TPP agreement – a bitter pill to swallow?

US negotiatiors have had to make concessions over biologics protection to secure a Trans-Pacific Partnership (TPP) deal, but health campaigners are unimpressed

The US pharmaceutical industry says it had to swallow a bitter pill to conclude the Trans-Pacific Partnership (TPP) talks in Atlanta on 5 October, but health campaigners disagree. Scheduled to end on the previous Friday, the talks dragged on through the weekend because of tough talks on legal protections for original biologic medicines. US pharma companies had insisted on extending the country’s 12-year ‘data exclusivity’ legal window for certain biologic drugs, aimed at treating cancer and other life-threatening diseases, to the entire 12-country trade bloc. They did not succeed, but the compromise does not suit everyone.

TPP negotiators have agreed on a five-year window; factoring in another three years of ‘regulatory review’, this would undercut the US position by four years, while lengthening exclusivity to countries like Vietnam, which has no data exclusivity timeframe under its current law. The five-year guarantee did, however, match existing protection in TPP members Australia and New Zealand, and effectively matches that imposed in Canada. The TPP encompasses the US, Canada, Australia, Japan, Mexico, New Zealand, Singapore, Malaysia, Vietnam, Peru, Chile and Brunei. Together, these economies account for 40% of global GDP.

According to a briefing note from the US Trade Representative (USTR) office, the TPP’s intellectual property chapter ‘contains pharmaceutical-related provisions that facilitate both the development of innovative, life-saving medicines and the availability of generic medicines, taking into account the time that various parties may need to meet these standards’. The USTR said this includes commitments on protecting undisclosed test and other data submitted to obtain marketing approval of new pharmaceuticals. And it reaffirms that TPP countries are not prevented from authorising generics to deal with urgent public health issues, following World Trade Organisation (WTO) guidance.

The extension of protection to US pharma companies in some TPP countries has predictably elicited the scorn of some international public health advocates

Despite this, the extension of protection to US pharma companies in some TPP countries has predictably elicited the scorn of some international public health advocates, with Doctors Without Borders (Médecins Sans Frontières; MSF) warning that TPP could set a dangerous precedent for future trade deals. ‘The big losers here are nations, ministers of health and humanitarian treatment providers like MSF that work in developing countries,’ Judit Rius Sanjuan, US Manager and Legal Policy Advisor at MSF, has said.

MSF expressed its ‘dismay that TPP countries have agreed to US government and multinational drug company demands that will raise the price of medicines for millions by unnecessarily extending monopolies and further delaying price-lowering generic competition’. It stated: ‘The big losers in the TPP are patients and treatment providers in developing countries.’

But the US pharma sector says it stands to lose more than it gains from the deal all the same. Mark Grayson, spokesman for Pharmaceutical Research and Manufacturers of America (PhRMA), minimised any gain from TPP, pointing out that pharmaceuticals ‘are already a global industry with tariff-free access’.

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

The disappointment, he said, comes on the intellectual property front, exactly the issue that has riled MSF. ‘We are disappointed that the ministers failed to secure 12 years of data protection for biologic medicines,’ he said. ‘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.’

PhRMA president and CEO John Castellani added: ‘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.’

US generic drug manufacturers, a group that has a different take on patent protections and data exclusivity, are taking a more guarded, yet supportive, approach. ‘The Generic Pharmaceutical Association (GPhA) and its Biosimilars Council strongly support efforts to improve worldwide patient access to affordable medicines,’ said Chip Davis, GPhA president and CEO. ‘We are optimistic that the agreement announced on the Trans-Pacific Partnership brings us closer to achieving that goal by embracing competition from safe, effective biosimilar therapies.’

Australia was one country that had negotiated hard over the biologics protection period. The country’s senior pharmaceutical industry body, Medicines Australia, says it is disappointed with the outcome of the TPP talks, particularly with regards to intellectual property protection for biopharmaceuticals.

Medicines Australia is disappointed with the outcome of the TPP talks, particularly with regards to intellectual property protection for biopharmaceuticals

Australia has a five-year data exclusivity period for biologics, as does New Zealand, and it was not prepared to budge on this during prolonged negotiations. In the end, a ‘two-track’ system was agreed upon, which confirmed the Australasian system while liberalising the USA’s 12-year rule. Australia trade minister Andrew Robb has assured Australian media that there would be no changes to Australia’s current intellectual property regulations for pharmaceuticals, nor an increase in the price of medicines for Australian consumers because of the TPP.

