Here is some of what we learned at the TPP negotiation in Chicago this week.
Transparency will be worse than ACTA.
In response to the repeated calls in civil society and academic presentations for TPP negotiators to increase transparency in the process, including through ongoing releases of negotiating text, USTR officials signaled that the process will be less transparent than the extremely controversial process followed in the Anti-Counterfeiting Trade Agreement. This came in the public question and answer session with Assistant USTR Barbara Weisel and in conversations with USTR negotiators throughout the meeting. Weisel explained in a question and answer session that TPP negotiating countries signed an agreement at the onset of negotiations that the text will remain confidential throughout the negotiations. This may bar the kind of end-game release of text permitted in the ACTA process (which was only done after all major negotiating points had been finalized and was followed by no public process to accept public comments on the substance of the text). Public Citizen’s Lori Wallach asked if negotiators would release the confidentiality agreement itself, to which Weisel replied that “it’s something they have to discuss.” Assistant USTR for intellectual property Stan McCoy, the author of the infamous “transparency soup” memorandum on ACTA, called the ACTA negotiation “the most transparent process ever conducted by USTR” and intimated that (although not his responsibility in this agreement) that TPP would not aspire to that high standard.
USTR has abandoned the “May 10” flexibilities for developing countries.
It appears all but official that USTR’s proposed IP chapter, which according to some was to be tabled at the negotiations on Sunday or Monday, will propose requiring all developing countries to give up the additional flexibilities granted under the Bush Administration through the so-called “May 10th” agreement with Congress. This was fairly clear from the leaked IP text, which some sources familiar with the USTR position affirmed is the operating text the US is proposing. In response to a direct question on this issue, Barbara Weisel commented that she “prefers not to comment” on content of the US position at this time and emphasized the time USTR has spent consulting the “full range” of stakeholders. When asked about the possibility for differential treatment for developing countries, Weisel said development is “a cross-cutting horizontal issue.” The implication appears to be that there will be no differential treatment for poorer countries in the US proposal. May 10th, in other words, is dead to the US.
USTR continues to believe that IP maximalism, including the promotion of restrictions on TRIPS flexibilities, promotes access to medicines in developing countries.
Sometime this week, perhaps as early as today, USTR will issue a public white paper on access to medicines explaining why expanding patent scope (e.g. to new uses of existing products and to surgical methods, plants and animals), up to 12 years of data exclusivity, patent-registration linkage, and restrictions on the abilities of government programs to negotiate price reductions in public reimbursement programs will improve access to medicines in developing countries.
USTR resists evidence-based law making for IP chapter.
According to one source, a USTR negotiator was asked whether it would support the kind of evidence-based requirement for new TRIPS-plus IP rules in TPP that it is promoting for other kinds of regulations in the “regulatory coherence” chapter (in which the US is promoting mandatory cost-benefit analysis for all new regulations). The USTR official replied that “IP is different.”
Pharma endorses Medicaid/US carve outs, urges other countries to similarly scale back public reimbursement.
One big sticking point for the US effort to convince other members to adopt a pharmaceutical chapter restricting the operation of price negotiation in public reimbursement programs has been the fact that the US does not follow the same rules in its own public reimbursement programs, especially Medicaid. To quell the vociferous state government opposition to the pharmaceutical chapter, USTR has repeatedly assured US constituencies that all US programs will carved out of the agreement. A PhRMA spokesperson attempted to explain the principle why the carved out is appropriate. He said the reason was that Medicaid only covers 9% of all pharmaceutical sales in the U.S. and therefore does not account for a meaningful share of the market. “We would not object to other countries having limited discreet programs for the poorest, like Medicaid.” The problem with the systems in other countries, like New Zealand (the main target of PhRMA), is that they obtain better pricing for a much larger share of the population. One USTR official suggested a cut off might be around 30% of the population. If a government program provided access for more of the population than that, then it should be subject to international law restrictions of the type proposed by the US, he explained. In response to a question about what it meant to have a “competitive market price” for patented drugs where there is no competition in supply, the PhRMA representative explained: “But in the US there are many different purchasers. That is what we mean by a competitive market. If you only have a limited number of large purchasers, then there is no competition on the demand side.” That would not be a definition of competition endorsed by any economist. One seller and atomized consumers is, of course, the condition promoting the highest monopoly rents in an unregulated market. Predictably, none of this comforted Maine Representative Sharon Treat, the author of Maine Rx and a national leader on US pharmaceutical pricing policy. Maine has been at the forefront of efforts to expand Medicaid discounts to a much greater share of the population. “We in the US are moving toward the New Zealand model,” she explained in her public presentation. In Medicaid, for example there are policy proposals actively under discussion to create a national formulary to obtain better prices. There are also proposals to bring Medicare Part B prices under the control of one formulary. If both of these proposals are followed, the US market would be close to the 30% threshold one official described as a good trigger for application of international restrictions on price negotiations. And in some irony, Treat explained that pharmaceutical companies in the US demand states to not release the rebate figures they negotiate with drug companies as a condition for getting better deals. “This is not how we do business here,” said Treat of the US position on pharmaceutical pricing.
