U.S. FTAs and the WTO Declaration on Access to Medicines

When Congress passed the Trade Act of 2002 it gave the United States Trade Representative (USTR) potentially conflicting instructions for negotiating agreements governing drug patents. 

The USTR was to negotiate strong drug patent rules and facilitate access to foreign markets for firms that depended on patent protection (to be done for intellectual property in general, but my interest here is in medical drugs).

But the USTR was also supposed to respect the objectives of the WTO's 2001 Declaration on Access to Medicines, which recognized problems drug patents could sometimes pose when cheap drugs were needed in a public health emergency.

The Government Accountability Office (GAO) has just taken a look at how the USTR responded to the potential conflict: Intellectual Property: U.S. Trade Policy Guidance on WTO Declaration on Access to Medicines May Need Clarification (September 2007)

Whether or not there is an actual problem depends on how you interpret the WTO's Declaration:

The U.S. interprets the Declaration as a political statement that recognizes the severity of public health crises while affirming the importance of IP protection. It maintains that the Declaration neither changes existing TRIPS obligations, nor creates new rights and does not assign public health greater priority than IP protection. USTR says the Declaration clarifies flexibilities already in TRIPS, including the flexibility to compulsorily license patents under certain circumstances. USTR recognizes these as being allowed for WTO members, including those facing public health crises, but only in a fashion that will not unduly harm patent holders.

How does the USTR turn this interpretation into concrete agreements:

• USTR balances respect for the Doha Declaration [the same thing I'm calling the Declaration on Access to Medicines - Ben] with TPA’s other two IP negotiating objectives by actively promoting high levels of IP protection for pharmaceuticals while making targeted allowances for developing country partners. USTR believes that this longstanding U.S. pursuit of high IP protections for pharmaceuticals creates incentives for investment in research and development of new treatments, ultimately enhancing public health.
• With regard to the TPA objective of respecting the Doha Declaration, USTR’s key policy change was to not insist upon two provisions [compulsory licensing and parallel imports, defined at this link - Ben] it sees as relevant to the Declaration in FTAs with developing country trading partners. Otherwise, USTR has continued to pursue other pharmaceutical related IP protections that it does not consider related to the Doha Declaration.

Specifically:

• USTR officials stated that they did not change the initial demands USTR makes in FTA negotiations as a result of the Doha Declaration.
• However, they argued that USTR follows TPA guidance to respect the Doha Declaration by making concessions during negotiations with what it considers to be developing countries on the two TRIPS flexibilities specifically mentioned in the declaration. USTR officials told us that when developing country trading partners raise concerns during FTA negotiations about provisions that would restrict the use of parallel imports or compulsory licensing, USTR ultimately backs off and removes them from the proposed text;
• however, they stated that no such concessions were made for countries that USTR considered developed countries. A USTR official said that developed countries have more tools and resources with which to deal with public health situations and that they should not have to revert to such extraordinary measures outside of the cases specified in FTA provisions, such as national emergencies. Restricting these concessions to developing countries is in line with USTR’s belief that the Doha Declaration is intended to apply primarily to developing countries with limited resources.
• USTR also attaches side letters on public health to FTAs with developing countries....  USTR officials noted that they use the side letters to further clarify that the provisions of the agreement leave intact a series of methods a country can use to respond to public health emergencies. However, according to a USTR official, these side letters do not create exceptions to the provisions in the FTA.

The GAO also reviews the administrative arrangements for incorporating public health input into ongoing negotiations:

U.S. interagency and private sector input into trade negotiations related to public health have remained limited since Congress enacted TPA. The Department of Health and Human Services (HHS) and other agencies generally endorse USTR’s view that strong IP protection promotes public health and access to medicines, and interagency input has been primarily technical in nature. Within the formal private sector trade advisory system, a public health representative was recently added to 2 of the 16 private sector advisory committees, but not until USTR had concluded nine trade agreements. USTR did obtain some public health views through other formal and informal means during this period.

This is a nice report, there's a lot here: 

• The GAO reviews (a) the content of the original Uruguay Round agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), (b) the Doha Declaration, (c) the negotiations and debates conducted in light of the Declaration, (d) the 2002 negotiating objectives given by Congress, and (e) the May 10 2007 bipartisan agreement.   
• As noted, the GAO looks at the interpretation the USTR has placed on the Congressional objectives, and how the USTR has converted them into concrete outcomes in its FTAs.
• Finally, the GAO looks at the administrative arrangements for interagency input into the health issues that arise in negotiations, for review by Industry Trade Advisory Committees, and for other formal and informal public input.

Senator Kennedy and Congressman Henry Waxman requested the report.  Here is their press release on the product: KENNEDY, WAXMAN: NEW GAO REPORT INDICATES U.S. TRADE POLICY (October 30).  They don't think the USTR balanced the different objectives correctly.

Comments

[M Martin]

Very thorough, You guys are really expanding on all this and it's great.