Bilateral Trade Disputes involving the United States, over intellectual property and health care

Version 1.2-September 15, 2000

This report seeks to identify particular trade disputes over country policies on intellectual property and health care. This report is by no means comprehensive. Much of the content is taken directly from various US government reports, including USTR Special 301 Press Releases from 1995-2000, USTR's annual National Trade Estimate Report on Foreign Trade Barriers, and USTR "Reports to Congress on Section 301 Developments," (January 1995- June 1996) and (June 1996-January 1998). Over time we will be expanding and updating this page.

Comments and corrections to Thiru Balasubramaniam thiru@cptech.org


Current US position on Intellectual Property and Health Policy (2000 Special 301 Report)

On December 1, 1999, President Clinton announced that the United States is committed to helping developing countries gain access to essential medicines, including those for HIV/AIDS. Also on December 1, United States Trade Representative Charlene Barshefsky and Secretary of Health and Human Services Donna E. Shalala announced their intention to develop a cooperative approach on health-related intellectual property matters to ensure that the application of U.S. trade law related to intellectual property remains sufficiently flexible to respond to public health crises.

Specifically, the announcement stated that USTR and HHS will work together to establish a process for analyzing and evaluating health issues that are relevant to the application of U.S. trade-related intellectual property laws and policy. When a foreign government expresses concern that U.S. trade law related to intellectual property protection significantly impedes its ability to address a health crisis in that country, USTR will seek and give full weight to the advice of HHS regarding the health considerations involved. This process will permit the application of U.S. trade-related intellectual property law to remain sufficiently flexible to react to public health crises brought to the attention of USTR. It will also ensure that the minimum standards of the TRIPS Agreement are respected.

In announcing the results of the Special 301 review today, Ambassador Barshefsky stated that USTR has begun implementation of the policy she and Secretary Shalala announced on December 1. USTR and HHS have done so by establishing a regular consultative mechanism on health-related intellectual property matters consistent with their goal of helping poor countries gain access to essential medicines. The agencies are also working closely with interested NGOs and industry to ensure that this policy is implemented effectively.

Since December 1, USTR and HHS staff have worked together to address individual health-related intellectual property issues that have arisen with U.S. trading partners, as in the case of Thailand, as well as with respect to the health-related issues that have arisen in this year's Special 301 process. For the first time, HHS has participated actively as a member of the Special 301 Trade Policy Staff Sub-Committee that is charged with developing the Special 301 recommendations. Ambassador Barshefsky said that she was very pleased to have been able to rely on the helpful support of HHS in making her final decisions in this review.

The Special 301 committee has not been approached directly by any government with a request under the December 1 policy. Nevertheless, the committee has taken health and development issues into account in accordance with the Administration's December 1 policy in making its Special 301 recommendations.

Ambassador Barshefsky went on to say that since December 1, USTR has encouraged U.S. trading partners facing a health care crisis to explore all options for extending access to effective treatments. Nevertheless, the U.S. Government has made clear that the final choice of what policies to employ is one for each government to make on its own. In the view of the U.S. Government, should a government determine to avail itself of the flexibility the TRIPS Agreement provides to address a health care crisis, the United States will raise no objection, provided the policy employed is consistent with the provisions of the WTO TRIPS Agreement.

Ambassador Barshefsky went on to stress that access to modern pharmaceuticals can and should be enhanced in a manner that assures the safety and efficacy of the drugs, preserves intellectual property rights, and promotes the worldwide pursuit of newer, more effective medicines. She concluded by noting that a modern patent system helps promote the rapid innovation, development, and commercialization of effective and safe drug therapies and that sound public health policy and intellectual property protection are mutually supportive (2000 Special 301 Report).


Albania

Agreement on Trade Relations between the Republic of Albania and the United States of America. This agreement has extensive provisions on intellectual property, including, for example, very restrictive terms on compulsory licensing. Signed on May 14, 1992.


Argentina

On August 10, 1988 the Pharmaceutical Manufacturers Association (PMA) filed a petition [citing] Argentina's denial of product patent protection for pharmaceutical products and discriminatory product registration procedures (Report to Congress on Section 301 Developments, June 1996 - January 1998).

On September 25 1988, USTR initiated an investigation regarding PMA's allegations.

Following consultations, the petition was withdrawn on September 23, 1989 because of Argentina's willingness to modify its pharmaceutical registration procedures and to address constructively the issue of patent protection for pharmaceutical products (Ibid).

On October 10, 1991, Argentina "submitted...a comprehensive proposed revision to its patent law that was generally responsive to the United States' concerns (Ibid).

In January 1994, the USTR undertook an out-of-cycle review in January 1994 in light of Argentina's efforts in enacting an "acceptable patent law (Ibid)."

The US government placed Argentina on the 1995 Watch List for reasons including inadequate protection of test data submitted for marketing approval.

In April 1995, the Argentine Congress passed an

unacceptable patent bill that included a[n] eight year transition period for pharmaceutical patent protection [that] failed to meet even TRIPS standards (Report to Congress on Section 301 Developments, January 1995 - June 1996).

The Menem Administration vetoed the portions of the law that did not comply with the TRIPS agreement and replaced them with an interim decree by the end of April 1995. These actions would have provided strong patent protection in Argentina by January 1, 1996, and TRIPS-consistent compulsory licensing measures. However, in late May 1995, the Argentine Senate voted to override portions of Menem's veto, re-instituting an eight year transition period for pharmaceutical patent protection and onerous compulsory licensing provisions (Report to Congress on Section 301 Developments, June 1996-January 1998).

