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Marketplace Morning Report
President Obama talks trade

In the end, the real hurdle to a TPP deal was drugs

Tracey Samuelson Oct 5, 2015
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The news came bright and early Monday: Negotiators working on the Trans-Pacific Partnership finally wrapped up more than five years of talks this morning around 5 a.m.

They battled down to the wire over sugar, dairy, cars — the traditional goods you expect to find in a trade agreement. But this deal, which will regulate some 40 percent of GDP, also covers services, e-commerce, data flows and a relatively new class of medicines called biologics. In fact, the heated debate over biologics almost derailed the agreement over the weekend.

What are biologics? The term “really covers many of the new medical tools and medical products, including not only drugs but also vaccines,” said Judit Rius, with Doctors Without Borders.

The issue for TPP negotiators was actually one of intellectual property. The debate centered on how long drugmakers should hold the exclusive rights to the clinical data needed to get their drugs approved before makers of generics can follow suit. Current U.S. law is 12 years. But some TPP countries had zero years of protections, others five or eight years. 

Doctors Without Borders is worried about the cost of drugs in the developing world and wanted the TPP to knock all its countries down to zero.

“One more year of monopolistic protection will mean one less year of access to generics and competition, and therefore higher prices,” Rius said.

But many name-brand pharmaceutical companies wanted the opposite — to bring all TPP countries up 12 years. Patrick Kilbride, with the U.S. Chamber of Commerce, points to the cost companies incur to develop these drugs.

“To keep that pipeline of new medicines going, you need that incentive, that period of exclusivity, that allows them to recoup their investment and then go on to make the next breakthrough,” Kilbride said.

In the end, TPP delegates didn’t agree on one overarching system. The U.S. can keep its 12 years. Other countries will have at least five years, perhaps more.

“Clearly it was important for [negotiators] to recognize the political constraints related to this issue within each country,” said Eswar Prasad, a trade policy professor at Cornell University. “But it was also very important for them to move forward on this deal.”

In the end, he said, it’s remarkable negotiators finally came to an agreement at all.

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