Is free trade bad for our health?
Free Trade Agreements (FTAs) are supposed to accelerate economic growth and create jobs by reducing red-tape, opening markets and reducing burdensome tariffs otherwise charged by foreign trading partners, which can lead to cheaper prices for Canadian consumers.
But what do they mean for your health?
The Comprehensive Economic and Trade Agreement (CETA), a planned free trade agreement between Canada and the European Union, and the Trans-Pacific Partnership (TPP), a proposed agreement of Pacific Rim countries, are touted as ways to boost the bottom line for Canadian companies.
But regardless of their economic considerations, free trade agreements can have significant and often negative effects on health, affecting everything from prevention strategies to drug pricing through a variety of mechanisms.
FTAs and Drug Pricing
Many FTAs increase protections for intellectual property rights. For example, CETA will bring drug patents in-line with European jurisdictions. It mandates that drug companies in Canada can apply for patent extensions of up to two years beyond their normal 20 year length if there are delays during regulatory approval.
CETA will also cement Canada’s eight-year data exclusivity period and tie other signatories to that timeline, during which generic manufacturers cannot use originator company data, making production of generic medications infeasible.
Both features can delay the entry of cheaper generic versions of patented drugs onto Canadian markets. For this reason, it is estimated that introducing CETA could increase Canada’s drug bill by $1.65 billion.
Free trade agreements also open Canada to lawsuits from multinational drug companies who feel they are being treated unfairly. In fact, Canada has been the most sued country through NAFTA’s investor-state dispute settlement provisions, settling cases for approximately $170 million.
In 2013, Eli Lilly filed a suit against the Canadian government claiming $500 million in lost profit after a Canadian court struck down patents for the antipsychotic drug Zyprexa and the attention-deficit hyperactivity disorder drug Strattera.
The pharmaceutical company’s suit says Canadian standards of proof for patents are out of line with its NAFTA obligations, requiring a higher burden of proof of effectiveness than its trading partners. The case is ongoing, with the government filing a response in 2015.
Drug costs related to FTAs can be felt most keenly in developing countries, where FTAs can be used to impose intellectual property rights of more developed trading partners, thereby delaying the entry of cheaper, more affordable generic medications in countries already having difficulty paying for medications.
For example, a modeling study projected that if the TPP was ratified, the number of people in Vietnam on HIV treatment would drop by more than half (from 68 percent to 30 percent) due to higher drug prices.
As a result, organizations like Medecins Sans Frontieres (MSF) have come out strongly against FTAs for significantly diminishing access to essential medicines.
FTAs can also make it more difficult to enforce regulations that are good for health but are seen to be impeding free trade.
Tobacco companies have turned to trade agreements to challenge countries introducing anti-tobacco legislation. For example, tobacco company Philip Morris sued the Australian government when it introduced plain packaging for tobacco products, arguing that plain packaging legislation infringes on trade agreements by violating intellectual property rights and creating a technical barrier to trade.
Australia spent roughly $50 million defending itself against the suit, and were ultimately successful.
Public health authorities have also successfully lobbied to ensure that companies could not use the TPPA to dispute tobacco control measures; however, this exclusion is limited to tobacco alone. Countries are still at risk of being sued for introducing prevention policies that may affect other products harmful to health.
The fear of lawsuits from well-financed companies can cause countries to reconsider health promoting policies. This is a phenomenon known as regulatory chill and can apply to any number of harmful substances, including alcohol, unhealthy processed foods and hazardous chemicals, leaving individual countries unable to implement health promotion campaigns for fear of running afoul of international trade agreements.
Samoa, a country with some of the world’s highest obesity rates, was forced to back away from a ban on importing low quality fatty meats, as the move was thought to be against World Trade Organization (WTO) rules. Thailand also faced WTO challenges in labelling unhealthy snack foods consumed by children.
Health Equity Impacts
There is disagreement between economists regarding the net economic impacts of FTAs, with economic gains varying by national, regional, and individual context.
Economic think tanks project the net economic benefit of the TPP, for example, to be quite modest at a 0.08 to 0.2 percent increase in Gross Domestic Product.
Worse, a study looking more closely at the outcomes of the TPP found that while economic gains translate to large wage increases for the top one percent of wage earners, the lowest earning 90 percent of workers actually experience small wage decreases.
Income inequality is known to lead to poorer health. Low income workers living in places with high income inequality experience higher stress, insecurity, and a decreased sense of personal well-being which may trigger heart disease or worsen mental health.
Furthermore, the economic impacts of free trade can affect different societal groups unequally.
Losses of jobs in the manufacturing sector, for example, which can be triggered by FTAs that promote cheaper labour elsewhere, can impact workers who are already vulnerable to a changing economy because of technological advances.
These same workers are often less able to transition to new work in other areas of the economy. That means already disadvantaged groups may be forced to take on precarious work or find themselves with no work at all, which can have severe implications on their health and the health of their families.
Call to Action
While some medical organizations like MSF have openly stated their concerns regarding the TPPA, there has been relatively little discourse on health impacts of FTAs, despite their potential for far-reaching effects on medication access, government ability to enforce healthy public policy and their disproportionate effect on already-vulnerable segments of society.
Health impact assessments (HIA) are one way of identifying and acting on potential health inequalities prior to implementation of policies related to FTAs. HIAs explicitly consider the health effects of a proposed policy, program or project (often based on the literature) and the distribution of those effects in the population. They can also help ensure that health becomes part of the discussion in trade agreement discussions.
By taking health impacts into account, we get a clearer, more comprehensive view of FTAs apart from just the economic effects.
But these assessments will only be effective if their findings are acted upon. FTAs must contain provisions to mitigate the negative health impacts identified.
Health care providers have a role in getting informed and advocating on how FTAs will affect their patients and communities. By explicitly asking how the health of their community may be affected by FTAs, providers serve a crucial role in ensuring trade discussions include health and that community-specific health needs are considered and addressed.
Aamir Bharmal and Jia Hu are resident physicians in Public Health & Preventive Medicine at the University of Toronto. Yassen Tcholakov is a Public Health & Preventive Medicine resident physician at McGill University.