Trump, Trade Deals and Medicines

When Pfizer and other major corporations drafted the rules that became the WTO’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), they set global standards that still determine who gets affordable medicines and who doesn’t. Today, those rules are even more evident through the announcement of Trump's tariff deals.

Countries are rushing to Washington following the 2 April 2025 announcement of U.S. Reciprocal Tariffs seeking bilateral deals to shield their economies. But what do these free trade agreements demand and what will they mean for access to medicines in developing countries?

In this episode, Sanya Reid-Smith explains TRIPS and TRIPS-Plus in simple terms, with clear examples and figures: how compulsory licenses lowered hepatitis C treatment in Malaysia, how TRIPS-Plus rules could cost Colombia US$1.5 billion a year and how Australia’s trade deal with the U.S. became a warning case.

Credits
Production: Third World Network Berhad
Audio editing: Guilherme Conde & Isadora Chamis
Soundtrack: Daniel Gómez Rico
Artwork: Ames Sia

Transcript

0:07

Welcome to Health Equity in Focus. This is the Access to Medicines and Intellectual Property podcast of the Third World Network, where we share insights and critical analysis from a Southern and equity perspective. I'm Rajnia de Vito of the Third World Network, speaking to you from Brazil. These countries are calling us up, kissing my ass. They are dying to make a deal. Please, please start making a deal. What you just heard was the U.S. President Donald Trump referring to how countries were proactively seeking the White House to negotiate bilateral trade agreements after the announcement of the U.S. Reciprocal tariffs on 2nd April 2025. Countries are rushing to seal deals with the U.S. and other countries to bypass the negative effects of the tariffs. But what will these deals mean for access to medicines, especially in developing countries? To discuss this scenario, we welcome today's Sanya Reed-Smith to unpack free trade agreements, particularly how they can affect access to medicines in developing countries. Sanya is a senior researcher at Third World Network. With a background in biochemistry, economics, and law, she has worked extensively on international trade law, intellectual property, and access to medicines, and is widely regarded for her critical analysis of global trade policies, including the latest developments under the Trump administration. So to start us off, Sanya, what can developing countries expect from these Trump tariff deals regarding intellectual property and access to medicines? So, in the last few days, we have seen the full text of some Trump tariff deals published for the first time, and they are with Malaysia and Cambodia. And those deals were signed at the ASEAN summit a few days ago. And, in those, we see that there are some stronger intellectual property provisions on medicines that are likely to mean that more medicines are patented, say in Malaysia and Cambodia, or if they ratify these agreements as they are written. But not all Trump tariff deals seem to have this. So for some of the other Trump tariff deals, we only have kind of joint statements or summaries or the first phase. And from those we can see, for example, with the UK and the European Union, that they don't have stronger intellectual property on medicines provisions. For example, the EU one just says we commit to discuss high standard commitments on intellectual property. That's it. There's not actually stronger intellectual property provisions that you must comply with the way that there is in the Malaysia and Cambodia deals. The thing to note about the Malaysia and Cambodia deals, which seem to be a bit of a template, we can see that the joint statements that were issued on those days. For other countries like Thailand and Vietnam seems like the full deals are going to be similar for them. The obligations are only on the non-US country. So the US doesn't have to do anything. 30 pages of obligations on Malaysia and Cambodia. If the US considers you have not complied, then they can terminate the deal or raise the tariffs on you or whatever. Could you explain what TRIPS plus provisions are and give us some historical context on how and why these provisions came to be included in trade agreements? So first, we need to think about what is TRIPS. TRIPS is the Agreement on Trade- Related Aspects of Intellectual Property Rights. And these are the intellectual property rules at the World Trade Organization. It was set up in 1995 and it has 166 countries as members and they need to comply with all the rules in the WTO, including TRIPS. How did we get to TRIPS? Pfizer, the big pharmaceutical company, published a full-page advertisement in The Economist in 1995 explaining that the U.S. government asked the U.S. Companies for proposals on this intellectual property text and to get the international private sector together to push it through. So Pfizer and IBM with EU and Japanese businesses drafted the rules which became TRIPS and now we are all bound by them. TRIPS sets global minimum standards on intellectual property. For example, all WTO members are required to have 20-year patent monopolies on medicines, and there's a transition period for Least Developed Countries that we can talk about. For example, before TRIPS, before 1995, countries such as India