In September 1995, the Menem Administration promulgated a

bill which would shorten the transition period for pharmaceutical patents to five years and fix problems with the compulsory licensing provisions (Report to Congress on Section 301 Developments, January 1995 - June 1996)."

In March 1996,

Argentina submitted a draft law to the Congress that would provide data submitted in the course of an approval process to be protected from disclosure and unfair commercial use (Ibid).

Despite Argentina's passing of a data exclusivity law in November 1996, the USTR deemed this "inadequate" and "announced that Argentina would lose 50% of its GSP benifits (Report to Congress on Section 301 Developments, June 1996 - January 1998)."

The US government placed Argentina on the 1996, 1997, 1998 and 1999 Priority Watch Lists for reasons including inadequate patent protection of pharmaceutical products, "onerous compulsory licensing provisions", inadequate protection of test data, and the lack of protection from parallel importing (USTR Special 301 Press Releases 1997-1999).

In 1998, the US government noted that Argentina's patent regime "will not provide pharmaceutical patent protection until November 2000 (USTR Special 301 Press Release, 1998)." According to USTR, however, many of Argentina's alleged TRIPS-inconsistencies "are not immediately actionable in the WTO," because Argentina's claim to "developing country status" accords her a special transitional period till November 2000 (USTR National Trade Estimate Report on Foreign Trade Barriers, 1999). Furthermore, Argentina "failed to provide effective exclusive marketing rights to qualifying pharmaceutical products in accordance with current TRIPS obligations (USTR Special 301 Press Release, 1998).

The US government placed Argentina on the 2000 Priority Watch List for reasons including the failure to provide exclusive marketing exclusivity rights for pharmaceuticals (see Article 70.9 of TRIPS), failure to protect confidential test data from unauthorized commercial use,

the denial of certain exclusive rights for patents, such as the protection of products produced by patented processes and the right of importation; the failure to provide prompt and effective provisional measures for purposes of preventing infringements of patent rights from occurring; and the improper exclusion of micro-organisms from patentability(USTR Special 301 Press Release, 2000). 

In May 2000, the US government put Argentina on the 2000 Priority Watch List and initiated WTO dispute settlement consultations with Argentina for reasons including: failure to provide exclusive marketing exclusivity rights for pharmaceuticals (see Article 70.9 of TRIPS), failure to protect confidential test data from unauthorized commercial use, failure to "provide certain safeguards for the granting of compulsory licenses, including timing and justification safeguards for compulsory licenses granted on the basis of inadequate working," and failure to " provide prompt and effective provisional measures, such as preliminary injunctions, for purposes of preventing infringements of patent rights from occurring" (US Government Request for WTO consultations with Government of Argentina)


Australia

The US government placed Australia on the 1996, 1997 and the 1998 Watch Lists for reasons including the limited protection for test data on pharmaceutical products. This relates to Article 39 of the TRIPS provisions on test data which requires WTO members to protect test data from "unfair commercial use" when "approving the marketing of pharmaceutical...products (WTO TRIPS Agreement)."

In April 1998, Australia implemented a regime to protect test data submitted to regulatory authorities for marketing approval of pharmaceuticals as required by the TRIPS Agreement.


Bahrain

The US government placed Bahrain on the 1998 Watch List for reasons including inadequate patent protection for pharmaceuticals.

Bahrain's patent law does provide for pharmaceutical product protection, but only through re- registration of patents filed in the UK (USTR Special 301 Press Release, 1998).

Brazil

On June 11, 1987 the Pharmaceutical Manufacturers Association (PMA) filed a petition alleging that the Government of Brazil's denial of patent protection to pharmaceutical products and processes is unreasonable and burdens or restricts United States commerce." Despite USTR consultations with the Brazilian government, Brazil offered no firm guarantees for providing patent protection for pharmaceutical products (Report to Congress on Section 301 Developments,January 1995 - June 1996).

On July 21, 1988, President Reagan deemed Brazil's policy on patent protection was "unreasonable and imposed restriction upon United States commerce, and that he would take appropriate action under section 301 (Ibid)."

On October 20, 1988 the President invoked section 301 authority to increase tariffs to 100 percent ad valorem for certain paper products, non-benzenoid drugs, and consumer electronic items, effective October 30, 1988. The level of retaliation was estimated to be approximately $39 million...The retaliatory tariffs virtually prohibited most Brazilian exports of these products from entering the US market during 1989 and the first half of 1990 (Ibid).

On June 26, 1990, the President of Brazil announced his intention to enact legislation that would provide patent protection for pharmaceutical products and production processes of pharmaceuticals.

On June 27, USTR "determined that it was in the interest of the United States to terminate the application of the increased duties...effective July 2, 1990 (Ibid)."

In May 1991, the Brazilian Government submitted legislation to the Brazilian Congress that if implemented, would have provided patent protection for pharmaceutical processes and products [albeit deficient by US standards of patent protection] (Ibid).

In May 1992, a new bill was submitted to the Brazilian Congress. This new bill fell short of world class standards for intellectual property protection, but represented a major improvement over the 1991 bill and responded to many of the concerns expressed by the United States (Ibid)."

