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Info-Policy-Notes - A newsletter available from listproc@tap.org
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INFORMATION POLICY NOTES
February 5, 1997
USTR seeks limits on the ability to "rely" upon scientific research
or actions by the U.S. FDA, on matters concerning pharmaceutical
efficacy and safety
The following is a February 4, 1997 letter send by Ralph Nader, James Love
and Robert Weissman to President Clinton, asking the United States to
withdraw trade sanctions against Argentina. The United States Trade
Representative Charlene Barshefsky is seeking the sanctions in an effort
to prevent Argentina and other countries from relying upon known
scientific evidence on pharmaceutical safety and efficacy, in considering
marketing approval for generic drugs. The dispute concerns drugs which
are not subject to patent, often because the research was government
funded and entered the public domain. Several OEDC countries (including
the U.S.) now prevent generic drug manufactures from "relying upon" other
researchers evidence of drug efficacy and safety for five years or more,
and the USTR wants to extend this policy to the entire world. For
example, the unpatented cancer drug Taxol commands very high prices in the
United States, because Bristol-Myers Squibb is the only firm that is
permitted to relpy upon the National Cancer Institute's extensive research
that was used for FDA marketing approval. The USTR wants Argentina and
other countries to prohibit competition from generics for Taxol and
similarly situated drugs. The dispute raises important questions in terms
of ethics, public health and the dissemination and use of scientific
knowledge. For more information, contact James Love (202.387.8030,
love@tap.org) or Robert Weissman (202.387-8030; rob@essential.org), or
see http://www.essential.org/cpt/pharm/pharm.html.
(Note: The letter is formatted with 1 inch margins, w/11 point
courier font.The HTML version is on the Web at:
http://www.essential.org/cpt/pharm/registration.html)
P.O. Box 19367
Washington, DC 20036
February 4, 1997
President William Clinton
The White House
Washington, DC
We are writing to ask that your Administration reconsider its
proposal to impose trade sanctions against Argentine consumers as
punishment for that country's policies toward the pharmaceutical
industry. We believe the U.S. Trade Representative has erred for two
reasons. First, for public health and competitive reasons, the United
States Government should not support artificial barriers to the
introduction of generic versions of unpatented drugs. Second, it is
inappropriate for the United States to punish Argentina consumers for
plainly legal advocacy efforts undertaken by Argentine private sector
domestic drug companies, who are simply seeking to protect their
interests in worldwide forums on rules for intellectual property.
1. The U.S. Government should not support artificial barriers to
the introduction of generic versions of unpatented drugs.
In the USTR's January 15, 1997 statement, the principal substantive
complaint about Argentina's policies on intellectual property rights
concerned the decision of the Argentine Congress to permit drug
manufacturers to rely upon scientific clinical trials already
submitted to drug regulators. The USTR statement says:
Following the April, 1996 decision, the Government of
Argentina stated that it would attempt to address U.S. IPR
concerns by enacting legislation to protect health
registration data. Such scientific and technical data
which must support claims of efficacy and safety of new
products - must be submitted by pharmaceutical innovators
to Health ministries to obtain approval for marketing new
products. These data generally cost millions of dollars to
develop. Given these costs to innovators, many countries
prohibit competitors from relying upon such data when they
seek Health Ministry approval for the same pharmaceutical
product.
On December 18, just before the scheduled completion date
of USTR's out-of-cycle review, the Argentine Congress
passed legislation dealing with health registration data.
However, this legislation does not archive (sic) its
stated purpose. Specifically, the legislation does not
prevent competitors from relying upon the innovator's test
data when these rival firms seek marketing approval. On
the contrary, the new legislation specifically permits
Argentine competitors to rely upon such data that has been
submitted for registration in Argentina, the United
States or in certain other countries.
This is the crux of the complaint against Argentina. That country
will permit firms who seek to sell generic versions of unpatented
drugs to "rely upon" scientific data submitted to the U.S. FDA and
other regulatory bodies, as evidence that the drug is safe and
effective.
We have interviewed officials from the USTR, FDA, PhRMA and the
generic drug industry to try to understand the rationale for creating
unnecessary barriers to the marketing of generic versions of
unpatented medicines. Joseph Papovich from the USTR did not offer a
public interest rationale for the policy, but he did note that the
United States protects for five years the scientific data used for
FDA drug approval, and he asserted that Article 39 of the TRIPS
requires countries to adopt similar measures when the WTO transition
periods expire.
Article 39.1 of the TRIPS requires governments to protect against
"unfair competition," data which is submitted "to governments or
governmental agencies." In 39.3, TRIPS states:
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 a considerable effort, shall
protect such data against unfair commercial use. In
addition, Members shall protect such data against
disclosure, except where necessary to protect the public,
or unless steps are taken to ensure that the data are
protected against unfair commercial use.
Argentina has agreed to keep such data confidential, and like several
other countries, simply seeks to permit the sale of generic versions
of unpatented drugs, based only on bioequivalence, when the U.S. FDA
or other similar bodies declare a pharmaceutical drug to be safe and
effective for a particular indication.
The United States and several OEDC countries have taken a different
approach than Argentina, due in large part to extensive lobbying from
the pharmaceutical industry, in the case of Canada, due to extensive
pressure from U.S. NAFTA negotiators. The U.S. has a statute that
prevents a firm from relying upon the evidence presented by another
firm to the FDA to support safety and efficacy claims for five years
after the date of marketing approval. [21 U.S.C. Sec.
355(c)(3)(D)(ii) (1996)]. Some OEDC countries protect such data for
even longer terms.
We are concerned about the appropriateness of the U.S. announcement
from the point of view of the public's health. We believe the
Argentine position is the one that best promotes public health
interests, and that it is the United States which should seek changes
in domestic legislation and support interpretations of the TRIPS
which would permit easier entry by generic drugs.
Under the U.S. Constitution, inventions are protected for a limited
time by patents. Companies that invent new drugs, or which discover
new applications for drugs, are eligible for patent protection. So
called "use patents" even permit firms to have a monopoly on the
commercial sale of drugs such as Levamisole or AZT, when the chemical
entity itself has long been in the public domain, because a patent is
given for the discovery that the public domain chemical entity can be
used to treat a particular disease.
The USTR actions against Argentina and the U.S. laws which create
barriers to the introduction of generic drugs based upon known
scientific evidence, are backdoor attempts to convey private monopoly
power for drugs that do not qualify for patent protection. Often
these unpatented drugs were developed with government funds.
In our view, medical scientific research which is not patented should
not receive this form of protection. U.S. patent and copyright laws
reward innovation and creativity, but do not extend monopoly
protections to works on the basis of investment. PhRMA members may
claim such protection is necessary to provide an economic incentive
to undertake the research, but there is considerable evidence to the
contrary. Many studies of the pharmaceutical industry demonstrate
significant economic returns for "being first" on the market. More
important, may of the drugs which benefit from the protectionist
policies on scientific evidence were drugs where the research isn't
patented because it was supported by the government.
In a cost-benefit analysis, the benefits from the prohibitions on
reliance upon scientific evidence are compared to the benefits of
competition. It is difficult to justify the monopoly on non-patented
scientific research, because the benefits from competition are so
important -- particularly with respect to matters concerning public
health. Any policies that result in higher prices for medicines raise
inescapable ethical issues. The United States is advocating policies
which would have the predictable effect of preventing billions of
consumers from obtaining access to new scientific discoveries for
five years or more, because those policies would prevent would-be
generic drugs from entering the market without conducting redundant
medical research to recreate non-patented discoveries. This is both
socially wasteful and morally repugnant.
Data As A Barrier To The Marketing Of Taxol
A highly relevant example is Taxol, a drug which was invented by the
U.S. National Cancer Institute (NCI). According to Dr. Samuel
Broder, Director of NCI, U.S. government research on Taxol began
sometime before 1977, and "was totally responsible for its
development," including all biological screening in both cell culture
and animal tumor systems, the chemical purification, isolation and
structure identification, large-scale production for human use,
development of dosage formulation, preclinical toxicology, filing of
an FDA Investigational New Drug Application (INDA) and sponsorship of
dozens of Phase I, II and III clinical trials.[1] Research about
Taxol has been extensively reported in scientific journals, and the
drug was never patented.
After Phase II human use clinical trials had indicated Taxol was
likely to be a blockbuster drug against cancer, the Bush
Administration NCI entered into a contract between the NCI and
Bristol-Myers Squibb (BMS) which gave that company the exclusive
rights to use the clinical data from all past, present and future
NCI-sponsored clinical trials on Taxol. In return, BMS pays no
royalties, but provided the government with 17 kilos of Taxol, with a
production cost estimated at about $5 million, and promised to make
its "best efforts" to commercially market Taxol to cancer patents.
BMS initially used Hauser Chemical, the NCI's own contractor, to
produce Taxol for $.25 per milligram. When the FDA approved Taxol
for marketing, BMS initially charged a wholesale price of $4.87 per
milligram, and has recently raised this price to more than $6 per
milligram -- about 24 times the company's initial cost to manufacture
the drug. Patients now report paying as much as $2,000 for a
treatment cycle, which can be repeated as often as 25 times for a
patent suffering from breast cancer -- or as much as $50,000 for a
completed treatment. The U.S. government pays for many of these
expensive treatments through programs such as Medicare and Medicaid.