did not have patents on medicines. They did not have product patents on medicines. You could have the cheaper generic version, which is the same medicine, but made by a different company with a different brand. And for example, Australia, which is a rich, developed country, only allowed patents for 16 years, but because of TRIPS, they had to extend it to 20 years. So, least developed countries are countries that, according to the United Nations criteria, are least developed. And they have renewable transition period. So, at the moment, they have until 2034 before they have to comply with most of the rules in TRIPS. So, least developed countries do not have to give patents on medicines or any patents, for example. They have a right to renew this transition period for as long as they are least developed countries. But when they graduate, according to the United Nations criteria, they lose this flexibility and they have to start having patents, including patents on medicines. TRIPS itself has some flexibilities and some exceptions. For example, there's something called compulsory license. That says even if the medicine is patented, the government can issue a compulsory license on that medicine, which allows it to override the patent so that the domestic companies can make the generic version of the medicine, or they can import the generic version, and then the generic company just pays a royalty to the patent owner. For example, Paracetamol, there's the brand name Panadol, but many other companies also make paracetamol under different brand names. It might be paraletalol or something. It's the same medicine. It works the same. It's just as safe and effective, but it's made by a generic company, because the patent has expired or there's no patent. So then you have competition and cheaper prices. But when we get to TRIPS+, that means stronger intellectual property protection than TRIPS requires. So this could be broader monopolies, longer monopolies, new monopolies, less exceptions. And since developed countries, like the US, have a lot of companies that own patents. For example, on medicines, they have Pfizer and Eli Lilly and so on. The EU has Novartis and Switzerland has Roche. The US has a Hollywood film industry and book authors. These companies all benefit from stronger intellectual property protection because they get more royalties on their films or on their patented medicines and so on. Those developed countries usually push for this stronger intellectual property protection or TRIPS plus in their free trade agreements. And this requires the countries that agree to it to do stronger intellectual property protection than the World Trade Organization's intellectual property rules or TRIPS requires. And it's usually in a separate intellectual property chapter. These TRIPS Plus provisions can make the TRIPS flexibilities and exceptions useless. For example, even if you issue a compulsory license, you can't get the medicine to the patient. What is their impact on access to medicines? If we go back a step and we look at even just the impact of TRIPS, before we even get to the impact of TRIPS Plus, TRIPS requires these patent monopolies on medicines, which is a 20-year monopoly. So that means for 20 years, you can have no generic competition. Nobody else can make that medicine. And so the prices remain high. So, for example, when they first developed medicines to treat HIV/AIDS, they cost $15,000 US dollars per patient per year. So it was unaffordable for most developing countries. But the generic version only cost $61 per patient per year. So once the patent expired on those antiretrovirals to treat HIV/AIDS, many generic companies made generic versions of those antiretrovirals, those life-saving medicines. And because of competition, the price fell from $15,000 to $61 per patient per year. A more recent example is patients who have cystic fibrosis. The patented version costs $325,000 dollars a year, but the generic version is 96% cheaper and it's $12,775 a year for adults. So this is the price difference between the monopoly price when there's a patent and no competition. And then, when the patent is over or there's no patent anymore, the generic version, when there's competition, it reduces the price. Some of the TRIPS plus provisions that we see in free trade agreements can be, for example, that least developed countries, who have that transition period we mentioned in TRIPS, they lose it in the free trade agreement and are required to immediately implement patents on medicines. There can also be other types of intellectual property monopolies that are not required by TRIPS, in addition to patents, that further block competition from generic versions. And we can see that when you have this kind of combined impact of these stronger intellectual property provisions, they can undermine the use of the TRIPS flexibilities and there's a variety of them. For example, some free trade agreements require you to allow patents on new uses of an old medicine. It's easier for companies to retest their existing library of chemical compounds they have to see if they work for other diseases because they already know that they're not dangerous in terms of side effects. It's easier, cheaper and quicker for them to retest their existing medicines to see if they work for new diseases. 