Pharma flap imperils president’s trade deal

The most important trade deal of Barack Obama’s presidency could hinge on a single provision that’s reigniting a years-old debate on monopoly rights for drugmakers.

The exact details of the pharmaceutical provision, which involves a class of drugs called biologics, won’t be made public until later this month. Still, it’s already threatening to drag out — and possibly derail — the approval process for a deal reached by a dozen nations that together make up 40 percent of the world’s gross domestic product.

{mosads}Under the Trans-Pacific ­Partnership, pharmaceutical companies could get up to eight years of exclusive rights to their clinical trial data, compared to 12 years currently in place in the U.S, five years in Australia and little to none in developing nations.

The U.S. Trade Representative touts the deal as the first trade agreement offering minimum standards for biologics.

“We have achieved a strong and balanced outcome in TPP that both puts in place incentives for creating new life-saving medicines and ensures that those medicines are widely available to those who need them,” a spokesman wrote in a statement.


American drugmakers were intent on preserving the existing standard in a final deal.

“They were supposed to come back with U.S. law on [intellectual property] rights, and they didn’t, and our board is very disappointed,” said Mark Grayson, a spokesman for PhRMA, which represents dozens of top pharmaceutical companies.

The U.S. pharmaceutical industry is now in a standoff with the Obama administration, searching for a playbook in its effort to keep Congress from ratifying the deal next year. Because the deal will be considered in an up-or-down vote, a vote in favor of PhRMA would mean a vote against the entire deal.

“I think everybody’s still figuring out what’s next. We’ll look at the rest of agreement, then decide what the next steps are,” Grayson added.

As the Obama administration prepares to hand over a copy of the deal to Congress this month, all eyes will turn to Sen. Orrin Hatch (R-Utah), who led the fight this spring to pass the bill giving Obama fast-track trade authority.  As Finance Committee chairman, Hatch wields considerable power in approving the deal when it comes up for a vote early next year. But he has been sharply critical of what he has seen, including the pared-down monopoly protections for drug companies.

“What’s going to happen is that a lot of companies are just going to go out of business because they cannot recoup the monies,” Hatch told NPR three days after the deal was struck. “Everybody would like lower drug costs, but the drug costs are going to skyrocket.

Biologics, described as the next frontier of pharmaceuticals, are among the most complicated and expensive types of drugs to produce. Companies have said it takes between 12.9 years and 16.2 years to break even on the costs.

The drugs also hold life-saving potential that remains out of reach for many populations outside the United States’.

The biologics provision is drawing criticism from all sides: It’s been condemned both by Republicans siding with Big Pharma and Democrats advocating for global health groups that want to end monopoly rights altogether.

Democratic presidential front-runner Hillary Clinton singled out pharmaceuticals when she declared her opposition to the deal last week, warning that drug companies “may have gotten more benefits, and patients and consumers fewer.”

Obama can only afford to lose support from a handful of lawmakers from the GOP, a party has been reliably pro-­pharma over the years.

The powerful lobby spends about $10 million a year, not including campaign contributions. During the last election cycle, the biggest recipient of PhRMA cash was Senate Majority Leader Mitch McConnell (R-Ky.), according to OpenSecrets.org

Hatch is already warning that the trade deal is losing support in the Senate. Though the trade vote cannot be filibustered and supporters need only a simple majority to pass it, the potential losses could threaten the deal.

“I’ve heard some very trying things that may very well make it impossible to pass,” Hatch said last week, pointing to lawmakers representing dairy and tobacco industries who are beginning to walk back their support. “We passed it with 62 votes. We’re already starting to lose those.”

Drugmakers’ exclusivity rights have been one of the biggest sticking points for trade ministers during the years-long process of crafting the trade deal. As negotiators worked out the final details in Atlanta earlier this month, they twice had to extend their stay because of disagreement over the matter.

“That was one of the issues that broke down the agreement in Hawaii and that was for sure the last issue remaining on the agenda in Atlanta,” said Judit Rius Sanjuan, a legal policy adviser for Doctors Without Borders who was in Atlanta to await the deal.

“It was highly contentious. I think that was the potential for the whole agreement to fail if the government had agreed to what they agreed,” she added.

It’s also a fight Obama’s familiar with— after a drawn-out fight in 2008, his administration agreed to 12 years of exclusivity during the crafting of the Affordable Care Act. The administration said then that seven years would be a “generous compromise.”

Since striking the deal last week, the president has personally tried to court the powerhouses of the pharmaceutical industry by inviting a coalition of CEOs to the White House last Thursday.

That group included Merck chief and PhRMA Chairman Ken Frazier and Biogen CEO and PhRMA Chairman-elect George Scangos. Both companies declined to comment, deferring to PhRMA.

After the executives walked out, they said Obama’s remarks did not break the stalemate.

“The president wanted to try to explain how they did the work and the companies still believe we need to get 12 years,” said Grayson, the PhRMA spokesman. “They told the president the companies still need the 12 years.”

– This post was updated at 5:33 p.m.

Tags Barack Obama Hillary Clinton Mitch McConnell Orrin Hatch
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