[Ip-health] Politico (US) - Leaked: What's in Obama's trade deal

Joanna Keenan joanna.l.keenan at gmail.com
Wed Jul 1 05:23:26 PDT 2015

Politico (US)
Leaked: What's in Obama's trade deal
Is the White House going to bat for Big Pharma worldwide?
By Michael Grunwald

A recent draft of the Trans-Pacific Partnership free-trade deal would give
U.S. pharmaceutical firms unprecedented protections against competition
from cheaper generic drugs, possibly transcending the patent protections in
U.S. law.

POLITICO has obtained a draft copy of TPP’s intellectual property chapter
as it stood on May 11, at the start of the latest negotiating round in
Guam. While U.S. trade officials would not confirm the authenticity of the
document, they downplayed its importance, emphasizing that the terms of the
deal are likely to change significantly as the talks enter their final
stages. Those terms are still secret, but the public will get to see them
once the twelve TPP nations reach a final agreement and President Obama
seeks congressional approval.

Still, the draft chapter will provide ammunition for critics who have
warned that TPP’s protections for pharmaceutical companies could dump
trillions of dollars of additional health care costs on patients,
businesses and governments around the Pacific Rim. The highly technical
90-page document, cluttered with objections from other TPP nations, shows
that U.S. negotiators have fought aggressively and, at least until Guam,
successfully on behalf of Big Pharma.

The draft text includes provisions that could make it extremely tough for
generics to challenge brand-name pharmaceuticals abroad. Those provisions
could also help block copycats from selling cheaper versions of the
expensive cutting-edge drugs known as “biologics” inside the U.S.,
restricting treatment for American patients while jacking up Medicare and
Medicaid costs for American taxpayers.

“There’s very little distance between what Pharma wants and what the U.S.
is demanding,” said Rohat Malpini, director of policy for Doctors Without

Throughout the TPP talks, the Obama administration has pledged to balance
the goals of fostering innovation in the drug industry, which means
allowing higher profits, and promoting wider access to valuable medicines,
which means keeping prices down. U.S. Trade Representative Michael Froman
has pointed out that pharmaceutical companies often have to invest hundreds
of millions of dollars to get a new drug to market, which they would have
little incentive to do without strong protections for the patented product.
But Froman has also recognized the value of allowing much cheaper generic
drugs to enter the market after those brand-name patents expire. In the
U.S., generics now comprise more than five-sixths of all prescription
drugs, but only about one-quarter of drug costs.

Advocates for the global poor, senior citizens, labor unions and consumers
as well as the generics industry have accused the administration of
abandoning that balance, pushing a pharmaceutical-company agenda at the
expense of patients and taxpayers. One critic, hoping to illustrate the
point and rally opposition to TPP in Congress, gave POLITICO the draft
chapter, which was labeled “This Document Contains TPP CONFIDENTIAL
Information” on every page.

U.S. officials said the key point to remember about trade deals is that no
provision is ever final until the entire deal is final—and that major
compromises tend to happen at the very end of the negotiations. They expect
the real horse-trading to begin now that Obama has signed “fast-track”
legislation requiring Congress to pass or reject TPP without amendments.

“The negotiations on intellectual property are complex and continually
evolving,” said Trevor Kincaid, a spokesman for Froman. “On pharmaceutical
products, we are working closely with stakeholders, Congress, and partner
countries to develop an approach that aims to make affordable life-saving
medicine more widely available while creating incentives for the
development of new treatments and cures. Striking this important balance is
at the heart of our work.”

The draft chapter covers software, music and other intellectual property
issues as well, but its most controversial language involves the rights of
drug companies. The text reveals disputes between the U.S. (often with
support from Japan) and its TPP partners over a variety of issues—what
patents can cover, when and how long they can be extended, how long
pharmaceutical companies can keep their clinical data private, and much
more. On every issue, the U.S. sided with drug companies in favor of
stricter intellectual property protections.