78% of medicines getting new patents in the US were for existing medicines. And these are not required by TRIPS. For example, I think one of the medicines to treat HIV/ AIDS came from a cancer medicine. They retested and they said, 'Oh, it works for HIV/AIDS.' Then they asked for a second twenty-year patent monopoly. TRIPS says you don't have to give that second monopoly. One medicine, one chemical, gets one monopoly. That's it, even if you find it later works for 10 different diseases. But the TRIPS Plus in free trade agreements can say each time you find that it works for a new disease, it gets a second 20-year monopoly consecutively. When there was a World Health Organization calculation of what is the impact of this kind of combined TRIPS Plus provisions on Colombia from its US free trade agreement, it found that Colombia would have to spend an extra $1.5 billion US dollars a year on medicines every year. And if this is not spent, Colombians would have to reduce their medicine consumption by 44%. Which types of free trade agreements usually contain these TRIPS plus provisions that you mentioned? Is it South-South trade agreements, North-South trade agreements? And what about the recent trade deals announced by the U. S. administration? Do they also have TRIPS plus provisions? It's normally the North-South free trade agreements that have TRIPS Plus provisions because it's the developed countries who have the companies that benefit from them. So Switzerland is the home of Roche. The US has Pfizer and Eli Lilly, and a Hollywood industry. The EU has their own pharmaceutical companies. We see that the European Union, for example, their free trade agreement proposals are usually public on their website, and you can see that they are proposing stronger intellectual property on medicines in their negotiations with many countries. The European Free Trade Association, which is the European countries that are not in the EU, so Iceland, Norway, Switzerland, and Liechtenstein, also often proposes stronger intellectual property on medicines. And the US has also often proposed stronger intellectual property on medicines. Most of those free trade agreement negotiations happen in secret. You don't know what the proposals are and you only see the text once it's already concluded and it's too late to change it, except for the EU where they publish their proposals. But we now see that some South- South free trade agreements amongst developing countries also have these stronger intellectual property provisions. So we were quite surprised to see the United Arab Emirates free trade agreement with Kenya has some of these stronger intellectual property provisions. And it's not clear why, because neither country has companies that can benefit from it. And in terms of the recent US trade deals, these Trump tariff deals, we have just seen these texts with Malaysia and Cambodia, and we see that it does require them to join some TRIPS Plus treaties that go beyond the requirements in TRIPS. Sanya, you mentioned TRIPS flexibilities. Could you explain briefly what they are and give some examples? Sure. So, TRIPS flexibilities are kind of exceptions and limitations to the monopolies required by TRIPS, like patents for 20 years on medicines. And one example is compulsory licensing, which even when there's a patent on a medicine, let's say in Malaysia, it allows the Malaysian government to issue a compulsory license, and TRIPS allows this, and that compulsory license overrides the patent and allows the Malaysian companies to make generic versions of that medicine, or Malaysia can import the generic versions, let's say, from India, even though there is a patent, and the generic companies pay a small royalty to the patent owner, for example 0.5%. Many countries have used compulsory licensing. An example is that Malaysia has 500,000 people with hepatitis C, which can cause liver cancer. And the patented price to cure hepatitis C was $71,300 per patient, which was unaffordable for many Malaysians. So Malaysia issued a compulsory license to override the patent. They imported the generic version. Ans it only cost 100 US dollars to cure people. So now, 400,000 Malaysians can be cured because it can be provided in public hospitals. Similarly, in India, when they issued a compulsory license on a medicine used for kidney cancer, it reduced the price by 97%. And in Thailand, when they issued compulsory licenses for three medicines, saving them 24 million US dollars a year. The World Bank estimated if they used compulsory licensing in Thailand to reduce the cost of HIV/AIDS medicines by 90%, it would save them 3.2 billion US dollars by 2025. A second example of a TRIPS flexibility is what we call parallel importation. Parallel importation allows you to import the medicine from another country where it's cheaper. Even if it's patented in your country, you can import it from another country, where it may be cheaper because of price controls. Parallel importation reduced the price of HIV/AIDS medicines in Kenya to one-third of the price before they used parallel importation. And a study of the impact in Denmark found that if they did not have parallel importation, it increases consumer spending by 10 million euros a year and government spending by 25 million euros a year. Free trade agreements also often require that developing countries join many intellectual property treaties, correct? For a developing country, is it advisable