TPP would make medicine a luxury for developing nations
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The Trans-Pacific Partnership, a treaty currently stalled in the U.S. Senate, contains a provision that would require all member countries to adopt laws that protect the profits of American pharmaceutical companies. On the losing end of this requirement are impoverished citizens of developing nations, who would see the cost of biologic medicines soar.

The Trans-Pacific Partnership is marketed as a deal that will promote free trade by removing barriers between North American and Pacific countries, including the United States, Japan, Malaysia, and Singapore. The agreement offers many benefits, but contains several troubling provisions, including one that would force member countries to implement strong monopoly protections for newly introduced biologics.

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Biologics are complex molecules, isolated from organisms. They are used for medicines from vaccines to gene therapies, and can treat numerous diseases from arthritis to cancer. Heightened protections would allow pharmaceutical companies to elevate prices throughout Pacific markets.

The United States currently grants data exclusivity, a type of intellectual property protection, to new biologic products for 12 years. Data exclusivity prevents firms that create similar molecules called biosimilars from using data from the original biologic to enter the market. This increases financial returns for biologic developers, but extending similar standards abroad would make many medicines unaffordable to millions of people throughout the world.

TPP would create five- to eight-year data protections for biologic products in all member countries. Previously, only three TPP countries protected new biologics for longer than five years.

There are many arguments for and against data exclusivity. Every country has different levels of protections for biologics. Protections range from twelve years in the United States to zero years in Brunei. Each country weighs the tradeoffs and determines the policy that is best for its people and its economy. But through the TPP, the United States and other economic powerhouses are attempting to force strong IP protections upon developing countries.

Presumably, these monopoly protections will funnel investment into biologic research and development, leading to a greater number of biologic discoveries over time. Proponents of intellectual property protections for biologics claim that the increased medical progress outweighs the higher prices that pharmaceutical companies will be able to charge in the short term.

However, there is empirical evidence that patent protections and analogous intellectual property protections do not increase innovation or productivity, and that strong protections often have ill-effects. Despite the increase in strength of U.S. patent protection, there has not been a significant increase in innovation or research and development expenditures. One could certainly argue that biologics are a unique market not subject to these generalized claims, but the truth of the matter is muddled at best.

Further, there is evidence that fixed patent terms distort cancer research and development by steering research and development spending toward products that can be commercialized quickly to maximize patent length. This pushes funding toward cures rather than prevention (by a factor of 30) and skews funding toward drugs for patients who have almost no chance of survival. Economic research has also indicated that patent protections suppress future innovation by allowing intellectual property holders to rest on their laurels.

In practice, the effects of intellectual property protections are far more complex and uncertain than the rosy picture painted by proponents.

In the case of biologics, the most visible cost of intellectual property protections are the increased prices. Countries that protect intellectual property can expect biologic prices in many cases to exceed $45,000 per year. This makes life-saving treatments unaffordable for many, particularly for people living in poorer TPP countries. Because of this lack of access to medicine, many will suffer. Some will die.

IP protections for biologics certainly funnel investment into the sector, and have helped the United States become a world leader. Yet it is unclear if that capital could have been used more productively in the absence of government protections. It is also difficult to imagine that countries such as Malaysia will see large improvements in their biologic industry if they adopt more stringent IP protections. What is clear is that that Malaysians will suffer because of higher drug prices.

There may be a defensible argument that strengthening the U.S. biologics industry is more important than providing cheaper medication to Malaysians. But using economic power to force other nations to adopt policies that conform to this opinion is unacceptable. This provision has already become a point of animosity between TPP countries. But far worse, if other nations are forced to follow America’s dictates, many people will be denied life-saving medicine.

The TPP cannot be amended before it comes to a vote. But there is hope to amend this provision in the future, and to keep such protectionism out of the American agenda in other trade agreements that will surely follow.

Nick Archer is a contributor to Economics21 and a student of Economics and Mathematics at Hillsdale College.


The views expressed by authors are their own and not the views of The Hill.