[Ip-health] Politico: Trump’s 'America First' agenda on drug pricing could backfire around the world

Thiru Balasubramaniam thiru at keionline.org
Wed May 9 03:47:58 PDT 2018


Trump’s 'America First' agenda on drug pricing could backfire around the

He’s vowing to take on drug prices at home — but they could go up abroad.


05/09/2018 05:05 AM EDT

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President Donald Trump wants Americans to get lower prices for medicines —
and the rest of the world may pay for it.

His "America First" message on drugs at home, coupled with
pro-pharmaceutical industry policies abroad, could lead to higher costs for
patients around the world — without making drugs more affordable for those
in the U.S.

Trump on Friday plans to deliver his long-promised speech on how to lower
drug costs, addressing an industry he has in the past accused of "getting
away with murder." Global health officials worry he will also target
practices that keep medicines affordable in other countries.

Amid rising trade tensions between the U.S. and key trading partners, Trump
and top administration officials have repeatedly blamed high U.S. prices in
part on foreign countries that take advantage of the significant U.S.
investment in medical research without paying their fair share. Many
nations, including wealthy European ones, negotiate or regulate drug prices
to keep them lower than what Americans typically pay.

“As part of President Trump’s bold plan to put American patients first, HHS
is focused on solving a number of the problems that plague drug markets,
including … foreign governments free-riding off of American investment in
innovation,” Health and Human Services Secretary Alex Azar recently said.

He added that high drug prices can leave crucial medicines out of reach.

“There's little difference for a sick patient between a miracle cure that
hasn't been discovered and one that is too expensive to use,” said Azar, a
former executive at Eli Lilly, which has received its share of criticism
for raising the price of medicines, including insulin.

Foreign governments and international advocates are struggling to reconcile
Trump’s dual messages. He is making a populist call for affordability, but
at the same time U.S. diplomats have been defending the industry’s
prerogatives more than ever in trade negotiations and international

Many European experts view the policies he is crafting on trade, patents,
transparency and intellectual property rights as advancing the drug
industry’s interests overall, affecting rich and poor nations alike. The
United States can’t unilaterally change the sticker price on drugs abroad,
but Trump’s administration can create a climate in which they are likely to

“It’s hilarious. Trump is a businessman, and every businessman knows you
charge what the market will bear,” said Suerie Moon, of the Global Health
Centre, Graduate Institute of International and Development Studies in
Geneva. “It’s a line that we have heard from [pharmaceutical] lobby groups,
that if European countries would pay more, that would be a fairer
situation, but I’ve rarely heard companies argue if Europe paid more, the
U.S. pays less."

WHO to focus global attention on drug prices this month

Trump’s policies may play out in trade pacts like a revised NAFTA
agreement, which is currently being negotiated, or in global forums like
the World Health Organization, which will take up drug pricing at its May
21 annual meeting. WHO has nearly 200 member countries, but the U.S., which
provides about a quarter of its budget, holds outsize sway.

Poorer countries have long struggled to pay for the latest drugs, but
nowadays even richer Western European nations feel the pinch of five- and
six-figure price tags on treatments for diseases like hepatitis C or cancer.

“The pharma pricing issue has really come to a breaking point,” said Ellen
‘t Hoen of the University of Groningen in the Netherlands and a former
executive director of the Medicines Patent Pool, which secures rights to
produce cheap copycats of drugs for poor countries. “There’s a real
appetite for change.”

The White House declined to comment before Trump’s speech except to refer
to the president’s past remarks and his administration’s economic reports.

U.S. Office of the Trade Representative spokeswoman Emily Davis said the
aim is pharmaceutical trade policies that are transparent,
nondiscriminatory “and increase fair market access for American
innovators.” The White House Council of Economic Advisers issued a report
in February that labeled “free-riding” from wealthy countries ”the root of
the problem.”

Some trade policies the administration has favored, like keeping generics
off the market longer than some public health experts advocate, could
actually reduce competition for pricey biologics for diseases like cancer
or rheumatoid arthritis. Delaying the marketing could also set back the
emerging biosimilar industry, meaning less access to cheaper versions of
these new therapies in the U.S. and abroad.

The Trump administration has gone after Colombia and Malaysia for taking
steps that are legal under international agreements to skirt brand drug
patents when public health needs necessitate lower-cost medicines, a
forceful maneuver known as compulsory licensing, in which a country
basically voids a patent so a cheaper generic can be made. The White House
negotiated a South Korea trade deal that opened up its market to U.S.

And the U.S. drug lobby PhRMA cheered Trump for an April report from the
U.S. trade office, which for the first time devoted a section solely to
pharmaceutical intellectual property rights. The list did not ultimately
include the European Union, despite PhRMA’s request that it be put on
notice ahead of proposed changes to medical IP incentives, due later this
month. However, the report did name-and-shame more than a dozen countries —
including close partners like Japan and Canada — based on complaints about
pharma patent protections.

Researchers at the Center for Health Policy and Outcomes at Memorial Sloan
Kettering Cancer Center empirically tested Trump's claim that the high U.S.
prices are required to fund research and innovation. They found that drug
companies earn “substantially more” than what the industry spends on R&D
and concluded that drug-makers have room to lower U.S. prices without
raising them overseas, and still maintain their R&D investments.

