The USTR Special 301 Report, some initial reactions

The USTR Special 301 Report was issued today. The full report is here, the USTR web page on the report is here, and a link to the USTR press release about the report is here. Earlier copies of the 301 Reports are available at: /ustr/special301

Making the list were 12 countries on the “Priority Watch List,” 28 countries on the “Watch List” and one country for Section 306 Monitoring.

The 41 countries include 4 of the 27 members of the European Union*, 2 of 2 non_US members of NAFTA, 3 of 4 members of Mercosur, 2 of 53 members of the African Union, 5 of the 9 countries in the TransPacific Partnership negotiations, 11 countries in Latin America, and 19 of 52 countries in Asia. (Some countries fit in more than one category).

(* In addition to the 4 members of the EU, Germany and Poland were mentioned in the report in the context of pharmaceutical drug pricing, and Norway, a member of the European Economic Area (EEA), was cited.)

It will take a while to digest the latest round of the 301 report. On the copyright side, much of it is fairly familiar. On the medicines side, note that USTR cited 20 countries for inadequate intellectual property protection for data used to register pharmaceutical drugs, including 4 of the 9 members of the TPP negotiation, one of which is classified as a least developed country (Viet Nam).

Several countries, including Poland, Japan and New Zealand, which were not on any of the lists, were nonetheless mentioned in the context on drug and medical device pricing issues.

Overall, the Special 301 Report should be looked at as only part of a much larger campaign by the Obama Administration to press trading partners to change intellectual property norms. The USTR discussion of IPR policy concerns seems muted in the report, compared to the pressure that the US government actually applies both behind the scenes and in different trade fora. In practice, the 301 Report represents only a fraction of the issues being raised and the pressures being applied by the White House and various federal agencies. In this sense, one has to be cautious in reading too much into the report in terms of evaluating U.S. trade policy.

That said, it was a disappointment to read that USTR is pressing so hard on the pharmaceutical test data issue, including even for a Least Developed Country (LDC), and that the USTR cites the Philippines for tying patentability of certain chemical forms unless the applicant demonstrates increased efficacy, and complains that India does not patent “temperature-stable forms of a drug or new means of drug delivery.” During the hearings, public health groups made it quite clear that it was important for developing countries to continue to have the flexibility to limit the evergreening of pharmaceutical products via these types of patents.

Beyond the 301 Report, public health groups need to monitor the less transparent aspects of the Obama trade policy, and the remarkable revolving door with industry lobbyists.

From the 301 Report discussion of pharmaceuticval and medical device pricing:

Supporting Pharmaceutical and Medical Device Innovation through Improved Market Access

USTR has sought to reduce market access barriers that U.S. pharmaceutical and medical device companies face in many countries, and to facilitate both affordable health care today and the innovation that assures improved health care tomorrow. For example, this year’s Special 301 Report highlights concerns regarding market access barriers affecting pharmaceutical products in Algeria and Indonesia.

Even where a trading partner’s IPR regime demonstrates a commitment to strong IPR protection, other types of measures have the potential to affect market access in the pharmaceutical and medical device sector. For example, government practices including unreasonable regulatory approval delays and potentially unfair reimbursement policies can discourage the development of new drugs and other medical products. The criteria, rationale, and operation of such measures are often nontransparent or not fully disclosed to patients or to pharmaceutical and medical device companies seeking to market their products. USTR encourages trading partners to provide appropriate mechanisms for transparency, procedural and due process protections, and opportunities for public engagement in the context of their relevant health care systems.

U.S. industry has expressed concerns regarding the policies of several industrialized trading partners, including Finland, Germany, Greece, Japan, Korea, New Zealand, Poland, and Taiwan, on issues related to innovation in the pharmaceutical sector and other aspects of health care goods and services. Examples include:

  • With respect to Japan, pharmaceutical and medical device issues are an integral part of regular bilateral discussions. While Japan has made progress on these issues, the United States continues to work with Japan to seek continued improvements in transparency in addition to further reform of reimbursement and regulatory systems that would facilitate the timely introduction of innovative pharmaceuticals and medical devices into Japan’s market.
  • With respect to Poland, U.S. industry is concerned about healthcare reform legislation introduced in 2010 that would alter Poland’s pricing, reimbursement, and clinical trials policies. Industry continues to express concern about the pharmaceutical industry’s general lack of ability to meet with the Ministry of Health to provide their perspectives on policy initiatives.
  • With respect to New Zealand, U.S. industry has expressed serious concerns about the policies and operation of New Zealand’s Pharmaceutical Management Agency (PhARMAC). Industry continues to express concerns regarding, among other things, the transparency, fairness, and predictability of the PHARMAC pricing and reimbursement regime, as well as the overall climate for innovative medicines in New Zealand.

The United States is seeking to establish or continue dialogues with relevant trading partners to address these and other sectoral concerns, and encourage a common understanding on questions related to innovation in the pharmaceutical and medical device sectors. For example, the United States-Korea Free Trade Agreement, once in force, would improve access to innovative medical products and ensure the transparent, predictable, and non-discriminatory pricing and reimbursement of innovative and generic pharmaceutical products, and medical devices. The United States is also continuing its engagement with China to promote fair and transparent policies in this sector. The United States shares policy goals and concerns related to health care with other countries, including challenges surrounding aging populations and rising health care costs. The United States also shares the objective of continued improvement in the health and quality of life of its citizens, and the objective of delivering care in the most efficient and responsive way possible. The United States looks forward to engaging with these trading partners to address specific concerns related to reimbursements, regulatory policies, and transparency.