Drug prices could threaten Dems’ support of new NAFTA
WASHINGTON — The clash over free trade in North America has long been fought over familiar issues: low-paid Mexican workers. U.S. factories that move jobs south of the border. Canada’s high taxes on imported milk and cheese.
But as Democrats in Congress consider whether to back a revamped regional trade pact being pushed by President Donald Trump, they’re zeroing in on a new point of conflict: drug prices. They contend that the new pact would force Americans to pay more for prescription drugs, and their argument has dimmed the outlook for one of Trump’s signature causes.
The president’s proposed replacement for the 25-yearold North American Free Trade Agreement is meant to win over Democrats by incentivizing factories to hire and expand in the United States. Yet the pact would also give pharmaceutical companies 10 years’ protection from cheaper competition in a category of ultra-expensive drugs called biologics, which are made from living cells.
Shielded from competition, critics warn, the drug companies could charge exorbitant prices for biologics.
“This is an outrageous giveaway to Big Pharma,” Rep. Rosa DeLauro, a Connecticut Democrat, said in an interview. “The government guarantees at least 10 years of market exclusivity for biologic medicine. It’s a monopoly. It’s bad policy.”
The objections of DeLauro and other Democrats suddenly carry greater potency. The need to curb high drug prices has become a rallying cry for voters of all political stripes. Trump himself has joined the outcry. The revamped North America trade deal must be approved by both chambers of Congress, and Democrats now control the House.
Rep. Earl Blumenauer of Oregon, the new chairman of the House Ways and Means subcommittee on trade, said, “I don’t think candidly that it passes out of my trade subcommittee” with the biologics provision intact.
“The biologics are some of the most expensive drugs on the planet,” he said.
Still, the politics of NAFTA 2.0 are tricky for Democrats and not necessarily a surefire winner for them.
The original NAFTA, which took effect in 1994, tore down most trade barriers separating the United States, Canada and Mexico. Like Trump, many Democrats blamed NAFTA for encouraging American factories to abandon the United States to capitalize on lowerwage Mexican labor and then to ship goods back into the U.S., duty-free.
Having long vilified NAFTA, Trump demanded a new deal — one far more favorable to the United States and its workers. For more than a year, his top negotiator, Robert Lighthizer, held talks with Canada and Mexico. Lighthizer managed to insert into the new pact provisions designed to appeal to Democrats and their allies in organized labor.
Late last year, the three countries signed their revamped deal, the U.S.-Mexico-Canada Agreement. But it wouldn’t take effect until their three legislatures all approved it. In the meantime, the old NAFTA remains in place.
The question now is: Are Democrats prepared to support a deal that addresses some of their key objections to NAFTA and thereby hand Trump a political victory? Some Democrats have praised the new provisions that address auto wages, though many say they must be strengthened before they’d vote for the USMCA.
Protection for drug companies is another matter.
Top biologics include the anti-inflammatory drug Humira, the cancer fighter Rituxan and Enbrel, which is used to treat rheumatoid arthritis.
U.S. trade rules are designed to force Congress to give trade agreements an up-or-down vote. Still, there are ways to bypass those restrictions. Congressional Democrats could, for example, push the administration to negotiate so-called side letters with Canada and Mexico to address their concerns. President Bill Clinton did this with the original NAFTA.