October 6, 1999 letter to Charlene Barshefsky regarding review of US trade policy as it relates to access to essential drugs

October 6, 1999

Charlene Barshefsky
United States Trade Representative
600 17th Street, N.W.
Washington,DC 20508

Dear Ambassador Barshefsky:

We are very pleased that the US government has ended its efforts to seek the repeal or modification of the South African Medicines Act provisions as they relate to compulsory licensing and parallel imports, on public health grounds. We are writing to ask that the USTR now begin a broader review of US trade policy, as it relates to public health considerations, not only in terms of trade policy toward the government of South Africa, but as it relates to all countries.

As you know, after nearly 18 months of debate, the World Health Assembly (WHA) enacted a "Revised Drug Strategy" resolution in May 1999. The resolution (EB103/4), which passed with US government support, requires member countries to:

(1) to reaffirm their commitment to developing, implementing and monitoring national drug policies and to taking all necessary concrete measures in order to ensure equitable access to essential drugs;

(2) to ensure that public health interests are paramount in pharmaceutical and health policies;

(3) to explore and review their options under relevant international agreements, including trade agreements, to safeguard access to essential drugs;

We believe it is time to implement commitments required by the WHA resolution, and to recognize that U.S. trade policy should reflect the fact that American citizens are generally supportive of sound public health policies worldwide, as reflected by generous charitable giving, for example, and that it is not appropriate for U.S. government agencies to simply advance the commercial interests of the largest pharmaceutical companies.

The policy review should include the following specific issues:

1. Compulsory licensing of patents. In several countries, the US government has pressed for very restrictive policies on the use of compulsory licensing. For example, in some cases, the US government has asked countries to limit the scope of compulsory licensing to cases involving anticompetitive practices, national emergencies and air pollution control. There are also disputes involving the use of compulsory licensing for research purposes. In Thailand, where there are reportedly one million HIV/AIDS patients, the US government has opposed the use of compulsory licensing of HIV/AIDS drugs. For starters, the US government should revisit its opposition to compulsory licensing in Thailand, where public health groups such as MSF support the use of compulsory licensing to get drugs such as ddI, 3TC, d4T or Norvir to AIDS patients. More generally, USTR should immediately extend the policy in the South African case to all developing countries.

2. Parallel Imports. The US government has opposed the use of parallel imports of pharmaceuticals in New Zealand, South Africa, Thailand, Ecuador, Israel, Argentina, Indonesia and many other countries. We believe restrictions on parallel importing are highly protectionist and impede national efforts to stretch national health care budgets, particularly in countries that do not have competitive distribution markets. Again, the policy decisions in South Africa should be extended to other countries.

3. Patent exemptions for research. The U.S. is involved in disputes with Cyprus, Israel, Canada and many other countries over exceptions to patent rights or compulsory licensing for medical research. Public health groups generally support policies that would permit medical research involving patented materials, either through US styled patent exceptions (the Bolar amendment) or through programs of compulsory licensing for research. As you know, pending disputes before the WTO are addressing the issue of the role of Article 30 of the TRIPS in permitting medical research. We ask that the US government declare its support for the broadest possible rights to medical researchers, under national laws, and we further ask that the US government end its opposition to efforts by foreign countries to enact research exemptions in their national patent laws.

4. Health Registration Data. The US government has pressed the Netherlands, New Zealand, Australia, South Africa, India and many other countries on the issue of "unfair commercial use" of health registration data. In plain language, the US government doesn't want generic drug companies to be able to "rely upon" scientific data that is "owned by" someone else, when seeking marketing approval of a drug. This is mostly an issue for drugs not protected by patents, such as drugs that were developed with US government support. Central to this dispute is the registration of generic versions of Paclitaxel, a US government invention used to treat ovarian and breast cancer, and Kaposi Sarcoma, a disease that afflicts many patients who suffer from HIV/AIDS. Having obtained (for free) exclusive rights to use NIH sponsored clinical data on Taxol, Bristol-Myers Squibb now enjoys monopolies for its Taxol version of Paclitaxel in many countries. Largely because of US trade pressures against the use of generic versions of Taxol, access to this important cancer drug is extremely limited in many countries. For example, in New Zealand and in England, Taxol is off formulary for much of the population, due to its high cost -- leading to unnecessary suffering and death. In some cases, such as in South Africa, the US government has asked countries to match the 10 years of market exclusivity for test data that is used in the European Union, despite the fact that US law only requires 5 years (and even that period has been criticized as excessive). Moreover, the EU's 10 year market exclusivity for test data was initially only a measure to compensate for the lack of patent protection in Spain and Portugal; it is completely inappropriate for drugs like Taxol that were invented by government researchers. The US government should immediately cease efforts to keep generic competitors of Taxol off the market worldwide, and the US should not seek to promote the 10 year EU period of market exclusivity as an international norm. (CPT is developing specific proposals for more appropriate norms that are consistent with Article 39 of the TRIPS.)

5. . Market Exclusivity for older drugs. In a number of countries, including Korea, China, India, Pakistan, Thailand and Brazil, to mention a few, the US government has asked countries to extend various forms of regulatory exclusivity to older products that are not protected by patents in those countries. The objective of this trade policy is to seek commercial benefits for US exporters of pharmaceutical drugs. However, these retroactive market exclusivity policies generally do not create forward looking incentives, since the drugs are already on the market. From a public health point of view, it is better to remove market exclusivity for drugs off patent, and particularly when the drugs were developed years ago. As a direct result of US pressure, the drug fluconazole received market exclusivity in Thailand until last year. Pfizer charged such high prices for fluconazole that HIV/AIDS patients risked blindness and death because they could not afford treatment. With the elimination of market exclusivity last year, two generic companies entered the market, and prices dropped from 200 baht to 6.5 baht in nine months -- a decrease of more than 95 percent. The US government should ask the WHO to identify other older essential drugs that should not be protected by retroactive market exclusivity regulatory barriers.

6. Generic drug substitution. There have been disputes in Mexico, South Africa, Thailand, the Philippines, Pakistan and elsewhere over the mandatory prominent display of the generic name of a drug on product packaging, or in mandatory generic prescribing by public health workers. Claiming that TRIPS trademark provisions give companies complete control over product packaging and protect the promotion of the brand name, PhRMA asserts that government policies to promote the use of generic names and generic prescribing dilute and violate company trademark rights under TRIPS. The US government should reject the PhRMA arguments, and declare that in similar disputes, public health considerations are paramount.

7. National use of price controls or limits on government reimbursements for drugs. In many countries, including Pakistan, Thailand, Taiwan and New Zealand, to mention a few, the US government considers domestic policies regarding reimbursement of drugs to constitute "trade barriers" for US exports. The US government has engaged in a global campaign against even the most market driven efforts to control pharmaceutical prices, such as the New Zealand reference pricing system. The US government should cease its efforts to bully countries on domestic pricing issues.

8. R&D reinvestment. The US government should support efforts by countries to require "compulsory research" on essential public health problems. R&D reinvestment requirements should not be considered barriers to trade.

These are only a few areas where the US government should begin a review of US policy with regard to pharmaceuticals, trade and the public health. We look forward to your response, and we hope for a constructive dialogue on these issues.

Sincerely,

Ralph Nader

James Love

Robert Weissman