Michael Geist: TPP Puts Global Health at Risk
As the TPP negotiations reached their conclusion in Atlanta last October, one outstanding issue stood above all others: protection for biologics. While not well understood by the public, at issue was billions of dollars and access to cutting edge medicines.
The Trouble with the TPP series examines the outcome of the biologics issue and argues that even with less protection than the U.S. advocated, the TPP’s requirements still represent a significant problem for global health (prior posts include Day 1: US Blocks Balancing Provisions, Day 2: Locking in Digital Locks, Day 3: Copyright Term Extension, Day 4: Copyright Notice and Takedown Rules, Day 5: Rights Holders “Shall” vs. Users “May”, Day 6: Price of Entry, Day 7: Patent Term Extensions).
Biological drugs are pharmaceuticals involving complex molecules or mixtures of molecules that are made of biological sources manufactured within a living system. They differ from conventional drugs that are manufactured by combining chemical ingredients. Building on greater knowledge of genetics and cell processes, the area represents a major growth area for the pharmaceutical industry. With the complexity comes cost, however, with biological drugs far more expensive than conventional ones. Much like the generic pharmaceutical industry creates cheaper, generic versions of chemical drugs, companies have begun to create “biosimilars” as cheaper versions of biological drugs, relying on data from clinical trials to formulate the alternative. Pharmaceutical companies have therefore sought protection for the clinical data.
As a relatively new area with billions at stake, countries have adopted a wide range of approaches to the issue of data protection. The U.S. currently offers 12 years of data protection (which it wanted emulated within the TPP), though President Obama has seemingly recognized the mistake of offering such long protection (the term was part of the negotiation over health care reform) and recently sought to reduce the term to seven years, which would have yielded billions in health care savings. Other countries have taken different approaches: Australia and New Zealand offer five years of protection, Japan and Canada eight years, and some TPP countries such as Mexico, Peru, Vietnam, Malaysia and Brunei have no protection at all.
The optimal term of protection remains a contentious issue. The Federal Trade Commission released a study in 2009 that raised doubts about the need for any biologics-specific protection, citing the protections offered by patents and the high costs of entry as evidence that biosimilar competition would be limited. Moreover, it noted that there were already sufficient market incentives to support biologic competition and innovation.
The TPP compromise remains contentious, as Article 18.52 provides for at least eight years of protection or five years of protection plus other measures to provide comparable outcome in the market. The ongoing dispute over what this provision means is the source of some of the opposition to the TPP in the United States (particularly since Australia maintains its current approach is compliant with the TPP). Canada currently meets the eight year standard, so no further legislative changes would be required.
Yet even the compromise represents a problem. As the FTC concluded, it is far from clear that any protection is needed given market incentives and the protections that may be granted through patents. Moreover, President Obama’s second thoughts on the term of protection in the U.S. points to both the enormous costs that come with each year of additional protection and the prospect that countries may wish to reduce protections in the future. The TPP locks-in protection, however, making it difficult for any TPP country to later amend its rules. That binding policy, which comes at a still early stage of new technological development, may create long term health costs to the detriment of patients, innovation, and marketplace competition.
Michael Geist is the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa. He can be reached at www.michaelgeist.ca.