[CTC] Administration close to reaching biologics solution with Hatch, TPP countries

[Arthur Stamoulis]

INSIDE US TRADE

Sources: Administration close to reaching biologics solution with Hatch, TPP countries

October 28, 2016
 
Roughly two weeks before Congress returns for a lame-duck session, the Obama administration appears close to a solution that could satisfy Senate Finance Committee Chairman Orrin Hatch (R-UT) on his main Trans-Pacific Partnership concern, clarifying each country's commitments on the market exclusivity period for biologics.
 
The “fix,” sources said, could move previously undeclared lawmakers to support the TPP implementing bill in the lame-duck.
 
Sources told Inside U.S. Trade that Hatch's team has been working “very hard behind the scenes” with TPP partners to arrive at a solution that would not require reopening the deal or force other TPP countries to take on additional commitments.
 
One source said that while members of Hatch's trade staff -- who have been traveling to TPP countries, most recently Japan -- have been talking “very cryptically” about the issue, it is clear they are working on biologics.
 
“They either have a solution or are on the cusp of being done,” another source told Inside U.S. Trade. “There seems to be a process underway -- a concerted effort on the part of Senator Hatch to bridge the divide, to find a way where they can move forward.”
 
Multiple sources characterized the work as a “clarification” of how individual countries will implement the TPP biologics provision, including their regulatory landscape on the ground -- which countries like New Zealand and Australia have claimed already amounts to a market exclusivity period for biologics drugs of more than 12 years -- and how TPP will affect their market exclusivity for biologics in the future.
 
As part of the clarification, countries would outline their domestic regulatory processes for bringing biologics and biosimilars online, sources said. Through that clarification, those countries would show that their exclusivity periods for biologics exceeds the demanded 12 years of exclusivity, despite domestic laws that require a less lengthy protection period.
 
“What's on paper can mean different things for different countries,” one source said, adding that TPP footnotes provide for transition periods to comply with the provision for some countries.
“Hatch's staff and the White House are in conversations to provide him with clarity on that,” the source added.
 
As stated in footnote 160 of TPP's chapter 18 on intellectual property, “Only the following Parties have determined that, in order to implement and comply with Article 18.51.1 (Biologics), they require changes to their law, and thus require transition periods: Brunei Darussalam, Malaysia, Mexico, Peru and Viet Nam.”
 
New Zealand's ambassador to the U.S., Tim Groser, in September defended his country's market exclusivity for biologic drugs before biosimilars are introduced to the market -- “the shortest period of time” is 21 years, he said <http://insidetrade.com/node/155832> -- and added that “pretending that the only issue that is relevant is the mandatory period of data protection is manifestly untrue.”
 
TPP would require participants to comply with one of two options, the first of which is to provide at least eight years of exclusivity. The second option is to provide five years of exclusivity, and undertake additional regulatory measures that U.S. officials have said should effectively extend that protection to eight years.

Hatch is demanding that the trade agreement require that all parties provide 12 years of exclusivity for biologic drugs, which aligns with U.S. domestic law as set out in the Affordable Care Act.
Officials from TPP countries have made clear they are unwilling to renegotiate or enter into side letters or other binding commitments, but moves to merely clarify the text of the agreement, while not requiring additional commitments that deviate from the TPP text, have not been ruled out, sources said.
 
“I don't think anyone is departing from anything that was agreed,” one source said. “There will be no binding documents. The administration is trying to clarify for him, 'look, this is what is expected to happen.'”
 
The so-called biologics “fix” has two components, sources said. The first part of the fix would be to find a way to satisfy Hatch's demand to secure the current 12 years of domestic market exclusivity for biologics. Budget proposals from the Obama administration have included language that would shorten the market exclusivity period to seven years, but Congress has never agreed to such language -- and sources generally believe 12 years of exclusivity has bipartisan support, regardless of Hatch's fears.
 
Multiple sources said that part of the potential fix is more important both to Hatch and the Pharmaceutical Researchers and Manufacturers of America (PhRMA) because the other TPP countries do not provide as big of a market for them as the U.S., and the other countries have ruled out agreeing to any market exclusivity period that goes beyond the TPP text.
 
