Info Justice | February 8, 2011
USTR considering pharmaceutical pricing restrictions in TPP; refuses to follow May 10th agreement on IP-medicines issues
By Sean Flynn
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 programs.
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 email@example.com). 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 www.infojustice.org
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 input.”
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.
“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.
[A resolution from state legislators opposed to the inclusion of a pharmaceuticals chapter in the TPP was presented to USTR at the meeting. More resolutions and letters from states to federal officials are available here.]
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 region. 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 exclusivity.