[Ip-health] Inside US Trade: House Dems Criticize Bush on IPRs

[Asia Russell]

Inside US Trade
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HOUSE DEMOCRATS CRITICIZE ADMINISTRATION OVER IPR PROVISIONS IN FTAS


Date: October 8, 2004


House Democrats last week criticized the Bush Administration for
including intellectual property rights provisions in recent free trade
agreements, as well as agreements still under negotiation, that they
said restrict developing countries' access to medicines, including
generics. The members said these provisions violate U.S. obligations to
uphold World Trade Organization rules governing members' access to
medicines in the name of public health.





Specifically, House Democrats said they oppose provisions that prevent
test data from being used by generic companies, and criticized the lack
of specific language in recent FTAs on the right to issue compulsory
licenses and the right to accept parallel imports, which are imports
brought in through channels not authorized by the primary rightholder.
In a Sept. 30 letter to President Bush, 12 House members also asked the
Administration to halt the use of side letters as a means of explaining
the intellectual property protections in the agreements and replacing
the side letters with language in the text that is "clear and
specific."





The members also criticized the Office of the U.S. Trade Representative
for seeking commitments that go beyond those required in the WTO in
bilateral agreements and pointed to the IPR provisions in the recently
completed agreements with the five Central American countries and the
Dominican Republic, Morocco and the negotiations on an agreement with
the four Andean countries and Panama. However, House Democratic aides
said the provisions could be harmful to any developing country the U.S.
is negotiating with, including Thailand and the Southern African Customs
Union.





The letter, which was signed by Ways and Means members Jim McDermott
(D-WA), Fortney Stark (D-CA), Sander Levin (D-MI), Xavier Becerra (D-CA)
and Ranking Member Charles Rangel (D-NY), argued that the failure to
address these problems could lead to agreements that violate the terms
of the WTO Declaration on the Trade-Related Aspects of Intellectual
Property Rights (TRIPS) Agreement and Public Health.





In particular, the members said the IPR provisions in question
contravene paragraphs five and six of the Doha Declaration on TRIPS.
Paragraph 5 states that "each member has the right to grant compulsory
licenses and the freedom to determine the grounds upon which such
licenses are granted," while paragraph six recognizes the right of WTO
members with insufficient or no manufacturing capacities in the
pharmaceutical sector to use compulsory licensing under the TRIPS
agreement. The right to import drugs made under these compulsory
licenses was further clarified under a 2003 WTO decision by the Council
on Trade-Related Aspects of Intellectual Property Rights.





Democrats noted that in the CAFTA, parties are allowed to issue
compulsory licenses "when necessary to protect the public," while in the
case of Morocco, compulsory licenses are mentioned in the side letter to
the text of the agreement. House Democratic aides argued that the
language carries less weight when it is in the side letter than if the
language were in the text itself.





The Morocco side letter states that the commitments on intellectual
property protection in the text of the agreement "do not affect the
ability of either Party to take necessary measures to protect public
health by promoting access to medicines for all."





The Democrat's letter also cites the prohibition of parallel imports in
the intellectual property chapter of the Morocco FTA. Section 15.9.4 of
that agreement holds that "each Party shall provide that the exclusive
right of the patent owner to prevent importation of a patented product,
or a product that results from patented process, without the consent of
the patent owner shall not be limited by the sale or distribution of
that product outside its territory."





In a July 19 letter responding to Democratic members' earlier questions
about the provisions in the Morocco FTA, John Veroneau, general counsel
for the Office of the U.S. Trade Representative, explained that the text
reflects current Morocco law that prohibits parallel imports and
provides patent holders the exclusive right to import patented products.
Veroneau further noted that the U.S. has not used similar provisions in
past FTAs, including the CAFTA. But a Democratic aide said that
"enshrining" these provisions in an FTA makes it difficult for countries
such as Morocco to make changes to their law against parallel imports in
the future (Inside U.S. Trade, July 23, p. 10).





In addition, aides said Democrats are also concerned that the U.S. may
pursue similar language prohibiting parallel imports in upcoming FTA
negotiations, including in the Andean talks.





Democrats last week also singled out language in the CAFTA text that
grants five to eight years of data exclusivity, during which time a
regulatory authority cannot use test data submitted by the first
applicant in granting marketing approval for generic equivalents.
Without allowing regulators to use the test data, even medicines
obtained under compulsory license or through parallel imports will not
be able to get approved, according to Democratic aides.





In addition, the text of the section 15.10.1(b) of the CAFTA chapter on
intellectual property would give U.S. companies a five-year data
exclusivity period in CAFTA partner countries once they introduce a new
drug, and would let these companies start a new five-year data
exclusivity period once they introduce the drug into a CAFTA country,
which could mean a maximum 10-year period. House Democratic aides said
members believe there should be no data exclusivity provisions in the
agreements and argued that such provisions are driven by the
pharmaceutical industry. "This goes beyond protecting IPR to protecting
a monopoly," one aide said.


--
Asia Russell
Health GAP
asia@healthgap.org
tel +1 267 475 2645
http://www.healthgap.org