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TPP countries slowly restart formal talks on pharmaceutical IP protections

SINGAPORE -- After roughly a year hiatus, countries participating in the Trans-Pacific Partnership (TPP) talks here restarted formal 11-party talks on pharmaceutical intellectual property rights (IPR), although the nature of that conversation was fairly basic. At the 16th round of negotiations, which wrapped up this week, as well as at the next formal round, TPP negotiators will focus on exchanging information, not text-based negotiations.

At a March 13 press conference, Singaporean chief negotiator Ng Bee Kim said negotiators will not discuss the existing U.S. proposal in this area, nor will they discuss any possible revision of the U.S. proposal, at the next negotiating round, which is slated to take place May 15-24 in Lima, Peru. "For the coming round in Lima, there will continue to be discussion on this issue, but it will not be on textual proposals," Ng said.

The talks here on pharmaceutical IPR also did not delve into the specifics. "Countries shared respective information about their systems, and the delegations have also agreed to continue this exchange of information into the next round with a view to finding possible common grounds on this issue," Ng said. Before this week, TPP negotiators had not met formally to discuss pharmaceutical IPR since the Melbourne round back in March 2012.

Pharmaceutical IPR is one of the most contentious areas of the talks. The U.S. proposal, which focuses on the concept of an "access window," has been roundly rejected by many TPP partners. In response, the U.S. is now in a period of reviewing its proposal, and stakeholders are eager whether and how the U.S. opts to alter its proposal to make it more palatable to other TPP members.

While the comments by the chief Singaporean negotiator this week do not technically rule out the possibility that the U.S. could table a revised legal text prior to the Peru round but not discuss it there, one observer here said that scenario is highly unlikely. It is "impossible to believe" that TPP countries would avoid discussing a new legal text from the U.S. if it were on the table, this observer argued.

With negotiators saying they want to wrap up negotiations this year, however, this latest development does raise questions about when text-based negotiations will resume in this crucial area. After Lima, the next formal round that is now on the schedule will not take place until September, although there observers say TPP partners may schedule another round in July, after Lima and before that September round.

One observer offered several possible explanations for why the U.S. is apparently still holding off on tabling a revision. One possibility is that the administration simply needs more time in its deliberations. Another possible explanation is that Peru, which has the ability to set the agenda for the May round, has refused to allow a discussion on a revised U.S. proposal at that round, and wants to stick only to information exchange on this topic.

A third possible explanation is that TPP countries are aware that Japan may formally enter the negotiations sometime after the May round (see related story), and therefore want to ensure that Japan has the ability to negotiate on this sensitive issue, the observer said. The U.S. may believe that having Japan at the table could help drive a more favorable outcome on pharmaceutical IPR, this source speculated.

Speaking at the March 13 press conference, U.S. chief negotiator Barbara Weisel said the U.S. internal review of its proposal has not yet concluded. "We have been internally discussing what approaches might be possible in the United States and those consultations … are still underway, and until we conclude those discussions internally, we will not be prepared to put forward a proposal," she said.

Weisel did not give any indication as to when the U.S. would table a new proposal. She also clarified that the discussions on pharmaceutical IPR held in Singapore consisted only of an exchange of information to ensure that all parties understand the way in which others handle pharmaceutical intellectual property issues. That input will be valuable in informing the internal discussion in the U.S. about this issue in TPP, she maintained.

According to an industry source, most TPP countries have indicated that they will not be in a position to reply to the U.S. proposal until its missing pieces are tabled, including on biologic drugs. This source said it is unclear whether the U.S. internal review of the proposal will result in a revision, or merely a decision on how to fill in the missing pieces of the proposal as it now exists.

Sources said negotiators from other TPP countries are beginning to speculate that the U.S. may end up proposing some sort of "special and differential treatment" in a revised pharmaceutical IP proposal that would apply different standards to developing countries and developed ones.

Under this scenario, the U.S. could propose applying the stronger patent protections of the U.S.-Korea free trade agreement to developed countries in the TPP, while developing countries would be subject to the more flexible "May 10" standards included in U.S. FTAs with Peru, Panama and Colombia.

But this would require the U.S. to specify which TPP partners would be considered "developed" for the sake of the IP chapter, and sources said countries like Chile and Singapore would likely oppose being put in that category if it meant they had to adhere to the higher standard.

U.S. business groups, which favor the IP standards of the Korea FTA, in general oppose the idea of special and differential treatment although they support giving developing countries a transition period to phase in their TPP obligations, when necessary.

In general, the industry source said the U.S. has held bilateral consultations over the past several months with TPP partners on its proposal proposal, which has laid the groundwork for the U.S. to move forward in this area. Those consultations have yielded useful information in terms of what are the specific problems or sensitivities certain countries have regarding the proposal, as well as what sort of IP protections they already provide, this source said.

This will help U.S. negotiators see past the "rhetorical" opposition that was expressed by TPP countries when the proposal was discussed in earlier rounds, and to approach negotiations on this issue pragmatically, this source said.

IPR negotiators discussed pharmaceutical issues on March 9 during a session in which Canada and Mexico for the first time provided information about their regimes for protecting pharmaceutical intellectual property. It was the first time Canada and Mexico engaged in talks on pharmaceutical IPR since joined the talks in October. During the March 9 session, other TPP countries also discussed their systems, and some described how they would be negatively impacted by the U.S. proposal, sources said.

The U.S. proposal would allow brand-name drug companies to obtain stronger pharmaceutical patent protections if they sought marketing approval for a drug in a TPP country within a certain period of time after first obtaining marketing approval in another TPP country. The length of this so-called "access window" was never defined in the U.S. proposal, and was a key missing element along with the length of data exclusivity protections for biologic drugs.

In response to a question at the press conference, Weisel said the U.S. has not yet made a proposal on biologics, and the issue was not discussed here. Brand-name pharmaceutical companies are urging the U.S. to propose 12 years of data exclusivity for biologics in TPP, which is the current length of protection under U.S. law.

Malaysian chief negotiator J Jayasiri acknowledged that IP is a sensitive area for his country in the talks. When it comes to the wide range of disciplines being discussed in TPP, "there are areas where current proposals would cause some difficulties for Malaysia," he said. "We would like to see … sufficient flexibilities to accommodate the kind of difficulties that we face, and this includes in areas like intellectual property."

Ng signaled that TPP countries have not yet made a decision on whether to schedule an additional round in July. The initial 2013 schedule agreed upon by TPP countries only called for rounds in March, May and September. "As to whether we will have another round in July, what we will do is, really, we have to consider this question even as we look to build on the positive momentum to try to conclude the [negotiations] in the course of a later date," she said.

TPP countries may want to hold a July round whether or not Japan enters the negotiations, the observer speculated. If Japan were to declare its intent to join TPP this week, and TPP countries then quickly concluded bilateral and group discussions with Tokyo, and the Obama administration were to send its notification to Congress, Japan could potentially be at the table by a July round. If Japan opts not to join the TPP talks, the current 11 partners may still want to hold a July round so they could bolster their chances of concluding a deal this year, the observer said.

The observer speculated that chief negotiators may not have been able to formally announce a July round here because they need to go back to their capitals to work out scheduling and budgetary details. Another observer pointed out that the Islamic holiday of Ramadan begins on July 9 and last through Aug. 7, and that TPP countries would likely want to avoid scheduling a round during that period because Muslim negotiators would be fasting during daylight hours.