PhRMA
Link to submissions here.
Canada
Canadian judiciary has created a heightened standard for patentable utility.
Under Canada‘s heightened utility test, innovators are now required to “demonstrate “or ” soundly predict” the effectiveness of a pharmaceutical “promised” at the time of filing the patent application in order to meet the utility requirement. Such a standard is fundamentally inconsistent with TRIPS, as well as the R&D timeline for pharmaceuticals.
European Union
PhRMA and its member companies are very concerned that current practices of the European Medicines Agency (EMA) and proposals being advanced through the EMA and the European parliament to provide virtually unrestricted access to and publication of biopharmaceutical companies‘ clinical trial regulatory submissions and data will substantially harm patient privacy, the integrity of the regulatory system, and incentives for pharmaceutical research and development.
Test data
On test data, PhRMA targets EU and 27 developing countries:
PhRMA is deeply concerned about the failure of almost all the developing countries on which we report to implement their TRIPS Article 39.3 obligation to prevent unfair commercial use of undisclosed test data. Even the European Union, one of the United States‘ strongest partners in providing robust IP protections, is proposing through the European Medicines Agency a policy of unrestricted access to and publication of clinical trial data that will substantially harm patient privacy, the integrity of the regulatory system, and incentives for pharmaceutical research and development. PhRMA member companies believe it is now time to refocus government efforts on core commercial priorities, and that U.S. commercial interests would be best served by a strong, high-level and consistent commitment to full implementation of TRIPS, including those provisions concerning protection of undisclosed data.
Key trading partners with behavior of concern related to the implementation and enforcement of regulatory data protection include: Algeria, Argentina, Australia, Brazil, Canada, Chile, China, Costa Rica, Dominican Republic, Ecuador, Egypt, El Salvador, Honduras, India, Malaysia, Mexico, Morocco, Nicaragua, Peru, the Philippines, Russia, Taiwan, Thailand, Tunisia, Turkey, Vietnam and Venezuela.
Scope of Patentable Subject Matter
On the issue of scope of patentable subject matter, PhRMA wants action against 14 countries, including Australia, Canada, Finland, and 11 developing countries.
Scope of Patentable Subject Matter – Especially troubling is the recent phenomenon in some countries to undermine IP protections by applying unduly narrow standards of patentability either at the time of the patent application or after the fact in legal disputes concerning the validity of the patent through several mechanisms. For example:
- India has not only narrowed the scope of patentable subject matter in a manner specific to pharmaceutical patents through amendment of its patent law, but has also revoked commercially significant pharmaceutical patents after grant using “hindsight” analyses to claim lack of inventiveness.
- Argentina released new patent examination guidelines in 2012 (currently being considered for codification into law) that specifically prohibit certain types of pharmaceutical patents and add additional patentability criteria for pharmaceutical and agrochemical patents only beyond the requirements of novelty, inventiveness, and utility as set forth in the TRIPS Agreement.
- The Canadian judiciary has created a heightened standard for patentable utility that has so far been applied only in pharmaceutical patent cases.
- In an amendment to Brazil‘s patent law, the health regulatory authority has been given authority to review pharmaceutical patent applications that may present a “health risk.” That review is given equal weight to the patent office‘s review, thereby creating an additional hurdle for pharmaceutical patent applications. Moreover, legislation that similarly grants the health regulator authority over patentability determinations has been proposed in countries like Argentina and Colombia.
WTO Members must make patents available and patent rights enjoyable for inventions in all fields of technology, with limited specified exceptions. In addition, this must be done without discrimination based on the place of invention, field of technology, or whether products are imported or locally produced. Restrictions on the scope of patent eligible subject matter undermine the patenting of important biopharmaceutical inventions, are inconsistent with international standards set forth in the TRIPS Agreement, and, perhaps more importantly, prevent U.S. businesses from realizing the potential of valuable inventions in these markets.
Key trading partners with behavior of concern related to scope of patentability include: Argentina, Australia, Brazil, Canada, China, Colombia, Costa Rica, Ecuador, Finland, India, Peru, Thailand, Vietnam and Venezuela.
Pricing, Reimbursements
The most extensive comments by PhRMA were focused on the topic of pricing and reimbursements of medicines. This included more than 2,800 words in the overview section of the submission, which includes this quote:
a hypothetical 10 percent price drop in Greece would have cost industry $390 million in Greece but $1 billion in Europe (i.e., 2.5 times more) and $2.8 billion worldwide (i.e., 7.0 times more) if all countries re-referencing Greek prices through formal and informal links are included.
Here are Sections D and E of the PhRMA overview, both dealing with pricing and reimbursement issues:
D. Engage on Foreign Government Price Controls and Cost Containment Measures that Undermine IP and Impede Market Access
The Special 301 statute calls for designation of countries with policies that undermine IP and impede market access. This is reinforced by section 301(d)(3)(F)(ii) of the Trade Act of 1974, as amended, which “includes restrictions on market access related to the use, exploitation, or enjoyment of commercial benefits derived from exercising intellectual property rights . . . .”
