International Trade International Trade and Medicine Pricesand Medicine Prices

Mike PalmedoMike Palmedo

Research CoordinatorResearch CoordinatorProject on Information Justice and Intellectual PropertyProject on Information Justice and Intellectual Property

Washington College of Law, American UniversityWashington College of Law, American UniversityNovember 30, 2006November 30, 2006

Hartford, CTHartford, CT

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

$600.00

Lipi

tor

Zocor

Nex

ium

Preva

cid

Advai

r Dis

kus

US Retail

Best Price, I-SaveRX.net

I-SaveRx.net Savings on Top 5 Selling I-SaveRx.net Savings on Top 5 Selling DrugsDrugs

Federal Food, Drugs and Cosmetics Act

21 USC 381 (d)(1)21 USC 381 (d)(1)

(d) Reimportation(d) Reimportation

(1) Except as provided in paragraph (2), no drug subject (1) Except as provided in paragraph (2), no drug subject to section 353(b) of this title or composed wholly or partly to section 353(b) of this title or composed wholly or partly of insulin which is manufactured in a State and exported of insulin which is manufactured in a State and exported may be imported into the United States unless the drug may be imported into the United States unless the drug is imported by the manufacturer of the drug.is imported by the manufacturer of the drug.

(2) The Secretary may authorize the importation of a (2) The Secretary may authorize the importation of a drug the importation of which is prohibited by paragraph drug the importation of which is prohibited by paragraph (1) if the drug is required for emergency medical care. (1) if the drug is required for emergency medical care.

WTO Agreement on Trade Related WTO Agreement on Trade Related Aspects of Intellectual Property RightsAspects of Intellectual Property Rights

Article 6Article 6

ExhaustionExhaustion       

For the purposes of dispute settlement under this For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights.issue of the exhaustion of intellectual property rights.

U.S.-Australia Free Trade AgreementU.S.-Australia Free Trade Agreement

Article 17.9

4. 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 AgreementU.S-Morocco Free Trade Agreement

Article 15.9

4. 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.10

10 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 ... None of the funds made available in this Act may be available in this Act may be used to include in any used to include in any bilateral or multilateral trade bilateral or multilateral trade agreement the text ofagreement the text of(1)(1) paragraph 2 of Article 16.7 of paragraph 2 of Article 16.7 of

the United States-Singapore the United States-Singapore Free Trade Agreement; Free Trade Agreement;

(2)(2) paragraph 4 of Article 17.9 of paragraph 4 of Article 17.9 of the United States-Australia the United States-Australia Free Trade Agreement; or Free Trade Agreement; or

(3)(3) paragraph 4 of Article 15.9 of paragraph 4 of Article 15.9 of the United States-Morocco the United States-Morocco Free Trade Agreement. Free Trade Agreement.

Free Trade Agreements Free Trade Agreements May Threaten Preferred May Threaten Preferred

Drug ListsDrug Lists

Annex 2(c) of U.S-Australia FTA

1. AGREED PRINCIPLES1. AGREED PRINCIPLES

The Parties are committed to facilitating high quality health The Parties are committed to facilitating high quality health care and continued improvements in public health for their care and continued improvements in public health for their nationals. In pursuing these objectives, the Parties are nationals. In pursuing these objectives, the Parties are committed to the following principles:committed to the following principles:

(c) (c) the need to promote timely and affordable access to the need to promote timely and affordable access to innovative pharmaceuticals through transparent, innovative pharmaceuticals through transparent, expeditious, and accountable procedures, without expeditious, and accountable procedures, without impeding a Party’s ability to apply appropriate impeding a Party’s ability to apply appropriate

standards of quality, safety, and efficacy; standards of quality, safety, and efficacy;

PhRMA Continues to Attack Australian PhRMA Continues to Attack Australian Pharmaceutical Benefits SchemePharmaceutical Benefits Scheme

““Government-imposed price and market access Government-imposed price and market access controls serve as a barrier to trade ... Moreover, those controls serve as a barrier to trade ... Moreover, those controls deny American firms and workers the ability to controls deny American firms and workers the ability to compete on fair and equitable terms in foreign markets compete on fair and equitable terms in foreign markets and undercut the value of intellectual property rights. and undercut the value of intellectual property rights.

