PIJIP Statement on the Release of the 2010 Special 301 Report

April 30, 2010

Sean Flynn: 202-294-5749 | sflynn@wcl.american.edu
Associate Director, Program on Information Justice and Intellectual Property
American University Washington College of Law

Today the U.S. Trade Representative (USTR) released the 2010 Special 301 Report. One of the hallmarks of the report is the threatening of countries with trade sanctions for intellectual property policies that do not violate any trade agreement. This use of the report is not required by the authorizing statute and, particularly with respect to access to medicines issues, such use violates international trade and human rights law as well as the Administration's own policies.

The 2010 Report report continues to attack countries for using intellectual property flexibilities to access medicines, though the report does show some improvement over previous year.  According to PIJIP Professor Sean Flynn:

On preliminary review, it looks like the public health representation before USTR this year on the 301 report had some noticeable effect on it, although the report as a whole is still very bad for access to medicines. The most notable change may be a decrease in the number of citations of countries for lacking patent-registration linkage.  However, the 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. USTR expresses concern about compulsory licenses in Thailand and Ecuador and about TRIPS compliant patentability criteria in India and Brazil. The most frequently asserted complaint on medicines issues continues to be a lack of U.S. or EU-style “data exclusivity” rules, despite the removal of a data exclusivity requirement from TRIPS in the negotiation.

To view the full report, as well as submissions to USTR by public health groups, and many other resources, please see http://wcl.american.edu/pijip/go/301.  A breif analysis of the Special 301 Program is below.


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 essentially no weight in the process, as they were told at various points by different government officials. Industry, on the other hand, traditionally sees 75% to 85% of their recommendations adopted in the report, an influence rate that does not appear to have changed in this administration.

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