[Ip-health] TPP Access To Medicines Proposal Faces Strong Opposition

Sean Flynn sflynn at wcl.american.edu
Fri Mar 16 06:12:36 PDT 2012


Inside U.S. Trade - 03/16/2012

U.S. TPP Access To Medicines Proposal Faces Strong Opposition

Posted: March 15, 2012

A controversial U.S. proposal that the Obama administration says is
aimed at improving access to medicines in the Trans-Pacific Partnership
(TPP), along with other U.S. intellectual property (IP) proposals, met
strong resistance in last week's negotiating round in Melbourne,
according to informed sources.

 

TPP participants have refused to accept the U.S. access to medicines
proposal or its underlying principle of a so-called "access window,"
which describes a time period in which a company is required to seek
marketing approval for a drug in a TPP country in exchange for more
robust patent protections.

 

In the view of opponents, including representatives of the generic drug
industries, the proposal may bring brand-name pharmaceuticals to a
market sooner but could serve to prolong higher levels of protection for
those drugs and thereby delay the entry of affordable drugs in the
market.

 

However, the U.S. government has argued that the proposal is innovative
because it is using a stick and carrot approach to get pharmaceutical
companies to market products in countries they normally would not.

 

Some representatives of non-governmental organizations described the
debate in Melbourne as revealing universal opposition from the other TPP
participants, but to varying degrees. But some business representatives
and at least one U.S. official has offered a less dire description
post-Melbourne.

 

The U.S. government has informally acknowledged that TPP participants
have pushed back against the U.S. IPR proposals -- including opposition
to both patent and copyright issues, sources said. Melbourne was the
first substantive discussion of the U.S. proposal on creating an access
window, sources said.

 

Similarly, a U.S. pharmaceutical industry source rejected the notion
that the talks on IPR have "stalled," noting that "negotiations never
move in a straight line." This source also said that U.S. proposals
often incite debate because they seek to break new ground. "[U.S.]
provisions are almost always controversial," this source said. He said
any perceived resistance to the proposal is merely countries "thinking
out loud" on how the proposal would affect their markets.

 

Sources critical of the U.S. proposal said TPP countries fear the
"access window" approach blocks generic drugs from coming to market,
thereby driving up health care costs for these governments.

 

The U.S. industry source also noted that the U.S. pharmaceutical
industry has not yet developed a position on the U.S. access to
medicines proposal, and that doing so involves getting information on a
number of unanswered questions. "We don't know the extent to which we
would embrace it until we see the full contours of it," the source said.

 

The length of time that companies would have under the "access window"
to file for marketing approval in a TPP country is one of these issues,
the source said. The Pharmaceutical Research and Manufacturers of
America (PhRMA) and the Biotechnology Industry Organization (BIO) is
expected to provide input on this and other details of the U.S. proposal
by the next negotiating round in May (Inside U.S. Trade, March 9).

 

The U.S. IP proposal is not only controversial among TPP countries for
the access window but has also drawn fire because it would broaden what
could be patented beyond their current law and, in some cases, previous
trade agreements with the U.S.

 

For example, the U.S. proposal states that a new form, use or method of
using a known product may satisfy the criteria for patentability, even
if the invention does not result in increased efficacy. Additionally,
the U.S. proposal requires that patents be made available for
diagnostic, therapeutic and surgical methods. That would go beyond the
U.S.-Australia free trade agreement, where parties were allowed to
exempt from patentability diagnostic, therapeutic and surgical methods.

 

Also controversial are the U.S. proposals for copyright protections,
which include provisions that could be relevant for the liability of
Internet service providers if a user posts infringing information,
according to these sources. But copyright issues were less of an issue
in Melbourne because they were only briefly discussed, informed sources
said.

 

Other controversial issues discussed in Melbourne include the U.S. labor
proposal, which asks that countries uphold, in their laws and practices
the 1998 International Labor Organization (ILO) Declaration on the
Fundamental Principles and Rights at Work. That is a substantive change
from the earlier FTAs the U.S. negotiated with Singapore, Chile and
Australia and is mired in controversy. Only the U.S.-Peru FTA includes
that standard, according to private-sector sources.