In 1993, the USTR identified Brazil as a priority foreign country for reasons including inclusion of overly broad compulsory licensing provisions and requirements.

On April 17,1996, Brazil enacted a new law that would provide product patent protection for pharmaceuticals, pipeline protection and limit parallel imports thus prompting the US government to move Brazil from the Priority Watch List to the Watch List.

In May 2000, the United States government initiated WTO dispute settlement proceedings against Brazil for the qualification in her patent law which requires "local working" as a condition for the exploitation of exclusive patent rights.


Cambodia

Agreement between the United States of America and the Kingdom of Camboida on Trade Relations and Intellectual Property Rights. Apparently signed in 1994.


Canada

The US government registerd a complaint against Canada before the WTO Dispute Settlement Board (DSB) on May 6, 1999. This complaint, (WT/DS170/1), on Patent Protection Term[s] contended that the
TRIPS Agreement obligates Members to grant a term of protection for patents that runs at least until twenty years after the filing date of the underlying protection, and requires each Member to grant this minimum term to all patents existing as of the date of the application of the Agreement to that Member. The United States alleges that under the Canadian Patent Act, the term granted to patents issued on the basis of applications filed before 1 October 1989 is 17 years from the date on which the patent is issued. The United States contends that this situation is inconsistent with Articles 33, 65 and 70 of the TRIPS Agreement. On 15 July 1999, the United States requested the establishment of a panel. At its meeting on 22 September 1999, the DSB established a panel (Overview of the State-of-play of WTO Disputes).


Chile

The US government placed Chile on the 1996 and 1995 Watch Lists for reasons including TRIPS-inconsistent pipeline protection. "The term of patent protection is not consistent with the TRIPS term of 20 years from filing (1999 National Trade Estimates Report on Foreign Trade Barriers)." According to the USTR, Chilean patent law regarding proprietary test data offers inadequate and ineffective protection.


China

In 1991 and 1994, the US government designated China as a Priority Foreign Country for reasons including inadequate implementation of "administrative protection" programs for pharmaceuticals" and overly-broad compulsory licensing provisions (USTR Special 301 Press Release, 1994).

In 1998, the US government placed China under Section 306: Monitoring for reasons including problems in obtaining administrative protection for pharmaceuticals.


Colombia

The US government placed Colombia on the 1996 and 1997 Watch Lists for reasons including overly broad compulsory licensing provisions, and the lack of protection against parallel imports.

The US government placed Colombia on the 1996, 1997 and 1998 Watch Lists for the inadequate protection of pharmaceutical patents.


Costa Rica

The US government placed Costa Rica on the 1995, 1996 and 1997 Watch Lists because the

Costa Rican term of patent coverage is a non-extendable 12 year term from the date of grant which is less than the patent term coverage of 20 years from filing as required by [Article 33 of] TRIPS (USTR Special 301 Reports, 1995-1997).
Pharmaceuticals fall under the category of products deemed to be in the "public interest." The term of protection is only one year from the date of grant for "public interest" products .

The US government placed Costa Rica on the 1998 and 1999 Watch List for reasons including non-compliance with TRIPS and Paris Convention requirements for patent protection on pharmaceuticals.


Cyprus

In 1996, the USTR noted Cyprus' inadequate patent protection of pharmaceuticals. The government has opposed efforts by Cyprus to enact a US style "Bolar" amendment, permiting research on bioequivalancy, prior to patent expiration.


Dominican Republic

The US government placed the Dominican Republic on the 1999 Priority Watch List for reasons including the "granting of marketings approvals for products that infringed on pharmaceutical patents (USTR Special 301 Report, 1999)."

The existing 1911 Law provides for broad exclusions of subject matter from patentability, and includ onerous local working requirements. ...The Fernandez Government has submitted new intellectual property legislation to the Congress as part of a broader commercial code. As now written, this legislation will contravene several TRIPS provisions, such as those pertaining to compulsory licenses (National Trade Estimate Report on Foreign Trade Barriers) .

Note: The USTR Special 301 Press Release (2000) was published before the promulgation of the new Industrial Property Law of the Dominican Republic. The US is currently in the process of reviewing this law and making a determination of its "TRIPS-consistency."

The US government placed the Dominican Republic on the 2000 Priority Watch List for reasons including the failure to

correct deficiencies in its legal framework to meet its obligations under the TRIPS Agreement...[the US government] will continue to consult informally with the Government of the Dominican Republic in an effort to encourage it to resolve outstanding TRIPS compliance concerns as soon as possible in the coming months (USTR Special 301 Press Release, 2000) .

In 2000, the US government indicated that it would be considering a potential dispute settlement case against the Dominican Republic because the US government determined that the Dominican Republic was not in compliance with its WTO TRIPS obligations.


Ecuador

The US government placed Ecuador on the 1999 Watch List for reasons including inadequate pipeline protection,

provisions permitting parallel importation, working requirements for patents, and ambiguities surrounding protection for test data (National Trade Estimate Report on Foreign Trade Barriers).

El Salvador

In 1999, the USTR noted that El Salvador contained several provisions that were not TRIPS consistent. These included patent terms:

only 15 years from the date of solicitation for pharmaceutical products and processes; overly broad compulsory licensing provisions, the potential for obligatory compulsory licenses; and no protection for products in the pipeline (USTR Special 301 Report, 1999).

