Case Studies on Corporations and Global Health Governance by Nora Kenworthy Ross MacKenzie & Kelley Lee

Author:Nora Kenworthy, Ross MacKenzie & Kelley Lee
Language: eng
Format: epub
Tags: undefined
Publisher: undefined
Published: 2012-03-12T16:00:00+00:00

Implications of Eli Lilly Challenge for Global Health Governance

The Canadian Supreme Court upheld the revocation of two of Eli Lilly’s patents on the grounds that they did not adhere to the domestic patent law of a sovereign state. Dissatisfied with this outcome, Eli Lilly turned to an international arbitral tribunal system in 2012 according to which three privately appointed arbitrators will rule on whether Canadian patent law is compliant with NAFTA’s investor protections. Within the international investment arbitration system, this ‘elite 15’ have decided 55 percent of all investment disputes, and 75 percent of all disputes valued at around US$4 billion. Many of these elite arbitrators have sat on corporate boards, and concerns about their true independence have been raised. Individuals, for example, could be motivated to find in favour of an investor to elicit future appointments (Eberhardt and Olivet 2012). In 2014 the panel that ordered Russia to pay damages in excess of US$50 billion to Yukos Oil (Davies et al. 2014), the largest arbitral award thus far, was entirely comprised of ‘elite 15’ arbitrators, with another ‘elite 15’ arbitrator representing the investor. Although the tribunal does not have the authority to overturn Canadian law, it can award financial compensation large enough to make it prohibitive to enforce in the future.

While precedent is not de jure in these courts, it is often implemented de facto. If the tribunal were to support Eli Lilly’s reinterpretation of the national treatment standard, the decision would enter into existing case law and become available for reference in future litigation. Obliging countries to compensate pharmaceutical companies for upholding national patenting standards that are more stringent than familiar international standards undermines national sovereignty and provides corporations with new channels into influencing domestic policy, particularly in areas where they may have previously lacked enough political influence to develop more industry-friendly and capital-accumulating standards. Canada’s promise doctrine attempts to deter speculative patenting. Patent law in other countries, such as India, is intended to deter pharmaceutical companies from renewing patent protections (and thus higher prices) on new uses of existing or known drugs that do not increase therapeutic efficacy (Kapczynski 2015). Protecting the patenting system from exploitation by pharmaceutical companies, including unsubstantiated utility or so-called evergreening,[2] is recognized as vital to achieving affordable access to medicines. If Eli Lilly proves to be successful, it may weaken Canada and India’s ability to uphold these elevated standards and deter other states from introducing similar measures.

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