Review of the 2010 Special 301 Report Sections on IP and Access to Medicines
Sean Flynn
Updated May 3, 2010
The 2010 report indicates there has been a major policy change in the Obama administration on the issue of linkage. "Linkage" refers to requirements that FDA-like marketing authorities not register generic copies of medicines for which there is a patent claimed by a supplier. The rule in the US has led to "ever-greening" - where marketing monopolies are continually extended with new (often baseless) applications for patents that prohibit FDA approval of generics until the patent dispute is litigated. The WTO TRIPS agreement does not require countries to implement linkage rules.
In 2009, a lack of linkage was the second most cited medicines-related complaint in Special 301 (after data exclusivity). This year, the only countries cited for lacking linkage in the report are those that agreed to linkage requirements in FTAs signed before the New Trade Deal with Peru and other countries. For example Chile and Dominican Republic are cited for lack of linkage, but both signed trade agreements with the U.S. containing a linkage requirement. At least on the issue of linkage, the new administration has embraced a more progressive rule that countries will not be cited in 301 for lacking a policy not clearly required by TRIPS or an FTA obligation with the U.S.
Unfortunately, this new rule is not applied to other areas. The US still cites countries for lacking data exclusivity, even though the U.S. proposal that TRIPS include a data exclusivity requirement was rejected in the WTO negotiations.
Although data exclusivity is still complained about in the 2010 report, the number of countries cited for this issue has decreased from 21 in 2009 to 15 this year. It is not clear from the report what accounts for this change.
The concerns of state officials protesting the use of 301 to criticize reimbursement policies abroad that are similar to those used by U.S. Medicaid programs had minimal effect. There is a renamed section on price controls that continues to target "unfair" reimbursement policies without describing what is unfair about them or how these programs differ from what states now do to reduce drug prices. There are fewer countries cited for such reimbursement policies than in the past. But states should continue to be concerned that pharmaceutical reimbursement policies appear at all in the report. There is nothing in the 301 statute that authorizes USTR to pressure or sanction other countries for their pharmaceutical reimbursement policies. There is nothing in the report that backtracks from Ambassador Kirk's expressed support for a new international trade agreement that would "discipline" pharmaceutical pricing programs in developed countries such as the U.S.The statement in the 2010 301 report on public health has a more robust endorsement of the Doha Declaration than in last year's report. But the report continues to refuse the requests of public interest groups to endorse the language of the declaration supporting rights to use TRIPS flexibilities “to the full” to promote access to medicines. This is an unfortunate lost opportunity for the administration to distance itself from the previous administration's antipathy toward the Doha Declaration.
The most notable change in the language
endorsing the Doha Declaration is the removal of the qualification of
US support for the use of flexibilities only in a “crisis” or
“emergency.” The statement says that the US the “respects a country’s
right to protect public health and, in particular, to promote access to
medicines for all,” and also refers to support of TRIPS flexibilities
to respond to “public health challenges.” These are much broader
categories of public interest concerns than the US has previously
endorsed.
As in the past, Special 301 program continues to be
used to pressure developing countries to adopt heightened intellectual
property protection and reduced price regulation of medicines in
developing countries. In addition to the 15 citations for data
exclusivity (Algeria, Argentina, Brazil, Chile, Dominican
Republic, Egypt, India, Indonesia, Lebanon, Malaysia, Mexico, Pakistan,
Paraguay, Turkey, and Vietnam), USTR expresses concern about compulsory
licenses in Thailand and Ecuador and about TRIPS compliant
patentability criteria in India, Brazil and the Philippines.
The uses of Special 301 to threaten unilateral sanctions on countries for not adopting controversial interpretations of TRIPS (e.g. on data exclusivity) or for not adopting policies that exist no where in any binding agreement violates the multilateral dispute resolution and most favored nation clauses of the WTO agreement. There is no authority under international law for the U.S. to decide for itself what intellectual property or pharmaceutical price regulation policies other countries should have and to sanction them for noncompliance with the unilaterally generated norm. International law generally, and the WTO specifically, was established to avoid precisely this sort of exertion of power.
