[Ip-health] Special 301 statement of Essential Inventions

Krista Cox krista.cox at keionline.org
Wed Feb 15 15:20:06 PST 2012

Below is a copy of the 2012 Special 301 hearing statement submitted by
Essential Inventions.  A pdf copy is available here:

Hearing Statement of Essential Inventions, Inc. on the 2012 Special 301

About Essential Inventions

Essential Inventions, Inc. is a US-based corporation created to distribute
generic medicines. In order for this small company to operate, it much
overcome patent and other barriers to enter markets.

Essential Inventions has previously been involved in several compulsory
licensing cases. One case involved a request to manufacture and export
generic versions of imatinib mesylate, a drug used to treat certain rare
forms of cancer, from Canada to Chile. A second case involved a request for
compulsory license in order to import AIDS medicines from India to
Cameroon. A third case involved a request to NIH to exercise its march-in
rights on the patents on Xalatan (generic name latanoprost), a government
funded invention that Pfizer sold for higher prices in the United States
than were charged in any other high income country. The fourth case
involved march-in rights for patents on ritonavir, a government funded
invention sold by Abbott. Abbott charged US consumers prices that were 5 to
10 times than Abbott charged consumers in Europe or Canada. Essential
Inventions also petitioned OMB to use government rights in several AIDS
drugs, in order to supply inexpensive generic drugs to US HIV/AIDS patients
that received federally-funded reimbursements. The Bush administration
opposed our efforts in each of the cases described above.  In the imatinib
mesylate case, the US intimidated the governments of Chile and Canada,
ultimately harming the final outcome.

Although the Bush Administration opposed these cases, some public benefits
have nonetheless been realized as a result of actions by Essential
Inventions.  The case of ritonavir went to a hearing—the only NIH march-in
case to do so—and Abbott ultimately made very large concessions in the
pricing of ritonavir to federal program, saving the US taxpayers millions
of dollars.  Thus, while Essential Inventions has not yet delivered drugs
to customers, it has created a large public benefit in the US, in the form
of lower prices for ritonavir.

Soon, Essential Inventions will file another compulsory licensing request.
Among other requests, Essential Inventions will ask the NIH to adopt a
general rule that it will grant march-in requests on patents when the
prices for products in the United States are higher than the companies
charge consumers in other high income countries.

Essential Inventions is also in discussions with suppliers for possible
distribution of a generic version of Herceptin, an expensive drug now used
to treat breast cancer. In order to do so, however, Essential Inventions
needs a workable pathway for the manufacturer and distribution of this
important drug for HER2+ breast cancer patients.

The Special 301 process can negatively impact our operations by encouraging
the creation of patent and non-patent barriers that exceed international
obligations, thus reducing the likelihood that Essential Inventions will be
able to achieve its goals.  Herceptin is a life-saving drug for many women
suffering from breast cancer and it is critical for this Committee to
recognize the real and tangible impacts its Special 301 review process will
have for patients. The Special 301 process, because of its potential
negative impacts, is a health issue, a human rights issue, and in
particular for Herceptin, a women's health and women’s rights issue.

As a corporation involved in compulsory licensing requests with a mission
to distribute inventions that support public health, Essential Inventions
opposes actions in the USTR Special 301 process that create barriers to the
distribution of generic medicines.

TRIPS Standards and Other International Commitments

The World Trade Organization (WTO) Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) provides for global norms on
intellectual property protection. This global standard, in conjunction with
other important international instruments or documents such as the Doha
Declaration on TRIPS and Public Health or the World Health Organization
(WHO) Global Strategy and Plan of Action, set forth global commitment and
standards. It is inappropriate for the US to use a unilateral process to
pressure countries to provide for increased levels of intellectual property
protection that go beyond the minimum TRIPS standards. Efforts to pressure
countries to implement heightened intellectual property standards not only
undermines important protections for the general public, including those
that improve access to knowledge or access to medicines, but also creates a
form of cultural imperialism. Countries are pressured to adopt US norms to
avoid placement on the Special 301 watch list, without regard to the
development concerns or cultural context, in what appears to be a form of
cultural imperialism by the US.

