[Ip-health] Congressional Quarterly: 'Big Pharma' vs. Generic In CAFTA Drug War

[Mike Palmedo]

'Big Pharma' vs. Generic In CAFTA Drug War

By Rebecca Adams, CQ Staff
Congressional Quarterly
July 25, 2005

In recent years, the powerful U.S. drug industry has shown it can play
defense very effectively. It has successfully blocked plans to let the
government use its negotiating power to get low prices in Medicare. The
industry fended off proposals to allow people to import drugs from other
countries, such as Canada. And it has fought off attempts to give
regulators more authority over the companies to ensure safety.

Now, Big Pharma, as it is known, has found something it wants to keep.
"I suspect that in every single trade agreement from now on, you will
have this prototype, and we will have to keep fighting," said Rep. Jo
Ann Emerson, R-Mo., who has expressed concern about the provisions. She
said they "do nothing but line the pockets of the pharmaceutical
industry instead of helping anyone."

Lawmakers such as Emerson were making their objections to the provision
known to U.S. Trade Representative Rob Portman as he worked the Hill
last week seeking support for the agreement from members of the House,
where Portman served until April when he took the trade post. His answer
to his former colleagues is that trade law requires him to look out for
the best interests of American companies and to protect patent rights.

Current law does require negotiators to aim for the broad goal of
protecting intellectual property rights, but international law also
requires countries to place a priority on public health needs. Opponents
of the drug provisions, such as generic drug manufacturers and the
nonprofit humanitarian groups, argue that the Bush administration has
ignored the need for balance and has sided with the drug industry at the
expense of patients around the globe.

"These provisions in CAFTA have been drafted by and for big [drug
companies]," said Rob Weissman, the co-director of Essential Action, a
nonprofit group that advocates for access to medicines. "This is a big
payoff to Big Pharma for its dutiful campaign contributions."

And the up-or-down nature of trade pact bills means that lawmakers
cannot pick and choose which provisions they like. The language is often
closely held, known only to government negotiators and the industry
groups that advise them, until a global deal has been reached. Once a
pact is completed, lawmakers are allowed only an up-or-down vote on the
entire document, with no amendments allowed.

The outcome of the House vote, planned for next week, is uncertain, and
Portman and House leaders were working hard last week to piece together
a majority to support the pact. The Senate passed the implementing
legislation June 30.

Advantages of Exclusivity

Under CAFTA, when a drug is approved in one of the pact countries, the
data used to get approval will be protected in that country for at least
five years, regardless of whether the drug had been approved in another
country previously. So if a drug is developed in the United States but
not introduced in a Central American country for another two years, the
five-year clock will not start ticking on the data in Central America
until two years after it had already been in the United States.

That could give drug companies twice as many years of protection as they
have under other trade deals, such as the North American Free Trade
Agreement. That pact gives companies five years of exclusivity that
starts when a drug is approved in any of the countries in the agreement.

CAFTA also would allow for patent extensions that do not include limits
on the protections that are in U.S. law. The deal also would require a
nation to monitor drug patents around the world before allowing a
generic company to produce a drug. That will be a challenge for
countries that do not have the ability to monitor worldwide drug approvals.

Many lawmakers say that encouraging the use of generics is key to
holding down health care costs in the United States. The 2003 Medicare
drug law, for instance, contained three provisions aimed at speeding
generics to market, so supporters of generics say it stands to reason
that Congress should support greater access to generics in low-income
developing countries as well.

But drug lobbyists say the United States should not be subsidizing the
cost of drugs in other countries. They have made this argument in
lobbying for the provision in trade agreements, which in recent years
have come to look more like policy documents.

And lobbyists have become more sophisticated in their requests for
provisions as trade talks have evolved from a series of swaps on tariffs
on specific products to complex conferences with wide-ranging policy
implications.

The best example may be the drug industry, which has succeeded in
expanding the intellectual property rights protections in trade deals
over the years. A trade pact with Thailand contains intellectual
property protections similar to those in CAFTA. And preventing patients
from getting quick access to generic drugs could have even greater
implications there because of the country's deadly AIDS epidemic.

The industry also was successful in winning provisions in trade
agreements with Australia, Singapore and Morocco to prevent drugs from
countries with price controls from being shipped back to the United
States at the cheaper prices, also called "reimportation." Critics of
the provisions, such as Rep. Anne M. Northup, R-Ky., say that Americans
should have the unrestricted ability to buy cheaper drugs from overseas.

Critics are also frustrated because they cannot really do anything about
the provisions. When language is inserted into a trade agreement,
lawmakers must weigh their support for free trade against their interest
in the narrower issue, in this case cheap drugs here and abroad. No
free-trade deal has been rejected by Congress.

Advisers With an Interest

And the industry is in a strong position to influence trade
negotiations. A technical advisory committee on intellectual property
rights consults with U.S. trade negotiators every couple of months. The
committee meets with the trade office representatives for several hours
to hear updates on current trade talks and to give their reaction to
negotiations. The next meeting is scheduled within the next two weeks.

The committee, which discusses many of the controversial drug provisions
in question, is composed largely of lobbyists for brand-name drug
companies. There are no representatives of generic drug companies or
non-governmental organizations who are affected by the provisions.

The committee's members include the director of public policy for Merck
& Co.; a consultant for Eli Lilly; a vice president for Pfizer, Inc.;
and an associate vice president for the industry's trade group, the
Pharmaceutical Research and Manufacturers Association (PhRMA). The
15-member panel includes six drug lobbyists, four anti-pirating
organizations whose members include drug makers, and five lobbyists for
other industries such as media or food companies.

A U.S. Trade Representative spokesman said that other committees do have
representatives from nonprofit groups or a broader range of business
interests, but that the agency nonetheless considers the panel "balanced."

The generic drug companies do not think so, saying the brand-name drug
companies' access to trade negotiations gives them an unfair advantage.
Generic company lobbyists acknowledge that they were caught off guard by
the anti-generic provisions in CAFTA, for example.

"We don't want back-door maneuvers, and we're trying to stop that," said
Kathleen Jaegar, president of the Generics Pharmaceutical Association.
The generics association is applying for membership to the advisory panel.

But the idea of using trade negotiations to achieve policy objectives is
a natural development in the modern global marketplace, according to the
co-president of the advisory group, drug industry consultant Jacques Gorlin.

"This is not a back-door approach," he said. "International agreements
do bind all of the parties, but we live in a democracy. If the majority
of [lawmakers] still support free-trade agreements with these
provisions, then that's the nature of decision-making."

Big drug companies, meanwhile, say there is no reason for them to back
down from efforts to press for strong anti-generic and anti-importation
provisions in future trade pacts.

"Strong patent rights are vital incentives to developing innovative
products, such as pharmaceuticals, that can improve the health and
quality of life for the patients all around the world," said Ken
Johnson, senior vice president at PhRMA.