Egypt

The US government placed Egypt on the 1995, 1996, 1997, 1998, 1999 and 2000 Priority Watch Lists for reasons including the lack of patent protection for pharmaceuticals. The Egyptian government will avail itself of the full transition period for pharmaceutical product patent protection (January 1, 2005) as accorded her by WTO TRIPS Article 66.4.

In 1998, the US government raised objections on Egypt's

overly broad compulsory licensing provisions. In the area of pharmaceuticals and medicines, manufacturing process are patentable, but the term for process patents is only 10 years. The Egyptian government has stated its intention to delay pharmaceutical patent protection until the year 2005, availing itself of the TRIPS transitional period for certain developing countries (USTR Special 301 Report, 1998).

In 2000, the US government raised objections to Egypt's inadequate marketing exlusivity provisions for pharmaceuticals.

In 2000, the US government indicated that it would be considering a potential dispute settlement case against Egypt because the US government determined that Egypt was not in compliance with its WTO TRIPS obligations.


Guatemala

The US government placed Guatemala on the 1995, 1996 and 1997 Watch Lists for reasons including the inadequate patent protection of pharmaceuticals.


Honduras

The US government placed Honduras on the 1998 Watch List for reasons including overly broad compulsory licensing provisions.


Hungary

The US government placed Hungary on the 1999 Watch List for reasons including inadequate pharmaceutical patents and inadequate legal protection for confidential test data. USTR sought further refinement on Hungary's law on pipeline protection for pharmaceutical patents.


India

India was a Priority Foreign Country from 1991 to 1993 for reasons including the failure to provide product patent protection for pharmaceuticals, an inadequate term of protection, and overly broad compulsory licensing provisions.

On April 29, 1992, under USTR's recommendations that India's patent laws placed "unreasonable" burdens and restrictions on US commerce, President Bush

raised the most favored nation rate of duty with respect to approximately $60 million in trade with India, including all imports of pharmaceuticals products, chemicals, and related products (Report to Congress on Section 301 Developments, January 1995 - June 1996).

The US government placed India on the 1995, 1996, 1997, 1998 and 1999 Priority Watch List for its failure to implement its obligations under Article 70 of TRIPS which require

all countries that do not provide product patent protection for pharmaceuticals... on January 1, 1995, to establish by that time a means by which applications for patents for such inventions can be filed, which is commonly referred to as a 'mailbox' (Ibid).
This is a transitional provision for developing to countries to enact.
Article 70 of the TRIPS Agreement also requires WTO members delaying the grant of pharmaceutical...patent protection to grant "mailbox" applicants up to five years of marketing exclusivity if such applicants are granted a patent and marketing approval in another WTO member and marketing approval in the member providing marketing exclusivity (Ibid).

On July 2, 1996, the USTR registered a complaint against India to the WTO Dispute Settlement Board (DSB) citing India's failure to establish a "permanent formal mailbox system" for pharmaceutical product applications or a "system for the granting of exclusive marketing rights (Report to Congress on Section 301 Developments, June 1996 - January 1998)."

In September 1997, the WTO [DSB] Panel ruled in favor of the United States in the case against India regarding India's failure to establish a "mailbox" system for filing patent applications for pharmaceuticals and the failure to establish a system of exclusive marketing rights for these products (Ibid).

In December 1997, the WTO Appellate Body ruled in favor of the United States on India's appeal of the Panel's decision in India- Patent Protection for Pharmaceuticals and Agricultural Chemicals Products (USTR Special 301 Press Release, 1998).

In April 1999, India enacted legislation and drafted implementing regulations establishing mailbox and exclusive marketing rights systems for pharmaceutical products (Ibid).

India's patent act prohibits patents for any invention intended for use or capable of being used for pharmaceuticals. India does not provide product patent protection. Under existing law product patents expire 14 years from the date of patent filing. Stringent compulsory licensing provisions have the potential to render patent protection virtually meaningless, and broad "licenses of right" apply automatically to food and drug patents (1999 National Trade Estimate Report on Foreign Trade Barriers).
India's Drug Policy is an issue of concern for U.S. industries. The policy imposes a stringent price control regime which adversely affects U.S. companies from a commercial standpoint. There is no system allowing for automatic adjustment of prices to offset cost fluctuations. With the lack of effective intellectual property protection coupled with a rigid pricing system, U.S. industries face extreme obstacles to maintain viable businesses in India. Industries most significantly affected are pharmaceutical companies placing the best and latest innovative drugs out on the Indian market. Industry representatives have expressed interest in the Government of India proceeding to the adoption of free pricing measures (Ibid).

The US government placed India on the 2000 Priority Watch List for reasons including

failing to comply with the obligations of the TRIPS Agreement in a number of areas, especially with regard to local working requirements, patentable subject matter and exclusive patent rights, term of protection, and protection for test data (USTR Special 301 Press Release, 2000).

In 2000, the US government indicated that it would be considering a potential dispute settlement case against India because the US government determined that India was not in compliance with its WTO TRIPS obligations.

