Working Paper Number 61
`June 2005
`
`Patents, Price Controls and Access to New Drugs:
`How Policy Affects Global Market Entry
`By Jean O. Lanjouw
`
`Abstract
`
`We consider how patent rights and price regulation affect whether new drugs are
`marketed in a country, and how quickly. The analysis covers a large sample of 68
`countries at all income levels and includes all drug launches over the period 1982-2002.
`It uses newly compiled information on legal and regulatory policy, and is the first
`systematic analysis of the determinants of drug launch in poor countries. Price control
`tends to discourage rapid product entry, while the results for patents are mixed. There is
`evidence that local capacity to innovate matters and that international pricing externalities
`may play a role.
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`Exhibit 1138
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`Patents, Price Controls and Access to New Drugs:
`How Policy Affects Global Market Entry1
`Jean O. Lanjouw
`
`April 19, 2005
`
`
`
`
`
`
`Abstract
`
`
`We consider how patent rights and price regulation affect whether new drugs are marketed in a
`country, and how quickly. The analysis covers a large sample of 68 countries at all income levels
`and includes all drug launches over the period 1982-2002. It uses newly compiled information on
`legal and regulatory policy, and is the first systematic analysis of the determinants of drug launch
`in poor countries. Price control tends to discourage rapid product entry, while the results for
`patents are mixed. There is evidence that local capacity to innovate matters and that international
`pricing externalities may play a role.
`
`
`
`
`1 The author is an Associate Professor, Agricultural and Natural Resources Department, University of California
`at Berkeley, and a Non-Resident Senior Fellow at the Center for Global Development and the Brookings
`Institution. This paper was prepared for the Commission on Intellectual Property Rights, Innovation, and Public
`Health of the World Health Organization. Daniel Egel and Margaret MacLeod, the Brookings Institution, and
`Rachel Menezes, the Center for Global Development, provided superb research assistance. Early work was done
`while I was resident at those institutions and I appreciate their encouragement. I thank Bronwyn Hall, Peter
`Lanjouw, Mark Schankerman, John Strauss and Brian Wright for their useful suggestions, as well as seminar
`participants at U.C. Berkeley, Stanford, Yale, the University of Arizona and the World Bank. The World Bank
`and the Brookings Institution provided funding for the purchase of data used in this project.
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`I. Introduction
`The pharmaceutical industry faces a rapidly evolving legal and regulatory environment.
`Governments, drug companies and advocacy groups continue to engage in a decade-long battle over
`the type of patent rights that will be available to industry, particularly in poor countries. Particular
`criticism has focused on the intellectual property standards required of members of the World Trade
`Organization—standards known as Trade-Related aspects of Intellectual Property, or TRIPS, rules.
`International drug pricing is also coming under the spotlight. Americans have accused the Europeans
`and Canadians of using their price control systems to free-ride on U.S. consumers, and the United
`States is starting to push for regulatory changes in bilateral trade negotiations.2 These pressures may
`well generate future reforms on a broad scale.
`The choices made by each country about its patent system and price regulation will have many
`ramifications – influencing the size of future investment in medical research, the availability of the
`resulting therapies, how the financial burdens are distributed across countries, and finally the health of
`consumers. We focus here on how policy choices affect whether new drugs are marketed in a
`country, and how quickly. Because there are fixed costs associated with launching new products, it
`would seem intuitive that both weaker price regulation and stronger intellectual property would
`facilitate entry by virtue of increasing firm profit.3 However, what makes this an interesting economic
`problem is that intellectual property can have a second important effect. While patents indeed make
`local markets more attractive, they also convey control over launch decisions to multinational firms
`with global interests.4 Multinationals may delay or even avoid launching drugs in lower-priced
`countries because they are concerned about the implications for pricing in other markets. If they
`hesitate, and patent rights block otherwise willing local entrants, then strong patent rights may actually
`reduce product entry.
`
`
`2 See, for example, the speech by Mark McClellen, then Commissioner of the U.S. FDA, before the First
`International Colloquium on Generic Medicine. September 25, 2003, Cancun, Mexico. Available at
`http://www.fda.gov/oc/speeches/2003/genericdrug0925.html (accessed 12/28/03). Most recently, the U.S.
