International trade policy plays a critical role in ensuring that the U.S. biopharmaceutical industry can continue to develop and provide both American and international patients with access to innovative, life-saving medicines. Unfortunately, in many countries across the world, a host of trade barriers, discriminatory measures and the failure to comply with international commitments impedes – or even prevents – this access.
In its recent National Trade Estimate Report on Foreign Trade Barriers (NTE) submission to the Office of the United States Trade Representative (USTR), PhRMA outlined significant market access and intellectual property barriers in several overseas markets. These barriers seriously jeopardize the U.S. biopharmaceutical industry, undermine further scientific innovation, threaten the ability of PhRMA’s member companies to develop life-saving medicines and put American jobs and exports at risk.
Such barriers include: (i) practices that deny fair and equitable market access (e.g., government price controls and discriminatory pricing policies), (ii) practices that undermine the protection of U.S. intellectual property (e.g., patentability restrictions, compulsory licensing and regulatory data protection failures), and (iii) localization barriers (e.g., mandatory technology transfers and de facto import bans).
Below are key examples of these harmful practices:
- Canada employs government price-setting policies that fail to appropriately value and incentivize biopharmaceutical innovation. For example, the country’s Patented Medicine Prices Review Board, which regulates prices in both public and private markets, recently announced draconian changes intended to set prices at levels paid by less wealthy countries.
- Japan recently amended its pricing policies in a way that significantly undermines global research and development and discriminates against non-Japanese companies. In particular, the revised eligibility criteria for the Price Maintenance Premium program will result in some of America’s most innovative medicines being significantly undervalued in the market.
- Korea continues to remain noncompliant with important obligations established by its trade agreement with the United States. For example, health technology assessments require unreasonable thresholds for cost-effectiveness, and international reference pricing inappropriately compares innovative medicines with off-patent and generic competitors.
- Malaysia is one of several countries that has issued compulsory licenses – drastic government measures to break patents on innovative products without the consent of the patent holder. The government shows no signs of ending this discriminatory practice and in fact is considering legislation that would further weaken patent enforcement.
Canada, Japan, Korea and Malaysia are examples of the many countries with policies that threaten biopharmaceutical innovation. Medicines invented and manufactured by PhRMA member companies are regularly targeted by foreign government practices that deny fair and equitable market access and undermine the protection of U.S. intellectual property. Such measures substantially eliminate the investment incentives that are necessary to drive discovery and distribution of new treatments and cures to patients around the world.
PhRMA’s NTE submission calls for USTR and other federal agencies to pursue the following five actions to address these issues: (i) enforce and defend global, regional, and bilateral rules; (ii) secure strong commitments in global, regional, and bilateral trade negotiations; (iii) end discriminatory pricing and reimbursement practices; (iv) combat the worldwide proliferation of counterfeit medicines; and (v) build and strengthen global cooperation.
American inventors and workers must be able to compete on an even playing field in foreign markets. Given the cost-intensive, risky process of biopharmaceutical research and development, U.S. companies rely on strong intellectual property protections and fair and equitable market access. Eliminating the host of trade barriers and discriminatory policies in foreign markets could add billions of dollars towards tomorrow’s treatments and cures and lower overall health care costs around the world.
To read PhRMA’s full NTE submission to USTR, please click here.
Douglas Petersen Douglas Petersen is PhRMA’s deputy vice president for international trade. Previously, he was international trade counsel for the U.S. Senate Committee on Finance, an international trade attorney with White & Case LLP and a trade policy analyst at the Cato Institute. He received a law degree from New York University, a graduate degree from the London School of Economics, and undergraduate degrees from the University of Utah.