[Ip-health] IP Watch on IP Provisions in US Bilateral FTAs

[Mike Palmedo]

http://www.ip-watch.org/weblog/index.php?p=3D699&print=3D1&res=3D1024_ff&pr=
int=3D1

Observers Watchful Of US Trade Impact On Medicines Access

Tove Iren S. Gerhardsen
IP-Watch
24 July 2007

The United States has begun incorporating a revised intellectual
property and health policy into its bilateral trade deals. But although
the overall softer approach towards its partners may improve access to
medicines, the debate on the impact of the US free trade agreements on
public health in developing countries is not over, according to close
observers.

=93The net of the changes certainly favours facilitated access, but there
are some new potential trouble spots as well,=94 Frederick Abbott,
international law professor at Florida State University College of Law,
told Intellectual Property Watch.

The revisions apply to trade deals with Colombia, Korea, Panama and
Peru, a spokesperson for the Office of the United States Trade
Representative (USTR) told Intellectual Property Watch. So far only Peru
has agreed to the changes.

The US FTAs have long been criticised as emphasising the protection of
intellectual property rights for US companies at the expense of public
health considerations in developing countries signing the agreements
(IPW, US Policy, 11 December 2006). A Geneva source said that it was
particularly the generics industry that had pushed for the changes in
the trade deals as they saw the old provisions as export barriers to
these markets.

USTR=92s =93Bipartisan Agreement on Trade Policy: Intellectual Property,=94
which emerged after the opposition political party took control of
Congress in January, was intended to rectify some of this. It covers
environmental and labour laws, and intellectual property and health
provisions and stakes out a new course for the US when negotiating
bilateral trade deals. It was aimed at getting the approval of
Democrats, who gained the majority in Congress at the beginning of 2007,
and was agreed between the White House (USTR) and congressional leaders,
a source said (IPW, US Policy, 17 May 2007). But time will show whether
it will lead to significant changes, sources said.

The USTR spokesperson said that the aim of the bipartisan agreement is
=93to clear the way for bipartisan support in Congress for these four FTAs
and to rebuild the bipartisan consensus on trade that will ensure the US
stays actively engaged in the global marketplace.=94

But Abbott predicted a continuation of the debate. =93Given the ambiguity
or open-ended quality of some of the provisions on marketing
exclusivity, and the new provisions on remedies, it is reasonable to
foresee some continuing discussions about the extent to which the FTAs
inhibit access to medicines,=94 he said. =93This should not overshadow the
positive contribution of the changes, but rather suggests that this is
only another chapter in a continuing story.=94

For intellectual property, the main issues in the bipartisan agreement
relate to clinical test data and patent safeguards. These are provisions
that previously could have delayed the introduction of generic medicines
upon patent expiry. The provisions effectively extended the patent
protection period in the FTA partner countries, preventing approval of a
generic drug while a patent is in force unless authorised by the patent
holder.

A change is that the five-year data exclusivity period will run
concurrently with the US exclusivity period. Test data is information
from medicine trials, which according to many FTAs can be protected for
at least five years, but sometimes a further three years if the medicine
may be used in a new manner. The new approach also will remove some
obstacles to issue a compulsory licence for patented products, which
allows their production without the patent holder=92s authorisation, a
source said.

The test data provision has been used as a =93back door=94 protection
against compulsory licensing, a Geneva source said, which means that a
government issues a licence for the use of a patented subject matter, as
allowed under the World Trade Organization (WTO) Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS). Some FTAs
specifically limit the use of compulsory licensing, such as to emergency
situations, which is the case with US bilaterals with Vietnam, Jordan,
Singapore and Australia, the Geneva source said.

Peru Deal Moves Ahead

All four FTAs were completed and signed by 30 June so they are covered
by the presidential trade-negotiating authority that expired on that
date, the USTR spokesperson said. The authority limits Congress to a
=91yes or no=92 vote on these agreements.

The National Assembly of Panama approved a pact with the US by a 58-3
margin, with one abstention, in early July, according to the website
bilaterals.org. The agreements with Panama and Korea will have to be
ratified by the US Congress, which some say could happen this autumn.

The new provisions have already been incorporated retrospectively into
the free trade agreement between the United States and Peru, which was
first signed on 7 December 2005. The Geneva source told Intellectual
Property Watch that the provisions had been =93faithfully incorporated=94 i=
n
the Peru FTA. The USTR spokesperson said the health provisions in the
bipartisan agreement had been discussed between the US and Peru, and
that =93Peru agreed to adopt them in a modified version of the FTA.=94

The Peruvian Congress reopened discussions on the new provisions in the
FTA, and on 26 June the new deal was passed, with 70 in favour, 38
against and one abstention, a source said.