`insisted that reforms to Australia’s domestic price and reimbursement system be a part of the AUS Free Trade
`Agreement (see www.aph.gov.au/Senate/committee/freetrade_ctte for details and discussion. Accessed
`1/24/05). Suggesting a future agenda, see “Ten Questions,” Pfizer Annual Review 2004: “We believe
`Americans carry an unfair share of the global cost of biomedical research. We think that’s a serious issue that
`should be near the top of the global trade agenda.”
`3 Local fixed costs include obtaining marketing approval from the country regulatory authority and educating
`doctors and patient groups about the drug’s benefits. These costs can be sizeable, particularly for the first entrant.
`4 While in principle smaller local firms could develop new drugs, in fact multinationals hold almost all product
`patents. Some 86% of the applications for product patents in India in 1995 were submitted by inventors with a
`non-Indian address (CDRI, 1996) and in most developing countries the share is far higher. As firms based in
`developing countries also begin to invest in the development and patenting of new products they will have the
`same global marketing incentives and constraints faced by the current multinationals.
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`Although the pricing of patented pharmaceuticals has attracted a great deal of attention
`recently, the question of whether new drugs are marketed at all, remarkably, has not.5 This is
`significant given that less than one-half of the new pharmaceutical molecules marketed
`worldwide are sold in any given country – whether rich or poor. Even those drugs that are
`eventually marketed in one country frequently appear on pharmacy shelves only six or seven
`years after becoming available to consumers elsewhere.6 Both price regulation and intellectual
`property rights influence these outcomes. The CEO of Pfizer, Hank McKinnell, frankly
`acknowledged this point some years ago when he threatened that the company would withhold
`new treatments from France unless the government allowed higher drug prices (Financial
`Times, December 10, 2001).
`When considering the effect of patent rights it is important to distinguish two main
`types: those that protect of methods of manufacture (“process patents”) and those that protect
`pharmaceutical products (“product patents”).7 Process patents are relatively weak. While one
`firm’s patents on methods for producing a molecule might give it a monopoly for a time, a
`second firm can legally devise (and patent) a new method and come into the market. Indeed,
`countries have purposefully chosen a “process-only” patent regime for pharmaceutical
`innovations in order to foster a domestic industry based on inventing around originators’
`manufacturing processes.8 Although relatively weak, process patents may nevertheless
`encourage product entry by slowing down the arrival of competitors, allowing firms to cover
`fixed entry costs.
`The ambiguity arises with product patents because these concentrate control in the hands
`of a single innovating firm. In the debate preceding the TRIPS Agreement it was argued that
`countries refusing to grant product patents were failing to get many newer drugs precisely
`because of the threat of follow-on imitative competition. If innovator firms could be assured of a
`local monopoly, it was suggested, they would find it attractive to launch more products. In the
`presence of externalities, however, this argument is no longer obvious.
`
`
`5 Although when Gilead Sciences recently offered to expand to 95 the number of countries eligible to receive its
`key anti-retroviral drug “at cost”, the offer was called “disingenuous” by the NGO Doctors without Borders
`because the firm has been supplying only 22 of the original 68 eligible countries. San Francisco Chronicle,
`March 18, 2005.
`6 A “drug” refers to a chemical entity in any of its presentations – e.g. tablets, capsules, liquid.
`7 Some countries also give additional protection to new formulations and new uses of existing products.
`8 India’s rejection of its adopted colonial British patent code in 1972 in favor of a system allowing only short (5-
`7 year) process patents for drugs provides an example. With only process patents available, the multinational
`subsidiary Glaxo India faced several local competitors from the first day that it marketed its blockbuster drug
`ranitadine (Zantac); while Cipla was manufacturing a version of the Pfizer drug Viagra shortly after the drug’s
`global launch (Wall Street Journal, July 10, 1998).
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`Several mechanisms can generate international pricing externalities. Some developed country
`price regulators explicitly use cross-country comparisons to establish ceiling prices. U.K. drug
`prices, for example, are used as an international reference by regulators in Austria, Canada,
`Greece, Ireland, Italy, Luxembourg, Netherlands and Portugal (Bloom and van Reneen, 1998; see
`also Jacobzone 2000). Physical arbitrage across country borders can also erode prices in higher-
`priced markets. Arbitrage is legal among E.U. member countries, which pushes prices in the
`direction of uniformity although it has not resulted in a single price across markets (Kanavos, et.
`al., 2004; Ganslandt and Maskus, 2004). Arbitrage between most countries is illegal.