to join these treaties? What is the developmental impact? It's true. We often see free trade agreements, including the most recent Trump tariff deals with Malaysia and Cambodia, require developing countries to join many, sometimes ten treaties. We call these treaties 'TRIPS Plus Treaties.' So these intellectual property treaties have a range of impacts, including on farmers in terms of making seeds more expensive, making medical devices, like ventilators and prosthetic limbs, more expensive, and some also have an impact on access to medicines. For example, the Patent Cooperation Treaty and the Patent Law Treaty, which are some of these TRIPS Plus treaties that countries are required to join often in these free trade agreements, make it procedurally easier to get a patent. If your government joins these treaties, for example, because they're required to in a free trade agreement, it is likely to increase the number of applications for patents on medicines in your country. And then, if your country grants them at the same rate, for example, 50% of the patent applications, that would mean that more medicines are patented in your country and at that higher monopoly price. Developing countries are generally what we say IP importers. They pay more to multinational companies in royalty than they earn from their own inventions or films being sold abroad. When developing countries agree to these stronger intellectual property provisions, they end up paying more royalties to foreign companies. Even some developed countries, like Australia and New Zealand, are IP importers. And so, historically, in free trade agreement negotiations, their position has been that they do not want to agree to TRIPS Plus because they don't have many inventors who will benefit from it. Instead, more money flows offshore, and it's higher prices for their patients and the governments who subsidize these medicines. What are the most common patent-related TRIPS plus provisions found in free trade agreements? And what is the impact of these provisions on access to medicines? These provisions, of course, are not required by TRIPS. They go beyond TRIPS. One that is less common, but we still see sometimes, is ban on parallel importation, the one that I had mentioned. But there are also other provisions. We often see proposals to have patent term extensions. So this is a longer patent than the 20-year monopoly required by TRIPS. This has been calculated to end up costing a lot more for medicines. So, for example, in South Korea, their three-year patent term extension is calculated to have cost them $1 billion in lost savings from 2012 to 2020. It cost them $250 million in 2018 alone. Their EU free trade agreement required five-year patent term extensions, which has resulted in lost cost savings since 2015, amounting to more than US $592 million to 2020, just based on the slower generic entry of just 26 medicines. There are similar results for Canada and Australia being required to implement these patent term extensions. And for Thailand, the impact of a five-year patent term extension over 15 years was calculated to cost them $4 billion. In Peru, a four-year patent term extension is calculated to lead to $159 million increase in pharmaceutical spending. Then there is patent linkage. It's linking the two systems of medicine marketing approval and patents. Under TRIPS, the Ministry of Health usually has a medicine regulatory office. The medicine regulatory authority is full of doctors and pharmacists. Their expertise is, you know, is the medicine's effective, safe and good quality? Under TRIPS, this medicine regulatory authority does not have to care whether the medicine patented or not. That's not their problem. It's up to the patent owner to sue the generic company if they think the generic version is infringing or violating their patent. But, in these free trade agreements, they can be asked. And patent linkage means that you cannot approve the generic, while there is a patent. That the medicine regulatory authority in the Ministry of Health has to check if the generic is infringing the patent. So they become the patent police paid for by the taxpayer. And this is so difficult to figure out that a U.S. congressional report found that even the U.S. government's Food and Drug Administration does not have the capacity to do this because it doesn't have the expertise or the resources to assess the patent and it ends up with a lot of abuses of weak patents that are being enforced. 73% of the time when patents are challenged, they're found to be invalid. And normally, to assess whether a generic infringes the patent, you go to court and the court hears expert evidence about whether the generic has invented around the patent. Patent linkage now requires the medicine regulatory authority in the Ministry of Health to be those patent experts. And as you heard, the Food and Drug Administration in the US doesn't even have the capacity to do it, let alone the smaller medicine regulatory authorities in developing countries. And the other consequence of patent linkage is that if your government issues a compulsory license to override the patent to make or import the cheaper version, the medicine regulatory authority can't approve the generic until the patent expires. Since they can't approve the generic, the generic can't reach the patient. So the compulsory license is useless