[Ip-health] IUT: Complete U.S. IPR Chapter May Emerge At Chicago TPP Negotiating Round

Peter Maybarduk pmaybarduk at citizen.org
Mon Aug 8 15:19:25 PDT 2011

Inside U.S. Trade - 08/05/2011
Complete U.S. IPR Chapter May Emerge At Chicago TPP Negotiating Round

Posted: August 4, 2011
The United States is expected to propose what could be controversial patent provisions during next month's round of Trans-Pacific Partnership (TPP) negotiations, and could also table a proposed chapter that would place disciplines on pharmaceutical pricing and reimbursement programs, industry sources said this week.

Sources in Congress, industry and non-governmental organizations expect the Sept. 6-15 TPP session in Chicago to be a substantial negotiating round because of its length of nearly two weeks and because it is one of the final bargaining opportunities before trade ministers of the nine TPP countries are scheduled to present the "broad outlines" of a deal to leaders at the Nov. 8-13 Asia Pacific Economic Cooperation (APEC) summit.

An additional round of TPP negotiations is scheduled for late October in Lima, Peru, just prior to the APEC meeting, but sources expect any additional U.S. proposals on intellectual property rights (IPR) to be tabled in September as a way to move forward the stalled IPR negotiations. Tabling such proposals shortly before the APEC leaders' meeting would not give other TPP countries adequate time to consider them prior to developing the outlines of a TPP deal, these sources argue.

Further fueling the expectation that the Obama administration will put forward IPR-related proposals in September is a flurry of letters that House members sent last week to President Obama and U.S. Trade Representative Ron Kirk pushing for strong IPR provisions in the TPP or adherence to past agreements that facilitate access to medicines in developing countries. Informed sources said members are sending out these letters now to influence both U.S. and foreign negotiators and state their policy positions as USTR finalizes its proposals for the next round of negotiations.

It is still unclear what the substance of USTR proposals will be on patent linkage, patent term extension, data exclusivity and pharmaceutical pricing and reimbursement, but industry sources said it was expected that something in each of these areas would be tabled in order to move the negotiations forward.

One industry source said USTR has recently been "meeting with a lot of different people" on these subjects and groups are working extra hard to make sure their views are heard before the next round of negotiations.

These sources said these are clear signals that these provisions would be tabled despite a June 29 public statement by Assistant U.S. Trade Representative Stan McCoy that until the pending free trade agreements have passed Congress, USTR has "pressed pause" on conversations with congressional members on how to proceed with controversial pharmaceutical patent provisions in the TPP negotiations (Inside U.S. Trade, July 1).

Since McCoy's statement, it has become clear that the FTAs will not be taken up by Congress until September, and sources speculated that U.S. negotiators now may feel pressure to ready IPR-related proposals in the absence of FTA passage in order to have some deliverables by the November APEC meeting, sources speculated.

A USTR spokeswoman declined to say whether IPR-related texts or chapters would be tabled at the Chicago negotiating round, but said USTR is "continuing to work to finalize outstanding texts, including on IPR issues, as soon as possible."

USTR has already tabled a partial IPR chapter that does not include patent provisions covered by the May 10, 2007, agreement between House Democrats and the administration of George W. Bush. The agreement gave countries more flexibility when applying these measures on patents and are currently being applied in the U.S.-Peru free trade agreement.

For example, the May 10 agreement made patent linkage optional. Patent linkage requires the regulatory authority of a country to refrain from issuing marketing approvals for generic drugs unless it can certify they do not infringe on a brand-name drug patent. Sources that support broader access to medicines have said that making this optional for developing countries is desirable because these countries often do not have the resources in their patent offices to make such a determination, but the pharmaceutical industry favors strong patent linkage.

Also optional under the May 10 deal are patent term extensions, which refer to extensions of the life of the patent to compensate for administrative processing delays.

The third issue covered by the May 10 agreement is data exclusivity, which refers to the period of time for which an original patent holder is permitted to withhold test data proving the safety and efficacy of a drug from generic manufacturers for the approval of chemically equivalent drugs. Under the May 10 deal, countries "may" regulate the terms of breaking data exclusivity for "reasons of public interest, situations of national emergency or extreme urgency, when it is necessary to allow access to those data to third parties." Usually data exclusivity periods are rigidly enforced and even withstand compulsory licensing to produce generic drugs.

