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Regional Trade Agreements, Intellectual Property Rights and Regulatory Data Protection: issues in Dr
| 작성자 | 관리자 | 카테고리 | 전문가 인사이트 |
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| 작성일 | 2016-11-07 | 조회수 | 2,052 |
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Regional Trade Agreements, Intellectual
Property Rights and Regulatory Data Protection: issues in Drug Development and Marketing
- 글 Robert Freeman
- GPKOL위원
컨설팅 분야
- PM
- 임상
- 기술마케팅
주요 약력
- 2012-Present: The University of Maryland Eastern Shore/ Professor and Vice Chair of Research
- 2008-2010: Texas A&M Health Science Center/ Director of Graduate Studies
- 2007-2010: Department of Pharmaceutical Sciences/ Professor
- 1999-2005: AstraZeneca Pharmaceuticals LP/ Director
- 1993-1995: Sterling-Winthrop Pharmacoeconomics&Global Pricing/ Strategy Director
Abstract
Trade agreements are an overlooked area of pharmaceutical research and policy analysis that affect market access, pricing and reimbursement decisions by pharmaceutical manufacturers in the short- to intermediate-terms, and research and development decisions in the long term. The Trans-Pacific Partnership (TPP) is the most recent multi-national agreement under considerations that may have profound implications in developed and developing countries in the Pacific Rim. As in the case of other trade arrangements, the TPP negotiations were not transparent, but a major leak of the most recent draft was published in WikiLeaks (2014, 2015) followed by the final release of the approved agreement (Office of the US Trade Representative 2015). The trade document has raised a number of concerns about intellectual property rights (IPR) and regulatory data protection (RDP) that have implications for public health and economic policy throughout the region. In particular, IPR and RDP go beyond the minimum standards set under the World Trade Organization (WTO) and may affect drug access negatively by delaying generic drug and biosimilar product availability and by raising prices by removing national regulations dealing with drug pricing and reimbursement. Of particular concern is the establishment of a litigation process where multi-national companies can sue individual countries before a panel of private attorneys who are appointed by the World Bank or United Nations. This paper addresses these concerns along with a commentary on the likelihood of occurring and the implications for future research in this area.
Introduction
The Trans-Pacific Partnership (TPP) came about after the completion of lengthy, ongoing series or rounds of trade negotiations involving The United States, Canada, Australia, New Zealand, Mexico, Chile, Peru, Brunei, Malaysia, Singapore and Vietnam. The value of exports from the USA to the 11 other countries involved in the partnership negotiations approached $700 billion in 2012. (Office of the United States Trade Representative 2015) The ultimate goal of the TPP is to give a level playing field by eliminating tariffs and other anti-competitive national laws that present trade barriers or trade inefficiencies. The TPP is not a treaty, which requires two-thirds of both houses of Congress for approval, but, rather, it is a joint legislative-executive agreement that requires a simple majority in both houses to become effective. Also, the agreement is scheduled for a “fast track” approval in the USA, which means the Congress must conclude its review in 90 days following the agreement’s completion. The fast track review also excludes Congressional amendments to the agreement (The Guardian, 2015).
For the United States, negotiations are led by the United States Trade Representative (USTR) who represents interests of the USA’s public, labor, agriculture and business sectors. In practice, a variety of competing interests are balanced by the USTR and other nations in the negotiations that attempt to achieve a net positive economic balance to a nation’s balance sheet as a result of the agreement. Although the outcomes of negotiations are often spun was “win-win” for agreements between trade partners, in reality the economic theories underlying trade are based on relative “competitive advantages”, which suggest that a “win-lose” outcome is more likely at least in the short- to intermediate terms.
A great deal of criticism was leveled at specific terms of the trade agreement because terms were not disclosed during the negotiation rounds. As is customary in international trade negotiation the specific details of trade negotiations are not disclosed publically until a final agreement is reached and presented to national governments for ratification. In recent months, WikiLeaks (2014) obtained a draft document comprised of 30 chapters plus an annex (2015). Reaction has been mixed and varies across stakeholders (Silverman 2015, Stieglitz 2015). The final agreement was released in November 2015 (USTR 2015), and no substantive discrepancies were found between the content of the leaked documents and the official copy.
