[CTC] House Dems Question Impact Of TPP's Drug Provisions, 'May 10' Consistency

[Arthur Stamoulis]

House Dems Question Impact Of TPP's Drug Provisions, 'May 10' Consistency

Inside US Trade
Posted: December 09, 2015 
House Democrats on both sides of the Trade Promotion Authority (TPA) debate raised questions on Tuesday (Dec. 8) about whether the Trans-Pacific Partnership (TPP) adheres to the "May 10" standard on drugs and the extent to which the deal would worsen or improve access to affordable medicines in poorer TPP countries.

During an informal hearing hosted by Ways & Means Committee Democrats, lawmakers including Rep. Susan Davis (D-CA), who voted for TPA, pressed for answers about the impact of TPP from a divided four-person panel of advocates for cheaper medicines and representatives of the biotechnology industry.

"One of the things that I think I keep repeatedly hearing is that the TPP throws out 'May 10' ... Is that so? Because my understanding is that the TPP does reflect some of the May 10 language," Davis told the panel.

The May 10, 2007, agreement between the George W. Bush administration and House Democrats changed the labor, environment and drug IP provisions of trade agreements in ways favored by Democrats.

On drug IP, the deal made patent term extensions and patent linkage optional, and effectively shortened the requirement to provide five years of data exclusivity so that the period would begin when the U.S. granted marketing approval. This is known as a “concurrent” exclusivity period.

The panelists offered wide-ranging opinions during the hearing. Peter Maybarduk, director of Public Citizen's Global Access to Medicines Program, argued that that TPP is “not coherent" with May 10.

Maybarduk noted that the deal requires extensions of patent terms to account for drug approval delays, while they are voluntary under May 10, and imposes a distinct period of exclusivity for data used to request marketing approval for a drug in each foreign market in contrast to the concurrent timeline approach under May 10.

"All these standards that were extracted from the Bush administration by Congressional Democrats in 2007 have now been wiped out by the TPP. And the Obama administration unfortunately abandoned the May 10 template early on in the negotiations," Maybarduk said.

Meanwhile, Joseph Damond, senior vice president for international affairs at the Biotechnology Industry Organization (BIO), contended that May 10 was not the correct template to begin with, given the changes in the industry that have taken place since 2007 and the rapid emergence of biologic medicines.

Damond underscored that these drugs are difficult and financially risky to develop but are among the most promising in the field of medicine, and argued that stronger IP protections are necessary to incentivize such an undertaking. BIO has objected to the fact that TPP requires less than 12 years <http://insidetrade.com/node/150418>of market exclusivity for biologics, which is the standard in current U.S. law.

There is a difference of opinion about whether biologics was covered under the May 10 deal, which was included in the FTAs with Peru, Panama and Colombia. House Ways & Means Ranking Member Sander Levin (D-MI) has maintained that the obligation in May 10 to provide five years of data exclusivity also extended to biologics. But Peru did not interpret the commitment that way, and only implemented data exclusivity for small-molecule drugs. Maybarduk told Inside U.S. Trade he agreed with that interpretation.

A report <http://insidetrade.com/node/151497> prepared by Levin's staff and released on Monday in advance of the hearing draws no hard conclusions about whether the TPP deal is consistent with May 10, but overall seems to lean toward the notion that the agreement represents a departure from that standard in a number of ways.

It notes that while the rules of TPP on the one hand make no distinction between developed and developing countries -- as May 10 did -- the transition periods for developing members to implement the rules and other specific carveouts may ultimately have the same effect, depending on when those countries actually become developed.

For example, it notes that under TPP, Malaysia will not be required to implement the biologics exclusivity provision for five years, or to provide so-called “soft” patent linkage and patent term extensions for marketing approval delays for four and a half years after TPP enters into force. However, it will be required to provide extensions of a patent's life for delays in patent processing immediately upon entry into force, the report says.

The May 10 deal included a soft patent linkage obligation that is substantively the same as TPP. It also made optional both types of patent term extensions -- for delays in the patent approval and marketing approval.

Under TPP, Malaysia specifically will also be allowed to disregard <http://insidetrade.com/node/150518> the exclusivity protections for both small molecule and biologics drug if a brand-name drug maker does not seek marketing approval within 18 months from the time approval is granted in another TPP party, such as in the United States.

