[Ip-health] POLITICO: Huge trade deal hinges on Big Pharma protections

Peter Maybarduk pmaybarduk at citizen.org
Thu Jun 4 10:08:17 PDT 2015


POLITICO
Huge trade deal hinges on Big Pharma protections

By Brett Norman and Adam Behsudi
6/3/15 3:41 PM EDT

A class of drugs with the potential to treat intractable diseases like cancer and other killers — as well as to explode health spending globally — is at the center of the toughest negotiations of the biggest trade deal in history.

The pharmaceutical industry has been pressing the Obama administration to demand that these complex and costly drugs receive 12 years of monopoly pricing power around the world. Critics of the trade pact say such unprecedented protection from cheaper copycat versions globally would lock in higher drug costs for poorer countries and prevent the United States from setting its own policy.

The 12-year provision is unanimously opposed by the other 11 nations that would be party to the TPP. International relief organizations have very publicly warned that the deal would mean far fewer people in developing countries would be able to afford life-saving medical breakthroughs.

Yet with the backing of many Republicans and some <http://www.phrma.org/sites/default/files/pdf/year-data-protection-letter.pdf> Democrats<http://www.phrma.org/sites/default/files/pdf/year-data-protection-letter.pdf>, major pharmaceutical companies and their trade associations have thrown down the gauntlet. They insist they’re standing firm on the 12-year provision for biologics, as these highly promising drugs are known. As organic products derived from living cells, they’re typically injectable — in contrast to the traditional prescription pills most consumers get at the pharmacy.

The industry recently garnered a letter<http://www.phrma.org/sites/default/files/pdf/051315-tpp-biologics-letter-to-ustr.pdf> supporting the full period from GOP Sen. Rob Portman, a former U.S. trade representative under President George W. Bush, and 10 fellow Republicans. Some of the administration’s essential allies on the trade pact say they would have to rethink their support if biologics don’t get the full protection.

“I’ll be very upset,” Sen. Orrin Hatch told POLITICO. “I’d have a rough time supporting the bill.”

And then there’s the Obama administration’s own complicated position on the issue.

As part of the ACA, the White House allowed industry a dozen years of exclusivity with the drugs. Since then, however, the administration has repeatedly tried through budget proposals to cut the period to seven years. Agreeing to a dozen years in the trade talks would lock that in at home, too.

U.S. negotiators adopted the 12-year term as their initial position — it is current U.S. law, after all — but the other Pacific Rim countries in the talks are vehemently fighting back. In Washington, many Democrats and AARP oppose it based on the same concerns of affordability and access abroad as well as at home.

Trade Representative Michael Froman, who declined a request to comment for this story, has been quick to respond to lawmakers pressing for the full period by highlighting the huge differences in monopoly protection among TPP participants.

“Around the table, you have five countries that have zero years, four countries that have five years, two countries that have eight years, and we’re 12 years,” Froman testified at a Senate Finance Committee hearing in April.

The TPP trade deal aims to be the largest ever, covering more than 40 percent of the world’s gross domestic product. The pharmaceutical issue is only one among a set of broad new intellectual property rules the agreement would establish. Movie studios, publishers and software companies all have a stake in rules that would set the global standard for decades to come.

The drug industry says it needs the extended protection to recoup biologics’ higher development costs. But even as drug company executives reaffirmed the issue’s priority last month at a Pharmaceutical Research and Manufacturers of America meeting, an industry source said many were taking a broader view of how the overall deal would benefit them.

“I think potentially at the end of the day, we have to look at the totality of the agreement,” he said. “Are we at a better place or a worse place?”

Despite the public pressure for the 12-year lockout, two industry lobbyists said an eight- or nine-year period may be the most that pharma can realistically expect. Some Democrats are pushing for just five years, the same as was given for traditional medications in a 2007 trade deal that House Democrats negotiated with the Bush administration. A House Democratic aide familiar with the negotiations said that seven years would likely be acceptable, though — since that’s considered the target for U.S. law.

The length of the exclusivity period isn’t the only consideration for biologics. Also in play are provisions about when countries will have to comply with the new standards. The definition of exactly what constitutes a biologic drug is on the table, as well.

The stakes are huge. Sales of biologics were $130 billion worldwide in 2013 and are projected to hit $290 billion by 2020, according to<http://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/health-care-current-june2-2015.html?id=us:em:na:hcc:eng:lshc:060215#1> Deloitte. And while drug makers often have patents that are longer than the government-sanctioned monopolies they get under U.S. law after a product is approved, those patents aren’t always honored internationally, especially in developing countries. The guaranteed monopoly pricing would be an added defense against weaker patent laws abroad.

Nongovernmental relief groups like Oxfam; Doctors Without Borders; and amfAR, the Foundation for AIDS Research, have protested that the trade deal could make the drugs unaffordable for many poorer countries — even after accounting for the lower prices that manufacturers regularly negotiate outside of the United States. Doctors Without Borders mounted an advertising campaign in Washington Metro stations last month to decry TPP as “a bad deal for medicine.”

Other critics point to the potential impact closer to home, where changing the amount of time biologics have the market to themselves could also have major economic consequences. The White House estimates that capping the monopoly term at seven years would save $4.5 billion in spending over a decade just for federal health care programs.

Enshrining 12 years in the trade deal would block any future efforts to cut back the protection that was written into the ACA.

“Yes, BIO and PhRMA won in 2010,” Generic Pharmaceutical Association CEO Ralph Neas said, referring to the two biggest industry trade groups. “The important point here is that if BIO and PhRMA get their way in the TPP … then that 12 years would be permanent. That’s why they’re fighting so hard on this.”

Exactly what effect competition will have is unknown. The FDA approved the first generic-like “biosimilar” drug this year, but legal wrangling has so far kept it off the U.S. market. In Europe, where such biosimliars have been available since 2006, the cost in general is about 30 percent cheaper than the biologics they copy, according to some estimates. The European Union provides 10 years of exclusivity for biologics.

With the TPP trade ministers expected to bring negotiations to a close by early July, the protection provision must be resolved soon. Before that happens, President Barack Obama will have to secure fast-track legislation pending in Congress, which would allow him to submit an unamendable trade agreement for an up-or-down vote. Many countries are reluctant to offer their own bottom lines until they know the deal won’t get picked apart by U.S. lawmakers.

House Ways and Means ranking member Sander Levin considers the issues to be integrally linked. The Michigan Democrat fears the TPP discussions are moving “in the wrong direction” and eroding the progress reflected in that 2007 trade deal.

That pact “struck the right balance on medicines between the need to promote innovation and the need to protect public health,” Levin said in a statement to POLITICO. “This is the wrong time for Congress to give up its leverage. … This issue is too important to lives around the globe to fast-track the wrong approach in TPP.”

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