Opinion article

Turing and the TPP: Intellectual property, public health and access to essential medicines

The dispute over Turing Pharmaceuticals AG and Daraprim is an important cautionary warning in respect of some of the dangers present in the secret negotiations in respect of the TPP.

Turing Pharmaceuticals AG

A recent controversy in the United States over drug pricing by Turing Pharmaceuticals AG has raised larger issues in respect of intellectual property, access to medicines, and the Trans-Pacific Partnership (TPP).

In August 2015, Turing Pharmaceuticals AG – a private biopharmaceutical company with offices in New York, the United States, and Zug, Switzerland - acquired the exclusive marketing rights to Daraprim in the United States from Impax Laboratories Incorporated.

Martin Shkreli, Turing’s Founder and Chief Executive Officer, maintained:

“The acquisition of Daraprim and our toxoplasmosis research program are significant steps along Turing’s path of bringing novel medications to patients with serious disorders, some of whom often go undiagnosed and untreated.”

He emphasised: “We intend to invest in the development of new drug candidates that we hope will yield an even better clinical profile, and also plan to launch an educational effort to help raise awareness and improve diagnosis for patients with toxoplasmosis.”

In September 2015, there was much public controversy over the decision of Martin Shkreli to raise the price of a 62 year old drug, Daraprim, from $US13.50 to $US750 a pill.

The drug is particularly useful in respect to the treatment and prevention of malaria, and in the treatment of infections in individuals with HIV/AIDS. Daraprim is listed on the World Health Organization’s (WHO) List of Essential Medicines.

In the face of much criticism, Martin Shkreli has said that he will reduce the price of Daraprim.
He observed: “We've agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit.”

He maintained: “We think these changes will be welcomed.” However, he has been vague and ambiguous about the nature of the commitment.

Notably, the lobby group, Pharmaceutical Research and Manufacturers of America (PhARMA), disassociated itself from the claims of Turing Pharmaceuticals.

The group said: “PhRMA members have a long history of drug discovery and innovation that has led to increased longevity and improved lives for millions of patients.”

The group noted: “Turing Pharmaceutical is not a member of PhRMA and we do not embrace either their recent actions or the conduct of their CEO.”

The biotechnology peak body Biotechnology Industry Organization also sought to distance itself from Turing Pharmaceuticals.

A hot topic: United States political debate about access to affordable medicines

This controversy over Daraprim is unusual – given the age of drug concerned. Daraprim is not subject to patent protection. Nonetheless, there remains a monopoly in respect of the marketplace.

Drug pricing is not an isolated problem. There have been many concerns about drug pricing – particularly in respect of essential medicines for HIV/AIDS, tuberculosis, and malaria.

This recent controversy is part of a larger debate about access to affordable medicines. The dispute raises larger issues about healthcare, consumer rights, competition policy, and trade. The Daraprim controversy has provided impetus for law reform in the US.

US Presidential Candidate Hillary Clinton commented: “Price gouging like this in this specialty drug market is outrageous.”

In response to her comments, the Nasdaq Biotechnology Index fell sharply. Hillary Clinton has announced a prescription drug reform plan to protect consumers and promote innovation – while putting an end to profiteering.

On her campaign site, she has emphasised that “affordable healthcare is a basic human right.”

Her rival progressive candidate, Bernie Sanders, was also concerned about the price hike. He wrote a letter to Martin Shkreli, complaining about the price increase for the drug Daraprim.

Sanders said: “The enormous, overnight price increase for Daraprim is just the latest in a long list of skyrocketing price increases for certain critical medications.” He has pushed for reforms to intellectual property to make medicines affordable.

The TPP and intellectual property

The Daraprim controversy and political debate raises further issues about the design of the TPP. The dispute highlights the dangers of extending the rights of pharmaceutical drug companies under intellectual property, investor-state dispute settlement, and drug administration.

Recently, the civil society group Knowledge Ecology International published a leaked draft of the Intellectual Property Chapter of the TPP. Knowledge Ecology International Director, James Love, was concerned the text revealed that the US “continues to be the most aggressive supporter of expanded intellectual property rights for drug companies.”

He was concerned that “the proposals contained in the TPP will harm consumers and in some cases block innovation.”

James Love feared: “In countless ways, the Obama Administration has sought to expand and extend drug monopolies and raise drug prices.”

He maintained: “The astonishing collection of proposals pandering to big drug companies make more difficult the task of ensuring access to drugs for the treatment of cancer and other diseases and conditions.”

Love called for a different approach to intellectual property and trade:

“Rather than focusing on more intellectual property rights for drug companies, and a death-inducing spiral of higher prices and access barriers, the trade agreement could seek new norms to expand the funding of medical research and development (R&D) as a public good, an area where the US has an admirable track record, such as the public funding of research at the National Institutes of Health (NIH) and other federal agencies.”

In addition, there has been much concern about the Investment Chapter of the TPP. The investor-state dispute settlement regime would enable foreign investors to challenge government policy making, which affected their investments.

In the context of healthcare, there is a worry that pharmaceutical drug companies will deploy their investor rights to challenge public health measures – such as, for instance, initiatives to curb drug pricing and profiteering.

Such concerns are not merely theoretical. Eli Lilly has brought an investor action against the Canadian Government over the rejection of its drug patents under the investor-state dispute settlement regime of the North American Free Trade Agreement (NAFTA).

The Health Annex to the TPP also raises worries that pharmaceutical drug companies will able to object to regulatory procedures in respect of healthcare.

It is disappointing that the TPP – in the leaks that we have seen – has only limited recognition of the importance of access to essential medicines. There is a need to ensure that there are proper safeguards to provide access to essential medicines – particularly in respect of HIV/AIDs, malaria, and tuberculosis.

Moreover, there must be protection against drug profiteering and price gouging in any trade agreement. There should be strong measures against the abuse of intellectual property rights.

The dispute over Turing Pharmaceuticals AG and Daraprim is an important cautionary warning in respect of some of the dangers present in the secret negotiations in respect of the TPP.

There is a need to preserve consumer rights, competition policy, and public health in trade negotiations over an agreement covering the Pacific Rim.

About the authors

Matthew Rimmer

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Dr Matthew Rimmer is a Professor in Intellectual Property and Innovation Law at the Faculty of Law in the Queensland University of Technology (QUT). He is a leader of the QUT Intellectual Property and Innovation Law research program, and a member of the QUT Digital Media Research Centre (QUT DMRC) the QUT Australian Centre for Health Law Research (QUT ACHLR), and the QUT International Law and Global Governance Research Program.