On August 10, USTR staff met civil society actors to discuss the intellectual property and pharmaceutical provisions in the Trans Pacific Partnership. USTR was represented by Probit Mehta, Stan McCoy and Jared Raglad, and the civil society actors were James Love (Knowledge Ecology International), Rohit Malpani (Oxfam American) and myself (on behalf of the Forum on Democracy and Trade).
Stan McCoy said that USTR’s broad goals in the negotiation are economic integration among diverse trading partners, and raising U.S. exports (including exports from branded and generic drug firms). USTR wants to increase access to medicines, and strong IP will “stabilize expectations” about when generic entry can occur. McCoy used the word “access” to mean the entrance of a product onto the market, and drew a distinction between “access” and “pricing.”
When asked about reports USTR is considering turning back from the “May 10” trade policy compromise that the Bush Administration and Congressional democrats reached in 2007, McCoy said many policy options are being discussed, and “2007” is one of them, but not the only one. He always referred to the policy deal as “2007.” He said that USTR is open to trying to find new ways of balancing competing objectives.
Rohit Malpani emphasized how important many public groups view the May 10 policy. It was a balanced approach that facilitated market entry by putting in place rules on data exclusivity that discouraged firms from delaying entry into developing country markets. If USTR goes back on this policy, public health groups will be reinvigorated to oppose the administration’s trade policies.
Regarding IP and market entry, Malpani described the results of an Oxfam study of the Jordanian pharmaceutical market after implementation of the US-Jordan FTA. It found that pharmaceutical firms did not enter the Jordanian market faster, and when they did, prices were higher.
Malpani also described conversations Oxfam has had with employees of biopharmaceutical firms, who say the decisions on whether or not to enter markets are based largely on factors other than IP, especially the capability of a country’s medical infrastructure to deliver biopharmaceuticals.
Love noted that the enforcement section of the leaked IP Chapter contains a lot of provisions found in ACTA. It also contains provisions that were in earlier versions of ACTA, but were edited out before negotiators arrived at the final draft, especially in the areas of injunctions and damages. Some of these conflict with US law and practice, such as a requirement for injunctions for surgical method patents.
Responding to McCoy’s assertion that USTR is looking for new ways to achieve a balance between competing interests, Love suggested two things. The first was a framework where IP protection for a medical product in developing counties is dependent on access to that product. If a firm brings a new product to market but it is prohibitively expensive, then the firm does not get IP protection. Second, Love proposed a framework where high income countries (where the vast bulk of industry sales are made) agree not to parallel import products from middle and low income countries, and to agree to not use prices in middle and low income countries for reference pricing.
I asked USTR about the rumored provision in the pharmaceuticals chapter that would require countries using evidence based pricing strategies to base prices or reimbursements on prices in their own territory. I ask if there is any special/differential treatment for poor countries like Vietnam and Peru. Stan McCoy and Jared Ragland both answered that USTR is not trying to dictate how countries make decisions on prices, but merely trying to increase transparency and ensure fair processes. McCoy said that countries often have pricing policies that discriminate against U.S. firms (but hard evidence is difficult to point to due to the lack of transparency in this area). Malpani noted that WHO is trying to help Vietnam and Malaysia put pricing policies into place that could conflict with trade obligations if they are similar to those in existing trade agreements.
I point out that the provisions in the Korea FTA were significant enough that state legislators raised alarm, and the text changed in response to make sure their pricing programs are not affected. This leads to a scenario where the U.S. is simultaneously trying to create a system of norms for price negotiations abroad, but then trying to carve out U.S. programs. We included a carveout in Korea for Medicaid, but that might not apply to other programs like 340B – which gets discounts for programs like ADAPs and community hospitals serving low income Americans. Now we hear through the grapevine that the carveout is expanded to include Medicaid and “related” programs, but we’re not sure exactly what that means. But all in all, it doesn’t make sense for the U.S. to export a system of conditions for price negotiations that it doesn’t abide by.
