U.S. Considers Easing Drug Protections to Break Logjam Over Trade Pact
Democrats push to reduce length of time that biologic drugs would be protected from generic imitators in U.S.-Mexico-Canada agreement
WASHINGTON—The Trump administration is considering scaling back intellectual-property protections for big drugmakers to help win Democratic support for a new trade pact with Mexico and Canada, according to people familiar with the matter.
Many Democrats, backed by labor unions and consumer groups, are pushing the administration to reduce the length of time that leading biologic drugs would be protected from generic imitators in the U.S.-Mexico-Canada Agreement, or USMCA.
The accord, which must be ratified by Congress, now protects these drugs for 10 years. That compares to 12 years under U.S. law.
Democrats and others want that time period reduced, or at least new language to allow for a reduction in the 10 years if U.S. domestic law changes.
The Trump administration, eager to win passage of USMCA, is considering easing the standard, the people said. That assessment was bolstered by Jesus Seade, Mexico’s senior envoy to North America.
“There has been some accommodation—we will have to see how much,” Mr. Seade told reporters in Ottawa on Friday when asked about a shorter time frame for protection of biologic drugs, which are frequently high-priced medicines produced from living cells or tissue.
Mexico City and Ottawa would have to agree to any changes to the three-way agreement they signed a year ago.
The U.S. trade representative’s office, which is leading the negotiations with Congress, didn’t respond to a request for comment.
Ratification of the trade pact has been held up by House Democrats who are also seeking other changes, including making new labor rules in USMCA more strictly enforceable.
Democratic lawmakers remain skeptical of trade agreements that don’t have sufficient safeguards to prevent jobs from going abroad, especially to Mexico. They are eager to work with unions to get the biggest possible toolbox to enforce labor rules south of the border.
Some Democratic lawmakers are pushing House Speaker Nancy Pelosi (D., Calif.) to have a vote on the deal this year.
“I would still bet on it being pre-Christmas, that’s sort of the general sentiment,” said Rep. Jim Himes (D., Conn.), an advocate of deals that safeguard trade. A senior Democratic aide said that negotiations continued over the holiday week, and that a vote by the end of the year was “not out of the question.”
Administration officials say it is possible they will strike a deal with Democrats this week, but one official close to the talks said it could take a little longer, while still asserting optimism for passage.
“By all accounts, a deal is close on USMCA,” Sen. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, said Monday on the Senate floor. “If a deal cannot be reached by the end of this week, I do not see how USMCA can be ratified in 2019.” Mr. Grassley and other proponents of USMCA have warned that trade legislation will be difficult if not possible to pass in the height of the 2020 election year.
Democrats in competitive districts campaigned on working with the president when it benefited their constituents. They see passing the trade agreement as a sign that they can do that, even as the caucus moves forward with its impeachment inquiry against President Trump.
Mr. Trump and Republicans have criticized the Democrats for focusing on impeachment rather than shared policy goals, so clearing the way for a vote on the trade pact would address some criticism of Mrs. Pelosi as the 2020 election year approaches. “It would appear that impeachment is going to get USMCA over the finish line,” said Chris Krueger, an analyst at Cowen & Co.
Yet trade experts say the biologic drug debate shouldn’t be underestimated, since a fight over that issue helped scuttle congressional consideration of the 12-nation Trans-Pacific Partnership, or TPP, in 2015 and 2016.
Many Democrats are critical of rules that benefit big drug companies, including the market exclusivity period for biologic drugs. Big pharmaceutical companies want the longest-possible protection period for their drugs so that producers of so-called biosimilars can’t quickly take advantage of data from their medical trials to market their own products.
The big drugmakers see trade agreements as a way to set a blueprint for intellectual property protection for biologic drugs, similar to the patent protection enshrined in trade pacts. Trade officials, business-friendly Republicans and many moderate Democrats see longer periods of exclusivity as wins for the U.S. in international negotiations, since American pharmaceutical companies dominate the global industry.
But generic producers and other critics say expensive intellectual-property policies should be decided through domestic law rather than international agreements.
The generic and biosimilar producers say the current time period may be too long once biosimilars are developed more quickly in the future.
“We believe that setting a floor of 10 years does not allow exclusivity to adjust when the research and development process gets more efficient,” said Jonathan Kimball, vice president for trade and international affairs at the Association for Accessible Medicines, which backs generic and biosimilar drugs.
The Pharmaceutical Research and Manufacturers of America has said a long period of exclusivity helps pay for innovation by recouping expensive research and development costs. “If those protections are diminished, it will embolden foreign governments who want to steal American intellectual property and free ride on our world-leading biopharmaceutical research and development,” said Priscilla VanderVeer, a spokeswoman for PhRMA
Democrats seeking rules to limit drugmakers previously had a harder time enacting such policies, in part due to the influence of former Republican Senate Finance Committee chairman, Orrin Hatch, who made defending intellectual property and pharmaceutical firms a priority.
The current chairman, Sen. Grassley has voiced more concern for the affordability of medicine, a priority for Democrats as well as the Trump administration.
The pharmaceutical industry says the provisions in USMCA, if enacted, won’t directly affect U.S. law or drug affordability for Americans.