February 4, 1997 letter to President Clinton regarding
trade sanctions against Argentina for policies on
health registration data
P.O. Box 19367
Washington, DC 20036
February 4, 1997
President William Clinton
The White House
Washington, DC
We are writing to ask that your Administration reconsider
its proposal to impose trade sanctions against Argentine
consumers as punishment for that country's policies toward
the pharmaceutical industry. We believe the U.S. Trade
Representative has erred for two reasons. First, for public
health and competitive reasons, the United States Government
should not support artificial barriers to the introduction
of generic versions of unpatented drugs. Second, it is
inappropriate for the United States to punish Argentina
consumers for plainly legal advocacy efforts undertaken by
Argentine private sector domestic drug companies, who are
simply seeking to protect their interests in worldwide
forums on rules for intellectual property.
1. The U.S. Government should not support artificial
barriers to the introduction of generic versions of
unpatented drugs.
In the USTR's January 15, 1997 statement, the principal
substantive complaint about Argentina's policies on
intellectual property rights concerned the decision of the
Argentine Congress to permit drug manufacturers to rely upon
scientific clinical trials already submitted to drug
regulators. The USTR statement says:
Following the April, 1996 decision, the Government
of Argentina stated that it would attempt to
address U.S. IPR concerns by enacting legislation
to protect health registration data. Such
scientific and technical data - which must support
claims of efficacy and safety of new products -
must be submitted by pharmaceutical innovators to
Health Ministries to obtain approval for marketing
new products. These data generally cost millions
of dollars to develop. Given these costs to
innovators, many countries prohibit competitors
from relying upon such data when they seek Health
Ministry approval for the same pharmaceutical
product.
On December 18, just before the scheduled
completion date of USTR's out-of-cycle review, the
Argentine Congress passed legislation dealing with
health registration data. However, this
legislation does not archive (sic) its stated
purpose. Specifically, the legislation does not
prevent competitors from relying upon the
innovator's test data when these rival firms seek
marketing approval. On the contrary, the new
legislation specifically permits Argentine
competitors to rely upon such data that has been
submitted for registration in Argentina, the
United States or in certain other countries.
This is the crux of the complaint against Argentina. That
country will permit firms who seek to sell generic versions
of unpatented drugs to "rely upon" scientific data submitted
to the U.S. FDA and other regulatory bodies, as evidence
that the drug is safe and effective.
We have interviewed officials from the USTR, FDA, PhRMA and
the generic drug industry to try to understand the rationale
for creating unnecessary barriers to the marketing of
generic versions of unpatented medicines. Joseph Papovich
from the USTR did not offer a public interest rationale for
the policy, but he did note that the United States protects
for five years the scientific data used for FDA drug
approval, and he asserted that Article 39 of the TRIPS
requires countries to adopt similar measures when the WTO
transition periods expire.
Article 39.1 of the TRIPS requires governments to protect
against "unfair competition," data which is submitted "to
governments or governmental agencies." In 39.3, TRIPS
states:
Members, when requiring, as a condition of
approving the marketing of pharmaceutical or of
agricultural chemical products which utilize new
chemical entities, the submission of undisclosed
test or other data, the origination of which
involves a considerable effort, shall protect such
data against unfair commercial use. In addition,
Members shall protect such data against
disclosure, except where necessary to protect the
public, or unless steps are taken to ensure that
the data are protected against unfair commercial
use.
Argentina has agreed to keep such data confidential, and
like several other countries, simply seeks to permit the
sale of generic versions of unpatented drugs, based only on
bioequivalence, when the U.S. FDA or other similar bodies
declare a pharmaceutical drug to be safe and effective for a
particular indication.
The United States and several OEDC countries have taken a
different approach than Argentina, due in large part to
extensive lobbying from the pharmaceutical industry, in the
case of Canada, due to extensive pressure from U.S. NAFTA
negotiators. The U.S. has a statute that prevents a firm
from relying upon the evidence presented by another firm to
the FDA to support safety and efficacy claims for five years
after the date of marketing approval. [21 U.S.C. Sec.
355(c)(3)(D)(ii) (1996)]. Some OEDC countries protect such
data for even longer terms.