`Nevertheless there are concerns about black market movements, with occasional high-profile
`stories involving developing countries and a soaring trade between the U.S. and Canada.9
`
`The behavior of political interest groups can also push prices toward uniformity. Consumers
`forcefully object to paying prices that are higher than those they see being charged to consumers
`elsewhere, giving firms and their regulators reason to fear a political backlash if obviously
`different prices are in place. A growing literature examines how firms may distort behavior to
`avoid the imposition of regulation or soften its effect. Glazer and McMillan (1990), for example,
`model pricing by a monopolist where the firm may choose to forestall regulation by setting a price
`closer to that desired by the regulator. Erfle and McMillan (1990) find that oil firms limited their
`price increases during the 1979 oil crisis. Price restraint was more pronounced on more visible
`fuels like home heating oil and more likely among large and visible firms. Ellison and Wolfram
`(2004) show that pharmaceutical firms acted collectively to limit price increases during a period of
`intensive political discussion of health care reform in the U.S. Firms identified as particularly
`vulnerable to regulation were more likely to engage in price restraint and lobbying. Examining the
`stock prices of credit card firms, Stango (2003) finds that announced rate cuts were less damaging
`to returns when the announcements followed a regulatory threat. Again this result was more
`pronounced for politically visible firms.10
`
`Identifying the precise mechanisms generating pricing externalities across markets is not the goal
`of this paper. Rather, the concern here is whether product patents can reduce access to new drugs
`by making firms that care about externalities – whatever the source – more important players.
`
`
`9 For example, “HIV Drugs For Africa Diverted to Europe,” The Washington Post, October, 2002; “Europeans
`Investigate Resale of AIDS Drugs,” New York Times, October 29, 2002.
`10 Behavior beyond pricing may also be affected. For example Maxwell, Lyon, and Hackett (2000) examine
`firm efforts to deter consumer mobilization, and thereby government-imposed regulation, by voluntarily limiting
`their pollution output.
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`Whether access is, in fact, limited is also a key question for interpreting the welfare implication of
`firms’ inability to fully price discriminate across countries.11
`
`Two examples of firm behavior in this environment are instructive. In the late 1980s, Bayer chose
`not to introduce its new antibiotic ciprofloxacin in India. To do so it would have needed to price
`the product very low to be competitive in that market, at a time when the firm was negotiating
`prices in its more important markets. Instead, ciprofloxacin was introduced in India three years
`after its world launch by the Indian firm Ranbaxy. However, eight years after the drug’s global
`launch and long after the entrance of a multitude of local producers, Bayer finally entered the
`Indian market (interview with Bayer executive, India, 1997). More recently, GlaxoSmithKline
`and Pfizer have cut back supplies of their products to Canada to prevent drugs from leaving for the
`United States – where they damage the higher prices that the firms enjoy in that country.12 In
`both of these situations the multinationals found it profitable to engage in a local market at a low
`price. Their reluctance to do so clearly stemmed from the potential implications for their profits in
`other markets. What is particularly notable in the story of ciprofloxacin is the further suggestion
`that pricing externalities may become less acute later in the product lifecycle.13
`
`Given the considerations raised here, one would expect to see three types of entry into
`poorer country markets. Firms interested in producing only for the local or regional market
`should be willing to enter at any time, assuming that expected returns in the local market at least
`cover the fixed costs of entry. Multinationals might enter poorer markets quickly in situations
`where they can set a price that is close to their target price in the major markets. Sales would
`then be limited to the local elite. Finally, one might see multinationals waiting for some time
`after the global launch of a new product, and then entering developing country markets with a
`low price that allowed them to capture market share. Which of these strategies are feasible and
`likely will be influenced by price regulation and the intellectual property regime.
`To date there has been little analysis of the determinants of international drug launches.
`Danzon, Wang and Wang (2005) examine launch data from 25 major markets for the years 1994-1998,
`and a selected sample of 85 new chemical entities (NCE). They are specifically concerned with the
`
`
`11 Maleug and Schwartz (1994) show that uniform pricing by a monopolist yields lower global welfare than
`third-degree price discrimination when demand dispersion is such that many markets are left unserved under
`uniform pricing. See also Scherer and Watal (2002). This result is accentuated if one allows for global
`equity concerns and differences in the marginal utility of income across consumers (See Jack and Lanjouw,
`2005, where they apply many-person Ramsey pricing to the problem of global pharmaceutical pricing.)
`12 Wall Street Journal, January 22, 2003; “Pfizer Cuts Supplies to Canadian Drugstores,” The Washington Post,
`April 5, 2005.
