FTA Malaysia | 12 March 2007
Colombian Study on Impact of US FTA on Medicine
This is an English translation of a full study done in Colombia of the impacts of its US free trade agreement (USFTA) on medicine consumption and the Colombian generic industry. The study study used the World Health Organization’s methodology.
The study did not consider all the provisions in USFTAs that go beyond those required by the World Trade Organization’s intellectual property rules (TRIPS), so it is likely to be an underestimate. For example it did not consider the impact of joining the Patent Cooperation Treaty, the impact of the preamble, investment chapter and non-violation provision, and the impact of restrictions on compulsory licensing on medicine prices.
Nevertheless, it found that:
Broadening the scope of patentability to allow patents for minor modifications would cost an extra US$241million in the year 2020 and an extra US$353million per year by the year 2030 because more medicines would be patented. This alone would also cause Colombian medicine manufacturers to lose up to 17% of their market share.
If the USFTA required patents to be given for new uses of an old medicine (for example zidovudine (AZT) was a cancer medicine and then it was found to be useful for treating AIDS. If patents on new uses were allowed, this would mean that AZT received two consecutive 20 year patents, resulting in a 40 year patent monopoly) this would cause an 8% increase in medicine prices in Colombia by 2020 resulting in an additional cost of US$181million per year by 2020 and US$265million per year by 2030. This alone would also cause the Colombian medicine manufacturers to lose up to 13% of their market share by 2020.
The overall impact of the patents provision in Colombia’s USFTA is estimated to cost Colombia an extra US$401million per year by 2020 and an extra US$657million per year by 2030. If this additional amount is not spent, the consumption of medicine by Colombians would have to fall by 18% by 2020 and 20% by 2030. This patent provision alone would cause the Colombian medicine manufacturers to lose up to 31% of their market share by 2030.
Data exclusivity (which grants a separate monopoly, even when there is no patent) was found to require Colombia to spend an additional US$675million per year by 2020 and US$989million per year by 2030. If this additional money is not spent, Colombians will have to reduce their medicine consumption by 30% by 2020. Data exclusivity alone is predicted to cause the Colombian medicine manufacturers to lose 47% of their market share by 2020.
The linkage of patent status and approval of the quality, safety and efficacy of medicines is predicted to increase spending by US$53million per year by 2030 and cause Colombian medicine manufacturers to lose 3% of their market share by 2020.
The trademark provisions of a USFTA would reduce the rate at which patients chose the generic version of medicines so would cost an additional US$167million in the year 2020 increasing to an additional US$246million per year by 2030.
The total effect of all of these USFTA provisions is to require an extra US$1.5billion to be spent on medicines every year by 2030, if this extra money is not spent, Colombians will have to reduce their medicine consumption by 44% by 2030 (page 37). It will also cause Colombian medicine manufacturers to lose 64% of their market share by 2030.