Impact of the USMCA on the Medical Device Industry

Awaiting congressional approval, the United States-Mexico-Canada Agreement could reduce duplicative regulations while increasing intellectual property protections, among other changes.

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Since the inception of the North American Free Trade Agreement (NAFTA), trade in medical products expanded nearly 760 percent with 16.5 billion dollars made in 2016. When President Trump announced the re-negotiation of NAFTA, many were concerned about a negative impact on trade. Negotiations have finished, and the “new NAFTA,” re-named the United States-Mexico-Canada Agreement (USMCA)1, remains largely similar to the old agreement. However, the medical device industry has secured victories including recognition of international standards, elimination of duplicative regulatory requirements, and expansion of intellectual property protections.

The USMCA sets out the definition of medical device by country and incorporates by reference each country’s already established definitions for medical devices. Generally, a medical device means instrument, apparatus, contrivance, or other similar article used in the diagnosis, correction, or treatment for human beings or animals.2

USMCA, unlike NAFTA, allots medical devices its own annex.3 This annex allows medical devices to be eligible for assignment to a committee that meets regularly to review each party’s progress or violation(s), allowing grievances to be timely addressed. Each country, and the international community, recognize the importance of regulatory compliance in the design and manufacture of medical devices. Yet the standards and guidance for regulatory compliance is far from uniform.

In the USMCA, the countries committed to avoid duplicative regulatory requirements and coordinate efforts to harmonize regulations with international fora. Just as important, they committed to periodically review whether its respective agencies and their methods are duplicative. Additionally, there was a commitment to providing a more transparent regulatory framework for exporters including proper classification of devices focusing on safety; prohibition of release of sale, pricing, or financial data used in marketing for the device; and a mechanism for improperly labeled devices to be re-labeled at the port of entry rather than being returned to the exporter. Reduction of duplicative regulatory requirements aims to ease the significant administrative burden placed on the medical device industry.

As for intellectual property, the majority of medical devices (or rather their components) are manufactured in Mexico while Canada remains a major procurer of the finished end product.4 Canada has significantly less stringent intellectual property protections for patent holders. There remains a significant disparity between protections afforded by the respective countries; however, the USMCA’s Chapter 20 is a significant step in increasing patent protections for patent holders.

The USMCA requires members to give either due consideration to Patent Law Treaty or adopt procedural standards consistent with the objectives of the Patent Law Treaty. Specifically, the USMCA now allows countries to revoke, nullify, or hold a patent unenforceable for “fraud, misrepresentation or inequitable conduct.”5 USMCA also crucially allows patent applicants to make amendments, corrections, and observations as long as the language does not exceed the scope of the disclosure of the innovation.6 USMCA permits parties to prove patent term adjustments for delays and consideration of patent extension where there is “unreasonable delay” in grating a patent application.“Unreasonable delay” is defined as five years from the date the application is filed, or three years after a request for examination is made, whichever is greater. The agreement affords patent holders the ability to seek compliance with international standards.

This agreement, if approved by Congress, will help to reduce duplicative and wasted regulatory requirements and increase transparency. The medical device industry should see a reduced administrative burden with the reduction and even elimination of duplicative regulatory requirements. Additionally, the medical device industry can seek out increased protections for patents as intellectual property standards harmonize. Patients also benefit by being provided greater access to the latest medical technology.

References

1. United States-Mexico-Canada Agreement, Signed November 30, 2018, available at: https://ustr.gov/trade-agreements/free-trade-agreements/united-states-me...

2. USMCA, Article 12.E.1, Annex 12-E, provides separate definitions for Canada, Mexico and United States. For example, the United States definition is “a product for human use covered as a “device” under 21 U.S.C. § 321(h), as amended.” Available at: https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/12_...

3. USMCA, Annex 12-E, available at: https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/12_...

4. Mihir Torsekar, U.S. International Trade Commission, "Four Key Takeaways from NAFTA's Impact on Medtech," available at: https://www.mpo-mag.com/issues/2018-01-01/view_columns/four-key-takeaway...

5. USMCA, Art. 20.F.3.

6. USMCA, Art. 20.F.6.

7. USMCA, Art. 20.F.9 and Art. 20.F.11(2).

Debra Doby and Michael Siem

Debra Doby and Michael Siem

Debra Doby is recognized nationally as an authority on legal issues involving opioids and cannabis. As member of Goldberg Segalla's Intellectual Property Practice Group, she works to protect the ideas, innovations, inventions, and creative property that have fueled her clients’ successes. This includes litigation and arbitration involving patents, trademarks and copyrights, trade secrets, licensing and portfolio management, and unfair competition — especially in matters of international trade. Drawing on a bachelor's in chemistry from the University of West Georgia, a J.D. and Certificate in International and Comparative Law from Vermont Law School, and an LL.M. focusing on international arbitration and cross-border disputes from Trinity College Dublin, Doby combines her mastery of technical vocabulary and concepts with an intimate understanding of complex cross-border dynamics to advise clients working at the forefront of some of the chief intellectual property issues shaping domestic and international business.

Michael Siem, a partner at Goldberg Segalla, is a nationally renowned intellectual property litigator and registered patent attorney with a focus on complex and high-value patent litigation. Siem has litigated cases in many technological areas, including pharmaceuticals, consumer electronics, chemical processes, computer networks, and biotechnology. He currently serves as lead trial counsel in several ongoing matters representing some of the largest pharmaceutical manufacturers in the world. In addition, Siem's intellectual property practice extends to drafting and filing patent and trademark applications as well as trademark litigation under the Anticybersquatting Consumer Protection Act. He is a graduate of the Illinois Institute of Technology (with a B.S. in Chemical Engineering) and earned his juris doctor at the University of Michigan Law School.

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