In the expensive briar patch that is American healthcare, generic drugs have been key to keeping costs down. But intellectual property provisions in the Trans Pacific Partnership, set to be the largest free trade deal ever and the subject of intense speculation since 2005, have public health advocates concerned about the fate of this key component of affordable healthcare, not only in the U.S., but worldwide.
The White House believes that the TPP will be beneficial for America’s economic and political presence in Asia. Others are worried that the twelve negotiating Pacific nations, from the U.S. and Japan, to Vietnam and Peru, are trading away vital access to price-lowering generic medicines and giving already powerful pharmaceutical companies more marketplace clout. Doctors Without Borders/Médecins Sans Frontières (MSF) has warned, “the TPP agreement is on track to become the most harmful trade pact ever for access to medicines in developing countries.” Such concerns are mostly based off leaks, as the deal, like most international accords, is being worked out in secret.
We may soon find out just what’s in this infamous deal, however. At the Asia-Pacific Economic Cooperation summit in Beijing this week, the President recommitted the U.S. to getting it done, calling the TPP “a historic agreement.” U.S. negotiators hope to have the deal signed by early next year, the Washington Post reported, and set for Congressional approval well before the 2016 election season.
“The TPP agreement is on track to become the most harmful trade pact ever for access to medicines in developing countries.”
So why are public health advocates worried? Many of their concerns are rooted in potential changes to the rules for producing generic drugs—changes that could limit how countries manage public health, and paralyze generic manufacturers around the world.
Many countries have legal pathways for developing generics, but can also use compulsory licenses when necessary—a flexibility that enables governments to give generic drug manufacturers permission to copy a patented product without the consent of the patent-holder. Since these licenses were formalized in a 1995 agreement, they’ve controversially enabled India and other nations to make generic versions of drugs, like Bayer’s cancer drug Nexaver, which they claimed were unaffordable. And yet, while the system is far from perfect (last year the biggest fine ever was leveled against an Indian generic manufacturer for badly made products), effective generics are still vital to accessible healthcare.
The problem, as public health advocates see it, is that the TPP seems set to stymie the use of these compulsory licenses, and hence, potentially limit their use in emergencies when countries need it most. The most recent TPP leak, released in October but dated May 16 2014, contains language that appears to limit circumstances that will justify the use of compulsory licenses to a specific list of diseases, epidemics, or extreme emergencies. Such a provision could walk back each member state’s wide prerogative to decide their public health priorities, as clarified in the 2001 Doha Declaration, and open them up to legal challenges from pharmaceutical companies.
While the fate of compulsory licensing is hazy, there’s another way that the TPP’s potential proposal could drive up the cost of drugs: An additional monopoly for pharmaceutical companies called “biologic data exclusivity.”
Biologic drugs are on the cutting edge of biomedical research—producing everything from new cancer and arthritis medications, to potentially relief for spinal cord injuries. But they’re complex to develop, and currently cost a lot more than regular “small molecule” drugs. That’s why biosimilars, the “generic” version of biologics that could one day offer these miracle products at cheaper prices after their patents have expired, are so important.
The TPP could threaten the vitality of this burgeoning biosimilar industry by pushing through long data exclusivity terms. In other words, as far as we can determine, the TPP will have a moratorium— anywhere up to 12 years—on allowing biosimilar manufacturers to use any of the original company’s clinical test data in their own regulatory application. Why does this matter? Relying on the original innovator’s data allows generic manufacturers to avoid replicating long, expensive, and unnecessary (and thus unethical) human testing. This is more efficient, keeps prices lower, and speeds up entry to market. These long exclusivity terms could slow the development of future biosimilars down, effectively fostering an extended monopoly for biologic pharmaceutical companies; on top of any patent protection they also hold.
Here in the U.S., biologic data exclusivity has already been around for a few years. In fact, the U.S. introduced 12 years of biologic data exclusivity as part of the Affordable Care Act, creating a streamlined legal biosimilar pathway in the name of lowering healthcare costs. But considerable debate still exists over how necessary the monopoly is, and just how long it should be. In the lead up to twelve years of data exclusivity being introduced, the pharmaceutical industry argued that twelve-fourteen years were vital to recoup their investment, while others said 7 years were sufficient. The Federal Trade Commission (FTC) however, stated that data exclusivity was not needed at all to promote innovation, as the patent system offered biologic manufacturers sufficient economic incentive. Even President Obama’s 2013 budget proposed reducing the term to seven years.
“The TPP is locking in patent and data monopoly for pharmaceutical companies."
Data exclusivity might be less worrisome if the TPP clearly ensured countries had enough flexibility to get around it, when public health concerns demanded it. In the most recent leak, the deal appears to lack a clear framework to circumvent biologic data exclusivity. If a regional epidemic emerged, for example, and the manufacturer of a certain biologic drug could not create needed quantities, a government might want another manufacturer to get on-line quickly. That’s a process best achieved by relying on the original drug’s safety and efficacy data. Without a work-around, countries would just have to pay up for the expensive, non-generic brand—if one company could even manufacture enough of it— or charge another company with replicating years of expensive and unnecessary clinical testing. As Brook Baker, Professor of Law at Northeastern University told me, “The TPP is locking in patent and data monopoly for pharmaceutical companies. Full stop. Anything you could do to deal with public health emergencies like Ebola would have to be done around the edges.”
The role of intellectual property has always been to spur innovation for the public good. An internationally consistent set of patent laws and exclusivities could promote development and innovation, but only if sufficient flexibility ensures that the deal is not at the expense of public health. As Alex Brill, research fellow at the American Enterprise Institute, put it, “We want these companies and we need them to be able to innovate. Lawmakers need to better understand the balance between innovation and access. The companies that come behind them, the generics, offer a public benefit too.” If the TPP locks in greater monopolies for pharmaceutical companies at the expense of price-lowering generic medicines, it could be a bitter (and expensive) medicine to swallow.