[Ip-health] TPP Negotiating Parties' Counterproposal to the US on Medicines Represents a More Flexible Approach

Thiru Balasubramaniam thiru at keionline.org
Thu Nov 14 07:22:11 PST 2013


http://keionline.org/node/1826

Submitted by Krista Cox on 14. November 2013

On November 13, 2013, Wikileaks obtained and published a copy of the
consolidated IP negotiating chapter for the Trans-Pacific Partnership
Agreement (TPP). This leak has allowed the public to learn what is in the
text, including about the reported five country counterproposal to the
United States' proposal on pharmaceuticals and medicines.

In September 2011, the United States tabled controversial text on
pharmaceuticals which it called it "Trade Enhancing Access to Medicines
(TEAM)" text. This proposal, which included provisions on exclusive rights
over test data, patent linkage and patent term extensions, included a
complicated system for countries using systems of registration by
reference. The proposal was met with heavy opposition and all eight of the
then-negotiating parties (Canada, Mexico and Japan had yet to enter into
the negotiations) opposed the United States' proposal. After the March 2012
round in Melbourne, the United States entered into its infamous "period of
reflection" which reportedly ended in the August 2013 round in Brunei. A
review of the newly leaked
text<http://keionline.org/sites/default/files/Wikileaks-secret-TPP-treaty-IP-chapter.pdf>
shows
that the United States has not changed its so-called "TEAM" text or
withdrawn its proposal.

In the meantime, other countries offered a counterproposal to the United
States' proposal on medicines. This counterproposal was first reported as
being discussed in the May 2013 round in Lima and again in the July 2013
round in Kota Kinabalu before being tabled in Brunei. According to news
reports, the counterproposal initially was drafted by six countries,
Australia, Canada, Chile, Malaysia, New Zealand and Singapore, though
Australia dropped out of the group when the proposal was tabled in Brunei
due to the fact that Australia was in its period of elections. Overall, the
proposal is a very positive one that preserves important TRIPS
flexibilities and will do far more to promote the public health than the
United States' proposal.

Based on the following block of countries (NZ/CA/SG/CL/MY) below is a
review of some of the text of the counterproposal on pharmaceuticals. While
it may not cover every issue tabled as part of the counterproposal during
the Brunei round, it does include many of the important features:

*Objectives*
In Article QQ.A.2 on objectives, six countries have proposed additional
objectives related to technology transfer and the protection of public
health. The objectives and principles section of the agreement can play an
important role in interpreting the substantive provisions of the agreement,
including in dispute settlement.

[NZ/CA/SG/CL/MY/VN propose. g. The protection and enforcement of
intellectual property rights should contribute to the promotion of
technological innovation and to the transfer and dissemination of
technology, to the mutual advantage of producers and users of technological
knowledge and in a manner conducive to social and economic welfare, and to
a balance of rights and obligations.
h. Support each Party's right to protect public health, including by
facilitating timely access to affordable medicines.]

*Principles*
Five countries have proposed principles for the agreement that specifically
take into account important issues such as development and the public
interest. The principles proposed would also allow countries to "prevent
the abuse of intellectual property rights by right holders or the resort to
practices which unreasonably restrain trade or adversely affect the
international transfer of technology." It would also allow countries to
take measures to address anticompetitive behavior.

[*Article QQ.A.2bis: {Principles}*
[NZ/CA/SG/CL/MY propose:1. Each Party may, in formulating or amending its
laws and regulations, adopt measures necessary to protect public health and
nutrition, and to promote the public interest in sectors of vital
importance to its socio-economic and technological development, provided
that such measures are consistent with the provisions of this Chapter.

2. Each Party may adopt or maintain appropriate measures, provided that
they are consistent with the provisions of this Chapter, to prevent the
abuse of intellectual property rights by right holders or the resort to
practices which unreasonably restrain trade or adversely affect the
international transfer of technology.

3. Each Party may adopt or maintain, consistently with the other provisions
of this Chapter, appropriate measures to prevent or control practices or
conditions that may in particular cases constitute an abuse of intellectual
property rights having an adverse effect on competition in the relevant
market.]]

*Other Use Without Authorization of the Right Holder*
The group of five countries proposed a provision that would preserve the
limitations and exceptions under Article 31 of the TRIPS Agreement for
compulsory licenses. This text represents an important preservation of the
flexibilities that exist under the TRIPS Agreement which does not appear
elsewhere (and presumably has not previously been proposed) in the TPP
negotiating text.

*Article QQ.E.5quater: {Other Use Without Authorisation of the Right
Holder}*
[NZ/CA/SG/CL/MY propose: Nothing in this Chapter shall limit a Party's
rights and obligations under Article 31 of the TRIPS Agreement or any
amendment thereto.]

