In the face of pressure to pull provisions in the United States-Mexico-Canada Agreement (USMCA) that would grant 10 years of regulatory data protection (RDP) for biologics inventions, a recent report claims that the requirement would not result in higher drug prices for U.S. patients.
The USMCA is currently being negotiated, but the chances of a vote this summer are quickly dwindling. In addition to other objections, many Democrats have opposed granting 10 years of RDP—an increase from 8 years in Canada and from 0 in Mexico (the U.S. period of exclusivity is longer, at 12)—arguing it would result in higher drug prices and delayed entry for biosimilars. Patrick Kilbride, Vice President of International Intellectual Property for the Global Intellectual Property Center (GIPC) at the U.S. Chamber of Commerce, has argued here before that the data does not support those claims.
Geneva Network, a UK-based “public policy research and advocacy organization working at the nexus of innovation, trade, and development policy,” released a report last month based on evidence from Canada and Japan on the link between RDP term and drug prices. According to the report:
Spending on drugs as a proportion of Canada’s overall health expenditure is less today than it was in 2006, the year that regulatory data protection was introduced. In fact, drug expenditures declined as a proportion of overall health spend in the years immediately following the change.
Drug spending in Japan as a percentage of total health spending declined from 2007, when the government increased regulatory data protection from 6 to 8 years for all new medicines. Drug spending fell from 20% of total health spending in 2007 to 19.7% in 2015, the last year of available data.
In May, Representative Richard Neal (D-MA), Chair of the House Ways & Means Committee, and other democrats sent a letter to USTR Robert Lighthizer warning him of their opposition to certain provisions of the USMCA:
The new Agreement seeks to export standards like the ones set in current U.S. laws and policies. Similar to May 10, our attention is drawn to provisions such as the number of years of market exclusivity provided for and the definition of biological pharmaceuticals, usage of secondary patents, linkage of a valid patent to marketing approval of a drug, and the Bolar exemption. We note that the new Agreement does not export some of the safeguards and incentives the U.S. system provides for generic companies to be the first to enter into our market.
Most recently, a group of moderate Democrats sent a letter to Lighthizer warning him not to push Democrats on the USMCA timeline and indicating that a vote would take place “later this year.”
The topic of drug pricing has been a hot one in Washington this term. There are several bills pending that aim to address the issue from a variety of angles, and the Trump administration approved a new rule to require list prices be included in TV ads for drugs covered by medicare or medicaid, although a judge recently blocked its implementation. With such bipartisan support for lowering drug prices by limiting IP rights, the perceived link between RDP exclusivity and higher drug prices does not bode well for the USMCA provision.
Philip Stevens, Geneva Networks’ Executive Director, said that the concerns are unfounded and urged Congress to pass the bill with the current language on RDP. “The IP provisions in the USMCA are vital to North America’s continued leadership in biotech innovation”, Stevens said. “Yet the evidence from Canada and Japan shows that higher IP standards do not necessarily mean more drug spending”.
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