For more information, see http://www.cptech.org/ip/health/india/


Indonesia

The United States' objections to Indonesian patent law with respect to pharmaceuticals include: importation not meeting the

requirement to 'work' or exploit the invention domestically as required by the first paragraph of TRIPS Article 27; the right to prevent importation of products made by patented processes is available only if the process is also worked in Indonesia;...there is no requirement that Government use of patented invention comply with the provisions of TRIPS Article 31 (Ibid)."
The US pharmaceutical industry expressed concerned over Indonesia's "TRIPS-inconsistent" patent law which contains compulsory licensing provisions and restrictive working requirements.


Ireland

In 1996, the USTR noted that

Ireland's patent law was not in conformity with the patent compulsory licensing provision of the TRIPs Agreement. The law appears to violate the discrimination and "working requirement" limitations under Article 27.1 of the TRIPs Agreement and the limitations on the grant of compulsory licenses under Artical 31 of the TRIPs Agreement. The Administrations expects that Ireland will comply promptly with its TRIPS obligations (USTR Special 301 Press Release, 1996).

Israel

The US placed Israel on the 1998 and 1999 Priority Watch Lists for reasons including the Israeli Knesset's amendment on Israeli patent law to

allow non-patent holders to manufacture and export patented pharmaceutical products prior to the expiration of the patent to seek foreign and Israeli marketing approval when the patent expires (USTR Special 301 Press Release, 1998-1999)."

The February 1999 amendment to the Pharmacists Law diminished pharmaceutical patent protection by permitting the parallel importation of pharmaceuticals and sanctioned the unfair commercial use of test data (USTR Special 301 Press Release, 1999).
The US government also objected to the relatively short term of patent extensions

The US government placed Israel on the 2000 Priority Watch List for reasons including

possible TRIPS deficiencies such as failure to protect adequately confidential test data... and continued concerns about possible adoption of amendments to the Pharmacists Law which would weaken patent protection for pharmaceuticals and permit the unfair commercial use of test data (USTR Special 301 Press Release, 2000).

In 2000, the US government indicated that it would be considering a potential dispute settlement case against Israel because the US government determined that Israel was not in compliance with its WTO TRIPS obligations.

For more information, see http://www.cptech.org/ip/health/israel/


Jordan

The US government placed Jordan on the 1997, 1998 and the 1999 Watch Lists for reasons including the absence of patent protection of pharmaceuticals which has led to a

growing problem of patent infringement for pharmaceuticals which are manufactured for both domestic and export markets (USTR Special 301 Press Releases, 1997-1999).

Korea

The US government placed Korea on the 1999 Watch list for reasons including the inadequate level of patent protection for pharmaceuticals and the protection of data in Korea, as well as with Korea's market access restrictions on pharmaceutical products.

The US government placed Korea on the 2000 Priority Watch List for reasons including unresolved differences concerning such issues as the

protection of clinical test data against unfair commercial use and disclosure,... intellectual property authorities such that approval is not granted for the launch into the Korean market of drugs that would infringe valid patents (USTR Special 301 Press Release, 2000).
US Korea agreement on protection of intellectual property rights. Apparently negotiated from November 1985 to July 1986.

Kuwait

The US government place Kuwait on the 1999 Priority Watch List and the 1997 and 1996 Watch Lists for reasons including the deficient protection for pharmaceutical products and compulsory licensing.

In December 1998, Kuwait signed a decree banning the registration of copies of pharmaceutical products still under patent protection (USTR Special 301 Press Release, 1999).

Lebanon

In 1999, the US government raised concerns that Lebanon was "considering allowing the registration of generic copies of drugs still protected by patents (USTR Special 301 Press Release, 1999)."

The US government placed Lebanon on the 2000 Watch List for reasons including the Lebanese health authories' alleged registration of generic copies of patented pharmaceuticals.


Netherlands

In 1998, the US governments noted the

repeated concern it had with the Netherlands' failure to provide protection for proprietary data submitted to the Government for gaining marketing approval of pharmaceuticals in a manner consistent with its obligation under TRIPS 39.3 (USTR Special 301 Press Release, 1998).

"In April 1998, a Dutch court upheld the confidentiality of pharmaceutical test data submitted to regulatory authorities (USTR Special 301 Press Release, 1999)."


New Zealand

New Zealand established the Pharmaceutical Management Agency (PHARMAC) in 1993 as a "limited liability" company to manage the purchasing or funding of pharmaceuticals for the Health Funding Authority (HFA). PHARMAC administers the National Pharmaceutical Schedule...The Schedule lists medicines subsidized by the government and the reimbursement paid for each pharmaceutical. The schedule also specifies conditions for prescription of a product listed for reimbursement." From its inception, PHARMAC has been exempted from New Zealand's normal completion laws. "While New Zealand does not per se restrict the sale of non- subsidized pharmaceuticals in New Zealand, private medical insurance companies will not cover unsubsidized medicines. Thus, PHARMAC effectively controls what prescription medicines will be sold in New Zealand and, to a large extent, at what price they will be sold (National Trade Estimate Report on Foreign Trade Barriers, 1999).

Pharmaceutical suppliers complain that it is difficult to list new chemical entities and line extension on PHARMAC's schedule. In general, PHARMAC will not apply a subsidy to a new medicine unless it is offered at a price lower than currently available subsidized medicines in the same therapeutic class or unless the producer is willing to lower its price on another medicine already subsidized in another class. Pharmaceuticals can also be delisted if a competing product is selected to serve the market as the result of a tender or if a cheaper alternative becomes available and the manufacturer of the original product refuses to discount its price to that of the lower-priced alternative. PHARMAC's use of reference pricing, the practice of doing trade-off deals between classes of drugs, and tendering practices can negatively affect a company's revenue return on its intellectual property. The United States and New Zealand governments have begun a dialogue with the aim of alleviating impediments to market access from PHARMAC's practices (Ibid).


