Ruth Lopert MD MMed Sc FAFPHM
Adjunct Professor
Dep't of Health Policy & Management,
Milken Institute School of Public Health
\
Adjunct Professor
Dept. of Clinical Research & Leadership
School of Medicine and Health Sciences
George Washington University
PharmedOut 2017
Georgetown University
June 15-16th 2017
How the pharmaceutical industry influences trade discourse – and
why it matters
Recap on market failure
US trade agenda, brought to you by Pharma
Pharma’s rhetoric, avenues of influence, regulatory capture
Examples from AUSFTA, KORUS, TPP
Conclusions
PharmedOut 2017
Georgetown University
June 15-16th 2017
2
Market failure in medicines
In a perfectly competitive market equilibrium is reached — ie supply
matches demand at the current price — when:
• multiple consumers and producers are in the market
• producers can freely enter and exit
• consumers can compare products and make informed choices
But in the real world there is
• inelastic demand / extreme willingness to pay / 3rd party payment
• regulated market entry
• information asymmetry
• limited comparative information
• intellectual property protection
PharmedOut 2017
Georgetown University
June 15-16th 2017
Responses to market failure
Governments in most industrialized countries recognise that intervention is
necessary
•
almost all high income and many MICs subsidize medicines
•
though the extent of subsidy varies, across the OECD consumers
typically assume less than half the cost of their medicines;
Where governments purchase, subsidize or reimburse large quantities of
medicines they have considerable market power
•
in some countries an effective monopsony
•
this market power can be used to regulate prices directly or indirectly
Drug coverage programs in most OECD countries require manufacturers to
accept direct or indirect regulation of prices in exchange for the inclusion of
the products in reimbursement formularies
PharmedOut 2017
Georgetown University
June 15-16th 2017
Pharma’s rhetoric
Pharma frames the issues as problems - and trade agreements as the
solution*
Pharma as victim
• ‘unfair’ treatment of the industry by governments outside the US United States) –
helping the industry
Pharma as global protector of patient rights and public good
• restricted access to ‘innovative medicines’ - helping the patients
Pharma as the vanguard of economic development
• addressing the US economic crisis, by expanding and protecting pharmaceutical
industry markets – helping the economy
“PhRMA believes that the TPP FTA negotiations […] could help ensure that US-based
biopharmaceutical products have as fair and equitable access to foreign markets as
foreign products have to ours.”
PhRMA submission to USTR (2009)
* Gleeson DH, Neuwelt P, Monasterio E, Lopert R. How the transnational pharmaceutical industry pursues its interests through
international trade and investment agreements: a case study of the Trans Pacific Partnership. Chapter in: Handbook Of Research On
Transnational Corporations. (Edward Elgar, 2016)
PharmedOut 2017
Georgetown University
June 15-16th 2017
Pharma’s avenues of influence
Membership of key committees
•
Industry Trade Advisory Committee on Intellectual Property Rights
(ITAC15) – also reps from Gilead, J & J, and the Biotechnology Industry
Organization (BIO)
•
Industry Trade Advisory Committee on Chemicals, Pharmaceuticals,
Health/Science Products & Services (ITAC3)
•
Advisory Committee for Trade Policy & Negotiations
•
(No representation from NGOs or academe).
Informal communications between industry and USTR officials
The ‘revolving door’
PharmedOut 2017
Georgetown University
June 15-16th 2017
Regulatory capture
“This subset of IP stakeholders, with access to current information
and the ability to discuss negotiating proposals with U.S. negotiators,
is able to nudge the law in free trade agreements toward the kind of
IP law they would prefer existed domestically. Accordingly, the
making of international IP law has been captured through the U.S.
trade negotiating regime.
USTR is not subject to the same transparency, input or oversight
requirements as other agencies. Consequently, the USTR is
structurally subject to information capture by its limited industry
advisors, with little or no countervailing textual input by opposing
industries, the public, or public interest groups. “
Margot E. Kaminski, ‘The Capture of International Intellectual Property Law
through the US Trade Regime’ (2014) 87 Southern California Law Review
977.