Foreign firms would like to market Taxol in the United States at
prices in the neighborhood of $.60 to $.90 per milligram, or 10 to 15
percent of the BMS price. Also, Hauser Chemical, the company that
was supplying Taxol to BMS for $.25 per milligram, has indicated an
interest in producing the drug for another drug company. But this
competition has been put on hold by the our statute which requires a
firm to wait five years, or present redundant scientific evidence
that Taxol is safe and effective. As a consequence, BMS expects
Taxol sales to top $1 billion this year, which is good for the BMS
shareholders, but often bad news for the consumers who are paying
enormous premiums for a drug BMS did not invent.
We have been contacted by consumers who have faced hardships or a
complete inability to obtain Taxol, due to the high price. As one
would expect, HMOs are carefully screening requests for Taxol, and
erecting unnecessary barriers to the use of this very important
medication.
While consumers in the United States are facing very high prices for
Taxol, some countries can benefit from the lower prices, by taking
advantage of a competitive domestic market. What the USTR is
attempting to do in Argentina and elsewhere would enhance the BMS
monopoly on this unpatented drug worldwide. Moreover, Taxol is only
one of many government-funded drug inventions which are subject to
protectionist policies toward health registration data.
2. It Is Inappropriate To Punish Argentine Consumers For Legal
Advocacy Efforts By Argentine Private Sector Domestic Drug Companies.
The January 15, 1997 statement by the USTR included the following
statement:
In addition, Argentine pharmaceutical interests continue
to work aggressively to frustrate our efforts to achieve
improved intellectual property protection in other
countries. As a result, the United States will with draw
50 percent of the duty-free trade benefits otherwise
available to Argentina under the U.S. GSP program."
We were surprised that USTR Charlene Barshefsky would openly base
trade sanctions against the Argentine public on the actions of
private sector Argentine drug companies. Under this line of
reasoning, countries abroad would be morally and legally justified
linking sanctions to the political actions of U.S. firms. This does
not seem an approach that the U.S. government wants to legitimize,
given the extensive political involvement worldwide by large U.S.
firms. The USTR should be instructed to withdraw this particular
complaint. It is unseemly and hypocritical for the United States to
object to the political actions by foreign private sector firms in
this dispute over intellectual property rights, while PhRMA members
have an enormous presence on these issues before WIPO, the WTO and
virtually every national legislature on earth. PhRMA, which includes
many foreign owned firms, lobbies the United States extensively, and
countless other large U.S. and foreign firms lobby the United States
on every conceivable government action. And of course many of these
firms are huge contributors to both the Democratic and the Republican
parties in the United States. What is the Administration's point?
That only PhRMA is allowed to lobby the Argentine, Indian and U.S.
governments?
Other critics may note the irony that while the United States is
criticized at home for failing to impose trade sanctions on countries
that limit dissent, the USTR is seeking to impose trade sanctions in
an effort to limit dissent in newly democratically inclined
Argentina.
3. Closing Comments
We urge your administration to withdraw the trade actions announced
against Argentina on January 15, 1997. We furthermore ask that the
Clinton Administration appoint a special task force to reevaluate the
U.S. positions in international trade negotiations as they relate to
public health matters.
As a precedent, we point to your commendable decision to reverse
earlier administrations' record of blindly using trade policy to
advance U.S. tobacco interests. We urge you to extend the same
insightful analysis to the public health matters which are at stake
in policies concerning the pharmaceutical industry. We have earlier
written the USTR and met with USTR officials about similar concerns
we have about the U.S. posture on trade issues that effect the
public's health. We are including as an attachment our October 9,
1996 letter to then USTR Mickey Kantor, his November 8, 1995
response, and the notes from a July 30, 1996 meeting with several
members of the USTR staff. These and other materials are also
available on the Internet at:
http://www.essential.org/cpt/pharm/pharm.html. Thank you for your
attention to this important matter.
Sincerely,
Ralph Nader
James Love, Consumer Project on Technology
http://www.essential.org/cpt; love@tap.org 202.387-8030
Robert Weissman, Essential Information
rob@essential.org; 202.387-8030
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Footnote
[1] September 10 , 1991 letter to Representative Ron Wyden,
reprinted in U.S. House of Representatives, Committee on Small
Business, Subcommittee on Committee on Regulation, Business
Opportunities and Energy, Exclusive Agreements Between Federal
Agencies and Bristol-Myers s Squibb Co. For Drug Development: is the
public interest protected? July 29, 1991. Serial No. 102-35, 1st
Session, 102nd Congress, pages 350-377.