International Trade and Medicine Prices Mike Palmedo Research Coordinator Project on Information Justice and Intellectual Property Washington College of Law, American University November 30, 2006 Hartford, CT

I-SaveRx.net Savings on Top 5 Selling Drugs

Federal Food, Drugs and Cosmetics Act 21 USC 381 (d)(1) (d) Reimportation (1) Except as provided in paragraph (2), no drug subject to section 353(b) of this title or composed wholly or partly of insulin which is manufactured in a State and exported may be imported into the United States unless the drug is imported by the manufacturer of the drug. (2) The Secretary may authorize the importation of a drug the importation of which is prohibited by paragraph (1) if the drug is required for emergency medical care.

WTO Agreement on Trade Related Aspects of Intellectual Property Rights Article 6 Exhaustion For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights.

U.S.-Australia Free Trade Agreement Article Each Party shall provide that the exclusive right of the patent owner to prevent importation of a patented product, or a product that results from a patented process, without the consent of the patent owner shall not be limited by the sale or distribution of that product outside its territory, at least where the patentee has placed restrictions on importation by contract or other means.

U.S-Morocco Free Trade Agreement Article Each Party shall provide that the exclusive right of the patent owner to prevent importation of a patented product, or a product that results from patented process, without the consent of the patent owner shall not be limited by the sale or distribution of that product outside its territory A Party may limit application of this paragraph to cases where the patent owner has placed restrictions on importation by contract or other means.

Northup Appropriations Amendment... None of the funds made available in this Act may be used to include in any bilateral or multilateral trade agreement the text of (1)paragraph 2 of Article 16.7 of the United States-Singapore Free Trade Agreement; (2)paragraph 4 of Article 17.9 of the United States-Australia Free Trade Agreement; or (3)paragraph 4 of Article 15.9 of the United States-Morocco Free Trade Agreement.

Free Trade Agreements May Threaten Preferred Drug Lists

Annex 2(c) of U.S-Australia FTA 1. AGREED PRINCIPLES The Parties are committed to facilitating high quality health care and continued improvements in public health for their nationals. In pursuing these objectives, the Parties are committed to the following principles: (c) the need to promote timely and affordable access to innovative pharmaceuticals through transparent, expeditious, and accountable procedures, without impeding a Party’s ability to apply appropriate standards of quality, safety, and efficacy;

PhRMA Continues to Attack Australian Pharmaceutical Benefits Scheme “ Government-imposed price and market access controls serve as a barrier to trade... Moreover, those controls deny American firms and workers the ability to compete on fair and equitable terms in foreign markets and undercut the value of intellectual property rights. …It is critical, therefore, that USTR… address the trade distorting aspects of these foreign government price controls.” -Jan, 2006 PhRMA Submission to USTR for Annual 301 Report

Democratic Representatives “Deeply Concerned” with Annex 2(c) First, we are deeply concerned about the proposal’s implications for the United States... Individuals potentially affected by the proposal include the elderly who receive Medicare, working people on Medicaid, veterans who receive health benefits through the Veterans Administration, and active military men and women who participate in the Department of defense TRICARE program, as well as other people who participate in programs administered by the Indian Health Service, the Public Health Service, and a myriad of state and local governments throughout the United States.

U.S-Korea FTA and Preferred Drug Lists

GDP Per Capita, A7 v. Korea

U.S. Threatens Trade Dispute “…we are concerned about the discriminatory effect the proposed changes to the pharmaceutical pricing system would have upon our products. If not addressed appropriately, this issue is likely to develop into a serious trade dispute.” - Commerce Secretary Don Evans - Commerce Secretary Don Evans Letter to Korean Health Minister 2001

Planned Korean Reforms to National Health Insurance Current Reimbursement: Negative List National Health Insurance reimburses all drugs purchased by Koreans, unless the drug has been placed on a list of drugs that will not be reimbursed. Proposed Reform Positive List In order for a new drug to be reimbursed by the National Health Insurance, it must be placed on a list of cost- effective drugs that are covered.

USTR Strongly Opposes Korean Switch to Positive Reimbursement List “…the decision to proceed with this plan is inconsistent with both the mandate of the pharmaceuticals working group and the market opening spirit of the KORUS FTA… …The positive list system as explained to our delegation by the Ministry of Health would discriminate against innovative drugs which are the types of drugs that are mainly supplied by U.S. and other foreign companies.” -Assistant US Trade Representative Wendy Cutler Chief US Negotiator for the US-Korea FTA

Data Exclusivity Provisions in FTAs

WTO Agreement on Trade Related Aspects of Intellectual Property Rights Section 7: Protection of Undisclosed Information Article Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

“US+” Data Exclusivity in FTAs US Law: Three years of extra additional data exclusivity granted for “new condition of use” for existing product when new use is tested. FTAs: Three years of extra additional data exclusivity granted for “same or similar products” when new use is tested. Three years of extra additional data exclusivity granted for “same or similar products” when new use is tested.

The 110 th Congress

Expiration of theTrade Promotion Act of 2002

Trade Promotion Authority Will Probably Not Pass House; Better Odds in Senate “As a practical matter, whatever law reauthorizes fast-track authority... will have to strengthen labor and environmental provisions in some way to win broader Democratic support.“ - -Sen. Max Baucus Next Senate Finance Committee Chairman

Trade Promotion Act Legislates Negotiating Objectives for U.S. Trade Negotiators

High Medicine Prices Can Be Deadly in Middle- and Low-Income Countries

Per Capita GDP of Nations Negotiating FTAs with the United States ($US) Korea16,309 Malaysia5,134 Thailand2,749 Colombia2,804 Peru2,628 South Africa 5,314 Lesotho5,298 Namibia3,016 Botswana2,414 Swaziland809

Doha Declaration on the TRIPS Agreement and Public Health 4. We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to medicines for all.

Trade Promotion Act of 2002 SEC 2102, (B)... (4) INTELLECTUAL PROPERTY The principal negotiating objectives of the United States regarding trade-related intellectual property are …(C) to respect the Declaration on the TRIPS Agreement and Public Health, adopted by the World Trade Organization at the Fourth Ministerial Conference at Doha, Qatar on November 14, 2001.

Bush Administration Has Failed to Follow the Negotiating Objective So Far “…here in Congress, we have to do a better job of insisting that our trade agreements comply with the letter and the spirit of the Doha Declaration. It's the law of the land, and it's a matter of life and death for hundreds of millions of people in other lands.” - Sen. Edward Kennedy February 16, 2005

Henry Waxman (D-CA)  Next Chairman of House Committee on Government Reform  Seeks investigation into anti-Health provisions in trade agreements  Expert on generic markets: The Hatch-Waxman Act largely responsible for U.S. generics industry.

Charles Rangel (D-NY)  Next Chairman of the House Committee on Ways and Means  Wants to reopen closed FTA negotiations to protect labor rights  Has opposed anti-Health measures in previous FTAs

Anti-Health Provisions in FTAs Identified by Congressional Democrats  Restrictions on reimportation  Expanding patent coverage to new uses of existing products  Expanding patent coverage to include diagnostics and therapeutics  At least 5 years of market exclusivity, regardless of patent coverage  Linkage between regulatory agencies and patent

Pro-Health Provisions Missing from FTAs Identified by Congressional Democrats  “Bolar” provisions that allow for quick market entry of generics upon patent expiration  Requirements that patent holders disclose the “best mode” for reproducing an invention  Caps for patent extensions required in cases of delays of patent issuance or marketing approval

wcl.american.edu/pijip Mike Palmedo American University, Washington College of Law Project on Information Justice and Intellectual Property