These were my notes from my talk on Thursday morning at the annual Fordham International IP conference, which is organized by Professor Hugh Hansen. The panel was titled “Examination of TPP & TTIP.”
What is wrong with the TransPacific Partnership (TPP)?
The TPP was negotiated with asymmetric secrecy. Not from industry, but from the public. Nearly all of the real experts in IP policy were in the dark over the actual language of the texts. We delegated too much power to government trade negotiators and to lobbyists.
I note also that lots of people here today, that were shaping the TPP from a Congressional or government position, now work for right holders, and some cases also did before taking government jobs. This bears mentioning when considering the anti-consumer outcomes.
Some of the results are astonishing.
The TPP provisions on damages and other remedies are completely at odds with the U.S. Register of Copyrights report recommendations for limitations for remedies for orphan works. This was raised maybe 50 times with US negotiators from LOC, USPTO and USTR. Ironically, by undermining the development of liability rules based upon limitations on remedies for orphan works, the TPP pushes the USA toward expanded fair use solutions.
The TPP provisions on damages are in conflict with the provisions in the Biologics Price Competition and Innovation Act (BPCIA), on patents that are not constructively disclosed to competitors. The so-called patent dance.
The TPP is at odds with U.S. legal doctrine on state sovereign immunity. Hard to tell what this will be in the future as the Supreme Court is about to change, but it is the law of the land, and an important space for research on patented inventions in state universities, for orphan works, and for educational use of copyrighted works.
The TPP has a number of provisions that were never vetted or justified to the public. For example,
The TPP prohibits governments from requiring information about drug prices or R&D costs in connection with drug registration. Who wants a trade agreement to enforce ignorance of drug prices or R&D costs?
The TPP prohibits governments from mandating open source code for mass market products. The recent problems with Volkswagen software cheating on emissions tests, concerns about backdoors in router software, apps that spy and steal from consumers, and efforts to promote interoperability and competition in select markets, present arguments for more transparency of code, at least in certain areas of public interest. Why was this unvetted provision in a secret negotiation?
The focus on higher drug prices is a mistake. Higher and higher prices leads to more and more rationing and restrictions on access.
We have an aging population.
From 1990 to 2007, the percent of the US population over 65 was basically flat, but since then it has gone up every year, and is expected to jump from 13 percent in 2010, to more than 19 percent in a few years. At the same time we are seeing young people enter the labor force later.
We spend 2.8 percent of GDP on prescription drugs, about 80 percent of what we spend in the military. The current system is not only expensive, but wasteful. Only a small fraction of drug sales is reinvested in R&D, and less in R&D for products that matter.
We are concerned that the TPP ISDS provisions will create risks for the US if the NIH or the Army use its rights in the patents on the prostate cancer drug Xtandi. In this case, a drug invented on US government grants at UCLA is sold by Astellas, a Japan company, for $129,000 per year in the USA, but only $39,000 in Japan or Sweden, about $30,000 in Canada. If the NIH breaks the monopoly, which it has a right to do, under the Bayh-Dole safeguards, will Astellas bring an ISDS case?
The TTIP should not make the same mistakes.
The negotiating text should be public, like WIPO treaties are, at every stage. The EU claims that USTR is the problem here. USTR, why hide the text from the public, when industry lobby groups get the text? And, do you really not want to benefit from the input of the broader and less politically connected experts? Relax, for many issues, only a small number of people can even understand the texts.
On the drug side, it is time for a paradigm shift, to make R&D the focus on the trade agreements, and in particularly, the funding of R&D as a public goods.
The UN Secretary General has appointed a high level panel on access to medicine, which is focusing on the financing of R&D, because the funding of R&D is directly related to access. The most important reform is the progressive delinkage of R&D costs from drug prices, and we expect that to be endorsed by the HLP.
The HLP panel includes the CEO of GSK. He has proposed experimenting with delinkage in connection with the very expensive drugs for rare diseases.
The trade negotiations need to become more knowledgeable about new thinking on paying for R&D for new drugs. It is not only about high drug prices.