[Ip-health] US pressured Chile on meds

Sean Flynn sflynn at wcl.american.edu
Wed Aug 31 06:22:13 PDT 2011

Inside U.S. Trade - 08/26/2011 

At FTA Commission, U.S. Presses Chile On Brand Name Drug Protections 

Posted: August 25, 2011 

The United States this month again pressed Chile to strengthen the
system by which patent owners can challenge the approval of allegedly
infringing generic pharmaceuticals to be sold in that market, and its
protection of test data used to demonstrate the safety and efficacy of
drugs against use by generic companies, according to a U.S. trade

Both issues came up an Aug. 2 meeting of the U.S.-Chile Free Trade
Commission, which reviewed the functioning of the bilateral free trade
agreement. But it is unclear to what extent the Chilean government is
heeding the U.S. demands, according to sources on both sides of the

"We've been encouraging them to implement the commitments they made
under the [free trade agreement] to provide an effective system to
address patent issues expeditiously in connection with the applications
to market [pharmaceutical] products," the U.S. trade official said in an
Aug. 17 interview with Inside U.S. Trade.

The U.S. trade official also said the U.S. pressed Chile to provide
"adequate" protection for pharmaceutical data at the Aug. 2 meeting.

The U.S. pharmaceutical industry has also complained that once data used
to determine the safety and efficacy of new drugs are disclosed --
either in part by the data owner itself, or by foreign health
authorities -- the Chilean government does not guard against other
companies using the data to sell generic products.

Under the FTA, Chile is supposed to protect proprietary pharmaceutical
test data against unfair commercial use during the five-year "data
exclusivity" period from the time a drug is approved, the industry group
PhRMA has said.

One business source said that officials from the Office of the U.S.
Trade Representative came away from the meeting in Santiago feeling
"optimistic" that Chile will make the challenge process more efficient,
and told USTR it would seek to boost data exclusivity protection in a
package of legislation to be submitted this year.

He noted that the administration of Chilean President Sebastian Pinera
seems more open to changes in its intellectual property rights (IPR)
regime as part of its effort to be removed from the "priority watch
list" established under the Special Section 301 law. This point was
echoed by PhRMA in its latest Special Section 301 submission and USTR in
its 2011 Special 301 report.

But the business source noted that actually getting the changes the U.S.
is seeking through the Chilean Congress would be difficult because the
government's party is not in control of the legislature.

Some supporters of the changes sought by brand name drug companies point
to the Chilean government's establishment of an inter-ministerial
committee on IPR in 2010 as an example of the Pinera government's
openness to their demands.

According to PhRMA's submission in the Special Section 301 process, this
committee is charged with proposing an amendment to Chile's industrial
property law to establish "an effective patent enforcement mechanism."

However, Alberto Cerda Silva, a law professor at the University of Chile
based in Washington, said that the inter-ministerial body has a broader
scope, and is currently focusing on other issues like how to prevent the
circumvention of "digital locks," a separate U.S. complaint.

He also claimed that the Chilean government -- at least officially --
does not care whether it is on the priority watch list, and still does
not believe it has to do more to protect pharmaceutical patents in order
to fulfill its FTA commitments.

Silva noted that Chile has already established a special tribunal on
intellectual property that only handles patent and trademark cases,
which has improved the efficiency in resolving such disputes. This
tribunal functions just like a court, he noted, and parties who are
found to have infringed a patent must generally pay damages.

But a Chilean brand-name drug industry source said this week that the
process is still too slow -- taking somewhere between one and three
years -- and complained that copycat generic drugs can be sold on the
market during that time, hurting a brand-name drug's market presence.

Access to medicines advocates say that barring the marketing of generics
until a patent dispute is resolved would lead to abuse of the system and
keep drug prices high. One source said that if Chile is considering such
a change, it would be especially worrisome in light of its participation
in the Trans-Pacific Partnership negotiations.

Some members of Congress have joined access to medicines groups in
pushing for USTR to adopt the standards of a May 10, 2007 agreement on
IPR in the context of those nine-nation trade negotiations, which would
allow developing countries like Chile to opt out of patent linkage and
limit patent extensions.

The U.S. pharmaceutical industry has been aggressively lobbying against
the May 10 deal being applied to TPP, and USTR is expected to table its
IPR chapter in the next round of the negotiations in September (Inside
U.S. Trade, Aug. 5).

Since the U.S. and Chile entered into an FTA in 2004, the pharmaceutical
IPR provisions have been a major bone of contention. Although the United
States has never explicitly charged that Chile is violating the FTA, it
has long hinted that the country must do more on IPR in order to live up
to its commitments under the deal.

At the root of the tension lies a difference in interpretation of the
wording of Article 17.10.2 of the U.S.-Chile FTA. It states that both
parties must "make available to the patent owner the identity of any
third party requesting 

marketing approval effective during the term of the patent," and "not
grant marketing approval to any third party prior to the expiration of
the patent term, unless by consent or acquiescence of the patent owner."

Chile traditionally has claimed it is in compliance with that language
because it allows patent owners to challenge allegedly infringing
products in court. Chilean officials have also argued that Chile does
not grant "marketing approval," but instead simply certifies the safety
of drugs by issuing applicants a "sanitary permit" (Inside U.S. Trade,
March 11, 2005).

PhRMA, however, has long claimed that the granting of a sanitary permit
represents de facto marketing approval. In its Special 301, PhRMA
claimed that to comply with Article 17.10.2, Chile must "establish
mechanisms to prevent the marketing of patent infringing products" -- a
system known as patent linkage.

"This is not satisfied by enabling a patent-holder to defend itself,
after a third party has requested and received a sanitary
registration/marketing approval and marketed an infringing product,"
PhRMA added.

Access to medicines advocates say that regulators in developing
countries that approve drugs for sale do not have the resources to
coordinate with their patent offices and determine if an applicant
generic drug is infringing on a patent.



Sean M Fiil Flynn

Associate Director

Program on Information Justice and Intellectual Property (PIJIP) 

American University Washington College of Law
4801 Massachusetts Ave., NW 
Washington, D.C. 20016



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