Saudi Arabia, which last year made its first appearance on the U.S. Trade Representative’s (USTR) Priority Watch List, is back on the list this year and is being singled out for an out-of-cycle review due to what the USTR calls its “unfair commercial use” and “unauthorized disclosure” of proprietary data submitted for drug approvals.
Despite Saudi regulations that expressly protect against such use of undisclosed test results and other data generated for marketing approval of medical products, the Saudi Arabia Food and Drug Administration (SFDA) has granted approval, since 2016, to domestic companies relying on another company’s proprietary data, according to the USTR’s annual Special 301 report that was released April 29.
In addition, Saudi’s National Unified Procurement Company for Medical Supplies reportedly has awarded national tenders to some of those domestic companies. “The United States has been engaging with Saudi Arabia on this issue, but SFDA’s continued actions and the lack of redress for affected companies have intensified concerns,” the report said.
Saudi isn’t the only country the USTR has its eyes on because of unfair trade practices that disadvantage U.S.-based drug and device companies. Nine other countries joined Saudi in repeat appearances on the Priority Watch List: Algeria, China, Argentina, Chile, India, Indonesia, Russia, Ukraine and Venezuela. The new list is nearly a repeat of 2019, as the only difference is that Kuwait moved from the priority list to the Watch List. The 2020 report also marks the 16th consecutive year China has appeared on the Priority Watch List.
Meanwhile, this year’s Watch List shrunk to 23 countries, most of which are regulars to the report: Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Kuwait, Lebanon, Mexico, Pakistan, Paraguay, Peru, Romania, Thailand, Trinidad & Tobago, Turkey, Turkmenistan, United Arab Emirates, Uzbekistan and Vietnam. Besides the addition of Kuwait, other changes to the Watch List include the addition of Trinidad & Tobago and the removal of Costa Rica, Greece, Jamaica and Switzerland.
Like last year, Malaysia isn’t on either list, but the USTR said it will extend its 2019 out-of-cycle review of the country to ensure it fully resolves concerns about its intellectual property protections.
The Biotechnology Innovation Organization and Pharmaceutical Research and Manufacturers of America urged the USTR in 2019 to name Malaysia as a Priority Foreign Country, a designation reserved for the worst of the worst U.S. trade partners, citing the country’s stated interest in expanding a compulsory licensing scheme for patented drugs.
Also like last year, the USTR didn’t list Australia, Japan, Korea or New Zealand, but it did call them out over continuing policies that can disadvantage U.S.-based drug and device companies and for not paying their fair share for medical innovation.
The ongoing concern in Australia, which affects domestic companies as well, is a delay in notifying drug patent holders, as required by the U.S.-Australia Free Trade Act, of requests by other companies for marketing approval for products that could infringe their patents. Australia’s Ministry of Health is considering proposals to increase the transparency of the notification process and promote the early resolution of potential drug patent disputes, according to the report.
The USTR’s issue with Japan is its pricing and reimbursement policies for innovative drugs and advanced medical devices. For instance, implementation of a cost-effectiveness assessment “may add uncertainty for companies selling highly innovative and high-impact drugs and medical devices in Japan,” according to the report. “Any assessment of health care spending should fairly evaluate all areas contributing to costs in the long term, rather than targeting a particular sector.”
The report also noted that recent changes to Japan’s Price Maintenance Premium (PMP), designed to accelerate the introduction of innovative drugs, create an advantage for domestic companies. PMP calculations that consider such factors as the number of domestic clinical trials and product launches “appear to make it easier for Japanese companies to qualify for the premium,” the USTR said.
The concern in Korea is its implementation of its 2018 commitment, under the Korea-U.S. Free Trade Agreement, to amend its Premium Pricing Policy for Global Innovative New Drugs to ensure nondiscriminatory and fair treatment for imported drugs and devices. “Korea’s implementation of this commitment has resulted in amendments that appear to make it so that very few, if any, companies or products will qualify for premium pricing,” the USTR said.
“It is critical that Korea implement this commitment fully and in good faith, while also addressing continuing U.S. concerns regarding the lack of transparency and predictability and the need to appropriately recognize the value of innovative pharmaceuticals and medical devices in Korea’s pricing and reimbursement policies and their underlying methodology,” the agency continued.
Pricing policies also are a long-standing concern with New Zealand, with the report citing the lack of transparency, fairness and predictability of New Zealand’s Pharmaceutical Management Agency’s pricing and reimbursement regimes, “as well as negative aspects of the overall climate for innovative medicines.”
The report wasn’t all negative. It also touted progress the USTR made in the past year involving drugs and devices:
- The USTR praised provisions in the new U.S.-Mexico-Canada Agreement that will ensure national-level government processes for the listing and reimbursement of drugs and medical devices are transparent, fair and nondiscriminatory, and that they provide full market access for U.S. products. The agreement is scheduled to go into force July 1, 2020.
- It secured commitments from China to establish a mechanism for the early resolution of drug patent disputes so the patent holder can seek remedies before an infringing product is marketed, to provide patent term extensions to compensate for unreasonable patent office and marketing approval delays, and to permit the use of supplemental data to meet the relative patentability criteria for drug patent applications.
- It raised concerns with Argentina over its scope of patentable subject matter and effective protection against the unfair commercial use and unauthorized disclosure of proprietary data generated for marketing approval of drugs.
- It encouraged the United Arab Emirates to issue regulations to protect against the unfair use and disclosure of such data.
- It pressed Indonesia to fully resolve concerns over its patent law, local manufacturing and use requirements, and the grounds and procedures for issuing compulsory licenses.
Compulsory licensing is an issue with several trade partners. Threats to issue or encourage others to issue compulsory licenses “can undermine a patent holder’s IP, reduce incentives to invest in research and development for new treatments and cures, unfairly shift the burden for such research and development to American patients and those in other markets that properly respect IP, and discourage the introduction of important new medicines in affected markets,” the USTR said.
The agency warned that compulsory licensing should not be used as a tool to give advantage to domestic companies or as undue leverage in pricing negotiations. Looking ahead, the USTR said it will continue to monitor compulsory licensing threats not only in Indonesia and Malaysia but also in Chile, Colombia, Egypt, El Salvador, India, Russia, Turkey and Ukraine.