Observers watchful of US trade impact on medicines access
Intellectual Property Watch, Switzerland
Observers Watchful Of US Trade Impact On Medicines Access
By Tove Iren S. Gerhardsen
24 July 2007
The United States has begun incorporating a revised intellectual property and health policy into its bilateral trade deals. But although the overall softer approach towards its partners may improve access to medicines, the debate on the impact of the US free trade agreements on public health in developing countries is not over, according to close observers.
“The net of the changes certainly favours facilitated access, but there are some new potential trouble spots as well,” Frederick Abbott, international law professor at Florida State University College of Law, told Intellectual Property Watch.
The revisions apply to trade deals with Colombia, Korea, Panama and Peru, a spokesperson for the Office of the United States Trade Representative (USTR) told Intellectual Property Watch. So far only Peru has agreed to the changes.
The US FTAs have long been criticised as emphasising the protection of intellectual property rights for US companies at the expense of public health considerations in developing countries signing the agreements (IPW, US Policy, 11 December 2006). A Geneva source said that it was particularly the generics industry that had pushed for the changes in the trade deals as they saw the old provisions as export barriers to these markets.
USTR’s “Bipartisan Agreement on Trade Policy: Intellectual Property,” which emerged after the opposition political party took control of Congress in January, was intended to rectify some of this. It covers environmental and labour laws, and intellectual property and health provisions and stakes out a new course for the US when negotiating bilateral trade deals. It was aimed at getting the approval of Democrats, who gained the majority in Congress at the beginning of 2007, and was agreed between the White House (USTR) and congressional leaders, a source said (IPW, US Policy, 17 May 2007). But time will show whether it will lead to significant changes, sources said.
The USTR spokesperson said that the aim of the bipartisan agreement is “to clear the way for bipartisan support in Congress for these four FTAs and to rebuild the bipartisan consensus on trade that will ensure the US stays actively engaged in the global marketplace.”
But Abbott predicted a continuation of the debate. “Given the ambiguity or open-ended quality of some of the provisions on marketing exclusivity, and the new provisions on remedies, it is reasonable to foresee some continuing discussions about the extent to which the FTAs inhibit access to medicines,” he said. “This should not overshadow the positive contribution of the changes, but rather suggests that this is only another chapter in a continuing story.”
For intellectual property, the main issues in the bipartisan agreement relate to clinical test data and patent safeguards. These are provisions that previously could have delayed the introduction of generic medicines upon patent expiry. The provisions effectively extended the patent protection period in the FTA partner countries, preventing approval of a generic drug while a patent is in force unless authorised by the patent holder.
A change is that the five-year data exclusivity period will run concurrently with the US exclusivity period. Test data is information from medicine trials, which according to many FTAs can be protected for at least five years, but sometimes a further three years if the medicine may be used in a new manner. The new approach also will remove some obstacles to issue a compulsory licence for patented products, which allows their production without the patent holder’s authorisation, a source said.
The test data provision has been used as a “back door” protection against compulsory licensing, a Geneva source said, which means that a government issues a licence for the use of a patented subject matter, as allowed under the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Some FTAs specifically limit the use of compulsory licensing, such as to emergency situations, which is the case with US bilaterals with Vietnam, Jordan, Singapore and Australia, the Geneva source said.
Peru Deal Moves Ahead
All four FTAs were completed and signed by 30 June so they are covered by the presidential trade-negotiating authority that expired on that date, the USTR spokesperson said. The authority limits Congress to a ‘yes or no’ vote on these agreements.
The National Assembly of Panama approved a pact with the US by a 58-3 margin, with one abstention, in early July, according to the website bilaterals.org. The agreements with Panama and Korea will have to be ratified by the US Congress, which some say could happen this autumn.
The new provisions have already been incorporated retrospectively into the free trade agreement between the United States and Peru, which was first signed on 7 December 2005. The Geneva source told Intellectual Property Watch that the provisions had been “faithfully incorporated” in the Peru FTA. The USTR spokesperson said the health provisions in the bipartisan agreement had been discussed between the US and Peru, and that “Peru agreed to adopt them in a modified version of the FTA.”
The Peruvian Congress reopened discussions on the new provisions in the FTA, and on 26 June the new deal was passed, with 70 in favour, 38 against and one abstention, a source said.
“The deal is done. It was approved in our Congress,” a Peruvian official told Intellectual Property Watch. “We are just waiting ratification in the US Congress and then it would enter fully into force. That is getting complicated, but our hope is that this will be done in September.”
