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Expanded Analysis: U.S. Pharmaceutical Corporation Uses NAFTA Foreign Investor Privileges to Attack Canada's Patent Policy


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JL
- 512 days ago - citizen.typepad.com
In December we reported that Eli Lilly, the fifth-largest U.S. pharmaceutical corporation, had announced its intent to use the extreme foreign investor privileges enshrined in NAFTA to directly challenge Canada's entire basis for granting patents.



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JL A. (275)
Sunday April 7, 2013, 2:42 pm
March 26, 2013
Expanded Analysis: U.S. Pharmaceutical Corporation Uses NAFTA Foreign Investor Privileges to Attack Canada’s Patent Policy

In December we reported that Eli Lilly, the fifth-largest U.S. pharmaceutical corporation, had announced its intent to use the extreme foreign investor privileges enshrined in NAFTA to directly challenge Canada's entire basis for granting patents. Eli Lilly's audacious attempt, sparked by Canadian courts' invalidation of an Eli Lilly medicine patent, marks the first time a patent-holding pharmaceutical corporation has tried to use the extraordinary investor privileges provided by U.S. “free trade” agreements (FTAs) as a tool to push for greater monopoly patent protections, which increase the cost of medicines for consumers and governments. Because Canada has dared to enforce its own patent policy, Eli Lilly is demanding $100 million in compensation from Canadian taxpayers.

We've just released an updated and expanded analysis of this worrisome NAFTA attack, available here. In this expanded briefing paper, we uncover more bogus but dangerous legal claims that Eli Lilly asserts as backing for its attempt to take down Canada's entire legal basis for granting patents. For example, the corporation accuses Canada of using a patent policy that "contravenes" the company's "expectations." Eli Lilly claims that NAFTA guarantees the company the "right" to see its expectations fulfilled by the Canadian government. To make such a cavalier claim, the company ignores the consistent opinions of multiple governments (including the U.S. government) that even NAFTA's sweeping investor protections guarantee no such "right," instead drawing on the inventive interpretations of FTA investor-state tribunals comprised of three private attorneys. As the U.S. government stated in another NAFTA investor-state case, "if States were prohibited from regulating in any manner that frustrated expectations – or had to compensate for any diminution in profit – they would lose the power to regulate."

Eli Lilly also invokes the national treatment privileges that NAFTA provides to investors (that governments should treat foreign and domestic investors alike), but instead of using NAFTA's already broad provisions, the company decides to invent a wholly new goverment obligation to foreign investors. Eli Lilly complains that Canada's patent standards are different from those found in the U.S. and EU, and then asserts that Canada is obliged by NAFTA to enforce those foreign standards. The notion of such a bizarre obligation is rather unprecedented even among the musings of creative investor-state tribunals. In short, Eli Lilly is alleging that Canadian taxpayers should fork over $100 million because their government enforced its own patent laws rather than those of other countries.

Not yet finished, the company alleges an additional national treatment violation by claiming that the Canadian courts' invalidation of its patent for an ADHD drug gives a prohibited advantage to Canadian generic firms that are now allowed to sell the drug. Um, of course the removal of patents helps generic producers – it always does, but it does so regardless of whether the generic firms and/or the patent holders are foreign or domestic. Were Eli Lilly’s skewed logic to be accepted by the investor-state tribunal, any invalidation of a foreign investor’s patent, regardless of the basis, could be construed as a violation of FTA-protected investor privileges.

Finally, Eli Lilly argues that Canada's invalidation of its patent monopoly in accordance with the country's established patent policy constitutes an "indirect expropriation" of the pharmaceutical giant's investment. This avant garde legal claim, one rejected by most nations' courts, would require a government to compensate a corporation even for a nondiscriminatory regulatory policy that happens to diminish the value of the company's "property" (including, according to Eli Lilly, a patent monopoly). In making this allegation, Eli Lilly skirts the fact that even NAFTA allows nations the flexibility to determine their own patent policy standards, and that such autonomously-defined standards cannot be the basis for claims of "expropriation."

As far-fetched as Eli Lilly's allegations are, the anomalous investor-state system enshrined in NAFTA-style deals now empowers three attorneys sitting on a FTA-created tribunal (a body that has become notorious for imaginative and sympathetic approaches to investor claims), to determine the validity of Canada's patent policy. Unfortunately, this radical system would be expanded by the Trans-Pacific Partnership (TPP), a NAFTA-style deal being negotiated between the U.S., Canada, and nine other countries. The TPP's leaked investment chapter would extend the scope of NAFTA's investor privileges to explicitly cover "intellectual property," making it easier for pharmaceutical corporations to launch Eli-Lilly like attacks on sovereign governments' patent polcies.

Will Eli Lilly prove successful in undermining Canada's patent laws to protect its patent monopoly in the ironic name of "free trade?" The outcome of the corporation’s investor-state attack under NAFTA is critical for those seeking to safeguard countries’ ability to determine their own patent standards, a prerogative that is essential for preventing patent “evergreening” and ensuring access to affordable medicines. It is critical not just so that Canadian taxpayers can make sure that the demanded $100 million goes to more worthy ends than enhancing Eli Lilly’s profit margin, but to avoid emboldening other pharmaceutical firms contemplating the launch of similar investor-state demands against other governments that dare to set their own patent policies. As the Eli Lilly case gets underway, negotiations for the TPP and its proposed expansion of the investor-state system continue. Stopping the NAFTA expansion deal presents health advocates with today’s biggest opportunity to halt the advance of the system that empowered Eli Lilly’s audacious threat.

