Notes from KEI’s testimony at today’s USTR Special 301 hearing

(An expanded, edited and better version of this is available in our March 4, 2016 reply comment to USTR, available here:

These were my notes from my testimony for KEI at today’s USTR Special 301 hearing

Big market puts countries on the #special301 watch list

We have reviewed the submissions of PhRMA, BIO, BSA, IIPA and the US Chamber of Commerce’s Global IP Center, among others. One thing that jumps out at you is that the primary predictor of whether or not a country is is targeted by industry is the size of its economy. In Northern Africa, South America and Asia, being big means being a target. We can provide the detailed statistical analysis of this in a follow up submission.

BSA submission

We agree with and appreciate the concerns of BSA regarding government involvement in the use of unlicensed software.

We also understand and appreciate BSA’s concerns over government policies that discriminate against foreign suppliers of software. Here we note also that the activities of the United States in spying on everyone, including anyone working for a foreign government, creates an environment where people around the world have legitimate concerns about backdoors and surveillance.

BSA has also raised concerns about rules that ban government use of cloud-based email programs and require data to remain within countries, and we also understand those concerns. However, again, the Snowden revelations of US spying, and the lack of effective regulation of consumer privacy, contribute to these problems. So long as the United States is seen as an aggressive actor in surveillance and as having weak protections on privacy, these problems will probably get worse. I think Tim Cook at Apple is trying to explain this to the FBI right now.

We disagree with the BSA opposition to government mandates to make source code of software open, but again, open source code allows third parties to find surveillance backdoors, and to address the need for greater interoperability between programs, and to ensure competition, particularly in the many markets where monopoly power exists.


We agree that ancillary copyright is a threat both to U.S. internet companies, and more generally, a threat to the public, and undermines access to knowledge. Governments have legitimate concerns over tax avoidance by companies, but taxing quotations and/or hypertext links is not the solution. We agree this is a violation of TRIPS and a barrier to trade.

Place countries doing this on the Priority Watch list, and consider an out-of-cycle review.

PhRMA, BIO and US Chamber.

PhRMA targeted 20 countries in the Special 301. This included complaints about reimbursement policies in 18 countries, making pricing rather than IPR the most common topic.

In the United States, a 2015 Kaiser Family Foundation survey found 72 percent of the public believes that drug costs are unreasonable.

According to another survey, nearly seven-eighths of the country’s top healthcare leaders favor the government taking a bigger role in curbing the rising cost of prescription drugs, 86% supported giving the federal government the authority to negotiate drug prices on behalf of Medicare and Medicaid beneficiaries.

We also note that both Democratic candidates and Donald Trump for the GOP are campaigning to introduce tough curbs on high drug prices.

If you think your job is to keep drug prices high, you might talk with the rest of America about that.

A number of the submissions supported by the pharmaceutical industry have targeted India. India is important both because it is a large country with more than a billion persons, and because itIndia is frequently looked to as a supplier of affordable generic products in other countries.

KEI is working on compulsory licensing cases in several countries, and like others will look toward India to play a role in providing a supply of products.

In 2016, KEI asked the US government to use its royalty free or march-in rights in patents for the prostate cancer drug Xtandi. This product was invented at UCLA on grants from the Army and the NIH, and is sold to US residents at a price of $129 thousand per year, by Astellas, the Japan owned firm that acquired the licenses to the UCLA patents on the drug. The price in the United States is far higher than in any other country, even though it was invented on US government grants. If we succeed in that effort, we would consider sourcing generic products from India.

In closing, we note that on Sunday, February 28th, 2016, the United Nations Secretary-General’s High Level Panel (UNSC-HLP) on access to medicines concluded a request for submissions, looking for ways to reconcile human rights and access with innovation. There were a very large number of thoughtful submissions for dozens of experts and stakeholders. We will highlight some of those submission in our reply comments, including those that seek to replace the current focus on high prices with new approaches that consider R&D as the central objective of global norm setting, and which lead to the progressive delinkage of R&D costs from product prices.