Exclusive: 'Tax for TRIPS' deal altered UN declarations on NCDs, TB

MUMBAI, India — Last week, a crucial high-level political declaration on tuberculosis passed at the United Nations General Assembly secured a partial victory for advocates of affordable medicines. At the same time, a high-level declaration on noncommunicable diseases also passed at UNGA was criticized for lacking teeth.

Now, delegates have told Devex that a diplomatic trade-off on tax and intellectual property rights between the United States and countries of the G-77 group impacted the outcomes.

The U.S. had opposed two key features in the political declarations. In the document on NCDs, it was against the inclusion of taxes on tobacco, alcohol, and food products containing high levels of sugar, salt, and transfats as a way of combating diseases. In the document on TB, it was opposed to a clause on Trade-Related Aspects of Intellectual Property Rights, which would allow countries to produce affordable drugs by overriding patents. The document on NCDs also included a section on TRIPS as a way of promoting access to medicines for all.

After months of negotiations, the U.S. eventually agreed to include the clause on TRIPS in both documents — but at the cost of deleting the mention of taxes from the declaration on NCDs, government representatives involved in the negotiations said.

The agreement on TB was important particularly for developing countries, which shoulder over 95 percent of TB cases and deaths globally. It was initially feared that the final declaration would have no mention of TRIPS after the U.S. threatened to walk out over the issue in July. It was only after South Africa intervened that discussions were reopened.

With a new chance at securing the mention of affordable drugs, diplomats of G-77 countries joined forces to devise a strategy: They would back the U.S. on the issue of taxes in the NCD agreement in order to leverage support for affordable medicines in the TB agreement.

“We decided to support the U.S. in order to get their backing for the TB declaration,” a senior diplomat from a G-77 country, who did not wish to be named as they were not authorized to speak about the issue publicly, told Devex. “We agreed to delete the mention of taxes in the NCD document and convinced other countries as well so that we could argue for this crucial feature on affordable medicines in both the documents.”

A delegate from another G-77 country privy to the negotiations, and who also wished to remain anonymous, added: “TB is a more urgent public health issue, and this was the first high-level meeting on the disease, so we knew we had to secure the TRIPS clause. Many countries have individually introduced taxes on alcohol, sugar, and tobacco, and will continue to do so.”

An examination of the various drafts of the NCD declaration made available online by NGO Knowledge Ecology International, which works on issues related to intellectual property and public health, corroborates the claims.

In a draft issued on July 16, G-77 countries are seen introducing new language around TRIPS, while the U.S. requests the removal of any mention of taxes. A revised draft issued on July 26 contains no mention of taxes. Under the section on TRIPS, a note states “co-facilitators understand that interested delegations are pursuing consultations.” The final draft, issued after these consultations, includes the clause on TRIPS — a win for advocates, although some said the language was not as strong as they wanted — but made no mention of taxes.

The U.S. government denied the trade-off. “The two document negotiations were completely separate and went through two different and distinct processes. The soda tax discussion came to a resolution earlier in the summer, while the discussion on IP [intellectual property, or TRIPS] came to a final resolution last week,” Caitlin Oakley, a spokesperson at the U.S. Department of Health and Human Services, told Devex.

However, connections and trade-offs between the two sets of negotiations have been reported elsewhere. Indian news website The Wire reported last week that Indian diplomats supported the U.S. in negotiations on the NCDs agreement in exchange for getting language on TRIPS into both documents. It had also previously been reported that the U.S. was stalling negotiations on the NCD declaration in the hope that weaker language in the TB negotiations would strengthen its opposition to TRIPS.

Defending U.S. opposition to taxes, and pushing back against allegations of colluding with industry, Oakley said: “Taxes on sugary drinks [are] not new, bold, or innovative and neither is the false narrative of industry influence. Such accusations are lodged to divert attention from the fact that there is a lack of evidence that such a tax produces positive health outcomes, specifically reducing the burden of NCDs.”

Civil society members disagree.

“We thought this would have been a good opportunity for governments to make strong statements to speed up progress in the NCD targets. The weak language around fiscal measures and the lack of commitment around taxation especially around sugar-sweetened beverages is a real missed opportunity,” said Katie Dain, CEO of NCD Alliance.

“The U.S.’s government’s pro-private sector approach was quite challenging throughout the negotiations. This was very dangerous for the declaration on NCDs given the influence of the unhealthy commodity industry like big food, big tobacco, and big alcohol.”

U.S. opposition to sugar and tobacco taxes is not new. Earlier this year, the World Health Organization’s Independent High-level Commission on NCDs, which included Eric Hargan, U.S. deputy secretary of health and human services, also failed to mention taxes following U.S. resistance.

“Industry has been selling this idea of doubt on evidence [that taxes work] for decades, putting the burden of proof on the public health side,” said Bill Savedoff, a senior fellow at the Center for Global Development.

Describing the trade-off as “problematic,” he pointed out the limited use of TRIPS for low-income countries.

“As much as TRIPS is opposed by the pharmaceutical industry, it is still about expanding the market for pharmaceutical products. The countries who are able to use this agreement are stronger G-77 countries like South Africa, India or China. Smaller countries in Africa and Asia don’t have the resources to use the TRIPS provisions to produce drugs domestically, even if they want to.”

He said the TRIPS clause was easier to get through than the tobacco and sugar tax clause due to the level of industry influence. “Annually, there are more premature deaths from tobacco than HIV/AIDS, TB, and malaria combined, more than half of which are in low- and middle-income countries. Deaths due to diseases that result from high consumption of sugar and alcohol add to that number.”

“I would ask whether it was the right trade-off,” he said.