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INTERNATIONAL PATENT LAWS "MAY NEEDLESSLY INCREASE PHARMACEUTICAL COSTS"

Executive Summary

INTERNATIONAL PATENT LAWS "MAY NEEDLESSLY INCREASE PHARMACEUTICAL COSTS" in the U.S., Sen. Pryor (D-Ark.) maintained in a March 9 letter to U.S. Trade Representative Mickey Kantor. Citing the North American Free Trade Agreement, the proposed General Agreement on Tariffs & Trade and the European Community's recently adopted Supplemental Protection Certifications, Pryor declared that "certain provisions of these documents may needlessly increase pharmaceutical costs in this country by making it more difficult for lower-cost generic versions of brand-name pharmaceutical products to be marketed." Pryor named two specific concerns. First, he said, new EC patent laws may prohibit European manufacturers "from supplying [active] ingredients to U.S. generic companies as long as the product is still under patent in that country." Second, Pryor declared, "under the guise of harmonization, [the NAFTA and GATT] agreements could preclude the U.S. from reducing the term of a pharmaceutical patent if manufacturers increase drug prices excessively." In regard to the EC patent law, the letter asks the USTR to "make a more concerted effort to insure that foreign patent laws contain language that would allow the U.S. to import pharmaceutical preparations that are still under patent in other countries for the purpose of required FDA pre-approval testing." "The USTR in the previous administration had been seeking the enactment of strong foreign intellectual property laws, but apparently did not make foreign governments aware of the U.S. policy for prompt post-patent generic approvals," Pryor wrote. He noted that the U.S. Waxman-Hatch drug patent law contains an exemption (the so-called "Bolar amendment") allowing generic drug firms to use patented materials to satisfy preapproval regulatory requirements. "The USTR in this administration needs to strongly advise our trading partners of the need for a special exemption in foreign patent laws," Pryor wrote. "Without this specific exception, there may be significant delay in the approval of generic drugs in this country." The effect of changing European patent policies on U.S. generic firms has been a concern to industry for some time. In an Aug. 13, 1992 letter to Senate Labor & Human Resources Committee Chairman Kennedy (D-Mass.) and House Energy & Commerce/Health Subcommittee Chairman Waxman (D-Calif.), the National Association of Pharmaceutical Manufacturers estimated that "this situation could delay generic entry for three to six years beyond U.S. patent expiration." In a March 16 press release, NAPM publicized the issue, citing a need for "added U.S. pressure." With respect to NAFTA and GATT, Pryor requested that the USTR's office "determine the impact of any changes the U.S. would have to make in our pharmaceutical patent laws under current provisions of" the two agreements. The current proposed language for GATT "states that all parties would adhere to a patent system that provides a patent term of 20 years from the date of filing or 17 years from the date of the grant of the patent," Pryor said, which "may or may not require the U.S. to change its current 17-year patent system." The "health care system in the U.S. can ill-afford any additional patent protection being given to pharmaceutical manufacturers, over and beyond what the current law allows," Pryor declared. "The overwhelming evidence suggests that pharmaceutical manufacturers use the period of patent protection to sharply increase prices on drugs, far beyond the rate of general inflation," Pryor maintained. "I am concerned that these international trade agreements may tie our hands in using the pharmaceutical patent as the mechanism to contain drug costs," Pryor said. "As a matter of policy, we should be sure that the NAFTA and GATT does not preclude the U.S. from reducing the period of the patent term as an option for containing drug prices." Pryor has suggested that he is considering limiting patent rights as a means to control drug prices ("The Pink Sheet" Feb. 8, p. 7). In the letter, Pryor wrote that "the previous administration exerted significant pressure on the Canadian government to abandon their system of compulsory pharmaceutical patent licensing." Canada enacted legislation (C-91) to that effect on Feb. 4 ("The Pink Sheet" Feb. 22, T&G-4).

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