Researchers Question Benefits of Pharma Protections in US Trade Deals

Regulatory NewsRegulatory News
| 01 May 2019 | By Michael Mezher 

The authors of a new perspective in the New England Journal of Medicine question the benefits gained by the US from intellectual property protection provisions for pharmaceuticals in international trade agreements over the last several decades.
According to authors Thomas Bollyky, senior fellow for global health, economics and development at the Council on Foreign Relations, and Aaron Kesselheim, associate professor of medicine at Harvard Medical School, such provisions have not led to more pharmaceutical manufacturing jobs in the US or a more even distribution of drug prices between the US and other parties to the agreements.
In each of the dozen international trade agreements signed by the US since the North American Free Trade Agreement (NAFTA) in 1994 there have been provisions to increase the level of protection for pharmaceuticals or biologics such as regulatory data protection, patent term extension or longer exclusivity periods.
The authors trace the impetus for including greater intellectual property protections for pharmaceuticals to the rapid rise in US trade deficit and shrinking manufacturing sector in the early 1980s.
“US Officials sought a trade strategy that could improve US competitiveness, attract industry support, and reduce public outrage over the growing trade deficit and declining manufacturing. A major part of that strategy was building on US economic advantages in high technology (such as software and pharmaceuticals) and entertainment (such as movies and music) by implementing stronger intellectual property protections,” they write.
Despite securing pharmaceutical intellectual property protections through the agreements, the authors write that drugmakers have “increasingly shifted their manufacturing and ownership of their patents abroad to low-tax countries so as to avoid paying US taxes. Ireland, with a 12.5% corporate tax rate is now the leading exporter of pharmaceuticals to the United States.”
Since NAFTA was enacted, the authors say the US pharmaceutical trade deficit has grown to $52 billion whereas pharmaceutical manufacturing employment has grown by only a few percent since the first post-NAFTA trade agreement was enacted in 2001.
And while Trump and others have argued that other countries are “free-loading” by spending less  than the US for the same drugs, the authors point out that most of the trade deals the US is party to are more than 10 years old and have not led to more even drug prices between the US and other countries in the agreements.
Instead, the US has seen prescription drug spending increase significantly over the last decade, from $236 billion in 2007 to $333 billion in 2017.
“Americans and their representatives are ignoring history if they expect the inclusion in the USMCA of longer exclusivity for biologics to redress the US trade deficit, loss of manufacturing jobs and high prescription drug prices,” the authors conclude.


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