Leaks show trade deal undermines Obama’s proposed healthcare reforms

The Obama administration is giving up on billions of dollars in healthcare savings it has promised to the American people. The administration’s proposed rules for the Trans-Pacific Partnership (TPP) would tie the hands of Congress and foreclose cost-saving reforms for biotech drugs and Medicare Part D.

U.S. trade negotiators, acting on behalf of pharmaceutical companies, are trying to force developing countries to give up, too, and to undermine access to affordable medicines at the expense of peoples’ lives.

Earlier this week, WikiLeaks published the draft TPP “Annex” on healthcare technologies. In the five-page document, the U.S. government commits Medicare to rules and procedures that would make it difficult — if not impossible — to implement a national formulary that would provide leverage for proposed negotiations with drugmakers under Medicare Part D.

{mosads}Medicare costs are expected to more than double from $77 billion in 2015 to about $174 billion in the next decade. In February, the president called for giving Medicare the power to negotiate prices with drug manufacturers to ameliorate this cost burden. Americans support giving Medicare negotiating power by wide margins and across party lines.

Negotiations are most effective if the U.S. government has leverage. Experts suggest that key leverage in Medicare negotiations should come from developing a national drug formulary — a list of drugs that Medicare would cover. A formulary would stimulate competition, reduce prices and lead to healthier outcomes for patients and the healthcare system.

But the leaked TPP “Annex” shows that the pact would impose procedural requirements on formulary decisions, exact significant administrative costs and open up the drug review process to increased corporate influence. Medicare would have to live by these rules. The result could be a toothless negotiator, and a formulary filled with expensive drugs that have questionable public health benefits, if any.

The administration’s trade arm already knows this. That is why the same leak includes footnotes that should, hopefully, exclude other government programs such as the Veterans Health Administration (VA) from its reach. Partially thanks to a strong formulary, the VA routinely pays 40 percent less than Medicare plans for prescription drugs. The agency is widely heralded as the best drug procurement system in the country. Many health policy experts would like to see Medicare follow in the VA’s footsteps. The TPP may foreclose that option.

And there is a second contradiction. The White House budget includes a separate proposal that would save Americans billions every year and promote access to affordable cancer and heart disease treatment by reducing the automatic monopoly period for biotech drugs from 12 years to seven.

These harmful data and marketing exclusivity measures were tucked into the Affordable Care Act to satiate the pharmaceutical giants. Many new and forthcoming treatments for cancer, heart disease and other serious conditions are biologics, meaning they are derived from living organisms. The industry routinely prices them at tens and sometimes hundreds of thousands of dollars. (Prices on this order are neither necessary for, nor related to, the research and development investments we need.) Reducing the exclusivity period would allow earlier “biosimilar” competition. This is our best bet for controlling biologics’ costs.

Incredibly, WikiLeaks published another secret TPP text in October — the “Intellectual Property Chapter” — which includes a U.S.-sponsored proposal to enshrine long exclusivity periods in the treaty. If successful, Congress will be unable to shorten the period to promote access to treatment and healthcare solvency at home. If the United States is successful, people in all TPP countries will suffer. Over time, many will likely die.

Prescription drug spending surged 13 percent in the United States last year. The U.S. already pays twice as much for prescription drugs as other wealthier countries. We confront unprecedented high prices from a pharmaceutical industry that wields the monopoly powers we give it, and knows that we will pay almost any price to protect our loved ones.

We need leverage and we need competition.

Instead, we are debating giving the administration the authority to pass these and other harmful trade rules without amendment, negotiated under longtime pressure from industry lobbyists and clearly without adequate consultations, even internally to the administration. The policy incoherence is appalling. We must ask ourselves what other harmful rules we may find in the 20-plus TPP chapters that have not leaked.

Congress should not cede its constitutional authority over trade. If the TPP is adopted without amendment, people’s health will suffer. We will lose some of our options to control healthcare spending. These are costs no patient can bear.

Maybarduk is director of Public Citizen’s Global Access to Medicines Program.