……It is critical, therefore, that USTR… address the trade It is critical, therefore, that USTR… address the trade distorting aspects of these foreign government price distorting aspects of these foreign government price controls.”controls.”

-Jan, 2006 PhRMA Submission to-Jan, 2006 PhRMA Submission toUSTR for Annual 301 ReportUSTR for Annual 301 Report

Democratic Representatives “Deeply Concerned” with Annex 2(c)

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

U.S-Korea FTA and U.S-Korea FTA and Preferred Drug Preferred Drug

ListsLists

GDP Per Capita, A7 v. KoreaGDP Per Capita, A7 v. Korea

05,000

10,00015,00020,00025,00030,00035,00040,00045,00050,000

US

UK

Ger

man

y

Fran

ceItal

y

Switz

erla

nd

J apa

n

Kor

ea

U.S. Threatens Trade Dispute

“…“…we are concerned about the discriminatory effect we are concerned about the discriminatory effect the proposed changes to the pharmaceutical pricing the proposed changes to the pharmaceutical pricing system would have upon our products. If not system would have upon our products. If not addressed appropriately, this issue is likely to develop addressed appropriately, this issue is likely to develop into a serious trade dispute.” into a serious trade dispute.”

- - Commerce Secretary Don EvansCommerce Secretary Don Evans

Letter to Korean Health MinisterLetter to Korean Health Minister

20012001

Planned Korean Reforms to National Health Insurance

Current Reimbursement:Current Reimbursement:

Negative ListNegative List

National Health Insurance National Health Insurance reimburses all drugs reimburses all drugs purchased by Koreans, purchased by Koreans, unless the drug has been unless the drug has been placed on a list of drugs placed on a list of drugs that will that will notnot be be reimbursed. reimbursed.

Proposed Reform Proposed Reform

Positive ListPositive List

In order for a new drug In order for a new drug to be reimbursed by the to be reimbursed by the National Health National Health Insurance, it must be Insurance, it must be placed on a list of cost-placed on a list of cost-effective drugs that effective drugs that areare covered.covered.

USTR Strongly Opposes Korean Switch to Positive Reimbursement List

“…“…the decision to proceed with this plan is inconsistent the decision to proceed with this plan is inconsistent with both the mandate of the pharmaceuticals working with both the mandate of the pharmaceuticals working group and the market opening spirit of the KORUS group and the market opening spirit of the KORUS FTA… FTA… ……The positive list system as explained to our The positive list system as explained to our delegation by the Ministry of Health would discriminate delegation by the Ministry of Health would discriminate against innovative drugs which are the types of drugs against innovative drugs which are the types of drugs that are mainly supplied by U.S. and other foreign that are mainly supplied by U.S. and other foreign companies.”companies.”

-Assistant US Trade Representative Wendy Cutler-Assistant US Trade Representative Wendy CutlerChief US Negotiator for the US-Korea FTAChief US Negotiator for the US-Korea FTA

Data Exclusivity Data Exclusivity Provisions in FTAsProvisions in FTAs

WTO Agreement on Trade Related WTO Agreement on Trade Related Aspects of Intellectual Property RightsAspects of Intellectual Property Rights

Section 7: Protection of Undisclosed InformationSection 7: Protection of Undisclosed Information

Article 39Article 39

3. Members, when requiring, as a condition of approving the 3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.the data are protected against unfair commercial use.

“US+” Data Exclusivity in FTAs

US Law:US Law:

Three years of extra Three years of extra additional data additional data exclusivity granted exclusivity granted for “new condition of for “new condition of use” for existing use” for existing product when new product when new use is tested.use is tested.

FTAs:FTAs:

Three years of extra Three years of extra additional data additional data exclusivity granted for exclusivity granted for “same or similar “same or similar products” when new products” when new use is tested.use is tested.

