12. April 2017
Novartis has threatened Colombia with international investment arbitration to avoid the issuance of a compulsory license.* The Swiss pharma giant is also turning to Colombian courts in an attempt to kill the price reduction imposed by the authorities over its cancer blockbuster Glivec. Both of these moves are confirmed by confidential documents obtained by Public Eye.
Leaked letters (PDF, 3.2 MB) to the Ministry of Trade and Industry show how Novartis threatened to resort to international investment arbitration for an alleged violation of the Swiss-Colombian bilateral investment treaty (BIT), which was signed by both countries in 2006. This undemocratic procedural mechanism, better known as Investor-State dispute settlement (ISDS), forms part of many trade agreements and allows an investor from one country to bring a case directly against the country in which they have invested before a private international arbitration tribunal, without going through local courts first. This threat has undoubtedly influenced the decision of the Colombian health authorities to stop short of pursuing a compulsory license, focusing only on a price reduction.
Further evidence shows that Novartis also appealed the issuance of the Declaration of Public Interest (DPI). However the Ministry of Health reconfirmed the DPI in September 2016. Novartis subsequently filed two legal challenges at the Colombian Supreme Court), copies of which were obtained by Public Eye. One is against the DPI itself (December 2016) (PDF, 4.7 MB), the other one (February 2017) seeks to annul the price control methodology (PDF, 1.1 MB) established following the DPI. This latter led to the decision, in December 2016, to impose a price reduction of 44% on Glivec.
Finally, through the local pharmaceutical industry trade group AFIDRO, of which Novartis is a member, the Swiss giant has even targeted the Presidency of Colombia, involving the special representative for the accession of Colombia to the Organization for Economic Co-operation and Development (OECD) as an additional, inacceptable pressure. AFIDRO has also worked behind closed doors with the Ministry of Trade and Industry on a proposal for alternative DPI rules which should “regulate in a better manner the procedure and conditions for the issuance of a DPI”, ensuring that the said Ministry has a more central role in deciding for future DPI.
The confidential documentation unveiled by Public Eye reveals undue pressure and features many misleading facts related to the issuance of a compulsory license – much of the same that were put forward earlier by the Swiss and the US governments. The pharmaceutical industry and its hosting countries are fighting unfairly against any sovereign countries resorting to legitimate legal instruments such as compulsory licenses, out of fear that a precedent may be set. Colombia is no exception, and the lawsuits lodged by Novartis are just another sign that their determination is to place corporate interests and profits above public health and human rights.
*A compulsory license is a legal and legitimate mechanism foreseen by the Agreement on trade-related aspects of intellectual property rights (also called TRIPS) of the World Trade Organization (WTO), and which was reaffirmed in the Ministerial Doha Declaration on TRIPS & Public Health (2001) and, most recently, by a landmark report of the UN high-level panel on access to medicines co-chaired by former Swiss President Ruth Dreifuss (2016). A compulsory license allows a government to restore the competition in a monopoly market despite a patent, without the authorization of the patent-holder. It is part of several policy-space mechanisms also called ‘TRIPS flexibilities’. According to WTO, each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted