[Ip-health] TPP should protect patients, not patents

Elizabeth Rajasingh elizabeth.rajasingh at keionline.org
Fri Jun 12 10:34:25 PDT 2015


TPP should protect patients, not patents
June 12, 2015, 08:00 am
By James Love

The U.S. Congress is poised to give President Obama broad authority to
conclude a binding international trade agreement known as the TransPacific
Partnership (TPP); the latest and most important new trade agreement that
seeks to create new standards for intellectual property that are more
friendly to pharmaceutical companies and other industries.

Basically, the U.S. Trade Representative has proposed a series of measures,
championed by PhRMA members, that lock-in the most pro-industry features of
current law, and add some new things they want, some of them so complicated
few members of Congress even understand what they do.

Among the controversial provisions are proposals to mandate extended patent
terms, require a 12-year monopoly on the evidence used to register pricy
biologic drugs, ramp up the enforcement of rights, make it more risky and
costly to register generic drugs and limit the scope of exceptions to
patent rights.   The TPP would also give drug companies leverage to
influence rules on drug prices atMedicare, as outlined in the most recent
NYT/Wikileaks leak of a proposed Annex on Health Care.
The result is to lock the United States into the spiral of increasing
prices and increased rationing for expensive drugs –putting patients are

Today a number of new cancer drugs are entering the market with very high
prices. For example, Bristol-Myer’s new drug for advanced melanoma,
nivolumab (trade name Opdivo), can cost from $2,500 to $3,700 per week,
depending upon the patient weight. The leading new hepatitis C treatments
retails at $95,000. The newer chronic treatment regimens for HIV are close
to $30,000, per year. Today several treatments for rare diseases are priced
at more than $200,000 per year, some greater than $500,000 per year, and
collectively their cost is significant.

Prices of drugs are escalating faster than the rate of inflation, and
importantly, the U.S population is aging. According to the Bureau of the
Census, by 2015, 14.9 percent of the population will be 65 or older. This
will increase to more than 16.8 percent by 2020 and 20.6 percent by 2030.
[Source here] The number of persons requiring treatments for cancer
increase significantly with age.

Higher drug prices are defended on one ground and one ground only, that
they stimulate more R&D. But high prices are certainly not the only or most
efficient way to finance R&D. For the last three years for which we have
data, less than 8 percent of global pharmaceutical sales has been
reinvested in global private sector R&D. (Link here). Governments could
embrace all sorts of ways to protect or enhance R&D outlays, without
endorsing unsustainable $3,000 per week drug prices. For example, some
years ago, the Department of Health and Human Services insisted that
Bristol-Myers lower the price of cisplantin, a cancer drug developed on a
government grant, by 30 percent, and at the same time, provide $40 million
to fund independent research on cancer drugs. Funding R&D at any level the
Congress or the Executive branch want could be made a requirement for
selling drugs protected by monopolies, and, at the same time, the
government can condition the existence of the monopoly on an obligation to
charge a reasonable price.

Furthermore, we could also make R&D financing part of the trade
negotiations. In 2010, the FDA approved 10 new cancer drugs — the largest
set of approvals for cancer ever. The US also subsidized much of the R&D
for new drugs. One of the subsidies was the Orphan Drug tax credit, which
pays for 50 percent of the cost of qualifying clinical trials. Clinical
trials are the most important expense in the development of new drugs. For
the 2010 cancer drugs, 9 of the 10 products qualified for the 50 percent
tax credit. That tax credit comes at the cost of lower US. tax revenue from
the drug companies on their profits.   Our trading partners contribute
nothing to this subsidy.

Suppose the other TPP members matched the U.S. tax credit, and
collectively, either lowered our costs, or increased the subsidy to a
higher percentage of trial costs.  Or funded more R&D grants, or innovation
inducement prizes?    Focusing trade agreements on R&D, rather than IPR,
would give governments the flexibility to lower drug prices, while ensuring
robust and sustainable sources of R&D, and targeting R&D funding where it
does the most good.

We need trade agreements that allow innovation in the way we fund
innovation, including approaches that completely de-link R&D costs from
drug prices, so patients are no longer at risk to be the hostages in cost
control efforts.

Elizabeth Rajasingh
Perls Research and Policy Fellow, Knowledge Ecology International
1621 Connecticut Ave. NW, Suite 500
Washington, DC 20009
*elizabeth.rajasingh at keionline.org <elizabeth.rajasingh at keionline.org>* |

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