AARP warns trade deal could lock in high drug prices

AARP warned the top U.S. trade official against allowing the language in the Trans-Pacific Partnership (TPP), a 12-nation trade deal now under consideration.

The provision would effectively lock in high prices for the popular drugs and could undermine public programs including Medicare and Medicaid, according to the nonpartisan group, which represents Americans 50 and over and their families.

“AARP strongly believes the final trade agreement should not bind the U.S. to a 12-year market exclusivity period for brand-name biologic drugs,” the group wrote this week in a letter to U.S. Trade Representative Michael Froman.

Biologics — drugs developed through biological processes — are used to treat a variety of ailments, including multiple sclerosis, rheumatoid arthritis and different forms of cancer. The medication, however, is often far more expensive than conventional “small-molecule” drugs.

The price can be prohibitively high for patients — even those with comprehensive insurance policies.


“With annual costs that can reach as high as $400,000, the high price of biologic drugs not only has adverse effects on consumers, but also on other health care payers, including public programs like Medicare and Medicaid,” according to the letter, signed by Nancy A. LeaMond, executive vice president of AARP’s State and National Group.

The high prices, critics charge, stem from drugmakers’ exclusive rights to test data, which makes it difficult for generic versions or “biosimilars” to enter the market.

The Biologics Price Competition and Innovation Act, signed into law by Obama more than three years ago as part of the healthcare reform law, allows for 12 years of exclusivity for the drugs.

Proponents of the 12-year window, including the Pharmaceutical Research and Manufacturers of America (PhRMA), say the period is needed for their member companies to see returns on their investments in research and development of the drugs.

But Obama's budget proposals, including his fiscal 2014 plan, have repeatedly called for the window to shrink to seven years. The administration estimates the policy change could save billions of dollars for federal health programs.

AARP backs that plan, projecting a $3.8 billion savings and the introduction of biosimilars with prices that are 40 percent lower than the brand-name versions.

“However, should the U.S. agree to the TPP with a provision requiring a 12-year market exclusivity period for brand-name biologics, U.S. policymakers would be prevented from taking action to reduce the costs associated with biologic drugs for U.S. consumers,” LeaMond told Froman.

Leaders of the TPP countries have said they expect to complete the talks before the end of the year.