But at least one nongovernmental organisation source was sceptical about the contribution of the FTA for Peru. “On balance, there’s no question that Peru remains worse off than it would be in the absence of an FTA,” the source said. “Still, these revisions are not trivial.”
Abbott’s Analysis: Watch Implementation, Injunctions
On the question of whether the USTR-Congress agreement would make any difference in the area of public health, Abbott said, “Yes, to the extent that the agreement is reflected in the terms of the FTAs in a way that reflects the letter and spirit of the agreement, this should have a positive impact on access to medicines in the countries which benefit from the changes.”
But, he added, “These differences may not manifest themselves immediately since most will affect future events, such as future grants of compulsory licences. And in some instances the differences may be more subtle than others - such as differences between ‘new pharmaceutical product’ and ‘new chemical entity’ - but these changes should generally have a positive effect from the standpoint of access to generic versions of necessary medicines.”
But Abbott was also cautious on some issues, including the implementation of the provisions. “[The] agreement was not a ‘one-way street’ in favour of facilitated access,” he said.
“It is also necessary to consider that post-FTA approval, there is a phase in which USTR supervises implementation in the counterpart country,” he said. The fact that Congress has persuaded the White House to modify the terms of the FTA “will not necessarily act as a constraint on the demands made by USTR in the implementation phase.” That phase is less transparent than the phase of negotiation and approval of the FTA texts. “In order to understand the ‘real effects’ of the new texts, it will be necessary to study the implementing statutes and regulations in the counterpart countries. It cannot be assumed that those countries will take advantage of the new flexibilities.”
Another issue may be the requirements for injunctions in the agreements, Abbott said. “The new template [the bipartisan agreement] adds an obligation to provide preliminary injunctions or equivalent effective provisional measures for claims of infringement covering a patent on an approved pharmaceutical product or its approved method of use,” he said. “This specific obligation did not appear previously in the enforcement section of the IP chapter template. This obligation is accompanied by a requirement that the patent holder be given adequate notice and sufficient time to bring such an action prior to the marketing of the allegedly infringing product.”
“For many developing countries preliminary injunctions can be rather problematic for generic producers seeking to enter the market. Moreover, while ‘method of use’ language was used in the prior template, the context was subtly different. This may also raise issues in some legal systems,” Abbott said.
When asked what specific changes have been made to the Peru FTA as a result of the bipartisan agreement, Abbott said it “introduces into the text an explicit exception from marketing exclusivity with respect to the grant of compulsory licences. This eliminates the need to rely on the side letters which USTR had indicated did not create a legal exception, and which in any case rewrote and narrowed the WTO August 30, 2003 decision and 2005 amendment (TRIPS Article 31bis). This is a clear gain from the standpoint of facilitated access to medicines.”
Below is Abbott’s assessment of the Peru Deal:
“The new template removes most of the language providing extraterritorial effect for the submission of regulatory data in the United States (and elsewhere) for pharmaceutical products, although retaining it for agricultural chemicals. This is a gain.
The marketing exclusivity provision for pharmaceutical products establishes a presumptive five-year term as the ‘reasonable period’ of protection, taking into account the nature of the data and the expenditure in creating it. This leaves room for a reduced period of protection (but also does not expressly incorporate an upper limit on the term of protection).
The marketing exclusivity provision limits the term of protection, for countries which rely on foreign approval, to the term in the country whose approval is relied upon, but only if the relying country approves the application for registration within six months. This appears to be a positive. However, note that for some countries a six-month approval cycle might be quite unusual. Also, the text does not expressly limit the marketing exclusivity period in the foreign country. One can imagine requests to match the foreign exclusivity period, even if not expressly required by the text.
The new template changes the products affected by marketing exclusivity from ‘new pharmaceutical product’ to ‘new chemical entity’. ‘New pharmaceutical product’ had been further defined to refer to products previously approved in the national territory, which appeared to require treating products previously approved only in other countries as ‘new’. The new template does not further define ‘new chemical entity’, providing some discretion as to how that term is defined. However, because of language in the new template indicating when marketing exclusivity need not be provided, some clarification remains needed regarding the intent of the new terms.
The new template makes patent term extension with respect to pharmaceutical products optional for delays based on regulatory approval and patent application approval. This is a clear positive from the standpoint of facilitating access to medicines.”
