TWN Info Service on WTO and Trade Issues (Mar07/09)

30 March 2007


Key Congressional Democrats against TRIPS-plus in FTAs
Published in SUNS #6211 dated 15 March 2007
By Riaz K. Tayob, Geneva, 14 March 2007

Twelve influential members of the United States Congress, in a letter to US Trade Representative Susan Schwab, have urged the "immediate reconsideration" of certain TRIPS plus provisions in US Free Trade Agreements so as to ensure adherence to the World Trade Organization's 2001 Doha Declaration on TRIPS and Public Health.

Such adherence, they said, should be ensured both in Free Trade Agreements already concluded with Colombia, Peru and Panama and those being negotiated with Thailand, Malaysia and others.

The letter by California Democratic Congressman Henry Waxman and eleven others underscores the Congressional direction to the Administration, in the 2002 Trade Promotion Authority Act, for adherence to the Doha Declaration as a "principal negotiating objective" in US trade negotiations.

Waxman is Chairman of the important Committee of the House of Representatives on Oversight and Government Reform, and is also a member of the House Committee on Energy and Commerce. With Democrats in control of the House of Representatives, Waxman and his Committee have jurisdiction over a whole range of government activities and holding the administration accountable.

Seven of the signatories are on the House Ways and Means Committee, viewed as the most powerful committee of Congress and has jurisdiction over all taxation, tariffs and other revenue-raising measures, as well as a number of other programs including Social Security, Unemployment Benefits and Medicare.

Under the US constitution, all bills regarding taxation must originate in the House of Representatives, and House procedure is that all bills regarding taxation must go through this committee. These stipulations make this committee particularly powerful, especially in comparison with its Senate counterpart, the US Senate Committee on Finance (which has jurisdiction over tax legislation and trade agreements). Several other members are on the House Energy and Commerce Committee.

The letter, dated 12 March, refers to recently negotiated Free Trade Agreements (FTAs) with Colombia, Peru and Panama and pending agreements with Thailand, Malaysia and others.

The letter points out that Congress in the 2002 TPA has directed the Administration to "adhere to the Doha Declaration as a 'principle negotiating objective' in US trade negotiations".

However, regret the members in their letter, the US FTAs undermine the commitment to Doha, with provisions in the FTAs that "strip away flexibilities to which countries are entitled under TRIPS."

The FTA provisions "upset an important balance between innovation and access by elevating intellectual property at the expense of public health." Consequently, "they threaten to restrict access to life-saving medicines and create conditions where poor countries could wait even longer than the United States for affordable generic medicines."

Specifically, the letter raises concerns about data exclusivity (exclusive rights over use of clinical test data submitted for a drug's first approval), patent extensions (when there are delays in a patent review or marketing approval), patent "linkage" (between drug approval and patent authorities), compulsory licensing (government grant of a license, to make use of the patented invention without the consent of the patent holder to a manufacturer other than the patent holder) and the absence of appropriate consumer safeguards.

Clinical test data refers to information submitted to regulatory authorities for approval and marketing of a drug. Recent US FTAs add the requirement for a period of data exclusivity on clinical test data from the date when the patented drug is approved by the regulator. This means that during the data exclusivity period, regulators cannot rely on the clinical test data submitted for a drug's first approval when considering subsequent applications for approval for generic versions of the drug, as a result delaying the availability of generics even if a patent has already expired. The FTAs with Peru, Colombia and Panama require "at least" a five year period of exclusivity.

US law provides for data exclusivity but "places strict caps on the periods available." The recent FTAs do not require caps. The letter states that developing countries may face pressure to adopt longer exclusivity periods where the wait for generics could be even longer in a developing country than in the United States. Data exclusivity does not improve access to generic medicines in these countries and creates the potential for serious harm.

[The TRIPS agreement has no provisions for disciplines on data exclusivity - SUNS.]

The letter states that "even if a developing country institutes limits equal to those in the US, the wait for generics could still be longer if a company launching a new medicine in the US does not seek approval in the developing country until later."

