The paper provides a critical analysis of certain aspects of the Special 301 Report and process, while focusing on the Israel experience. The main argument raised is that both the Special 301 process and its outcome contain serious flaws. It is suggested that the United States Trade Representative's economic ideology bears an important contribution to the formation of such flaws. Such ideology, in the author's opinion, requires modification.
‘TRIPS’ is the acronym for ‘Agreement on Trade-Related Aspects of Intellectual Property Rights’, which comprises Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization (WTO), dated 15 April 1994. The text of TRIPS is available at http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm.
The 1998 law was amended in 2005, in order to clarify the legislator's original intent (see the discussion under the subheading ‘The need for clarification of the original Israeli PTE legislation - the 2005 Amendment’ in this respect).
4.
Current term of DE protection in Israel: 5.5 years from the date a drug was first approved for use in a ‘recognised country’ (the United States, the EU, Switzerland, Australia, Canada, Japan, New Zealand, Iceland and Norway), or 5 years from the date of registration in Israel, whichever is the earlier. It should be noted that apparently, in practice, the approach taken by the Israeli Ministry of Health (MOH) is that only marketing approvals issued in EU countries which joined the EU before May 2004 (‘the EU-15‘), or EMEA approvals, trigger the counting down of the DE period in Israel. Current PTE formula according to Israeli law: the basis for calculation of the PTE period in Israel is the shortest PTE period granted in a ‘recognised country’ (the countries mentioned above under the DE legislation (only that here the EU member countries are explicitly limited to the EU-15), save for Canada and New Zealand, since these two countries do not provide any PTE). In addition, there exist the following caps: (a) expiration upon first expiration of a PTE in a recognised country; (b) 14 years from first marketing approval for the drug protected by PTE in a recognised country; and (c) up to 5 years of PTE in Israel.
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Other tools include direct pressure from the USTR and the US administration on the Israeli government and legislature (the Knesset) and Israel's desire to join the Organisation for Economic Co-operation and Development (OECD). Israel is keen to join the OECD, and negotiations for its entry are progressing. The OECD does not have a set of detailed IPR requirements. However, both the United States and EU sit on its approval committee. See also the discussion under the subheading ‘The justifications in recent Special 301 Reports for Israel's designation on the PWL’ in this respect).
It should be noted, that for the third consecutive year, countries are mentioned in the Executive Summary of the Special 301 Report that are not included in any of the report's lists.
8.
The USTR describes countries that are placed on the PFC as ‘[c]ountries that have the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant US products’ (see 2008 Special 301 Report, p. 18).
9.
Following the 2008 Special 301 Report the USTR also initiated an Out-of-Cycle Review of Israel. See the discussion under the heading ‘Israel's 2008 Out-of-Cycle Review process’.
10.
The 2008 Special 301 Report states that ‘PFC are potentially subject to an investigation under the Section 301 provisions of the Trade Act of 1974’ (see at p. 18). Such investigation may lead to various trade sanctions (see Section 301(c), 19 U.S.C. §2411(c)). With respect to the PWL, the report uses vaguer terms: ‘Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons relying on intellectual property. Countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the problem areas’ (see p. 18).
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It is a well-known fact that the US is Israel's closest ally, in all aspects of international relations.
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The reader may ask why he would want to spend time reading about the saga of a small country such as Israel. Well, apart from the fact that Israel's international weight with respect to generics far outweighs its size or population, I believe that Israel may be of interest as an example or model of the battles that could emerge in other countries, where a strong generic industry is present, or will become apparent in the future.
13.
No assertion is implied here that any or all other PWL-designated countries deserve (with and/or without inverted commas) to be on the PWL. What is asserted is that Israel clearly provides stronger IPR protection than all other PWL-designated countries, except perhaps for Chile.
See PhRMA Special 301 Submission 2008, pp. 164–165 (Lebanon (which, according to PhRMA, is ‘still relying indirectly on the data supporting the safety and efficacy determinations associated with the innovative product’)); pp. 270-271 (Egypt (which, according to PhRMA, places a time limit on protection against disclosure of pharmaceutical test and other data, and not only against reliance on such data. Israel, on the other hand, places no time limit on protection against disclosure)).
