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Industry Spotlight > Broker Dealers

Drugmakers say Pacific trade pact to stifle investment in cures

By Anna Edney and Doni Bloomfield

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(Bloomberg) — The biotechnology industry, whose ranks include Gilead Sciences Inc. (Nasdaq:GILD) and Amgen Inc. (Nasdaq:AMGN), criticized the deal struck by negotiators for the Trans-Pacific Partnership (TPP) agreement to let drugmakers keep data secret for at least five years, saying negotiators should have extended protection for 12 years.

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

“BIO strongly believes that 12 years of data exclusivity is a prerequisite to attract the investment required to continue medical innovation and develop new biological cures and therapies,” Jim Greenwood, president and chief executive officer of the lobbying group Biotechnology Industry Organization (BIO), said in an e-mailed statement.

The trade pact’s terms set it apart from the standard in the United States. When American lawmakers passed legislation in 2010 allowing the Food and Drug Administration (FDA) to approve for sale lower-cost versions of brand-name biotechnology drugs made from living organisms, they gave manufacturers of such drugs 12 years after approval that they could keep their drug data secret from would-be competitors. President Barack Obama has asked Congress to lower the term to seven years, a change Democratic presidential candidate Hillary Clinton is also seeking.

While patents can keep lower-cost versions from coming on the market, data exclusivity keeps manufacturers of those biologic copycat drugs, called biosimilars, from accessing the brand-name companies’ data to help develop their products.

Awaiting approval

Specific terms of the negotiated Trans-Pacific Partnership, which includes the United States, Canada, Japan, Mexico, Malaysia and seven other Pacific-rim countries, weren’t immediately disclosed. The trade pact must still be approved by the U.S. Congress and other countries at the national level.

See also: FIO, Congress Urged to Take Greater Roles to Boost Industry’s Trade Globally

“This is one of the most challenging issues in the negotiation,” U.S. Trade Representative Michael Froman said Monday in a news conference.”It will be an effective period to encourage both innovation and access.”

The TPP agreement won’t affect the U.S. data exclusivity period, though it “has the potential to chill global investment and slow development of new breakthrough treatments for suffering patients,” Greenwood said.

The biggest drug-industry trade group, Pharmaceutical Research and Manufacturers of America (PhRMA), also criticized the pact.

“This term was not a random number, but the result of a long debate in Congress, which determined that this period of time captured the appropriate balance that stimulated research but gave access to biosimilars in a timely manner,” John Castellani, president and chief executive officer (CEO) of PhRMA, said in an e-mailed statement.

Budget pressure

For many countries in the trade pact, the exclusivity period is longer than the one they currently enforce. That will pressure their budgets and may significantly reduce access to drugs, according to Ruth Lopert, a professor at George Washington University. She said as many as 40,000 people in Vietnam, the poorest country in the agreement, could stop getting drugs to fight HIV because of provisions that will boost the price of therapy.

See also: Bernie Sanders says he is running for president

The aid group Medecins Sans Frontieres, also known as Doctors Without Borders, said the agreement will hurt patients and health care providers in developing countries.

“Although the text has improved over the initial demands, the TPP will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies,” said the group in a statement.

See also: Big pharma lobby group forswears drugmaker targeted by Clinton

Still, the agreement won’t make much of a difference to biotechnology stocks, Eric Schmidt, an analyst at Cowen & Co., said before the pact was announced. With or without exclusivity, biotech intellectual property is pretty well protected, he said.

“I don’t think this is a big deal for us,” Schmidt said. “Biotech patents have historically been very long-lived, more durable than either eight or 12 years of government-granted exclusivity.”

The Nasdaq Biotechnology Index rose less than 1 percent at 9:56 a.m. in New York.

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