How European IP Policy Hinders Access to Affordable Medicine in Tunisia

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Aug 10, 2022 Tunisia
Patient room in a private clinic in Tunisia. Photo by Habib M’henni via Wikimedia Commons. Patient room in a private clinic in Tunisia. Photo by Habib M’henni via Wikimedia Commons.

How European IP Policy Hinders Access to Affordable Medicine in Tunisia

By : Mohamed Haddad

Have you heard about “win-win” cooperation in international development? What you did not hear about is how often the same party can win. And, when it comes to the European Patent Office’s (EPO) treaties with emerging countries, it is fair to say that the European side won…twice. The patent validation treaties Europe  has signed with its counterparts in Tunisia, Morocco, Moldova, Georgia and Cambodia is the perfect example.

Intellectual property (IP) is like a temporary legal monopoly given to a firm or a person in order to make up for investment in innovation. Although patents often last for twenty years, the means to circumvent this cap and increase the monopoly duration are more and more numerous. Pharmaceutical companies and tech companies rely heavily on IP in their business models.

IP is everywhere. If you are reading this paper, you must have encountered at least one of the common IP symbols in your newspaper, on your phone, laptop, or tablet. © is for copyright, and ® or ™ indicates that a trademark is or will be effective. Not to mention  the recurrent mention of “patented in” followed by the territory. 

Thanks to EPO patent validation treaties, European patent applicants and holders extend their IP rights to non-member countries. However, these treaties are not reciprocal. Domestic applicants from the latter cannot validate their patents in the vast territory covered by the EPO. As a matter of fact, in2013, when the Executive branch proposed the treaty to the parliament, and then when the elected officials discussed the draft, the issue of reciprocity had never been evoked. Thinking that it seemed like an obvious problem, I contacted the minister. He defended the treaty and told me that he believed it was reciprocal. Asked about the reciprocity, the EPO confirmed to me that there was not such a thing.

So far, Morocco, Moldova, Georgia, and Cambodia have signed such treaties. In 2014, Tunisia also signed, somewhat discreetly, a treaty that stands higher than domestic laws. It came into effect in 2017.  

The territorial coverage of IP is exactly what EPO validation treaties aim to tackle. On its website, it is introduced as follows: “under the national law of the extension and validation states, a European patent extended to or validated in those states has the effect of a national patent granted by the relevant state and is subject to the same conditions. The patent geographic coverage.” The treaties were voted by parliaments and promulgated by the executive branch. Still, they can be unfair. You have to read between the lines to see that European patents, and only European patents, can be extended abroad. Moroccan, Tunisian, Georgian, Moldovan or Cambodian cannot. 

IP can have dire consequences, particularly in hampering access to affordable medicine. Tunisia relies heavily on generics. Seventy three percent of the drugs produced by Tunisian pharmaceutical companies are no longer regulated by patents. Extending European patents to Tunisia has one major consequence: increasing the cost of essential medicines. The Tunisian people would bear a considerable share as the out-of-pocket expenditures in Tunisia are insanely high (thirty-eight percent) compared to the rest of the MENA region (twenty-eight percent), and the world average (eighteen percent).

If COVID-19 had one advantage, it would be raising awareness about unequal access to medicines throughout the world. This disparity stems, in part, from weak supply chains and lack of domestic production. The main reason for these inequalities, however, remains IP hindrance, which makes more recent drugs unaffordable for patients in the Global South. Health coverage in Tunisia could be jeopardized by this treaty. 

According to a high-ranking civil servant in the Health Ministry explained that pharmaceutical companies have not considered Tunisia as a potential market given the relatively small population and the low purchasing power. “Since the signature of the EPO Treaty, Tunisia has become a box to check on the EPO application form,” she sighed. She meant it literally.

Five years after the treaty came into effect, more than seventy-thousand health-related patent applications  checked the “Tunisia box,” based on the EPO database Espacenet. However, Tunisian counterpart INNORPI only provided a list of five users. All are pharmaceutical companies from Spain, US, UK, and Sweden. According to another high-ranking Tunisian health public servant, this is a “catastrophe.”

     

Before 2017, foreign pharmaceutical labs did not systematically register their patents in Tunisia, considering that it was deemed a negligible market and the red tape was considerable. Now, Tunisia is just a box to be checked next to Moldova and Morocco for the patents of new drugs to be applied. Domestic production, mainly generics, covers seventy percent of the needs of the Tunisian market, but it is directly threatened by the EPO treaty.

Let me give you a concrete example of how IP hinders access to affordable medicine. Tunisia bought Herceptin® from the patent holder, the Swiss pharmaceutical company Roche®, as a treatment for breast cancer. The state’s public insurance fund paid more than nine-hundred USD for each dose from 2008 to 2016. Relative to GDP, Tunisia paid more than any European country. It was the fund’s biggest expenditure. 