*Pre-Grant Opposition*
The group of five countries have also proposed an explicit provision that
would require parties to provide for third-party oppositions to the grant
of the patent. According to the proposal, parties would be given the option
to permit pre-grant opposition, post-grant opposition or both. One of the
important criticisms of the United States proposal was the attempt to
eliminate all forms of pre-grant opposition to patents, though it appears
that the United States has withdrawn its proposal in this regard. Pre-grant
opposition is an important mechanism to promote high patent quality, by
ensuring that weak patent claims are properly opposed and patents that
should not have been granted are not given monopoly status for any period
of time. Pre-grant opposition has been successfully used in countries such
as India to promote access to medicines by ensuring that spurious patents
are not granted, thereby allowing generics to enter the market rather than
forcing them to litigate patent claims in expensive and time-consuming
court battles.

*Article QQ.E.4: {Opposition to Grant of Patent}*
[NZ/CA/SG/CL/MY propose: Each Party shall provide a procedure for third
persons to oppose the grant of a patent, either before or after the grant
of a patent, or both.]

*Protection of Undisclosed Data*
Six countries (with the inclusion of Vietnam) support a more flexible
approach on the protection of undisclosed test data used for regulatory
approval. The United States proposal would require exclusive rights over
test data for a period of at least five years, with an additional three
years of exclusivity for the submission of new clinical information. The
United States has not yet proposed text to replace its "placeholder" for
biologics.

By contrast, the alternative proposal would not require exclusive rights
over test data. Instead, it largely replicates the language used in Article
39.3 of the TRIPS Agreement, providing only for the protection of
undisclosed test data. It preserves the TRIPS flexibilities and safeguards,
applying protection requirement only to "new chemical entities" for
"undisclosed test or other data," and that data must involve "considerable
effort." It only requires parties to protect the data against "unfair
commercial use," but adds the caveat that an exception occurs "where
necessary to protect the public or unless steps are taken" to protect
against unfair commercial use. This approach allows flexibilities in
implementing the provision and would allow for cost-sharing mechanisms to
be adopted.

The language also explicitly provides for a number of ways that parties may
limit the protection of undisclosed data, including providing that it may
only be available for a new chemical entity, available only once per
pharmaceutical product, or not available for new uses or dosage forms.

There are, perhaps, two areas for concern, however in subparagraphs 2(f)
and 2(g). With regard to (f), it may be seen as a positive that parties may
limit it to a specified period of time; however such time-limited periods
raise an implication that exclusive rights are provided for. Because most
countries do implement Article 39 of TRIPS by providing for exclusive
rights over test data, this provision is likely to apply to those
countries. Subparagraph (g) is potentially problematic because it may imply
that such waiver only applies in cases where there is a voluntary or
compulsory license and does not address the situation where there may not
be a valid patent on the product. In those cases, no license would be
necessary, but where protection or exclusivity exists, this language may
become problematic. The language would be stronger if it addressed
situations where no patent exists and explicitly noted that one may
override data protection or data exclusivity.

Paragraph 3 is positive, explicitly recognizing the Doha Declaration and
any waiver or amendment of the TRIPS Agreement.

Overall, this proposal is much better in terms of protecting the public
health than the United States' proposal.

*Article QQ.E.XX.4: {Protection of Undisclosed Data}*
[NZ/CA/SG/CL/MY/VN propose: 1. Where a Party requires, as a condition of
marketing, regulatory or sanitary approval for pharmaceutical products
which utilize new chemical entities, the submission of undisclosed test or
other data, the origination of which involves a considerable effort, that
Party shall protect such data against unfair commercial use. In addition,
each Party shall protect such data against disclosure, except where
necessary to protect the public or unless steps are taken to ensure that
the data is protected against unfair commercial use.

2. Each Party may provide that the protection of data under paragraph 1,
inter alia:
(a) is limited to undisclosed test or other data, the origination of which
involves a considerable effort;
(b) is limited to pharmaceutical products that do not contain a new
chemical entity that has been previously approved for marketing in the
Party;
(c) is limited to pharmaceutical products which utilize a new chemical
entity;
(d) is available only once per pharmaceutical product;
(e) is not available for new uses or indications, new dosage forms or
methods of making a pharmaceutical product;
(f) is limited to a period of time as determined by the Party; or
(g) may be waived to facilitate the marketing, regulatory or sanitary
approval of a pharmaceutical product that is the subject of a voluntary or
compulsory license, or a licence otherwise issued pursuant to the TRIPS
Agreement.

3. Each Party may take measures to protect public health in accordance with:
(a) the Declaration on the TRIPS Agreement and Public Health
(WT/MIN(01)/DEC/2) (the “Declaration”);
(b) any waiver of any provision of the TRIPS Agreement granted by WTO
Members in accordance with the WTO Agreement to implement the Declaration
and in force between the Parties; and
(c) any amendment of the TRIPS Agreement to implement the Declaration that
enters into force with respect to the Parties.]

*Patent Term Extensions*
The United States proposal includes a system of mandatory patent term
extensions, including for countries who use a reference by registration
system where companies file for marketing approval within an "access
window." Patent term extensions for both patent delays and delays in the
regulatory approval process extend the term of the patent beyond the
international standard of twenty years and can delay entry of generic
medicines.

