KEI comment on USTR’s 2016 Special 301 report

The 2016 USTR Special 301 report is now available. (copy here). The report is 77 pages of complaints about intellectual property policies around the world, plus a number of other complaints, including those related to pricing and reimbursement of pharmaceutical drugs and medical devices, restrictions on data flows, standard setting, and government procurement.

On the one hand, USTR says it is supports “access to medicine for all.”

As affirmed in the Doha Declaration on the TRIPS Agreement and Public Health, the United States respects a trading partner’s right to protect public health and, in particular, to promote access to medicines for all.

But then USTR sets out a series of complaints about anything that would make medicines more affordable. For example, USTR cites “reimbursement policies can impede a company’s ability to enter the market, and thereby discourage the development and marketing of new drugs and other medical products,” naming New Zealand’s Pharmaceutical Management Agency (PHARMAC), which apparently does too good a job negotiating drug prices, as well as the EU Member States, including Austria, Belgium, Czech Republic, Finland, Hungary, Italy, Lithuania, Portugal, and Romania. USTR complains about compulsory licensing practices in Indonesia, Ecuador, “proposals in Colombia and Ecuador designed to enhance domestic manufacturing capacity for pharmaceuticals,” and provides this extended set of complaints against India, the world’s most important manufacturer of affordable generic drugs:

India has also not taken the opportunity to address longstanding challenges that represent significant IPR regime deficiencies compared to other markets. The pharmaceutical industry in particular faces a host of challenges related to IPR. These include irregularities in the application of Section 3(d) of India’s Patents Act; the lack of an effective system for protecting against unfair commercial use, as well as the unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products; lack of clarity on standards for Sections 85 and 92 compulsory licenses and revocation under Section 66; and the lack of an effective system for notifying interested parties of marketing approvals for generic pharmaceuticals in a manner that would allow for the early resolution of potential patent disputes.

USTR can’t reconcile the notion that they respect the need to “promote access to medicines for all” with the obligation to publish an annual list of objections to policies that would make that goal more achievable.

President Obama has never been able to rein in the pharmaceutical or publisher lobbies, and his administration has been behind the curve or in opposition to efforts to change business models for drug development, so that innovation and access would not be in conflict with each other.

On other topics, USTR increasingly cites restrictions on data flows as an IPR issue, complains about government procurement of software obligations to make some software code open, and sees standard setting policies as a threat.

Trade secrets are mentioned 57 times in the report, illustrating the increased emphasis on broader definitions to trade secrets and expansions of corporate secrecy as a trade policy, including complaints like this:

Requiring the (often unnecessary) submission of excessive confidential business information for regulatory approval purposes and failing to protect such information appropriately.

One good sign. USTR is finally looking at excessive IPR as a possible trade barrier, specifically the obligations to pay to provide links to or short quotations from news stories, policies which undermine the mandatory copyright exceptions for news of the day and quotations in the Berne Convention.

Some public comments received in response to the 2016 Special 301 Federal Register notice also identified developments in several countries that may have created market uncertainties for technology companies and online content providers such as laws that involve remuneration by news aggregation services providers. The United States is monitoring these developments and other related measures. (See Fact Sheet: Key Barriers to Digital Trade).