Patently perturbed: Trans-Pacific Partnership trade deal raises fears about drug patent periods, higher costs

Multilateral trade deals—such as the Trans-Pacific Partnership touted by President Barack Obama on his recent trip through Asia—are usually of little concern or consequence to healthcare stakeholders.

But the largest regional trade agreement in history—if ratified and implemented by the dozen signatory countries—could affect pharmaceutical pricing around the globe. As a consequence, the pact is drawing fire from physician-advocates on the front lines of ensuring advanced medicines are available and affordable in developing countries.

The headlines from the president's trip spoke only about the benefits for American business and how the Trans-Pacific Partnership would get rid of 18,000 taxes that other countries place on goods from the U.S. The nations that have signed the TPP are the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

But the deal's terms on cross-border intellectual property protection worry some healthcare advocates. They say the patent measures in the accord will translate into higher prices on many medications in poor countries.

The deal includes “dangerous provisions that would dismantle public health safeguards enshrined in international law and restrict access to price-lowering generic medicines for millions of people,” Doctors Without Borders, the Nobel Peace Prize-winning not-for-profit that sends doctors into some of the most impoverished regions of the globe, says on its website.

In April, Doctors Without Borders sent a letter to members of Congress, co-signed by about 50 other advocacy organizations, calling on legislators to reject the TPP in its current form. In the letter, the groups called out a number of clauses. Most alarming to the advocates was a requirement that signatory countries grant 20-year extensions to patents for existing medicines when their manufacturers demonstrate new uses.

“These provisions facilitate abuse of the patent system and extend the monopoly protection that enables patent holders to keep prices high over many more years for products that are already on the market,” according to the letter.

The pharmaceutical industry rejects those assertions. Yet it has expressed its own misgivings about one aspect of the agreement. It lost its fight to extend the U.S. policy of granting 12 years of data exclusivity for biologic medicines to other countries. Data exclusivity means another company wouldn't be able to get a product approved using the data generated by the original company during a certain period.

While Obama has expressed confidence the TPP could pass in this session of Congress, it looks increasingly unlikely. Both Democratic and Republican front-runners in the race for the White House have attacked the deal, and Congress is unlikely to take up a controversial measure in an election year. Most trade deals are not considered treaties but are congressional-executive branch agreements that must be approved by both houses of Congress.

Last November, Republican businessman Donald Trump call the TPP a “horrible deal … designed for China to come in, as they always do, through the back door and totally take advantage of everyone.” China isn't part of the deal, and some foreign policy experts see the deal as part of the U.S.' efforts to create a diplomatic bulwark against Chinese hegemony in the region.

Democratic front-runner Hillary Clinton, under pressure from the left, has also attacked the deal, which she supported while secretary of state. “We are not going any longer to be at the mercy of what any country is going to do to take advantage of our markets,” she told Ohio voters in March during a swing through that Rust Belt state.

Leaders of both parties have expressed doubts that it will come up for a vote this year, even during the lame-duck session following the November presidential election. The TPP needs to pass through legislative channels in all 12 countries before it can be implemented. Negotiations could resume if some countries are unable to pass it in its current form.

Another area of concern for Doctors Without Borders and the other organizations that hope to influence the discussion before the TPP comes up for a vote involves measures for biologic medicines, the first time a U.S. trade agreement has tackled these products. Though the Federal Trade Commission ruled that exclusivity periods aren't necessary for companies to recoup the cost of biologics, the letter notes that the TPP includes five to eight years of exclusivity for data generated during a biologic's regulatory approval.

Those terms are also a sticking point for the drug industry. After the TPP was signed by the U.S. and 11 other nations in February, Stephen Ubl, CEO of Pharmaceutical Research and Manufacturers of America, said in a statement that the language around the protection of biologics “falls far short of what is necessary to continue the cycle of innovation that will lead to the breakthrough medicines of the future.” The trade group had been pushing for the TPP to mirror the current U.S. law that grants 12 years of regulatory data protection for biologic medicines.

Underlying PhRMA's preference for regulatory periods that are the same as the ones in this country is the assumption that drug patents and other exclusivity arrangements will function in other countries as they do in the U.S. If they did, the price of branded medicines will remain higher for a longer period because of delayed competition, which is what Doctors Without Borders and the other groups fear.

But it's unclear to what extent longer patent life will affect the prices of drugs either domestically or abroad. Only two small studies of Guatemala and Jordan have looked at the issue.

Thomas Bollyky, an economics, development and global health expert at the nonpartisan Council on Foreign Relations, noticed that and, in March, published what is likely the most extensive analysis of how trade deals affect drug pricing.

Bollyky has been paying attention to drug pricing issues for more than 20 years and was struck by the absence of data when these discussions arose. At conferences, Bollyky observed that people on all sides of this issue—from industry, associations and not-for-profit groups—would “make wildly divergent statements” on the outcomes of trade agreements on drug prices.

Using data from the IMS Institute for Healthcare Informatics, a comprehensive source for pharmaceutical sales data worldwide, Bollyky examined 15 countries that have trade deals with the U.S. Over the course of a decade, he found that the drug markets in those countries did not become more like the U.S. and that there was no significant shift away from low-cost generic drugs.

While his analysis is the first to look at a large number of countries, the study has limitations. The IMS Institute data come mainly from retail pharmacies, which does not accurately account for all drug distribution channels, such as public-sector purchases. Government plays a much bigger role in drug distribution in developing countries than it does in the U.S.

However, the pattern is unlikely to be affected much since most signatories to the pact already have extended more generous patent protection terms to the international drug industry. “Most of the TPP countries have previously entered into U.S. trade deals and already have variants of the pharmaceutical patent and exclusivity terms required by the TPP,” Bollyky argued in Foreign Affairs magazine. “In the areas where the agreement mandates a significant change, the less wealthy countries in the TPP get more time to adopt it.”

Bollyky suggested that disputes over the TPP terms obscure other issues. “There's a lot of debate over what emerges from these exclusivity models of drug development,” he said. “I think there's a debate to be had there, but it's not being had. Instead we're debating over what the drug price effects are in these other countries.”

Another big question implicit in the discussion over the TPP and patent protection is about how it restricts access to drugs. Trade deals aren't even the main issue when it comes to that, said Amanda Glassman, director of global health policy at the Center for Global Development, a Washington, D.C.-based think tank. Rather, access to medicines “relates more to market size, price negotiations and payer know-how,” she said.

Some of these issues were at play recently when the Colombian government declared its intention to override a patent on Novartis' anticancer drug for acute myeloid leukemia, Gleevec. The government is hoping the move will force Novartis to negotiate. It is threatening to issue a rare compulsory license, which allows another party to produce the drug without the consent of the patent owner.