Drugmakers Say Pacific Trade Agreement to Stifle Investment

Pacific Rim Trade Deal Heads to White House
  • Pact likely to set off intense lobbying in Washington
  • Other critics say deal hurts access to drugs in poor nations

The biotechnology industry criticized the deal struck by negotiators for the Trans-Pacific Partnership agreement, saying it would undermine innovation by offering only limited protection of the data that drugmakers keep secret from competitors.

Under the terms of the deal struck by 12 Pacific-rim nations over the weekend, pharmaceutical companies will get at least five years of exclusivity before they have to share drug data with competitors seeking to make imitations of their products. In the U.S., drugmakers get to hold on to that data for 12 years, and the industry had been pushing for a similar period for America’s trade partners.

The trade deal is likely to set off an intense round of lobbying in Washington, since the pact still must be approved by Congress. While the pact wouldn’t change the 12-year protection drugmakers get in the U.S., it could put more pressure on lawmakers to bring the country in line with other nations with shorter exclusivity periods. Already, President Barack Obama has asked Congress to lower the term to seven years, a change Democratic presidential candidate Hillary Clinton is also seeking.

“BIO strongly believes that 12 years of data exclusivity is a prerequisite to attract the investment required to continue medical innovation and develop new biological cures and therapies,” said Jim Greenwood, chief executive officer of the lobbying group Biotechnology Industry Organization, in an e-mailed statement. The group includes industry giants such as Gilead Sciences Inc. and Amgen Inc.

Cheaper

While patents can keep lower-cost versions from coming on the market, data exclusivity keeps manufacturers of those biologic copycat drugs, called biosimilars, from accessing the brand-name companies’ data to help develop their products.

“This is one of the most challenging issues in the negotiation,“ U.S. Trade Representative Michael Froman said Monday in a news conference. “It will be an effective period to encourage both innovation and access.”

Specific terms of the negotiated Trans-Pacific Partnership, which includes the U.S., Canada, Japan, Mexico, Malaysia and seven other Pacific-rim countries, weren’t immediately disclosed.

The TPP agreement “has the potential to chill global investment and slow development of new breakthrough treatments for suffering patients,” Greenwood said.

Criticism

The biggest drug-industry trade group, Pharmaceutical Research and Manufacturers of America, also criticized the pact.

“This term was not a random number, but the result of a long debate in Congress, which determined that this period of time captured the appropriate balance that stimulated research but gave access to biosimilars in a timely manner,” John Castellani, president and CEO of PhRMA, said in an e-mailed statement.

Generics makers, on the other hand, said the trade deal would help more patients get access to affordable drugs.

“The TPP presents an unprecedented opportunity to usher in a new era of global trade, patient access and health savings,” the Generic Pharmaceutical Association said in a statement.

Exclusivity Period

For many countries in the trade pact, the exclusivity period is longer than the one they currently enforce. That will pressure their budgets and may significantly reduce access to drugs, according to Ruth Lopert, a professor at George Washington University. She said as many as 40,000 people in Vietnam, the poorest country in the agreement, could stop getting drugs to fight HIV because of provisions that will boost the price of therapy.

The aid group Medecins Sans Frontieres, also known as Doctors Without Borders, said the agreement will hurt patients and health-care providers in developing countries.

“Although the text has improved over the initial demands, the TPP 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 the group in a statement.

Still, the agreement won’t make much of a difference to biotechnology stocks, Eric Schmidt, an analyst at Cowen & Co., said before the pact was announced. With or without exclusivity, biotech intellectual property is pretty well protected, he said.

"I don’t think this is a big deal for us," Schmidt said. "Biotech patents have historically been very long-lived, more durable than either eight or 12 years of government-granted exclusivity."

Still Blockbusters

Many top-selling biotechnology drugs won’t be affected by the TPP, since they’re already well outside both the trade agreement’s five-year window as well as the 12-year exclusivity period that the U.S. has, said Henry Grabowski, director of program in Pharmaceutical Health Economics at Duke University.

That includes drugs like Johnson & Johnson’s arthritis drug Remicade, which generated $6.87 billion in sales in 2014, and Amgen’s Epogen for anemia associated with chronic kidney disease, with $2 billion in sales last year. Remicade came to the U.S. market in 1998, and Epogen in 1989.

“The exclusivity period is an important long-term incentive,” Grabowski said in an e-mail.

The Nasdaq Biotechnology Index fell less than 1 percent at 3:06 p.m. in New York.

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