Oman

The US government placed Oman on the 1996, 1997 and 1999 Watch List including the absence of legal protection for pharmaceutical product patents.


Pakistan

The US government placed Pakistan on the 1995, 1996, 1997, 1998 and 1999 Watch Lists for reasons including Pakistan's patent law which provides process protection but not product protection for pharmaceutical products . The term of protection for patents under its patent law for processes is not consistent with TRIPS.

Pakistan law protects patents for a duration of sixteen years, although the government is committed to eventually offering product patents in accordance with its WTO obligations (National Trade Estimate Report on Foreign Trade Barriers).

The US government placed Pakistan on the 1996 Watch List for its failure to "implement its obligations" under Articles 70 of the TRIPS Agreement (USTR Special 301 Press Release, 1996).

Article 70 of the TRIPS Agreement requires all countries that do not provide product patent protection for pharmaceuticals... on January 1, 1995, to establish by that time a means by which applications for patents for such inventions can be filed, which is commonly referred to as a 'mailbox'." This is a transitional provision for developing to countries to enact. "Article 70 of the TRIPS Agreement also requires WTO members delaying the grant of pharmaceutical...patent protection to grant "mailbox" applicants up to five years of marketing exclusivity if such applicants are granted a patent and marketing approval in another WTO member and marketing approval in the member providing marketing exclusivity (Report to Congress on Section 301 Developments, June 1996 - January 1998).

After the US initiated WTO dispute settlement against Pakistan [April 30, 1996], the Government changed its patent law [February 4, 1997] and regulations to comply with TRIPS obligations to implement Articles 70.8 and Articles 70.9 of TRIPS Agreement, the so-called 'mailbox' and 'exclusive marketing rights provisions' (USTR Special 301 Press Release, 1997).

On February 4, 1997, through USTR pressure at WTO consultations, the President of Pakistan

fulfilled Pakistan's obligations under Article 70 and issued No. XXVI of 1997, establishing a framework for a filing system for patent applications and a system for the grant of exclusive marketing rights under certain circumstances (Report to Congress on Section 301 Developments, June 1996 - January 1998).
Regulations governing product registration....act as a barrier to U.S. goods. U.S. industry has expressed concerns in particular to the Pakistan governments unilateral adoption of a discriminatory policy against transnational pharmaceutical companies by insisting that they can only register products that are on sale in the country of incorporation of the respective company. Local companies, however, are not held to such a standard, as they can register products from any source. This results in a policy that discriminates against the research-based companies operating in Pakistan. In addition, the time required for the registration process for many multinational pharmaceutical companies in Pakistan is often 2 years, if not longer. Further, industry has also expressed concern with Pakistans drug labeling rules, noting that these laws appear to place Pakistan in violation of the WTO TRIPs rules protecting trademarks (National Trade Estimate Report on Foreign Trade Barriers).

The US government placed Pakistan on on the 2000 Watch List for reasons including the US government determination that " Pakistan's regime for protection of intellectual property does not yet comply with the obligations of the TRIPS Agreement (USTR Special 301 Press Release, 2000)."


Paraguay

The US government identified Paraguay as a Priority Foreign Country on January 16, 1998 for reasons including inadequate intellectual property legislation covering patents.


Panama

Pharmaceutical patents are granted for only 15 years, but can be renewed for an additional 10 years if the patent owner licenses a national company (minimum of 30 percent Panamanian ownership) to exploit the patent (National Trade Estimate Report on Foreign Trade Barriers, 1999).

Peru

The US government placed Peru on the 1996 Watch List for reasons including inadequate protection of pharmaceutical patents, deficiencies in its compulsory licensing provisions, and lack of protection from parallel imports.


The Philippines

USTR commentary on Philippine intellectual property (1996):

While it has made some progress in recent years, the Philippines still fails to consistently and effectively protect intellectual property rights. Significant problems have included inadequate laws and regulations and insufficient resources of enforcement. In April 1993,a significant step forward was taken when the Philippines and the United States signed an agreement to strengthen protection of intellectual property rights in the Philippines. As a consequence, the Philippines was moved from the Administration's Special 301 "priority watch list" to the "watch list." The Philippine Government has generally complied with the agreement except for legislative improvements. After considerable delay, legislation to improve IPR protection was introduced in the second half of 1995, and the government has certified these measures as priority legislation. These measures are presently pending in the Philippine Congress (National Trade Estimate Report on Foreign Trade Barriers, 1996).

The Philippine Government is a party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty; it is also a member of the World Intellectual Property Organization and the World Trade Organization (Ibid).

UNDERSTANDING BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA REGARDING THE PROTECTION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

USTR commentary on Philippine patent law (1996-1997):

The present Philippine patent law requires that a compulsory license be issued two years after registration with the Patent, Trademark and Technology Transfer Board if a potential item is not being used in the Philippines on a commercial scale or if domestic demand for the item is not being met to an "adequate extent and on reasonable terms." The requirement could impose a significant burden on patent holders. Other concerns include exceptions for experimental use of patented inventions, government use provisions, "intervening rights" for reissuance of patents, and treatment of plant varieties within the definition of unpatentable inventions (National Trade Estimate Report on Foreign Trade Barriers, (1996-1997).

