The TPP Tries to Put a “No Exit” Sign on America’s Crapified Health Care System by Allowing Medical Procedures to be Patented World-wide

By Lambert Strether of Corrente.

Hundreds of thousands of people — especially those who can’t afford concierge medical care — increasingly look to medical tourism to exit the tapeworm-infested brutal and hideously expensive U.S. health care rental extraction device system, with its Taylorist methods and penitentiary-like facilities, in favor of more humane and more reasonably priced alternatives available in other countries; heck, there’s even a medical tourism trade association!

Of course, “medical tourism” might be more accurately called “medical arbitrage.” For example, my privileged position as a citizen of the United States, once a first-world country in areas beyond the Acela corridor, still entitles me to various free gifts, including the high value of the US dollar, which I can arbitrage to purchase health care in not-first-world countries with lower value currencies and first-class — and not brutal — care. The Trans-Pacific Partnership (TPP) because it requires that medical procedures can be patented, will lessen this arbitrage opportunity in medical care by raising the price of medical procedures, thereby making you less able to get the kind of health care that you need and deserve, by raising its price.[1] Here is the relevant draft text, from TPP’s Article QQ.E.2, with the U.S. proposal underlined:

[US: Consistent with paragraph 1] each Party [US proposes; AU/NZ/VN/BN/CL/PE/MY/SG/CA/MX oppose: shall make patents available for inventions for the following] [NZ/CL/PE/MY/AU/VN/BN/SG/CA/MX propose: may also exclude from patentability]: (a) plants and animals, [NZ/CL/PE/MY/AU/VN/BN/SG/CA/MX propose: other than microorganisms]; (b) [JP opposes: (b)diagnostic, therapeutic, and surgical methods for the treatment of humans or animals [US proposes; AU/SG/MY/NZ/CL/PE/VN/BN/CA/MX oppose: if they cover a method of using a machine, manufacture, or composition of matter]; [NZ/CL/PE/MY/AU/VN/BN/SG/CA/MX propose:] and

As you can see from the bracketed text, most other countries oppose the U.S. proposal. There are good reasons for doing so.

First, the U.S. proposal would raise the cost of medical care — that’s the part that eliminates arbitrage for U.S. citizens.[2] Public Citizen:

Medical procedure patents create significant transaction costs for patients . Physicians or healthcare providers could be charged additional royalties on top of the one-time cost of a medical device each time they practice a patented method. … The patenting of medical processes essentially nullifies the effect of patent exhaustion in specific instances, giving patentees rights over downstream uses of a patented medical device. Physicians , healthcare providers, or other companies, who infringe medical procedure patents may then be liable to pay high damages that are “adequate to compensate for the infringement, ” but no less than a reasonable royalty rate.

Courts often set a reasonable royalty rate based on the “percentage of infringing sales resulting from the unauthorized use of the patented invention.” In Medtronic Sofamor Danek USA, Inc. v. Globus Medical, Inc., for example, the court found defendants liable for $2,085,269.20 in damages for infringing patents on “devices a nd methods used by spinal surgeons to stabilize bony structures.” Insurance companies typically cap the amount they will reimburse on any given procedure. Price hikes resulting from medical procedure patenting are likely to be shifted onto consumers, either in the form of higher co-payments or higher insurance premiums.[3]

The additional costs that medical procedure patents impose may be no small deal for the patient. While patients are billed anywhere from $1500 to $2000 per stent used in coronary angioplasties, the actual cost of manufacturing the stent is only $15. A high-tech scan may cost a hospital “a few cents of electricity” and “a couple of hundred dollars [sic] worth of a technician’s or a doctor’s time,” but the patient is typically billed “several thousand dollars” per diagnostic procedure.

Second, most medical associations regard medical procedure patents as unethical — as indeed they are.

Under the TRIPS Agreement 1994 in the WTO, governments are allowed to refuse to grant patents that cover diagnostic, therapeutic and surgical methods for the treatment of humans or animals. This allowance under international trade law recognises that patents over medical treatment methods are an unjustifiable limitation on the freedom of physicians to treat their patients to the best of their abilities and are a risk to human health. If a patent exists over a surgical method, a physician has a choice (assuming they are even aware a patent exists over the surgical method): respect the patent and risk the health of their patient, or violate the patent and risk being sued for infringement. This is not a decision that physicians, particularly in emergency situations, should be required to make, and is an unjustifiable risk to health and undermines medical ethics.

