WASHINGTON -- The General Agreement on Trade and Tariffs(GATT) threatens to burden biotechnology with rules thatwould force companies to account for subsidies from federallysponsored research and supply GATT officials with strategicallyvaluable information.

In a recent internal memo, Ruth Kirschstein, acting director ofthe National Institutes of Health, warned that most companieswould cease working with NIH rather than comply.

Carl Feldbaum, president of the Biotechnology IndustryOrganization (BIO), relayed similar concerns to Vice PresidentAl Gore last week in a letter, and late last month, 21 legislatorswrote to President Clinton.

Representatives of the U.S. and 115 other countries arestruggling to meet a Dec. 15 deadline for signing GATT. TheParis-based Organization for Economic Cooperation andDevelopment, a think tank for the industrial nations, estimatedthat the agreement would inject hundreds of billions of dollarsinto world trade.

The threat to biotechnology comes from the so-called "DunkelRules," drafted in 1991 by then-Secretary General of GATTArthur Dunkel. The rules were designed to force Europeangovernments to reduce subsidies to the Airbus or face tariffs toprevent unfair competition with the next generation of U.S.aircraft, Lisa Raines, vice president for government relations atGenzyme Corp., told BioWorld.

Last summer, Raines and about 20 others, mostly from NIH andNASA, attended a meeting on these issues at the office of thepresidentially appointed U.S. trade representative.

For products to be traded tariff-free among signatories, appliedresearch subsidies would have to be limited to 25 percent andbasic research subsidies to 50 percent. This applies to alltechnologies, not just biotechnology, and could stymie theClinton administration's efforts to promote governmentcooperation with industry.

In her memo, NIH's Kirschstein warned that to qualify researchsubsidies as "basic," companies would have to reveal projectgoals and other strategic information to GATT. "Theamendments would enable other GATT (signatories) to requestinformation from NIH on the nature of research subsidies,"according to a source inside NIH.

"Cooperative Research and Development Agreements (CRADAs)and small business innovation research (SBIR) grants, amongothers, could be classified as subsidies," BIO's Feldbaum warnedGore. Even university research grants might be classified assuch, the NIH source told BioWorld.

"There is great concern about these provisions among ...technology and pharmaceutical companies whom we rely on totranslate the billions of dollars the NIH spends annually onbiomedical research into useful products," Kirschstein wrote.

But the problem could be dealt with quite simply, thelegislators told Clinton in their letter. "We would urge you todirect our negotiators to seek to remove the language onresearch subsidies from the final Uruguay-round text pendingfurther study. The existing GATT subsidies language, whichresults from the 1973 Tokyo round, has not and would not posea threat to your technology policy."

As currently constituted, GATT would reduce existingintellectual property problems that biotechnology companiesface, although it is not ideal, Bruce Lehman, the U.S.commissioner of Patents and Trademarks, told BioWorld.

Under the current international treaty, the Paris Convention,many foreign countries can require U.S. drug companies tomanufacture within their borders or lose protection. And somerequire compulsory licensing of drugs to their own genericcompanies, Lehman said.

"(The latter problem) is worse than no patent protection"because a company that wanted to sell its U.S.-based productwould be "infringing on its own patents, the rights for whichhave been transferred," he said.

The Trade-Related Intellectual Property Rights Agreement(TRIPS) would ban those practices, but developing countrieswould have 10 years to phase in the new law, said Lehman.Existing patents that have not exhausted the period ofexclusivity and new patents would be unprotected. "That's toolong, but it's better than what we have right now," saidLehman.

And "whatever happens in Geneva, we are going to continue topress for stronger protection," Lehman added. "So it's not as ifTRIPS is the last word."

-- David C. Holzman Washington Editor

(c) 1997 American Health Consultants. All rights reserved.