Intellectual Property in the Peru FTA

The House is likely to pass the Peru-U.S. FTA tomorrow (Nov 8). 

Martin Vaughan reports on the intellectual property provisions - including those introduced into the deal to increase availability of generic drugs - after the May "bipartisan trade deal" between the Administration and Congress: US-Peru Restores Some Flexibility on Health (Intellectual Property Watch, Nov 5):

House Government Reform and Oversight Committee Chairman Henry Waxman, a California Democrat and a frequent critic of Bush administration trade policies with respect to IP, announced his support for the Peru agreement in a “Dear Colleague” letter on 5 November. “The revised Peru FTA restores much of the flexibility needed to protect public health,” Waxman wrote.

Negotiations between congressional Democrats, their Republican counterparts, and the Bush administration led to agreement this summer on new language to be added to the four trade agreements in the areas of labour, the environment, investment and intellectual property rights. Over the objections of brand-name pharmaceutical firms, the White House signed off on changes in several key areas related to protection of innovative products (IPW, Bilateral/Regional Negotiations, 17 May 2007).

The agreement drops a requirement included in previous US bilaterals that countries compensate patent holders for delays in the marketing approval process by extending patent periods. For other products, the agreement states that Peru “shall” extend patent terms to compensate for those delays. But in the case of pharmaceuticals, it states only that Peru “may” provide such compensation. [A drug may be patented long before it receives passes the testing and other requirements for marketing approval.  Without extensions, the period the drug is both patent protected and on the market can be a lot shorter than the period of patent protection - Ben]

It also loosens data exclusivity requirements that name-brand drug firms say they rely on to protect their IP in markets where patents are hard to obtain or poorly enforced. The Peru agreement retains the boiler-plate language that Peru protect clinical test data for a “reasonable period” of five years after an innovative product has entered the market. But it stipulates that the five-year period must not extend beyond the data exclusivity period in the United States.[data exclusivity rules prevent generic producers from getting marketing approval for a generic knock-off based on marketing approval data created by the company that originally developed the drug - Ben]

Besides those changes, Peru and the US agreed to incorporate into the text of the agreement a side letter stating that nothing in the agreement impedes a party’s ability to protect public health, and use the flexibilities in the World Trade Organization Doha Declaration on TRIPS and Public Health. TRIPS is the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.

Those changes were also added to trade agreements with Colombia and Panama. They were not added to the US-South Korea trade deal, in recognition of South Korea’s more advanced level of economic development.

Other key intellectual property provisions of the Peru agreement include a requirement that Peru set up an online registration system for trademarks, and beef up enforcement against copyright piracy, according to US trade officials. It includes language recognising biodiversity and traditional knowledge, and stipulates that parties shall make “all reasonable efforts” to recognise patents on plant varieties. That includes an anti-backsliding provision to ensure that once patent protection for plants or animals is provided, it must be maintained.

The opposition of brand-name drug manufacturers to the new patent language has had some impact in the Senate, where two GOP members of the Finance Committee cited weaker intellectual property provisions as one reason they voted against the Peru deal in a 21 September markup of the bill.

“They want our taxpayers to fund billions of dollars in innovative research and then take it from us for free,” Utah Republican Senator Orrin Hatch said of US trading partners during that markup. Sen. Jon Kyl, R-Arizona, also voted against the pact. The 21 September vote was non-binding. The formal vote on Peru took place on 5 October, where the agreement was approved by voice vote.

But the Peru deal is expected to easily gain majority support in the Senate. Further congressional action on trade deals with Colombia, Panama, and South Korea will be delayed until next year at the earliest. But each of those agreements faces obstacles that make it unclear whether any will be approved before Bush’s tenure ends in January 2009. The US-Colombia agreement is strongly opposed by labour unions, and US beef producers and automakers are fighting the South Korea pact. Meanwhile, a diplomatic imbroglio involving the election as head of Panama’s national assembly of Pedro Gonzalez - who is wanted in the United States for the 1992 killing of a US soldier - has stalled that agreement.

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