The 110The 110thth Congress Congress

Expiration of Expiration of theTrade Promotion theTrade Promotion

Act of 2002Act 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 BaucusNext Senate Finance

Committee Chairman

Trade Promotion Act Trade Promotion Act Legislates Legislates

Negotiating Negotiating Objectives for U.S. Objectives for U.S. Trade Negotiators 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)

KoreaKorea 16,30916,309

MalaysiaMalaysia 5,1345,134

ThailandThailand 2,7492,749

ColombiaColombia 2,8042,804

PeruPeru 2,6282,628

South AfricaSouth Africa 5,3145,314

LesothoLesotho 5,2985,298

NamibiaNamibia 3,0163,016

BotswanaBotswana 2,4142,414

SwazilandSwaziland 809809

Doha Declaration on the TRIPS Agreement and Public Health

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

Trade Promotion Act of 2002

SEC 2102, (B)...SEC 2102, (B)...

(4) INTELLECTUAL PROPERTY(4) INTELLECTUAL PROPERTY

The principal negotiating objectives of the United The principal negotiating objectives of the United States regarding trade-related intellectual property areStates regarding trade-related intellectual property are

……(C) to respect the Declaration on the TRIPS (C) to respect the Declaration on the TRIPS Agreement and Public Health, adopted by the World Agreement and Public Health, adopted by the World Trade Organization at the Fourth Ministerial Trade Organization at the Fourth Ministerial Conference at Doha, Qatar on November 14, 2001. 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 here in Congress, we have to do a better job of insisting that our trade agreements comply with the of insisting that our trade agreements comply with the letter and the spirit of the Doha Declaration. It's the law 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 of the land, and it's a matter of life and death for hundreds of millions of people in other lands.”hundreds of millions of people in other lands.”

- Sen. Edward Kennedy

February 16, 2005

Henry Waxman (D-CA)

Next Chairman of House Next Chairman of House Committee on Government Committee on Government ReformReform

Seeks investigation into Seeks investigation into anti-Health provisions in anti-Health provisions in trade agreementstrade agreements

Expert on generic markets: Expert on generic markets: The Hatch-Waxman Act The Hatch-Waxman Act largely responsible for U.S. largely responsible for U.S. generics industry.generics industry.

Charles Rangel (D-NY)

Next Chairman of the Next Chairman of the House Committee on Ways House Committee on Ways and Meansand Means

Wants to reopen closed Wants to reopen closed FTA negotiations to protect FTA negotiations to protect labor rightslabor rights

Has opposed anti-Health Has opposed anti-Health measures in previous FTAsmeasures in previous FTAs

Anti-Health Provisions in FTAs Identified by Congressional Democrats

Restrictions on reimportationRestrictions on reimportation Expanding patent coverage to new uses of Expanding patent coverage to new uses of

existing productsexisting products Expanding patent coverage to include Expanding patent coverage to include

diagnostics and therapeuticsdiagnostics and therapeutics At least 5 years of market exclusivity, At least 5 years of market exclusivity,

regardless of patent coverageregardless of patent coverage Linkage between regulatory agencies and Linkage between regulatory agencies and

patent patent

Pro-Health Provisions Missing from FTAs Identified by Congressional Democrats

““Bolar” provisions that allow for quick market Bolar” provisions that allow for quick market entry of generics upon patent expirationentry of generics upon patent expiration

Requirements that patent holders disclose the Requirements that patent holders disclose the “best mode” for reproducing an invention“best mode” for reproducing an invention

Caps for patent extensions required in cases of Caps for patent extensions required in cases of delays of patent issuance or marketing delays of patent issuance or marketing approvalapproval

www.forumdemocracy.netwww.forumdemocracy.netwcl.american.edu/pijipwcl.american.edu/pijip

Mike PalmedoMike Palmedo

American University, Washington College of LawAmerican University, Washington College of Law

Project on Information Justice and Intellectual PropertyProject on Information Justice and Intellectual Property

mpalmedo@wcl.american.edumpalmedo@wcl.american.edu

202-274-4442202-274-4442