Too big a price to pay for an FTA

New Straits Times (Malaysia)

Too big a price to pay for an FTA

28 Feb 2007

by JIMMY PIONG, Vice-president, Malaysian Organisation of Pharmaceutical Industries, Petaling Jaya

The letter from the American Malaysian Chamber of Commerce ("Generics can expect to do much better" - NST, Feb 21) claimed that Malaysian generic medicine manufacturers will do better if the Malaysia-United States free trade agreement (Mufta) is signed.

Amcham purports to know what will be good for Malaysian generic companies. However, no Malaysian generic medicine manufacturer is a member of Amcham.

The Malaysian Organisation of Pharmaceutical Industries (Mopi) represents Malaysian generic medicine manufacturers.

Members of Amcham include US and other multinational pharmaceutical companies who own the patents to medicines in Malaysia (98 per cent of patents granted here are to foreigners). As owners of these monopolies on medicines, they will be the prime beneficiaries of the stronger intellectual property provisions likely to be in any Mufta.

Amcham claims the existing US free-trade agreements have not harmed the generics industry.

But the reason there has been little impact so far on the overall cost of medicines in countries that have signed US FTAs is because the stronger intellectual property (IP) protection under US FTAs only applies to each new medicine.

The World Health Organisation’s economic model predicts that it will take 15 years before the full effects on overall medicine prices in a US FTA country are felt. No US FTA with these stronger IP provisions has been operating for as long as 15 years. The US FTAs cited have been in force for at most three years.

However, if the Mufta is signed, based on US demands in its other free-trade agreement, patents will last longer and US pharmaceutical companies will get new monopolies even when there is no patent.

There will also be serious restrictions on Malaysia’s ability to issue compulsory licences the way it successfully did in 2003.

One of Malaysia’s largest generic manufacturers has announced it will set up its manufacturing operations in India because once the FTA takes effect, it would stand to lose to US-based multinational pharmaceutical companies.

Amcham asserts that medicine prices will not increase because of a US free-trade agreement. However, the United Nations Special Rapporteur on the Right to Health said he was deeply concerned the US-Peru trade agreement would lead to higher prices for essential drugs that millions of Peruvians would find unaffordable. The provisions in the Peru-US FTA are likely to be in Mufta.

His concerns are shared by the World Health Assembly; ministers of health from 10 Latin American countries and the ministers of health and trade of the African Union.

Patented medicines in Malaysia can be 1,044 per cent more expensive than their generic equivalents, so extensions of these monopolies under Mufta will condemn Malaysians to paying higher prices for longer.

The UN Committee on the Rights of the Child was concerned enough about the effect of a Mufta on medicine prices to ask our Attorney-General how the government was going to ensure that free-trade agreements did not interfere with the provision of generic medicines.

Amcham basically argues that stronger IP protection will increase investment. But Malaysia’s International Trade and Industry Minister has already said that existing IP regulations provide adequate protection for US investors to encourage them to come to Malaysia.

Mopi is concerned Mufta will result in delayed entry of cheaper generic medicines and make Malaysia’s generic manufacturers uncompetitive. Therefore, at the very least, the WHO’s economic model of the long-term effects should be carried out and the results released to the Malaysian public before negotiations proceed further.