Trade deal is a rare setback for Big Pharma
A revamped North American trade deal nearing passage in Congress gives both the White House and Democrats a chance to claim victory and offers farmers and businesses clearer rules governing the vast flow of goods among the United States, Canada and Mexico.
But the pact leaves at least one surprising loser: the pharmaceutical industry, a near-invincible lobbying powerhouse in Washington.
To satisfy House Democrats, the Trump administration removed a provision that would have given the makers of ultra-expensive biologic drugs 10 years of protection from less expensive knockoffs. Democrats opposed what they called a giveaway to the industry that could have locked in inflated prices by stifling competition. Top examples of the injected drugs made from living cells include medications to fight cancer and immune disorders such as rheumatoid arthritis.
“This is one of the first times we’ve actually seen pharma lose,” said Rep. Earl Blumenauer, an Oregon Democrat who leads a subcommittee on trade. “They have a remarkable track record because they are a huge political force. They spend lots of money on lobbying, on advertising, on campaign contributions. But we held firm, and we won on all counts.”
The removal of the provision also helped illustrate just how potent a political issue skyhigh drug prices have become. It was a reminder, too, that President Donald Trump repeatedly pledged to work to lower drug prices.
Last week, drug manufacturers absorbed another — though likely only temporary — defeat when House Democrats passed legislation, along party lines, that would authorize Medicare to use its influence in the marketplace to negotiate lower prices from drug companies. The bill is thought to have no chance of passage, though, in the Republican-led Senate.
Yet the revamped U.S.-Mexico-Canada Agreement, Trump’s rewrite of the 25-year-old North American Free Trade Act, seems set to clear Congress without the biologics protection that the drug industry had sought. On Tuesday, the House Ways and Means Committee approved the legal text. The full House is expected to approve it Thursday, though the Senate isn’t likely to take it up until January.
“It’s not a mystery,” said Rep. Jan Schakowsky, an Illinois Democrat who helped negotiate with the administration. “If you poll the American people, the cost of pharmaceuticals is a really big deal. It’s at the top of the list.”
The trade agreement the administration reached last year with Mexico and Canada gave biologics 10 years of protection from cheaper near-copies known as biosimilars. Among the leading biologics are the anti-cancer drug Rituxan and Humira and Enbrel, which fight immune disorders.
The industry — and the Trump administration — had argued that manufacturers of biologics require years of protection to profit from their drugs before biosimilars should be
allowed to cut into sales. Otherwise, they contend, brand-name drug companies and biotech startups that rely on money from venture capital firms would have little incentive to invest in developing new medicines.
“The announcement made today puts politics over patients,” the leading drug industry trade group, PhRMA, said in a statement last week. “Eliminating the biologics provision in the USMCA removes vital protections for innovators while doing nothing to help U.S. patients afford their medicines or access future treatments and cures.”
The industry also rejected the notion that the biologics provision would keep drug prices high and hurt consumers. Existing U.S. law, they noted, already gives makers of biologics 12 years’ protection, more than the proposed 10 years in the USMCA. But