The U.S. government’s “watch list” on developing countries’ use of health rights

Special 301 is an annual report by the Office of the US Trade Representative (USTR) which places countries on a “watch list” if USTR would like to see greater changes in their intellectual property rules or enforcement practice. This year’s report came out May 1st. We pay attention because USTR relies heavily on comments from big business, and USTR’s opaque standards and criticism of other countries could stymie the development of public interest policies in areas including health. For example, countries have sovereign rights to issue “compulsory licenses” on pharmaceutical patents. Compulsory licensing authorizes price-lowering generic competition with patented drugs in exchange for royalty payments to the patent holder. It’s a key strategy for improving access to affordable medicines, especially in developing countries. But the US has often criticized compulsory licensing, and sometimes sought to stop it (see eg: www.citizen.org/leaked-cables-show-US-tried-failed-to-organize-against-ecuador-compulsory-licensing).

This year’s Special 301 Report, and past 301 Reports, have included language to the effect, “the United States respects a trading partner’s right to protect public health and, in particular, to promote access to medicines for all,” and “the United States respects its trading partners’ rights to grant compulsory licenses in a manner consistent with the provisions of the TRIPS Agreement [the World Trade Organization agreement on intellectual property rules].” (See pages 22 and 23 of this year’s 301 report.)

Nevertheless, in recent years, USTR has typically cited countries for issuing compulsory licenses or developing compulsory licensing plans, and expressed concern on behalf of the US government. With the exception of Canada’s 2007 export arrangement with Rwanda, every recent pharmaceutical compulsory license or major compulsory licensing policy – at least, of which USTR is aware, and so far as I can tell — has been referenced in the 301 Report. (I had to go back to 2004/2005 to find exceptions, in the case of Indonesian and Malaysian government use licenses for AIDS.) Sometimes the criticism is direct; other times the references are oblique or pledges to monitor the situation. But in each case the mere reference is important; a bullying tactic that tends to serve as a warning to all countries against using health rights.

At USTR’s hearing earlier this year informing the Special 301 review, I stated that it is becoming difficult to maintain faith in the US government’s general assurances that it respects countries’ use of these health rights, since USTR appears to cite any given use of compulsory licensing in the 301 Report. I asked USTR and the other federal agencies present to lend meaning to US Government commitments by excluding any reference to TRIPS-compliant compulsory licenses in this year’s report. (I’ve repeated the ask in various private meetings.)

This year’s 301 Report is, as always, an embarrassing application of US power on behalf of Big Pharma and the content industry, and against a number of public interests. The report criticizes compulsory licensing in India and Indonesia, among other pharmaceuticals-related policies.

However, by the limited criteria above, we appear to have made some important progress. This year, Ecuador issued its second compulsory license, for the HIV medicine abacavir+lamivudine. Brazil renewed its 2007 license on efavirenz. Neither of these licenses are mentioned in the report — neither explicitly nor implicitly.

PhRMA (an industry association of major pharmaceutical companies) expanded its complaints this year about Thailand’s 2010 renewal of compulsory licenses for efavirenz and lopinavir+ritonavir. There is some general language in the 301 Report this year (and since 2011) which should probably be read as applicable to the licenses. But our best understanding is that this year Thai licensing was not targeted in internal US Government discussions.

USTR was certainly aware of Ecuador’s license. USTR may have been unaware of Brazil’s license renewal, since PhRMA did not complain about it in its submission. It is also probably relevant that the Ecuador license and Brazil and Thailand renewals are each for HIV/AIDS products, rather than for cancer, as in India’s case. Compulsory licensing for non-communicable disease treatments remains lamentably controversial within the US government.

In spite of the many negative aspects of this year’s 301 Report, the omission of any reference to two and perhaps several instances of pharmaceutical compulsory licensing is a helpful precedent, and we should build from it. Country specifics follow:

India – India issued a compulsory license this year for sorafenib, a treatment for kidney and liver cancer. It is worth noting that the local working provision cited by USTR was only one of several grounds on which India issued its license (the others being affordable price and public needs, see Section 84 of the Patent Act), and any one of these grounds would have sufficed under Indian law as well as under TRIPS.

*  301 excerpt, page 38 – Priority Watch List: “The United States will also continue to monitor closely developments concerning compulsory licensing of patents in India, particularly following the broad interpretation of Indian law in a recent decision by the Indian Intellectual Property Appellate Board (IPAB), while also bearing in mind the Doha Declaration on TRIPS and Public Health, discussed in the Intellectual Property and Health Policy section of this Report. In particular, India’s decision in this case to restrict patent rights of an innovator based, in part, on the innovator’s decision to import its products, rather than manufacture them in India, establishes a troubling precedent. Unless overturned, the decision could potentially compel innovators outside India – including those in sectors well beyond pharmaceuticals, such as green technology and information and communications technology – to manufacture in India in order to avoid being forced to license an invention to third parties.”

Indonesia – This year Indonesia authorized government use of patents for seven HIV/AIDS medicines. See: http://www.citizen.org/actions-indonesia. The authorizations are TRIPS compliant, set a critical precedent for global health and could save thousands of lives. Unfortunately, Indonesia made a strange submission to USTR citing an unspecified “mistake in procedure” when issuing the licenses. See Indonesia’s submission at page 7. (The document also oddly states that licenses were issued on nine products.) Indonesia’s submission opened a door for USTR criticism.

*   301 excerpt, page 40 — Priority Watch List: “The United States notes with concern statements in Indonesia’s Special 301 submission indicating that Indonesia failed to abide by its procedures in issuing a compulsory license decree in 2012, and that its patent law does not require individual merit review in connection with the grant of compulsory licenses. The United States further encourages Indonesia to provide for judicial or other independent review of any compulsory license authorizations. The United States looks forward to working with Indonesia on these and other matters.”

Thailand – In 2010, Thailand renewed compulsory licenses for HIV medicines efavirenz and lopinavir+ritonavir. PhRMA complained this year and last that Thailand did not consult the patent owners. This is contested. A civil society group tells us of a 2010 Ministry of Health consultation with patent holders. In any case, Thailand is not obliged to consult prior to making government use of patents. PhRMA also alleges non-payment of royalties. The same civil society group tells us patent holders have failed to collect their royalties, and have not taken advantage of a provision that gives them an opportunity to negotiate the rate.

*   301 excerpt, Priority Watch List, Page 42: “The United States continues to encourage Thailand to engage in a meaningful and transparent manner with all relevant stakeholders, including IPR owners, as it considers ways to address Thailand’s public health challenges, while maintaining a patent system that promotes innovation.”

Ecuador – Ecuador issued a compulsory license for abacavir+lamivudine, the country’s second license since a 2009 Presidential decree established a protocol for the compulsory licensing of pharmaceuticals in the public interest. (Follow this link for more information on Ecuador’s access to medicines protocol.) USTR is aware of the license, but this year’s 301 Report does not address it, explicitly or implicitly. The section does target other pharmaceutical-related rules in Ecuador (Watch List page 47), but not compulsory licensing.

Brazil – Brazil renewed its 2007 compulsory license on the HIV medicine efavirenz for another five years. It is not clear whether any agencies involved in the 301 process took note of this development, but it is not referenced in any way in this year’s 301 Report. Brazil is on the Watch List at page 44, where USTR unfortunately does complain about the ANVISA system (in which health authorities review patent applications).