It is no surprise then that the World Medical Association (WMA) has taken a strong position against patenting of surgical methods. In its position statement on the patenting of medical procedures, the WMA states that the patenting of medical procedures poses serious risks to the effective practice of medicine, and is unethical and contrary to the values of the medical profession.

(To be fair, if you’re a neo-liberal, putting the possibility of losing money in a lawsuit over the health of the patient — for example, you — isn’t a bug. It’s a feature, because markets.)

Third, most other nations regard medical procedure patents as unfit for public purpose, as indeed they are:

More than 80 countries, including most TPP negotiating parties, exclude medical procedures from patentability. Medical methods are expressly excluded from patentability in Brunei Darussalam (Section 16 of the new Patents Act (2011)), Chile (Article 37 of Chilean Law No. 19.039 on Industrial Property), Malaysia (Section 13 of the Malaysia Patents Act (291 of 1983)), Mexico (Article 19 (VII) of the Industrial Property Law), Peru, (Article 20 of Andean Community Decision 486 “Common Intellectual Property Regime” , as authorized by Article 16.9.2 of the US-Peru TPA), Singapore, (Section 16(2) of the Patents Act (No. 24 of 2001, as amended by Act No. 2 of 2007), as authorized by Article 16.7.1 of the US-Singapore FTA), and Vietnam (Vietnamese Law on Intellectual Property (50/2005)). In Canada, Section 2(d) of the Canadian Patent Act does not exclude medical procedures from patentability, but case law prohibits patents on surgical and therapeutic methods, while allowing patents on diagnostic methods. In New Zealand, while medical procedures are not statutorily excluded from patentability, case law has generally rejected such patents. Only Australia—even though it maintained the flexibility to do so in the AUSFTA (Article 17.9.2)—the Patents Act of 1990 doesn’t specifically exclude medical procedures from patentability, and case law suggests that they are in fact patentable. [See Public Citizen’s website for more comparisons between domestic laws and proposed TPPA provisions.]

In the US, case law is swinging the pendulum even further away from broad medical procedure patents. Earlier this year, the Supreme Court reaffirmed the importance of limiting the adverse effects of diagnostic method patents, which remain among the most contentious of the medical procedure trio. In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. — (2012), the Court invalidated Prometheus’s patent on a diagnostic method that involved administering thiopurines and observing chemical reactions in the body as a basis for dosing advice, stating that the patent improperly claimed a natural law.

If only Australia allows for fully enforceable medical procedure patents, why would the USTR want to provide for them in the draft TPPA?

Why, indeed? The short answer: The power of the medical device lobby, of course. Knowledge Ecology International, which tracks intellectual property issues, comments:

An interesting example of how the US seeks to change national and global norms are the provisions in the TPP over patents on surgical methods. The WTO permits countries to exclude “diagnostic, therapeutic and surgical methods for the treatment of humans or animals.” The US wants to flip this provision, so that “may also exclude from patentability” becomes “shall make patents available.” …. The US proposal, crafted in consultation with the medical devices lobby, but secret from the general public, was similar, but different from the U.S. statute, which narrowed the exception in cases involving “the use of a patented machine, manufacture, or composition of matter in violation of such patent.” How different? As Public Citizen’s Burcu Kilic puts it, under the US proposal in the TPP, the exception would only apply to “surgical methods you can perform with your bare hands.”

Why is the United States putting so much effort into narrowing if not eliminating the flexibility in the WTO agreement to provide exceptions for patents on “diagnostic, therapeutic, and surgical methods for the treatment of humans or animals”? It did not hurt that AdvaMed, the trade association for the medical device manufacturers, hired Ralph F. Ives as Executive Vice President for Global Strategy & Analysis. Before becoming a lobbyist for the medical device industry, Ives was the head of pharmaceutical policy for USTR. And Ives is just one of an army of lobbyists (including former Senator Evan Bayh) representing the medical devices industry. ITAC3, the USTR advisory board for Chemicals, Pharmaceuticals, Health/Science Products And Services, includes not only Ralph Ives, but also representatives from Medronic, Abbott, Johnson and Johnson, DemeTech, North Coast Medical and Airmed Biotech — all companies involved in the medical device business. All are considered “cleared advisors” to USTR and have access to the TPP text.