See IIPA's 2008 Special 301 Report, p. 254 and USTR's special 301 Report 2008, p. 42 (Lebanon); IIPA's 2008 Special 301 Report, p. 368 and USTR's special 301 Report 2008, p. 45 (Turkey). IIPA's recommendation to retain Pakistan's WL status was not endorsed by the USTR, and Pakistan was elevated to the PWL in the 2008 Special 301 Report. However, the level of IPR protection in Pakistan in general, and with respect to pharmaceuticals in particular, is vastly inferior to that existing in Israel.
JorgeMaria Fabiana (2007) Trade agreements and public health: Are US trade negotiators building an intellectual property platform against the generic industry? Are they raising the standards to go beyond the US law?Journal of Generic Medicines4: 169–179., doi:10.1057/palgrave.jgm.4950072.
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The connection between the USTR and PhRMA is evident: in addition to the participation of PhRMA on one of the advisory committees to the USTR, there is reported a ‘revolving door’ between USTR and PhRMA senior officials, as well as other US government agencies, PhRMA member companies and so on. See‘Revolving door between the US Government and Industry’, February 2006, http://www.cptech.org/ip/health/politics/revolvingdoor.html The USTR clearly relies heavily on PhRMA's contentions regarding the factual legal situation in foreign countries, and, accordingly, there are high levels of endorsement in the Special 301 Reports of PhRMA's recommended designations, in its annual Special 301 submissions to the USTR. See ‘PIJIP Snapshot of Industry Influence on the 2008 Special 301 Report’, available on the PIJIP ‘Enforcement of Intellectual Property’ page, beneath the heading ‘Special 301 Watch’ and the subheading ‘PIJIP Documents’, http://www.wcl.american.edc/pijip/go/research-and-advocacy/enforcement. Another interest group which makes annual Special 301 submissions to the USTR is the trade association Biotechnology Industry Organization (BIO).
22.
Indonesia, Brazil, Costa Rica, Lebanon, Saudi Arabia and Turkey are some examples of countries which PhRMA recommended in its 2008 submission to the USTR be designated to the PWL, but were nevertheless classified only on the WL in the 2008 Special 301 Report (with Lebanon and Turkey, as aforementioned, even being relegated from the PWL to the WL in this year's report).
23.
In that respect, the US Generic Pharmaceutical Association (GPhA) made the following statement in its 2008 Special 301 Report Submission to the USTR, http://www.ustr.gov/assets/Trade_Sectors/Intellectual_Property/Special_301_Public_Submissions_2008/asset_upload_file142_14484.pdf p. 4, note 5: ‘Moreover, requiring the PTE in Israel to be extended beyond the expiration of the extension of the corresponding patent in the United States would have a significant negative impact on both the US generic market and the end consumer. Such an extended term of protection would prevent the US generic manufacturers from sourcing their active pharmaceutical ingredient from Israel (and other countries)’.
24.
See the discussion under the heading ‘Israel's 2008 Out-of-Cycle Review process’.
25.
As is evident from those justifications (combined with lack of any claim to the contrary by the USTR), the USTR acknowledges that the level of IPR protection for pharmaceuticals in Israel neither amounts to a breach of its international obligations nor falls below established international standards (first and foremost - TRIPS).
26.
See the 2008 Special 301 Report, p. 36. A similar statement was made in the 2007 Special 301 Report.
27.
The US-Israel FTA entered into force back in 1985. The relevant article of the FTA dealing with IPR (Article 14), states that: ‘The Parties reaffirm their obligations under bilateral and multilateral agreements relating to intellectual property rights, including industrial property rights, in effect between the Parties’. It cannot be disputed that Israel is not in breach of Article 14 of the FTA, since, inter alia, at the time of signature of the FTA or upon its entry into force (in 1985), no bilateral or multilateral agreements which could, even remotely, form a basis for demands related to PTE or DE, were in existence. Thus, no such obligations - giving rise to the USTR's demands - were ‘in effect between the Parties‘. It should also be noted that the FTA was signed after the enactment of the Hatch-Waxman Act, which introduced PTE and DE into US law, but did not require Israel to follow that path and adopt similar measures in Israel's IPR laws.
See the 2007 and 2008 Special 301 Reports, at pp. 26, 36 respectively.