A key component of the TPP is the proposal to expand strong intellectual property protection and enforcement. The TPP is not unlike other trade relationships that govern Intellectual Property Rights (IPR) and Regulatory Data Protection (RDP) treatment. The Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) already contains language covering both patents and RDP, setting minimum standards for nations that belong to the World Trade Organization. The section on IPR and RDP are priority areas for the multi-national pharmaceutical and biologics industry, and one of the greatest area of controversy. In reality, IRP is a major initiative of the USA and encompasses the interests of industrial sectors beyond those of the pharmaceutical industry.
It is commonly acknowledged that patents are absolutely essential to incentivize innovation. Without patents innovators could not generate sufficient profits and cash flow to sustain research and development. Patents, however, are only one part of the TPP talks and IP. The other distinct component is RDP, which consists of proprietary information about a new drug’s or biologic’s safety and efficacy. While the topic is not in the public’s eye, data confidentiality, or privacy, is essential to the commercial success of a new drug because patents in and of themselves do not assure commercial success. While patent length is standardized by the World Trade Organization, RDP length is decided at the local country level and is set for a limited time and varies amongst nations. The TPP negotiations are focusing on standardizing the length of the RDP for biologics to a period of 12 years.
For patients and consumers, as well as for research based health industries, IP and RDP protections encourage and support investment in the development of new treatments and cures. The legacy of this investment is increased access to generic drugs upon expiry of IP and RDP protections. For a generic drug to become available following patent expiry, the generic manufacturer establishes bio-equivalency by essentially copying the safety and efficacy data in the innovator’s original regulatory file.
Obviously generic manufacturers prefer to access the innovator’s data because it is significantly less expensive to use existing data instead of conducting original research. The data that form the basis of a product’s safety and efficacy submitted for marketing approval typically includes the following: the basic science data such as chemistry, toxicology, pharmacology, and clinical data originating from Phase II and III trials (the product’s indications, efficacy, tolerability, pharmacokinetics, drug interactions, adverse events, side effects, contra-indications, precautions, warnings, use in pregnant women, adverse effects, dosage and route of administration).
Many of the most effective new medicines under development are biologics. Unlike small-molecule drugs, it is not possible to produce a bio-equivalent generic copy. Rather, bio-similar copies cannot be produced upon expiry of patents and regulatory data protections, but because biosimilars are not identical to the originator products additional clinical research is required to determine the safety and efficacy of a biosimilar product
RDP is essential to ensure commercial viability and is the basis for research-based industries efforts (supported by many patient advocacy organizations and others) to secure a meaningful data exclusionary period in the final TPP. If these data are readily accessible by generic competitors, the financial returns of drug discovery and development are simply too low to merit the expenditure of up to $1.2 billion to bring a drug or biologic to market. The challenge, of course, is to set a period of time that balances the need for market time to generate sufficient profits and cash flows to incentivize research with the need to provide greater access through generic drugs and biosimilars approvals.
Controversies surrounding the TPP and the Pharmaceutical/Biologics Industry
The specifics of the TPP and IP and RDP issues are fraught with controversy, some real and others inconsequential. Notably, some of the main controversies are as follows: Pharmaceutical prices will be driven up by the agreement, and low-income countries will either not have access to essential drugs or generic entry will be delayed. Under the investor-state dispute settlement (ISDS) proposal multi-national corporations can sue individual countries for significant financial damages if pricing and reimbursement levels are not set with free-market principles and if the industry’s profits are harmed. It is alleged that the US Center for Medicare and Medicaid Services could be sued under this provision as could other countries’ direct and indirect price and reimbursement regulations. The multi-national pharmaceutical industry has an undue, protectionist influence in the negotiations, and its negotiation positions are at odds with public health.
