[Ip-health] U.S. Agrees To Lengthen Patent Linkage Implementation For Korea In FTA

Peter Maybarduk pmaybarduk at citizen.org
Thu Dec 9 00:50:44 PST 2010

Inside US Trade
Daily News
U.S. Agrees To Lengthen Patent Linkage Implementation For Korea In FTA
Posted: December 6, 2010

In order to help secure changes to auto provisions in the U.S.-Korea free trade agreement, the U.S. agreed to double to 36 months the time that South Korea will have to put in place a system of patent linkage for pharmaceuticals that is required under the FTA, according to U.S. industry sources.

Under the FTA as originally negotiated, the U.S. granted South Korea a period of 18 months to implement a system of patent linkage, which obligates South Korean government regulators to investigate and confirm that a generic drug seeking marketing approval does not infringe an existing patent claim.

If a patent claim exists, the Korean regulatory authority would have to deny marketing approval for that generic product until the patent term expires.

A June 2007 confirmation letter exchanged between the two sides states that neither side can formally challenge the other for failing to implement the FTA provisions on patent linkage until 18 months after the FTA goes into effect. This essentially gives South Korea more time to implement the patent linkage provisions.

In last week's negotiations for a supplemental FTA deal, the U.S. agreed to lengthen this time period to 36 months, but did not alter the underlying FTA requirement that South Korea put in place a patent linkage system. There were "no substantive changes" to the FTA on patent linkage, one industry source said.

The Pharmaceutical Research and Manufacturers of America (PhRMA) last week issued a statement in support of the FTA, but did not mention the patent linkage issue in that statement.

Public health groups object to mandatory patent linkage, arguing that it prevents the effective use of compulsory licensing because no generic medicines can obtain marketing approval during the patent term. This delays the availability of affordable generic medicines until well after expiry of the patent, they argue.

Under a 2007 compromise between House Democrats and the Bush administration on FTAs with developing countries, the U.S. abolished the requirement that developing countries establish a mandatory patent linkage system.

As a result of the compromise, the U.S.-Peru FTA makes implementation of a patent linkage system optional. That said, the Peru FTA still stipulates that Peru must have a system in place that allows a patent owner to effectively challenge infringements by generic drugs before they are marketed.

The 2007 compromise did not apply to the Korea FTA, as South Korea was considered a more advanced country.

When asked during a Dec. 5 press conference in Seoul why elimination of mandatory patent linkage was not brought up in last week's supplemental negotiations, South Korean Trade Minister Kim Jong-hoon said the South Korean economy is "much more advanced" than the Peruvian economy, according to an informal transcript of his remarks.

According to a confirmation letter that accompanied the original FTA chapter on IPR, both sides are prohibited from invoking formal dispute settlement concerning obligations under Article 18.9.5(b), which deals with patent linkage, of the FTA during the first 18 months after the entry into force.

The patent linkage change is one of several changes the United States made to the original FTA to offset Korean concessions on autos. Another change is to extend by two years the tariff phaseout for a category of frozen pork known as "frozen others" that accounts for 94 percent of U.S. exports, Kim said, according to the transcript.

This will give Korean pork farmers extra time to enhance their competitiveness, he said. Under the original FTA, Korea would have eliminated 25 percent duties on frozen product on Jan. 1, 2014, but Korea will now have until Jan. 1, 2016, to do so, Kim explained.

According to the U.S. Meat Export Federation (USMEF), the U.S. exported 64,209 metric tons of pork to South Korea through the first nine months of this year, valued at $136.5 million. This amount is down 17 percent compared to the same time period in 2009, according to USMEF.

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