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How US-Canada-Mexico Trade Deal Could Impact Drug Prices, Research
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The United States-Mexico-Canada Agreement keeps biologic drug prices high but could potentially spur new research opportunities, a pharmaceutical expert told Healio Family Medicine.
The agreement between the three countries announced on Nov. 30, but still subject to approval by Congress and legislatures in Canada and Mexico, will significantly change how the U.S. does business with some of its closest geographic neighbors, members of President Donald J. Trump’s administration said.
“This paradigm-shifting model ... will consist of a host of ambitious provisions on digital trade; intellectual property; services, including financial services, designed to protect our competitive edge,” Robert E. Lighthizer, U.S. trade representative, said at a press conference in October.
President Trump elaborated further on some of the health care components of the agreement at the press conference.
“We also provide brand new intellectual property protections for biologic drugs, which will make North America a haven for medical innovation and development. We want our drugs to be made here. When you talk prescription drugs, we don't like getting them from foreign countries. We don't know what's happening with those drugs, how they're being made,” he said.
The text of the agreement indicates biologic drugs are those produced using biotechnology processes, that are or contain allergenic product, antitoxin, blood, blood component or derivative, protein, therapeutic serum, toxin, virus vaccine, or similar products that are intended to prevent, treat or cure a disease or condition.
In addition, the agreement indicates Canada and Mexico will share inspection reports of facilities that make biologics with the United States. The decisions for granting marketing authorization for a specific biologic will be made based on its safety, effectiveness, and quality but not its sales or other financial data.
The agreement also states that medical devices that require periodic reauthorization are allowed to stay on the market so long as no significant quality, safety, and efficacy issues have been identified. In addition, the country where the product was manufactured does not necessarily have to be the one whose regulatory agency decides on its availability to the public.
The Advanced Medical Technologies Association, or AdvaMed, applauded the agreement.
“The agreement includes new provisions that apply to medical devices that will foster greater patient access to the latest medical technology innovations and further regulatory harmonization. We urge the U.S. Congress and the governments of Mexico and Canada to approve the United States-Mexico-Canada Agreement as expeditiously as possible,” the association said in an October statement.
Some analysts and Medicins san Frontieres argued that the agreement would be a boon to the pharmaceutical industry that did not significantly benefit patients.
Possible negatives to the agreement
The intellectual protections in the proposed trade deal could ultimately stifle competition, said Robert A. Freeman, PhD, a professor of pharmacy administration at the University of Maryland’s Eastern Shore campus.
“The United States-Mexico-Canada Agreement is not good news for most U.S. patients and doctors,” he told Healio Family Medicine. “By doubling the length of time that information surrounding the development of drugs can be protected from 5 to 10 years, pharmaceutical companies keep their monopolies and keep their biologic drug prices high.”
“I don’t think you’ll see a new biologic entering the treatment market for less than $100,000 a year in the U.S. as a result of this deal. Biologics for rare diseases could cost upwards of $350,000 and higher annually,” Freeman continued.
The Washington Post reported that current U.S. law protects biologic drugs from generic competition for 12 years, but some Democrats have tried to lower that to 7 years as a way to speed cheaper generics to the market and lower drug spending.
Leonardo Palumbo, advocacy adviser at Medicins san Frontieres, also raised concerns about the agreement, and said the impact could extend beyond the three signatory countries.
“In signing this trade deal, [the agreement’s] negotiators are disregarding the health of millions of people in order to cater to the profits of pharmaceutical corporations,” he said in a statement.
“It’s absolutely reckless and counterproductive for the U.S. government to support this deal despite evidence that it keeps drug prices high and further reduces access to lifesaving medicines. This agreement is not only a threat to patients in the United States, it sets a dangerous precedent for future trade deals involving countries all over the world, including many in which [Medicins san Frontieres] works,” Palumbo continued.
ACP was one of more than two dozen groups from the medicine, labor and consumer sectors that joined forces that sent a letter to Lighthizer in November describing its apprehensions.
“We are deeply concerned that the 10-year brand-name biologic exclusivity provision proposed in the [United States-Mexico-Canada Agreement], as well as the other barriers it adds to generic and biosimilar competition, will slow the development of biosimilars and limit patient access to more affordable medicines,” the groups wrote.
“Even if Congress later decides that these pharmaceutical monopoly periods are not needed to incentivize the development of new medicines, as currently written, this trade agreement will prevent Congress from taking corrective action and lowering drug prices,” they added.
Potential positives to agreement
There are potential benefits to the agreement, Freeman said.
The prices of nonbiologics should not be significantly impacted by this accord. In addition, by extending patent protections to from 5 to 10 years may lead to more of a drug’s benefits being discovered, "since 5 years was not always long enough to do so.”
Freeman also said the agreement between the three countries is not necessarily a contradiction to the Trump administration goal of lowering prices. Lowering drug prices was a focus of Trump’s campaign, and he has repeatedly promised to announce steps that would result in reduced prices. In June HHS Secretary Alex Azar told lawmakers the president’s plan “is nothing short of comprehensive reform .... That doesn’t happen in a week or 2; across the board change will take time.”
Freeman agreed that there are very few steps that will immediately drop drug prices but offered one way the agreement could change biologic drug prices over the long term.
“At some point, with most trade deals, well-to-do countries invest in economically-developing countries. This could lead some countries to develop stronger drug making capabilities. This could spur competition and thus, lower drug prices over time,” he said. – by Janel Miller
Reference: Office of the United States Trade Representative. "Agreement between the United States of America, the United Mexican States, and Canada." https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/agreement-between. Accessed Dec. 7, 2018.
Disclosures: Freeman reports no relevant financial disclosures. Healio Family Medicine was unable to determine the other contributors' relevant financial disclosures prior to publication.