The United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, which represent 40% of the world's economy, reached a final agreement on Trans-Pacific Partnership (TPP). Among several controversial measures, the TPP would extend intellectual property protection for biologics among the member nations that decide to ratify the agreement.
IHS Life Sciences perspective | |
Significance | The United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam reached a final agreement on Trans-Pacific Partnership (TPP). |
Implications | If ratified by the US Congress and other member nations, the TPP would create a preferential trade zone between 12 countries covering 40% of the world's economy. Regarding the pharmaceutical sector, the TPP has extended to five years' data-exclusivity protection for biologics, without setting a maximum. |
Outlook | The announcement of a final agreement on the TPP has generated mixed feelings. Across some of the emerging markets, the main concerns have been the potential delays on biosimilars' market entry and the increase on biologics prices. However, the TPP needs to be ratified before this extension can be applicable. |
Twelve nations, including the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, reached on Monday (5 October) a final agreement on Trans-Pacific Partnership (TPP) after 10 years of negotiations.
According to UK newspaper the Independent, if ratified by the US Congress and other member nations, TPP would create a preferential trade zone between 12 countries comprising 40% of the world's economy, reducing trade barriers and establishing uniform rules on corporations' intellectual property (IP). TPP would also harmonise rules on investor-state dispute settlement, wider IP disputes, dairy trade, environmental protection, and privacy obligations across the 12-nation group.
However, the final agreed text has not been published yet, and, according to several media sources, the final text will not be released until the TPP is ratified by the countries that were part of the negotiations. According to the New York Times, the US president Barack Obama must notify Congress of his intentions to sign the accord, following which Congress will have 90 days to scrutinise the agreement, with some bipartisan opposition very likely.
Strong intellectual property protection
Although the final text of the agreement remains secret, during the 10 years of negotiations several drafts were released, generating much controversy in the pharma industry and the member states that were part of the negotiations.
One of the most controversial proposals was the United States' suggestion of extending to 12 years data protection for biologic medicines. Several media sources have reported that in the final agreed text, a minimum of five years' data exclusivity protection for biologics producers has been set, without setting a maximum.
Furthermore, some additional IP has been discussed to compensate pharma companies for losses incurred due to delays in granting patent protections.
During the TPP negotiations, the governments of Australia, New Zealand, and Chile showed strong opposition to the proposal from the US government. According to UK newspaper the Guardian, there is strong opposition among Australian health organisations to lengthening market exclusivity for biologics. On 1 September, 150 senior health experts wrote to Australian trade minister Andrew Robb to support him on his resolve not to extend market exclusivity on these products.
Some of the drafts also revealed disagreement between the negotiating countries regarding the definition of biologics. An approach proposed by Australia and New Zealand and supported by Chile would leave it to each country to determine what constituted a biologic product under its domestic law.
Outlook and implications
The announcement of a final agreement on the TPP has generated mixed reactions. Across some of the emerging markets – Chile, Malaysia, Mexico, Peru, and Vietnam – the main concerns have been the potential delays to biosimilars market entry and the risk of stifling innovation in the event that patent terms are extended too far with the potential ratification of the TPP in those markets (see Mexico - Chile - Peru: 5 March 2015: TPP free trade agreement likely to increase costs of medicines in Chile, Mexico, and Peru).
Furthermore, the introduction of stronger IP protection would lead to higher prices of medicines in emerging markets, generally affecting their healthcare systems adversely, or undermining the government's power to regulate healthcare costs. An increase on biologics prices with the ratification of the TPP seems likely not only in emerging markets but also in more developed markets, such as Australia and Japan (see Australia: 4 March 2015: Trans-Pacific Partnership to raise costs of medicines, say Australian researchers).
The Australian Public Health Association has gone further in its opposition to increasing protection on biologics, highlighting that any extension on data exclusivity should include a specific public health exception for biologics that allows market exclusivity requirements to be waived in circumstances where it is necessary to protect public health, national security, non-commercial public use, national emergency or other urgent circumstances.
An extension of IP protection would create a friendly environment for pharmaceutical companies, which would feel more safe to launch their biologics in countries that secure them longer data exclusivity. However, some parts of the industry, such as the Pharmaceutical Research and Manufacturers of America (PhRMA), have already expressed disappointment at the failure of the TPP to secure 12 years of data protection for biologic medicines (see United States: 7 October 2015: PhRMA bemoans failure of Trans-Pacific Partnership to secure 12-year data protection).