TWN Info Service on Free Trade Agreements

14 March 2007


Key Congressional Democrats Voicing Concern over TRIPS-plus in FTAs

Twelve influential members of the Congress of the United States have sent a letter to US Trade Representative Susan Schwab addressing its concerns over certain TRIPS plus provisions in US FTAs so as to ensure adherence to the World Trade Organisation's 2001 Doha Declaration on TRIPS and Public Health.

The letter urged for balancing the protection of innovation and the intellectual property provisions in the current FTAs which extend pharmaceutical monopolies without sufficient regard to consumer access and public health.

A copy of the letter dated 12 March 2007 is reproduced below.

We have also reproduced an article from SUNS #6211 Thursday, 15 March 2007 below.

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Congress of the United States
Washington, DC 20515

March 12, 2007

The Honorable Susan Schwab
United States Trade Representative
600 17th Street, N.W.
Washington, DC 20508

Dear Ambassador Schwab:

According to international health organizations, ninety percent of the 14 million people killed annually by treatable infectious disease live in the developing world. Even more die of treatable noninfectious illnesses. But despite the high disease burden in developing countries, one-third of the world's population has no access at all to essential medicines. The need for expanded access to affordable drugs is dire, and demands careful attention when international trade policies address intellectual property.

Recognizing this, the U. S. was one of 142 countries that adopted the 2001 "Doha Declaration" on the Trade-Related Aspects of Intellectual Property Agreement (TRIPS) and public health. 1 The Doha Declaration "reaffirm[ed] the right of WTO members to use, to the full, the provisions of the TRIPS agreement which provide flexibility" to protect public health. 2 It specifically affirms countries' rights to interpret and implement trade obligations in ways that protect access to essential medications. 3 In the 2002 Trade Promotion Authority Act. Congress directed the Administrative branch to adhere to the Doha Declaration as a "principal negotiating objective" in U. S. trade negotiationt. 4

Regrettably, recent U. S. free trade agreements (FTAS) appear to undermine this commitment with provisions that strip away flexibilities to which countries are entitled under TRIPS. The FTA provisions also appear to upset an important balance between innovation and access by elevating intellectual property at the expense of public health. The end result is that they threaten to restrict access to life-saving medicines and create conditions where poor countries could wait even longer than the United States for affordable generic medicines.

We are writing to urge the immediate reconsideration of these provisions in recently negotiated FTAS with Colombia, Peru, and Panama, and in pending agreements with Thailand, Malaysia, and others.

Our concerns are detailed below.

Data Exclusivity

Under WTO rules, pharmaceutical innovations receive twenty years of patent protection.5 Recent U.S. FTAs add an additional requirement: a period of “data exclusivity” that begins when a patented drug receives marketing approval.6 During this period, regulators cannot rely upon clinical test data submitted for a drug's first approval when considering marketing approval for generic versions. The effect can be to delay the availability of generics even if a patent has already expired.

Current U.S. law provides data exclusivity, but places strict caps on the periods
available.7 In contrast, the recent FTAS require data exclusivity periods but do not require caps.8 As a result, developing countries may face pressure to adopt longer exclusivity periods,
presenting a scenario where the wait for generics could be even longer in a developing country
than in the United States. Even if a developing country institutes limits equal to those in the
United States, the wait for generics could still be longer if a company launching a new medicine in the United States does not seek approval in the developing county until later.9

The data exclusivity provisions ignore fundamental differences between the development of U.S. law on generics and the context of today's trade agreements. When periods of marketing exclusivity were introduced in the United States, there were few generics on the market. The exclusivity periods were coupled with measures to facilitate the approval of generics and accelerate competition in the marketplace. In contrast, today many countries have access to a competitive generic market. Data or marketing exclusivity does not improve generic access in these countries, and creates the potential for serious harm.

For any patient, five years or more without a medicine priced out of reach can be severe. The consequences are especially serious for patients with HIV/AIDS or other chronic diseases, where the cost of treatment can mean the difference between life and death. Colombia and Peru, parties to recently negotiated U.S. FTAs, together have more than a quarter million people infected with HIV and alarmingly low treatment access rates.10

Patent Extensions and “Linkage”

Another obstacle presented by the FTAS is the provision for potentially unlimited patent extensions. U.S. law grants patent extensions when there are delays in either the patent review or marketing approval period, but safeguards consumer rights by limiting the total duration permitted.11 The FTAS require that countries provide patent extensions for such delays - but do not require any lirnitations.12 Because developing countries have scarce resources for these activities, the review and approval processes can be lengthy. With the resulting extensions, the patent term could be longer in a developing country than in the United States.

