the ratification deadline. Such an analysis should include but not limit itself to the potential impacts the TPP could have on the development of a national pharmacare program, which is currently receiving support from academics, organizations, and governments across the country, as well as three additional public health implications. These are:

1. Extension of patents to medical procedures

In its current form, the TPP agreement allows for the application of patents to medical procedures, including surgical techniques, medical tests, and other treatments. This represents an unprecedented development in Canadian health care, and would dramatically reduce the availability of medical innovations in crucial areas for other health care providers. The result would be less collaboration and knowledge-sharing both nationally and globally, with many patients blocked from accessing procedures with life-saving potential.

2. Strengthening of patents for pharmaceuticals

If ratified, the TPP will allow drug companies to extend patent terms under certain conditions. The resulting extensions will delay the development of generic alternatives to expensive, patent-protected brands, prolonging cost barriers to access for many patients, especially those without drug insurance plans.

3. Weakening of state regulatory powers

The TPP includes provisions that enable corporations to challenge foreign government policies that diminish their actual or potential earnings through investor-state dispute settlement (ISDS) tribunals. As has been shown under NAFTA and other agreements, ISDS tribunals empower multinationals to seek legal action when faced with regulation, thereby curtailing a regulator’s ability to act for the public’s benefit in the arena of public health. ISDS tribunals are not new to the TPP, but the agreement has the potential to diminish state regulatory powers beyond what has been experienced under previous trade partnerships.

Introduction

Canadian Doctors for Medicare (CDM) was created in 2006 in response to events in the medical profession and public policy that threatened to undermine Canada’s national commitment to equitable health care access.

As medical professionals, we are firmly committed to evidence-based health care policy reform. We advocate for innovations in treatment and prevention services to improve the quality, sustainability, and equity of Canada’s health care system.

Representing a market of nearly 800 million people with a combined GDP of $28.5 trillion, the Trans-Pacific Partnership is an agreement with far-reaching social and economic implications. From its ramifications for the automotive industry to its impact on the traditionally protected dairy sector vis-à-vis its proposed liberalisation of that market, the TPP has the potential to significantly alter Canada’s socioeconomic landscape—and not always for the better.

Certain aspects of the TPP have the capacity to directly affect Canadian health care and public health as well, and though the full spectrum of the agreement’s consequences should be analyzed with care, it is those specific aspects with which CDM is most concerned.

Three areas in particular have the potential to negatively impact Canadian health care: the extension of patents to medical procedures, which will stifle knowledge-sharing in relation to essential innovations in surgery and elsewhere; the strengthening of patents for new pharmaceuticals, which will impede the development of affordable generics; and the weakening of state regulatory powers, which will inhibit the government’s ability to unequivocally act in the best interest of Canadians in the health policy arena.

As health providers who witness the effects of policymaking in our offices and hospitals on a daily basis, we are concerned that these provisions will have adverse consequences for our patients, especially those who already struggle with inequitable barriers to treatment. There are millions of Canadians, for instance, who cannot afford their prescription medication.

The health and livelihood of these individuals will be affected by this agreement. We ask that the federal government analyzes its consequences by undertaking a comprehensive and transparent health impact analysis before making further decisions. The TPP is an immensely complex agreement; its consequences for existing and future health policy should be carefully scrutinized, and the principles of universal health care carefully upheld.

Medical Procedures

The extension of patenting to medical methods represents a significant change in patent law. For example, current legislation in the U.S. prohibits the enforcement of such patents on medical professionals, since, according to Médecins Sans Frontières (MSF), they introduce significant and untenable increases in medical liability and health care costs.

While it is certainly true that the TPP’s provision on medical procedures would expose surgeons and other practitioners to increased liability, it is also the case that it would immensely complicate their day-to-day decision-making, and would do so at a cost to the patient.

Rather than deciding which procedure is in the best interest of the patient, practitioners would be forced to navigate an intellectual property apparatus, determining—often in high-risk, time sensitive scenarios—which procedure or technique is permissible. In many cases this would not be the best or most appropriate choice, but the allowable one within a complicated network of intellectual property ownership and organizational risk management.

There is no doubt that the quality of Canadian health care overall would suffer as a result, with patients blocked from accessing the best services for their particular needs. Many of these services have the potential to save lives.

The Canadian medical community has benefited from a global environment of knowledge and innovation sharing, the idea being that no technology or technique with medical potential should be hidden behind legal and political barriers. The TPP’s extension of patenting to medical procedures challenges this environment and the range of benefits that come with it.

Amongst the existing and emerging literature on the TPP’s potential impacts on health policy, this aspect of the agreement has received less attention than others. Strangely, the provision constitutes the most significant divergence from existing medical and legal structures, and for this reason requires the Canadian federal government’s careful attention.

Pharmaceuticals

If ratified, the TPP will allow drug companies to extend the term of a drug patent by five years or more, depending on whether delays in the patent approval process are “unreasonable.” Similar provisions have appeared in other FTAs, but as The Foundation for AIDS Research (amfAR) has made clear, “the TPP weakens the required justification for what constitutes an ‘unreasonable delay,’ making it easier for pharmaceutical companies to demand longer patent extensions.”