The second part of the fix -- which involves the cooperation of the other TPP countries -- is the attempt to “give him some clarity for what the package deal actually means in the case of each country,” one sources said, adding that no country was ever likely to give in to Hatch's demand of 12 years.
 
Sources have also speculated about whether PhRMA was asked to “hide” behind Hatch's demand to give him political cover in holding up the agreement even though the industry would prefer the current deal -- including the commitments as outlined in the TPP text -- over no deal at all, sources said.
 
Consumer groups this week also weighed in on the biologics debate, urging President Obama not to meet Hatch's demand for a 12-year market exclusivity period in the TPP implementing bill or compel other countries to commit to longer periods.
 
“We strongly urge you not to include language in the TPP implementing legislation committing the United States to 12 years of exclusivity or enter into side letters to extend the biologics exclusivity period for any TPP signatory country,” representatives of AARP, AFL-CIO, Oxfam, ConsumersUnion and Doctors Without Borders wrote in an Oct. 26 letter <http://insidetrade.com/node/156370> to Obama, asking him “to stand by your previous support for reducing U.S. market exclusivity to seven years for high cost biologic medicines.”
 
“Binding the U.S. and any other TPP party to an international obligation that requires a 12 year exclusivity period would not only undermine your proposal but future proposals to provide no more than seven years of market exclusivity to enable lower cost biosimilars to come to market sooner,” the groups added.
 
Sources noted that while reaffirming 12 years in the implementing bill that Congress will vote on has been floated as a possible means of satisfying Hatch, such a move can always be overturned by a new Congress or administration.
 
“Any law can be repealed,” one source said. “Hatch just wants to make it even more difficult for that ever to be changed; that matters the most.”
 
Some sources said efforts to secure language in the implementing bill and written clarifications from the other countries would allow Hatch to “save face” because he managed to get “something” for the U.S. industry.
 
Hatch's office and USTR did not respond to requests for comment.
 
The apparent progress on the biologics issue is also sparking optimism among business leaders in the Asia-Pacific region.
 
The Asia-Pacific Council of American Chambers of Commerce is going to push for U.S. ratification of the deal -- as the groups' “number-one priority” -- during a door-knock on Capitol Hill in the first week of December, chairman Jackson Cox told Inside U.S. Trade on Oct. 25.
 
“We are 100 percent focused on mobilizing support among the U.S. business community,” Cox said. “I feel like that the opposition to trade has been exploited and sensationalized. The business community has to step up our efforts to tell our story.”
 
Cox and one of his colleagues -- AmCham in Australia Chairman Niels Marquardt -- said whether TPP happens this year depends on House Speaker Paul Ryan (R-WI), who is in a “difficult position” because of Republican presidential nominee Donald Trump's stance on trade.
 
When asked about Ryan's comments that the deal will not be taken up in the lame-duck because it doesn't have the votes, Marquardt said, “I think that answer was true when he gave it, but is that true on Nov. 9?”
 
“We are acting as if TPP will be on the agenda for the lame-duck,” Cox said. “If anything changes between now and Thanksgiving then we will take another look” -- meaning if TPP is not on the schedule for the lame-duck, the business groups could cancel their trip to Washington.
 
On the potential vote count for the deal, and the offices that will be targeted in their lobbying efforts, Cox said “it is hard to determine until we know what the biologics resolution and the aftermath of the election is.”
 
According to another source, the votes in the House “are there” -- and that will become apparent once the biologics issue is resolved. The source added that “silence has been the best weapon so far,” noting that a number of House members have remained undeclared on TPP for political reasons.
 
White House press secretary Josh Earnest this week sidestepped a question on the timing of congressional action on the deal, calling it “foolish to try to predict congressional outcomes, and so I'm going to resist the temptation to do it here.”
 
“I mean, obviously, this is something that we're thinking through and we've indicated for some time now that we're prepared to coordinate with the leaders in both parties and supporters of the TPP in both parties to formulate a strategy about the best path forward,” Earnest told reporters on Oct. 25.
 
“I don't have anything to tell you about that strategy at this point,” he added. “But obviously, the election's two weeks away and we'll have more to say about it afterwards. OK?” -- Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>) & Jack Caporal (jcaporal at iwpnews.com <mailto:jcaporal at iwpnews.com>)
 
 
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