The counterproposal, supported by six countries, addresses delays by
encouraging parties to promote efficiency and using language that parties
"shall endeavor" to address those delays. It does not mandate any specific
mechanism that countries must follow to address the delays and makes no
mention of patent term extensions. This proposal is much more flexible and
allows countries to determine how to promote efficiency. Furthermore, with
regard to the efficiency in the patent registration system, the proposal
also notes that parties also "shall endeavour to improve quality," an
important aspect in improving the patent system and ensuring that weak
patents are not granted.

*Article QQ.E.XX.2: {Patent Quality and Efficiency}*
[NZ/CA/SG/CL/MY/VN propose: 1. Each Party shall endeavour to improve
quality and efficiency in its patent system.

2. Each Party shall endeavour to enhance its patent registration system by
maintaining examination procedures, cancellation procedures and, where
provided, opposition procedures that consistently provide high quality
rights for granted patents, and endeavour to simplify and streamline its
administration system for the benefit of all users of the system and the
public as a whole.]

*Article QQ.E.XX.3: {Processing Efficiency}*
[NZ/CA/SG/CL/MY/VN propose: 1. Each Party shall endeavour to process
applications for patents, and applications for marketing, regulatory or
sanitary approval of pharmaceutical products, in an efficient and timely
manner.

2. Each Party may provide a procedure for patent applicants to apply to
expedite the examination of their patent application.

3. If there are unreasonable delays in a Party's processing of applications
for patents, or processing of applications for marketing, regulatory or
sanitary approval of pharmaceutical products, the Party shall endeavour to
address those delays.]

*Patent Linkage*
Like exclusive rights over test data and patent term extensions, the United
States would mandate that parties adopt systems of patent linkage. Patent
linkage is a highly inappropriate system where patent status is linked to
the systems for drug registration. Patent linkage is not used in most
European countries and is also inappropriate for developing countries.
Abuses of the patent linkage system have been well documented, yet the
United States continues to push countries to adopt these systems.

The counterproposal does not include any provisions regarding patent
linkage.

*Measures to Encourage Timely Entry of Pharmaceutical Products*
The United States proposal included a complicated "access window" system
for countries using registration by reference, providing that parties would
be required to provide for patent linkage, patent term extensions and
exclusive rights over test data if a company filed for marketing approval
within a certain window of time after being granted approval in another TPP
country. The term of years for the access window had not been determined or
proposed. Aside from the fact that patent linkage, patent term extensions
and exclusive rights over test data are inappropriate mechanisms that
simply lengthen monopolies and delay generic entry into the market, the
proposal was further problematic because companies were not required to
ever finish the process for registration in order to receive these
benefits. For countries not using registration by reference, patent
linkage, patent term extensions and exclusive rights over test data would
always be mandatory, regardless of the fact that companies may not choose
to quickly market in smaller high-income markets (that do not use reference
by registration).

The counterproposal does not specify what a party must do in order to
promote timely entry of pharmaceutical products. Instead, it simply leaves
it up to each party, stating that parties "may adopt or maintain" such
measures, without specifying the exact mechanisms to be used.

*Article QQ.E.XX.1: {Measures to Encourage Timely Entry of Pharmaceutical
Products}*
[NZ/CA/SG/CL/MY/VN propose: Each Party may adopt or maintain measures to
encourage the timely entry of pharmaceutical products to its market.]

*Experimental Use of a Patent*
Five countries have also proposed a section permitting parties to allow the
experimental use of a patent. The proposal clearly states that experimental
purposes may encompass a wide range of activities and provides for a
non-exhaustive list that includes "determining how the invention works,
determining the scope of the invention, determining the validity of the
claims, or seeking an improvement of the invention (for example,
determining new properties, or new uses, of the invention." This
experimental use provision, if accepted, would be a welcome one. The United
States does not have a statutory experimental use exception and the Federal
Circuit case in *Madey v. Duke* greatly reduced the scope of the common law
experimental exception.

*Article QQ.E.5ter: {Experimental Use of a Patent}*
[NZ/CA/SG/CL/MY propose: 1. Consistent with [Article QQ.E.5 (Exceptions) ],
each Party may provide that a third person may do an act that would
otherwise infringe a patent if the act is done for experimental purposes
relating to the subject matter of a patented invention.

2. For the purposes of this Article, experimental purposes may include, but
need not be limited to, determining how the invention works, determining
the scope of the invention, determining the validity of the claims, or
seeking an improvement of the invention (for example, determining new
properties, or new uses, of the invention).]

*Conclusion*
The counterproposal is a positive one and represents a much more flexible
approach than the one set forth by the United States. The counterproposal
is not only flexible, but also less complicated, preserves TRIPS
flexibilities, and specifically takes into account important factors
including the public interest, levels of development, and the potential for
abuse of intellectual property rights by the right holders.



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