The US International Trade Commission (ICT) issued a new report on the likely impacts of the US-Mexico-Canada Agreement (USMCA) on the US economy and specific industry sectors—which include medical devices and technologies, pharmaceuticals and biotechnologies.
USMCA has received mixed reactions since the agreement between the US, Mexico and Canada was signed last November. Device industry group AdvaMed was quick to welcome the latest report, while the generic drug industry group, the Association for Accessible Medicines, has said the agreement “will decrease competition from more affordable generic and biosimilar medicines and keep patients paying high drug prices for longer.” The new agreement seeks to build on the countries’ 1994 North American Free Trade Agreement (NAFTA).
ICT concludes in its report from last Thursday that USMCA is likely to have a moderate impact on the US economy, whereas the impact on industries differs across specific sectors and provisions. Except for changes to intellectual property rights (IPRs) for the sector, the overall impact on the medical device sector is expected to be small because of certain points of regulatory consistency that are already in place among the three countries.
USMCA is not expected to have a significant economy-wide impact on the chemicals and pharmaceuticals sector. International data transfer provisions are likely to have an impact on all industries of natural resource and energy goods, including devices and chemicals and pharmaceuticals.
“The new agreement would affect barriers to trade in goods and services, revise rules that govern trade and investment and alter the regulatory environment for exports and imports in the region,” ICT notes. The report cites duplicative regulatory procedures, the adoption and application of standards and data transfer regulations, among others, as examples of remaining technical barriers.
To break down remaining nontariff barriers, USMCA places emphasis on regulatory harmonization and standardization, strengthening rules of origin and IPRs, open data flows and reducing policy uncertainty.
AdvaMed executive vice president of global strategy and analysis Ralph Ives said the ITC report showcases “USMCA’s substantially positive impact on the US economy compared to NAFTA.” The industry trade association is also pleased with the medical technology-specific benefits identified in the report. These anticipated benefits relate to reimbursement transparency and procedural fairness, regulatory best practices, the facilitation of customs and trade and improved IPRs.
USMCA “will further regulatory harmonization across borders and foster expanded access to the latest medical technology innovations for the benefit of patients,” Ives added. Technical barriers to trade (TBTs) increase the trade costs of medical devices by up to 20%, AdvaMed’s estimated
in a submission to ICT.
The annex on medical devices aims to prevent TBTs through the inclusion of language that discourages duplicative regulatory procedures, while encouraging audit recognition and device standards alignment.
“Onerous standards and regulatory procedures—which USMCA discourages—have been found to exert a statistically significant, negative impact on medical device trade,” ITC says of an August 2018 ICT paper
ICT’s new report shows USMCA is expected to have a positive regional and global impact. ICT highlights an estimate that USCMA would increase the US gross domestic product by 35% or $68.2 billion and US employment by 0.12% or 176,000 jobs, with manufacturing experiencing the largest percentage gains.
Device manufacturers are in the only sector that will be significantly impacted by IPR provisions under ICT’s economy-wide model. These previously drew mixed reactions from the drug sector, particularly as it relates to expanded regulatory data protection (RPD) for biologics and expanded patent protections.
, stakeholder groups took issue with the 10-year RPD exclusivity provision for biologics that USMCA would set. Mylan supported off-setting the effects of a USMCA provision by balancing this with the US Food and Drug Administration’s 180-day exclusivity period for certain first-approved generic applicants.
Of the IPR-intensive manufacturing sectors ICT analyzed, scientific and analytical instruments and medical devices “exhibit a statistically significant positive relationship between trade flows and IPR protection as measured by the external index.”
The findings “suggest that higher domestic IPR protections are associated with greater import activity in these two sectors,” which is “consistent with the notion that some industries feature a greater share of gaining and losing firms than others.” Gains to first market entrants in the biopharmaceutical sector “are likely to be offset by losses to generic firms” but there is no comparable sector for devices. “IPR improvements in Canada and Mexico thus demonstrate a significant relationship to medical device trade flows,” according to ICT’s new estimates.