[Ip-health] Patent provisions in Australia FTA (BNA Publications)

[Chris Rugaber]

FYI...from BNA's International Trade Reporter

 Bilateral Agreements
 Provision in Australia FTA Could
 Conflict
 With Drug Reimport Bill, House Member
 Says






                  A provision in the U.S.-Australia free
                  trade agreement could conflict with a bill
                  currently before Congress that would allow
                  the reimportation of pharmaceuticals and
                  could hamper the ability of Congress to
                  enact health care policy if it is included
                  in future free trade agreements, a member
                  of Congress asserts.


                  In a "Dear Colleague" letter circulated to
                  House members June 25, Rep. Tom Allen
                  (D-Maine) said that legislation (S. 2328)
                  permitting the reimportation of drugs from
                  Canada and other developed countries,
                  sponsored by Sens. Byron Dorgan (D-N.D.),
                  John McCain (R-Ariz.) and Olympia Snowe
                  (R-Maine), among others, could be
                  challenged under a provision of the
                  Australia free trade agreement (FTA).


                  The letter said that a U.S. trade official
                  acknowledged during a June 23 House Ways
                  and Means Committee informal markup that
                  the FTA would block the reimport of drugs
                  from Australia, even though such reimports
                  would be permitted under U.S. law if the
                  Dorgan-McCain bill was enacted.


                  Rep. Sander Levin (D-Mich.), ranking
                  member of the Ways and Means Subcommittee
                  on Trade, criticized the provision during
                  the June 23 Ways and Means markup. But he
                  also said that Australia is unlikely to
                  become a source of pharmaceutical
                  reimports to the United States due to the
                  nature of its health care system and
                  therefore the issue is unlikely to be a
                  problem under the Australia FTA. Australia
                  subsidizes most medicines and bans the
                  re-export of drugs.


                  However, the measure could be a problem in
                  future trade agreements, Levin said, and
                  should not be included in pacts that cover
                  countries such as South Africa, Canada and
                  Brazil. Levin supports the Australia
                  agreement.

                    'Back Door Effort' to Block Reimports



                  Article 17.9.4 of the U.S.-Australia FTA
                  requires that both countries provide
                  patent holders--such as pharmaceutical
                  companies--the right to prevent
                  importation of their products through
                  contracts or other means, a principle
                  known as "territorial exclusivity." Yet
                  the Dorgan-McCain bill would prevent drug
                  companies from restricting pharmaceutical
                  imports from approved countries, including
                  Australia, the Allen letter said.


                  In addition, the House approved similar
                  legislation (H.R. 2427) sponsored by Rep.
                  Gil Gutknecht (R-Minn.) in July 2003, by a
                  vote of 243-186.

                    Policy Could be Prejudiced, Allen Says



                  "The 243 members who supported that bill
                  should be concerned that this trade
                  provision is a back door effort by the
                  pharmaceutical industry to block
                  reimportation," Allen's letter said. "If
                  included in future trade agreements, this
                  provision could nullify future domestic
                  law to allow reimportation from Canada and
                  elsewhere."


                  "Regardless of one's position on
                  reimportation, however, all of us should
                  question whether domestic health policy is
                  being prejudiced by trade provisions," the
                  letter said, "and whether Congress'
                  ability to enact health laws is being
                  restricted by an agreement that Congress
                  has no ability to amend."


                  The Australia FTA also initially included
                  language that would have directly banned
                  the re-import of pharmaceuticals from
                  Australia, but that section was removed
                  prior to the signing of the agreement
                  after several members of Congress
                  protested that it interfered with the
                  congressional debate over pharmaceutical
                  reimports.


                  The Bush administration is expected to
                  forward legislation implementing the
                  U.S-Australia FTA to Congress as early as
                  the week of July 5. Senate Majority Leader
                  Bill Frist (R-Tenn.) has said the Senate
                  will consider the pact in July.

                              TPA Guidance Cited



                  During the June 23 Ways and Means session,
                  Levin asked John Veroneau, general counsel
                  for the Office of the U.S. Trade
                  Representative, whether any provision of
                  the agreement would prevent the United
                  States from changing its laws on drug
                  imports.


                  Veroneau responded "The answer to that
                  would have to be an unequivocal no" and
                  cited Section 102 of the draft
                  implementing legislation, which provides
                  that any part of the agreement
                  "inconsistent with any law" in the United
                  States will have no effect.


                  Under further questioning, however,
                  Veroneau said that while the FTA was
                  consistent with current U.S. law, "if
                  current U.S. law changes, then obviously
                  that could give rise to an inconsistency
                  between U.S. law and a commitment under
                  this trade agreement."


                  Veroneau argued that trade promotion
                  authority (TPA) rules direct the USTR to
                  include intellectual property rights (IPR)
                  provisions in trade agreements that
                  reflect current U.S. law. The principle of
                  "territorial exclusivity" is a
                  long-standing aspect of U.S. law, he said.


                  Levin, however, said, "I don't think we
                  can use TPA as a shelter to ... put [a
                  provision] in the FTA when it would
                  handcuff the U.S. Congress."



                  By Christopher S. Rugaber