[Ip-health] US may move away from May 10

Sean Flynn sflynn at wcl.american.edu
Mon Feb 14 04:13:16 PST 2011

U.S. Open To Moving Away From May 10 IPR Provisions In TPP Talks 

Posted: February 10, 2011 



U.S. trade officials last week signaled that the U.S. proposal for
intellectual property rights (IPR) provisions within the Trans-Pacific
Partnership (TPP) will not be bound by the standards set by the May 10,
2007 agreement negotiated between the Bush administration and House
Democrats, according to informed sources.

U.S. trade officials in a Feb. 3 meeting with stakeholders indicated
that the May 10 agreement reflects the position of a previous Congress
and administration, and that the TPP will be a high standard agreement
that will deal with IPR in the context of the present circumstances,
which may require different provisions, sources said.

Moreover, sources said the Office of the U.S. Trade Representative
appears interested in putting in place more stringent patent protections
than what is contained in the May 10 agreement. Asked to comment, a USTR
official said USTR is still evaluating proposals and input on IPR issues
from stakeholders, and no decisions have been made.

U.S. officials have told stakeholders that the IPR language it plans to
propose in the TPP talks will reflect IPR provisions in "past
Asia-Pacific agreements" that the U.S. has negotiated. Some sources have
taken this to mean that the U.S. may support industry demands that it
table language similar to the IPR standards in the U.S.-Korea free trade

The Korea FTA did not incorporate the IPR provisions from the May 10
agreement, and pharmaceutical groups are urging USTR to use the IPR
provisions in the Korea FTA as a template for the TPP negotiations.

Access to medicines advocates oppose the provisions of the Korea FTA,
and are urging USTR to use the May 10 agreement as a baseline for the
TPP negotiations.

U.S. trade officials have also signaled that they will not look to
replicate the data exclusivity provisions in the May 10 agreement in an
eventual TPP agreement. Instead, these officials have said they intend
to approach the issue of data exclusivity in the TPP talks the same way
as that issue is handled under U.S. law, sources said.

Some sources said this would mean that test data for a particular drug
would be restricted for five years. According to access to medicines
advocates, this would delay the manufacture of generic versions of the

Data exclusivity is granted for a period of time to prohibit generic
drug manufacturers from using clinical test data generated by a brand
name drug company to demonstrate the safety and efficacy of the drug.
Generic manufacturers use the data for the approval of a generic version
of a drug.

The May 10 agreement does not make this data exclusivity period
optional, but it does make it easier for the government to issue
compulsory licenses that allow other companies access to the restricted
data. For example, a compulsory license can be issued for public health

The May 10 agreement also make data exclusivity less restrictive by
starting the five-year period from where the patent was filed first and
prevents drug companies from beginning the five-year period anew in
another country.

A Feb. 7 letter from the U.S. Business Coalition for TPP to USTR Ron
Kirk asks for IPR provisions that "do not diminish the protections found
in each of the existing U.S. trade agreements with TPP countries." The
organization also requests provisions that build on the obligations in
the Korea FTA, which one business lobbyist said is one of the "codes"
for moving away from the May 10 deal.

Rep. Jim McDermott (D-WA) pressed Kirk at a Feb. 9 Ways and Means
Committee hearing on the IPR proposal to be tabled in the TPP. He said
that he did not want USTR to "weaken the things that were agreed upon in
that May 10th agreement that made possible the Peru agreement,
particularly the access to medications." 

Kirk did not directly respond, but said the May 10 agreement was a
"good, sound, bipartisan agreement among Democrats and Republicans." He
seemed to imply that it needed to be updated when he said some new areas
are not addressed in the May 10 deal, such as indigenous innovation and
state-owned enterprises. He said those are issues USTR was "striving
for" in the context of the TPP.

Speaking with Inside U.S. Trade, McDermott said he did not know that
USTR was moving away from the May 10 deal, but wanted to convey the
message to Kirk that he and other members of Congress were watching. "I
wanted him to think about that," he said.

He said an eventual TPP agreement should incorporate all the provisions
of the May 10 agreement. Moving away from it on the pharmaceutical
provisions, would convey the message that the U.S. is indifferent to
global health issues, he said.

McDermott also signaled that not incorporating the May 10 agreement
provisions could create problems when the administration eventually
works to get the TPP passed through Congress.

The May 10 agreement was initially reached as a way to apply less
stringent IPR standards to the U.S.-Peru FTA by making patent term
extensions and patent linkage both optional, which allows for faster
marketing of cheaper, generic pharmaceuticals. The Korea FTA makes these
provisions mandatory.

TPP countries will gather for another negotiating round in Santiago,
Chile from Feb. 14-18, but USTR has said it is not likely to table any
new IPR text and has continued to express that it remains involved with
an internal process of developing a position on the more controversial
aspects of an IPR section (Inside U.S. Trade, Jan. 14).

The negotiations will include an opportunity for stakeholders to present
to the negotiators on issues of concern. Sources said access to
medicines groups as well as those representing high tech companies, such
as Google, are expected to attend the briefing.

Sources said that industry groups are pushing USTR to propose a chapter
devoted to pharmaceuticals, but one industry source said this is not a
specific request and that industry is instead seeking assurances that
any provisions that are relevant to pharmaceuticals be strong throughout
the agreement.

Pharmaceutical chapters can be found in other U.S. trade agreements with
Australia and South Korea. In these agreements, pharmaceutical chapters
set standards for how a country should implement a pricing and
reimbursement program for drugs that are made available to the public
through government programs.

For example, the Korea FTA language requires that the government
"appropriately recognize the value of the patented pharmaceutical
product or medical device in the amount of reimbursement it provides."

The Korea FTA chapter on pharmaceuticals sets transparency requirements
for pricing and reimbursement programs by accepting input from companies
and allows companies to appeal decisions taken by a government on the
pricing or listing of a particular drug. The U.S.-Australia FTA does not
have a similar appeals process.

USTR has not yet taken an official position on whether it would push for
a pharmaceutical chapter similar to those found in pre-existing FTAs,
but USTR officials have said they were involved in consultations on the
issue, sources said.

A Jan. 25, 2010 submission to USTR from the Pharmaceutical Research and
Manufacturers of America (PhRMA) does not demand a specific
pharmaceutical chapter in the TPP but asks for greater transparency on
policy and regulatory procedures, opportunities for input from
manufacturers and the right to appeal decisions made by a regulatory

One source noted that TPP negotiators will discuss anti-trust and IPR
enforcement issues, which would regulate the use of IP through
competition law mandates. The relationship of these two issues are not
currently governed by any international rules and are not usually
addressed in trade agreements, this source said.

Some countries do have anti-trust laws that have been interpreted to
allow broader access to IPR, which could be taken into account when
discussing this agenda item.

For example, in South Africa, anti-trust laws were used to open the
market to cheaper AIDS medications.

These medications were made more widely available after the government
found that drug companies were excessively pricing their products,
refusing to give competitors access to essential facilities for research
when it is economically feasible to do so and not dealing with
competitors when the harm in not doing so outweighs the benefit to the



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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