The US Trade Representative (USTR)’s Special 301 Report for 2008 on worldwide intellectual property rights (IPR) protection and enforcement includes an unprecedented focus on pharmaceuticals, with USTR Susan Schwab noting her concerns over the growing problem of counterfeit medicines and the development of market access barriers to US drugmakers.

The US will also be paying more attention this year to the role of Health Technology Assessments (HTAs) in drug pricing decisions around the world, adds Ambassador Schwab.

Increasing production of counterfeit drugs in Brazil, China, India, Mexico and Russia and the sale and distribution of fake medicines in many countries is a growing problem that poses special concerns for consumer health and safety, says the Report. In combating the trade, the USTR particularly urges all nations to do more to regulate and enforce against the unauthorized use of bulk active pharmaceutical ingredients (APIs) in the manufacture of fake drugs and to ensure APIs are not exported for unauthorized use abroad.

Turning to IP protection and health policy, the Report points out that, in its recent-signed free trade agreements (FTAs) with Central America/Dominican Republic, Korea, Morocco, Bahrain, Oman, Peru, Colombia and Panama, the US has “clarified” that FTAs do not impede governments’ ability to take measures necessary to protect public health. This includes the promotion of access to medicines for all, in particular for HIV/AIDS, tuberculosis and malaria and other epidemics, or in cases of extreme urgency or national emergency.

However, the Report is uncompromising in its defence of patents. IP protection is critical to health care systems’ long-term viability in order to encourage rapid innovation, development and commercialization of effective and safe drug therapies, it says, and adds that financial incentives are necessary - no one benefits if research on such products is discouraged.

At the same time, the US is “firmly of the view” that international obligations such as the World Trade Organization's Trade-Related Aspects of Intellectual Property rights (TRIPs) Agreement have sufficient flexibility to allow countries, particularly developing and least-developed nations, to address the serious public health problems which they face.

Turning to US concerns over obstacles to trade, the Report points out that, even where a country’s IP regime is adequate, price controls and regulatory and other barriers can discourage the development of new drugs. These “potentially unfair” market access barriers - which include unreasonable regulatory approval delays, reference pricing and linkages between dispensing and prescribing - are often not fully disclosed to patients or to companies seeking to market their drugs, it adds. To address these issues, a US government task force, which includes the USTR, has been set up to work through FTA negotiations and dialogues with key countries in order to engage “on the most effective way to promote continued innovation in the pharmaceutical sector and enhanced access to innovative pharmaceuticals now and in the future.”

These negotiations so far include:
- 2005’s FTA with Australia, which addressed the “transparency and accountability” of Australia’s drug reimbursement system and created a US-Australia Medicines Working Group, which will meet for a second time in first-half 2008; and
- 2007’s FTA with Korea (KORUS FTA), which includes provisions on market access for pharmaceutical and medical devices “that go beyond those in any other US FTA.” Specifically, the deal includes commitments to: improve access to innovative products and ensure “the transparent, predictable and non-discriminatory pricing and reimbursement” of innovative and generic drugs, devices and biologics; promote ethical business practices; establish a Medicines and Medical Devices Committee; and create an independent mechanism to review pricing and reimbursement decisions.

The US has also held talks with Japan and Germany to discuss its concerns and encourage “a common understanding,” and has established a dialogue on drug issues with China. Moreover, it is watching closely the European Commission’s current investigation of a regulation introduced by Poland in 2006 which, it says, appears to reduce the official maximum wholesale and retail prices for imported drugs by 13% while generally leaving the prices of Polish-made drugs unchanged.

Looking to the coming year, the report says the US government will continue its dialogue with industrialized trading partners including Italy, Germany, Canada and France on pharmaceutical innovation and other issues. In addition, it will pay extra attention to trends in HTAs and their relationship to pricing policies, as “it is important that HTA policies are implemented in a transparent manner and in keeping with international standards of science-based evaluation.” Moreover, issues surrounding consumers’ ability to obtain information about pharmaceutical and other medical products “merits additional attention and dialogue,” it concludes.