Essential Inventions is in the business of creating and distributing
generic versions of life-saving medicines and cannot conduct its mission
when the USTR Special 301 reports encourage countries to implement higher
levels of intellectual property rights than are mandated by international
law. Prior reports evidence a commitment by USTR to encourage countries to
give up their TRIPS flexibilities and instead follow a US model, even when
such provisions would clearly hinder access to medicines.

In order to have a clear pathway to distribute essential medicines, such as
Herceptin, TRIPS flexibilities and safeguards must be preserved. Prior
Special 301 reports indicate that USTR either ignored or seeks to eliminate
the use of important TRIPS flexibilities. It is also important to recognize
that TRIPS obligations can be implemented in a variety of ways and the US
model is often inappropriate.

Patent Extensions

Essential Inventions opposes the promotion of laws that extend patent terms
beyond the twenty-years mandated by the WTO.

Patentability Criteria

Essential Inventions also opposes USTR pressure on countries to lower
patentability criteria. Article 27 of TRIPS lays out the framework for
patentable subject matter; however a key flexibility retained by countries
is the determination of what inventions meet the standards that inventions
are “new, involve an inventive step and are capable of industrial
application.” In last year’s Special 301 report, USTR placed India on its
“priority watch list” and cited concerns that India prohibits patents for
new forms of known inventions where there is no showing of increased
efficacy. The Philippines was similarly placed on the “watch list” with the
same objection noted. By pressuring countries to lower patentability
criteria results in more patents, contributing to a system of
“evergreening,” and delays entry of generic drugs into the market, even
where the original patent on the invention has long expired.

Domestically, it should be noted that when Essential Inventions submitted
its request to the Department of Health and Human Services to exercise
government march-in rights on ritonavir, Abbott Laboratories sought to
block the request by claiming, in part, that in addition to the NIH funded
patents on the drug itself, Abbott had obtained patents on the use of gel
tabs to deliver ritonavir to patents, and also on its combination with any
protease inhibitor used to treat HIV/AIDS. Abbott claimed these patents
would prevent Essential Inventions from producing and distributing generic
versions of the medicine. Although the government funded, and therefore had
march-in rights under the Bayh-Dole Act to, the active pharmaceutical
ingredient in ritonavir, Abbott’s patents over its formulation and
combination provided additional barriers.

Abbott’s claims were dubious as they applied in the domestic context, and
not necessarily relevant in the case in other countries that did not grant
patents on gel tabs or new combinations of older drugs. For many developing
countries, it is important to preserve their rights to determine the
appropriate patentability criteria within the flexible definition of
Article 27 of TRIPS and prevent systems of evergreening. Countries should
be free, for example, to reject patents for minor modifications of
formulations, or the creation of heat-stable formulations, as failing one
of the elements for patentability under TRIPS.

Patent Linkage

Essential Inventions objects to policies of exporting the practice of
linking drug registration to patent status.  Not only is it extremely
difficult for regulators to evaluate such patents, but the US system has
demonstrated that patent linkage has been a colossal failure as companies
routinely file spurious patents with the FDA which are later invalidated by
courts.  Patent linkage creates particular problems in countries that
cannot afford to challenge low quality patents.

Exclusive Rights Over Regulatory Test Data

We also emphasize that placing pressure on countries to adopt US models of
protection or TRIPS implementation is not only often inappropriate, but is,
at times, unethical. For example, Article 39.3 of TRIPS requires member
states to protect “undisclosed test or other data” that involves
“considerable effort” from “unfair commercial use.” Such obligations do not
apply “where necessary to protect the public, or unless steps are taken to
ensure that the data are protected against unfair commercial use..” TRIPS
does not require countries to grant exclusive rights to rely upon test data
to register new products. Indeed, if the TRIPS did so require, the United
States would have succeeded in bringing a WTO case against the many
countries that refuse to recognize such exclusive rights.

