[Ip-health] A debate over U.S. pharmaceuticals is snagging the Trans-Pacific Partnership deal

Claire Cassedy claire.cassedy at keionline.org
Wed Aug 12 07:43:49 PDT 2015


A debate over U.S. pharmaceuticals is snagging the Trans-Pacific
Partnership deal

By Editorial Board August 10

FOR THE Obama administration, the heady feeling over congressional passage
of trade-promotion authority in June has given way to at least temporary
frustration. Twelve-nation talks in Hawaii that many thought might produce
a final Trans-Pacific Partnership (TPP) agreement instead broke up at the
end of July with no deal. Sticking points range from a three-way dispute
over truck tariffs involving Mexico, Japan and the United States to market
access for New Zealand’s dairy products in North America. Canada’s election
campaign may paralyze that nation’s ability to cut a deal well into the
fall; and if things drag on much longer, the trade pact could get entangled
in U.S. presidential election politics.

No issue caused more conflict in the latest round of talks — or in the
general political debate over the TPP — than the question of intellectual
property and other protections for the U.S. pharmaceutical industry. To be
sure, the word “protection” wouldn’t seem to belong in a discussion of free
trade to begin with. Many critics of the proposed deal argue that Big
Pharma, abetted by President Obama’s negotiators, is nevertheless trying to
use the TPP to grab greater control of the world market in medicines. This
is not only economically inefficient but also morally repugnant, the
argument goes: The patent infringement and market-access rules U.S. drug
manufacturers are demanding would raise prices for cutting-edge cures in
poor TPP countries such as Peru or Vietnam, and even put pressure on
developed nations such as Australia or New Zealand to weaken drug cost
controls embedded in their single-payer health systems.

The other side of this inflammatory charge is that, to some extent, the
United States already pays more than its fair share of the world’s costs
for developing and distributing new pharmaceuticals. That’s because only
the United States offers drug-makers the ability to recoup the high costs
of discovering cures through a combination of strong patent protection and
pricing power when dealing with government health-care programs such as
Medicare. Other countries’ health-care systems, meanwhile, import products
and sell them for less than they would fetch in the United States. From the
U.S. industry’s point of view, then, some TPP countries are trying to free
ride off a drug-development system that ultimately rests on the higher
prices paid by U.S. consumers and taxpayers.

On this one, Big Pharma has a point — up to a point. The profit-driven
system in this country has its inefficiencies, including high marketing
costs and the like; but on balance it has served the United States, and the
world, well, by promoting more innovation than a state-dominated system of
research probably would have. Brandishing leaked (but now out-of-date)
drafts of the TPP, the Obama administration’s critics say it’s acting as a
“lobbyist” for drug companies — as if governments don’t normally represent
their domestic industry in trade negotiations. The administration’s policy
is to seek accommodations for the poorer TPP countries so that the costs of
patent protection for drug-makers fall on those who can best afford them.
That’s the right goal, and U.S. negotiators should be judged on how well
they achieve it in a final deal, not on the charges and counter-charges
that crop up during the talks.

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