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U.S. Trade Position Protecting High Drug Prices Blasted By U.N. Agencies

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WASHINGTON -- Two major United Nations organizations warned world leaders on Thursday to avoid restrictive free trade agreements that may threaten public health, amplifying international pressure against President Barack Obama's controversial Trans-Pacific Partnership deal.

A report issued by the U.N. Development Program and the anti-AIDS UNAIDS detailed a host of drug financing policies and intellectual property standards that inflate the price of medications, and urged governments to reject such terms in trade negotiations. By granting pharmaceutical companies long-term monopolies on lifesaving medications, the U.N. groups noted, poor citizens are denied lifesaving treatments.

The Obama administration, in trade talks with eight Pacific nations, is aggressively pursuing the price-protecting standards denounced by the U.N. groups. The new report carefully omits any explicit reference to trade pacts in the works. But the report's release follows a U.N.-hosted meeting between several Pacific nations, including Malaysia and Vietnam, both of which are involved in the Trans-Pacific talks. A UNAIDS press release accompanying the report mentions the Trans-Pacific deal, and trade experts said the report is a clear rebuff to the American position.

"The report gives added ammunition to the opponents of the U.S. approach, which appears to include all of the eight non-U.S. countries" in the Trans-Pacific Partnership negotiation "as well as a broad global civil society coalition," American University School of Law Professor Sean Flynn told HuffPost.

The report also criticized two U.S. free trade agreements -- one with Bahrain and another with Colombia -- as particularly problematic. The report highlighted a 2006 study on the Colombia deal that concluded the South American nation would need to spend an additional $919 billion by 2020 to maintain the same level of medical care. The draft version of the Trans-Pacific deal includes even more restrictive terms on medicines than the Colombia pact.

Over the past month, the Obama administration has been assailed by members of Congress in both political parties about the American position on the proposed Trans-Pacific deal. More than 60 House Democrats and one House Republican sent a letter to Obama on May 3, objecting to the deal'sproposed ban on "Buy American" preferences for government contractors. On May 15, House Oversight Committee Chairman Darrell Issa (R-Calif.) called for more transparency in the negotiation process, which is kept secret from the public, and leaked the entire draft intellectual property chapter from the Trans-Pacific deal to the public on his website. Although the document previously was available over the Internet via other leaks, Issa's move dramatically increased political pressure on the administration to share information about the deal.

Sen. Ron Wyden (D-Ore.) heightened that pressure on May 23 by publicly rebuking the Obama administration for refusing to share draft Trans-Pacific documents with members of Congress. Wyden is widely believed to be unsupportive of the deal, and his move raised concerns that the administration is selectively freezing critics out of the negotiation process.

Public health experts also have been critical. They said they fear the agreement will cost lives and stymie international relief efforts. The patent-inflated drug prices that result from the policies the Obama administration is pushing in the trade talks can cause particularly acute problems with AIDS medications, which require decades of constant use to be effective. With the global economy stumbling, many existing AIDS relief programs are in crisis. Even in the U.S., starved AIDS programs have left 2,759 low-income citizens on waiting lists for lifesaving drugs.

"The sustainable future of HIV treatment programs in Asia is of serious concern," said Steven J. Kraus, director of UNAIDS for Asia and the Pacific. "Countries must use all the means at their disposal, including [trade] flexibilities, to increase treatment levels and to reach people most in need."

Under a 1994 World Trade Organization treaty known as TRIPS, governments are required to grant drugmakers 20-year patents on medication. But nations have broad flexibility under the pact to determine which drugs deserve patents, and to develop their own patent standards depending on public health needs. A poor country with a severe AIDS epidemic, for instance, can provide inexpensive generic versions of HIV and AIDS drugs, rather than the pricey, patented, name-brand version.

The pricing differential is extreme. In the U.S., which abides by medical intellectual property standards that are more restrictive than those required by the TRIPS treaty, the popular AIDS drug Atripla costs upwards of $20,000 per patient for every year of treatment. In countries that allow generic competition on Atripla, the cost is about $200 per patient.

The monopolies bestowed by patents allow drugmakers to raise prices as their medications become popular. A year's worth of Atripla was originally introduced in the U.S. at an average wholesale price of $13,810 in 2006, and has since soared over 50 percent, according to data provided by AIDS Healthcare Foundation researcher James Driscoll. That rate is more than triple that of overall consumer price inflation. Atripla manufacturer Gilead declined to comment for this story.

Drug companies insist that patents are necessary to reimburse them for the costs research, development and regulatory approval, but public health experts reject the industry's claims.

The Trans-Pacific deal contains a number of provisions that would eliminate these flexibilities, policies the new report refers to as "TRIPS-plus" standards. The report said generic competition spawned by TRIPS flexibilities is "one of the key factors" fueling the global decline in AIDS drug prices. Over the past decade, according to the report, prices for critical AIDS medications have fallen from over $10,000 a year per person to just $116.

"Assertions are often made about the advantages of TRIPS-plus protection," reads the report, referring to drug financing and intellectual property standards more restrictive than those in TRIPS. "But there has been little evidence of the beneficial effects of TRIPS-plus measures either in the form of increased foreign investment or increased innovation."

In the Trans-Pacific talks, the Obama administration is seeking to require other countries to adopt secondary patents on existing drugs -- patents for new uses, slightly different formulations, pill coatings and other features that can prolong a company's monopoly beyond the 20 years guaranteed by TRIPS. American negotiators are also seeking radical new "data exclusivity" provisions that ban any new medical research based on prior data or research that resulted in a patented drug. Public health experts are especially critical of data exclusivity, noting that it violates centuries of standard scientific practice and hampers innovation. The new report urges governments to reject such provisions.

"The Trans-Pacific deal would create harsh new global norms for intellectual property infringement -- in some respects above and beyond the already over-the-top regulations in the United States -- stifling innovation across the globe and denying countless global citizens access to affordable medicine," said David Segal, executive director of Demand Progress, an Internet freedom advocacy group. "It's yet another pathetic reminder that our leaders, at home and across the globe, govern in the interests of capital and against those of ordinary people."

The Office of the U.S. Trade Representative, the White House agency responsible for negotiating the Trans-Pacific deal, was not available to comment for this story. In the past, the trade representative has argued that strong intellectual property protections encourage the development of new drugs that can be used by the developing world. It has also said that it has devised a new program to help Vietnam, in particular, maintain access to medicines.

In negotiations before the World Health Assembly last week, the Obama administration attempted to block the creation of a new drug financing fund for developing nations in which governments, not the private sector, would pony up 0.01 percent of their country's total economy every year. In exchange for the funding, governments would receive the ability to provide all medicines developed by the fund to their population at generic costs. The U.S. already spends much more than 0.01 percent of its gross domestic product on government-funded drug research. In separate negotiations last week before the U.N. World Intellectual Property Organization, Obama negotiators shut down efforts to adjust intellectual property standards to make lifesaving medication affordable for poor countries.

A coalition of 34 international nonprofit groups -- including Oxfam and Doctors Without Borders -- wrote an open letter blasting the Obama administration's position in the talks as " shameful."

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