The US has elected to implement Article 39.3 of TRIPS, relating to the
protection of undisclosed regulatory test data, by providing for exclusive
rights over test data. By providing the originator of the data with
exclusive rights, generic companies cannot rely on such data proving the
safety and efficacy of a drug where the exclusive rights remain in effect
even when the patent has expired. Exclusive rights in test data thus result
either in a delay in generic entry into the market--keeping the prices of
important medicines high and out of the reach of many patients--or forces
the generic company to replicate the test data in violation of certain
medical ethics. A number of countries listed on the 2011 Special 301 watch
list were encouraged to “provide adequate protection against unfair
commercial use, as well as unauthorized disclosure, of undisclosed test or
other date generated to obtain marketing approvals for pharmaceutical
products.” Exclusive rights in test data creates additional barriers for
corporations like Essential Inventions to overcome, delays entry of generic
products into the market, and contributes to a wasteful or unethical system.

It is important to note that exclusive rights in test data is not the only
way to implement Article 39.3 of TRIPS. It does not even represent the most
efficient method, and it also presents a direct conflict with established
medical ethics. Paragraph 20 of the Declaration of Helsinki on Ethical
Principles for Medical Research Involving Human Subjects notes:

Physicians may not participate in a research study involving human subjects
unless they are confident that the risks involved have been adequately
assessed and can be satisfactorily managed. Physicians must immediately
stop a study when the risks are found to outweigh the potential benefits or
when there is conclusive proof of positive and beneficial results.

The WHO Global Strategy and Plan of Action on Public Health, Innovation and
Intellectual Property explicitly cites the Declaration of Helsinki and
notes the importance of promoting ethical principles. Element 6.2 states a
commitment to:

establishing and strengthening mechanisms to improve ethical review and
regulate the quality, safety and efficacy of health products and medical
devices . . .
[. . .]
(g) Promote ethical principles for clinical trials involving human beings
as a requirement of registration of medicines and health-related
technologies, with reference to the Declaration of Helsinki, and other
appropriate texts, on ethical principles for medical research involving
human subjects, including good clinical practice guidelines.

As noted above, the Agreement on TRIPS does not require the granting of
exclusive rights. Additionally, in cases where it is appropriate to protect
TRIPS economic rights in test data, there are other mechanisms for doing
so. For example, for middle- and high-income countries, proposals have been
made to institute cost-sharing mechanisms that avoid unnecessary
duplication of clinical trials. Such proposals represent a superior
implementation of Article 39.3 than exclusive rights over test data because
they serve to fairly compensate the originator of test data while
minimizing barriers to entry for generic medicines and complying with
medical ethics. That the US would demand for other countries to enact
unethical standards is unacceptable and we strenuously object to any
pressure on foreign governments to enact systems of exclusive rights over
regulatory test data.

Compulsory Licenses

One extremely important flexibility under TRIPS is the right of states to
grant compulsory licenses and we object to the practice of USTR placing
countries on its Special 301 watch lists for issuing or threatening to
issue a TRIPS-compliant compulsory license for medical inventions.

Although the US has claimed to support the sovereign right of countries to
issue compulsory licenses, it has placed countries such as Ecuador in 2011
on its “watch list” and Thailand on its “priority watch list” over the
course of several years for concerns over compulsory licensing. Despite the
fact that the US has issued several compulsory licenses over the years,
including numerous judicially imposed compulsory licenses after the Supreme
Court in eBay v. MercExchange refused to require enforcement of injunctions
in all cases of intellectual property infringement, it seeks to eliminate
this important flexibility in other countries. Placing pressure on
countries not to issue compulsory licenses severely impacts the public
health of citizens of those countries and will impede the ability of
Essential Inventions to distribute critical, life-saving drugs.


We must question what the Special 301 report is intended to achieve and
what value it provides. As the examples above illustrate, the Special 301
process is clearly not a system that merely checks compliance with TRIPS
obligations but, rather, encourages excessive TRIPS-plus measures. If its
design is to create or increase patent and non-patent barriers, we have
strong objections to such a system both because of its impact on public
health and human rights, but also because it creates roadblocks for the
business of Essential Inventions. Countries should not be forced to give up
its internationally recognized TRIPS-flexibilities, particularly at the
expense of dying patients.

Krista Cox
Staff Attorney
Knowledge Ecology International
(202) 332-2670

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