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December 11, 2019

How the new US-Mexico-Canada trade agreement would affect health care

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    The House Ways and Means Committee on Tuesday announced that Congress and the Trump administration have agreed on a renegotiated North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico that does not include a 10-year exclusivity period for biologic drugs that was backed by pharmaceutical companies.

    Background on the trade deal

    The trade deal—called the United States–Mexico–Canada Agreement (USMCA)—would update NAFTA for the first time in more than two decades. An initial agreement, which President Trump announced in 2018, included a provision to offer 10 years of exclusivity for biologics in Canada, Mexico, and the United States.

    Drugmakers currently receive 12 years of exclusivity in the United States for biologic drugs, and the biologics industry for years has advocated to keep that exclusivity period intact. The Biotechnology Innovation Organization (BIO) in comments to the Office of United States Trade Representative (USTR) said, "This remains one of BIO's top objectives in any future trade agreement."

    In contrast, drugmakers receive eight years of exclusivity in Canada for biologic drugs. In Mexico, drugmakers receive five years of exclusivity for their products, but Mexico's regulations do not explicitly state whether the five-year exclusivity period applies to biologic drugs.

    While the agreement would have increased exclusivity for biologic drugs in Canada and Mexico, it would have lowered the United States' current 12-year exclusivity period. USTR said the initial agreement also would have expanded the scope of products eligible for the drug exclusivity period.

    However, the agreement is subject to Congress' approval, and some lawmakers raised concerns about the initial deal's drug exclusivity provision. The administration and Congress since then have been working to reach an agreement on the trade deal.

    Lawmakers, admin reach USMCA agreement

    The House Ways and Means Committee in a fact sheet released Tuesday announced that House Democrats and the administration have reached an agreement on USMCA, and have agreed to remove the 10-year exclusivity period for biologics from the trade deal.

    The fact sheet stated that the agreement between House Democrats and the administration also removes provisions included in an earlier version of the USMCA deal that would have required the United States, Canada, and Mexico to:

    • Provide patents for new uses of prescription drugs that already have been approved, which lawmakers said could have allowed drugmakers to avoid generic competition by securing additional patents for their products; and
    • Provide an additional three years of exclusivity for clinical information submitted in connection with new uses of prescription drugs that already have been approved, which lawmakers said could have allowed drugmakers to further delay competition to the products.

    In addition, the fact sheet stated that, under lawmakers' new agreement with the administration, they revised a:

    • Data protection provision to establish limitations that "foster generic competition";
    • Patent linkage provision to eliminate the link between regulatory approval and patent status by adding language to allow incentives for generic competition and bolster transparency;
    • Regulatory review provision to clarify the instances in which generic and biosimilar drugmakers can use a patented invention to receive marketing approval on the first day a product's patents expire; and
    • Patent-term adjustment provision to provide examples of limitations on changes to patent terms for regulatory delays.

    The agreement still must be approved by Congress and ratified by Canada and Mexico to take effect, STAT+ reports.


    Rep. Jan Schakowsky (D-Ill.) said the original version of USMCA's proposed exclusivity period for biologics would have locked in "high drug prices and expanded Big Pharma's monopoly," but the revised agreement allows each country to individually decide exclusivity periods.

    As such, the revised agreement likely will have little impact on U.S. drug prices, because it maintains the current status quo when it comes to exclusivity periods, Axios' "Vitals" reports.

    Several observers applauded the new agreement.

    Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing, said, "At a time when one in four Americans can't afford their medications, [our membership] applauds policymakers for working across party lines to improve this historic trade agreement by rejecting Big Pharma's anti-competitive and price-gouging tactics."

    The Association for Accessible Medicines, a trade group for biosimilar and generic drugmakers, similarly praised the new agreement and released an animated video to celebrate the revised deal's announcement.

    But some pharmaceutical industry groups have argued that extending exclusivity periods in other countries would ensure patients in those countries are contributing to the medications' costs, and are criticizing the move to drop the 10-year period.

    BIO CEO Jim Greenwood in a statement said, "The real losers today are America's scientists, entrepreneurs, and patients waiting for the next generation of breakthrough medicines." He said the new agreement "declares open season on these innovators and sends a clear message that the U.S. government will stand idly by while foreign entities attack American intellectual property, American jobs and America's global leadership in medical innovation."  

    Pharmaceutical Research and Manufacturers of America in a statement said, "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 only winners today are foreign governments who want to steal American intellectual property … and free ride on America's global leadership in biopharmaceutical research and development" (Florko, STAT+, 12/10 [subscription required]; Cohrs, Modern Healthcare, 12/10; Owens, "Vitals," Axios, 12/11; Loftus, Wall Street Journal, 12/10; Cassella, Politico, 12/10; House Ways and Means Committee release, 12/10; House Ways and Means Committee fact sheet, accessed 12/11; BIO release, 12/10; PhRMA statement, 12/10).

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