 

Also mired in controversy are the U.S. demands for strict rules of
origin on textiles and footwear, which are opposed by such countries as
Vietnam, Malaysia, and Australia, private-sector sources said. The U.S.
has been negotiating textiles market access with Vietnam, Malaysia,
Brunei and New Zealand jointly, but may opt to pursue them with each
country bilaterally, according to one informed source.

 

Another unresolved controversial issue is whether the market access
commitments negotiated in TPP should be reflected in a single schedule
applying to all countries or in one document consolidating commitment
countries made to each other in bilateral agreements.

 

There was a strong presence of generic pharmaceutical companies in
Melbourne, including in meetings with negotiators and in the stakeholder
forums, sources said. Generic companies generally oppose the access
window proposal because they argue it could further delay their products
from being able to enter a market.

 

For those using the access window, the TPP would extend protections like
longer data exclusivity, patent linkage and patent term extensions akin
to the level offered in the U.S.-Korea FTA but higher than would
otherwise prevail in the TPP.

 

Under patent linkage, a country's regulators are obligated to deny a
marketing approval if they believe that a generic drug infringes on a
patent.

 

One generic drug industry source said the text of the U.S. proposal
opens the potential for a brand-name pharmaceutical company to use the
access window system to continue to receive enhanced protections among
TPP countries for an extended period of time that is longer than the
to-be-determined duration.

 

The U.S. proposal states that a company can benefit from stronger patent
protections if it commences the process of obtaining marketing approval
in a TPP country for a drug within "X" amount of time from the date of
marketing approval of the same product "in another party."

 

The source said the language "in another party" is problematic because
it would allow a company to stagger its use of the access window. For
example, a company could get initial marketing approval for a drug in
the U.S. and then, within the length of the unspecified "access window,"
it could seek marketing approval in New Zealand where it will get
enhanced patent protections.

 

But the company could then use the marketing approval in New Zealand to
begin another "access window" process in a third TPP country, thereby
once again receiving enhanced IP protections in the third country, the
source said.

 

The staggering of the access window could be repeated for each country
the company wants to market the drug, according to the source. If the
text of the proposal were to state that the access window would commence
from the date of marketing approval in the country where it was first
granted, a company would be limited to one access window.

 

The generic pharmaceutical industry in the U.S. and other TPP countries
are advocating that the U.S. use the provisions from the May 10, 2007,
agreement, which applied to U.S. trade deals with Panama, Colombia and
Peru and made it optional to implement mandatory patent term extensions
and patent linkage, according to informed sources.

 

During the Melbourne round, generic companies presented an analysis to
negotiators showing that a system of mandatory patent linkage under the
"access window" proposal would not contain the potential benefits for
the generic industry as it does in the U.S. where the market is much
larger.

 

The patent linkage system in the U.S. proposal would require TPP
countries to place an automatic delay on the marketing approval of an
allegedly infringing generic version of a drug to ensure the generic
product does not come to market while legal proceedings unfold.

 

The U.S. proposal would leave it open for the generic company to legally
challenge the marketing delay based on an invalid patent in court during
this delay. If it is successful, the generic company is awarded with a
period of marketing exclusivity, during which it can recover lost
profits. Although the U.S. TPP proposal does not state the length of
this exclusivity period, sources said it could be similar to U.S. law,
where the company can get 180 days of exclusivity.

 

However, U.S.-based generic pharmaceutical company Hospira, in an
analysis of all its products launched in non-U.S. TPP countries in the
last four years, found that it is unlikely it would have been able to
recover any profit loss as a result of litigation unless the cost of
litigation was low and the exclusivity period was long.

 

The company states that this system of patent linkage only works in the
U.S. because the structure and size of the U.S. market allow generic
companies to recover profits more easily from costly litigation.



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