May is World Trade Month—a celebration of the industries that import and export goods and services around the world. The month offers a good opportunity to examine the significance of international trade agreements and highlight the important economic role that the innovative biopharmaceutical sector plays both domestically and abroad. As it continues to build on the pro-innovation provisions of the United States-Mexico-Canada Agreement (USMCA), the United States has several major opportunities to raise global standards even further. The successful pursuit of an ambitious trade agenda will help to deliver lifesaving medicines to patients both today and in the future.
International trade agreements that protect intellectual property (IP), increase regulatory cooperation, and eliminate market access and other barriers are crucial to reward appropriate risk, support innovation, and promote research and development. To that extent, the USMCA, which includes a host of important IP protections, including at least ten years of regulatory data protection for biologics, establishes a very strong base from which to negotiate future agreements. As PhRMA President and CEO Steven J. Ubl underscored when the agreement was announced, the USMCA “marks a historic point for U.S. trade policy, cementing critical [IP] protections and other standards that will pave the way for the next generation of treatments and cures.” For these and other reasons, Congress should quickly consider and pass the USMCA.
Most important, international trade agreements like the USMCA have real impacts on patients because without protections and incentives for innovation, medical discovery would wither. That’s why the U.S. must remain firm in pursuing a pro-innovation international agenda that prioritizes IP protection and enforcement, regulatory cooperation and transparency, and fair and reliable market access.
Unfortunately, current policies in many countries fail to provide these assurances, as outlined in PhRMA’s recent Special 301 Report and National Trade Estimate Report submissions to the U.S. government. A variety of foreign government practices discriminate against U.S. companies, and, as a result, patients around the world suffer from reduced access to both future and current state-of-the-art medicines. The United States must hold these countries accountable.
While the harmful policies of many countries merit U.S. government attention, U.S. trade negotiations with Japan, the European Union (EU), and the United Kingdom (UK) offer targeted opportunities to reinforce world-class international IP standards by building on the strong provisions established in the USMCA. Moreover, the negotiations offer a unique opportunity, consistent with bipartisan-enacted Trade Promotion Authority (TPA), to address and eliminate government price controls and “to ensure that government regulatory reimbursement regimes are transparent, provide procedural fairness, are non-discriminatory, and provide full market access for United States products.”
- Negotiations with Japan should establish firm rules to ensure that Japan appropriately values, encourages and protects innovation and provides greater transparency in pharmaceutical pricing and reimbursement decisions. Consistent with Japan’s existing international obligations, the negotiations should address the discriminatory elements of Japan’s price maintenance premium system, which unfairly privileges Japanese companies and calls into question Japan’s commitment to its World Trade Organization obligations. Further, the negotiations provide a timely opportunity to ensure that any new Japanese health technology assessment system incentivizes innovation and provides patients with timely access to new medicines.
- Negotiations with the European Union should directly confront the significant market access challenges that American companies face. Because many EU Member State governments are the primary payers for medicines and in effect dictate prices, their dominant positions often result in their failure to appropriately recognize the value of innovation in pricing and reimbursement policies. Instead, these governments often engage in actions that distort markets and artificially depress prices. Such policies and actions disproportionately impose the significant burden of financing innovation on American patients, workers and innovators.
- Recognizing that the specific scope of negotiations with the United Kingdom remain uncertain pending the resolution of ongoing Brexit negotiations, U.S. negotiations with the UK should address several longstanding market access barriers that reduce the ability of UK patients to access the latest, most innovative medicines.
The United States must continue to promote the highest global standards through these and other trade negotiations by ensuring that its trading partners value, encourage, and protect innovation. Mutually beneficial agreements that protect IP, promote regulatory cooperation, and eliminate market access barriers strengthen the global engine of innovation. In the United States alone, the biopharmaceutical sector generated $54.7 billion in biopharmaceutical exports in 2018, supported nearly 4.7 million jobs and produced the vast majority of the world’s medical innovation.
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.