Further, the FTAS place an onerous “linkage” between drug approval and patent
authorities.13 A typical example is the requirement that a drug regulatory authority withhold
approval of a generic drug until it can certify that no patent would be violated. Such provisions
put a significant burden on regulatory agencies that have neither the expertise nor the authority to enforce private patentholder rights. The problem is especially severe for developing countries where resources are already stretched thin by the primary task of monitoring the safety, efficacy, and quality of medicines on the market. The provision could compromise this fundamental mission and cause indefinite delays for the approval of generic drugs.

Compulsory Licensing

Compulsory licensing is the government granting of a license to a manufacturer other
than the patentholder to produce a drug at an affordable price. The Doha Declaration affirmed
the TRIPS principle that each WTO member country has “the freedom to determine the grounds upon which such licences are granted.”14 However, the U.S. has included provisions in FTAs to narrow these grounds.15

USTR has also refused to reference the right to compulsory licensing - or other public
health exceptions - in the text of FTAs. Instead, USTR has relied upon the use of vaguely
worded “side letters” that are subordinate to the agreements and non-binding on the parties. The letters also fail to provide clear and specific assurances affirming the ability of governments to take various measures to address public health needs.16

Absence of Appropriate Consumer Safeguards

Certain key elements of U.S. law designed to protect consumer access are entirely left out of the FTAs. These include:

• The Bolar provision, a law allowing the early registration of generics so that they can enter the market promptly once a patent expires.17

• A requirement that patent applicants describe the “best mode” to reproduce an
invention.18
• Protections to address attempts to gain repeated and unjustified patents on a product.19

The absence of these safeguards further threatens access to affordable generics in poor countries.

Conclusion

The world's consensus at Doha was that all nations have the right to use the flexibilities
available under TRIPS to “promote access to medicines for all.” Protecting innovation is
important, but the intellectual property provisions in current FTAs extend pharmaceutical
monopolies without sufficient regard to consumer access and public health.

We call on you to pursue a trade agenda that reasserts the U.S. commitment to the Doha
principles, and to revise the FTAs now under consideration.

Sincerely,


Henry A. Waxman
Member of Congress

Jim McDermott
Member of Congress

Tom Allen
Member of Congress

Llyold Doggett
Member of Congress

Janice D. Schakowsky
Member of Congress

Pete Stark
Member of Congress

Diana DeGette
Member of Congress

Chris van Hollen
Member of Congress

Barbara Lee
Member of Congress

Earl Blumenauer
Member of Congress

John Lewis
Member of Congress

Rahm Emanuel
Member of Congress


l Declaration on the TRIPS Agreement and Pub!ic Health, WTO Ministerial Conference - Fourth Session, WT/MlN(O1)/DEC/2, adopted 14 November 2001 (“Doha Declaration”) (online at http://www.wto.org/english/thewto_e/minist_e/min01 _e/ mindecl_trips_e.htm); World Trade Organization, Agreement on Trade-Related Aspects of lntellectual Property Rights (1994) (“TRIPS”) (online athttp://www.wto.org/english/ tratop_e/trips_e/t_agm0_e.htm).
2 Doha Declaration, Paragraph 4 (emphasis added).
3 Id.
4 Pub. L, No. 107-210; 19 U.S.C. §3802(b)(4)(C).
5 TRIPS, Article 27.1 and Article 33.
6 See, e.g,, Peru FTA §16.10.1; Colombia FTA §16.10. 1; Panama FTA §15. 10.1 ,
7 21 U.S.C. §355(j). The current U.S. framework for the approval of generics was
established by the Drug Price Competition and Patent Term Restoration Act. Pub. L. No. 98-417 (98th Congress, 1984). This legislation is also known as the “Hatch-Waxman Act.”
8 The FTA texts use the term “at least” in regard to the 5-year period of exclusivity. (See supra note 6).
9 The FTAs with Central America and Panama let drug companies wait up to five years
after launching a drug in the U.S. to launch it in the other nations, and still get five years of
marketing exclusivity upon approval in each country. As a result, approval of a generic for these FTA partners could lag up to five years behind general approval in the U.S. (CAFTA,
§15.lO. 1(b) and Panama FTA §15.10.1(b)),
10 UNAIDS, Countries (online at http://www.unaids.org/en/Regions_Countries/ Countries/default.asp).
11 35 U.S.C. §156. In the United States, patent extensions in cases of approval delay are limited in the following ways: (1) only one five-year extension is permitted; (2) the extension applies to only one patent per product; and (3) the total life of a patent from the time of marketing approval cannot exceed 14 years.
12 See, e.g., Peru FTA §16.9.6.; Colombia FTA §16.9.6; Panama FTA §15.9.6.
13 See, e,g.. Peru FTA §16.10.3(a); Colombia FTA §16.10.3(a); Panama FTA §15. 10.2(a).
14 Doha Declaration, Paragraph 5(b).
15 For example, the Singapore agreement sets three narrow conditions under which
compulsory licenses will be permissible, Under this agreement, a compulsory license will only be allowed: (1) if a court determines that the patentholder engaged in “anti-competitive” behavior; (2) when a government agency or contractor needs to use the patent; or (3) in a “national emergency or other circumstances of extreme urgency,” (Singapore FTA §16.7.6). The Agreement also provides that a patent owner subject to a compulsory license under condition (2) or (3) cannot be required to transfer “technical know how” to the licensed generic manufacturer. (Singapore FTA §16.7(b)(iii)).
16 See, e,g., U.S.-Colombia FTA: “Understanding Regarding Certain Public Health
Measures” and “Letter Regarding Certain Regulated Products,” signed November 22, 2006,
17 35 U.S.C. §271 (e)(1).
18 35 U.S.C. S § I12.
19 U.S. law provides mechanisms to counter the abusive “evergreening” of patents, by
which patentholders might use minor changes or frivolous patents attempt to gain repeated and
unjustified patent protection for a pharmaceutical product. For example, U.S.law limits the
types of patents that relate to generic approval, and includes a specific mechanism for patents to be challenged. (See supra note 7).
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SUNS #6211 Thursday, 15 March 2007