We are concerned about the appropriateness of the U.S.
announcement from the point of view of the public's health.
We believe the Argentine position is the one that best
promotes public health interests, and that it is the United
States which should seek changes in domestic legislation and
support interpretations of the TRIPS which would permit
easier entry by generic drugs.
Under the U.S. Constitution, inventions are protected for a
limited time by patents. Companies that invent new drugs,
or which discover new applications for drugs, are eligible
for patent protection. So called "use patents" even permit
firms to have a monopoly on the commercial sale of drugs
such as Levamisole or AZT, when the chemical entity itself
has long been in the public domain, because a patent is
given for the discovery that the public domain chemical
entity can be used to treat a particular disease.
The USTR actions against Argentina and the U.S. laws which
create barriers to the introduction of generic drugs based
upon known scientific evidence, are backdoor attempts to
convey private monopoly power for drugs that do not qualify
for patent protection. Often these unpatented drugs were
developed with government funds.
In our view, medical scientific research which is not
patented should not receive this form of protection. U.S.
patent and copyright laws reward innovation and creativity,
but do not extend monopoly protections to works on the basis
of investment. PhRMA members may claim such protection is
necessary to provide an economic incentive to undertake the
research, but there is considerable evidence to the
contrary. Many studies of the pharmaceutical industry
demonstrate significant economic returns for "being first"
on the market. More important, may of the drugs which
benefit from the protectionist policies on scientific
evidence were drugs where the research isn't patented
because it was supported by the government.
In a cost-benefit analysis, the benefits from the
prohibitions on reliance upon scientific evidence are
compared to the benefits of competition. It is difficult to
justify the monopoly on non-patented scientific research,
because the benefits from competition are so important --
particularly with respect to matters concerning public
health. Any policies that result in higher prices for
medicines raise inescapable ethical issues. The United
States is advocating policies which would have the
predictable effect of preventing billions of consumers from
obtaining access to new scientific discoveries for five
years or more, because those policies would prevent would-be
generic drugs from entering the market without conducting
redundant medical research to recreate non-patented
discoveries. This is both socially wasteful and morally
repugnant.
Data As A Barrier To The Marketing Of Taxol
A highly relevant example is Taxol, a drug which was
invented by the U.S. National Cancer Institute (NCI).
According to Dr. Samuel Broder, Director of NCI, U.S.
government research on Taxol began sometime before 1977, and
"was totally responsible for its development," including all
biological screening in both cell culture and animal tumor
systems, the chemical purification, isolation and structure
identification, large-scale production for human use,
development of dosage formulation, preclinical toxicology,
filing of an FDA Investigational New Drug Application (INDA)
and sponsorship of dozens of Phase I, II and III clinical
trials. Research about Taxol has been extensively
reported in scientific journals, and the drug was never
patented.
After Phase II human use clinical trials had indicated Taxol
was likely to be a blockbuster drug against cancer, the Bush
Administration NCI entered into a contract between the NCI
and Bristol-Myers Squibb (BMS) which gave that company the
exclusive rights to use the clinical data from all past,
present and future NCI-sponsored clinical trials on Taxol.
In return, BMS pays no royalties, but provided the
government with 17 kilos of Taxol, with a production cost
estimated at about $5 million, and promised to make its
"best efforts" to commercially market Taxol to cancer
patents.
BMS initially used Hauser Chemical, the NCI's own
contractor, to produce Taxol for $.25 per milligram. When
the FDA approved Taxol for marketing, BMS initially charged
a wholesale price of $4.87 per milligram, and has recently
raised this price to more than $6 per milligram -- about 24
times the company's initial cost to manufacture the drug.
Patients now report paying as much as $2,000 for a treatment
cycle, which can be repeated as often as 25 times for a
patent suffering from breast cancer -- or as much as $50,000
for a completed treatment. The U.S. government pays for
many of these expensive treatments through programs such as
Medicare and Medicaid.