It gives the example of FTAs with Central America and Panama which lets drug companies wait up to five years after launching a drug in the US to launch it in the other nations and still get five years of marketing exclusivity upon approval in each country.

The letter clarifies that when periods of marketing exclusivity were introduced in the US, there were few generics on the market and the exclusivity periods were coupled with measures to facilitate the approval of generics and accelerate competition in the marketplace.

However, says the letter, today there exists a "competitive generic market" and data or marketing exclusivity "does not improve generic access in these countries and creates potential for serious harm."

The FTAs require that the patent term, normally twenty years under TRIPS, be extended when there are delays in either the review of the patent or marketing approval period. The FTA provisions allow "for potentially unlimited patent extensions." The FTA provisions are different from US law, which places limits on patent extensions. The letter recognises that developing countries have limited resources for patent review and marketing approval activities and that these processes may be lengthy. It concludes that with such provisions, "the patent term could be longer in a developing country than in the US".

The letter also regards as "onerous" the linkage between drug approval and patent authorities, where for example, a drug regulatory authority is required to withhold approval of a generic drug until it can certify that no patent would be violated. This provision is "especially severe" for under-resourced drug regulatory authorities and could "cause indefinite delays" for the approval of generic drugs and compromise their fundamental mission of monitoring the safety, efficacy and quality of medicines on the market. Such provisions, the letter adds, put a significant burden on regulatory agencies that have neither the expertise nor the authority to enforce private patent holder rights.

The letter regards compulsory licensing as the government granting a licence to a manufacturer other than the patent holder to produce a drug at an affordable price. It recalls the Doha Declaration which reaffirms the TRIPS principle that each WTO member country has "the freedom to determine the ground upon which such licenses are granted."

The US has included provisions in FTAs to narrow these grounds. The USTR has also refused to reference the right to compulsory licensing or other public health exceptions in the text of FTAs. Instead, it relies on "vaguely worded 'side letters' that are "subordinate to the agreements and non-binding on the parties." In addition, these side letters "fail to provide clear and specific assurances affirming the ability of governments to take various measures to address public health needs."

[The Doha Declaration on TRIPS and Public Health states that "the TRIPS Agreement does not and should not prevent members from taking measures to protect public health." - SUNS.]

Key elements of US law designed to protect consumers "are entirely left out of the FTAs," the letter complains. The letter mentions specifically as key elements: the Bolar provision, which allows for the early registration of generics so that they can enter the market promptly once a patent expires; a requirement that patent applicants describe the best mode to reproduce an invention; and protections to address attempts to gain repeated and unjustified patents on a product.

For example, states the letter, the US law provides mechanisms to counter abusive "evergreening" of patents (minor modifications to an invention and attempts to gain another 20 year patent protection for the allegedly new invention).

In conclusion, the letter states that the "world's consensus at Doha was that all nations have the right to use the flexibilities available under TRIPS" and the United States was one of the 142 countries that adopted the 2001 Doha Declaration on TRIPS and Public Health. As such, the US should pursue a trade agenda that reasserts this commitment.

All the signatories are Democrats. Besides Waxman, the other signatories are: Jim McDermott, Tom Allen, Lloyd Doggett, Jance D. Schakowsky, Pete Stark, Diana DeGette, Chris Van Hollen, Barbara Lee, Earl Blumenauer, John Lewis and Rahm Emanuel.

Of the members, Pete Stark, Chris Van Hollen, Jim McDermott, Lloyd Doggett, Earn Blumenauer, John Lewis and Rahm Emmanuel are on the Ways and Means Committee of the House. Tom Allen is a member of the House Budget Committee and of Energy and Commerce. Janice D. Schakowsky is a member of the House Energy and Commerce Committee and the sub-committee on Oversight and Investigations. Diana DeGette is a member of the House Energy and Commerce Committee. Barbara Lee is a member of the House Black Caucus and of the Progressive Caucus.