Some of the most contentious provisions involve “patent linkage,” which
would prevent regulators in TPP nations from approving generic drugs
whenever there are any unresolved patent issues. The TPP draft would make
this linkage mandatory, which could help drug companies fend off generics
just by claiming an infringement. The Obama administration often describes
TPP as the most progressive free-trade deal in history, citing its
compliance with the tough labor and environment protections enshrined in
the so-called “May 10 Agreement” of 2007, which set a framework for several
trade deals at the time. But mandatory linkage seems to be a departure from
the May 10 pharmaceutical provisions.

In an April 15 letter to Froman, Heather Bresch, the CEO of the generic
drug company Mylan, warned that mandatory patent linkage would be “a recipe
for indefinite evergreening of pharmaceutical monopolies,” leading to the
automatic rejection of generic applications. The U.S. already has mandatory
linkage, but most other TPP countries do not, and Bresch argued that U.S.
law includes a number of safeguards and incentives for generic companies
that have not made it into TPP.

“With all due respect, the USTR has…cherry-picked the single provision
designed to block generic entry to the market,” Bresch wrote.

Generics are thriving in the U.S. despite linkage, saving Americans an
estimated $239 billion on drugs in 2013. But the U.S. is the world’s
largest market, and advocates fear that generic manufacturers may not take
on the risk and expense of litigation in smaller markets if TPP tilts the
playing field against them. One generics manufacturer, Hospira, reportedly
testified at a TPP forum in Melbourne, Australia, that it would not launch
generics outside the U.S. in markets with linkage.

The opponents are also worried about the treaty’s effect on the U.S.
market, because its draft language would extend mandatory patent linkage to
biologics, the next big thing in the pharmaceutical world. Biologics can
cost hundreds of thousands of dollars a year for patients with illnesses
like rheumatoid arthritis, hepatitis B and cancer, and the first knockoffs
have not yet reached pharmacies. The critics say that extending linkage to
biologics—which can have hundreds of patents—would help insulate them from
competition forever.

“It would be a dramatic departure from U.S. law, and it would put a real
crimp in the ability of less expensive drugs to get to market,” said K.J.
Hertz, a lobbyist for AARP. “People are going to look at this very closely
in Congress.”

Drug companies are already pushing for TPP to guarantee them 12 years of
exclusivity for their data regarding biologics, although the draft text
suggests the other TPP nations have not agreed. Jay Taylor, vice president
of the Pharmaceutical Research and Manufacturers of America, said it’s
crucial for TPP to protect the intellectual property that emerges from
years of expensive research, so that drug companies can continue to develop
new medicines for patients around the world.

“These innovations could be severely hindered if IP protections are scaled
back,” Taylor said. “This is especially important in the area of biologic
medicines, which could hold the key to unlocking treatments for diseases
that have thwarted researchers for years.”

U.S. officials would not discuss the status of the TPP talks. But they
suggested the May 10 Agreement did include a milder form of linkage,
although it didn’t prevent regulators from approving generics mired in
patent disputes.  They also believe a 2009 U.S. law included a form of
linkage for biologics, although again, that law's dispute resolution
process for patent issues was not as prescriptive as the TPP draft. And
they cautioned that any pre-Guam draft would not reflect recent
negotiations over “transition periods” that would delay the stricter patent
standards in developing countries like Vietnam.

In any case, Kincaid said U.S. negotiators are determined to strike a
balance between innovation and access in the final product.

“While this is our touchstone, the negotiations are still very much in
process, and the details of a final outcome cannot yet be forecasted,” he

But Malpani of Doctors Without Borders said U.S. negotiators have basically
functioned as drug lobbyists. The TPP countries have 40 percent of global
economic output, and the deal is widely seen as establishing new benchmarks
for some of the most complex areas of global business. Malpani fears it
could set a precedent that crushes the generic drug industry under a
mountain of regulation and litigation.

“We consider this the worst-ever agreement in terms of access to medicine,”
he said. “It would create higher drug prices around the world—and in the
U.S., too."

Joanna Keenan
Press Officer
Médecins Sans Frontières - Access Campaign
P: +41 22 849 87 45
M: +41 79 203 13 02
E: joanna.keenan[at]geneva.msf.org
T: @joanna_keenan


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