Congress may soon vote on the “New NAFTA” -- the revamped trade deal to modernize 1980s-vintage rules that have done much to grow North American commerce. Mexico already ratified the pact. Canada is expected to do so imminently.
Here in the United States, however, some lawmakers want to rewrite the deal, known as the “United States-Mexico-Canada Agreement,” at the eleventh hour.
USMCA’s robust intellectual property protections for advanced medicines, called “biologics,” are at the center of the debate. Critics fear the intellectual property protections afforded to these medicines will raise drug prices -- so they want the provision stripped out.
This would be a mistake. The provisions won’t impact drug prices. And removing them would slow medical innovation, unnecessarily threatening millions of lives.
Biologics are created from living organisms. The molecules are many times larger than traditional drugs, and the molecular structure is virtually impossible to copy exactly.
As a result, patents alone aren’t enough to protect the inventors of biologics. Innovators also require “data exclusivity.”
In the United States, companies enjoy 12 years of data exclusivity on biologics. During that period, companies can keep their research data private from would-be competitors. This prevents rivals from creating knockoff biosimilars, which are clinically similar, though slightly molecularly different, from the original biologics.
Canada currently offers innovators an eight-year exclusivity period. Mexico, meanwhile, gives companies no data protection at all.
USMCA would require Canada and Mexico to offer at least 10 years of data exclusivity to new biologics.
Some have voiced concerns about USMCA’s 10-year requirement, which they fear could prevent drug firms from creating cheaper biosimilars. Consequently, patients would be stuck paying higher brandname prices for a longer period.
For starters, nothing in the deal would change America’s data exclusivity period: it would remain at 12 years. To backslide on this under USMCA wouldn’t reduce the price of drugs, but rather create uncertainty for the industry, putting at risk much-needed investment in cutting-edge R&D.
Recent history proves that extending data exclusivity periods doesn’t drive up spending. When Canada increased its data-exclusivity period to eight years in 2006, drug spending as a percentage of overall healthcare spending actually fell. The same thing happened in Japan in 2007.
Shortening data exclusivity periods would result in fewer cheap biosimilars, not more.
It takes roughly $2.6 billion to create just one new medicine. Without a reasonable data exclusivity period, competing firms could simply copy a new biologic and sell it for a bottom-dollar price. It would be extremely difficult for inventors to recoup their development costs. So innovators would have little incentive to invest in new biologic research in the first place.
USMCA represents an important opportunity to advance medical innovation for American patients. Removing the deal’s data exclusivity provision would be bad trade policy -- and bad health policy.
Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at Georgetown University’s School of Foreign Service.