USTR commentary on Philippine intellectual property (1998):

In spite of governmental efforts, including the creation in February 1993 of the Interagency Committee on Intellectual Property Rights (IACIPR) as an entity charged with recommending and coordinating enforcement oversight and program implementation, serious problems continue to hamper the effective operation of agencies tasked with IPR enforcement. Insufficient government resources is a major problem. The IACIPR has prioritized efforts to eliminate software piracy in government agencies, but has also undertaken regional efforts within the Philippines to increase public awareness of the importance and benefits of IPR protection. Joint efforts between the private sector and the National Bureau of Investigation (NBI), the Philippine equivalent of the FBI, have resulted in a series of successful enforcement actions. The judicial system remains a stumbling block to more aggressive use of the courts to deter effectively IPR violations.The designation of 48 IPR courts to handle IPR violations has done little to speed up the process, since these courts have not received additional resources and continue to handle a heavy non-IPR workload. Because of the lengthy nature of court action, many cases are settled out of court (National Trade Estimate Report on Foreign Barriers to Trade, 1998).

USTR commentary on Philippine patent law (1998):

A new intellectual property code (R.A. 8293), which was signed into law on June 6, 1997 and which took effect January 1, 1998, improves the legal framework for IPR protection in the Philippines. R.A. 8293 moves the Philippines to a first-to-file system, increases the term of patents from 17 to 20 years, and provides for the patent ability of micro-organisms and non-biological and microbiological processes. The holder of a patent is guaranteed an additional right of exclusive importation of his invention. A compulsory license may be granted in some circumstances, including if the patented invention is not being worked in the Philippines without satisfactory reason, although importation of the patented article constitutes working or using the patent. Legislation is pending to include plant varieties within the definition of patentable inventions, and to provide IPR protection to layout-designs of integrated circuits (National Trade Estimate Report on Foreign Trade Barriers, 1998).

The US government placed the Philippines on the 1999 Watch List for reasons including the Philippines'

tentative proposal which would conflict with TRIPS trademark obligations by restricting the use of brand names on pharmaceutical products (USTR Special 301 Press Release, 1999).

Poland

In 1999, USTR noted that US companies complained that Poland's current pipeline and data protection of pharmaceuticals is inadequate. Another USTR concern was that the lack of data exclusivity which appears to be contrary to TRIPS' requirements.

The US government placed Poland on the 2000 Priority Watch List for reasons including for providing only three years of exclusive protection for test data and the weak protection of process patents.

In 2000, the US government indicated that it would be considering a potential dispute settlement case against Poland because the US government determined that Poland was not in compliance with its WTO TRIPS obligations.


Portugal

In 1996, the USTR noted that

Portuguese patent law did not comport with the TRIPS requirement that the term of a patent be 20 years from filing and that this term apply to new patents granted as well as to those that are still in effect. Portugal chose to interpret TRIPS as requiring that the 20-year term apply only to new patents granted after June 1, 1995 not to existing patents (USTR Special 301 Press Release, 1996).

Under the provisions of the WTO Dispute Settlement Understanding, the USTR pressured the Government of Portugal to accede to the United States' interpretation of the TRIPS agreement.

On August 23, 1996, Government of Portugal issued Decree-Law 141/96, confirming that all patents that were in force on January 1, 1996, and all patents granted after this date based on applications that were pending on January 1, 1996, will receive a term of protection that lasts 15 years from the date of grant of the patent or 20 years from the effective filing date of the patent, whichever is longer (Report to Congress on Section 301 Developments, June 1996 - 1998).
Portugal and the United States issued a joint notification of settlement to the WTO on October 3, 1996.

Qatar

In 1997, the US government raised concerns about Qatar's lack of legal protections for pharmaceutical patents.

The US governments placed Qatar on the 1998 and 1999 Watch List because it has not enacted a program of patent law and therefore does not protect pharmaceutical products.


Romania

In 1996 and 1997, the US government raised concerns on Romania's failure to provide pipeline patent protection for pharmaceuticals.

The US government placed Romania on the 1999 Watch List for reasons including the inadequate protection of patents and proprietary data.


South Africa

The US government placed South Africa on the 1998 and 1999 Watch List for reasons including its amendment of the Medicines Act in December 1997.

According to the USTR, this new law "appears to empower the Minister of Health to abrogate patent rights for pharmaceuticals. It also would permit parallel imports (USTR Special 301 Press Releases, 1998-1999).
USTR also said that "undisclosed data is not adequately protected under South African law." In this dispute, the USTR was complaining about the South Africa government's decision to permit generic versions of Taxol (paclitaxel) on the market (several months after the US government protections on Paclitaxel health registration expired). USTR also cited South Africa for expressing unwelcome views at the World Health Assembly:
During the past year, South African representatives have led a faction of nations in the World Health Organization (WHO) in calling for a reduction in the level of protection provided for pharmaceuticals in TRIPS.

For considerably more detail, see http://www.cptech.org/ip/health/sa.