=93The deal is done. It was approved in our Congress,=94 a Peruvian officia=
l
told Intellectual Property Watch. =93We are just waiting ratification in
the US Congress and then it would enter fully into force. That is
getting complicated, but our hope is that this will be done in September.=
=94

But at least one nongovernmental organisation source was sceptical about
the contribution of the FTA for Peru. =93On balance, there=92s no question
that Peru remains worse off than it would be in the absence of an FTA,=94
the source said. =93Still, these revisions are not trivial.=94

Abbott=92s Analysis: Watch Implementation, Injunctions

On the question of whether the USTR-Congress agreement would make any
difference in the area of public health, Abbott said, =93Yes, to the
extent that the agreement is reflected in the terms of the FTAs in a way
that reflects the letter and spirit of the agreement, this should have a
positive impact on access to medicines in the countries which benefit
from the changes.=94

But, he added, =93These differences may not manifest themselves
immediately since most will affect future events, such as future grants
of compulsory licences. And in some instances the differences may be
more subtle than others - such as differences between =91new
pharmaceutical product=92 and =91new chemical entity=92 - but these changes
should generally have a positive effect from the standpoint of access to
generic versions of necessary medicines.=94

But Abbott was also cautious on some issues, including the
implementation of the provisions. =93[The] agreement was not a =91one-way
street=92 in favour of facilitated access,=94 he said.

=93It is also necessary to consider that post-FTA approval, there is a
phase in which USTR supervises implementation in the counterpart
country,=94 he said. The fact that Congress has persuaded the White House
to modify the terms of the FTA =93will not necessarily act as a constraint
on the demands made by USTR in the implementation phase.=94 That phase is
less transparent than the phase of negotiation and approval of the FTA
texts. =93In order to understand the =91real effects=92 of the new texts, i=
t
will be necessary to study the implementing statutes and regulations in
the counterpart countries. It cannot be assumed that those countries
will take advantage of the new flexibilities.=94

Another issue may be the requirements for injunctions in the agreements,
Abbott said. =93The new template [the bipartisan agreement] adds an
obligation to provide preliminary injunctions or equivalent effective
provisional measures for claims of infringement covering a patent on an
approved pharmaceutical product or its approved method of use,=94 he said.
=93This specific obligation did not appear previously in the enforcement
section of the IP chapter template. This obligation is accompanied by a
requirement that the patent holder be given adequate notice and
sufficient time to bring such an action prior to the marketing of the
allegedly infringing product.=94

=93For many developing countries preliminary injunctions can be rather
problematic for generic producers seeking to enter the market. Moreover,
while =91method of use=92 language was used in the prior template, the
context was subtly different. This may also raise issues in some legal
systems,=94 Abbott said.

When asked what specific changes have been made to the Peru FTA as a
result of the bipartisan agreement, Abbott said it =93introduces into the
text an explicit exception from marketing exclusivity with respect to
the grant of compulsory licences. This eliminates the need to rely on
the side letters which USTR had indicated did not create a legal
exception, and which in any case rewrote and narrowed the WTO August 30,
2003 decision and 2005 amendment (TRIPS Article 31bis). This is a clear
gain from the standpoint of facilitated access to medicines.=94

Below is Abbott=92s assessment of the Peru Deal:

=93The new template removes most of the language providing
extraterritorial effect for the submission of regulatory data in the
United States (and elsewhere) for pharmaceutical products, although
retaining it for agricultural chemicals. This is a gain.

The marketing exclusivity provision for pharmaceutical products
establishes a presumptive five-year term as the =91reasonable period=92 of
protection, taking into account the nature of the data and the
expenditure in creating it. This leaves room for a reduced period of
protection (but also does not expressly incorporate an upper limit on
the term of protection).

The marketing exclusivity provision limits the term of protection, for
countries which rely on foreign approval, to the term in the country
whose approval is relied upon, but only if the relying country approves
the application for registration within six months. This appears to be a
positive. However, note that for some countries a six-month approval
cycle might be quite unusual. Also, the text does not expressly limit
the marketing exclusivity period in the foreign country. One can imagine
requests to match the foreign exclusivity period, even if not expressly
required by the text.

The new template changes the products affected by marketing exclusivity
from =91new pharmaceutical product=92 to =91new chemical entity=92. =91New
pharmaceutical product=92 had been further defined to refer to products
previously approved in the national territory, which appeared to require
treating products previously approved only in other countries as =91new=92.
The new template does not further define =91new chemical entity=92,
providing some discretion as to how that term is defined. However,
because of language in the new template indicating when marketing
exclusivity need not be provided, some clarification remains needed
regarding the intent of the new terms.

The new template makes patent term extension with respect to
pharmaceutical products optional for delays based on regulatory approval
and patent application approval. This is a clear positive from the
standpoint of facilitating access to medicines.=94

Tove Gerhardsen may be reached at tgerhardsen@ip-watch.ch.


--
Mike Palmedo
Research Coordinator
Program on Information Justice and Intellectual Property
American University, Washington College of Law
4910 Massachutsetts Ave., NW Washington, DC 20016
T - 202-274-4442 | F 202-274-0659
mpalmedo@wcl.american.edu