Media

Resource

Comments on the U.S.-Andean Free Trade Agreement

March 30, 2004

Concerning Proposed United States-Andean Free Trade Agreement
Submission to the United States Trade Representative
March 30, 2004

I. Introduction

The Generic Pharmaceutical Association represents more than 140 companies, manufacturers and distributors of finished generic pharmaceutical products, manufacturers and distributors of bulk active pharmaceutical chemicals and suppliers of other goods and services to the generic pharmaceutical industry. GPhA members manufacture more than 90% of all affordable prescriptions dispensed in the United States, accounting for more than one billion prescriptions every year. Its member companies represent a significant sector of the United States pharmaceutical industry providing affordable drug therapies to treat millions of American patients daily.

The role of generic drugs in the United States has been key to providing greater access to affordable pharmaceuticals for American consumers. According to a 1988 study of the Congressional Budget Office, generic drugs save consumers approximately 8-10 billion dollars each year just in the United States. While generic drugs account for 51% of the market, they represent only 8% of every dollar spent on prescription drugs in the United States, according to data from IMS Health Inc.

GPhA is committed to a balance between innovation and access. To that end, we also are committed to innovation in medicines and the preservation of intellectual property protections both in the United States and abroad. With balance our main concern, we believe it is essential that the United States Trade Representative ensure that new trade agreements maintain parity between existing U.S. standards and requirements and those included in new trade agreements, including that with the Andean countries.

The generic pharmaceutical sector is uniquely impacted by the harmonization of agreements on intellectual property protections for pharmaceuticals -- particularly insofar as they increase market exclusivity periods or remove necessary access provisions (e.g., the Declaratory Judgment provision). New trade agreements thus could affect American consumers’ access to affordable drugs as well as the business interests of the U.S. generic pharmaceutical industry. The important role that generic drugs play in providing American consumers with affordable medicines can be expanded into other nations, but only if the USTR is vigilant in ensuring that parity exists to maintain the integrity of U.S. standards and requirements.

For that, we strongly support the inclusion of the following elements in any new trade agreement, such as with the Andean countries, in which the US is one of the parties involved:

1. Bolar Provision

The “Bolar” provision allows the development, testing and experimental work required for the registration of a generic medicine during the patent period of the original product. The purpose of this provision is to ensure that generic medicines enter the market immediately after patent expiry to improve access and encourage competition. This provision has been upheld by the World Trade Organization (WTO) as conforming with the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS) in a WTO dispute ruling.

In its report adopted on 7 April 2000, a WTO dispute settlement panel said Canadian law conforms with the TRIPS Agreement in allowing manufacturers to develop the necessary registration information and test data. (The case was titled “Canada -- Patent Protection for Pharmaceutical Products”).

Recent FTAs do not specifically state that that the Bolar Provision should be included in the legislation or regulations of the Parties. Clearly, the omission of the Bolar Provision is of grave concern to GPhA. This provision is essential to ensure that consumers have access to more affordable drugs as soon as a patent expires and has proven to be an effective measure in the United States that could also be of benefit to other nations. We believe that it is essential that future trade agreements include specific language to ensure its inclusion in the laws of the Parties.

2. Market Exclusivity

U.S. law establishes that a generic applicant cannot submit an abbreviated new drug application for a product that contains the same active moiety as in the new chemical entity for a period of 5 years from the date of the approval of the first approved new drug application. Art. 39.3 of TRIPS establishes that “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 considerable effort, shall protect such data against unfair commercial use. However, it does not establish any specific period for such market exclusivity.

Access to such data is necessary for generic companies to be able to submit early applications for the marketing approval of much needed generic drugs. Market exclusivity extensions could result in unnecessary delays of the application for marketing approval of generic companies. Such delays result in increased pharmaceutical costs for consumers. GPhA strongly opposes any extension to market exclusivity concepts beyond what it is currently in the U.S. law. Last November, we also expressed our opposition to the language that was proposed in the draft of the Free Trade Area of the Americas (FTAA) (Section 10. Article [1.2], [1.4], to establish “at least” five years of data protection). We have seen with great concern that the text of the FTA that was recently concluded with Australia states “at least 5 years.”

GPhA strongly opposes inclusion of similar language for all future agreements as such language can potentially delay consumer access to more affordable medicines both in the United States as well as in its trading partners. It is essential that consumers have access to affordable drugs immediately after the expiration of a patent.

3. Linkage

U.S. regulations establish a formal link between an intellectual property based abbreviated approval process. Simply put, it includes a linkage between certain types of patents and abbreviated product approvals. The end result is that the U.S. government is precluded from approving a generic pharmaceutical if certain patents are deemed valid and infringed by the generic product. Linkage in the United States was intended to promote pharmaceutical innovation while at the same time allowing access to affordable medicines.

However, linkage has, in some cases, led to unnecessary delays in generic competition stemming from patents improperly listed with the U.S. government. GPhA is concerned that the U.S. government may be requesting other countries to include an “automatic” linkage, despite no such parallel system components in current U.S. law. For example, under the U.S. approval system, the inkage is not automatic. A possible delay by the FDA in its analysis and approval of a generic drug due to an existing patent only occurs after the patent owner brings suit for patent infringement within 45 days of receipt by the patent owner of the notice of certification of the ANDA at the FDA. Failure of the patent owner to act within that time frame allows the FDA to proceed with the approval process of the drug (Títle 21, Chapter 1, Part 314.107(b)(3)). Moreover, only certain types of patents are subject to that linkage.

GPhA opposes the inclusion of automatic linkage in trade agreements as we believe that it has resulted in unnecessary delays to the entry of generic drugs into the market. In addition, GPhA believes that if the concept of linkage is adopted in trade agreements, it must be done in the context of the entire construct of U.S. law, including recent statutory changes enacted in Title VII of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. These changes include among other things: (1) the elimination of multiple 30-month stays of FDA approval of a generic drug application with a paragraph IV certification while the courts determine whether the patent has been infringed; and (2) permit a generic applicant to pursue a court challenge to the listing of a patent in the Orange Book under a declaratory judgment concept.

4. Patentable Subject Matter

GPhA believes that the same principles of parity between all components of the U.S. system –- that is, all standards and requirements –- and new FTAs negotiated by USTR applies to the issue of patentable subject matter. We believe that whatever is patentable in the United States should be proffered in trade agreements as patentable subject matter. Thus, trade agreements should neither exceed nor lessen U.S. patentability requirements for pharmaceuticals.

II. Conclusion

As the trade association representing a major industry in a key industrial sector, GPhA applauds and supports the USTR’s efforts to negotiate trade agreements with the Andean countries. We believe that such agreements can be beneficial both to global consumers and our member companies if their content reflects parity with established U.S. laws, standards and regulations governing the marketing of generic pharmaceuticals. Without such parity, American consumers -- who have come to depend on affordable generic medicines to help them lead longer, healthier and more productive lives -- are at risk of delayed access to the substantial savings created by generic competition.

GPhA appreciates the opportunity to comment on the Andean countries trade agreement negotiation and looks forward to continue to work with the USTR to ensure that American consumers have timely access to affordable pharmaceuticals.