`13 One candidate explanation is the fact that controlled prices set in high-income countries in the early entry
`years are typically not renegotiated over time (Jacobzone, 2000).
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`effects of price regulation. Rather than summarizing differences in price control systems directly, they
`use the price for a standard unit in a drug’s therapy class in an earlier year as indicator of the intensity
`of regulation. A similar variable is constructed for expected market size. Both higher prices and larger
`markets are found to have a significantly positive effect on the likelihood and speed of launch.
`Kyle (2004a and 2004b) analyzes 21 OECD countries and much larger set of drug launches,
`including 1577 molecules developed during the period 1980-2002. She focuses primarily on how firm
`characteristics affect launch timing and finds, for example, that domestic firms have a 5 times higher
`probability of launching at home (with domestic status most important in Japan and Italy). A dummy
`for price regulation has a significantly negative effect and she finds that firms are less likely to follow
`launch in a low-price country with launch in a high-price country.
`
`None of these papers consider intellectual property (IP) as a determinant of marketing
`decisions. McCalman (2004) provides an econometric analysis of how intellectual property might
`influence launch decisions – of American Hollywood movies. His data are from 1997-99 covering 37
`countries, and he estimates hazard models for the effect of IP strength on the speed of film launches
`across countries. He finds a non-monotonic relationship with moderate IP associated with the most
`rapid diffusion. There is, in his context however, no scope for pricing spillovers across countries.
`
`This paper analyzes launch patterns across a very large sample of 68 countries over the period
`1982-2002. The paper provides descriptive statistics; and probit and hazard analyses of the likelihood
`and speed of launch. Explanatory variables include those related to the attractiveness of markets and
`local technical capacity. Those of primary interest are newly constructed policy variables for the
`availability and strength of patent protection and the stringency of price control. This is the first
`analysis of pharmaceutical launch patterns that includes developing countries. Their experience is of
`independent interest and provides more variation in the policy variables than is found among OECD
`members.
`II.
`The Drug Launch Data
`The launch data are drawn primarily from the December 2002 “LifeCycle: Drug Launches”
`database constructed by the private vendor IMS Health. The database identifies the month and year
`that a product first has retail sales in a given country, and indicates which entries represent first world
`launches of new chemical entities (NCE).14 For each product launched, it gives the tradename, the
`Anatomical Therapeutic Classification (ATC) code, active ingredient, composition, and firm making
`the launch. Coverage includes entry during the 21 years 1982-2002 in the retail sector and, for some
`countries, the hospital sector also. The Indian market was not covered by IMS during this period so
`
`14 In some cases the same chemical was indicated as being ‘new’ more than once, or was identified as ‘new’ at a
`country launch later than the first launch in the world. In these cases the first appearance is taken as the global
`launch date.
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`we incorporate similar information obtained from the Indian market research company, ORG-MARG.
`The Indian data cover a partial, but broad, set of therapeutic classes – including launches of all
`antibiotics, ulcer and cancer drugs – and includes all products in those classes launched in the Indian
`market during the period 1986-98. The combined dataset covers 68 countries or country groups, 60%
`of which have at least twenty years of information.15 Further details regarding data construction are
`available in Lanjouw (2005).
`
`III.
`Description of Global Launch Patterns
`Table 1 gives the number of NCE’s with a first appearance (global launch date) in each
`year. The first column indicates the number of new “blockbusters”. These are drugs that
`were found among the top 200 in terms of world revenue in 1998 or 2003, or among the top
`100 U.S. revenue earners in 1995 and 1993 (Med Ad News, various issues). The second
`column includes all drugs. There was an increase in the number of new chemical entities
`launched in the mid-1980’s, with some fall off in the numbers in the early 2000’s (perhaps
`due in part to data processing delays). On the whole, however, the number of NCE’s
`appearing each year was fairly similar over the period.
`There were 836 new pharmaceuticals first marketed during the period 1982 – 2002. Table 2
`indicates the location of these first launches. The table includes countries having at least one first
`launch, ordered by income class.16 Two points stand out. First, firms almost invariably launch
`products first in rich country markets. Second, a very large share of all drugs is launched first in Japan
`(and only there – see below).
`Figure 1 gives an idea of the number of countries that an NCE typically reaches. It is based
`only on the 300 NCEs with global launch dates early in the period (1982-1988) to avoid truncation.