Trade: Key Congressional Democrats against TRIPS-plus in FTAs

Geneva, 14 Mar (Riaz K. Tayob) -- Twelve influential members of the United States Congress, in a letter to US Trade Representative Susan Schwab, have urged the "immediate reconsideration" of certain TRIPS plus provisions in US Free Trade Agreements so as to ensure adherence to the World Trade Organization's 2001 Doha Declaration on TRIPS and Public Health.

Such adherence, they said, should be ensured both in Free Trade Agreements already concluded with Colombia, Peru and Panama and those being negotiated with Thailand, Malaysia and others.

The letter by California Democratic Congressman Henry Waxman and eleven others underscores the Congressional direction to the Administration, in the 2002 Trade Promotion Authority Act, for adherence to the Doha Declaration as a "principal negotiating objective" in US trade negotiations.

Waxman is Chairman of the important Committee of the House of Representatives on Oversight and Government Reform, and is also a member of the House Committee on Energy and Commerce. With Democrats in control of the House of Representatives, Waxman and his Committee have jurisdiction over a whole range of government activities and holding the administration accountable.

Seven of the signatories are on the House Ways and Means Committee, viewed as the most powerful committee of Congress and has jurisdiction over all taxation, tariffs and other revenue-raising measures, as well as a number of other programs including Social Security, Unemployment Benefits and Medicare.

Under the US constitution, all bills regarding taxation must originate in the House of Representatives, and House procedure is that all bills regarding taxation must go through this committee. These stipulations make this committee particularly powerful, especially in comparison with its Senate counterpart, the US Senate Committee on Finance (which has jurisdiction over tax legislation and trade agreements). Several other members are on the House Energy and Commerce Committee.

The letter, dated 12 March, refers to recently negotiated Free Trade Agreements (FTAs) with Colombia, Peru and Panama and pending agreements with Thailand, Malaysia and others.

The letter points out that Congress in the 2002 TPA has directed the Administration to "adhere to the Doha Declaration as a 'principle negotiating objective' in US trade negotiations".

However, regret the members in their letter, the US FTAs undermine the commitment to Doha, with provisions in the FTAs that "strip away flexibilities to which countries are entitled under TRIPS."

The FTA provisions "upset an important balance between innovation and access by elevating intellectual property at the expense of public health." Consequently, "they threaten to restrict access to life-saving medicines and create conditions where poor countries could wait even longer than the United States for affordable generic medicines."

Specifically, the letter raises concerns about data exclusivity (exclusive rights over use of clinical test data submitted for a drug's first approval), patent extensions (when there are delays in a patent review or marketing approval), patent "linkage" (between drug approval and patent authorities), compulsory licensing (government grant of a license, to make use of the patented invention without the consent of the patent holder to a manufacturer other than the patent holder) and the absence of appropriate consumer safeguards.

Clinical test data refers to information submitted to regulatory authorities for approval and marketing of a drug. Recent US FTAs add the requirement for a period of data exclusivity on clinical test data from the date when the patented drug is approved by the regulator. This means that during the data exclusivity period, regulators cannot rely on the clinical test data submitted for a drug's first approval when considering subsequent applications for approval for generic versions of the drug, as a result delaying the availability of generics even if a patent has already expired. The FTAs with Peru, Colombia and Panama require "at least" a five year period of exclusivity.

