In a recent Health Affairs Web Exclusive, researchers document for the first time that trade rules reduce access to generic drugs in a low-income country. Using recent Ministry of Health data, they report that in Guatemala, some generics have been withdrawn from the market while others have been denied entry altogether due to intellectual property rules contained in the Central American Free Trade Agreement. As a result, the cash-strapped Guatemalan public sector must purchase higher priced brand-name drugs to fight diseases such as diabetes and HIV/AIDS, say Ellen Shaffer and Joseph Brenner, co-directors of the Center for Policy Analysis on Trade and Health.

The authors point specifically to CAFTA’s “data exclusivity” rules which provide brand-name drugs monopoly protection which, on top of existing patent protections, further contribute to higher prices. Generic drugmakers typically rely on the clinical trial data already generated by brand-name manufacturers to demonstrate the safety and efficacy of their products. But CAFTA prohibits generic drug manufacturers from using the brand-name clinical trial data for a fixed period of years, sometimes even after the brand-name drug is no longer under patent. Because of these rules, Guatemalans end up paying for brand-name drugs at costs up to hundreds of times higher than generics that were once available or that could be manufactured were it not for CAFTA rules.

Shaffer and Brenner argue that the United States should declare its intention not to implement the CAFTA data exclusivity rules. “More broadly, the United States should support Guatemala in exploring methods to obtain lower-price medicines from both donors and the market,” they write. The authors note that the World Health Organization has endorsed replacing intellectual property regimes with public health approaches, including reinvigorating local pharmaceutical production to stimulate technology transfer to developing nations.