Trade Pact Hits Biopharma Exclusivity

While labor and tariff reforms in the revised North American trade agreement may have more visible impacts on the United States economy, the final document levels a major blow to exclusivity and patent protections important to innovator biotech and pharma companies. Democrats heralded these changes in the final version of the US-Mexico-Canada Agreement (USMCA) as designed to reduce drug costs and generate savings for consumers, while industry predicted that patients will suffer as foreign entities “free ride” on American innovation.

This late development involves dropping an earlier provision backed by the Trump administration that set a minimum 10-year exclusivity period for biologics in all three countries. Instead, the pact now leaves the current 12-year exclusivity as is in the US, but imposes no added protections in neighboring states. This modification appears a major victory for Democratic reformers, who hope to press for future reductions in US exclusivity protections for pricey biotech therapies.

The final trade pact also took out language designed to extend patent protections by three years to sponsors developing new uses for existing products – a practice criticized as “patent evergreening.” Similarly, the agreement no longer requires three additional years of exclusivity for companies developing clinical information to support new uses of approved products, another strategy criticized for delaying generic drug competition. And to further promote “fair competition” in the prescription drug industry, the pact supports access to marketed products by generics firms looking to test copycat competitors prior to patent expiration of the brand [see House Ways & Means Committee summary of provisions.

Producers of generic drugs and biosimilars praised the deal as a “victory for patients” due to changes that promote competition and lower drug prices. Innovators predicted it would erode protections for American innovation, as it would encourage foreign entities to steal US intellectual property, according to the Pharmaceutical Research and Manufacturers of America (PhRMA). Although the pact leaves intact the current 12-year exclusivity period for biologics in the US, Democrats hope to be able to cut back that long period of protection in the future.

While the House may ratify the trade pact quickly, the Senate is not expected to act until early 2020 due to its focus on impeachment proceedings. Changes, thus, are still possible, but President Trump wants to be able to tout the trade deal as a victory for his administration in the coming election campaign – as do Democrats eager to highlight their efforts to preserve jobs and cut drug prices.