This will have a profound impact on those who rely on medications because it will delay the development of affordable generic alternatives to patent protected brands. By delaying the release of price-lowering generic competition, prices on brand name drugs will remain high for a longer period, prolonging cost barriers to access for many patients, especially those without drug insurance plans.

In 2014, the Director-General of the WHO, Dr. Margaret Chan, expressed serious concern over reduced access to generic medications, especially for those in developing countries: “If these agreements open trade yet close access to affordable medicines, we have to ask: Is this really progress at all, especially with the costs of care soaring everywhere?”

Similar concerns have been raised by physician groups. Médecins Sans Frontières (MSF), for instance, has pointed to the incredible value, historically, of generic development for HIV medications, which “brought the price of the first generation of HIV medicines down by more than 99% over the last decade, from $10,000 per person per year in 2000 to as low as $60 per person per year today.”

And amfAR has supported such a claim in their own analysis, stating that “The global community would never have achieved its successes in addressing the HIV epidemic if the terms of the proposed TPP were the international standard in 2001,” and concluding that “The HIV epidemic today would look decidedly different, more desperate, and more fatal.”

Some TPP advocates argue that stronger patent laws are required to incentivize pharmaceutical innovation, but this position has been repeatedly called into question. In fact, the inherent ambiguity of patent laws can lead to market instability and high litigation costs, both of which tend to stifle innovation. Additionally, there are other, more secure mechanisms in place with the capacity to fuel innovative medical development, such as tax incentives. Long, costly patents are not a prerequisite for pharmaceutical progress.

The TPP’s patent provisions ignore these facts, and are instead balanced heavily in favour of a corporate interest with no proven benefits to public health. There is no doubt that if the agreement comes into force, it will greatly impede generic development and access to affordable, life-saving drugs.

Regulatory Powers

The TPP agreement includes provisions that enable corporations to challenge foreign government policies that diminish, or have the potential to diminish, their earnings. This will occur through a process called “investor-state dispute settlement” (ISDS).

We have already seen how ISDS claims weaken the ability for governments to develop effective health policies. In 2011, for instance, Philip Morris Asia challenged the Government of Australia over the proposed introduction of standardized plain packaging for tobacco products. Though the challenge was dismissed in 2015, the legal complications led to the abandonment of that government’s plans for plain packaging.

As the New Zealand Medical Association (NZMA) has pointed out in their own analysis, though there is nothing new about ISDS tribunals, the TTP provisions will perpetuate existing structural flaws. For example, the tribunals are asymmetric, since only the investors (corporations) can initiate them, and often comprise only a few individuals from the private sector, leading to potential conflicts of interest. The TPP’s ISDS provisions also introduce new opportunities for legal action: ISDS claims can be launched on the basis of alleged, as opposed to proven, breaches of contract. In other words, a corporation can initiate an ISDS claim on the basis of supposed losses, not actually-incurred ones, thereby embroiling governments in expensive legal challenges. Along with existing structural flaws, this provision further erodes the regulatory powers of federal governments in the realm of public health.    

As with the strengthening of patents, ISDS tribunals have a very real impact on pharmaceuticals and their costs. Policies and rulings attempting to control drug costs could fall victim to the protective measures of the TPP, which empower multinationals to seek legal action when faced with regulation. This is already happening with the US pharmaceutical company Eli Lilly, who, under NAFTA, is suing Canada for $500 million; according to Joel Lexchin, the TPPA “does little to curb claims such as Eli Lilly’s and may, in fact, make matters worse.”

Conclusion

The signing of the TPP and its potential ratification come at a time of unprecedented instability in Canada’s public health care system. In BC, a trial involving the Cambie Surgeries Corporation is scheduled to begin in September, and will see the corporation’s clinics argue against the constitutional validity of that province’s Medical Services Plan. The trial has the potential to fundamentally alter the country’s health care landscape, paving the way for a two-tier system where the wealthy pay their way to the front of the que.

At the same time, direct violations of the Canada Health Act (CHA) have become alarmingly frequent, and are in some cases being facilitated by support from provincial governments. In Quebec this year, Minister Gaétan Barrette passed Bill 20, allowing physicians to charge for services typically covered by provincial insurance. The new fee schedule has yet to be finalized and implemented, but it represents a radical departure from the principle of access enshrined in the CHA. In Saskatchewan this month, Minister of Health Dustin Duncan introduced a bill to allow privatized CT scan services where patients can pay for priority treatment and jump ahead of the queue—this is based purely on their ability to pay, rather than their medical need for the procedure. These are only two of the more recent violations that have undermined Canada’s universal health care system, threatening to erode one of the country’s most cherished social institutions.

The TPP carries with it the potential to undermine Canadian health care by blocking access to services currently covered by provincial insurance (medically necessary procedures), creating barriers to medically necessary drugs that, though not covered, are essential to health, and by strengthening the means by which multinationals can avoid and deter regulation, even if that regulation is designed to benefit Canadians and save lives. For these reasons and for others not dealt with here, we urge the federal government to subject the Trans-Pacific Partnership to a rigorous and transparent health impact analysis, and ask that the results be made available to all Canadians. If we are going to ratify a trade agreement with sweeping health implications that touch on the lives of every citizen, we should be clear about the consequences.