[CTC] Analysis of latest TPP leak

Wed Jun 10 06:03:42 PDT 2015

Two pieces below...

For Immediate Release:                                            Contact: Angela Bradbery +1 (202) 588-1000
June 10, 2015                                                                          Peter Maybarduk +1 (202) 588-7755, 
                                                                                                                    pmaybarduk at citizen.org <mailto:pmaybarduk at citizen.org>            

Latest TPP Leak Raises Burning Questions About Implications for U.S. Health Care System

Obama Administration on the Defensive Once Again as it Tries to Rally Skeptical House Members to Support Trade Authority for Controversial Pact

WASHINGTON, D.C. – The latest secret document from the Trans-Pacific Partnership (TPP) negotiations – published today by WikiLeaks – shows that the pact could expose Medicare to pharmaceutical company attacks and constrain future policy reforms, including the ability of the U.S. government to curb rising and unsustainable drug prices, according to Public Citizen. The concerns about the U.S. health care system arising from this latest leak add to the litany of reasons that nearly all Democrats in the U.S. House o <>f Representatives and a substantial bloc of House GOP oppose Fast Track trade authority for the TPP. 

The December 2014 draft of the “Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices,” which sets rules and procedures TPP country health authorities would be required to follow regarding pharmaceutical and medical device procurement and reimbursement, is only the latest of several draft texts from the TPP negotiations published by WikiLeaks. Other draft sections of the pact have drawn the ire of public interest advocates due to threats presented to a host of issues ranging from financial regulation to tobacco control to environment to terms allowing corporations to challenge U.S. laws in foreign tribunals. More than 25 chapters remain shrouded in secrecy. 

“This leak reveals that the Obama administration, acting at the behest of pharmaceutical companies, has subjected Medicare to a series of procedural rules, negotiated in secret, that would limit Congress’ ability to enact policy reforms that would reduce prescription drug costs for Americans – and might even open to challenge aspects of our health care system today,” said Peter Maybarduk, director of Public Citizen’s Global Access to Medicines Program.  

The Annex was first leaked to the public in 2011. While strong opposition from many health, consumer and labor groups and nearly every TPP-negotiating country has led to the removal of some harmful provisions, many others remain, raising serious questions and concerns about the consequences of the text for U.S. health care and that of all negotiating countries.

Importantly, this leak comes as members of Congress weigh whether to cede their constitutional authority over trade to the Obama administration, removing their ability to approve the nearly-complete TPP text before the president signs it or to amend it during floor consideration and providing such extraordinarypowers to whomever may be president for the next six years with respect to additional pacts by requiring straight up-or-down votes on completed, signed deals presented by the administration.

In this memo, Public Citizen’s Global Access to Medicines program presents three questions raised by the text regarding the U.S. health care system that the administration should answer for a public and Congress worried about implications for rising medicine prices. 

For more than half a decade, the United States has been negotiating the TPP, a proposed free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The United States has ambitions to eventually apply the terms of the proposed TPP to all members of the Asia Pacific Economic Cooperation (APEC) forum – roughly 40 percent of the world’s population.

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MEMO: Three Burning Questions about the Leaked TPP Transparency Annex and Its Implications for U.S. Health Care

June 10, 2015

Today, WikiLeaks published <file:///C:/Users/pmaybarduk/AppData/Local/Temp/wikileaks.org/tpp/healthcare> the draft Trans-Pacific Partnership (TPP) “Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices.” This Annex sets rules that TPP country health authorities would be required to follow regarding pharmaceutical and medical device procurement and reimbursement.  The draft is dated December 17, 2014. An earlier version leaked in 2011. Unlike that document, the new leak expressly names the Centers for Medicare & Medicaid Services (CMS) as covered by the text, “with respect to CMS’s role in making Medicare national coverage determinations.” Under the TPP, then, these determinations would be subject to a series of procedural rules and principles, the precise meaning of which are not clear and perhaps not knowable.

Pharmaceutical companies could attempt to exploit the general language of the annex to mount challenges to Medicare and health programs in many TPP negotiating countries. The Annex would constrain future policy reforms, including the ability of the U.S. government to curb rising and unsustainable drug prices.