Discussion: controversies and an externality
Pharmaceutical and biologic products prices will be driven up by the agreement, and low-income countries will not have access to essential drugs.
It is likely true that pharma and biologic products will have an overall price level that is higher than those that would be found without the TPP. The industry uses a form of price discrimination (Ramsey pricing) that involves setting prices on the basis of a market segment’s, or country’s, wiliness and ability to pay. Typically, regional pricing bans are set, and the firm requires an individual country’s pricing to fall within these bans. To employ Ramsey pricing effectively, the company must be able to quantify price elasticities in each regional and country-level segment. In effect, higher prices are charged in wealthier countries with relatively low price elasticity; lower prices are charged in less wealthy countries with greater price elasticity. While Ramsey pricing is controversial, its application is said to maximize social welfare because countries that are willing and able to pay are benefited by early introduction of new drugs. If prices are set at a lower level or at a single global price, the transactional prices may be inadequate to allow early availability and would exceed the ability to pay in low income geographic markets. Extension of DPR to 12 years is one negotiating tactic to allow companies to maximize profits in the presence of price and reimbursement regulations.
IDIS and potential litigation at the member country level
Pharmaceutical and biologic products prices will be driven up by the agreement, and low-income countries will not have access to essential drugs.
ISDS is consistent with the WTO’s allowance of companies litigating against member nations that violate the trade agreement’s provisions against anticompetitive practices. The TPP’s provision in this area differs; however, in that the legal disputes would be tried before a court of private attorneys appointed by the World Bank or United Nations. It is feared that the suits could challenge national laws that violate “free market” principles outlined in the agreement. In effect, CMS could theoretically be sued for Medicaid and Medicare policies that are deemed by the company to be anticompetitive. The concern is real; however, it may be overstated in that it is rare for a pharmaceutical company to litigate under current WTO provisions. It is the dreaded “nuclear option” that, even if successful, exposes the company to a long-lasting hostile regulatory environment that would have significant negative consequences for the company’s entire operations in the country.
Pharmaceutical companies typically employ patient assistance programs (“free goods” or nominally-priced goods) to mitigate the political opposition to Ramsey pricing. To a large extent, this has been highly successful in avoiding market intervention by governments, and is a more profitable than offering price concessions.
The pharmaceutical industry’s influence in TPP negotiations
The USTR represents the interests of diverse industrial and labor sectors. While it may appear that the pharmaceutical industry influenced the USTR’s negotiating strategy, priorities are constant in flux, and the industry was unable to sustain its positions as negotiating rounds occurred. IPR and RDP reflected a compromise across industries’ competing priorities. On an anecdotal basis, the author served as an in-house consultant to the global strategy section of a medical device trade association during the Doha round of WTO negotiations and noted the ongoing frustration of the association leaders with the USTR, who in their view, often favored the US tobacco and alcohol industries’ positions over pharmaceutical and device manufacturers’.
The Externality: currency exchange and manipulation as a complicating factor
International monetary exchanges rates are in constant flux, meaning that currencies gain and lose value according to the market’s reaction of countries’ debt ratios, perceptions of ability to repay debt and economic conditions within the country. As these rates fluctuate, the value of an exporter nation’s products become more expensive (or less expensive) in the importing country. One of the more interesting provisions in the TPP is the prohibition of currency manipulations that contribute to (dis)advantages between trading partners. The significance of currency fluctuations and manipulations is that price differentials increase between “high price” markets and “low price” markets triggers parallel trade, which has the net effect of lowering profits within a geographic region.
Research Implications
Trade is not typically a part of health care researchers’ and pharmaceutical industry economists’ portfolios. Although global studies of pricing, national financing schemes and comparative health systems are undertaken, the impact of international trade on access, pricing, reimbursement and health outcomes is largely ignored. One can make an argument that trade should be studied in the context of global access issues as it largely determines pharmaceutical companies’ market access strategies and tactics in key country markets.
