Peter Drahos, professor in law at the Australian National University’s Regulatory Institutions Network and Professor of Intellectual Property at Queen Mary, London University, has written a well reasoned post about the hidden costs of including intellectual property clauses in so-called free trade agreements (FTAs). From The Canberra Times:
Today, multinational companies use patents, copyrights, trademarks and other legal privileges to extract profit from consumers, pushing states to police consumer behaviour on their behalf (as in the case of criminalising downloading)…
In effect, each FTA increases the taxing privileges of intellectual property owners. FTAs that, for example, increase patent or copyright terms mean more private taxes can be collected in the form of fees and royalties…
Patents have become an integral part of a win-win game for pharmaceutical companies in which they obtain high prices for their patented medicines, but use patents to shift their profits into tax havens…
For countries like Australia avoiding intellectual property chapters in FTAs that increase the private taxing power of multinationals is one option. Certainly, Australia should implement the recommendation of the Harper Competition Policy Review (2015) that “an independent and transparent analysis of the costs and benefits” be undertaken of intellectual property in any new trade agreements.
It is worth reminding readers that the Australia-US FTA (AUSFTA) included extensions to both patent and copyright terms, which in turn raised the cost of pharmaceuticals and copyrighted materials to Australians.
For example, according to Peter Martin, the extension of pharmaceutical patents under the AUSFTA, from 14 years to 20 years, “suppressed the development of a generic drugs industry and cost the government $200 million per year by slowing the entry of cheap generic drugs into the pharmaceutical benefits scheme”. Moreover, “generic manufacturers have missed out on an estimated $2 billion over eight years” whereas “70 per cent of drug patents expire later in Australia than in other countries”.
Now we have Australia locked in negotiation for the US-led Trans-Pacific Partnership (TPP) trade agreement, whose leaked draft intellectual property chapter revealed that the US is seeking to extend patent protection and strengthen monopolies on clinical data, which would raise Australian pharmaceutical costs. The US is also seeking to implement tougher rules on copyright, including outlawing the circumvention of technologies that restrict products to certain regions (known a “geoblocking”), thus allowing US companies to charge higher prices for digital content in Australia.
For these reasons, the Productivity Commission, the Australian Competition and Consumer Commission and the Harper competition review have all questioned the merits of including intellectual property in the TPP, as explained yesterday.
The Australian Government must learn from the mistakes of the AUSFTA and ensure that it does not sign onto a deal that imposes costs on Australia’s consumers, taxpayers, and our world-class health system by placing the interest of US pharmaceutical and digital companies ahead of our own.