Taiwan

In 1999, the USTR expressed concern that:

Taiwan's pricing system discriminates against patented and brand-name pharmaceuticals that are typically imported by providing a higher rate of return on "generic" products that are produced in Taiwan. Since Taiwan producers do not have to pay for research, development and testing (but are entitled to a high price), they can offer "unofficial" discounts on their products and thereby enjoy a significant price advantage over brand-name competitors when bidding on procurement contracts. Although Taiwan authorities have eliminated situations where generic drugs receive the same price as higher quality patented pharmaceuticals, US companies remain concerned that in some cases, price differentials between generic and name brand products remain overly narrow. (National Trade Estimate Report on Foreign Trade Barriers, 1999).
And, the USTR complained about a Taiwan government program to compensate patients who suffer from adverse reactions to drugs.
During 1998, the Taiwan Department of Health promulgated a no-fault compensation scheme for patients who suffer from adverse drug reactions. While theoritically voluntary, the scheme has built-in incentives which would put non-participating companies at a competitive disadvantage in the marketplace. The scheme requires a contribution of 0.1% of sales revenue from participating firms. U.S. firms claim this duplicates existing expenses for product liability insurance (Ibid).

Thailand

On January 30, 1991, the Pharmaceutical Manufacturers Association (PMA) filed a petition citing Thailand's inadequate and ineffective patent protection laws for pharmaceuticals. The petition cited the

lack of product patent protection for pharmaceuticals, a short term of protection, requirements to manufacture a product or use a process in Thailand, and excessively broad compulsory licensing provisions. The petition requested that Thailand amend its patent law promptly to remedy these deficiencies. PMA also sought transitional or 'pipeline' protection for pharmaceutical products that have been patented in other countries, but have not been marketed in Thailand (Report to Congress on Section 301 Developments, January 1995 - June 1996)."

On February 27, 1992, Thailand's National Legislative Assembly enacted amendments to its patent law. These amendments included provisions that provided patent protection for pharmaceutical products and a 20 year-year-from-filing term of protection. USTR objected to provisions that offered

no protection for existing patented pharmaceutical products that have not been marketed in Thailand" and overly broad compulsory licensing provisions (Ibid). USTR also objected to the newly created "Board of Pharmaceutical Patents charged with monitoring the prices of patented pharmaceutical products and establishing criminal penalties for failure to provide information to that board in certain circumstances (Ibid).

In 1993, USTR pressure compelled Thailand to issue regulations curtailing the "adverse effects" of compulsory licensing.

On October 1, 1993, Thailand established a mechanism to provide limited pipeline protection for pharmaceuticals (Ibid).

In the 1999 USTR NTE Report:

Thailand's Patent Law was amended by the Thai Parliament in October 1998 and the amended provisions will enter into effect in 1999. Pursuant to the U.S.-Thai IPR Action Plan, the amended law abolished the Pharmaceutical Review Board. According to initial observations, businesses in Thailand are generally pleased with the amendments. However, they foresee problems rising from new provisions regarding compulsory licensing authorizing the Director General of the Department of Intellectual Property to override a patent and issue a compulsory license if the patent is deemed as not being locally "worked" or if the price is deemed unreasonably high.

For more information, including copies of correspondence and agreements between the US and Thailand, see http://www.cptech.org/ip/health/thailand/


Tunisia

In 1998, the USTR noted Tunisia's "lack of patent protection for pharmaceuticals" meant that

dozens of unauthorized copies of top-selling medicines [were] in the market. Once a medicine is manufactured in Tunisia, its importation is restricted hindering access to the market for US firms (USTR Special 301 Press Release, 1998).

Turkey

In January 1999, Turkey extended patent protection to pharmaceuticals.

The US government placed Turkey on the 1995 Priority Watch List because of its lack of modern patent legislation. The USTR compared the Turkey policy of exempting pharmaceutical drugs from patent protection to "piracy."


United Arab Emirates (UAE)

The US government placed UAE on the 1997, 1998 and 1999 Watch List for reasons including UAE's exemptions on medicines and pharmaceutical compounds from protection in its patent laws. In 1999, USTR expressed concern over reports that "UAE authorities continue to allow the copying of European and American patented pharmaceutical products (USTR Special 301 Press Release, 1999)." The USTR stressed the critical need for "pipeline" protection of new products in the research and development cycle.

In 1997, the US government also raised objections about the UAE's onerous compulsory licensing provisions and the unauthorized production of pharmaceutical products.


Uruguay

The US government placed Uruguay on the 2000 Watch List for reasons including "omission of protection for confidential test data, overly broad compulsory licensing provisions, failure to address exclusive marketing rights, and international exhaustion of patent rights (USTR Special 301 Press Release, 2000)."

In 2000, the US government indicated that it would be considering a potential dispute settlement case against Uruguay because the US government determined that Uruguay was not in compliance with its WTO TRIPS obligations.


Venezuela

The US government placed Venezuela on the 1996 and 1997 Watch Lists for reasons including overly restrictive compulsory licensing provisions, inadequate protection of pharmaceutical patents, and the lack of protection against parallel imports.


Vietnam

The US government placed Vietnam on the 1998 and 1999 Watch Lists for reasons including inadequate patent protection for pharmaceutical products.

The US government placed Vietnam on the 2000 Watch List for reasons including the US government's determination that Vietnam's intellectual property law was "not fully consistent with international standards (USTR Special 301 Press Release, 2000)."


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