Global Insight Perspective | |
Significance | This year's Special 301 report singles out 43 countries accused of IPR violations. |
Implications | This year, Thailand has been elevated to the Priority Watch list of 12 countries, largely due to its compulsory licensing policies for pharmaceuticals in late 2006 and early 2007. |
Outlook | Although the USTR acknowledges the right of countries to issue compulsory licenses in case of public health, it says it is concerned about the lack of transparency and due process in the Thai case. Countries with strong IP protection records such as Germany have also been given a warning via the Special 301 report because of their restrictive drug pricing and reimbursement (P&R) policies. |
USTR's 301 List Names and Shames Countries with Weak IP Protection
The new USTR Special 301 report, released yesterday, holds few surprises. The report includes 12 countries in the Priority Watch List, 30 on the Watch List, while Paraguay is included in the Section 306 Monitoring List. Countries are listed for a variety of PR regulations affecting various industries. Without fail this year again, all but one of the countries included in the Priority Watch list are cited because of specific IP rights violations affecting the pharmaceutical industry.
- China: The country remains on top of the Priority Watch list due to piracy across various businesses. With regards to pharmaceuticals, China is accused of lacking "clarity in laws involving generic drug patent infringement”, adequate protection against unfair use of data used to obtain marketing approval, and regulatory mechanisms to prevent the use of active pharmaceutical ingredients (APIs) produced in China in the making of counterfeit medicines. Counterfeit pharmaceuticals from China are said to represent a direct threat to the health and safety of consumers in China, the United States and elsewhere.
- Russia: The country remains on the Priority Watch list due to inadequate data protection for clinical trial data. Considering the progress made by Russia in the past few months, it will be subject to an out-of-cycle review (along with Brazil, the Czech Republic and Pakistan) and could be removed from the Priority Watch list before the next April report.
- Argentina: Remains on the Priority Watch List due to inadequate data protection for clinical trial data and a backlog in processing patent applications.
- Chile: Remains on the Priority Watch List due to a lack of coordination between patent and drug approval authorities that results in the approval of copies of on-patent pharmaceuticals.
- Egypt: Remains on the Priority Watch List due to inadequate protection for clinical trial data and a lack of coordination between patent and drug approval authorities that results in the approval of copies of on-patent pharmaceuticals.
- India, Lebanon and Venezuela: These countries remain on the Priority Watch List due to inadequate data protection for clinical trial data.
- Turkey: Its Priority Watch List inclusion remains in effect due to weak data protection. In addition, the country is accused of maintaining an "inappropriate linkage of the term of data protection to the length of the patent term”.
- Israel: Israel is on the Priority Watch List due to inadequate protection of clinical trial data. In addition, Israel has left unchanged some aspects of its 2005 law, reducing the term of pharmaceutical patent protection by cutting the time granted to compensate for delays in obtaining regulatory approval of pharmaceuticals.
- Thailand: The country has been elevated to the Priority Watch list—a move signifying the most significant change between the 2007 list and last year's edition. The decision is based on evidence of "weakening of respect for patents" in addition to long standing concerns about deficient IPR protection. The USTR is particularly concerned about the Thai government's decision to issue compulsory licences for several pharmaceuticals. Although the United States acknowledges that Thailand may have a right to do that under the DOHA 2001 agreement provisions, it is the lack of transparency and due process that have warranted Thailand's inclusion in the Priority Watch list, according to the USTR. Delays in granting patent and weak data protection are cited as additional reasons for the decision.
Ukraine also remains on the Priority Watch List, but its inclusion is for other reasons. The country has been praised for amending its Law of Medicines in 2006 to provide protection against unfair use of clinical data.
Several countries—Bahamas, Bulgaria, Croatia, the European Union (EU) and Latvia—have been removed from the Special 301 list altogether as outstanding IP protection issues have been resolved.
Outlook and Implications
Interestingly, for the second consecutive year, counties are "named and shamed" in the Executive Summary of the Special 301 report that are not even included in the Priority Watch list or the Watch list. Australia, Germany and South Korea have been cited in the Executive Summary. While issues such as lack of transparency are mentioned, the USTR report specifically mentions these countries' P&R systems for pharmaceuticals as the reason for U.S. concerns. The U.S. government plans to continue dialogue with those to ensure that their healthcare cost-containment concerns do not interfere with IP protection priorities, according to the report. Poland, which is on the Watch List (but not on the Priority Watch List) has also been cited as undermining IP protection rights by enacting in 2006 a law that results in a 13% reduction in the maximum allowed price for imported pharmaceuticals.
Reading between the lines of the 2007 USTR Special 301 report, one has to wonder if P&R restrictions will be tomorrow's grounds for a country's inclusion in the Watch list. The 2007 report states that "even where a country's IPR regime is adequate, price controls and regulatory and other market access barriers can discourage the development of new drugs." Statements such as this confirm Global Insight’s understanding that the U.S. Administration's views on what constitutes free trade are shifting. The focus of future Special 301 reports will increasingly be on market barriers preventing U.S. pharma manufacturers from obtaining what they see as a fair price for their products. Whether the same market barriers and P&R constraints are applied to all products—including those from domestic producers and other importers—and whether IP protection rules are adequate will become secondary concerns.