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even months after President Trump accused the pharmaceutical industry of “getting away with murder,” he is busy lining the pockets of large pharmaceutical companies worldwide by giving them more power to charge higher prices overseas. Their price monopolies are likely to be extended under a draft executive order promising “greater intellectual property protection” in multilateral and bilateral trade agreements. The North American Free Trade Agreement, for example, has already been pegged to harmonize foreign intellectual property standards to reflect those found in the United States. Canada, it seems, will be the first target of U.S. indoctrination.

The Canadian government has been repeatedly excoriated for its failure to parrot U.S. intellectual property laws, receiving numerous reprimands in congressional hearings and Office of the United States Trade Representative reports for daring to define its own standards of patentability. While the U.S. vehemently defends its own sovereignty and singularity, it seems like it cannot tolerate these principles in other nations.

That was certainly the view held by U.S. pharmaceutical giant Eli Lilly when, in November 2012, it filed an investor-state arbitration claim against the Canadian government for overturning two of its pharmaceutical patents. As McGill University’s E. Richard Gold recently described in STAT, disgruntled with its losses, Eli Lilly sued the Canadian government for $500 million for its “radical departure” from U.S. intellectual property standards. Five years later, the company has spent more than $12 million trying to educate the Canadian government on what is, and what is not, an acceptable margin of change in its domestic law.

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The company’s strategy to mold Canadian law in its image ultimately prevailed. In June, the Canadian Supreme Court delivered a stunning decision, overturning decades of Canadian precedent to arrive at the same standard of patentability demanded by Eli Lilly and applied in the U.S.

The U.S. Chamber of Commerce gleefully praised the decision, while Canadian academics lamented the boon to foreign patent holders at the expense of local startups. The Canadian Supreme Court had pre-empted NAFTA’s renegotiation, which had identified Canada’s patentability standards as a “serious problem” that would need to be addressed.

The chilling effect of investor-state arbitration on national sovereignty is not new, and the Eli Lilly case is only one in a long line of throw-downs by deep-pocketed corporations anxious to wring more profits out of foreign markets.

The Australian government spent six years (and millions of taxpayer dollars) defending its plain packaging laws from tobacco giant Phillip Morris in a dispute so decidedly comical it even made the desks of late-night comedy shows. That a sovereign nation could not pass laws designed to protect the health of its citizens without being slapped with a billion-dollar lawsuit seems so determinedly ridiculous that one has to wonder how these disputes continue to arise. But they do — in the shadows of corporate boardrooms, behind the closed doors of arbitral proceedings, and on the fringes of mainstream media.

Here’s another example. The Colombian government had sought to supply its citizens with an affordable generic version of Gleevec, a cancer drug made by Novartis. Worried about losing profits on its $15,000 pill, Novartis threatened the Colombian government with an investor-state dispute, and the Colombian government had no choice but to accede.

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Similarly, the threat of an $800 million investor-state dispute was used by Gilead Sciences to force the Ukrainian government to deregister a generic drug that was competing with sofosbuvir (Sovaldi), Gilead’s $84,000 hepatitis C medication.

The increasing use of investor-state litigation by big pharmaceutical companies to bully sovereign nations into withdrawing public health measures reflects the broad and dangerous reach of investor-state arbitration. And the strategy isn’t limited to this industry.

Wealthy foreign companies can bring investor-state claims against any government measure that adversely affects corporate profits, including the closure of nuclear power plants, a ban on mining that was contaminating water, or the closure of a poisonous metal smelter.

National governments are increasingly confronting a shrinking domestic policy space, hemmed in by the chilling effect of closed-door arbitration that prioritizes profits over public health. As long as international trade agreements permit investor-state disputes, Eli Lilly, Phillip Morris, Novartis, and other companies will continue to bully sovereign nations into serving their bottom line.

As we continue to witness the private arbitration of public interests, we must ask ourselves whether Trump will continue abetting pharmaceutical companies at “getting away with murder.”

Brook K. Baker is a professor of law at Northeastern University in Boston and senior policy analyst for Health GAP (Global Access Project). Katrina Geddes is a research fellow at Global Access in Action at Harvard Law School.

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  • This looks like corporate fascism dictating to other countries. This is what trade treaties do. They claim that any regulations which reduce their profits are “trade barriers”, when often they have been made for safety.

  • @John Chu, if you read the article closely, you will see that although Eli Lilly lost its arbitration battle in March 2017, its ultimate objective (the removal of the so-called “Promise Doctrine”) was nevertheless achieved through the Canadian Supreme Court in a separate decision (three months later) regarding the same legal concept. That was entirely the point of the article – that these investor-state disputes funded by Big Pharma have ripple effects beyond the original case, as seen with the Canadian Supreme Court decision which overturned the very same doctrine that Eli Lilly had just spent five years (and $12 million) trying to remove.

  • In 1996 I think Dr Hamid the owner of Indian pharma company CIPLA have an interview to CNN sitting in his Belasis road, Mumbai office that If any African country within sub Saharan or outside would approach his company he would give HIV drug full one year course at mere USD 300 these all the drugs were patented by all innovators MNCs.MNCs were not in position to sue CIPLA an Indian pharma company because India was not following patent regime Many countries including developed South Africa imported cheap affordable HIV drugs from Indian pharma company CIPLA telling MNCs go to hell & hell with your patents because we couldn’t lose lives of our valuable citizens who couldn’t afford your highly expensive 1000% profit margin drugs because MNCs one month MNCs treatment cost was USD 15,000 per month while CIPLA offered full one year course@USD 300 About 30 companies in South Africa sued South African govt. for patent violation but South African government was firm in her decision & kept on importing drugs from CIPLA India because it was question of life & death of humanbeings & nothing about life of a humanbeings

  • “The company’s strategy to mold Canadian law in its image ultimately prevailed. In June, the Canadian Supreme Court delivered a stunning decision, overturning decades of Canadian precedent to arrive at the same standard of patentability demanded by Eli Lilly and applied in the U.S.”

    The above STUNNING DECISION links to this URL:

    https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16713/index.do

    It is about AstraZeneca Canada Inc. v. Apotex Inc. and the drug in question was esomeprazole (Nexium), a block buster proton pump inhibitor.

    Ditto for the US Chamber of Commerce link:

    https://www.uschamber.com/press-release/us-chamber-applauds-supreme-court-ruling-canadas-promise-doctrine

    These two links had NOTHING to do with Lilly nor Zpyrexa.

    While the Astra Zeneca vs. Apotex case did cover the Canadian Supreme Court’s ruling on the “Promise Doctorine”, the lack of due diligence to proofread and validate these two links with the “Lilly story” was rather glaring!

  • Fascinating scenario. Patients will die sooner or later. Unaffordability forces the decision on patient to live of die. Death then is not on the conscience of the pharma company. Does life have a value?

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