Although the price has gradually decreased to five-hundred USD, it remained much more expensive than its biosimilar (i.e. generic) Hertraz®, manufactured by the American Mylan®, and sold at 220 USD. The latter was only commercialized after the end of Roche’s patent. If Roche had extended and validated its patent in Tunisia, Tunisian taxpayers could have been obliged to pay the highest cost longer.

Whose fault is it? Who is to blame? 

Tunisian officials, undoubtedly. But also the European Union, in addition to the European Patent Office. In fact, the EU has consistently endeavored to harness Europeans’ IP rights in Tunisia. The same provisions on validation and extension, let alone trade secrets, were included in the draft of the Deep and Comprehensive Free trade agreement that was negotiated at the same time as the EPO’s treaty. 

In the first place, the main rationale behind signing this treaty was the hope to see more Foreign Direct Investments from the EU. The other goal was to see Tunisian inventors granted IP protection in EPO member states. Neither of these occurred.  

The silver lining is that the Tunisian-European treaty has a five-year term renewal. The Moroccan for example does not. This means that it’s easy to withdraw from it. In the event of such a withdrawal, it would be worth thinking about how international cooperation can genuinely be a win-win agreement.
Jul 3, 2019 Lebanon
Riccardo Fabiani By :
Riccardo Fabiani

Repression or Development? Morocco after the Hirak

The wave of social unrest that shook Morocco between 2016 and 2018 marked a major turning point in the country’s political and economic landscape. Spontaneous protest movements (soon termed Hirak, in Arabic) located in the semi-peripheral towns of al-Hoceima and Jerada highlighted deteriorating socio-economic conditions for a large section of the population due to the absence of jobs, investment, and infrastructure, among other things. The authorities met these demonstrations with a mixed approach, offering dialogue and investment projects while resorting to harsh repression measures to bring back stability. Meanwhile, protests in solidarity with al-Hoceima and Jerada took place across the rest of the country, threatening to escalate these demonstrations into a nation-wide phenomenon. Eventually, and with great difficulty, the authorities succeeded in containing these protests, which have gradually been absorbed and are now over, at least temporarily.

The unprecedented nature of these demonstrations rang a loud alarm bell for Morocco’s decision-makers. Unlike the 2011 Arab Spring-inspired unrest, which the urban middle classes largely dominated, the 2016-18 demonstrations took place in rural and semi-urban settings, marking a watershed in Morocco’s recent history. As famously described by Remy Leveau, since independence the rural population has been the most important constituency for the monarchy. Rural Moroccans have defended this institution from the revolutionary threats and demands for political and economic change coming from the country’s urban middle and working classes. Nevertheless, over the past years, the decline of rural notables (which have traditionally been the key connectors between the monarchy and the population in the countryside), the emergence of a new and better-educated generation, and an increasingly vocal rural and semi-urban population have started to affect this relationship. Indeed, rural communities have become vocal, expressing a rejection of the status quo and putting forward demands for better infrastructure, investment, and jobs.
The existential threat these new protests have posed is a potential game-changer in the country’s political economy.

The existential threat these new protests have posed is a potential game-changer in the country’s political economy. Aware of the impending risks, the Makhzen has so far resorted to a combination of approaches. First, the authorities have taken a firm security response (as highlighted by the case of the leader of the Hoceima protests, Nasser Zefzafi, who is still in jail), which has sparked criticism both domestically and abroad, with human rights activists denouncing this policy as a return to Hassan II’s “years of lead.” Secondly, the authorities have somewhat loosened their previously rigid fiscal stance to provide some respite to a population that has gone through a gradual reduction in public spending since 2012. This was evident in the April 2019 decision to increase public sector employees’ salaries (as well as the minimum wage), thus undoing the previous governments’ efforts to reduce the impact of the wage bill in the government budget. This wage hike was reminiscent of the fiscal loosening that took place in the immediate aftermath of the 2011 protest movement.

Finally, the monarchy has been the main sponsor of a series of structural economic measures that aim to correct some of the imbalances in Morocco’s economic model–namely, lagging productivity and an unfair land distribution in the agricultural sector, low levels of human capital affecting negatively employment and a lack of competition in domestic sectors stifling innovation and growth. Under pressure from the protests, the monarchy is cautiously trying to remove some of these obstacles that weigh negatively on economic development. Nevertheless, at this stage it is difficult to answer the questions of how far the Makhzen is willing to push changes and how genuine these efforts are, as the adoption of some and implementation of other measures is still in its early stages due to various factors, including political and societal resistance to changes and a slow and inefficient bureaucracy. Moreover, there is no sign that the monarchy is ready to scale down its direct involvement in the private sector through its al-Mada holding owned by the king, thus leaving unaddressed one of the biggest obstacles to competition and innovation in the country’s economy.