Alrighty, then. So, what will happen if the TPP passes with this clause in it? It’s actually going to be worse than you can possibly imagine, because [drumroll] enter patent trolls, who will end up doing for medical procedures what they have already done for the software industry. Here’s how they operate, according to the EFF:

A patent troll uses patents as legal weapons, instead of actually creating any new products or coming up with new ideas. Instead, trolls are in the business of litigation (or even just threatening litigation). They often buy up patents cheaply from companies down on their luck who are looking to monetize what resources they have left, such as patents. Unfortunately, the Patent Office has a habit of issuing patents for ideas that are neither new nor revolutionary, and these patents can be very broad, covering everyday or commonsense types of computing – things that should never have been patented in the first place. Armed with these overbroad and vague patents, the troll will then send out threatening letters to those they argue infringe their patent(s).These letters threaten legal action unless the alleged infringer agrees to pay a licensing fee, which can often range to the tens of thousands or even hundreds of thousands of dollars.

Many who receive infringement letters will choose to pay the licensing fee, even if they believe the patent is bogus or their product did not infringe. That’s because patent litigation is extremely expensive — often millions of dollars per suit — and can take years of court battles. It’s faster and easier for companies to settle.

So, if some guy decided to patent a medical procedure like, oh, looking at a patient’s teeth using a dental mirror (“tilt the mirror at the correct angle to display the crown or other surface”) that patent could be approved, if the examiner had a bad day, even though the procedure is neither new nor revolutionary. That would raise the price of dental care world-wide, an the profit would be creamed off by the rentier, the patent troll. So if you’re getting your teeth done in Mexico or Thailand or Costa Rica, you might want to think about that.

And the medical device industry, already thinks like patent trolls think; lots of minor modifications for marketing purposes:

Currently, medical-device manufacturers allocate only a sliver of profits to research and development and often focus on “tweaks” to existing devices, without providing any evidence that they are of better quality. Competitive pressures from public and private payers would provide incentives for the industry to become more innovative, producing technologies that actually lowered costs and offered truly advanced breakthroughs.

Just imagine the new horizons that will open up for them when they can lock in monopoly profits by patenting the procedures that their devices support! The dental mirror guys are gonna make a packet, because like Public Citizen said: Under TPP, anything except what doctors do “with their bare hands” is up for grabs.

Now, it is true that the U.S. has attempted to rein in the patent trolls through domestic legislation. However, here enters one of the most noxious of TPP’s many misfeatures: The patent trolls could sue the US (or any other government) for lost profits in trans-national, rigged tribunals. Nice work if you can get it!

* * *

So, if you’re one of the 750,000 Americans yearly who seek out sanely priced and humane medical care in foreign countries, give your congress critters a call and tell them the TPP ought to be deep-sixed, and at the very least, should not be fast-tracked so it gets a decent, public hearing. (And while you’re on the topic of health care, mention single payer!)


[1] And never mind the arbitrage comes right out of your pocket directly to some patent trolls pocket; the medical practitioner won’t see it.

[2] It’s like the neo-liberals don’t want us to escape!

[3] Or cash, right out of your pocket, if that’s how you pay for medical care in other countries.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. MikeNY

    Excellent post. “Rent extraction device” is funny because it is true.

    I’ll make the calls you suggest.

    1. trish

      Lambert’s posts often make me simultaneously laugh and cringe with yet another wave of revulsion and anger at the increasing corruption of our corporate plutocracy.

  2. trish

    Public outcry seems to be the only force against the lure of the lucrative revolving door, the corporate funding/pay-offs to our “congress critters” (seems too gentle and benign a term for them). And those congress critters won’t be the ones worrying about paying for medical procedures.

    great piece, as always.

    wish our MSM would run this kind of piece.