Foreign firms would like to market Taxol in the United
States at prices in the neighborhood of $.60 to $.90 per
milligram, or 10 to 15 percent of the BMS price. Also,
Hauser Chemical, the company that was supplying Taxol to BMS
for $.25 per milligram, has indicated an interest in
producing the drug for another drug company. But this
competition has been put on hold by the our statute which
requires a firm to wait five years, or present redundant
scientific evidence that Taxol is safe and effective. As a
consequence, BMS expects Taxol sales to top $1 billion this
year, which is good for the BMS shareholders, but often bad
news for the consumers who are paying enormous premiums for
a drug BMS did not invent.
We have been contacted by consumers who have faced hardships
or a complete inability to obtain Taxol, due to the high
price. As one would expect, HMOs are carefully screening
requests for Taxol, and erecting unnecessary barriers to the
use of this very important medication.
While consumers in the United States are facing very high
prices for Taxol, some countries can benefit from the lower
prices, by taking advantage of a competitive domestic
market. What the USTR is attempting to do in Argentina and
elsewhere would enhance the BMS monopoly on this unpatented
drug worldwide. Moreover, Taxol is only one of many
government-funded drug inventions which are subject to
protectionist policies toward health registration data.
2. It Is Inappropriate To Punish Argentine Consumers For
Legal Advocacy Efforts By Argentine Private Sector Domestic
Drug Companies.
The January 15, 1997 statement by the USTR included the
following statement:
In addition, Argentine pharmaceutical interests
continue to work aggressively to frustrate our
efforts to achieve improved intellectual property
protection in other countries. As a result, the
United States will with draw 50 percent of the
duty-free trade benefits otherwise available to
Argentina under the U.S. GSP program." [Emphasis
added]
We were surprised that USTR Charlene Barshefsky would openly
base trade sanctions against the Argentine public on the
actions of private sector Argentine drug companies. Under
this line of reasoning, countries abroad would be morally
and legally justified linking sanctions to the political
actions of U.S. firms. This does not seem an approach that
the U.S. government wants to legitimize, given the extensive
political involvement worldwide by large U.S. firms. The
USTR should be instructed to withdraw this particular
complaint. It is unseemly and hypocritical for the United
States to object to the political actions by foreign private
sector firms in this dispute over intellectual property
rights, while PhRMA members have an enormous presence on
these issues before WIPO, the WTO and virtually every
national legislature on earth. PhRMA, which includes many
foreign owned firms, lobbies the United States extensively,
and countless other large U.S. and foreign firms lobby the
United States on every conceivable government action. And
of course many of these firms are huge contributors to both
the Democratic and the Republican parties in the United
States. What is the Administration's point? That only PhRMA
is allowed to lobby the Argentine, Indian and U.S.
governments?
Other critics may note the irony that while the United
States is criticized at home for failing to impose trade
sanctions on countries that limit dissent, the USTR is
seeking to impose trade sanctions in an effort to limit
dissent in newly democratically inclined Argentina.
3. Closing Comments
We urge your administration to withdraw the trade actions
announced against Argentina on January 15, 1997. We
furthermore ask that the Clinton Administration appoint a
special task force to reevaluate the U.S. positions in
international trade negotiations as they relate to public
health matters.
As a precedent, we point to your commendable decision to
reverse earlier administrations' record of blindly using
trade policy to advance U.S. tobacco interests. We urge you
to extend the same insightful analysis to the public health
matters which are at stake in policies concerning the
pharmaceutical industry. We have earlier written the USTR
and met with USTR officials about similar concerns we have
about the U.S. posture on trade issues that effect the
public's health. We are including as an attachment our
October 9, 1996 letter to then USTR Mickey Kantor, his
November 8, 1995 response, and the notes from a July 30,
1996 meeting with several members of the USTR staff. These
and other materials are also available on the Internet at:
http://www.essential.org/cpt/pharm/pharm.html. Thank you
for your attention to this important matter.
Sincerely,
Ralph Nader
James Love, Consumer Project on Technology
Robert Weissman, Essential Information
[1] September 10 , 1991 letter to Representative Ron Wyden, reprinted in
U.S. House of Representatives, Committee on Small Business, Subcommittee
on Committee on Regulation, Business Opportunities and Energy, Exclusive
Agreements Between Federal Agencies and Bristol-Myers s Squibb Co. For
Drug Development: is the public interest protected? July 29, 1991.
Serial No. 102-35, 1st Session, 102nd Congress, pages 350-377.