The Monarchy Takes the Lead


While most accounts of the Moroccan Hirak have focused on the authorities’ security-minded response to instability, in the months that have followed the protest movements in Jerada and al-Hoceima, the monarchy has also presented a series of initiatives that aim to provide a political and economic answer to the demands for jobs, investment and social justice that emerged from the demonstrations. The growing frustration of the country’s rural population has been long in the making, but its explosion between 2016 and 2018 was a major source of concern for the monarchy, whose support has historically been found in these constituencies.

Indeed, since the beginning of this new phase, King Mohammed VI has intensified his interventions and speeches, in what has probably been an attempt to push the government to take action and provide answers to these key constituencies. The most evident example of this approach was the October 2017 “royal earthquake” as the local media outlets called it, when the king fired four ministers (Mohamed Hassad, Mohamed Nabil Benabdellah, al-Houcine Louardi, and Larbi Bencheikh) and other officials following the Audit Court’s report that pointed out a series of administrative mistakes and errors at the root of the unrest in al-Hoceima. This intervention was presented as a way for the monarchy to hold government officials accountable for their actions and was followed by a similar decision in August 2018, when the king fired Economy Minister Mohamed Boussaid. Through these spectacular dismissals, the monarchy has tried to distance itself from these allegedly ineffective officials, while sending a message that it remains in control of the situation.

In addition, the monarchy has taken a more proactive role in the legislative field. In late 2018, the monarchy imposed a bill to reintroduce the military conscription, bypassing any consultation with the government, political parties, or civil society. This initiative will be analyzed in more detail later, but it initially aimed to provide an answer to the large number of young unemployed Moroccans implicated in the protests. Most importantly, the monarchy has also kickstarted a larger debate on the need to update the country’s “development model.” The king has reiterated in several speeches the need to revise the current economic model, which has failed to produce jobs and wealth for everyone. Far from marking the beginning of a lively debate, the main goal of this invitation has been to lay the groundwork for a series of difficult economic decisions that have been gradually unveiled over the past months.

Agriculture, Human Capital, and Competition


Short of presenting a coherent vision for Morocco, the authorities have been working below the radar, putting forward a series of proposals that have attracted attention mainly in the specialized press. It is unclear whether this has been done on purpose to soften the predictable opposition of vested interests or, more likely, if this low-profile approach is the result of a frantic search for plausible answers to Morocco’s socio-economic malaise and to minimize scrutiny by civil society groups and foreign observers. Nevertheless, an analysis of the main initiatives deployed by the authorities highlights three main axes in the monarchy’s economic response: agriculture, human capital, and competition.

These three priorities are not new, as domestic observers and international financial institutions have been discussing some of these problems for a long time. In particular, Morocco’s low levels of human capital and insufficient competition in domestic markets have been identified as key obstacles to the country’s long-term economic development. What is new is the monarchy’s apparent willingness to tackle these issues, after years of inaction. If this effort to reform the economy is genuine, the authorities are likely to run into considerable opposition by the powerful businessmen that have traditionally benefited from a web of protection, monopolies, and fiscal advantages in exchange for their support for the monarchy.

The emphasis on agriculture is hardly surprising, due to the rural nature of the 2016-18 protests. In a country that has never had a land reform and where around forty percent of the workforce is employed in this sector, agriculture continues to play a key role in political and economic debates. The latest “Green Plan,” which was adopted in 2008, focused mainly on a minority of large enterprises and on boosting exports and competitiveness, paying little attention to the majority of small farmers. While the top-line results of this program were overall positive, with exports doubling over ten years thanks to considerable productivity gains, small farmers did not benefit from this improvement. In particular, a large part of agricultural workers continues to rely on “collective lands” with no formal property rights, posing all sorts of obstacles to farmers in terms of access to credit, investment, etc.

The new plan recently announced by Agriculture Minister Aziz Akhanouch (a close confidant of the king’s) aims to create a “rural middle class” by privatizing (“melkization”) these collective lands and facilitating access to credit for this new class of small landowners. Around one million hectares of land are available for this process, with young farmers identified by the authorities among the key beneficiaries of this plan. The plan is to start by privatizing some of the collective lands that are already irrigated (which amount to just sixteen percent of total cultivated land) and later to extend this process to the rest of the country. By creating a rural middle class with better access to credit and the ability to invest in increasing productivity, the aim is to create a direct relationship between the Makhzen and this new social class, and thus, ease some of the tensions that have been at the root of the recent protests, while leaving the current property structure and unbalanced distribution of infrastructural facilities unchanged.

The authorities have also placed significant emphasis on the problem of human capital. This is a well-known problem that has been highlighted by most international institutions (such as the World Bank), as Morocco continues to fare among the worst countries in the Middle East and North Africa in terms of educational outcomes. Low human capital levels weigh negatively on economic performance and contribute to youth unemployment, as young Moroccans are ill-equipped to grab opportunities in the job market. In turn, this frustration is seen as one of the main drivers of the recent wave of social unrest and a spike in migration from the country.