Expanded analysis of some of the comments above and excerpts from the 2010 301 report follow.
Special 301 Violates the Agreement Establishing the World Trade Organization
Special 301 is an illegal program under international trade law. The Special 301 program is a relic of the pre-WTO period in US trade policy where unilateralism triumphed. The program authorizes USTR to threaten and sanction countries for intellectual property policies that do not violate the WTO agreement on intellectual property rights or any other legally binding instrument. It is a way to press other countries to do what we want because we want them to - not because they have agreed. As such, it violates our WTO commitments to multilateral dispute settlement and most favored nation treatment. Countries are not permitted under the WTO to adjudicate their own trade disputes and sanction other countries with trade barriers or threats of them as they wish. The continuation of this program under a unilateral Republican Congress and Administration in the last decade was not surprising given their overall foreign policy perspective. By why is this new administration and this new Congress committed to continuing an illegal, unilateral program that sanctions other countries for legal policies?
Use of Special 301 to Restrict Access to Medicines Violates the Administration's Own Policies and Commitments to Global Health
The use of Special 301 to press developing countries to adopt intellectual property protections and pharmaceutical regulation restrictions in excess of those mandated by the WTO or other trade rules shocks the conscious and violates the administration's stated policies in this field. The Obama Administration is committed to a global health policy to "increase access to affordable drugs" in developing countries, including through support for "the rights of sovereign nations to access quality-assured, low-cost generic medication to meet their pressing public health needs under the WTO's Declaration on Trade Related Aspects of Intellectual Property Rights (TRIPS)." It is a signatory to the Doha Declaration, which affirms the "the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility" to promote access to medicines for all. And the United States has endorsed the 2008 World Health Organization (WHO) Global Strategy on Public Health, Innovation and Intellectual Property Rights, WHA61.21, which pledges "to take into account in trade agreements the flexibilities contained in the Agreement on Trade-Related Aspects of Intellectual Property Rights and including those recognized by the Declaration on the TRIPS Agreement and Public Health adopted by the WTO Ministerial Conference." Yet, Obama's USTR is continuing the Bush Administration policy of using Special 301 threats and sanctions to promote excessive intellectual property rules in developing countries that cannot afford the medicines they need even without such an increase monopoly protections.
Pressure on Access to Medicines Violates International Human Rights Obligations
The report violates more than the administration's own policies - it violates the internationally recognized rights of people in developing countries to have access to needed and affordable medications. Promoting access to affordable medicines for the poor is a widely recognized human rights duty, emanating from the recognition of civil and political as well as social and economic rights that bind the United States. Health and social policies which increase mortality and morbidity implicate the right to life in Article 6(1) of the International Covenant on Civil and Political Rights as well as Articles 22 and 25.1 of the Universal Declaration of Human Rights. States are bound to promote and protect the rights to life and health not only of their own citizens, but also of the citizens of other countries affected by their foreign policy, trade and assistance programs. As described in a Report to the UN General Assembly by the Special Rapporteur on the Right to Health, to promote access to medicines and the right to health while complying with the minimum standards of the TRIPS agreement, developing countries
"should incorporate the flexibility to: (a) Make full use of the transition periods; (b) Define the criteria of patentability; (c) Issue compulsory licences and provide for government use; (d) Adopt the international exhaustion principle, to facilitate parallel importation; (e) Create limited exceptions to patent rights; (f) Allow for opposition and revocation procedures. In addition, countries need to have strong pro-competitive measures to limit abuse of the patent system."
The Obama Administration's use of Special 301 violates these international human rights norms. A complaint has already been filed with the UN Human Rights Council seeking investigation of this matter in its November 2010 Universal Periodic Review of the United States under human rights instruments. PIJIP will work with public health advocacy organizations to file other complaints in appropriate forums to force the Administration to account for its policies.
