Wednessday on Paragraph 6 Negotiations: Why Things Broke Down

November 28, 2002

This is a quick note on where the paragraph 6 negotiations seem to have broken down. There was a period after Doha, where the USTR and DG-Trade genuinely appeared to be making an effort to control their own export industries, and reach a feasible compromise. There were significant differences between positions advocated by the USTR, DG-Trade and developing countries, and public health groups were quite critical of the many of the early proposals, but a deal seemed to be possible.

DG-Trade seemed intent on limiting the "solution" to cases where its various (let DG-Trade regulate prices in developing countries) tiered pricing systems broke down, and DG-Trade always wanted a set of special controls (safeguards) on developing countries (things they asked for but did not get in the Canada Article 30 bolar case). DG-Trade also made an early decision to exclude OECD countries from the solution, both as importers and exporters, believing it would eventually adopt a community patent, allowing it to "solve" the 31.f problem within Europe itself. DG-Trade refused to engage its own consumer interests in negotiations, framing everything as a development issue, but it was mostly protecting what it perceived as its core protectionist interest of its export pharma industry, while moving ahead on paragraph 6.

The USTR was less interested in the various TRIPS plus "safeguards" the DG-Trade was pushing, and mostly wanted to limit the "solution" to as few a countries and as few diseases as possible, but on the issue of the diseases, the US seemed to have some flexibility, having a very difficult time explaining to anyone why cancer, asthma and some devices would be excluded. The US also showed some early flexibility on reframing the issue in terms of economies of scale, something DG-Trade refused to do. The US strategy in negotiations was early on to split the Africa group from the Latin and Asian delegates, and to focus on the capitals, where trade ministers were less informed and easier to pressure, and where the US could link a narrow paragraph 6 solution to textiles, agriculture and other issues.

Right after Doha, the US government created an interagency task force to deal with paragraph 6, with DHHS, State, Department of Commerce, USPTO, USTR and others. State send a major cable out to African embassies in March (we believe). The US government negotiators and pharma held regular meetings.

By the summer, big pharma began to exercise far more power in the US and EC decision making, and DG-Trade and USTR positions began to harden on a number of issues.

DG-Trade began to push for a role for the WTO in supervising individual licenses that was quite extraordinary, and they decided the would try to block an Article 30 approach, in favor of mechanisms that were as complicated and burdensome as possible, giving the industry a set of inventory and marketing surveillance tools that it would use to undermine the generic industry. DG-Trade as also maddenly legalistic on a number of stupid issues, such as the need to limit the solution to only the precise issues raised in the decidedly poorly written Paragraph 6 of the Doha Declaration, for example focusing endlessly on the issue of how to measure manufacturing capacity, as if this was the main public health problem presented by 31.f, and as if DG-Trade never read the Canadian/EC bolar dispute where economies of scale and exports were a major issue (and DG-Trade lost) . The DG-Trade position was complicated by significant dissent (pro-public health positions) in several European countries (Netherlands, Belgium, France) and the European Parliament (Amendment 196).

The USTR by the summer had lost control over policy making to the White House, and Zoellick pushed the USTR to harder and harder lines on a variety of issues, but particularly on the scope of diseases. In the US election, big pharma poured in millions, and was decisive in holding the House and shifting the Senate to the republicans. Right before the election, President Bush was forced to hurt big pharma on US Hatch/Waxman issues to get votes. After the election, big pharma demanded ever greater control over the paragraph 6 negotiations. CEOs of companies were making regular calls, and PhRMA demanded the USTR deliver on the scope of diseases issues.

In Sydney, Zoellick told the Africa group that the USA opposed allowing asthma, cancer and other diseases in the "solution" and the USTR told the US press it didn't want X-Ray machines included. Rosa Whitaker sent her famous "three diseases" letter to Africa governments, PhRMA circulated a "three disease" letter in the US Congress, PhRMA planted a long editorial in the WSJ on "three disease" theory of what the Doha Declaration was about.

As the TRIPS Council meeting began this week, there was a big pharma meeting in the White House on Monday, and PhRMA's Shanon Herzfeld was checked into the Hotel President Wilson with the US delegates to crack the whip. Japan kicked off the disease debate by insisting the vaccines be removed from the solution, on the grounds that vaccines were technically not pharmaceuticals, another legalistic reading of paragraph 6 that was completely at odds with everything public health workers would recommend, and presenting the African group with a "solution" that didn't even include the technologies that might make ARV's unnecessary. Meanwhile the US press was hailing vaccines that appeared to be promising for breast, cervical and other cancers, which were clearly excluded on two grounds, they are for cancer, and are vaccines. Then the US proposed its famous traveling disease criteria, to limit the solution to only infectious epidemics, as if the US would only tolerate public health measures that might have a consequence on the US.

This week US missions in Africa, Asian and Latin American capitals stepped up their pressure to close the deal, one African delegate reporting having had a 30 minute call yesterday from his Trade Minister, demanding his Geneva negotiator to just give the American's what they wanted. But Pharma over played its hand. If there was a moment, it was when it was reported that Japan wanted vaccines out. After that, there was a sense that things were completely out of hand, and the US, DG-Trade, Canada, and Switzerland appeared to be getting nowhere to closing out the deal.

There was open criticism of the way that Edouardo Perez Motta from Mexico was managing the negotiations, including language in drafts of text that were in some cases verbatim from the pharma/Congress letter, and were highly responsive to US/Japan suggestions on scope of diseases, and often not responsive to delegations that were asking for more attention to Article 30 style approaches in terms of legal mechanisms.

Now the USTR is stuck spending Thanksgiving explaining to Shanon Herzfeld of PhRMA how threats of nuclear attacks may be necessary to move the Africa group to cut a deal by Friday at 2 pm, when the TRIPS council has a special unscheduled meeting for one more attempt to end this negotiation.

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