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September 17, 2014

Pharmaceutical CEO: This Controversial Deal Will Be Great for Us…And You (Trust Us)

In an op-ed appearing in Forbes on Tuesday, the CEO of Eli Lilly, a U.S. pharmaceutical corporation, paints a glowing picture of how the proposed Trans-Atlantic Free Trade Agreement (TAFTA) would benefit consumers on both sides of the Atlantic – but it’s pure fantasy.

It is not surprising that Eli Lilly is cheerleading this controversial deal. This is the same pharmaceutical firm that is using the North American Free Trade Agreement (NAFTA) – TAFTA’s predecessor – to challenge Canada’s legal standards for granting patents and demand $500 million in taxpayer compensation.

John Lechleiter, Lilly’s CEO, shrouds his arguments under the guise of “free trade,” while in reality Lilly’s TAFTA proposals are a plea for increased government protection for his company and expansion of the monopolistic business model upon which the multinational pharmaceutical industry relies.

This post will take on Mr. Lechleiter’s claims, one by one.


Claim: [Differing regulatory standards for approval of pharmaceutical products] represents a de-facto tax on innovation.

Reality: The pharmaceutical industry (like the chemical industry, the GMO industry, the oil and gas industry, the financial industry, etc.) sees higher regulatory standards as unfair barriers to trade. In its submission to the Office of the United States Trade Representative of its TAFTA wish list, PhRMA (a powerful pharmaceutical industry lobby group of which Lilly is a member) outlines precisely what sorts of “regulatory barriers” it would like to see dismantled by the deal. These include rolling back the EU’s rules requiring clinical trial data to be transparent. When given access to this data, researchers have discovered information that could have potentially saved thousands of lives and billions in government spending. If Lilly and other pharmaceutical multinationals get their wish, it could prevent the public from gaining critical information about the safety and efficacy of our medicines.

Claim: A unified approach to IP would take out some of the twists and turns in the drug development pipeline for innovators on both sides of the Atlantic.

Reality: Through analysis of previously negotiated free trade agreements (FTAs), leaked texts of agreements currently under negotiation and industry comments, we can see that FTAs have continually decreased access to medicines in the name of increasing pharmaceutical corporations’ “intellectual property.” By enshrining in FTAs rules that lengthen, strengthen and broaden the patent monopolies of pharmaceutical companies, drug costs become bloated, healthcare budgets are inflated, and access to medicines for patients in need is stifled. There is every reason to believe that an EU-U.S. FTA would be no different.

Claim: TTIP is a great chance to ensure that the process for reimbursing medicines throughout the EU is clear, predictable and transparent.

Reality: Big Pharma has quite a different notion of what the word “transparency” means than most people. What Mr. Lechleiter really means is that he would like his industry to have greater influence over government drug reimbursement decisions for pubic health programs like Medicaid and Medicare. Governments control public health costs by listing medicines approved for government purchase or reimbursement and negotiating with drug firms to obtain the lowest prices. Including rules in TAFTA that would require governments to allow greater pharmaceutical industry influence over such cost containment efforts is yet another mechanism for pharmaceutical companies to inflate prices and boost their bottom line at the expense of consumers and taxpayers.

Claim: [Discovery and development] of new medicines starts with the resources necessary for investment in R&D, and in health care itself–driven first and foremost by economic growth. At present, the simple fact is that economies on both sides of the Atlantic need to create jobs and growth … and freer trade is a great way to do that.

Reality: The TAFTA study most frequently touted by TAFTA proponents projected that, in the most optimistic scenario the authors could envision, the deal might generate a degree of growth smaller than that delivered by the most recent version of the iPhone.  And to generate this tiny growth, the study assumed a widespread curtailing of health, environmental, financial and other protections (and assumed no costs from such loss of safeguards). Furthermore, there is zero evidence that extending patent terms and lowering patent standards, as the pharmaceutical industry seeks, leads to job growth.

These realities are only a small sample of what Mr. Lechleister and other Big Pharma elite hope to attain through a secretly-negotiated EU-U.S. FTA. He fails to even mention in his piece how controversial investment provisions proposed for the deal would empower foreign companies to “sue” governments through international tribunals over rules and regulations that they perceive as undermining their expected future profits. In fact, that’s precisely what Lilly did when it was upset that Canadian courts found that Lilly had not satisfied the legal criteria to earn patents on two medicines. As mentioned, Lilly is using the same provision under NAFTA to demand $500 million in compensation from Canadian taxpayers. Perhaps Mr. Lechleiter was having trouble thinking of a way to translate that reality into an innocuous sounding claim.

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