`We see that just a very few drugs from that time period were launched worldwide. The mean number
`of countries is 20, the median is 9, and almost 20% of new drugs are marketed in just a single country.
`Of the 54 single-market drugs represented in this figure, 23 were sold only in Japan, 13 only in Italy,
`with the rest scattered across countries. Japan is clearly distinctive – it is the location of 24% of all
`drug launches, but 43% of those marketed in a single country. From 1995 there was a marked
`increase in the number of countries reached within a short span after global launch, so it is likely that
`today the distribution shown in Figure 1 has shifted rightward.
`Table 3 indicates how long it takes for a drug to become available to a country’s consumers.
`Calculations in this table are restricted to the 122 NCEs first launched 1986-92 and assigned to therapy
`classes for which the Indian data are available. There is some truncation for drugs entering after a
`
`15 French West Africa (Benin, Cameroon, Congo, Cote d’Ivoire, Gabon, Guinea, Senegal) and Central America
`(Costa Rica, El Salvador, Guatamala, Honduras, Panama) are aggregated by IMS because they are very small
`markets.
`16 The income classes follow those in the World Bank 2002 World Development Indicators Report. The ranges
`for GNI per capita measured in 1999 U.S. dollars are: Low ≤ $755 < Lower ≤ $2995 < Middle ≤ $9265 < High.
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`long delay because the data end at 2002, but each NCE has at least 120 months of information. It is
`evident that lags tend to lengthen as one goes down the income rankings. The group summary at the
`bottom of the table shows that differences are most pronounced between the high-income countries
`and the rest.17 However, there is also clearly a great deal of variation across individual countries:
`median launch lags range from months (Japan, Switzerland) to over eight years (Latvia, Lebanon).
`There is also considerable variation across products within countries: For example, the difference
`between the 10th and 90th percentile of the lag distribution is over 10 years in Morocco and Peru and
`over 7 years in some of the OECD countries.
`To avoid differing degrees of truncation across years, Table 4 restricts attention to launches
`that occur within 10 years of the first global launch of each NCE. The ten-year span includes most
`market entry, as shown in the previous table. Table 4 includes the 91 “blockbuster” and 462 total
`drugs in all therapy classes first launched during 1982-92 (so India is dropped). The first column, on
`the left side of the table gives the percentage of all drugs that was eventually launched in the row
`country at any point within a ten-year lag. The second column gives the percentage of blockbusters
`eventually launched in each country.
`Considering the first column, the percentage of drugs launched within a ten year lag
`ranges from lows of 19% and 22% (Egypt, Malaysia) to highs of 49% and 53% (Italy, Japan).
`Thus, no consumers anywhere have access to more than about one-half of the new
`pharmaceuticals that enter the world market. The mean (unweighted) percentage is 34.8% for
`the high-income countries, and 29.9% and 28.4% for the middle- and low-income countries,
`respectively. As expected, “blockbuster” drugs that experience high sales revenues in the
`developed world are also launched more frequently in the poorer countries than drugs overall,
`although in no country is the rate for even this more select group close to 100%. The fact that
`drugs are not launched more widely can be due to the availability of substitutes, differences in
`disease patterns across countries, and rejection by some local regulatory authorities.
`The remaining columns of Table 4 give the cumulative distribution of drug launches at
`different lags from one year to nine years. Thus the column headed “3” indicates the percentage of all
`NCE launched within ten years in a given row country that arrived in that market within three years.
`Countries are listed by income group and, looking down this column, we again see that drugs are more
`likely to be launched within three years in the richer countries than in the poorer countries. This is
`highlighted in Figure 2, which shows unweighted averages for each income group. However, the
`pattern is not strong. Israel, at 27%, for example, has a smaller share on the market this quickly than
`either the Philippines or Thailand (44% and 41% respectively). Again we see the large range of
`experience overall. Germany has 75% of its drugs on the market within three years of the global
`launch, Saudi Arabia just 16%.
`
`
`17 The difference for high income countries is not driven by the fact that Japan has a large number of unique
`drugs. Dropping Japan lowers the average number of drugs to 40 and increases the median lag to 28 months.
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`IV.
`
`Most global market entry is done by the “first” firm, defined as the firm that makes the first
`
`global launch of an NCE in a high-income country, or any country for the few NCE launched
`exclusively in the poorer countries. This firm almost surely holds most of the patents associated with
`an NCE and is typically a multinational. A smaller share is done by “other” firms – which may in
`many cases be entry done under license as part of a marketing arrangement and thus effectively
`controlled by the first firm (the data do not allow one to distinguish). “Other” firms may also be
`multinationals.
