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Drug patent dispute emerges as hurdle to Pacific trade deal

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(Bloomberg) — Drug patent rules are shaping up as one of the thorniest issues standing in the way of a massive Asia-Pacific trade deal as talks get under way in Hawaii.

See also: Obama pushes trade partners to add drug rules he opposes in U.S.

The dispute pits the administration of U.S. President Barack Obama and the pharmaceutical industry against poorer countries participating in the Trans-Pacific Partnership, such as Chile, Malaysia, Peru and Vietnam. At issue is a class of drugs called biologics. Developing nations are allied with richer countries like Australia, who don’t want to adopt U.S. rules that let drug companies keep confidential clinical data generated to win regulatory approval for such products.

The patent disagreement is one of many that trade ministers from 12 countries are hoping to resolve during talks on Maui to conclude six years of negotiations on the TPP. The pact, which ranges from agriculture to e-commerce, got a boost last month when the U.S. Congress approved Obama’s request for an up-or-down vote on any deal.

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Companies including Pfizer Inc. and Amgen Inc. stand to benefit if more countries adopt U.S.-style patent laws, and industry lobbyists have descended on Maui to make their case.

One issue they’re monitoring is a bid to make sure drug companies can control for 12 years the data generated to win approval for biologics, or biopharmaceuticals. The profitable and relatively new segment of the market involves medicinal preparations made from living organisms, as opposed to chemicals.

The 12-year lock-up, which is already in U.S. law, makes it harder to develop competing products and makes the patents more valuable.

U.S. baseline

The dispute puts U.S. Trade Representative Michael Froman, the administration’s top official in Maui, in the middle of a debate between the pharmaceutical industry and their Republican allies in Congress, and Democrats whose support is crucial to Obama’s trade agenda. The Obama administration has previously proposed, without success, for Congress to reduce the 12-year rule to seven years.

Sen. Orrin Hatch, R-Utah, who heads the committee that overseas trade, told industry lobbyists by video that he expects U.S. law to “serve as the baseline” for the TPP. “It’s imperative that the trade pact have the strongest possible terms for innovative industries,” Hatch said. He specifically endorsed the 12-year rule, which Republicans say is needed to justify the risk and research into new therapies.

Trevor Kincaid, a Froman spokesman, said the administration was “working hard to strike a balance that will ensure people have access to affordable life-saving medicines and innovators will have an incentive to invest in groundbreaking research.”

Poorer countries

Burcu Kilic, legal counsel for Public Citizen’s Global Access to Medicines Program, said the U.S. position threatens to burden poorer countries. “Their systems are simply not ready for the kinds of obligations that the U.S. is seeking in the TPP,” Kilic said in an interview.

Last week, a group of Democrats in the U.S. Congress who backed Obama’s bid for expanded authority to finalize the Asia-Pacific deal warned they might back away from the agreement over the pharmaceutical rules.

Reps. Earl Blumenauer, of Oregon; Susan Davis, of California; and James Himes, of Connecticut, said that TPP needed to include “incentives and safeguards” that both protect drug patents and ensure generic drugmakers can enter the market and lower costs over time.

“A TPP that inhibits a balanced approach could unreasonably delay the timely and affordable access to medicines in certain TPP countries,” they wrote.

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