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The Trans-Pacific Partnership Agreement and Implications for Access to Essential Medicines

Jing Luo, MD1; Aaron S. Kesselheim, MD, JD, MPH1

1Program on Regulation, Therapeutics, and Law, Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital and Harvard Medical School, Boston, Massachusetts
JAMA. Published online August 20, 2015. doi:10.1001/jama.2015.10872

After a difficult legislative battle, President Obama signed into law Trade Promotion Authority on June 29, 2015. The legislation allows for an up-or-down vote with no amendments in Congress for international trade agreements such as the Trans-Pacific Partnership (TPP) Agreement. The TPP Agreement includes 12 Asia-Pacific countries (United States, Canada, Mexico, Peru, Chile, Japan, Vietnam, Malaysia, Singapore, Brunei, Australia, and New Zealand) with a collective trading power amounting to 40% of the global gross domestic product. The TPP Agreement is still being negotiated; recently, in a meeting of trade ministers in Maui, Hawaii, negotiators failed to finalize the text of the Agreement due in large part to disagreement regarding intellectual property protections for pharmaceutical products.1

Intellectual property rights, including patents, are central to the business model of brand-name pharmaceutical manufacturers. Manufacturers can charge high prices during patent-protected periods without fear of competition, earning profits that are intended to provide incentives for investment in drug innovation. However, low-income patients frequently lack access to expensive drugs, and excessive spending on pharmaceuticals can strain government budgets, leading to reductions in other health services. In addition to addressing barriers to trade, the TPP will affect the pharmaceutical market in member countries due to its intellectual property provisions.
It is critical to ensure that patents protect only innovative pharmaceutical products and for governments to balance grants of market exclusivity with other competing interests, such as the widespread availability and affordability of certain drugs. In the United States, for example, patents are supposed to be issued only to novel products that are an innovative step beyond what already exists, and patents along with a variety of regulatory and other exclusivities permit conventional drugs to receive an average time of about 13 years of market exclusivity before competing generic versions are approved.2

The 1994 Trade Related Aspects of Intellectual Property (TRIPS) Agreement, which countries must agree to as a criterion for membership into the World Trade Organization, standardized basic intellectual property protections for pharmaceutical products around the world. Before TRIPS many lower-income countries had chosen not to grant patents for pharmaceutical products, emphasizing low-cost access over contributing to incentivizing innovation; however, the TRIPS Agreement required all signatory countries to change their policies and grant pharmaceutical patents.

In the years since, countries have implemented this requirement in different ways. Indian law, for example, required new forms of existing drugs to show significant improvements in efficacy before they can be granted a patent. This controversial provision was recently upheld in an Indian Supreme Court decision related to a new formulation of imatinib (Gleevec), a tyrosine-kinase inhibitor used to treat chronic myelogenous leukemia.3 In that decision, the Indian Supreme Court stated that the beta crystalline form of imatinib was not patentable in part because it was too similar to an older formulation discovered prior to India’s enforcement of patents for pharmaceutical products under TRIPS.

The TPP may end such flexible approaches to granting patents and add a number of new requirements related to intellectual property in addition to the TRIPS measures. Even though the exact details of the TPP are not known, negotiating drafts have been leaked, with the most recent intellectual property chapter dating from May 11, 2015.4 This chapter includes 8 sections covering a wide range of topics including patents, trademarks, copyright, industrial designs, and geographical indications.

In the case of pharmaceuticals, the text of the draft seeks to bring international intellectual property law into closer alignment with current US standards regarding the scope of what may be patented. For example, US negotiators favor allowing patents to cover inventions in all fields of technology (including inventions derived from plants and microorganisms), despite legal systems in other countries that include a more limited scope of patentable subject matter.