The authorities have therefore taken two initiatives to tackle these issues, but both bills have sparked controversy inside and outside parliament. The first initiative has been the re-introduction of military conscription–an ill-defined project that has been imposed in a top-down manner on Morocco’s political class and population. Among its many stated goals, this law aims to provide an opportunity for young Moroccans (particularly for those who have dropped out of school) to acquire a set of transferable skills that should contribute to raising human capital levels. It is unclear whether this project will manage to achieve this objective, as the budget for and details of the implementation remain opaque.

More promising is the new education bill and the goal of broadening access to pre-school facilities to all four and five-year-olds by 2028. These measures aim to overhaul Morocco’s educational system, in particular by placing more emphasis on learning foreign languages and improving access to pre-school education, which have been identified as key weaknesses in the current system. While the idea of pre-school education is uncontroversial, the issue of languages in school has become a major stumbling block on the way to the adoption of this bill. The plan to de-emphasize the role of Arabic in favor of the French language as the key teaching vehicle has divided the political class, with the Islamist Party of Justice and Development (PJD) blocking the approval of the bill for months. In the absence of a compromise on this issue, the law remains stuck in parliament, as the political and social cleavage between French-speaking and Arabic-speaking Moroccans is again at the center of the public debate. Indeed, the controversy around which teaching language should be used in Moroccan schools goes back to the early post-independence era and Hassan II’s “Arabization” policy.

Finally, the authorities have recently injected some momentum into the discussion on competition. The existence of monopolies and cartels between the main economic actors in almost all domestic markets has hampered productivity growth and depressed innovation and job creation. While this issue has always been a taboo that the local media have only been able to tackle in very cautious terms, the mid-2018 boycott campaign organized on social media against some of the country’s biggest companies has been impossible to ignore. By targeting fuel distributor Afriquia (owned by Akhanouch himself), dairy firm Centrale Danone, and bottled water company Sidi Ali, online activists have shed light on the incestuous ties between political power and some of the biggest enterprises in the country.

Therefore, it is not a coincidence that in late November, the king finally appointed the new president of the Competition Authority, Driss Guerraoui. Despite the adoption of the competition law back in 2014, this body had been inactive for the previous four years, most likely due to pressure from Morocco’s largest businesses. Symbolically, one of Guerraoui’s first acts was to tackle the issue of competition in the fuel distribution sector (which had been targeted by online campaigners) in early 2019. In addition, in late 2018, the king appointed the head of the National Commission for Integrity and Anti-Corruption, seven years after the institution was officially set up. These appointments fill two important gaps, but their effectiveness remains in question. At this stage, it is still unclear if these two bodies will be sufficiently empowered to carry out their mission, and thus, tackle some of Morocco’s most powerful businesses. Most importantly, it is highly unlikely that either institution will be allowed to take action against the king-owned companies, which often enjoy monopolistic or dominant positions in domestic sectors, such as agri-food and retail distribution.

Likewise, the government is preparing a new investment code, which is meant to redistribute fiscal incentives away from the country’s least productive sectors (such as real estate, which has been the object of considerable speculation over the years) to encourage business activity in more labor-intensive and export-oriented industries, such as manufacturing and information technology. Moreover, the new code will streamline fiscal incentives and subsidies, thus easing access to start-ups and small and medium-sized enterprises. This measure should contribute to creating a more attractive environment for companies operating in innovative sectors and to reducing the advantages enjoyed by companies operating in less productive and risky sectors.

Just a Bluff?


The monarchy has played a central role in the promotion of all these initiatives. In some cases (military conscription, competition) this role has been obvious, in other cases (agriculture, education, investment code) the king has preferred to take a lower profile and avoid any direct implication while pressuring the government to accelerate the adoption of economic reforms. Regardless of the direct or indirect involvement of the Makhzen, in all these cases the approach has been almost the same: a top-down imposition of measures that had been discussed for years but had never seen the light due to their politically sensitive nature.

Nevertheless, the key question remains how serious this effort is and if this is part of a strategy to overcome those obstacles that have so far undermined Morocco’s economic performance or if it is just a bluff, a maneuver to deflect responsibility. The devil is in the implementation: for example, the Competition Authority could have a significant impact on the country’s economy, but will it have the resources and the political backing to break up cartels and monopolies in the domestic economy (not to mention the companies owned by the king himself)? The alignment between formal and informal institutions (such as the patron-client relations going all the way up to the monarchy) will be decisive. The threat posed by social unrest in rural Morocco is a potentially existential menace that the monarchy cannot underestimate. How it decides to respond will be the key for its own future and for the long-term economic development of the country.