A political firestorm is building over the protections for drug companies in the Obama administration’s massive international trade deal, threatening support for a key piece of the president’s legacy.
The chapter addressing the issue, which was posted online Friday by WikiLeaks, grants at least five years of exclusivity to the makers of next-generation biologic medicines for diseases ranging including cancer and rheumatoid arthritis. That’s less than what drug companies enjoy in the United States. The language has become a sticking point for both critics and supporters of the industry – and has even changed the minds of some of the deal’s most ardent supporters.
Democratic presidential candidate Hillary Rodham Clinton is worried that the terms provide excessive protections for drug companies and said this week that she now opposes the Trans-Pacific Partnership. Sen. Orrin G. Hatch (R-Utah), who has been a key GOP backer of Obama’s trade agenda, said in a speech this week that he could drop his support partly out of concern that the agreement provides too little intellectual-property protections for drug development.
The biologics issue was among the final sticking points in a deal that was negotiated by the administration for more than five years, with trade ministers haggling over the matter until just hours before President Obama announced Monday that they had reached a deal.
Almost immediately, what was known about the biologics provision became controversial. According to the draft leaked Friday, drug companies will get either eight years of protection or “at least five years” plus an ambiguous amount of extra time due to “market circumstances” that will “deliver a comparable outcome in the market.” The language is obtuse enough that some are interpreting it as five years, others as eight. In the United States, those drugs enjoy 12 years of exclusivity through a provision embedded in the Affordable Care Act.
The “data exclusivity” granted by the deal means that competing companies making biosimilar drugs cannot bring their products to market. Bringing those products to market could help lower prices. Patient advocates said that the drug industry won monopoly protections it did not previously have and that those protections will hurt patients’ access to drugs. The pharmaceutical industry said anything less than 12 years of protection will stymie innovation.
The brewing battle over the protections of drug company monopolies is one of the trickiest debates emerging in politics. On one hand, there is the need to provide incentives for drug companies to sink considerable investments into the risky business of developing new therapies. On the other hand, there is a growing question over when monopolies produce an unsustainable system in which high prices are no longer linked to value but to what drug companies can charge.
The U.S. trade representative urged all sides to reserve judgment until the final agreement is made public.
“Despite the wide gulf between the U.S. and other TPP partners on this issue, we achieved a strong and balanced outcome that incentivizes innovation and ensures that medicines are widely available for those who need them,” said Matthew McAlvanah, a spokesman for the U.S. trade representative. “TPP will be the first trade agreement that provides minimum standards for an extended period of protection for biologics and will give countries multiple pathways to meet those strong standards.”
Henry Grabowski, a professor emeritus of economics at Duke University, said much of the industry anxiety stems from the possible ripple effects this agreement might have.
“I think the fear is that if a large part of the world adopts five years [of exclusivity], then it creates pressure . . . in the U.S. and Europe to shorten the exclusivity period,” Grabowski said. Clinton has proposed shortening the period of exclusivity in the United States for biologic drugs from 12 years to seven. The Obama administration’s budget proposal does, too.
Executives from major drug companies met with the president Thursday to express their disappointment in the agreement. In a statement, Mark Grayson, a spokesman for the pharmaceutical trade organization PhRMA, confirmed the meeting but declined to name the companies that were represented.
“We emphasized that strong intellectual-property protection is necessary for the discovery and development of new treatments and therapies for the world’s patients and are disappointed that the TPP, which, by failing to secure 12 years of data protection for biologic medicines, will compromise the next wave of innovation and disrupt the development of new, critically needed medicines,” Grayson said.
Both PhRMA and BIO, the trade group for the biotechnology industry, said they would not comment on the leaked draft.
Public Citizen, a patient-advocacy group, has argued that the deal is a major concession to pharmaceutical companies. Biologics currently do not have any exclusivity protection in many countries, while in others, such as Chile, New Zealand, Singapore and Australia, they have only five years of protection.
“This is a huge win for pharma and a huge loss for us,” said Burcu Kilic, a policy director at Public Citizen. “That is why we are quite confused. They won this game; they got five years, and they are building the pathway to eight now. They are putting the bricks there. Pharma shouldn’t play this as, ‘ We are the losers; we wanted 12 years.’”