For more analysis of this threat, click here to see our newly expanded briefing paper.

Posted by Ben Beachy
 

Angelika R. (146)
Sunday April 7, 2013, 5:16 pm
Shall be very interresting to see what will come out of this case. BTW never heard of Eli Lilly before. Thx!
 

Kit B. (276)
Sunday April 7, 2013, 5:17 pm

This gonna be mighty tricky, I can see this tied up in Canadian courts for a while. It is time we just told the Pharmaceutical Companies, "NO" . I just picked up a generic version of some eye drops for $72.00, (with the discount) the bottle contains less than one half ounce of fluid. I need those eye drops but what if also needed food, or a roof over my head? Four other companies make the same eye drops and all have agreed to a set price. How are people not being screwed by this?

Based cost, as I have discovered, with R&D long ago paid for, now is estimated at 12 cents production per package.
 

Angelika R. (146)
Sunday April 7, 2013, 5:19 pm
..and likewise interesting to see what our Canadian C2 friends here will comment on it ;) .. :-))
 

JL A. (275)
Sunday April 7, 2013, 5:22 pm
You are welcome Angelika. I, too, hope we hear from them. Thank you Kit for the type of example everyone should be aware of related to such arguments regarding costs and patent protection financial needs arguments.
You cannot currently send a star to Angelika because you have done so within the last day.
You cannot currently send a star to Kit because you have done so within the last day.
 

Angelika R. (146)
Sunday April 7, 2013, 5:29 pm
I'm falling off my chair kit... you sure that's not $7,20 ??? I am taking eye drops (non prescription though) that cost about $1,60/bottle, content: 10 ml (milliliter, don't know what's that in floz), agent= Hypromellose.
 

Angelika R. (146)
Sunday April 7, 2013, 5:30 pm
= 0,34 fl oz
 

JL A. (275)
Sunday April 7, 2013, 5:33 pm
Thanks for the comparison Angelika.
 

Julie P. (148)
Monday April 8, 2013, 6:59 am
Thanks for posting J.L. Many people do not pay attention to free trade agreements. Often included in the agreements are clauses related to the rights of foreign investors. For instance, if a company wishes to exploit a natural resource, and they are denied, they can sue the country for millions or billions of dollars for the loss or damage to their investment. So protecting your health and the environment can be very costly. A few examples:

"The federal government has agreed to compensate AbitibiBowater $130 million for pulp and paper assets expropriated by Newfoundland and Labrador in 2008."

http://www.cbc.ca/news/canada/newfoundland-labrador/story/2010/08/24/nl-abitibi-compensation-824.html

From Sierra Club Canada:

"A U.S.-funded energy firm, Lone Pine Resources, is using investor rights provisions in the North American Free Trade Agreement (NAFTA) to challenge Quebec’s 2011 moratorium on hydraulic fracturing for natural gas. Lone Pine says the moratorium upsets its right to profit from oil and gas mining in the St. Lawrence Valley, and is asking for $250 million in compensation...

What can you do?

1. Learn more about NAFTA, Canada’s FIPAs, the Canada-EU CETA and other unfair corporate trade deals at www.canadians.org/trade.

2. Contact your MP to demand that investor-state dispute settlement be excluded from future trade agreements so that provinces, municipalities and indigenous communities in Canada and globally have the right to protect themselves from environmentally and socially destructive resource projects.

3. Urge your municipal council to pass a resolution or by-law banning fracking. Fracking is a threat to water sources, air quality and public health, and communities have a right to say “no” to this harmful practice. Find out how at: www.canadians.org/fracking."

http://www.sierraclub.ca/en/main-page/how-nafta-fipa-and-other-investment-deals-put-democracy-and-environment-risk




 

JL A. (275)
Monday April 8, 2013, 7:26 am
You are welcome Julie. Thank you for providing the additional information and resources relevant to taking action in Canada on issues related to NAFTA.
 

Micheael Kirkbym (85)
Monday April 8, 2013, 10:32 am
Excellent comment Julie. If this is an example of NAFTA hard at work think of what things will be like were ATPA enforced and functioning. The PRC and the major other foreign investors in the Tar Sands Project or any other foreign owned industry would have a field day and the Canadian taxpayer would be picking up the bill.
I have always had reservations about NAFTA where it concerns Canada. The softwood lumber issue comes to mind.
 

JL A. (275)
Monday April 8, 2013, 11:25 am
You cannot currently send a star to Michael because you have done so within the last day.
 

Carol D. (109)
Monday April 8, 2013, 2:06 pm
Are any of these companies really interested in peoples health for the prices to be so high My goodness if you have to pay $72 for eye drops i dread to think what you would pay for a much needed drug
I just paid £3.53 for some generic eye drops the big company ones were about £5.50 I thought that was quite expensive If Kits price is right and not a mistake they are having a laugh are nt they!!

noted
 

JL A. (275)
Monday April 8, 2013, 3:41 pm
You cannot currently send a star to Carol because you have done so within the last day.
 

Mike and Janis B. (7)
Tuesday April 9, 2013, 11:05 am
They are dreaming if they think they can bully us. These creeps are the ones who demolished the only factory making animal insulins which for long term and child diabetics are a much better treatment. Just so they can charge folk a fortune for the rubbish they call synthetic insulin. Hate these pharmaceutical companies who think they are gods.
 
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