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January 25, 2017

Trump pulls US out of TPP trade deal. Here's what that means for health care.

Daily Briefing

    President Trump on Monday signed a presidential memorandum notifying the Office of the U.S. Trade Representative (USTR) that the United States will withdraw from an agreement on the Trans-Pacific Partnership (TPP) trade deal, a sweeping package of economic provisions, including some that would affect the health care industry.

    Trump during his campaign said he would remove the United States from the agreement, which he called a "horrible deal."

    Background: TPP and health care

    Twelve countries, including the United States, in October 2015 reached an agreement on TPP after about eight years of negotiations.

    Biosimilars as effective, less costly than their biologic counterparts, analysis finds

    One of the negotiation's most contentious points came over the length of market protections for biologics, advanced medicines made from living organisms. The United States had fought to preserve a 12-year exclusivity period for the drugs, arguing that it is needed to promote innovation. However, almost all of the other countries involved in the deal wanted to reduce that exclusivity period to allow lower-priced "biosimilars" to be brought to the market.

    To resolve the disagreement, the parties to the TPP reached a "complicated compromise" that would protect biologic manufacturers' exclusivity for at least five and up to eight years, the Wall Street Journal reports.

    The TPP also would no longer allow tobacco companies to use arbitration panels to sue countries that pass anti-smoking legislation.

    Matthew Myers, president of the Campaign for Tobacco-Free Kids, at the time called the tobacco provision "historic." However, several Republican senators said the tobacco provision would make them less likely to support the TPP, which was subject to congressional approval. Congress did not ratify the deal.

    Memorandum details

    The presidential memorandum said Trump's administration would "deal directly with individual countries on a one-on-one (or bilateral) basis in negotiating future trade deals."

    The memorandum directs USTR "to withdraw the United States as a signatory to [TPP], to permanently withdraw the United States from TPP negotiations, and to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages."

    Stakeholders react to US withdrawal from TPP

    Some industry stakeholders praised Trump's decision, while others took a more neutral stance.

    For instance, Peter Maybarduk, director of Public Citizen's Access to Medicines program, said Trump's decision to withdraw the United States from TPP is "a very good thing for patient access ... because the TPP—per the interest of the prescription drug corporations that lobbied more than any other industry for it—had many provisions ... that would have expanded the monopoly power of the pharmaceutical industry."

    Ralph Ives, EVP of global strategy and analysis at the Advanced Medical Technology Association (AdvaMed), in a statement said, "The medical technology industry has consistently supported trade agreements that open markets and improve patient access to needed medical advancements. We look forward to working with the new administration as it pursues these pro-innovation, pro-patient goals."

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    AdvaMed had praised TPP last year, stating that the deal could help to curb "corrupt business practices" and create global "codes of conduct" for the market.

    Pharmaceutical Research and Manufacturers of America (PhRMA) in a statement said the group "is supportive of bilateral and multilateral free trade agreements that include strong intellectual property protections, enhance market access and help us deliver lifesaving medicines to the world’s patients." PhRMA in a statement last year had said it was "disappointed" with TPP because it did not go far enough to protect biologics' exclusivity periods.

    Judit Rius Sanjuan, the U.S. manager for  Médecins Sans Frontières's (MSF) Access Campaign, said the group "would like to see an agreement that is a win-win for innovation and access," but added that it is unclear whether the Trump administration would pursue such a deal. MSF, an international humanitarian aid organization, last year said TPP would "raise the price of medicines for millions by unnecessarily extending monopolies and further delaying price-lowering generic competition."

    Ruth Lopert, a deputy director for pharmaceutical policy and strategy at Management Sciences for Health, said pharmaceutical companies likely will continue efforts to broaden market exclusivity periods "through the bilateral agreements [Trump] foreshadowed" in the memorandum. Lopert added, "Given the extent of industry influence on [Capitol] Hill, it seems unlikely that its shadow over trade policy will grow less any time soon."

    Other strongly criticized the move. For instance, Sen. John McCain (R-Ariz.) in a statement called Trump's decision to pull the United States out of the deal a "serious mistake." He said, "This decision will forfeit the opportunity to promote American exports, reduce trade barriers, open new markets, and protect American invention and innovation" (Rubenfire, Modern Healthcare, 1/23; Frieden, MedPage Today, 1/23; Baker, New York Times, 1/23; Presidential memorandum, 1/23).

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