July 30, 2015

Getting the Facts Straight: Access to Medicines and the TPP

By John Murphy

It’s ironic that today’s life-saving medicines often resemble modern miracles while the biopharmaceutical companies that create them draw the ire of activist groups. This drama is playing out again in the context of the Trans-Pacific Partnership (TPP).

For example, a recent Vox piece entitled “Experts say Obama’s Asian trade deal could drive up the cost of medicine” argues the TPP could deny access to medicines in developing countries, delay the introduction of inexpensive generics, and drive up the cost of medicines generally.

What are the facts?

1) Before a generic version of a medicine can become widely available, it has to be invented — and that won’t happen without intellectual property (IP) protections.

Yes, incentives matter. As Robert Ingram, the former CEO and chairman of GlaxoWellcome, recently wrote in the Wall Street Journal:

The reason new medications are so expensive is that research is expensive. It takes, on average, $2.6 billion and 10 or more years to research and develop a successful new treatment, according to researchers at Tufts University. This decade of development is a time of intense trial and error, and often failure. The U.S. Food and Drug Administration approves only 12% of potential medicines that enter clinical trials.

Not only is protecting IP critical to the creation of new medicines, they tend to be introduced into the marketplace first in countries that prioritize IP rights. This should come as no surprise as such products face the threat of counterfeiting worldwide.

For example, Jordan introduced regulatory data protection—which protects test data collected to prove the safety and efficacy of a new drug—upon entering into a trade agreement with the United States in 2001. In the following five years, 56 new medicines were introduced, more than doubling the rate of such launches and significantly enhancing Jordanians’ access to new medicines.

Similarly, Canada in 2006 implemented eight years of data protection as calculated from Health Canada regulatory approval. According to a membership survey conducted by Rx&D, Canada’s innovative pharmaceutical industry association, 40 new medicines were submitted to Health Canada for regulatory approval between 2006 and 2013 primarily as a result of this data protection regime.

Colombia also introduced regulatory data protection in 2002. Doing so accelerated the introduction of new medicines in the country, according to a report by Fedesarrollo, a Colombian think tank. For similar reasons, Mexico has become one of the countries where biopharmaceutical firms first roll out their new medicines.

2) Patents simply aren’t the barrier to access to essential medicines that activists claim.

The World Health Organization (WHO) maintains a list of more than 300 essential medicines that address priority health care needs and are selected “with due regard to disease prevalence, evidence on efficacy and safety, and comparative cost-effectiveness.” Many countries develop their own lists, basing them on the WHO’s work.

And patents? Approximately 95% of these essential medicines are off patent, meaning that they are widely available in generic versions. In other words, patents hardly figure in the access equation.

New medicines are regularly added to these lists — including, recently, groundbreaking treatments for hepatitis C — and some are added while under patent. But at some point the pipeline of innovative medicines that will become generics will run dry without the patent system that provides the incentives for the discovery and development of these new products.

Further, consider how biopharmaceutical companies have made their products available in low-income countries. When Indian courts denied Novartis patent protection for its innovative cancer medication Glivec in 2013, “access” to this medicine was a non-issue.

As John LaMattina wrote in Forbes, Novartis was already providing Glivec “free of charge to 16,000 patients in India, roughly 95% of those who need it via the Novartis ‘Glivec International Patient Assistance Program.’ The remaining 5% are either reimbursed, insured, or participate in a very generous co-pay program.” Again, patents just aren’t the issue.

3) Ensuring access to generics and protecting intellectual property complement one another.

Consider the record of the countries that have lengthened their terms of regulatory data protection. According to the Canadian generic industry association, the generic share of retail prescriptions in Canada has grown from 44.8% in 2006, the year data protection for innovative drugs was implemented, to 67.1% in 2014.

Similarly, after Mexico implemented regulatory data protection for biopharmaceuticals, the market share of generics expanded, increasing from 73% in 2011 to 77% in 2013.

Then there’s the United States, which is home to one of the world’s strongest systems of protection for IP (and, not coincidentally, the largest research-based biopharmaceutical sector in the world). Yet here, too, generics enjoy an 88% market share.

Activists like to claim such actions will burden health care budgets, but the historical records of Canada and Japan “indicate that these fears of budget increases are unlikely to materialize” if similar actions are taken elsewhere, according to a report from Geneva Network.

While the debate over access to life-saving medicines will certainly continue, the facts are clear. Protecting IP is central to creating new medicines, but it hasn’t limited access to generics. Here’s hoping cooler heads prevail at the TPP negotiating table.


John Murphy is Senior Vice President for International Policy at the U.S. Chamber of Commerce. 

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