August 26, 2015

Under the Microscope: Biologics Fight Highlights Importance of Stronger IP in Asia

When the 12 Asia-Pacific nations involved in Trans-Pacific Partnership (TPP) negotiations reached an impasse last month after week-long talks in Maui, one of the critical remaining points of disagreement was the trade agreement’s prospective coverage of intellectual property.

As these talks have drawn on over a period of several years, bright lines have emerged between countries that consider themselves producers of innovative products, such as new medicines, technology, and software, and countries that consider themselves net consumers of those products.  The former are seeking agreement on stronger intellectual property systems that will stimulate investment in research and development and help speed new innovations to market; the latter favor weakening such laws in order to make existing innovative products cheaper.

Data exclusivity agreements of biologic medicines—drugs made up of living matter that are incredibly expensive and risky to produce—are one such point. On average, biologics cost over $2 billion to develop and take 10-15 years to bring to market—making the break-even time for biologics makers to recover their research and development, manufacturing, and promotion an average of 14.6 years. While some nations are calling for seven or even just five years of patent protection for biologics, U.S. negotiators have and should continue to hold the line at 12 years, the current standard in the U.S.

In recent weeks, many prominent voices have echoed the importance of data protection for biologics.

Earlier this month, the Washington Post penned an editorial on the importance of reaching a trade deal that fosters U.S. innovation. The Post notes:

“To some extent, the United States already pays more than its fair share of the world’s costs for developing and distributing new pharmaceuticals. That’s because only the United States offers drug-makers the ability to recoup the high costs of discovering cures through a combination of strong patent protection and pricing power when dealing with government health-care programs such as Medicare.”

In another recent editorial, the Wall Street Journal called attention to the need to maintain strong IP protections for these drugs, and to the dire side effect of lessening the period of protection—a  disincentive for companies to create the innovative, life-saving drugs that are revolutionizing the treatment deadly diseases.

“Of the some 5,600 drugs in the pipeline among TPP nations, some 3,400 are being developed by U.S. companies. The other countries are ganging up in the name of cheaper drugs while undermining the incentives to make risky investments in the country where they matter. The result would be fewer cures for the world market and less U.S. growth. The 12-year patent life written into U.S. law enjoys broad bipartisan support, and Sen. Orrin Hatch (R., Utah) and others are right to push U.S. negotiators to insist on a strong standard.”

In his own piece, Senate Finance Committee Chairman Orrin Hatch called on negotiations to hold the line on this piece of the deal, noting the importance of the biopharmaceutical industry. Each year the industry supports over 3 million high paying jobs and contributes $800 billion to the U.S. economy. U.S. trade negotiators have a responsibility to ensure this vital sector of our economy is protected.

Stephen Ezell, Vice President for Global Innovation Policy at the Information Technology and Innovation Foundation, summed up the high stakes of this deal to American biopharmaceutical innovation:

“At stake in the TPP is the viability of a global innovation system that affords the necessary underlying IP protections that incentivize innovators to undertake the tremendous risk and expense associated with developing breakthrough new medicines, while also providing a pathway for generics competition. Twelve years of data exclusivity protection for biologics is the right standard — U.S. negotiators should come back with nothing less.”

Once finalized, the TPP deal will cover 40% of the world’s GDP and will open markets to 478 million consumers. Now is the time to get the details right and ensure American innovation is revitalized, not inhibited, by the terms of deal.


Kat Sullivan is Associate Manager of Communications for the U.S. Chamber of Commerce Global Intellectual Property Center (GIPC).

Photo via Pixabay

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