USTR 2018 Special 301 Report: Pharmaceutical and Medical Device Innovation and Market Access

Last month, the Office of the United States Trade Representative (USTR) released its 2018 Special 301 Report (the Report), identifying trading partners that do not adequately or effectively protect and enforce intellectual property (IP) rights or otherwise deny market access to U.S. innovators and creators that rely on protection of their IP rights.  The Report calls on U.S. trading partners to address IP-related challenges with a special focus on the countries identified on the Watch List and Priority Watch List.

Countries identified on the Watch List are:

  • Barbados
  • Bolivia
  • Brazil
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Saudi Arabia
  • Switzerland
  • Tajikistan
  • Thailand
  • Turkey
  • Turkmenistan
  • United Arab Emirates
  • Uzbekistan
  • Vietnam

Countries identified on the Priority Watch List are:

  • Algeria
  • Argentina
  • Canada
  • Chile
  • China
  • Colombia
  • India
  • Indonesia
  • Kuwait
  • Russia
  • Ukraine
  • Venezuela

With respect to pharmaceutical and medical device innovation and market access, the Report details the efforts of the USTR over the last year to engage with trading partners to ensure that U.S. IP owners have a full and fair opportunity to use and profit from their IP, including by the promotion of transparent and fair pricing and reimbursement systems.  In addition to ensuring that trading partners have robust IP systems, the USTR has sought to reduce market access barriers to pharmaceutical products and medical devices, including measures that discriminated against U.S. companies, were not adequately transparent or did not offer sufficient opportunity for meaningful stakeholder engagement.  Additionally, the USTR pressed trading partners to appropriately recognize the value of innovative medicines and medical devices so that these partners can fairly contribute their share to the research and development of new treatments and cures.  USTR activities with respect to specific countries are described in more detail below:

  • Canada and Mexico: Sought strong IP provisions during the renegotiation and modernization of the North American Free Trade Agreement (NAFTA) including seeking provisions that ensure the national-level government processes for the listing and reimbursement of pharmaceutical products and medical devices are transparent, provide procedural fairness, are nondiscriminatory and provide full market access for U.S. products.
  • South Korea: Sought to obtain, through negotiations, improvement and better implementation by South Korea of the U.S.-Korea Tree Trade Agreement (KORUS FTA).  Specifically, the USTR sought to obtain Korea’s commitment to better implement its KORUS FTA commitments to provide fair and non-discriminatory treatment of pharmaceutical products, including imported products, under certain medical pricing and reimbursement programs.
  • Japan: Engaged with Japan in the context of the U.S.-Japan Economic Dialogue to ensure transparency and fairness and address other concerns with respect to pharmaceutical and medical devices pricing and reimbursement policies.
  • China: Pressed China on a range of issues that impact and affect the pharmaceutical sector.  These included: providing for effective protection against unfair commercial use, unauthorized disclosure of test and other data generated to obtain marketing approval for pharmaceutical products, as well as expediting the implementation of an effective mechanism for the early resolution of potential patent disputes.
  • India: Engaged with India to secure meaningful IP reforms on a number of longstanding issues. These issues included:  criteria for patentability and compulsory licensing as well as protection against unfair commercial use, as well as unauthorized disclosure of test or other data generated to obtain marketing approval for pharmaceutical products.
  • Indonesia: Engaged Indonesia to resolve a number of concerns regarding revisions to Indonesia’s patent law. These revisions included:  criteria for patentability, local manufacturing and use requirements and the grounds and procedures for issuing compulsory licenses.
  • Argentina: Engaged Argentina with respect to concerns regarding the scope of patentable subject matter and effective protection against unfair commercial use, as well as unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products.
  • Saudi Arabia: Engaged Saudi Arabia regarding its protection and enforcement of patents and effective protection against commercial use as well as the unauthorized disclosure of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products.
  • United Arab Emirates: Sought confirmation that the United Arab Emirates will continue to protect pharmaceuticals through local procedures and the Gulf Cooperation Council (GCC) patent system.

The Report also highlights concerns regarding IP protection and enforcement and market access barriers affecting U.S. entities that rely on IP protection, including those in the pharmaceutical and medical device industries.  Examples of such barriers by trading partners include:

  • Unfair issuance, threat of issuance, or the encouragement of others to issue compulsory licenses. Trading partners being monitored with respect to such activities include Chile, Colombia, El Salvador, India and Malaysia.
  • Employment of measures that are discriminatory, nontransparent, or otherwise trade-restrictive that have the potential to hinder market access in the pharmaceutical and medical device sectors and which might potentially result in higher product costs. Examples include unreasonable regulatory approval delays and non-transparent reimbursement policies (such as pricing and reimbursement systems which are non-market-based or that do not otherwise appropriately recognize the value of innovative medicines and medical devices).  Trading partners being monitored with respect to such activities include Algeria, Australia, Canada, Japan, Korea, Turkey and New Zealand.

In our next few posts, we will examine in detail the USTR’s findings with the countries on the Priority Watch List.

This post was written by Lisa Mueller.