The Administration's Policies Threaten Affordable Medicines in the U.S.
State legislators and officials have long opposed the use of trade policies to push for new international standards that would limit pharmaceutical pricing regulations, including those in the U.S. Maine Governor John Baldacci is the latest such official to criticize this trend toward "a trade policy that might ultimately constrain the ability of the State of Maine and the federal government to continue best practices to control pharmaceutical prices." His letter to Secretary Sebelius and Ambassador Kirk this week explained:
The USTR is not a health-regulatory authority and it has no expertise in public health matters. I hope that the USTR will reverse the previous administration's support for using trade policy to restrict governmental powers to control medicine prices. . . . Medicaid and other local programs run by the state and federal governments provide healthcare for over 40 million people. To control the costs of pharmaceuticals in these programs, some states compare the safety, efficacy and cost effectiveness of new drugs to existing therapeutic alternatives and construct Preferred Drug Lists (PDLs) for preferential reimbursement. There are also federal mandates that require companies to offer their best prices to Medicaid. Similar mechanisms keep drug costs low for the Veterans Administration, Defense Department and the General Services Administration. As a result, although consumers and businesses in the U.S. generally pay the highest drug prices in the world, the prices for government-run programs in the U.S. tend to be equal to or lower than, the prices in Canada and other wealthy countries with national health insurance.
The past administration pursued a trade policy that sought to limit the ability of foreign governments to restrain medicine prices. At the public hearing on the Special 301 report held in March 2010, government officials indicated that there has not been any policy change on this issue in President Obama's Administration, and that the Special 301 Report would continue to press countries to restrict pharmaceutical pricing programs that are substantially identical to those used by states such as Maine. Trade agreements are, of course, reciprocal by nature. The USTR should not promote policies abroad that it is not prepared to require at home.
As you know, the success of health reform, including the federal role in covering much of the costs of state Medicaid expansion, depends on the ability of governments to control pharmaceutical costs. An administration-wide policy to protect the right of governments to affect medicine prices is in the best interests of citizens. I urge you to work to ensure that such a policy is reflected in the Administration's trade agenda.
The 301 Process is Flawed and Biased
Despite modest changes this year, the Obama Administration continues to use a flawed, biased and non-transparent process for creating this report. In the hearings and meetings with public health advocates on Special 301, the invited representative of HHS did not even show up, much less influence the process toward public health outcomes. Public health advocates made up 85% of the submissions at an all-day public hearing on the report, but those submissions carried vary little weight in the process. Industry, on the other hand, traditionally sees 75% to 85% of their recommendations adopted in the report, an influence rate that appears similar in this year's report.
Further Information:
- PIJIP Submissions and Testimony to USTR, 2010
- PIJIP News Releases
- PIJIP Webpage on Special 301
EXCERPTS FROM REPORT
For example, USTR works closely with
the Department of Health and Human Services to ensure consistency of
the Administration’s trade policy (including support for the 2001 WTO
Doha Declaration on the TRIPS Agreement and Public Health) with the
Administration’s health policy.
In 2010, USTR will conduct
OCRs of the Philippines and Thailand to monitor progress on IPR
protection and enforcement in those countries, and to consider again
their Special 301 status.
. . .
Numerous comments in
the 2010 Special 301 review highlighted important concerns arising at
the intersection of IPR policy and health policy. The 2001 WTO Doha
Declaration on the TRIPS Agreement and Public Health (Doha Declaration
on TRIPS and Public Health) recognized the gravity of the public health
problems afflicting many developing and least-developed countries,
especially those resulting from HIV/AIDS, tuberculosis, malaria, and
other epidemics. As affirmed in the Doha Declaration on TRIPS and
Public Health, the United States respects a country’s right to protect
public health and, in particular, to promote access to medicines for
all, and supports the vital role of the patent system in promoting the
development and creation of new and innovative lifesaving medicines.