Because of the United States‘ preeminence in the life-sciences sector, foreign cost containment measures create market access barriers that pose a significant threat to the U.S.-based biopharmaceutical industry, and in turn the U.S. economy. More specifically, these policies have the ability to dramatically impact the industry‘s ability to gain market access to and compete in new and existing markets thereby harming the ability to sustain and create exports, maintain and develop jobs, stimulate future innovation, and more.
Foreign governments are increasingly employing a range of strategies to control prices and contain costs related to biopharmaceuticals. Based on a recent 2012 analysis, approximately 53 countries proposed or implemented cost containment measures impacting the biopharmaceutical sector.25 In fact, the biopharmaceutical sector is unique in that it faces onerous price controls and other related measures in the vast majority of the sector‘s export markets, and in many of these markets the government is the sole pharmaceutical purchaser.
According to a recent study conducted for the Office of Health Economics in London by Garau et al., lower prices mean less income for pharmaceutical companies, ultimately translating into less investment in innovation. The report further notes that lower prices will have a negative impact on incentives for R&D and will ultimately reduce and delay the availability of innovative products in certain countries.26 These conclusions corroborate findings from a 2004 U.S. Department of Commerce Report that concluded price control policies can limit competition in some markets and require national health systems to forego the benefits of certain innovations in reducing health care costs dramatically impacting the U.S. biopharmaceutical industry‘s ability to enter and compete in new markets as well as its ability to compete in existing markets.
In addition to price controls, the biopharmaceutical sector has witnessed a surge in a number of cost containment measures, which in some cases have disproportionately targeted our sector. Such measures often have significant ripple effects in many markets. For example, ad hoc price cuts implemented in one country can directly and indirectly impact the price of medicines in many other markets due to international reference pricing where a government considers the price of a medicine across a set (or “basket”) of countries to determine the price of medicine in its own country. This can create a downward spiral in terms of prices for medicines, and may result in product shortages for medicines patients need. For example, according to a recent report, in 2011 the modeled impact of a hypothetical 10 percent price drop in Greece would have cost industry $390 million in Greece but $1 billion in Europe (i.e., 2.5 times more) and $2.8 billion worldwide (i.e., 7.0 times more)27 if all countries re-referencing Greek prices through formal and informal links are included.28
PhRMA members recognize the significant fiscal challenges that foreign governments face and seeks to be a partner in finding solutions; however, some governments have proposed or implemented cost containment measures without a predictable, transparent, and consultative processes. Such cost containment policies typically put short-term government objectives ahead of long-term strategies that would ensure continued R&D into medicines that patients need most.
Examples of key cost containment measures include ad hoc government price cuts, international and therapeutic reference pricing, mandatory rebates, and many others. Such measures can delay or reduce the availability of new medicines and can contribute to an unpredictable business environment in foreign markets for U.S. companies. Moreover, governments are increasingly engaging in product evaluation methods like health technology assessment as a barrier to market access and a cost
containment tool.Ad Hoc Government Price Cuts – Ad hoc price cuts include arbitrary measures employed by some countries to meet short-term budgetary demands without considering longer-term implications to innovation and other critical factors. For example, over the last few years, Turkey has ratcheted up the mandatory social security discount from 11 percent in 2009 to 41 percent at the end of 2011. These price cuts have not been revoked even though Turkey‘s pharmaceutical spend in 2012 came in significantly under budget.
International Reference Pricing (IRP) – IRP is a cost containment mechanism whereby a government considers the price of a medicine in other countries to establish the price in its own country. The reference price for a medicine is calculated by considering the price of the same medicine across a set (or “basket “) of countries using one of several possible methodologies. While historically used as an informal reference mechanism to double check assumptions and to provide additional input to the price setting process, over time IRP has become a highly damaging “runaway train‘ with ever-more countries adopting and applying it as a rigid cost containment mechanism designed to achieve lowest price.
While the ability of governments to ultimately achieve cost containment through IRP is limited for numerous reasons,29 mounting evidence points to the damaging nature of the policy including a 2010 study by Kanavos et al. which concluded that “by using [IRP], countries can import low price levels and generate rapid savings – however, at the risk of non-availability or delayed market entry of the respective product;30z” and another study by the European Commission concluding that IRP “allows for price arbitrage and is a deterrent to producers [to conduct business in those areas]. “31
If IRP is to be used by a country, its methodology must be balanced and “the application of IRP should be objective and transparent, in order to provide opportunities for assessing its effects, make decision-makers accountable, reduce uncertainty for the pharmaceutical industry, and diminish the risk of discrimination and corruption. “32 Nevertheless, certain countries are in egregious violation of such principles leading to a downward spiral in the prices for medicines with damaging results for PhRMA members.
