[Ip-health] IUT: USTR IPR Text Moves Away From 'May 10' Deal

Peter Maybarduk pmaybarduk at citizen.org
Fri Sep 16 10:49:22 PDT 2011

Inside U.S. Trade - 09/16/2011

USTR IPR Text Moves Away From 'May 10' Deal, Draws Fire From NGOs

Posted: September 15, 2011

The U.S. proposal on pharmaceutical patent provisions in the Trans-Pacific Partnership (TPP), tabled this week during the eighth round of talks, moves away from patent provisions contained in the "May 10" deal and offers pharmaceutical companies at least the possibility of enjoying stronger patent protections if they follow certain steps.

The approach immediately drew fire from public health advocates, who have long urged the Office of the U.S. Trade Representative to base its proposal on the May 10 standard. There were also early signs this week that the proposal, which has not been publicly released, will face objections from House Ways and Means Committee Democrats.

"We don't even want USTR to blindly follow May 10; there may be better ways to address various issues," one Democratic House aide explained. "At the same time, we have not been persuaded that some of the ideas described in that paper are in any way an improvement."

A pharmaceutical industry source declined to provide an overall comment on the proposal until more details become clear. However, this source said that the USTR "white paper," publicly released this week, outlining its approach on intellectual property rights in the TPP talks does appear to signal movement in a positive direction.

The major element of the U.S. confidential proposal appears to be that pharmaceutical companies could reap rewards in the form of stronger patent protections that go beyond protections required by the May 10 deal. To enjoy such protections, however, they must seek to gain marketing approval for their drugs in other TPP countries swiftly.

In its white paper, released Sept. 12, USTR proposes a "TPP access window" during which time obligations to apply "certain pharmaceutical-specific intellectual property protections" would be conditioned on the requirement drug companies seek marketing approval in TPP markets "within an agreed window of time."

The length of this "window of time" is undetermined and subject to negotiations, a U.S. trade official said.

Speaking with reporters on a conference call, U.S. trade officials signaled that companies that pursue marketing approval within this window of time would benefit from stronger patent linkage, patent term extension and data exclusivity provisions under a final TPP deal, whereas companies failing to act as swiftly would not.

Under the May 10 deal, patent linkage and patent term extensions were optional, and the officials signaled that the "stronger" TPP protections would mean that these would be mandatory. They also signaled that companies would enjoy stronger data exclusivity provisions, which were altered under the May 10 deal.

The May 10 deal changed the previous USTR template on data exclusivity by allowing a partner country to observe the data exclusivity period in the United States, where a drug is typically first marketed, instead of providing five years of protection starting once the drug is approved for marketing in the FTA country.

According to the white paper, this new approach in the TPP talks would have the affect of encouraging companies to seek swift marketing approval of brand name drugs in other countries, while establishing a pathway for generic drugs to enter those markets once the specified patent protections run out.

The official said this will provide drug companies with an incentive "to bring drugs to market in places they might not otherwise be brought to market." Currently, these companies don't seek marketing approval right away "because there's not an adequate incentive to go there and bring innovative products to the health care systems and patient populations," the official said.

Observers have said that U.S. pharmaceutical drug companies often do not seek marketing approval for their brand name drugs in other countries until years after attaining U.S. approval, partly due to their fear that if they did, generic versions of their drugs would crop up prematurely in other countries and undermine their profits.

This means that potential customers in those countries do not have access to these brand name drugs for years.

The white paper does not explicitly state whether the United States intends to abandon these May 10 IPR provisions for those companies that seek marketing approval in other TPP countries within the specified window.

While U.S. negotiators tabled provisions on pharmaceutical patents on Sept. 12, they did not include a proposal for a data exclusivity period for biologic drugs, another controversial issue in the talks. Observers speculate that there may be an internal debate on how USTR should proceed with this issue.

