Drugmakers try to outflank White House in trade agreement

In his budget, President Obama proposed cutting back the number of years that drugmakers have exclusive rights to test data on biologic medicines, arguing the move would cut costs for Medicare and Medicaid.

But if the Trans-Pacific Partnership (TPP) binds the United States to a 12-year timeline, the White House’s plan would be off the table.

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The push to have data exclusivity in the trade deal has become another front in the war between generic and brand name drugmakers in Washington. 

The Pharmaceutical Research and Manufacturers of America (PhRMA) argues the lengthy time period is needed for their member companies to see returns on their investments in costly research and development.

“You won’t have the new drugs unless you have the 12 years. You need to give the people the incentive to develop,” Mark Grayson, a PhRMA spokesman, told The Hill. 

The Generic Pharmaceutical Association (GPhA), however, wants that exclusivity period reduced in the trade deal to match the Obama budget proposal, which also includes banning drugmakers’ practice of “evergreening.” 

“TPP should reduce the 12-year exclusivity period to 7 years and limit the practice of ‘evergreening,’ where brand biologics apply for additional exclusivity because of minor adjustments in formulations,” said Ralph Neas, GPhA’s president and CEO, in a statement to The Hill. 

“Any final agreement should maximize the positive impact of both generic and brand pharmaceutical industries — encouraging exports, creating jobs and enhancing global access to more affordable medicines.”

The Office of the U.S. Trade Representative (USTR) is caught in the middle of the two powerful industries as it tries to finish the 12-nation trade pact. 

On Tuesday, leaders of the TPP countries said they expected to wrap up negotiations before the end of the year. But how to handle biologics data remains a major sticking point, and provisions dealing with exclusivity have been left blank in several leaked drafts of the pact. 

“It’s still up in the air,” said a lobbyist following the trade talks. “PhRMA is very worried that USTR is going to go lower than 12 years. On the other side of the coin, you have interest groups who think USTR is in the pocket of PhRMA. Everybody thinks they are going to get screwed.” 

Biologics are drugs developed by biological processes. Many of them treat different forms of cancer. 

Public interest groups are pressuring the Obama administration to keep the 12-year exclusivity period out of the trade deal, arguing it serves only to inflate drug prices and corporate profits.

“Locking in long-term monopolies for biologics means that consumers are going to pay more,” said Public Citizen President Robert Weissman.

Thanks to their market position, brand drugmakers can charge up to six figures annually for biologics, Weissman said. In the United States, people can generally find a way to cover the expense, often through their insurance plans.

 But people in poorer nations can’t afford the brand-name drugs because longer exclusivity means higher prices for the treatments, PhRMA’s critics say.

“It basically means less competition and the rise in cost of medical treatment,” said Judit Rius, the U.S. manager of the Access Campaign of Doctors without Borders. “Some of these treatments are life-saving treatments. Many will not be able to afford them, and it could mean life or death for some people.” 

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. 

But the president’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 $3 billion for federal health programs.

“The concern is, if it is included in the trade agreement, the Obama administration is locking us into a position that the Obama administration opposes,” Weissman said.

Congress has also sought to influence the trade negotiations. 

PhRMA has set up a Web page, titled “12 years of Data Protection in TPP,” that links to several letters from lawmakers calling for strong intellectual property protections, including a March 2013 missive from Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Orrin Hatch (R-Utah), the panel’s ranking member. 

Others on Capitol Hill, such as Rep. Henry Waxman (D-Calif.), have argued that the 12-year period shouldn’t be included in the trade deal.

Lawmakers have repeatedly questioned Michael Froman, the U.S. trade representative, about the U.S. position on the exclusivity period. Members of the House Ways and Means Committee brought up biologics at a July hearing with Froman.

“With regard to data protection for biologics, the United States has explained our system, including the 12 years of protection related to biologics, and we are in the process of a thorough discussion with our trading partners on that issue. I will ensure that my staff stays in close touch with you and other members of Congress as the negotiations continue on this important issue,” Froman said in reply to a Question for the Record from the hearing.

PhRMA believes U.S. trade negotiators will propose 12 years of exclusivity for biologics in the TPP. 

“We believe the U.S. will table 12 years. It’s U.S. law,” said Grayson with PhRMA. 

Critics of the drugmakers are urging Obama to take a stand for the greater good.

“It is a life and death issue. The core component is the issue of access,” said Weissman with Public Citizen.