On November 5, 2018, twenty-nine organizations representing various groups including insurance companies, patient and consumer advocacy groups, unions, and retirees, submitted a letter to U.S. Trade Representative Robert Lighthizer to raise serious concerns that the recently renegotiated version of the North American Free Trade Agreement (NAFTA) – now proposed to be called the U.S.-Mexico-Canada Free Trade Agreement (USMCA) – will exacerbate the problem of high prescription drug prices in the United States.
Intellectual Property Rights provisions are set forth in Chapter 20 of the USMCA. Article 20.F.14 provides that, “[w]ith regard to protecting new biologics, a Party shall, with respect to the first marketing approval in a Party of a new pharmaceutical product that is or contains a biologic, provide effective market protection through the implementation of Article 20.F.13.1 (Protection of Undisclosed Test or Other Data) and Article 20.F.13.3 (Protection of Undisclosed Test or Other Data), mutatis mutandis [once the necessary changes have been made], for a period of at least ten years from the date of first marketing approval of the product in that Party.”
The groups argue that the provisions proposed in the USMCA will keep drug prices high in the United States, will prevent Congress from being able to take action to lower drug prices, and that several provisions within the agreement are inconsistent with U.S. law. Despite the groups’ focus on U.S. laws and prices, one specific gripe is with the USMCA’s requirement that Canada and Mexico extend their biologic data exclusivity provisions. However, in the United States, the Biologics Price Competition and Innovation Act (“BPCIA”) already provides for 12 years of data exclusivity for new biologics, exceeding the minimum 10 years under the USMCA. In Mexico and Canada, however, new biologics receive just five and eight years of data exclusivity, respectively. Thus, the USMCA does not purport to extend biologics monopolies in the United States at all. Rather, the groups argue that the USMCA will tie Congress’ hands in case Congress decides in the future to reduce the biologics data exclusivity from 12 years to less than the 10 years required by the USMCA.
Further, the groups argue that “[w]hile the proposed USMCA text includes numerous monopoly protections and deterrents to competition — extended biologics exclusivity, broad exclusivities for drugs, patent term extensions and patent term adjustments, to name a few — the agreement lacks critical features of U.S. law that encourage generic and biosimilar competition.”
The groups urge that the imbalance be addressed through: a more robust regulatory review provision (“Bolar”); an appropriate incentive to encourage market entry by generic and biosimilar applicants; requirements for transparency around patents and exclusivities; and, a “best mode” requirement.
Further, the groups urge that Congress ensure that the USMCA is consistent with the terms used in U.S. law, particularly the Drug Price Competition and Patent Term Restoration Act (known as the Hatch-Waxman Act) and the BPCIA. The groups seek changes to the USMCA to “foster a free, fair, and balanced trade agreement with Mexico and Canada that ensures an adequate balance between access to affordable medicines and support for pharmaceutical innovation.”
These groups join the Canadian Generic Pharmaceutical Association (CGPA), who released a statement that the “pharmaceutical provisions in USMCA will delay access to competition from biosimilar biologic drugs in Canada, extending the period of market exclusivity for these products to 10 years from the current period of 8 years. Biologic medicines represent the fastest growing cost segment of health-care spending, and these delays will be costly to patients, businesses that sponsor employee drug plans, private payers and our industry.”
The USMCA is still subject to a majority vote in both the Senate and House of Representatives, and Senate Majority Leader Mitch McConnell, R-Ky., stated on October 16, 2018, that the Senate was not going to be able to vote on the USMCA until 2019.