Therapeutic Reference Pricing (TRP) – TRP is a cost containment mechanism whereby a group of medicines within a country is ultimately designated as a unique cluster of pharmacological-therapeutic equivalents and a maximum reimbursement limit (or reference price) for that cluster is set. TRP assumes that all products used to treat the same condition are interchangeable, without evidence. Treating medicines as if they are identical can harm patients, erode the benefits of patent protection, impede competition, and inhibit future innovation. For example, in Korea, pharmaceuticals with therapeutically and pharmacologically comparable active ingredients (including both innovative and generic medicines) are clustered, and the lowest priced medicine in the group is used to set a product‘s price. In addition to the price cuts previously mentioned, the resulting prices significantly undervalue the cost of developing innovative medicines included in such therapeutic reference groups. Similarly, Finland engages in a similar practice by linking the reimbursement price paid for patented products to the lowest priced generic medicine in the same therapeutic class.
Mandatory Rebates – Rebates are measures whereby payers achieve a lower real purchase cost than what they would have incurred at list price level. In rebate systems, a price reduction is negotiated with the payer while maintaining the official list price of a product. Ad hoc mandatory rebates can negatively impact a company‘s ability to plan ahead, and contribute to creating a highly unpredictable business environment. For example, in March 2010, the German Ministry of Health unexpectedly called for a “temporary ” increase of the mandatory rebate from 6 to 16 percent on non-reference priced medicines. This policy has been implemented since August 2010 and a three year moratorium was put in place through the end of 2013. (Notably the anticipated budget shortfall that was cited to justify the temporary increase of the rebate never materialized. Although the Government has finally issued proposals to reduce the mandatory rebate to 7 percent, these proposals plan to maintain the price moratorium.) Similarly, on August 20, 2011, Spain imposed a mandatory 15 percent rebate on all medicines sold in Spain for ten or more years.
In addition to the more common mechanisms highlighted, numerous additional egregious policies are in play or are under active consideration which hinder market access. For example, India‘s Department of Pharmaceuticals (DoP) Committee on Price Negotiation is considering several new measures including whether the price negotiation of a patented medicine should be linked with its marketing approval. Moreover, the DoP notified and is in the process of implementing the Drug Price Control Order (DPCO) 2013 which sets ceiling prices for essential medicines by taking the simple average of all drugs with a market share of 1% or more by volume. Price controls will not substantially improve access to medicines in India, because lack of access is more a function of insufficient healthcare financing systems and inadequate healthcare facilities;33 even medicines and vaccines which are offered free of charge often do not reach the patients who need these medicines.34 In another example, Colombia continues to layer numerous government pricing and reimbursement control policies on top of one another including one that expands price controls to the private market by applying maximum price provisions based on egregious calculation methods.
Governments are also increasingly using product evaluation methods like health technology assessment (HTA) as a barrier to market access and cost containment tool. HTA is a field of scientific research to inform policy and clinical decision-making around the introduction and diffusion of health technologies. PhRMA believes that research into the clinical benefits of products and the appropriate use of health technology assessments can be valuable in informing treatment decisions between doctors and patients. However, the recent, rapid emergence of HTA systems across the globe has raised great concern among PhRMA‘s member companies as a growing number of countries adopt health technology assessments as a cost containment tool. Many of these systems serve as “gate keepers ” that restrict access to the reimbursed market and thereby undermine patient access to the most effective and often life-saving medicines. For example, approval for reimbursement in Mexico includes a complex system that requires the submission of a pharmacoeconomic evidence for inclusion in the national formulary. Initial data suggests that only approximately one-third of products obtain a positive approval, with an average time to decision of over one year, which prolongs access for patients to innovative treatments.35 We are also troubled by countries that rely on health technology assessments from another country/system without conducting any sort of analysis to determine if the assessment makes sense for the local context. For these reasons, HTA systems can be a significant market access barrier to U.S. companies‘ ability to introduce innovative medicines to new markets.
Further, new medicines can also face various types of system and process- related delays which both prevents timely availability to patients and reduces the remaining patent life of original brands, thereby eroding commercial sales potential before generic competition begins. For example, although legislation requires the Turkish Ministry of Health to assess and authorize the registration of medicinal products within 210 days, the average regulatory approval period exceeded 1000 days, with an average of 934 days in 2012.36 In another instance, China‘s Ministry of Human Resources and Social Security (MoHRSS) has been severely delayed in updating its National Reimbursement Drug List (NRDL). Having only undertaken two substantive updates in ten years (2004 and 2009), market access of new (and existing) medicine has been severely restricted.
