[Ip-health] KEI comments at February 24, 2015 USTR Special 301 Hearing

Andrew S. Goldman andrew.goldman at keionline.org
Wed Feb 25 06:40:24 PST 2015

KEI comments at February 24, 2015 USTR Special 301 Hearing


Submitted by Andrew Goldman on 25. February 2015 - 7:37

On February 24, 2015, the USTR convened the Special 301 Review, taking
testimony almost exclusively from witnesses representing large corporate
rights holders. Over the course of the three-and-a-half hour hearing,
groups such as Phrma, NAM, IPO, and the misleadingly-named Alliance for
Fair Trade with India (an alliance comprised of groups such as Phrma, NAM,
MPAA and many other similar groups) as well as foreign-owned multinational
Bridgestone, pushed for the watch-listing of countries that fail to
implement TRIPS+ measures. Many of the lobby groups continued to make false
arguments, including, notably, the repetition of the claim that compulsory
licenses must be limited to emergency use. The hearing was void of any
alternative perspective save for the twenty minutes allotted to KEI and
UACT. Until KEI testified, there was not a single mention of drug pricing,
nor of HIV, cancer, hepatitis C, nor any other public health issues, nor
the domestic consequences of the policies the USTR supports.

I testified on behalf of KEI. My testimony is reproduced here:


*KEI comments at February 24, 2015 USTR Special 301 Hearing*

My name is Andrew Spencer Goldman, and I am Counsel for Policy and Legal
Affairs for Knowledge Ecology International (KEI), a nonprofit organization
based in Washington, D.C.

KEI primarily focuses on issues pertaining to the creation, use, and
management of knowledge goods.

KEI has long questioned the assumptions, methodology and objectives of the
Special 301 Review.

One almost unquestioned assumption is that copyright and pharmaceutical
companies are essentially U.S. assets that deserve our protection.

*Foreign ownership of IP intensive firms*

A March 2013 report by Jonathan Band and Jonathan Gerafi titled "Foreign
Ownership of Firms in IP-Intensive Industries" should be required reading
for this committee. Among the findings of their report:

Four of the “Big Six” English-language trade publishers were foreign-owned,
and these foreign-owned companies published more than two-thirds of the
trade books in the U.S.

Four of the five largest STM (science, technical and medical) /
Professional publishers were foreign-owned. More than 90 percent of the
revenue of the five largest STM/Professional publishers was generated by
foreign-owned firms.

The Band study also looks at the foreign ownership of the recording music,
film and other intellectual property intensive industries.

The KEI written submission in this proceeding noted that even for firms
like Pfizer and Johnson and Johnson, the majority of employees work outside
of the United States. For Pfizer, 2 of 3 jobs are in foreign countries.

KEI is particularly concerned about cancer drugs, and so too, it seems, is
PhRMA and USTR, given the extraordinary trade pressures on India. As our
submission notes, two Swiss firms, Roche and Novartis, had more than 45
percent of the global oncology market in 2013. Bayer, the firm at the
center of the Nexavar compulsory licensing dispute, is a German firm. Over
the past five years, a majority of new cancer drugs approved by the FDA
were registered by foreign-owned firms.

Many of the comments from the pharmaceutical lobby focus on a set of
policies that lead to higher prices for drugs.

These include, among others, demands that countries grant multiple patents
on new uses, formulations, combinations and doses of older drugs, demands
that governments extend patent terms beyond 20 years, complaints about the
use of compulsory licenses to curb excessive prices for drugs, and demands
that governments provide exclusive rights to test data used to prove the
efficacy and safety of drugs.

PhRMA’s 208-page submission also makes extensive complaints about
government efforts to exercise cost controls. The word “price” appears 359
times in the submission, and the context is always that PhRMA wants the
United States to use its power to promote higher drug prices.

Before turning to the impact of these trade policy enforced norms on the
United States, consider for a moment the impact on people living in
developing countries.

*Developing Countries*

In 2013, the United States had per capita income of $53,470. (GNI per
capita, Atlas method). For last year’s Special 301 list, the median per
capita income of the countries on the watch list was $7,120, just 13.3
percent of incomes in the United States.

For the priority watch list, the median per capita income was just $5,340,
less than one tenth the per capita income in the United States. A person
earning three times that much would qualify for Medicaid in the United
States. For many of the people living in developing countries on the 301
list, health insurance is quite limited or nonexistent.

*Doha Declaration*

The Doha Declaration on the TRIPS Agreement and Public Health, adopted in
2001 and agreed to by the United States under the Bush Administration,
states, in Paragraph Four, that the “TRIPS Agreement does not and should
not prevent members from taking measures to protect public health” and that
the “Agreement can and should be interpreted and implemented in a manner
supportive of WTO members’ right to protect public health and, in
particular, to promote access to medicines for all.”

During the December 2014 WTO Trade Policy Review of the United States, USTR
officials reiterated the Obama Administration’s full support of the Doha
Declaration. But policies that make access to medicine for all impossible
are clearly, obviously, and without any room for doubt, contrary to the
plain language and the intent of the Doha Declaration. This is most visibly
true for the new high-priced cancer drugs, most of which have prices in
excess of $100,000 per year.

When the government of India considered a compulsory license for dasatinib,
a drug for leukemia that Bristol Myers Squibb priced at $108 per day -- in
a country with a GNI per capita of $1,570 -- USTR was widely reportedly to
have pressured India, and the license was blocked. How does this play out?
BMS sales in India, at a price of $108 per day, will be very limited. But,
cancer patients will suffer the consequences of having no access. This
policy is wrong, and tarnishes our reputation around the world.

*Effects on the Aging U.S. Economy*

With respect to the United States, the policies that PhRMA wants -- the
norms that PhRMA is promoting through trade policy -- are designed to raise
prices. And while the impact of high prices is harsh in developing
countries, it also creates problems in the United States.

Many developing countries have higher birth rates and shorter life
expectancy than does the United States. About 14 percent of the U.S.
population is now 65 or older.

For the entire world, the figure is 8 percent. For Latin America and the
Caribbean, 7 percent. For South Asia, 5 percent.

Because cancer has higher incidence in older populations, we will bear a
disproportionate burden of high cancer drug prices, and things will get

In 5 years, more than 16 percent of the U.S population will be 65 or older.
In 15 years, it will be 19.3 percent.

US employers are already struggling with the taxes and insurance premiums
to pay for expensive drugs. Things are getting worse, not better, and USTR
is part of the problem.

*Sharing R&D Costs as Trade Policy*

Instead of supporting policies that are both harmful and wasteful, that
place strains on us at home and have such harmful effects on poor people
living in the developing world, USTR should be pursuing new trade policies.

The funding of R&D should be the focus of trade policy, not the promotion
of stronger IPR or higher drug prices.

Trade policy can be reformed to reconcile both innovation and access, and
lower barriers to reforms that improve the value for money spent on R&D.
This includes, most importantly, for the longer run, evaluation of
strategies to delink R&D costs from product prices. We would like to
supplement the written record with suggestions for how this can be done.

Thank you for the opportunity to appear today.

Andrew S. Goldman
Counsel, Policy and Legal Affairs
Knowledge Ecology International
andrew.goldman at keionline.org // www.twitter.com/ASG_KEI
tel.: +1.202.332.2670

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