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 (TPP). Senator Orrin 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 concerns that it provides too little intellectual property protection 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 they had reached a deal at a news conference on Monday.
Almost immediately, what was known about the biologics provision began to generate controversy. 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, which could bring down prices. Patient advocates said that the drug industry won monopoly protections it didn't previously have that 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's the need to provide incentives for drug companies to sink considerable money into the risky business of developing new therapies. On the other, there is 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 spokesperson for the USTR. "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," 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.
"It's part of a broader mosaic that it could come back to kind of create political pressures in the U.S. and Europe to shorten the exclusivity period, which I think would be a tremendous problem for the industry," Grabowski said.
Executives from major drug companies met with the President on 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 attended.
"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.
"The Congress set 12 years as the appropriate period to both foster innovation and provide access to biosimilars in a reasonable timeframe. While the TPP agreement will not impact the U.S. data protection period, we believe the failure of our Asian-Pacific partners to agree to a similar length of protection is remarkably short-sighted and has the potential to chill global investment and slow development of new breakthrough treatments for suffering patients," Jim Greenwood, the president of BIO said in a statement released this week.
Public Citizen, a patient advocacy group, has argued that the deal is 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 only have 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.'"
Politicians haven't hesitated to critique the deal, for diametrically opposed reasons.
In a speech on the Senate floor, Hatch lambasted the Obama Administration for failing to get intellectual property protections comparable to those that exist in the U.S.
"This is particularly true with the provisions that govern data exclusivity for biologics," Hatch said. "As you know, biologics are drugs that are on the cutting edge of medicine and have transformed major elements of the healthcare landscape thanks, in large part, to the efforts and investments of American companies."
In an interview with PBS, Clinton voiced her objections to the agreement, for the opposite reason:
“I’m worried that the pharmaceutical companies may have gotten more benefits and patients and consumers fewer. I think there are still a lot of unanswered questions,” she said.
Staff writer David Nakamura contributed to this story.
A previous version of this story incorrectly stated that Peru was among the countries that have five years of exclusivity for biologic drugs.