June 9, 1997 Letter by James Love and Ralph Nader to US Trade Representative Charlene Barshefsky

Ralph Nader
P.O. Box 19312, Washington, DC 20036

James Love
Consumer Project on Technology
P.O. Box 19367
Washington, DC 20036

June 9, 1997

Charlene Barshefsky
United States Trade Representative
Washington, DC

Dear Ms Barshefsky:

Thank you for your letter of May 5, 1997, in which you responded to our February 4, 1997 letter, regarding Argentina trade sanctions. We recognize that the United States government is engaged in a long running dispute over Argentine government policies regarding patent protection for pharmaceutical drugs. For several years we have known that the United States government has objected to Argentine policies on compulsory licensing, pipeline protection and parallel imports. While we disagree with the USTR's position on each of these topics, they were not discussed in our February 4, 1997 letter. Instead we specifically addressed the two new and novel theories under which the USTR was seeking bilateral trade sanctions.

Our first point concerned the Argentine laws concerning health registration data. The second point was the USTR announcement that sanctions would be based in part upon political activity by the Argentine private sector. We are troubled by these new actions, and urge your office to undertake a review of current policy on both points.

With respect to health registration data, we are opposed to efforts to establish international norms which would prevent regulators from recognizing and relying upon publicly available evidence of drug efficacy and safety, including such information as the actions of U.S. or other national regulators. The U.S. is asking Argentina and other countries to create a particular form of sui generis property rights for health registration data, that is designed to limit entry into the market for pharmaceuticals which are not protected by patents. We are not persuaded that any sui generis protection for health registration data is warranted. Health care research that leads to invention is already protected by patents, and thus it appears as though you are mostly protecting drugs for which research was funded by the government, and where the invention was placed in the public domain.

Even if some level of protection is desired, the particular form of protection sought by the United States is inappropriate as an international norm. At a very minimum, one would expect such a sui generis system to have protections against abuse, such as a system of compulsory licensing. As noted in our earlier letter, the current experience with Taxol illustrates the shortcomings of the USTR proposal.

Taxol is an unpatented drug which was invented by government scientists. The health registration data for Taxol was a series of clinical trials sponsored by the National Institutes of Health (NIH). By exploiting exclusivity provisions for health registration data which were part of the Hatch Waxman Act, Bristol-Myers Squibb has been able to charge extremely high prices for Taxol. We are attaching a copy of a medical bill for an uninsured breast cancer patient who was required to pay $2,324.70 for each 270 milligram injection of Taxol (Many injections are required). NIH was able to produce this amount of Taxol for $162 in small quantities, and Bristol-Myers Squibb paid $67.50 to produce the drug with larger production runs. The fact that Bristol-Myers Squibb invested about $5 million in Taxol for FDA approval, and expects to earn more than $1 billion this year alone from Taxol sales, illustrates the problems with the current system -- consumers, many of them women suffering from breast and ovarian cancer, are harmed by the excessive form of protection and the lack of safeguards against abuse.

Secondly, we are surprised that the USTR would base trade sanction on the fact that private sector firms are politically active. As you must know, there is a widely held view that the USTR itself has become an instrument of large corporate interests in trade negotiations. Certainly no one can deny the fact that PhRMA, the Businesses Software Alliance, the Motion Picture Association of America, Boeing, IBM, Microsoft, and other trade groups and corporations rely upon the USTR to advance their interests, and are politically active all over the world. Under what theory can the United States sanction one country for permitting private sector political activity when our trade negotiations are so clearly coordinated with corporate lobbying efforts here and elsewhere? While we generally support efforts to curb the influence of large corporations in trade negotiations, the one sided nature of sanctions in the Argentine case have the effect of enhancing the already extensive political power of PhRMA. In this case, the Argentine domestic pharmaceutical companies and generic drug companies from Canada and elsewhere have brought balance to an international debate which has been dominated by PhRMA and its members.

We would like to meet with your staff to review whatever analytical work was done to justify the U.S. Government's current position on the two specific issues which we raised in our February 4, 1997 letter and which we elaborate on today. We are also enclosing a copy of Mr. James Love's presentation to the May 1997 FTAA Business Forum Workshop on Intellectual Property, held in Belo Horizonte, Brazil. This paper sets out several specific recommendations for changes in U.S. trade policy on matters concerning health care and intellectual property. We ask your support for these recommendations in the next round of the FTAA negotiations, and look forward to discussing these ideas with you and your staff.


Ralph Nader

James Love

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