The TPP also could allow new uses of a known product to be granted additional monopoly protection. This may reduce TPP countries’ abilities to create patent laws that seek, as India’s does, to ensure that only truly innovative and clinically important pharmaceutical products are patentable. Seeking patents for the new methods of using existing drugs is a common tactic that pharmaceutical manufacturers in the United States use to delay the generic competition. For example, Eli Lilly sued Canada for $500 million dollars over its decision to invalidate 2 pharmaceutical use patents: the use of olanzapine (Zyprexa) in schizophrenia and atomoxetine (Strattera) in attention-deficit/hyperactivity disorder.5 Both drugs were previously patented in Canada for other uses, and a generic manufacturer (Novopharm) successfully challenged the validity of these patents by showing that there was insufficient evidence to support the claims at the time of filing. In the case of olanzapine, Lilly attempted to secure additional monopoly protection by restating the claims from an earlier patent while simultaneously failing to demonstrate substantial advantage over other antipsychotics for this new use, which is the current standard required under Canadian law. Under the TPP, a multinational pharmaceutical company could use the investor-state dispute settlement mechanism to challenge domestic laws like the one in Canada, which are intended to promote timely availability of generic drugs.6

The TPP also contains provisions that could make it more difficult to successfully challenge patents after they have been issued by shifting the burden of proof onto the challengers. This would ensure that potential generic market entrants must expend substantial resources to clear the numerous interrelated patents that innovator companies obtain on their products, increasing the cost and time of generic entry. The TPP draft could also impose substantial civil and criminal penalties on potential generic manufacturers found to have infringed patents, increasing the business risk for these companies. Moreover, language requiring the seizure and destruction of in-transit goods for “confusingly similar” products may expand the geographic scope of the TPP to affect countries not part of the direct agreement, such as India or Brazil, which may find it more complicated to ship generic medicines that are legal under their patent regimes through TPP member states.

In addition to forcing TPP member states to adopt patent laws that closely align with that of the United States, the TPP could also require member states to adopt the US Food and Drug Administration’s approach to preventing generic manufacturers from reaching the market for a minimum of 5 to 7 years after the approval of a new small-molecule drug, 3 years for new indications, and 12 years after approval of a new biologic drug.7 Nine TPP countries provide no guaranteed exclusivity periods for safety and efficacy data associated with biologic drugs because the complex manufacturing processes required to create these medicines naturally makes for fewer follow-on biologic competitors and fewer cost reductions arising from that competition. Notably, in the United States, the Federal Trade Commission similarly recommended no guaranteed exclusivity periods for biologics, and the Obama administration has repeatedly proposed to reduce the period of biologic exclusivity from 12 to 7 years for these same reasons. The TPP may reduce the flexibility of US policymakers to change the period of guaranteed biologic data exclusivity in the future, maintaining high biologic drug prices.

Thus, in its current form, the TPP could lower the bar for the patenting of pharmaceutical innovations and make it substantially more difficult for generic manufacturers to enter the market in TPP member countries. In addition, legal generic products could become seized during international transit. The overall effect of the TPP could be to extend the effective patent life of drugs and to decrease the availability of generic drugs or biosimilar medicines available to patients around the world.

Some economists have suggested that the intellectual property chapter of the TPP should be abandoned, because it could result in higher drug prices for patients.8 By contrast, industry representatives suggest that strong intellectual property protections are necessary for costly research and development, although this assertion has been disputed.9

It is likely that a balance between these competing objectives has not been struck by the TPP agreement in its most current form. The recent breakdown in negotiations suggest that some countries are taking a hard-liner on pharmaceutical-related provisions, so there remains hope that an agreement could be negotiated. If the United States continues down the path exposed in the leaked draft and expects other TPP countries to accept new standards for pharmaceutical intellectual property protections, it should also allow concessions that would encourage low-cost and high-quality generic drugs competition once market exclusivity ends. For example, data exclusivity for medicines should not be redundant or geographically transportable, meaning that if a 5-year exclusivity period has already expired in the United States, no additional exclusivity would be granted by regulatory authorities in other TPP member countries. In addition, meaningful technology transfer could be incorporated to promote local pharmaceutical manufacturing capacity. An innovative financing instrument, such as a nominal levy on top of existing tariffs for nonpharmaceutical trade (eg, goods and services), could also be created to help less-wealthy, signatory countries procure medicines that will inevitably be made more expensive by the agreement.

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