[Ip-health] Wall Street Journal: In Trade Deal, a Shift on Generics

[Thiru Balasubramaniam]

In Trade Deal, a Shift on Generics
Agreement Opens the Door
To Cheaper Drugs Abroad,
Easing Some Patent Rules
By SARAH LUECK
May 17, 2007; Page A4

WASHINGTON -- A new trade agreement between Congress and the White
House contains provisions that open the door to more sales of generic
drugs in developing countries. The plan, reversing earlier gains for
American drug makers backed by President Bush, marks the first big
setback for the pharmaceutical industry since Democrats claimed Capitol
Hill.

For now, the provisions likely only affect pending trade deals with
Peru, Panama and Colombia. But the plan also signals a broader shift as
congressional leaders give greater weight in trade talks to providing
cheaper medicines for the poor, even if it means denying the
Republican-friendly drug industry some of the protection it says it
needs.

The administration "has permitted the weakening of
intellectual-property protections in these agreements," said Billy
Tauzin, president of the Pharmaceutical Research and Manufacturers of
America, the drug industry's main trade group, in an interview. "They
were desperate to get continuing trade authority" from Democrats in
Congress, he said. "The fact is, their leverage changed since
November."

The main focus of the bipartisan trade deal, announced last week,
involves requiring U.S. trade partners to meet new standards for giving
their workers labor rights and ensuring environmental protections. But
the deal also allows developing countries more flexibility in dealing
with U.S. drug makers than they would have had under earlier versions.

Specifically, the policy would ease requirements on developing-country
regulators to prevent the sale of patent-infringing products. It also
releases trading partners from a requirement to extend the time for
patent protections as a form of compensation for delays in drug
approvals.

Public-health advocacy groups have argued for years that U.S. trade
policy under Mr. Bush often protected brand-name drug makers at the
expense of poor countries in need of more-affordable treatments. Many
of those groups said they weren't satisfied with last week's deal. Even
with the changes, they say, the Peru and Panama deals advance many of
the protections the drug industry wants -- just fewer than would have
existed if the Bush administration had stuck with its earlier trade
stance.

  "Compared to the many steps backward that have been taken since 2003,
this is a bit of relief for people who want access to affordable
medicines," said Ellen Shaffer, co-director of the Center for Policy
Analysis on Trade and Health in San Francisco. "Compared to an actual
policy that would provide affordable medicines for people and fairly
balance that with innovation, it is a small step forward."

Trade is just one of many fronts where the pharmaceutical industry
faces a less friendly policy environment, after enjoying strong support
during years of undivided Republican rule. Some Democrats want to
rewrite the Medicare prescription-drug benefit to allow the government
to negotiate lower prices with manufacturers. Some Democrats also want
to legalize imports of cheaper medications from Canada and other
countries. The Bush administration has maintained its support for the
industry on those issues, and the Senate has blocked those policy
changes.

But on exports, the administration last week changed course. For the
last several years, U.S. trade officials and drug companies have worked
to push new protections for drug makers in countries such as signers of
the Central American Free Trade Agreement.

Companies say stronger safeguards for their patents and proprietary
data are needed in many countries, to delay generic competition and
make it worthwhile for the industry to continue to invest in research
and development of new treatments.

Under the new American trade strategy, the biggest loss for the
industry is a change that may shift more responsibility to drug makers
for preventing the marketing of patent-infringing products.

Under recent trade agreements, the U.S. pressed countries to agree to
"linkage," which requires local drug regulators to make sure a generic
product doesn't violate any patents before allowing it on the market.
Public-health advocacy groups have said this puts makers of brand-name
drugs at an advantage and burdens regulators. Drug companies support
linkage because it prevents copies of their products from being sold
during lengthy court battles. Without it, companies will have to be
more vigilant. To take industry concerns into account, the new policy
calls for countries to set up fast procedures for resolving patent
disputes.

Another change in the new trade policy would weaken a common provision
in past trade agreements: that local regulators "shall" compensate drug
makers for delays in the process of approving their products, by
awarding extra time to sell their products free from competition.

Some Democrats said this unfairly penalizes consumers in those
countries for slow bureaucracies. A description of the changes to the
Peru and Panama agreements says countries "may" extend a company's
patent to make up for delays, suggesting more flexibility on what they
are required to do to compensate drug makers.

Health-advocacy groups complain the new policy still preserves the
data-exclusivity provision used to block generic competition. In many
countries, including the U.S., makers of generic drugs can often win
approval by proving their products are equivalent to the original
drugs. In that process, regulators use test data submitted by makers of
brand-name drugs. The data-exclusivity provision typically prevents
such use of the data for five years, acting as an effective hurdle for
generics. The new policy does, however, place more restrictions on the
five-year data exclusivity than previously existed in the Panama and
Peru agreements.

Write to Sarah Lueck at sarah.lueck@wsj.com1

   	URL for this article:
http://online.wsj.com/article/SB117936226237705632.html


---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org