PharmedOut 2017
Georgetown University
June 15-16th 2017
US trade agenda, driven by Pharma
TRIPS outcome below US and pharma expectations
“Forum shifting” by US to pursue expanded IPRs for medicines, began with
Jordan-US FTA in 2000
Increasing pursuit of 'TRIPs-plus' obligations including
•
expanding scope of patents
•
limiting grounds for patent revocation, eliminating pre-grant opposition
•
patent term 'restoration'
•
prohibition of parallel importation
•
constraints on compulsory licensing
•
mandating minimum periods of data exclusivity (DE), extended DE, and
market exclusivity for biologics
•
requiring linkage between patent status and regulatory approval
Attempting to establish new global norms
PharmedOut 2017
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June 15-16th 2017
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Evolution of IP provisions in US FTAs, to 2007
Krikorian GP, Szymkowiak DM (2007). Intellectual Property Rights in the Making: The Evolution of Intellectual Property
Provisions in US Free Trade Agreements and Access to Medicine. Journal of World Intellectual Property 10:388-418
PharmedOut 2017
Georgetown University
June 15-16th 2017
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Beyond IPRs - AUSFTA
USTR’s TPA mandate to seek “the elimination of government measures such
as price controls and reference pricing which deny full market access for US
products”
• Australia’s universal drug subsidy program, the Pharmaceutical Benefits
Scheme, clearly in sight
Supporting rhetoric intended to deflect criticism over high prices in the US
• the free-riding argument – ie countries that regulate drug prices or use
value based priority setting mechanisms are “free-riding”
• this reduces revenues to the industry which undermines future “innovation”.
In AUSFTA industry also sought to undermine formulary decision-making
processes
• 1st attempt by the US use a FTA to constrain another nation’s domestic
drug reimbursement was unsuccessful
• but set precedent for inclusion of provisions of this type within a trade
agreement
• more extensive and more intrusive provisions in KORUS
PharmedOut 2017
Georgetown University
June 15-16th 2017
Korea-US FTA (KORUS)
Obligations with respect to domestic health programs more intrusive than
AUSFTA and extend to medical devices
•
refers to “patented” rather than “innovative” products
•
reimbursement amounts “based on competitive market-derived prices” or
determined in a way that “appropriately recognize(s) the value of the patented
pharmaceutical product or medical device”.
•
requires assessment of innovation based on patent status, and precludes
determination based on assessment of value for money or opportunity cost
Substantial obligations WRT rulemaking within drug coverage programs
•
significant opportunities for industry influence in the listing and pricing processes
•
requires review body for listing and pricing determinations
Legalization of DTCA via internet
Establishment of a Medicines and Medical Devices Committee
Builds on background of A7 pricing agreement
PharmedOut 2017
Georgetown University
June 15-16th 2017
The Trans-Pacific Partnership
TPP signatories Australia, Brunei, Canada, Chile, Japan Malaysia, Mexico,
New Zealand, Peru, Singapore, US and Vietnam (US has withdrawn)
•
initial IP provisions AUSFTA+ and KORUS+
•
extensive provisions directed at drug coverage programs include developing
countries, expanded to include medical devices
•
while both moderated to some degree in final text, IP provisions particularly
onerous for LMICs
Other issues in chapters on regulatory coherence, TBT, investment
Absence of public input and lack of transparency despite extensive US
consultation with industry
PharmedOut 2017
Georgetown University
June 15-16th 2017
Conclusions
The pursuit of increasing standards of IP protection and provisions that
attempt to constrain other countries’ domestic drug coverage programs
•
prosecute the interests of a powerful industry
•
also reflect US’ enduring adherence to ‘market-based solutions’ and the belief
that government intervention in market failure largely unnecessary (or at least
undesirable)
The TPP may or may not be dead but
•
Pharma’s pursuit of increasing standards of IP protection and its attempts to
undermine other countries efforts to respond to market failure are not only
intended to expand markets and increase revenues abroad
•
they actively undermine efforts to entrench current standards and introduce
much needed domestic US reforms
Industry agenda also being aggressively pursued via non US bilateral and
plurilateral agreements – eg TTIP and RCEP
PharmedOut 2017
Georgetown University
June 15-16th 2017
[email protected]
PharmedOut 2017
Georgetown University
June 15-16th 2017