President Trump has often said that he wants to lower drug prices, in part by ending foreign “freeloading.”
That’s a laudable goal. Through price controls and other ham-handed policies, too many nations undervalue medical innovation. This leaves Americans with the majority of the world’s research burden.
Unfortunately, in an attempt to garner Democratic support for the United States-Mexico-Canada Agreement (USMCA), some members of his administration seem willing to sacrifice this goal by rewriting the trade deal to exclude intellectual property (IP) protections for certain medicines invented by U.S. scientists.
That wouldn’t be wise. USMCA’s IP protections will help reduce foreign freeloading, thus lowering drug prices and spurring more investment into biomedical innovation.
The new trade agreement with Canada and Mexico is almost over the finish line. Mexico has already ratified the agreement, and Canada seems poised to do the same. In the United States, lawmakers from both parties have signaled their support for this deal.
There’s just one problem. Rather than give the president a “win” on trade, House Speaker Nancy Pelosi (D-CA, 12th District) is determined to keep USMCA in limbo—in part by drumming up Democratic opposition to the deal’s IP protections for advanced pharmaceuticals.
The provision in question pertains to biological drugs, or “biologics.” These complex medicines—which are made from living organisms—are afforded 12 years of data exclusivity in the United States. During this period of time, generic drug firms can’t access an innovator’s data and use it to manufacture biosimilars.
The United States has had these IP protections in place since 2010, when they were established with bipartisan support through the Affordable Care Act.
Not every country shares America’s respect for IP rights and protections, though. Canada only offers eight years of data exclusivity to biologics. Mexico doesn’t offer anything. USMCA would require Canada and Mexico to lift their data exclusivity standards to 10 years, thus bringing both nation’s closer to the United States and helping to level the playing field for American innovators.
Some Democrats take issue with this provision, arguing that it would harm American patients by “locking in” high drug prices. But that’s not true; USMCA would not impact any domestic healthcare laws, and a report from the Geneva Network, a public policy research group, found that USMCA’s biologics’ provision wouldn’t increase domestic drug prices or spending.
In fact, USMCA could even lower drug prices. As Stephen Moore recently argued, “this could in the end mean lower prices for these drugs here in the United States because our two neighbors would pay their fair share to cover the billions of dollars of research costs to bring to market lifesaving new drugs.”
The deal will also catalyze more drug development. Investors will be more eager to fund U.S. scientists once they know their work will be protected abroad.
These are the outcomes President Trump hopes for when he vows to combat global freeloading. As written, the USMCA biologics’ provision is a win for American patients.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her next book — False Premise, False Promise: The Disastrous Reality of Medicare for All — will be published by Encounter in January 2020.