[Ip-health] NY Times: Drug Lobby Got a Victory in Trade Pact Vote

[mpalmedo@cptech.org]

http://www.nytimes.com/2005/07/02/business/worldbusiness/02drug.html?pagewa=
nted=3Dprint

Drug Lobby Got a Victory in Trade Pact Vote

New York Times
By STEPHANIE SAUL
July 2, 2005

The sidewalk between the drug industry's headquarters in Washington and
the United States trade representative's office has been taking a pounding
from the wingtips of industry lobbyists.

The work of these drug industry courtiers, who represent what is arguably
Washington's biggest and wealthiest lobby, appears to have succeeded in
the Central American Free Trade Agreement. The agreement would extend the
monopolies of drug makers and, critics say, lead to higher drug prices for
the mostly impoverished people of the six Latin American countries it
covers.

The accord cleared the Senate on Thursday but faces a difficult floor vote
in the House of Representatives this month. The agreement's pharmaceutical
provisions are a sideshow in the Congressional debate, eclipsed by
concerns of the textile and sugar industries and the labor unions that
their interests would not be protected.

In contrast, the agreement's pharmaceutical provisions, which provide five
years of market exclusivity to brand-name drugs, have been front and
center in Guatemala, where poor AIDS patients have marched in the streets
to protest.

The six countries affected by the pact "understand that the net effect of
these pharmaceutical provisions will be to raise the price of medicine,"
said Frederick M. Abbott, a professor of international law at Florida
State University. "The way they have to view it is that they're getting
something out of the agreement that will give them a net trade benefit."

The problem with such an analysis, Professor Abbott said, is that the
textile employers and agricultural producers gain, but the economic
benefits may never flow down to the people who cannot afford medicines.

According to Representative Sherrod Brown, Democrat of Ohio, the trade
agreement is an example of how the pharmaceutical lobby rarely loses on
trade issues, often by quietly working behind the scenes.

"A voter walking down the street would never think of the pharmaceutical
industry's influence in another country through the U.S. trade
representative," said Mr. Brown, who has criticized how the industry and
other corporate interests shaped the trade accord.

The Pharmaceutical Research and Manufacturers of America, the drug
industry association, is the single biggest influence group at the trade
office, according to a new analysis by the Center for Public Integrity, a
government watchdog group. The analysis is based on the sheer number of
reports, 59, filed by lobbyists for the group since 1998.

The reports do not have to disclose how many individual contacts the
lobbyists made.

The industry's primary interest at the trade office is protecting its
intellectual property, which Peter R. Dolan, the chief executive of
Bristol-Myers Squibb, recently called the "lifeblood" of the industry.

Like movies and software, pharmaceuticals require a lot of time, money and
creativity to develop, yet they are fairly simple to replicate. The
industry association estimates that intellectual property infringement in
21 countries costs its members $7 billion a year. Therein lies the problem
for drug makers, and the reason they are fighting a global war to protect
their patents.

In defending their efforts to extend intellectual property protection
abroad, industry officials point out that pharmaceutical companies
subsidize treatment for millions of people in developing countries.
Bristol-Myers, for example, has invested $150 million to set up AIDS
clinics and other charitable programs in Africa, a figure that does not
include the low-cost drugs the company distributes there.

The industry association also argues that extending its patent protections
worldwide will result in greater access to medications by encouraging drug
makers to enter those markets.

"It provides certainty for companies to be able to market and sell their
medicines in those particular markets," said Mark Grayson, a spokesman for
the trade association.

The certainty, according to Professor Abbott of Florida State, results
from the agreement's "highly restrictive market exclusivity rules which
allow the originator companies to block any registration."

One of the most contentious provisions in the trade pact is a requirement
that gives brand-name manufacturers market exclusivity for five years
after a drug is registered in the countries, even if the 20-year patent
has expired. A similar five-year period exists in the United States, but
the trade agreement would require countries to enforce the five-year
period even if the exclusivity period in the United States has already
expired.

During that period, manufacturers who ultimately wanted to register a
generic equivalent to the drug in that country would be barred from using
the animal and human test data submitted for the drug's approval, a
provision that critics say could delay the approval of generics beyond the
five-year period.

By protecting marketing exclusivity, the industry says, the trade
agreement would also spur innovation and encourage pharmaceutical
companies to register drugs in the small countries, ultimately helping
deliver those drugs to the needy.

It is a philosophical argument that the United States trade
representative's office has embraced.

"Trade rules that protect innovation and research foster a system that
produces the types of medicines American health consumers and health
consumers around the world use and need to fight diseases," said Richard
Mills, a spokesman for the trade office. Former Representative Rob
Portman, an Ohio Republican, was sworn in to the cabinet-level trade post
that runs the trade office in May.

The issue of intellectual property protection for pharmaceuticals has been
highlighted in the last week with the Brazilian government's threat to
break Abbott Laboratories' patent for the AIDS drug Kaletra by authorizing
one of its domestic drug manufacturers to make a copy at roughly half the
cost.

The Brazilian government currently buys Kaletra for about 180,000 citizens
with AIDS. Abbott Laboratories charges Brazil $2,500 a patient annually.
That represents a special price break from the company, which charges
$6,000 to $7,000 for the drug in other developed countries, according to
figures supplied by the company. Despite the special deal his government
is getting, Brazil's president, Luiz In=E1cio Lula da Silva, wants the drug
cheaper.

If President Lula goes through with his threat, he would invoke rarely
used "compulsory licensing" provisions of a 1994 World Trade Organization
agreement on intellectual property. The agreement forced countries to
adopt American-style patent rules for pharmaceuticals, but allowed
flexibility in cases of overriding public health issues by giving
countries the right to order compulsory licenses.

Citing the Brazilian example, Representative Pete Stark, a California
Democrat, referring to the industry trade group, said, "My guess is that
Pharma's worry is that one of these countries will say, ' To hell with
you,' and start making their own drugs."

Critics of the trade agreement say it sets up barriers to compulsory
licensing in the countries it covers - the Dominican Republic as well as
Nicaragua, Guatemala, El Salvador, Honduras and Costa Rica. The combined
gross domestic product of the six countries amounts to a third of the
annual revenues of major drug makers.

The pharmaceutical industry has also been successful in influencing trade
"priority lists" and "watch lists" issued by the trade representative in
recent years, according to the Center for Public Integrity analysis,
released this week. Inclusion on the trade watch lists constitutes the
first salvo in a trade war.

Last year, the pharmaceutical trade group requested action against 38
countries for infringing on American patents, producing counterfeit drugs
and releasing confidential test data. Of those, 31 found their way onto
some level of the trade watch list, according to the center's analysis.

The report for 2005, released in May, again showed the extent of the
industry's influence. Of 41 companies recommended for inclusion by the
industry, 32 made it onto one of the trade lists, the center said.

The trade representative's office disputes the analysis, however, saying
the office complies with exact pharmaceutical industry requests involving
the priority and watch lists only about half the time.

The 59 reports filed by lobbyists for the pharmaceutical association do
not count dozens of reports filed by individual companies. The analysis
revealed that Pfizer lobbyists had filed reports about lobbying the trade
office 32 times during the same period; Bristol-Myers, 27 times; and
Wyeth, 19 times.

Over all, the various representatives of the pharmaceutical association
and its individual companies filed 289 reports of lobbying at the trade
representative's office since 1998, making pharmaceuticals the
fourth-largest lobbying interest group, behind miscellaneous
manufacturing, business associations and agriculture, according to the
center's analysis.

Mr. Grayson said extensive lobbying efforts by his industry were a good sig=
n.

"If we're not doing a lot, we're not doing our job," Mr. Grayson said.