Waiting for copycat medicines

And critics say Trump’s international pharmaceutical agenda could have
ramifications at home.

The “trade agenda doesn’t necessarily seem to be synced up with the access
to affordable medicines agenda,” said Jeff Francer, senior vice president
and general counsel of the Association for Accessible Medicines, a generic
drug lobby.

He notes that if a renegotiated NAFTA deal grants pricey biologics 12 years
of monopoly protection, not only would Mexico and Canada have to wait
longer for cheaper copycat medicines but the U.S. wouldn’t be able to
change its own law to get biosimilars to market sooner. That 12-year
standard was put in place in Obamacare, but some Democrats have been
pushing to shorten it.

Francer also pointed out the risks in Trump’s proposal to slap billions of
tariffs on Chinese imports, including ingredients used to make finished
medicines like insulin, antibiotics and vaccines in the U.S. While many
financial analysts doubt the Chinese tariffs would have a big impact on
U.S. prices, they do worry that the U.S. could spread this policy to
countries like India that are more critical to the U.S. generic drug
industry. The administration has already criticized India for imposing
price caps on medical devices used to treat heart disease and has said it
is looking at whether to revoke special import status India gets in the
U.S. as a result.

It’s not unusual for U.S. presidents from either political party to
advocate for strong intellectual property protections for drug companies
overseas. The Obama administration, for example, pushed for 12 years of
biologic medicines exclusivity in the Trans-Pacific Partnership trade
agreement. Obama officials also went to bat for the drug industry when
low-income countries tried to issue compulsory licenses to break patents
and make cheaper medicines for diseases like cancer. But advocates say
Trump’s backing of this status quo is notable, given his strident populist

“We were sort of back in the ‘90s with the intellectual property maximalist
agenda,” ‘t Hoen said.

Trump has also brought the global pharmaceutical debate into the domestic
dialogue. He’s gone to the American people and blamed other countries for
high prices in a way that past presidents did not.

“The Trump administration has been consistent and explicit about its stance
that the lower prices that some countries manage to pay are a problem to be
fixed rather than a practice to be studied for possible benefits at home,”
said Peter Maybarduk, director of Public Citizen’s Access to Medicines

Others say that Trump has gone further than past presidents by shepherding
drug industry interests abroad in areas besides trade. At a WHO meeting in
January, the administration fought ideas like greater transparency about
R&D spending — an idea that has gotten some bipartisan support in Congress.
They portrayed it as “some big attack on the pharmaceutical industry,” said
Jamie Love, director of Knowledge Ecology International, a nonprofit that
pushes for broader access to medical technology.

Garrett Grigsby, director of HHS’ Office of Global Affairs, told a meeting
of the WHO executive board that “requiring companies to attempt to
calculate and then disclose research and development costs are impractical
and unlikely to be effective.” He added that it could even prompt drug
companies to abandon risky research that could benefit "the vulnerable
communities we are meant to serve and humanity as a whole."

Defenders of the Trump agenda argue that strong intellectual property laws
and reimbursement for medicines overseas are critical for the new drug
pipeline, which requires millions, even billions of dollars.

“Innovators and creators need to be fairly compensated for their work,”
said Brian Pomper, executive director of ACTION for Trade, which includes
business groups and the two major U.S. drug lobbies, PhRMA and BIO. “It’s a
natural human instinct to want to get stuff for free,” but if goods are
free, he argued, no one will create or disseminate them.

A biopharmaceutical industry leader, asking that he not be identified while
the White House is formulating policy, acknowledged there are no data to
demonstrate that pro-pharma trade agreements impacted overall drug pricing
or hurt access. But he argued that countries that don’t agree to strong
intellectual property protections are more likely to be harmed because a
drug-maker might not launch its medicine in those nations.

Asked for comment, PhRMA pointed to its statement on the recent U.S. trade
report, which praised the administration for trying to create a more level
international playing field.

But critics note that companies have often rewarded shareholders, not
patients, when they get a policy perk from the government. After the recent
U.S. tax overhaul, major drug companies announced stock buybacks, not lower
drug prices, according to a report from the office of Sen. Cory Booker

Meanwhile, Moon doesn’t think European policy makers would cave to U.S.
demands to pay more. She’s already heard concerns from the richest
countries in Europe, like Switzerland, Norway and Luxembourg. Furthermore,
Trump has lost clout in in the international arena by trashing
international trade deals and threatening withdrawal from trade agreements.

Others say it’s too soon to dismiss Trump’s idea that pushing for higher
prices overseas will help the U.S. public. It could boost his clout with
the drug-makers at home.

“It’s certainly possible that pharmaceutical companies will pocket the
profits from higher overseas pharmaceutical prices to the benefit of
shareholders,” without lowering U.S prices, said Mark Wu, a trade expert at
Harvard Law School. “On the other hand, it could provide the administration
with some leverage to push pharmaceutical companies to lower their prices
domestically in return for these overseas gains and benefits from the new
tax plan.”

Sarah Karlin-Smith reported from Washington, and Sarah Wheaton reported
from Brussels.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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