Meanwhile, Medicines Australia said that Australia was lagging behind its global competitors in terms of data exclusivity for innovative drugs, putting potential investment in the sector at risk. ‘It is one reason why our scientists look overseas to get their inventions turned into widely available products for consumers. That means Australia misses out on the economic benefits of the innovation, including jobs and the tax streams from these medical breakthroughs,’ the association said in a statement.

The flexible formula will also allow Canada to maintain its eight-year protection for biologics (and other pharmaceuticals). While reserving final judgement for when the full details of TPP are released, Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA) said his organisation welcomed the assurances outlined by the Canadian government that the TPP ‘will require no changes to Canada’s intellectual property laws for pharma-ceuticals, beyond the commitments that have already been made under the Comprehensive Economic and Trade Agreement (CETA) Canada has reached with the European Union’.

But Keon still had concerns about other IP protections. ‘CGPA is concerned regarding the expansive IP provisions included in the TPP agreement, and notes the provisions will have a negative impact on access to medicines for some TPP partners,’ he said.

Regardless of their stance, the US and other TPP pharma industries will have to wait to see the trade deal in action

Regardless of their stance, the US and other TPP pharma industries will have to wait to see the trade deal in action. The deal itself must be ratified by all 12 member states. In the US its success is far from assured, although Congress improved its prospects in June by giving President Obama ‘fast-track’ Trade Promotion Authority (TPA) enabling him to submit trade deals for yes or no votes without amendment. TPA gives Congress 90 days to scrutinise the deal (which has yet to be officially submitted), delaying a possible vote until 2016, an election year.

A legal text is also awaited – although it could be released in October. Until it is, the USA’s GPhA spokesman Steven Arnoff says it is too soon for his group to do any number crunching or cost-benefit analysis on TPP. ‘The technical details on exclusivity and other concerns have not yet been made public,’ he explained.

Some other details are clear, of course. Tariffs (rarely high, if above zero) for medicines will be scrapped under the agreement. And duties on manufacturing equipment and inputs trades between the 12 member states will scrapped, phased out or reduced. Also, according to the USTR briefing note, pharmaceuticals will be the focus of a number of TPP annexes promoting common regulatory approaches across the TPP region.

Heather Roy, Chair of Medicines New Zealand, said that her organisation was pleased to see that the TPP would in this way address issues of timeliness and transparency in the approval of subsidised pharmaceuticals through New Zealand’s approval authority Pharmac, without any change to the structure of Pharmac. ‘We have consistently asked for definitive timelines for decision-making on medicines and vaccine funding applications and an appeals process to be put in place,’ she said.

A Medicines Australia spokesman added that Medicines Australia remained optimistic about the TPP, given that in general free trade agreements foster exports. ‘The China-Australia free trade agreement, for example, will be extremely useful in attracting investment to the pharmaceutical manufacturing sector in Australia,’ he said.

Meanwhile, the General Manager of Medicines New Zealand, Graeme Jarvis, told Manufacturing Chemist ‘there will be an upside for the New Zealand pharmaceuticals manufacturing sector as a result of the TPP’, although this was hard to quantify without seeing the full text of the agreement. ‘Pharmaceuticals manufacturing is a subset of the manufactured goods sector [which] expects to see potential savings in annual tariffs of NZ$10m (US$6.6m). All exports to TPP countries will be duty free once TPP is fully implemented,’ he said.

We believe the trade agreement is favourable for Japanese pharmaceutical firms and we are pleased that the final deal is almost exactly what we expected

Japan's pharma sector is content with the deal. ‘We believe the trade agreement is favourable for Japanese pharmaceutical firms and we are pleased that the final deal is almost exactly what we expected,’ said Takeshi Shigihara, director of the international affairs division of the Japan Pharmaceutical Manufacturers’ Association.

Shigihara told Manufacturing Chemist that there were ‘some concerns in the industry’ earlier in the negotiations over intellectual property issues and the potential impact of the changes on the domestic healthcare system, but those had been eliminated with the final agreement. ‘We do not believe the agreement will have a major impact on the industry here,’ he said. ‘We also believe it will be good for our member companies as it will enable them to do more business in other Asian countries and Latin America.’ The deal will help Japanese pharma companies market innovative new products in other countries more quickly, he suggested.

In Europe, the Director General of the EFPIA, Richard Bergström, welcomed the completion of the TPP because it would enable the US to focus on completing negotiations to forge a Transatlantic Trade & Investment Partnership (TTIP) with the EU. ‘It is good to see renewed energy in global trade talks,’ he said. ‘Furthermore, the US now has the opportunity to complete TTIP with the EU.’

EU trade Commissioner Cecilia Malmström welcomed the TPP deal as ‘good news for world trade as a whole’ and said she hoped the US-European talks could now be approached ‘with an even greater focus from both sides’.

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