In light of these concerns, PhRMA calls on USTR to engage with foreign governments to address key government price controls and cost containment measures that undermine IP and impede market access. PhRMA believes that the U.S. government can play a critical role in addressing discriminatory government price controls and cost containment measures, and highlighting the global benefits for patients that could result from a reduction in key trade barriers related to government price controls and cost containment policies.
E. Ensuring Transparency and Due Process in the Development and Implementation of Regulatory Approval Systems and Pricing and Reimbursement Processes
As noted above, the biopharmaceutical industry is unique in that most foreign governments, as sole or primary healthcare providers, impose burdensome price controls and regulations on the sector. As a result, market access for pharmaceuticals is not only dependent on manufacturers meeting strict regulatory approval standards, but also in obtaining positive government pricing and reimbursement determinations. It is imperative, therefore, that regulatory procedures and decisions regarding the approval and reimbursement of medicines are governed by transparent and verifiable rules guided by science-based decision making. There should be meaningful opportunities for input from manufacturers and other stakeholders to health authorities and other regulatory agencies and a right of appeal to an independent, objective court or administrative body. In particular, proposed laws, regulations and procedures concerning how medicines are approved, priced and reimbursed should be:
Promptly published or otherwise made available to enable interested parties to become acquainted with them.Published prior to adoption in a single official journal of national circulation, with an explanation of the underlying purpose of the regulation. In addition, interested parties (including trading partners) should be provided a reasonable opportunity to comment on the proposed measures. Those comments and any revisions to the proposed regulation should be addressed in writing at the time that the agency adopts its final regulations. Finally, there should be reasonable time between publication of the final measures and their effective date so that the affected parties can adjust their systems to reflect the new regulatory environment.
In turn, specific regulatory determinations or pricing and reimbursement decisions should be:
Based on fair, reasonable, consistent and non-discriminatory procedures, rules and criteria that are fully disclosed to applicants.
Completed within a reasonable, specified time. In some countries there are no deadlines for making decisions on whether to approve new medicines. In others, deadlines exist, but are regularly not met. These delays impede market access, deplete the patent term, and are detrimental to patients waiting for life-saving medicines.
Conducted so that they afford applicants timely and meaningful opportunities to provide comments at relevant points in the decision-making process.
Supported by written reports which explain the rationale for the decision and include citations to any expert opinions or academic studies relied upon in making the determination.
Subject to an independent review process.
In short, it is essential that decisions whether to approve and/or reimburse a new medicine are made in a reasonable, objective and impartial manner.
25 Ross Consulting, analysis for PhRMA, August 2012.
26 Garau, M., Towse, A. and Danzon, P. (2011) Pharmaceutical pricing in Europe: Is differential pricing a win-win solution? Occasional Paper 11/01. London: Office of Health Economics.
27 Estimates are assumed to be upper bound as the analysis made several assumptions including that both formal and informal reference baskets were current; the inclusion of second round effects (i.e., the impact of the country that references Greece), so implicitly assumes two rounds of updating; all countries have a comparable products on the market that can be referenced to the Greek product; and simplification of the impact by determining the average changes based on the number of countries in the reference price rules.
28 Charles River Associates. International Reference Pricing: Relationship Mapping, Re-Referencing, and Economic Spillover Impact. April, 2011.
29 European Commission Report: Cost-Containment Policies in Public Pharmaceutical Spending in the EU (Sept. 2012).
30 Kanavos P, Vandros S, Habicht J, de Joncheere K. Review of the Estonian Pharmaceutical Sector: Towards the Development of a National Medicines Policy, available at http://www.euro.who.int/en/where- we-work/member-states/estonia/publications3/review-of-the-estonian-pharmaceutical-sector-towards-the-
development-of-a-national-medicines-policy (last visited Feb. 7, 2014).31 European Commission Report: Cost-Containment Policies in Public Pharmaceutical Spending in the EU (Sept. 2012).
32 WHO/HAI Project on Medicine Prices and Availability (Working Paper 1: External Reference Pricing). May 2011.
33 “A Study of Healthcare Accessibility,” Dr. DY Patil Medical College, Pune, India, prepared for India Health Progress, Mar. 2011. Wagstaff, Adam, “Health System Innovation in India Part I: India‘s health system challenges,” available at http://blogs.worldbank.org/developmenttalk/health-system-innovation-in-
india-part-i-india-s-health-system-challenges (last visited Feb. 7, 2014).34 “India Turns to Mobile Phones in Bid to Improve Vaccination Rate,” India Real Time/Wall Street Journal (Aug. 4, 2011); Patra, Nilanjan, “”When Will They Ever Learn?”: The Great Indian Experience of Universal Immunisation Programme” (Dec. 2009), available at http://www.isid.ac.in/~pu/conference/dec_09_conf/Papers/NilanjanPatra.pdf (last visited Feb. 7, 2014).
35 AMIIF 2011 Report.
36 AIFD Situation Assessment Survey of CTD Applications (Dec. 2012).