Drugs a headache in TPP talks
The Obama Administration is caught in a trap as it tries to bring home a trade deal with its Pacific Rim partners.
Some of the chief beneficiaries may be big drug companies such as Novartis AG, Roche Holding AG and Pfizer, while the losers could be consumers in both the US and the region.
The administration says it is bound by congressionally imposed instructions to try to get as much current US law as possible into trade accords – including stringent protections for patented drugs that it has repeatedly tried to ease at home to encourage more costsaving generics.
The disconnect has put US negotiators in the position of pushing provisions in the 12-nation Trans-Pacific Partnership that would preclude the administration from making further attempts to win the legal changes.
It also has negotiators pressing the region’s developing countries to sign onto a schedule for adopting the stronger rules, reversing previous exemptions to allow them easier access to cheap medicines.
Even though US trade representative Michael Froman says the talks are ‘‘in a closing mode’’, American proposals for tough intellectual property protections for drugs are meeting resistance from Australia, New Zealand, Canada and other Pacific Rim nations. Chile’s foreign minister has said flatly that his country won’t accept some key provisions.
At stake are hundreds of billions of dollars or more in extra costs that consumers may have to pay if the proposals make it harder for cheaper generics to win approval. The alternative is the loss of protections sought by the US for movies, music and software as well as drugs if no agreement is reached on the deal’s intellectual property provisions.
‘‘The trade representative’s drug proposals are an astonishing effort to require other countries to adopt policies that aren’t in their best interests and lock in policies here that the Obama Administration doesn’t support,’’ said Frederick Abbott, a Florida State University law professor and veteran consultant on health and trade issues.
Negotiators returned to bargaining this week to try to wrap up the most ambitious trade deal in at least a generation covering about 40 per cent of global output. In the US, any final accord must be submitted to Congress for an up-ordown vote with no amendments allowed.
US negotiators want to win makers of advanced drugs 12 years of exclusivity for data that might otherwise help competitors produce similar, cheaper versions. The administration has repeatedly sought to cut that period to seven years in domestic law.
Negotiators are also seeking language to make it easier for the drugmakers to win ‘‘secondary’’ patents to strengthen their control over products. The administration has proposed changing US law to make it harder to get such add-ons.
The deal would link the US, Canada, Mexico, Japan, Australia, New Zealand, Malaysia, Singapore, Peru, Vietnam, Brunei and Chile.
Talks are being conducted in secret, although members of Congress can read negotiating documents. Information about the US position and opposition to it comes from multiple drafts of the trade pact’s intellectual property chapter obtained by controversial watchdog group WikiLeaks, and from officials familiar with the latest May 11 version as well as recent bargaining over the accord.
Details of the administration’s position were reported earlier by political journalism organisation Politico.
The fight over drug rules reflects the complexities involved in a new generation of trade deals.
Traditionally such accords focused on removing tariffs and other trade barriers. Increasingly, however, pacts aim at the bigger target of synchronising countries’ laws and rules.
Advocates argue that such ‘‘regulatory harmonisation’’ can improve the global economy by relieving companies of the cost of complying with inconsistent regulations in different countries. Yet as the bargaining for the Pacific Rim deal illustrates, the effort is fraught with potential for clashes between a country’s domestic and trade goals, and the needs of developed and developing countries.