    1. OpenThePodBayDoorsHAL

      LOL “public outcry” LOL
      Just like there was “public outcry” when suicide banker Hank Paulson held Congress hostage for a sweet $700 billion worth of TARP for his pals?
      Or the “public outcry” when Obomba shut down any possibility that health care reform would be single payer so that Big Insurance could make a windfall?
      Or maybe the “public outcry” when the Obomba pushed to expand NSA spying after he promised to “reform” it?
      Or the “public outcry” as Obomba decries Crimea’s election results, with a larger voter turnout than any US election since 1900?

      1. Jess

        The Crimean vote? I agree with the other points you made but this one is just laughable. I have friends well placed in the Ukrainian community (average folks) and here’s what I heard today from one of them who has friends in the Crimea:

        Voting is “required”. Patrols are driving around in jeeps to voter’s doors and getting them to sign the voting envelope which contains the ballot — which has already been filled out. (HuffPo now reports the vote to join Russia was 95% yes. Contrast this with the pro-and-anti Russia Gallup poll results cited in the Foreign Affairs article in today’s Links.)

        Just because the US and the EU and the IMF want their hooks into Ukraine doesn’t mean that Putin isn’t also an imperialist bastard. (Not to mention the fact that Stalin murdered 7.5 million Ukrainians prior to WWII, and thus very few Ukrainians in the western portion of the country have any love lost for Russia. Plus, of course, the fact that a huge percentage of those of Russian ethnic background living in eastern Ukraine were moved there by Stalin after his genocide.)
        Like I said, you’re right on the other points but on this one you’re dead wrong. This vote is a farce. Of course, that will have no effect on what Putin does.

        1. OpenThePodBayDoorsHAL

          Conceded, willingly, with the facts you present.
          Let’s substitute “Or the public outcry when Obomba fights to reduce protections for whistleblowers”, or “Or the public outcry when Obomba decided to send 35,000 more troops to Afghanistan”, or “Or the public outcry when Obomba insisted on keeping Guantanamo open”, or…or…or…

        2. Nathanael

          I don’t know why Putin thinks that running a fake election, similar to the one for Nazi Germany’s annexation of Austria, is going to get him ANY credibility.

          It’s kind of a stupid thing to do, geopolitically speaking. Putin probably could have won an honest Crimean election if he was careful with his propaganda, but instead he looks like a brutal dictatorial invader.

  3. JDM

    Hey, there’s more than one way to have the best health care in the world. Why go the more difficult route of competing on the merits? Just bring everybody else’s down to our level. Bonus aspect: secret courts for enforcement!

  4. kris

    Excellent article. Made me wonder who ever thought of selling patents anyway, and why it was allowed.

  5. Sierra7

    “Raise” the costs to consumers of necessary services……by treaty…..
    “Crush” the level of wages…… treaty…..
    That’s called…..”Free Trade”

  6. Marcie

    Great post. It is scary when you think about it. Forced to take the medical care that is the worst in the world the TPP should be stopped.

  7. allcoppedout

    At your best here Lambert (and that’s a good best). I have a bit to do with protesting this kind “trade agreement” here and we are coming round to believe the game is lost, planning to focus a rearguard action in excluding the NHS from such.

  8. Banger

    Lambert, your first paragraph is a beautiful piece of writing as I’ve read in quite a while here.

    The TPP is going nowhere–there’s too much opposition to the provisions already let alone when these provisions become better known. I believe the U.S. trade reps may actually be negotiating in bad-faith. They are representing their feudal lords too well and thus undermining their interests. I am pretty certain that major parts of the right will oppose these treaties therefore dooming them. Patent law has, clearly, become one of the most important causes of a lack of creativity currently infecting the USA.

  9. Bill

    Very fair. Out here on the perimeter (NZ), we gaze in slack-jawed amazement at most US proposals for the TPP. There is suspicion they are intended to derail the whole process and prevent free trade ever happening in real stuff, like farm products. On balance, that would be OK by me.

  10. David

    If this raises the price of medical care for US citizens it’s because it would also raise the price for citizens of those other countries. And then their citizens really could not afford medical care at all.

    Then they would need to have communist revolutions to enact big government to provide the service to their people at local prices.

  11. Nathanael

    The good news is that no major country in the world will agree to the TPP, due to its egregious awfulness, so medical tourism will remain viable. (I don’t count the US as a major country any more; the US is like concession-era China.)

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