because you can't use it until the patent is expired, at which point you don't need the compulsory license anyway. So patent linkage makes that TRIPS flexibility of compulsory licenses ineffective. Beyond patents, are there any other TRIPS Plus provisions in FTAs that can affect access to medicines? Yes. So there are other TRIPS Plus provisions that are not required by TRIPS beyond patents. So these are additional monopolies, for example. A well-known one is data or market exclusivity. This is about the clinical trial data. As we talked about earlier, for a medicine to be given to a patient, in most countries, it has to be approved by your medicine regulatory authority in the Ministry of Health that the medicine is effective. It does, you know, cure hepatitis C or treat HIV/AIDS. It is safe. It doesn't kill you with side effects and it is good quality. For that, the Medicine Regulatory Authority usually requires clinical trial data for the first two. Normally, you have to do clinical trials on a whole lot of patients to prove that the medicine is effective and safe. Under TRIPS, the generic company can rely on the clinical trial data of the originator so that they don't have to repeat the clinical trials because repeating the clinical trials is unethical. It's expensive and it delays the access to these generics. So under TRIPS, the generic companies can rely on the clinical trial data of the originator or patent-owner company and say, 'Look, my medicine is chemically the same. It's still paracetamol. Just come and inspect my factory and see it's good quality and I can rely on the clinical trial data by the originator proving that paracetamol works to reduce headaches and it doesn't kill you with side effects.' But TRIPS Plus says that the clinical trial data itself must have a monopoly. So, for five or ten or even eleven years in some free trade agreements, the generic cannot rely on or be approved on the basis of that clinical trial data. That means if you want access to the generic in that time, the generic has to repeat the clinical trials, which as we said are unethical, expensive, and takes time, or otherwise you just have to wait. And this monopoly can be there even if there is no patent. For example, if you think about insulin for diabetics, it's not really a new medicine. It's not a new invention. It's extracted from pigs. It's a naturally occurring molecule. So you only get patents for new inventions, not an existing compound that exists in nature. So insulin should not get a patent. But it could get data exclusivity, a five to eleven year monopoly, even though there's no patent because it's on the clinical trial data, especially for biologics like insulin or vaccines. That means for that time you can't have the generic version. If there's no patent, there's nothing to issue a compulsory license on. And even if there is a patent and data exclusivity at the same time, you may think, 'Oh, well, there's a patent anyway.' But what happens if you issue a compulsory license over that patent? You could theoretically get the generic, but because of the data exclusivity, you can't get marketing approval of the generic that you make or even put under the compulsory license until that data exclusivity has finished. So it also makes compulsory licenses ineffective for the period of the data or market exclusivity. Because any generic that you make or import under the compulsory license can't get marketing approval. So can't reach the patient. There are also TRIPS plus enforcement provisions. So this is stronger enforcement than the TRIPS agreement requires at the WTO. And an example of this is what we call border measures. In TRIPS, you only have to check for imports of counterfeit, trademark or pirated copyright goods. This is, for example, a fake Rolex watch or a pirated DVD, because usually the customs authorities can see by looking at it, this is a fake. And you only have to check imports, not exports and not goods in transit. But TRIPS Plus, in some of these free trade agreements, for example, in EU free trade agreements, says that you have to check imports, exports, in transit, including for infringement of patents. It's difficult for the customs authority to tell, because the patented version might be a white round tablet and the generic version may be a white round tablet. The generic version might be quick acting paracetamol, and the patented version may be long- acting paracetamol. So the generic has invented around the patent, but the customs authority can't tell. They're both white round tablets, right? When you eyeball them, standing at the border, they look the same. So the customs authority would seize them, even though the generic has invented around the patent. And this is why TRIPS only required checking of

imports for counterfeit trademark: 21:37

