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Australia should stop stalling negotiations for the Trans-Pacific Partnership

Here in Washington, trade officials from the United States and Japan just started up bilateral talks to continue crafting the Trans-Pacific Partnership. Arguably the most important free trade deal of the last two decades, the TPP hit a snag earlier this summer when negotiations in Hawaii unexpectedly stalled amidst intransigence from some key partner nations on the final details. 

One of the remaining areas of contention is the strength of intellectual property protections afforded to biologic medicines. Australia has vigorously argued against the United States’ request for a reasonable protection period—maintaining that the partner nations need to allow for an economically adverse and hurried introduction of low-priced generic drugs to drive down healthcare costs. 

{mosads}That line of thinking may sound emotionally compelling in theory. But it falls apart in light of the evidence. Australia is on the wrong side of history in this debate. The TPP needs to include robust protections for advanced medicines—or we risk derailing investment in future life-saving medical discoveries.  

The specific protection at issue is what’s called “data exclusivity.” Certain advanced biopharmaceuticals are so complex that it’s possible for generic firms to create therapeutically equivalent copies without actually violating patents. The copycat drug is just different enough from the original to avoid a lawsuit, but it can still serve as a substitute—and therefore take away sales from the innovator. 

That’s why regulators have established data exclusivity, which prevents outside firms from accessing the research behind a new biopharmaceutical. This prohibition effectively prevents them from violating their intellectual property rights and creating copycat drugs. 

Here in the United States, data exclusivity is set at 12 years—and for good reason. The development costs for the average biopharmaceutical drug tops $2.6 billion. And research from Duke University shows that for the average brand-name medicine, it takes about 12 years for the inventor to break even in sales.  

If exclusivity were set any shorter, generic firms could flood the market with copies before the original inventor has even gotten out of the red. Companies would respond by scaling back on new research. Millions of patients all over the world would lose out on the next generation of life-saving drugs. And healthcare costs would rise.  

As James V. DeLong, vice president and senior analyst of the Convergence Law Institute, recently noted in The American, “If the protective period is too short, then innovation will suffer as the industry turns into a bunch of copycats, just waiting for someone else to be foolish enough to innovate, and investment will dry up. If the period is too long, then the worst outcome will be an over-investment in biotech that leads to even more innovations and products than we can readily use.” 

Australia is staunchly opposed to setting data exclusivity at 12 years. Its domestic patent system sets it at just five years—the length they want included in the final TPP deal.  

The country’s chief negotiator, Trade Minister Andrew Robb, has taken to arguing that the American patent system is actual inferior to Australia’s in light of a landmark 2013 US Supreme Court decision called Association of Molecular Pathology v. Myriad Genetics. 

Myriad slightly narrowed the kinds of biological material that can be patented under US law. Specifically, the Justices ruled that some of the genes linked to breast and ovarian cancer patented by the Utah-based Myriad Genetics were actually naturally occurring phenomena and couldn’t be patented.

Robb claims that Myriad renders America’s patent law more constricting than Australia’s and therefore less friendly to innovation. If he’s right, it really would make sense for the TPP to model the Australian system. 

But he’s wrong. The Myriad decision has had virtually no impact on biopharmaceutical innovation in the United States. That’s because Myriad preserved the right of drug firms to make intellectual property claims on all the key stages of drug development, most importantly including the synthetic molecules called “cDNA” used to build new therapies. 

These building blocks are still patentable because they require significant human ingenuity to create. Or, as Justice Clarence Thomas himself put it in Myriad decision, “The lab technician unquestionably creates something new when cDNA is made.”

Robb is mischaracterizing the nature of the American patent system. Myriad has not dampened domestic drug innovation. America’s pharmaceutical sector remains the most dynamic in the world.  

Collectively, the 12 nations that are party to the TPP negotiations comprise 40 percent of global GDP. Properly designed, this agreement has the potential to spur billions in new economic activity, improving—and saving—lives all over the world. Australia should stop resisting America’s calls for robust drug rights and help negotiators finally finish this historic trade deal.  Future recipients of these medical innovations deserve no less.

Schlecht is a writer who has worked on budget and economic issues in Washington, D.C., for more than 20 years. He has served in leadership offices in both the Senate and House of Representatives.


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