International Trade ineHealth Services:Obstacles and OpportunitiesUniversity of Michigan / WHOSymposium on Telemedicine: International Trade in eHealth Services: Obstacles and Opportunities University of Michigan / WHO Symposium on Telemedicine Matthew S. Yeo Steptoe & Johnson LLP myeo@steptoe.com


Overview: Overview Opportunities and obstacles to int’l trade in eHealth services Trade-Related Issues The Role of the WTO Other Possible Solutions Other Legal Obstacles Jurisdiction Privacy / Security Liability


Int’l Opportunities: Int’l Opportunities Potential int’l markets include: Developing countries Affluent countries with limited native medical expertise and resources (e.g., Gulf States) Private sector markets in countries with overburdened public health care systems & aging populations Remote areas (marine, oil rigs, etc.)


eHealth Opportunities: eHealth Opportunities While there are no reliable figures on export of health services, the U.S. is almost certainly the largest exporter. U.S. health care companies are uniquely situated to provide eHealth services to international markets. Market-driven health care system Lead in electronic commerce business models


Obstacles: Obstacles There are many obstacles to the provision of eHealth services across national borders: Cultural Local traditions concerning health and health care Sociopolitical Public vs. private health care systems Ethical Remote physician/patient relationships Technological Bandwidth Privacy / security / authentication


Obstacles: Obstacles Legal and regulatory obstacles, however, are probably the most immediate: Licensing of physicians Approval requirements for institutional providers Rules governing coverage / reimbursement Privacy / Security Regulations


The Role of the WTO: The Role of the WTO The General Agreement on Trade in Services (GATS) establishes rules governing int’l trade in services, including health care services. The GATS is one of the agreements administered by the World Trade Organization. Should not be confused with: General Agreement on Tariffs and Trade, which governs int’l trade in goods Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), governing enforcement of IP rights (including pharmaceutical patents)


GATS Overview: GATS Overview Most Favored Nation Treatment National Treatment Schedules of Commitments Modes of Supply Domestic Regulation Recognition


GATS: MFN Treatment: GATS: MFN Treatment “Most Favored Nation” Treatment for services and service suppliers. Members must give services and service suppliers from other member countries treatment no less favorable than that accorded to any other country. Subject to exemptions.


GATS: National Treatment: GATS: National Treatment “National Treatment” for services and service suppliers. Members must give services and service suppliers from other member countries treatment no less favorable than that accorded to national services and service suppliers. Applies only where a member has made commitments with respect to a particular service in its “GATS Schedule.”


GATS: Schedule of Commitments: GATS: Schedule of Commitments Each GATS Schedule lists, by service and “mode of supply,” the specific market access and national treatment commitments that a country is prepared to make (if any). Members may impose conditions and qualifications on national treatment with respect to specific service sectors.


GATS: Modes of Supply: GATS: Modes of Supply Mode 1: Cross-border Use of Internet to provide health services across national borders Mode 2: Movement of Persons Patient travels abroad to receive health services Mode 3: Commercial Presence Construction of hospitals abroad Mode 4: Movement of Service Providers Doctors seek jobs abroad


GATS: eHealth Commitments: GATS: eHealth Commitments 49 WTO members have made some form of commitment in Medical & Dental Services (in one or more modes). eHealth is almost entirely a “Mode 1” service (i.e., cross border). 23 WTO members have either a full or limited commitment for Mode 1 supply of Medical & Dental Services. Many members made no commitment in Mode 1 due to “technical infeasibility.”


GATS: Domestic Regulation: GATS: Domestic Regulation In sectors where specific commitments undertaken: Members must administer domestic regulations “in a reasonable, objective and impartial manner.” Members must provide “adequate procedures to verify the competence of professionals of any other Member.”


GATS: Recognition: GATS: Recognition Members encouraged to grant recognition to licenses and certifications obtained in other countries. Wherever appropriate, recognition should be based on multilaterally agreed upon criteria. Calls on members to work toward “common international standards” for services and professions.


GATS: Next Steps: GATS: Next Steps Progressive liberalization of service commitments in subsequent rounds U.S. should make Mode 1 commitments in health services a priority “There is a great potential for cross-border provision of health and related services, including remote diagnosis and treatment. This was not necessarily obvious during the Uruguay Round… but it is a commercial reality now. This is an area where WTO members could consider additional liberalization…” (U.S. submission to WTO, 1998)


GATS: Next Steps: GATS: Next Steps Council for Trade in Services should develop rules to prevent licensing standards from acting as unnecessary barriers to trade Objective and transparent criteria No more burdensome than necessary Licensing procedures should not act as restriction on supply of service Work already done for accountancy standards Work underway for “horizontal” rules


GATS: Next Steps: GATS: Next Steps The U.S. will have a very difficult time making the case for liberalization until it has its own house in order. State licensing requirements for lawyers have been a significant obstacle to liberalization of legal services. Need national certification standards that could be applied even-handedly to foreign service providers. Also, need to be mindful that regulations like HIPAA can act as barriers to trade.


Other Possible Solutions: Other Possible Solutions Unilateral Approaches Bilateral and Multilateral Mutual Recognition Agreements Progressive Harmonization


Unilateral Approaches: Unilateral Approaches Malaysian Telemedicine Act of 1997 Allows foreign physicians to practice telemedicine with a special certificate, or under the direction of a licensed practitioner. Solution is only plausible for countries that have a clear need to import health services.


MRAs: MRAs Negotiate bilateral or multilateral mutual recognition agreements. The GATS imposes certain disciplines on the negotiation of recognition agreements. Other countries with comparable standards must be allowed to join Should not act as disguised restriction on trade Separate int’l agreement on eHealth? Int’l Bar Association project


Harmonization: Harmonization Progressive harmonization of licensing standards Trilateral Initiative for North American Nursing Development of international criteria would provide basis for stronger GATS disciplines. A difficult and long-term enterprise, as evidenced by the U.S. experience with state telemedicine licensing issues.


Outlook: Outlook Widespread liberalization in health services trade will take many years. Focus should be on incremental steps: Expanded GATS commitments Mutual Recognition Agreements Discussion of int’l standards Pilot projects G8 project Getting our own house in order


Outlook: Outlook In the interim, eHealth applications will focus on: Countries that permit or do not regulate EU countries will be toughest Focus on Africa, Asia, Latin America Unregulated “D2D,” clinical, and diagnostic services


Jurisdiction: Jurisdiction Jurisdictional Issues Which country has jurisdiction to regulate cross-border providers of health services? How can countries enforce against remote providers? Many countries are likely to require “sponsorship” by licensed providers. Direct provision of services to patients very problematic.


Privacy / Security: Privacy / Security Cross-border provision of health services will often entail movement of personally-identifiable health information. Providers may need to consider privacy and data security laws of both the patient’s country and the provider’s country.


Privacy / Security: Privacy / Security Possible solutions: Explicit consent of patient for transfer of information Foreign certification of provider’s laws and regulations E.g., EU certification of HIPAA? Provider participation in compliance scheme E.g., “Safe Harbor” status under EU Data Protection Directive


Liability: Liability How to handle liability for cross-border provision of eHealth services? Countries may impose insurance requirements for foreign providers. Again, “mediated” relationships through local health care providers is the key.


The End: The End Matthew S. Yeo Steptoe & Johnson LLP myeo@steptoe.com