the Rolex or Coca-Cola, the brand, or pirated copyright. This has been a problem in real life. For example, the EU has TRIPS plus border measures in the EU and they check goods in transit, including for patent infringement. And so there were many examples where a medicine was not patented in India. They made the generic version. They exported it, for example, to Brazil, where it was also not patented. But that generic medicine went in transit through the Netherlands and the EU. And the Netherlands seized it. And they said, 'Oh, we think this infringes a patent.' And then they sent it back to India. So that was TRIPS plus border measures causing generics not to be able to go from India to Brazil. Some of the other TRIPS plus enforcement provisions we can see in these free trade agreements is higher damages. They try to invent around the patent, but the court says ‘No, actually, it's still too close to the patent. You are infringing it’. How much damages does the generic have to pay? And these can be set in free trade agreements at very high levels, so much that the generic company cannot afford to pay them. They have small margins. They charge low prices, so they go bankrupt. To our next question, supporters of free trade agreements often claim that accepting TRIPS Plus rules are a necessary trade-off for developing countries to gain market access and attract foreign investment. Is there any truth to this argument? What does the evidence actually show? The area where developing countries can benefit in a free trade agreement is usually if the developed country lowers their tariffs on exports from the developing country and tariffs as a tax on imports. For example, in these Trump tariff deals, Malaysia and Cambodia are getting lower US tariffs on some of their products entering the US. So, in return, they think, 'Oh, well, you know, the US is asking me for this stronger intellectual property protection, so I just have to agree to it’. That's why there's often this trade-off, as you say, between market access and stronger intellectual property on medicines. But what we see is when studies have been done about the relative costs and benefits, the costs of these TRIPS Plus provisions on medicines can be much higher than the benefits that countries get in terms of lower tariffs into the other country on their exports. An example here is the Australia-US free trade agreement, where the US, I think, removed almost all tariffs on Australian products, but Australia had to agree to TRIPS Plus on medicines. It was quite extensive, TRIPS Plus on medicines. And there was a study done which found that, if the Australia-US FTA delayed the entry of generic medicines in Australia, just by two years, for just the top five medicines subsidized by the Australian government, it would increase the cost to the Australian government by $1.5 billion over four years. But the total benefits from the Free Trade Agreement in terms of Australian exports entering the US was $53 million a year. So the costs outweighed the benefits by many times. This was modelling done by the Australian Parliament who was investigating the Free Trade Agreement. This is why patients often say, 'Don't trade away our lives in these free trade agreement negotiations. Don't give up TRIPS Plus on medicines in return for lower tariffs on exports because the cost outweighs the benefits by so many times.' Some countries may believe that, well, if we have this stronger intellectual property protection, we will get more foreign direct investment. But what we see is that studies by the World Bank and the United Nations find that what attracts foreign direct investment is things like good infrastructure, natural resources like oil and gas and minerals. They will come to extract them. Do you have a big market? There's always going to be foreign direct investment in China and India and Brazil because they want to sell to your big populations. It's not whether or not you have strong intellectual property protection. And we see this in real life examples, China and India had large FDI inflows when they had low levels of intellectual property protection. But African countries, which have high standards of intellectual property protection, generally have low levels of of foreign direct investment. First to wrap up all of this very informative and full of real-life examples and numbers and statistics that you bring to the discussion, what advice would you give to developing countries that are negotiating free trade agreements? So, basically, don't agree to TRIPS Plus on medicines or TRIPS Plus generally. The United Nations Special Rapporteur on the Right to Health said that developed countries should not ask for TRIPS Plus and developing countries and least developed countries should not agree to it. And we do see that TRIPS Plus can be dropped from free trade agreements. So we see the EU FTA proposal, where they propose lots of TRIPS Plus on medicines and then the final text often doesn't have very much because the developing country has resisted it. And we also see variation in the European Free Trade Association free trade agreements, some with more TRIPS Plus than others. So it seems like, if the developing country resists the developed country who's proposing can drop it. And for the US, those negotiating Trump tariff deals at the moment, the US Supreme Court, may strike down these Trump tariffs, these blanket Trump tariffs, perhaps before the end of 2025, in which case you don't need to negotiate these Trump tariff deals anymore, including with any TRIPS Plus or medicines provisions. Thank you so much for being here with us and being so clear on your explanation of this issue, which is very technical. Thanks for tuning in into Health Equity in Focus. This program is brought to you by the Third World Network, where we advocate for the needs and rights of the Global South, promoting just, equitable, and ecological development. Hope to see you next time.