US law provides for data exclusivity but "places strict caps on the periods available." The recent FTAs do not require caps. The letter states that developing countries may face pressure to adopt longer exclusivity periods where the wait for generics could be even longer in a developing country than in the United States. Data exclusivity does not improve access to generic medicines in these countries and creates the potential for serious harm.

[The TRIPS agreement has no provisions for disciplines on data exclusivity - SUNS.]

The letter states that "even if a developing country institutes limits equal to those in the US, the wait for generics could still be longer if a company launching a new medicine in the US does not seek approval in the developing country until later."

It gives the example of FTAs with Central America and Panama which lets drug companies wait up to five years after launching a drug in the US to launch it in the other nations and still get five years of marketing exclusivity upon approval in each country.

The letter clarifies that when periods of marketing exclusivity were introduced in the US, there were few generics on the market and the exclusivity periods were coupled with measures to facilitate the approval of generics and accelerate competition in the marketplace.

However, says the letter, today there exists a "competitive generic market" and data or marketing exclusivity "does not improve generic access in these countries and creates potential for serious harm."

The FTAs require that the patent term, normally twenty years under TRIPS, be extended when there are delays in either the review of the patent or marketing approval period. The FTA provisions allow "for potentially unlimited patent extensions." The FTA provisions are different from US law, which places limits on patent extensions. The letter recognises that developing countries have limited resources for patent review and marketing approval activities and that these processes may be lengthy. It concludes that with such provisions, "the patent term could be longer in a developing country than in the US".

The letter also regards as "onerous" the linkage between drug approval and patent authorities, where for example, a drug regulatory authority is required to withhold approval of a generic drug until it can certify that no patent would be violated. This provision is "especially severe" for under-resourced drug regulatory authorities and could "cause indefinite delays" for the approval of generic drugs and compromise their fundamental mission of monitoring the safety, efficacy and quality of medicines on the market. Such provisions, the letter adds, put a significant burden on regulatory agencies that have neither the expertise nor the authority to enforce private patent holder rights.

The letter regards compulsory licensing as the government granting a licence to a manufacturer other than the patent holder to produce a drug at an affordable price. It recalls the Doha Declaration which reaffirms the TRIPS principle that each WTO member country has "the freedom to determine the ground upon which such licenses are granted."

The US has included provisions in FTAs to narrow these grounds. The USTR has also refused to reference the right to compulsory licensing or other public health exceptions in the text of FTAs. Instead, it relies on "vaguely worded 'side letters' that are "subordinate to the agreements and non-binding on the parties." In addition, these side letters "fail to provide clear and specific assurances affirming the ability of governments to take various measures to address public health needs."

[The Doha Declaration on TRIPS and Public Health states that "the TRIPS Agreement does not and should not prevent members from taking measures to protect public health." - SUNS.]

Key elements of US law designed to protect consumers "are entirely left out of the FTAs," the letter complains. The letter mentions specifically as key elements: the Bolar provision, which allows for the early registration of generics so that they can enter the market promptly once a patent expires; a requirement that patent applicants describe the best mode to reproduce an invention; and protections to address attempts to gain repeated and unjustified patents on a product.

For example, states the letter, the US law provides mechanisms to counter abusive "evergreening" of patents (minor modifications to an invention and attempts to gain another 20 year patent protection for the allegedly new invention).

In conclusion, the letter states that the "world's consensus at Doha was that all nations have the right to use the flexibilities available under TRIPS" and the United States was one of the 142 countries that adopted the 2001 Doha Declaration on TRIPS and Public Health. As such, the US should pursue a trade agenda that reasserts this commitment.

All the signatories are Democrats. Besides Waxman, the other signatories are: Jim McDermott, Tom Allen, Lloyd Doggett, Jance D. Schakowsky, Pete Stark, Diana DeGette, Chris Van Hollen, Barbara Lee, Earl Blumenauer, John Lewis and Rahm Emanuel.

Of the members, Pete Stark, Chris Van Hollen, Jim McDermott, Lloyd Doggett, Earn Blumenauer, John Lewis and Rahm Emmanuel are on the Ways and Means Committee of the House. Tom Allen is a member of the House Budget Committee and of Energy and Commerce. Janice D. Schakowsky is a member of the House Energy and Commerce Committee and the sub-committee on Oversight and Investigations. Diana DeGette is a member of the House Energy and Commerce Committee. Barbara Lee is a member of the House Black Caucus and of the Progressive Caucus. +