“This provision is somewhat similar to the 'concurrent period' provision under May 10,” the staff report says. “Under both provisions, the exclusivity clock starts running when the drug is first marketed in another country.”

Noting that some estimates project Malaysia becoming “high income” in the next two or three years, the report concludes that the “outcome for Malaysia as a developing country is similar under TPP to the outcome under May 10 in some respects (i.e. exclusivity for small molecule and biologic medicines; linkage; patent term extensions for marketing approval delays; and the Doha Declaration).”

But the report points out that, on the other hand, the outcome differs from May 10 with respect to Malaysia when it comes to patent term extensions for patent delays, and because TPP also includes provisions absent in May 10 requiring additional three years of exclusivity when a patent holder submits new clinical information supporting “new uses” of a previously approved small-molecule drug.

The report also sounds a note of caution with regard to estimates about when current TPP countries like Malaysia, Vietnam, Mexico and Peru will really become high-income. “It cannot be emphasized enough that these estimates of development are preliminary; we will need much more input from experts at this point. And these estimates are likely a bit optimistic,” it says, noting that they presume steady economic growth on pace with the recent past.

The panelists at times during the hearing openly argued with one another and frequently offered testimony that was in total contradiction on the issue of whether stronger intellectual property rules are better for promoting access to drugs in developing countries, including those in TPP like Malaysia and Vietnam.

The only point of consensus among them seemed to be that on drug IP protections, the provisions of TPP are a step in the wrong direction -- although they were diametrically opposed on how this should be corrected.

Rep. David Price (D-NC), who opposed TPA, took note of the polarized nature of the debate while also trying to elicit responses about how TPP would affect access to medicines in poor countries compared with the status quo.

"Clearly you have to have incentives for innovation, for research. You have to have some protection for intellectual property. Yet, in the world's poorest countries, almost any price is too much to make lifesaving drugs available," Price said. "I understand the splitting of the difference that went on here, but as I say, it seems to draw fire from both sides."

Rohit Malpani, director of policy and advocacy at Doctors Without Borders, in response cited two studies that he said looked at the effect of the IP protections implemented by Guatemala <http://content.healthaffairs.org/content/28/5/w957.full> and Jordan <https://www.oxfam.org/sites/www.oxfam.org/files/all%20costs,%20no%20benefits.pdf> as a result of FTAs with the U.S. and found substantial increases in prices of medicines and a delay in the marketing of generic medicines.

Damond, for his part, cited a study by the National Bureau of Economic Research <http://www.nber.org/papers/w20799> that he characterized as finding that longer patent protections sped up the launch of new medicines.

During the hearing, both Damond and Stephen Ezell, director of global innovation policy at the Information Technology and Innovation Foundation, hammered home the point that a meaningful period of market exclusivity is necessary for biopharmaceutical companies to recoup their investments. At the same time, they noted that companies have sometimes been willing to offer their medicines at lower cost in poorer countries in order to provide care.

This argument drew an impassioned rebuke from Reps. Jan Schakowsky (D-IL) and Rosa DeLauro (D-CT), who countered that companies were too often charging the highest price the market would bear rather than basing prices on recouping R&D costs.

DeLauro said that instances of offering the medicine for a lower price elsewhere were evidence of that. “We're watching a drug go from $13.50 for a pill one day at $750 the next day,” she said. “So the notion that we're going to cut these deals for this population or that population, or that a developed country is going to pay a lot more money for it -- Let's talk about making medicine accessible to people who need it to to be able to survive.”

Malpani and Maybarduk also pointed to an investigation carried out by Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Sen. Chuck Grassley (R-IA) that concluded on Dec. 1 <http://www.finance.senate.gov/newsroom/ranking/release/?id=3f693c73-0fc2-4a4c-ba92-562723ba5255> that the drugmaker Gilead had based its price structure on maximizing revenue, imposing significant costs for Hepatitis C drugs on Medicare and Medicaid.

In addition, Malpani said that some of the TPP countries are close to being graduated from receiving U.S. foreign aid, and that this combined with higher drug costs would be a “perfect storm” for patients in those nations.


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