Research in this area of inquiry is fraught with challenges; however. As noted earlier, the theoretical underpinnings of international trade does not have a universally established model; rather, most empiric work is not dynamic, but static. It is also important to note that trade agreements do not expressly consider health policy issues other than environmental concerns and workers’ safety.
A brief list of potential research areas is as follows:
Drug Counterfeiting and Diversion: Trade agreements have untoward outcomes related to drug counterfeiting and diversion through the creation of gray markets or illegal parallel trade. This area appears promising for modeling prior to TPP’s implantation and afterwards. It is expected that drug counterfeiting will increase, and its prevalence merits estimation.
From a modeling perspective, the country-level impact on drug launches and price levels, notably in Australia and New Zealand, which are countries with long-standing reputations as “low price” countries, would be a productive area of inquiry. Under the TPP, New Zealand’s price control regulations and Australia’s requirement that new drugs be evaluated by cost-effectiveness analysis could be challenged, and the net effect on drug expenditures should be assessed.
The direct impact on access, prices and development of biologics’ DRP as a function of RDP provisions is another area for future research. A 12-year exclusivity period has significant implications for both the industry’s profitability and for national expenditures. Biologics are being developed at rapid rates and represent a cost-containment challenge for public and private third-party payers.
Conclusion
The impact of the TPP on pharmaceutical and biologic innovation is speculative. This commentary has examined pharmaceutical health policy issues associated with the TPP; however, much of the opposition in the USA has focused attention of its long-term impact in employment, the environment and workers’ rights issues in specific industrial sectors. Certainly, the impact on drug and biologic prices will increase, but it is only one segment in the public policy debate..
While its impact of the TPP on public health status in the member states is a valid public policy concern, it should be noted that trade agreements such as the TPP are not concerned with these outcomes, and that it is unrealistic to expect they will be an overriding consideration in any trade negotiation. In fact, the only considerations given to health issues are environment issues and the health of workers in the industrial sectors covered in these agreements. Quantification of public health outcomes of the TPP’s provisions are likely to occur years, if not decades, after the implementation of the agreement. Also, the TPP is open for any other country to join the negotiations at any time. It will be interested to see any evidence of a potential interest of China, India or the Republic of Korea in joining the negotiations even at a relatively late date.
Clarity will improve as additional leaks occur after the final agreement is ratified in the member states. At this point, the impacts on public health and economic outcomes can be addressed more definitively.
References
- Office of the United States Trade Representative. Overview of the Trans-Pacific Partnership. https://ustr.gov/tpp/overview-of-the-TPP. Accessed January 17, 2015
- “Barak Obama given ‘fast-track’ authority over trade deal negotiations. The Guardian. http://www.theguardian.com/us-news/2015/jun/24/barack-obama-fast-track-trade-deal-tpp-senate. June 25, 2015. Accessed August 12, 2015.
- The Trans-Pacific Trade Partnership, Chapter on Intellectual Property, Wikileaks. https://wikileaks.org/tpp/. Accessed April 20, 2015
- Annex on Public health, Wikileaks. https://wikileaks.org/tpp/healthcare/ Accessed August 15, 2015.
- J Stieglitz. “Don’t trade away our health.” The Opinion Pages. The New York Times, January 31 2015. http://www.nytimes.com/2015/01/31/opinion/dont-trade-away-our-health.html?_r=0. Accessed January 31 2015.
- E Silverman. “Will the trans-pacific partnership really be bad for your health?” WSJ Pharmalot. June 19 2015: http://blogs.wsj.com/pharmalot/2015/06/19/will-the-trans-pacific-partnership-pact-really-be-bad-for-your-health/. Accessed June 19 2015.
- Office of the United States Trade Representative. The Trans-Pacific Partnership. Leveling the Playing Field for American Workers. https://medium.com/the-trans-pacific-partnership/intellectual-property-3479efdc7adf. Chapter 18. Intellectual Property. Accessed November 10, 2015.
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