Medicare’s national coverage determinations include whether Medicare Part A and Part B will pay for an item or service. Among other things, Part A and B cover drugs administered in a hospital or a physician’s office, and durable medical equipment.[1] <applewebdata://2AE69BF2-4BFD-4FE2-9C63-3ACE260CCC92#_ftn1> Below are questions to which the American public and members of Congress should have full and complete answers before voting on whether to cede trade promotion authority (fast track) to the Obama administration.

1.       What guarantees are there that the TPP’s requirements would not override existing procedures for Medicare?

The Office of the United States Trade Representative (USTR) claims that Medicare today is fully compliant with the proposed provisions of the TPP. Yet the ambiguous language of the TPP leaves our domestic healthcare policies vulnerable to attack by drug and device manufacturers. For example:

·         Could companies use the Annex to compel Medicare to cover expensive products without a corresponding benefit to public health? Medicare reimbursement is limited to products that are “reasonable and necessary” for treatment. But the TPP “recognize[s] the value” of pharmaceutical products or medical devices through the "operation of competitive markets" or their "objectively demonstrated therapeutic significance," regardless of whether there are effective, affordable alternatives.

·         The TPP also requires countries to “make available a review process” for healthcare reimbursement decisions. Medicare national coverage determinations allow for appeals, but only in a limited set of circumstances.[2] <applewebdata://2AE69BF2-4BFD-4FE2-9C63-3ACE260CCC92#_ftn2> Might this conditional appeal process be construed as insufficient, if companies argue the TPP grants them an unconditioned right to review?

·         Similarly, the TPP mandates that parties provide opportunities for applicants to comment on reimbursement considerations “at relevant points in the decision-making process.” Though Medicare national coverage determinations allow for comments in certain stages of the process, these determinations may be vulnerable to legal challenge depending on the construction of “relevant points.”

2.       Would the TPP constrain pharmaceutical reform efforts in the U.S.?

In addition to its application to Medicare Part A and B, the Annex would apply to any future efforts related to national coverage determinations by the CMS, including potential Medicare Part D reforms.

In response to soaring drug coasts, advocates have increasingly called on the government to enable the Secretary of Health and Human Services to negotiate the price of prescription drugs on behalf of Medicare beneficiaries. Vital to this reform would be the establishment of a national formulary, which would provide the government with substantial leverage to obtain discounts. [3] <applewebdata://2AE69BF2-4BFD-4FE2-9C63-3ACE260CCC92#_ftn3>

The development of such a national formulary would be subject to the requirements of the TPP. These procedural requirements would pose significant administrative costs, enshrine greater pharmaceutical company influence in government reimbursement decision-making and reduce the capability of the government to negotiate lower prices.

3.       Could the inclusion of this Annex in the TPP bolster the case of a pharmaceutical company that is suing the United States?

Investor-State Dispute Settlement is a mechanism that has been a prominent feature of U.S. trade and investment pacts over the last two decades. It allows foreign companies to challenge directly government policies which they claim impinge on their expected future profits, demanding unlimited sums in taxpayer compensation.

Would a foreign pharmaceutical company that has launched an investor-state suit against a government for a reimbursement decision use this annex to bolster their case? The company could attempt to claim that their legitimate expectations have been frustrated, making reference to the expectations created by the annex. 

Contact: Peter Maybarduk, +1 202 588 7755; pmaybarduk at citizen.org <mailto:pmaybarduk at citizen.org>

[1] <applewebdata://2AE69BF2-4BFD-4FE2-9C63-3ACE260CCC92#_ftnref1> Medicare Drug Coverage under Medicare Part A, Part B, Part C , & Part D. (2015, May 1). Retrieved June 9, 2015, from http://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/downloads/11315-P.pdf <http://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/downloads/11315-P.pdf>
[2] <applewebdata://2AE69BF2-4BFD-4FE2-9C63-3ACE260CCC92#_ftnref2> “Department of Health and Human Services; Centers for Medicare & Medicaid Services [CMS-3285-N] Medicare Program; Revised Process for Making National Coverage Determinations,” 78 Federal Register 152 (7 August 2013), pp. 48164 - 48169.
[3] <applewebdata://2AE69BF2-4BFD-4FE2-9C63-3ACE260CCC92#_ftnref3> Outterson, K., & Kesselheim, A. (2009). How Medicare Could Get Better Prices On Prescription Drugs. Health Affairs. Retrieved June 9, 2015, fromhttp://content.healthaffairs.org/content/28/5/w832.full <http://content.healthaffairs.org/content/28/5/w832.full>
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