30.
Norway, another OECD member, reportedly does not provide even basic patent protection for ‘pharmaceutical products disclosed in Norwegian patents granted or pending prior to 1992, which account for nearly 75% of the Norwegian market.’ (See PhRMA's Special 301 Submission 2008, at p. 216.).
31.
See PhRMA's Special 301 Submission 2008, at p. 121: ‘Effective DE [in Turkey] is reduced to as little as 2–3 years in some cases …’ and ‘[f]or patented products, the protection period cannot extend beyond the period granted for patents in Turkey …’.
32.
It should be noted that IPR standards were not mentioned in the roadmap for the accession of Israel to the OECD Convention, published by the OECD.
The Trade Act was amended in 1994 to enable the USTR to reach a finding that a country's IPR protection is inadequate, even if the country is TRIPS-compliant. See Pub. L. 103–465, 108 Stat. 4939, amending 19 U.S.C. §2411(d)(3), which states, in subsection (A), that ‘An act, policy, or practice is unreasonable if the act, policy, or practice, while not necessarily in violation of, or inconsistent with, the international legal rights of the United States, is otherwise unfair and inequitable’, and in subsection (B), that ‘Acts, policies, and practices that are unreasonable include … any act, policy, or practice … which … denies fair and equitable … provision of adequate and effective protection of intellectual property rights notwithstanding the fact that the foreign country may be in compliance with the specific obligations of the Agreement on Trade-Related Aspects of Intellectual Property Rights’ (19 U.S.C. §2411(d)(3)(A), (B)(i)(II)). The question of the legality of this provision under international public law exceeds the scope of this paper.
36.
Again - the legitimacy of the Special 301 process under international law exceeds the scope of this paper.
37.
It should be stressed that no legitimacy under international law for demanding TRIPS-plus measures from any state should be inferred from the above discussion. As already noted above, such questions exceed the scope of this paper.
See the discussion under the subheadings ‘The Israeli DE mechanism and its objectives’ and ‘The original Israeli PTE legislation and its development’.
42.
See the 2008 Special 301 Report, at p. 36.
43.
High Court of Justice Case 5379/00 Bristol-Myers Squibb Company v. The Minister of Health, Israel Law Reports (PDI)45(4): 447.
44.
The report was issued by the Indian Ministry of Chemicals & Fertilizers, http://chemicals.nic.in/DPBooklet.pdf, The quotation in the text is found at p. 44.
45.
As already mentioned above, apparently, in practice, the approach taken by the MOH is that only approvals for marketing issued in the EU-15, or EMEA approvals, trigger the counting down of the DE period in Israel.
46.
See the 2008 submission of the government of Israel to the USTR with respect to the 2008 ‘Special 301 Review’ (February 2008), at p. 10: ‘The Ministry of Health reports that of the last 37 molecules for which drug data protection was sought in Israel, applications for protection of 26 of those molecules were submitted more than 6–12 or more months after their first registration in a ‘recognised country’ (www.justice.gov.il/NR/rdonlyres/641D6C7D-642D-457F-AE6A-9B6D2165CC4C/0/2008Special301Submission.pdf). Furthermore, global pharmaceutical companies abstain from launching many of their new drugs in Israel altogether. According to data collected by the Israel Manufacturers Association, out of approximately 193 new drugs launched in the United States during the years 1994–2005 (inclusive), 82 drugs were not launched in Israel. Thus, over 40 per cent of the new drugs are being withheld from Israeli patients, including important and potentially life-saving drugs such as Bexxar for cancer treatment, Abilify for schizophrenia and bipolar disorder and the cardiovascular drug, Tenecteplase.
It is important to emphasise that from 1998 to 2003, approximately 15 PTEs were granted according to the linkage mechanism enacted in 1998. No allegation was ever raised during those years - whether by the USTR, PhRMA or by BIO - concerning PTEs granted to PhRMA members in Israel.
50.
Compared, of course, to the interpretation adopted in the said ex parte decision, and ignoring the former interpretation and practice.
SeePresident Obama's memoranda of January 21, 2009 addressed to the Heads of Executive Departments and Agencies concerning the Freedom of Information Act and transparency and open government. Federal Register74(15): 4683–4686.