Pharmaceutical drug companies are pushing USTR to propose 12 years of data exclusivity for biologic drugs, which is the period of time contained in the 2010 health care reform bill. In his fiscal year 2012 budget proposal, however, President Obama asked that the term be reduced to seven years.

One pharmaceutical industry source said the new U.S. TPP proposal has some worrisome elements, especially when it comes to biologic drugs. This source pointed out that biologic drugs are a new form of drug, and many TPP countries may not have a "pathway" yet developed for approving cheaper, generic versions of the brand name drugs.

Absent such a concrete pathway, U.S. pharmaceutical companies may hesitate to seek marketing approval for biologic drugs in these TPP countries, as they would not know how the process will unfold and whether the process could adversely affect their interests, this source said.

Another possible problem is that, once the window of opportunity has passed, a pharmaceutical company would have little incentive to seek marketing approval in a TPP country. If it did so, its product would receive weaker patent protections, and so this could be an unattractive option, this source argued.

Public health advocates this week slammed the new U.S. approach on patent protections in the TPP talks.

"It's a clear subterfuge toward ensuring the Obama administration can continue to carry the water" of pharmaceutical companies, said Matt Kavanagh of the Health Global Access Project. "Ensuring the profits of multinational pharmaceutical industry has not proven an effective strategy for getting medicines to people in need," he said.

Peter Maybarduk, access to medicines program director at Public Citizen, said it was "insulting that USTR has released this paper on 'access to medicines' on the same day that it has tabled its most controversial and access-restricting provisions at the Trans-Pacific FTA negotiations -- and then failed entirely to address those provisions, or the other access-restricting elements of its aggressive intellectual property proposal, in this paper."

Knowledge Ecology International (KEI) said the white paper released this week is more about market access than affordable pricing of drugs. "USTR seems to frame, as an access to medicine strategy, the granting of exclusive right to rely upon regulatory test data, patent linkage and patent term extensions to innovators who register drugs within a window of time," said Krista Cox, KEI staff attorney.

The white paper explains USTR's new Trade Enhancing Access to Medicines (TEAM) strategic initiative. In addition to the "TPP access window," the paper proposes enhanced legal certainty for manufacturers of generic medicines by means of "patent exceptions and incentives."

A U.S. trade official said these exceptions and incentives would provide legal certainty to generic companies on when a market would be open to their products. While providing few details, the official referenced a provision of the current U.S. IPR system known as the "Bolar Exception."

Under the Bolar Exception, generic companies may apply for access to patented technology and other data to start the development of a generic version of the brand name drug before the patent of the brand name drug expires, thereby allowing the generic version to go on the market as soon as possible.

The paper also hints at possible disciplines on national health care pharmaceutical reimbursement programs by requiring "basic norms of transparency and procedural fairness."
U.S. drug manufacturers have long argued that the mission of the Pharmaceutical Management Agency of New Zealand (PHARMAC) to drive down prices comes at the expense of respect for intellectual property, transparency to the public and patient access to better health outcomes (Inside U.S. Trade, April 29).

Another part of the proposal would immediately eliminate tariffs on medicines and medical devices among TPP countries. The initiative also seeks to minimize "discriminatory, burdensome, and unpredictable customs procedures, that impede access to innovative and generic medicines," according to the white paper.

The U.S. proposal will also make customs and criminal enforcement measures available that will prevent counterfeit medicines from entering TPP markets.

According to the white paper, it will also seek to reduce internal barriers to distribution of medicines by guaranteeing importing, exporting, and distribution rights with respect to medicines. It would also seek to minimize unnecessary regulatory barriers to promote "transparent and non-discriminatory regulatory structures."

Finally, the proposal would seek to reaffirm TPP parties' commitment to the Doha Declaration on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Public Health.
USTR, as part of its proposal, will also convene a TEAM Task Force that is composed of experts in the government that will consider innovative trade policy approaches for promoting access to medicines. The TEAM Task Force will have direct agency-to-agency discussions on this topic and will report to the inter-agency Trade Policy Staff Committee.

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