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 

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 
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 

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 

	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 

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 

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 

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. 

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.


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.