The assessments set forth in this Report are based on various critical
factors, including, where relevant, the Doha Declaration on TRIPS and
Public Health.
Consistent with these views, the United States
respects our trading partners’ rights to grant compulsory licenses, in
a manner consistent with the provisions of the TRIPS Agreement, and
encourages our trading partners to consider ways to address their
public health challenges while maintaining intellectual property
systems that promote investment, research, and innovation.
The
United States is firmly of the view that international obligations such
as those in the TRIPS Agreement have sufficient flexibility to allow
countries to address the serious public health problems that they may
face.
We strongly support the WTO TRIPS/health solution
concluded in August 2003, in which members are permitted, in accordance
with specified procedures, to issue compulsory licenses to export
pharmaceutical products to countries that cannot produce drugs for
themselves. The General Council adopted a Decision in December 2005
that incorporated this solution into an amendment to the TRIPS
Agreement, and later that month the United States became the first WTO
member to formally accept this amendment. The United States hopes to
see at least two-thirds of the WTO membership accept this amendment by
the December 31, 2011 deadline, at which point the amendment will go
into effect for those members that accept it. The August 2003 waiver
will remain in place and available until the amendment takes effect.
The
United States will work to ensure that the provisions of our bilateral
and regional trade agreements are consistent with these views and do
not impede the taking of measures necessary to protect public health.
Accordingly, USTR will continue its close cooperation with the
Department of Health and Human Services to ensure that public health
challenges are addressed and the patent system is supported as a
mechanism to promote research and innovation.
Supporting Pharmaceutical and Medical Device Innovation through Improved Market Access
USTR
has sought to reduce market access barriers faced by U.S.
pharmaceutical and medical device companies in many countries, and to
facilitate both affordable health care today and the innovation that
assures improved health care tomorrow. For example, this year’s Special
301 Report highlights concerns regarding market access barriers
affecting pharmaceutical products in Algeria and Indonesia.
Even
where a country’s IPR regime demonstrates a commitment to strong IPR
protection, other types of measures have the potential to affect market
access in the pharmaceutical and medical device sector. For example,
government practices including unreasonable regulatory approval delays
and potentially unfair reimbursement policies can discourage the
development of new drugs and other medical products. The criteria,
rationale, and operation of such measures are often nontransparent or
not fully disclosed to patients or to pharmaceutical and medical device
companies seeking to market their products. USTR encourages trading
partners to provide appropriate mechanisms for transparency and
opportunities for public engagement in the context of their relevant
health care systems
U.S. industry has expressed concerns
regarding the policies of several industrialized trading partners,
including Finland, France, Italy, Japan, Korea, New Zealand, Poland,
and Taiwan, on issues related to innovation in the pharmaceutical
sector and other aspects of health care goods and services. For example:
- With respect to Japan, pharmaceutical and medical device issues are an integral part of bilateral discussions. While Japan has made progress on these issues, the United States continues to press for improved transparency, which would facilitate the introduction of innovative pharmaceuticals and medical devices into Japan’s market. Ways to improve transparency include ensuring meaningful opportunities for interested stakeholders to provide input into important regulatory, reimbursement, and pricing matters.
- With regard to Poland, the United States remains concerned about Poland’s enactment in 2006 of a regulation that appears to reduce the official maximum wholesale and retail prices for imported drugs by 13 percent, while generally leaving the prices for drugs of Polish origin unchanged. The U.S. pharmaceutical industry reports that this regulation has had a significant impact by reducing prices for numerous products manufactured outside Poland. The United States is concerned that this regulation created an impediment to market access for this industry and will continue to monitor the situation in Poland throughout the coming year.
The United States is seeking to establish or continue
dialogues with Organization for Economic Cooperation and Development
(OECD) members and other developed economies to address these and other
sectoral concerns, and encourage a common understanding on questions
related to innovation in the pharmaceutical and medical device sectors.
