Trump targets drug protections to save trade deal

The Trump administration is reportedly considering easing patent protections for brand-name drugs in order to secure Democratic support to pass the new North American trade deal through Congress.

If approved, the change would be a major shift in Republican priorities and a significant blow to the pharmaceutical industry, which opposes the move.

The current language in the U.S.-Mexico-Canada Agreement (USMCA) gives branded biologics — drugs that are made from living organisms rather than synthetic chemicals — 10 years of protection from cheaper alternatives.

Congressional Democrats seized on this language and insisted they would not vote for the deal unless it was changed. Now, the administration is reportedly considering scaling back the protections to allow cheaper, generic versions of biologic drugs to come to the market quicker.

The change would leave it up to the individual countries to set their own laws on biologics. In the U.S., current law protects patents for 12 years, but in Mexico the period is five years and in Canada it is eight. 

A similar disagreement over drug patents scuttled congressional approval of the Obama-era Trans-Pacific Partnership trade deal. President Trump pulled the U.S. out of the deal with an executive order in January 2017. 

Changing patent protections, though, is opposed by powerful pharmaceutical industry interests, and it’s not clear if drug protections alone will be enough to get reluctant Democrats to push the trade deal over the finish line.

House Democrats have long sought such changes, and moderates have been pressuring Speaker Nancy Pelosi (D-Calif.) to get a deal done. Members in districts that Trump won want to be able to show a strong policy victory to counter Republican arguments that Democrats have been too consumed with impeachment. 

Pelosi has previously characterized the deal as imminent, but late last month she cast doubt on the possibility of passing an updated trade deal by the end of 2019.

The talks have been complicated by a number of issues. Prescription drugs were only one of the many provisions Democrats demanded significant changes to; others were related to the environment and labor, as well as the general enforceability of the agreement.

“In terms of the prescription drugs, that’s a very big issue in our caucus, and we hope that we can resolve that,” Pelosi said in October. 

Democrats took control of the House in part by campaigning on lowering drug prices, and one of the legislative solutions eyed by House progressives is a bill that would lower the exclusivity period of biologics to seven years — something that would violate the USMCA as written.

Biologic drugs make up a small portion of prescriptions but can cost thousands of dollars. They are one of the main drivers of drug spending in the country and have little competition.

But there is already strong pushback to changing patent protections, including from some centrist Democrats.

Moderate Democrats and outside trade-friendly groups who back the deal are arguing against significant changes.

“This is the best trade agreement that speaks to Democratic values,” said former Rep. Joseph Crowley (D-N.Y.), honorary co-chairman of the Pass USMCA Coalition, a group of trade associations, businesses and advocacy groups, including the Pharmaceutical Research and Manufacturers of America.

Crowley said the provision in the trade deal will protect U.S. jobs. He noted that developing biologic drugs is both costly and time consuming. 

The pharmaceutical industry argues that a lengthy protection period, like the one already in current law, allows companies to recoup the significant research and development costs in bringing new drugs to market.

And while the administration sees the changes as a sweetener for Democratic votes, Crowley said he was concerned the changes could lead to the trade deal losing support from centrists.

“I think there are enough Democrats on board already,” Crowley said. 

The move would also represent a reversal for Trump, as the administration had previously rejected Democrats’ concerns over many of the deal’s terms.

The argument from the U.S. trade representative has always been that the deal would not change current law or prevent Congress from acting in the future. 

And it could put Trump at odds with members of his own party, who worry the changes could hurt American businesses. The debate over drug prices has changed in recent years though, with more GOP lawmakers, including Senate Finance Committee Chairman Charles Grassley (R-Iowa), opening the door to new actions aimed at tackling drug costs.

Trump is also motivated to get his new North American trade deal across the finish line and has made lowering drug prices a key priority for his presidency.

Drug pricing advocates and Democrats said the lengthy exclusivity period only serves to make drugs more expensive. Advocates for action on drug prices see the changes as an important step to targeting high costs.

The provision “is a pharma moneymaker, period. There’s no other reason for it,” said David Mitchell, president and founder of the group Patients for Affordable Drugs Now. 

“I don’t think anybody wants to have USMCA open to the criticism it will actually lead to and promote higher drug prices,” Mitchell said.