At this point, virtually every self-respecting publication and/or organization with an interest in the Trans-Pacific Partnership Agreement, TPP, has taken note of the speech Senator Orrin Hatch (R-UT) gave last Friday at the U.S. Chamber of Commerce. We know we are playing catch-up here, but that speech was exceptionally important and needs to be included in these pages.
The senator is the Chairman of the Senate Finance Committee and a strong proponent of open markets. He was also one of the driving forces behind the TPA legislation that will govern Congress's consideration of TPP. In short, his warning is not one that anyone concerned about the future of TPP can ignore.
To be sure, he did not rule out the possibility that he might support the current TPP. He did not say that there must be a renegotiation. Speaking just a day after the release of the text, Senator Hatch said:
"I want to take the time to review it, talk with my colleagues, and consult with all of you and other stakeholders but, as it stands right now,
I'm afraid that the current draft of the TPP agreement may fall short."
Still, his message, his warning, was clear enough: renegotiation may be necessary.
The Senator's principal concern has to do with the intellectual property provisions of the agreement. As he explained to the professionals at the Chamber's Global IP Summit, "over 200,000 Utahns - nearly one-fifth of the state's private sector workforce - are employed by IP-intensive companies." Within the broad topic of intellectual property rights, his special focus was, as it has been for some time, on the provisions dealing with the period of data exclusivity provided for biologics. Senator Hatch himself defined the latter. He said: "The term BIOLOGICS refers to medical and pharmaceutical products derived from living organisms, rather than a combination of chemicals.
"Biologics are on the cutting edge of medical innovation, especially in the treatment of diseases like cancer and arthritis, which, only a few decades ago, were considered untreatable. Because these treatments can be much more selective in attacking a disease within the body, they have the potential to treat or cure many diseases without the terrible side effects that often accompany other medicines, meaning that they can not only alleviate patients' suffering, but also reduce long-term healthcare costs."
As for data exclusivity, the start of the Wikipedia entry seems about right. It says:
"Test data exclusivity refers to protection of clinical test data required to be submitted to a regulatory agency to prove safety and efficacy of a new drug, and prevention of generic drug manufacturers from relying on this data in their own applications. Pharmaceutical companies argue that since test data is so expensive to produce, it is an unfair advantage to let other companies rely on that data without cost."
Because of the very high costs associated with developing biologics, U.S. law provides a 12 year period of data exclusivity for the companies that do that work. And even that number needs to be put in perspective. "On average," Senator Hatch said, "these products are on the market for nearly 15 years before their developers see a profit from their investment."
Against that background and from that perspective, the agreement is indeed deficient. "[It] appears to include a standard for only five years of data exclusivity for biologics, apparently with the possibility of an additional three years based on factors that are, as of right now, unclear at best," Senator Hatch said.
And of course the U.S. industry is not happy. John Castellani, the president and CEO of the Pharmaceutical Research and Manufacturers of America, PhRMA, had a somber reaction to the announcement last month that the agreement had been concluded. "We are disappointed," he said, "that the Ministers failed to secure 12 years of data protection for biologic medicines, which represent the next wave of innovation in our industry."
And why was the U.S. unable to win 12 years of protection for the test data for biologics? Senator Hatch expressed some doubt about the Obama administration's commitment to the 12 years. He was more definite in discussing the reluctance of U.S. trading partners to go along. According to reports on the final days of the TPP negotiations, he said:
"Some of our trading partners refused to accept additional data protections for biologics because doing so would lead to increased spending in their centralized health care systems.
"So in essence it appears this agreement would once again require the American public to pay higher costs at home in order to subsidize socialized medicines in other countries."
****
We need to add just a little more background before turning to our own brief comments. To the extent that one country (fairly or un-) has been singled out in this discussion, it is Australia. There are pharmaceutical firms in Australia, but, in TPP, the Australian government's main concern seems to have been keeping down costs for Australia's Pharmaceutical Benefits Scheme, which covers prescription medicines. Australia's Trade Minister, Andrew Robb, has been outspoken on this point. He told the Australian Associated press that Australia did not move "one iota" on this issue. Rather, he said, "We have absolutely no intention of increasing the cost of medicines to the Australian public by seeing any increase in the [5-year] period of data protection."
As for renegotiating the TPP agreement, America's TPP trading partners are saying "no" to that, and U.S. Trade Representative Michael Froman said "no" to any renegotiating even before the text was out and before Senator Hatch had given his now famous speech. In the course of an October 15 Council on Foreign Relations conference call, Ambassador Froman explained, "This is isn't one of those agreements where you can reopen an issue or renegotiate a provision."
|