[Ip-health] Notes from USTR meeting on TPP

Sean Flynn sflynn at wcl.american.edu
Tue Feb 8 06:41:24 PST 2011

USTR Considering Pharmaceutical Pricing Restrictions in TPP; Refuses to
Follow May 10th Agreement on IP-Medicines Issues 


For immediate release

Contact Sean Flynn at 202-294-5749, sflynn at wcl.american.edu

Peter Maybarduk, pmaybarduk at citizen.org 

Peter Maybarduk (Public Citizen) and Sean Flynn (representing Forum on
Democracy and Trade) met with USTR staff on January 3 to be briefed on
the administration's negotiation of the TPP with respect to the planned
IP chapter and the rumored chapter on pharmaceutical reimbursement

This meeting was requested to be on the record. A member of the USTR's
press staff was present and tape recorded the meeting (contact Carol
Guthrie at cguthrie at ustr.eop.gov). USTR staff asked to be referred to as
"USTR staff" rather than be identified by name.

These are notes from the meeting by Sean Flynn. Peter may have additions
and those will be incorporated into an amended set of notes at

Pharmaceutical chapter

Sean briefed the USTR staff on state government concerns with USTR
pressing for new international restrictions on pharmaceutical
reimbursement programs. He noted that in other areas USTR has announced
publicly that is pushing for certain topics to be within the agreement.
We know, for example, that the US supports inclusion of an IP chapter
and an investment chapter and that discussions have taken place between
countries on those chapters. We would therefore like USTR to state on
the record whether it is proposing a pharmaceutical chapter, for example
a chapter similar to those included with Australia and Korea. 

USTR first said it could not comment on discussions had between
countries. When pressed, USTR staff stated:   

"We are aware of the proposal from our pharmaceutical industry. We are
still evaluating the pharma proposal. Before we take positions in the
negotiation we go through a process of internal consultation. We are in
that consultation mode. We have reviewed the [pharma] position in the
past. We continue to work on these issues. We welcome submissions and

They emphasized that this would be the first FTA drafted entirely under
the Obama administration, so many policy decisions were yet to be
decided about what the Obama blueprint would be.

Staff continued: "In the past they [pharmaceutical chapters] have been
part of our FTAs. We are in the internal process of developing a
position of whether to propose a pharmaceutical chapter."

Staff continued to refuse to say whether there have been discussions
with other countries on a possible pharmaceutical chapter. There have
been some reports that other countries, particularly New Zealand, would
oppose such a proposal. 

Sean asked that NLARx and the Forum be consulted on any pharmaceutical
chapter to avoid including clauses that state Medicaid and other
programs do not follow now. This should be regardless of a state carve
out as found in the Korea agreement. The position of the US should be
that it will not pursue policies abroad that it does not follow now at
home, regardless of technical carve outs. The policy should be to
protect and promote best practices, not undermine them. 

USTR stated that they were consulting with states through their
government liaison office. 

We informed USTR staff that a pharmaceutical chapter would be
particularly controversial in an agreement including developing
countries, as TPP does. One of the key flexibilities in the WTO TRIPS
agreement is that it does not regulate other policy tools that can
restrain excessive pricing and otherwise control IP monopoly power. The
problem is acute in medicine markets in poorer countries where
monopolies promote extreme pricing power. Limiting the use of
reimbursement formularies to temper prices in such countries would be
particularly harmful and would likely draw intense criticism from global
health groups.

USTR accepted the comment but did not discuss it.

USTR staff were invited to inform us of particular issues they need
advice and assistance on, on or off the record. They did not identify
any such issues and the meeting ended soon thereafter. 

IP Chapter

When asked about the US position on the IP chapter in the negotiations,
they said only: 

"We plan to have IP negotiations at the next TPP meeting in Chile in two
weeks. We will be continuing to discuss those [provisions]." 

When asked if there was a US proposal, staff replied that the U.S.
proposal would be "Similar to past Aisa pacific agreements." This is is
a statement that is hard to interpret since there are a wide number of
divergent standards between trade agreements with IP chapters in the

When asked about the varying standards in IP agreements with U.S.
ranging from Peru to Vietnam to Australia and Korea, they stated: 

"The existing treaties stand," and explained that the TPP proposal would
be designed to allow other agreements to co-exist.

Staff encouraged us to look at the IP provisions in the bilateral trade
agreement with Vietnam, which neither of us were familiar with.

The staff refused to answer whether the US is considering differential
treatment clauses for the less developed members of the group so that,
for example, the softer norms with Peru could co-exist with the more
robust standards found in the recent Korea FTA.

When asked whether the "May 10th" agreement would be a constraint on US
demands in an IP chapter, the staff gave a carefully worded refusal to
commit to the guidelines of that accord. They explained:

"The value of the may 10th agreement is showing what congress believed
at that time. We are committed to a high standard agreement. The matrix
[for TPP] is how the issue should be treated today."

USTR staff refused to say whether an IP text would be tabled in Chile.
When asked whether a text would be publicly released, they said that
text had been shared with "cleared advisors," but there no plans as of
yet to share with the public. Staff stated that they were committed to
the Obama Administration's transparency policies as applied to ustr.

On data exclusivity they accepted comment that alternative mechanisms
exist to reward investments in clinical trials without exclusivity. They
explained that their baseline in all these negotiations is US law. That
is where they start in any proposed language and are doing so with data




Sean M Fiil Flynn

Associate Director

Program on Information Justice and Intellectual Property

American University Washington College of Law

Washington D.C. 20016


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