U.S. Legislators Call for Halt of Trade Restrictions on Pharmaceutical Pricing  

By Sean Flynn, Associate Director, Program on Information Justice & Intellectual Property, Washington College of Law, American University

 

On Friday January 21, the board of the National Legislative Association on Prescription Drug Prices (NLARx) endorsed a resolution calling on the U.S. to halt the use of trade agreements to enact international disciplines on pharmaceutical pricing programs. The resolution was passed at the Association's winter meeting in Washington, D.C. The resolution specifically targets the ongoing negotiation of the Trans-Pacific Partnership (TPP), a plurilateral trade agreement among eight nations. To date, no negotiating text has been publicly released. But the branded drug lobby has requested the inclusion of a chapter in the agreement that would require countries to "appropriately recognize the value of patented medicines" in public drug reimbursement programs and provide appeals for drug manufactures to challenge listing and reimbursement decisions of public health authorities.

 

As explained in the resolution, public health programs run by states, including the administration of Medicaid drug benefits for over 40 million Americans, use the same types of price restraining preferred reimbursement formularies (known as preferred drug lists, or PDLs) as foreign governments. Many federal programs, including drug programs for Medicare and veterans hospitals, achieve reductions on drug prices through similar preferred reimbursement programs.

 

"It is not in the best interest of the United States to promote limitations on the types of evidence-based drug pricing used by private companies, U.S. state governments, the U.S. Department of Veterans affairs - and by foreign governments - to control runaway pharmaceutical prices. At a time when health budgets everywhere are strapped, the federal government should not be promoting a new global regulatory agenda that would attack the most effective tools we have to combat excessive medicine prices in our health programs," said Sharon Treat, NLARx Executive Director.

 

The resolution recounts that these effective programs would be threatened by the kind of new international restraints on pharmaceutical pricing programs that the drug industry seeks:

 

"Trade Agreements are reciprocal by nature, and state government policies that violate the terms may lead to foreign government retaliation. The federal government may preempt state law thorough international agreements. And proposals to limit the operation of foreign reimbursement programs are likely to lead to increased foreign pressure to limit similarly operating programs in the U.S."

 

The first trade agreement to include a pharmaceutical pricing provision was the Australia-US FTA. That program required pharmaceutical company participation and appeal opportunities that state officials warned would cripple Medicaid if applied to states. More

 

The issue came to the fore again with the Korea - US FTA negotiation, during which the U.S. proposed language in the agreement that would prohibit Korea's "positive list" drug formulary. NLARx opposed that language, warning that such proposals would threaten Medicaid programs that use similar preferential purchasing lists to restrain drug prices. More 

 

The USTR has not thus far backed down from its agenda to craft new international restraints on effective drug price controls. In a public statement in late September 2009, for example, Ambassador Kirk expressed his "support" for broadening the discussion of a proposal by Pfizer to promote new international rules that "discipline" pharmaceutical reimbursement programs in the U.S. and abroad. 

 

The NLARX resolution will be transmitted to the USTR and to members of Congress. NLARx officials will meet with the USTR on January 31 to discuss TPP and drug pricing issues further.

 

For more on this issue, check out this week's the Legislators' Toolbox, the Forum on Democracy & Trade and PIJIP.