As Lighthizer Negotiates on USMCA, Former HHS Secretary Warns Against Buying Into ‘Myths’

By IPWatchdog
September 19, 2019

“Members from both sides of the aisle urged USTR to include strong intellectual property protections for pharmaceutical products in the Agreement, and Ambassador Lighthizer  wholeheartedly embraced this task.” – Former Department of Health and Human Services (HHS) Secretary Tommy Thompson

On September 13, U.S. Trade Representative Robert Lighthizer reportedly expressed a willingness to negotiate on several points of contention regarding the U.S.-Mexico-Canada Agreement (USMCA), including potentially reducing the 10-year period of intellectual property protection for biologic medicines.

In response to this, the Pass USMCA Coalition is touting a memo penned by Former Department of Health and Human Services (HHS) Secretary Tommy Thompson aimed at “debunking the widespread myth that the USMCA will drive up drug prices.” Thompson, also a four-term governor of Wisconsin, now advises the Pass USMCA Coalition.

Thompson’s memo focuses on three key arguments that he considers myths:

Myth 1: The USMCA Will Change U.S. Domestic Law

Myth 2: The USMCA Will Raise Drug Prices

Myth 3: This Provision Is Bad Policy

With respect to myth number two, which has been the topic of many congressional hearing this term and continues to remain in the spotlight, Thompson notes in part that the provision in the USMCA requiring a 10-year period of data protection for biologics—as opposed to the 12-year period required by U.S. law—was included in the agreement because “Congress itself directed the USTR to include it.”

Congress mandated this intent in the IP objective of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, which provides trade promotion authority (“TPA”) under which USTR negotiated the USMCA…. Members from both sides of the aisle urged USTR to include strong intellectual property protections for pharmaceutical products in the Agreement, and Ambassador Lighthizer  wholeheartedly embraced this task, describing the importance of limiting the ability of Canada and Mexico to free-ride off of U.S. innovations on pharmaceuticals in testimony he gave while the negotiations were underway.

Thompson further pointed out that other Free Trade Agreements in which drug pricing was a crucial issue have not resulted in higher drug prices in the United States, citing a recent study from ndp analytics which “found that ‘pharmaceutical expenditures as a share of healthcare expenditures in the U.S. remained unchanged from 2012.’”

In May of this year, 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. They wrote:

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.

In July, the Geneva Network released a report in which it said evidence from Canada and Japan on the link between RDP term and drug prices found that:

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.

Thompson explained that drug pricing debates should be relegated to other avenues, such as Congress and the presidential Administration. “Congress should stop its foot-dragging and vote on the USMCA for what it is: a trade bill that encourages other countries to meet existing U.S. standards,” Thompson wrote.

 

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