`Shares for the low- and middle-income countries are shown in Table 5, broken down by type
`of patent regime. Moving from left to right, a stronger patent regime is associated with more of the
`drug launch in a country being done by the first firm. Overall, two-thirds of all drug launches and
`three-quarters of blockbuster launches are done by the first firm. These firms are responsible for about
`80% of the new drug launches in the poorer countries that occur within the first 3 years. That these
`firms enter markets more rapidly is also clear in Figure 3, which shows the timing of drug entry in
`high or lower-income countries conditional on launch being done by the “first” or “other” firm.
`
`The Explanatory Variables
`Annual series were constructed to describe each of the main policy areas:
`Intellectual Property Protection: These include indicator variables for the availability of
`patents on innovative methods of manufacture for pharmaceuticals (process patents), and on
`new pharmaceutical compounds (product patents). Historically, countries have offered either
`no protection in the area of pharmaceuticals, process patents only, or both process and product
`patents. The data include the statuary term of each form of protection, and information about
`whether a country allows for an extension to the patent term to compensate for time spent in the
`marketing approvals process.
`How a country interprets and enforces its patent laws clearly affects how meaningful any
`patent “rights” are to their owners. Unfortunately this is a difficult characteristic to capture in
`data. We use one variable, “strong,” falling between 0 and 1, which takes on a higher value as a
`country limits how patent rights can be curtailed. Specifically, it is the average of non-missing
`values for three other 0/1 indicators: the first equals one if a country will not impose compulsory
`licensing until three years after patent grant; the second equals one if the country has no formal
`obligation to “work” a patent (supply the market); and the third equals one if the country does
`not revoke patents for failing to work if there is such a requirement. This variable was devised
`by Walter Park, who provided the data required for its construction for most countries for each
`five years beginning in 1980 (see Ginarte and Park, 1997, for details). For missing countries, his
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`data were supplemented assuming current values throughout the period based on the legal texts.
`A similar variable composed of enforcement-related indicators was not found to have any
`explanatory power and therefore was not included in the estimations.
`Price Control: Countries approach the control of pharmaceutical prices in a bewildering
`variety of ways. We consider systems of explicit price regulation and summarize the variation
`across countries with two dummy variables – one for the existence of “some” price control
`regulation and the second for “extensive” price control. A price regime is label “extensive” if all
`drugs are regulated, rather than just a subset of the market, or if a country’s price regulation is
`identified by commentators as being particularly rigorous. The set of reports consulted in
`making this determination, and legal texts sourced for relevant IP law, are given in Lanjouw
`(2005).
`
`The legal and regulatory policies of a country result from some process, and this makes
`endogeneity an obvious concern when trying to understand the effects of any policy regime. In our
`case, one might expect firms to lobby hardest to obtain strong patent protection in countries viewed as
`attractive markets for entry, potentially creating a positive bias in estimated relationships.18 However,
`a consideration of history suggests that substantive within-country changes in the patent law can
`reasonably be treated as exogenous for our purpose – certainly in their timing. Such changes tend to
`be forced by the rules of entry into new political groups (e.g., Portugal and Spain joining the EU in
`1992); by newly negotiated standards created at an international level (e.g., many poor countries and
`TRIPS, Mexico and NAFTA); or a vulnerability to trade pressure and the political dynamic of bilateral
`negotiations (Korea, Brazil, and Jordan in the 1980s and 1990s). (See Sell, 2003.) The link to the
`dynamic of trade negotiations is reflected in comments by the body that advises the U.S. Congress and
`administration on IPR and trade, the Industry Functional Advisory Committee on IPR for Trade
`Matters (IFAC-3), in its reports to the US Trade Representative:
`
`CAFTA (the Central American Free Trade Agreement) “mirrors, as closely as possible, the
`Singapore and Chile FTAs in order to establish clear precedents in most key areas of
`intellectual property protection for future FTA negotiations.”
`
`And
`
`“IFAC-3 is particularly gratified that….with high-level agreements with both small
`developing countries in the CAFTA and a strong and mature developed country like Australia,
`it will prove much easier to convince future FTA countries that strong intellectual property
`
`
`18 And lobby they do. For a candid discussion see historical issues of the PhRMA annual report.
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`protection is in the interests of all countries regardless of their economic circumstances.”
`(Italics mine).19
`Price regulatio