A House source said the May 10 deal has only been in implementation for two years, which has not been enough time to determine if there has actually been a negative impact on industry. However, USTR has alluded that "2007 was 2007" and "2011 is 2011" in an apparent signal that the May 10 deal as negotiated is not directly relevant for the TPP deal (Inside U.S. Trade, May 27).

USTR officials have also said that the IPR provisions in the U.S.-Korea FTA would form the basis for the TPP. The May 10 provisions were not applied to the Korea trade deal.

The U.S. pharmaceutical industry has been aggressively lobbying against the May 10 deal being applied to TPP and in an April 2011 lobbying document the Pharmaceutical Research and Manufacturers of America (PhRMA) criticized the deal because it "openly discriminates against the innovative pharmaceutical industry and would hinder our ability to compete fairly by lowering IP standards in export markets" (Inside U.S. Trade, April 29).

Despite this criticism, there is mounting pressure from House members that USTR preserve the May 10 agreement as it negotiates IPR provisions in the TPP. This week, a group of 10 House Democrats sent a letter to U.S. Trade Representative Ron Kirk asking for a meeting to discuss whether the approach USTR is considering "would undermine public health and access to medicines in the developing countries" in the TPP (see related story).

The Aug. 2 letter led by Rep. Jan Schakowsky (D-IL) raised ardent opposition to reports that USTR is considering options in the TPP that would shift U.S. policy "away from access to affordable medicines and towards the greater protection of intellectual property rights for brand-name pharmaceutical companies in the developing world."

The letter highlights reports that USTR is considering expansion of data exclusivity requirements beyond the May 10 agreement and argues that any data exclusivity provisions, "if included at all, be made voluntary, expire no later than a comparative period in the U.S., and include public health safeguards."

Meanwhile, 14 House Ways and Means Democrats signed on to a July 26 letter to Kirk urging USTR to "incorporate and defend the May 10 agreement" as it develops the U.S. position in the TPP negotiations. Rep. Lloyd Doggett (D-TX) was the only Democrat from the committee not to sign the letter.

"The May 10 agreement is a critical basis to any successful conclusion of the TPP negotiations," according to the letter spearheaded by Ways and Means Ranking Member Sander Levin (D-MI).

However, many of the same Ways and Means Democrats signed a July 27 letter asking that USTR secure 12 years of marketing and/or data exclusivity for biologic drugs in the TPP. This means generic versions of biologics, known as biosimilars, would not be able to hit the market until the 12-year period has run out.

The July 27 letter was signed by a bipartisan group of 40 House members, including 17 Ways and Means members, and argued that failure to secure such data protection would put the U.S. biopharmaceutical industry at a disadvantage in the TPP because foreign countries do not provide the same type of protection rules.

The 12-year protection period for the drugs, also known as biologics, would reflect provisions in the U.S. health care reform bill that was signed into law last year. At the same time, the members said they were aware of the fact that President Obama's fiscal year 2012 budget proposal called for a reduction of the data exclusivity period for biologics to seven years.

A House aide said it is possible for a member to concurrently support the May 10 provision on data exclusivity and a 12-year exclusivity period for biologics. Some members may want TPP countries to observe the same period of exclusivity for biologics but still include the May 10 flexibilities that allow a country to break a period of data exclusivity in the interest of public health, this source explained.

Another letter sent yesterday (Aug. 4) to President Obama includes a group of seven House Democrats led by Rep. Henry Waxman (D-CA) urging the president to refrain from negotiating any provisions on exclusivity for biologics.

The letter notes that if TPP were to ultimately contain a 12-year exclusivity period for biologics, it would impede the ability of Congress to achieve the administration's budget proposal for seven years of exclusivity without running afoul of U.S. trade obligations.

The letter includes signatures from Reps. Jim McDermott (D-WA), Pete Stark (D-CA), Peter Welch (D-VT) Rosa DeLauro (D-CT), Raul Grijalva (D-AZ) and Schakowsky.

Past trade deals do not include provisions on exclusivity for biologics, and an increase in protection for these drugs would be an increase from the five years of data exclusivity the United States has negotiated in trade deals for conventional drugs.

The biotechnology industry is opposed to the May 10 provisions on data exclusivity but wants a full 12 years of data exclusivity for biologics in the deal, an industry source said.

"USTR shouldn't table anything unless it is going to address concerns of stakeholders," this source said.

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