Trade deal disappoints drugmakers, consumer groups
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October 05, 2015 01:00 AM

Trade deal disappoints drugmakers, consumer groups

Lisa Schencker
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    President Barack Obama meets with leaders from the Trans-Pacific Partnership at the U.S. embassy in Beijing in November 2014.

    A trade agreement between the U.S. and 11 other countries has left both the drug industry and consumer groups disappointed over intellectual protections of certain drugs.

    The deal, known as the Trans-Pacific Partnership Agreement, may also face congressional scrutiny, some say.

    Part of the agreement requires the countries to extend data protection for biologic medicines—drugs produced by living matter—for at least five to eight years. The pharmaceutical industry had hoped for a minimum of 12 years, and some consumer groups had hoped for no minimum exclusivity.

    Such exclusivity prevents, for a certain length of time, competing drug companies from bringing biosimilars, which are drugs very similar to an existing biologic, to market based on clinical trial data from the original drug.

    Biologics currently have 12 years of data exclusivity in the U.S. under federal law, and that's unlikely to change regardless of the trade agreement. The biggest impact will be felt by some of the partnership's other countries; Australia, Brunei, Vietnam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore.

    Some countries don't currently have any exclusivity for biologics, meaning the agreement would require them to pass laws granting at least five years of exclusivity.

    “In the U.S., I don't think there would be that much that would need to change,” said Joy Liu, a partner at Ropes and Gray who advises drug and biotech companies on FDA-related matters.

    Liu said biosimilar competition on foreign markets could impact companies, some of which are based in the U.S., because they've invested in the R&D.

    The industry agreed.

    “PhRMA believes that strong intellectual property protection is necessary for the discovery and development of new treatments and therapies for the world's patients,” said John Castellani, CEO of industry group the Pharmaceutical Research and Manufacturers of America, in a statement. He called biologic medicines the “next wave of innovation in our industry.”

    “While we await final details, it appears that the Ministers missed the opportunity to encourage innovation that will lead to more important, life-saving medicines that would improve patients' lives,” Castellani said.

    But Peter Maybarduk, director of consumer advocacy group Public Citizen's Access to Medicines Program, said that while the deal fell short of the 12 years the industry had hoped for, it still delays biosimilars from entering the market for too long.

    “The problem of drug pricing is increasingly out of control in the U.S. and everywhere,” Maybarduk said. “Of course we need to pay for medical innovation, but there are more efficient ways to do that than monopolies.”

    Doctors Without Borders also criticized the deal.

    “Although the text has improved over the initial demands, the [trade agreement] will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies,” said Judit Rius Sanjuan, legal policy adviser to the group's access campaign, in a statement.

    Maybarduk said he doesn't believe data exclusivity is needed given that biologics also carry patents.

    Patents keep biosimilars from entering the market for a period of time. But the pharmaceutical industry has argued that 12 years of exclusivity was also needed in the U.S. because patent laws in the areas of biotechnology are weaker than those for traditional drugs, said Arti Rai, a law professor at Duke University and expert in intellectual property law and health policy.

    Whether Congress will agree to the trade deal is still a matter of speculation. Before negotiations were complete, Congress agreed to fast track the agreement, meaning Congress must simply vote it up or down without amending it.

    Sen. Orrin Hatch (R-Utah), who chairs the Senate Finance Committee, has already said that for any trade agreement to win his approval it must strengthen the intellectual property right laws of the U.S.'s trade partners. He's said that he fully expected the Trans-Pacific Partnership agreement to include 12 years of regulatory data protection for biologics.

    Opposition could also come from the other side of the aisle. In July, 11 Democrats wrote a letter expressing concern that the agreement may fail to pass muster if it doesn't meet standards set under a previous agreement. That one, reached by House democrats and President George W. Bush in 2007, sought to address what future trade agreements should contain. That previous agreement set exclusivity at five years.

    “As members who support trade done right, we strongly believe that the [Trans-Pacific Partnership] must not inhibit access to lifesaving medicines,” the lawmakers wrote.

    Rai said the agreement's chances of passing through Congress will depend on a “complicated mix of politics.”

    “It's certainly a compromise, there's no doubt about that,” Rai said of the trade agreement. “In general, compromise in these areas seems to be better than one side entirely winning the game.”

    Janelle Waack, a partner at Bass Berry and Sims who works with pharmaceutical companies on patent and regulatory issues, said Congress will have to weigh the consequences of the agreement.

    “[Drugmakers] made a substantial investment both in terms of time and money to research and develop biologics and it can take 10 years or more to recoup the cost of that investment," Waack said.

    She advised that Congress carefully consider the impact on the pharmaceutical industry and smaller companies that are doing the ground level research, saying the agreement raises questions about whether they would continue "to pursue these lines of research in view of what could be a more limited period of exclusivity."

    "Are (they) going to pursue these lines of research in view of what could be a more limited period of exclusivity?” she wondered.

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