For example, the United States-Korea Free Trade Agreement, once in
force, would improve access to innovative medical products and ensure
the transparent, predictable, and non-discriminatory pricing and
reimbursement of innovative and generic pharmaceutical products, and
medical devices. Separately, the United States is also continuing its
engagement with China to promote fair and transparent policies in this
sector.
The United States shares policy goals and concerns
related to health care with other countries, including challenges
surrounding aging populations and rising health care costs. The United
States
also shares the objective of continued improvement in the health and
quality of life of its citizens, and the objective of delivering care
in the most efficient and responsive way possible. The United States
looks forward to engaging with these trading partners to address
specific concerns related to reimbursements, regulatory policies, and
transparency.
India
One concern in this regard is a
provision in India’s Patent Law that prohibits patents on certain
chemical forms absent a showing of increased efficacy. While the full
import of this provision remains unclear, it appears to limit the
patentability of potentially beneficial innovations, such as
temperature-stable forms of a drug or new means of drug delivery. The
United States also encourages India to provide protection against
unfair commercial use, as well as unauthorized disclosure, of
undisclosed test or other data generated to obtain marketing approval
for pharmaceutical and agricultural chemical products.
Thailand
In
the pharmaceutical sector, the United States encourages Thailand to
engage in a meaningful and transparent manner with all relevant
stakeholders, including owners of intellectual property rights, as it
considers ways to address Thailand’s public health challenges while
maintaining a patent system that promotes investment, research, and
innovation. In addition, the United States reiterates its support for
the 2001 Doha Declaration on the TRIPS Agreement and Public Health, as
described in Section I of this Report. Overall, the United States
encourages Thailand to continue its efforts to strengthen its IPR
protection and enforcement regime, and looks forward to working with
Thailand in the coming year through the OCR.
Brazil
Patent
concerns remain, including about the scope of patentability and the
uncertain role of ANVISA, Brazil’s sanitary regulatory agency, in
examination of certain patent applications. Brazil also does not
provide for the adequate protection against unfair commercial use, as
well as unauthorized disclosure, of undisclosed test or other data
generated to obtain marketing approval for pharmaceutical products.
Dominican Republic
The
United States is also concerned about excessive delays in the issuance
of patents. The United States will continue to monitor the Dominican
Republic’s implementation of its bilateral and multilateral obligations
to provide an effective system for protecting against unfair commercial
use, as well as unauthorized disclosure, of undisclosed test or other
data generated to obtain marketing approvals for pharmaceutical and
agrochemical products, and to provide an effective system to address
patent issues expeditiously in connection with applications to market
pharmaceutical products. The United States looks forward to future
cooperation on IPR matters with the Dominican Republic, and will
continue to monitor the Dominican Republic’s implementation of its IPR
commitments under CAFTA-DR.
Ecuador
The United States
is also concerned about excessive delays in the issuance of patents.
The United States will continue to monitor the Dominican Republic’s
implementation of its bilateral and multilateral obligations to provide
an effective system for protecting against unfair commercial use, as
well as unauthorized disclosure, of undisclosed test or other data
generated to obtain marketing approvals for pharmaceutical and
agrochemical products, and to provide an effective system to address
patent issues expeditiously in connection with applications to market
pharmaceutical products. The United States looks forward to future
cooperation on IPR matters with the Dominican Republic, and will
continue to monitor the Dominican Republic’s implementation of its IPR
commitments under CAFTA-DR.
Egypt
The United States
continues to urge the Ministry of Health to clarify its commitment to
protect against unfair commercial use, as well as unauthorized
disclosure, of undisclosed test or other data generated to obtain
marketing approvals for pharmaceutical products, and to provide an
effective system to address patent issues expeditiously in connection
with applications to market pharmaceutical products.
Peru
In connection with its obligations under the PTPA, Peru should clarify its system for protecting undisclosed test or other data submitted to obtain approval of agricultural chemical products, particularly in light of recent measures that appear to provide for automatic approval of generic products.
