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Marketplace Morning Report

Why some people are worried about drug patent protections in the new NAFTA

Scott Tong Oct 2, 2018
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LARS HAGBERG/AFP/Getty Images

The new NAFTA — or as it’s officially known, the U.S.-Mexico-Canada Agreement — is already raising some complaints from north of the border. Canadians are worried their drug prices will go up.

That’s because one piece of the deal gives years of extended patent protection to high-end, expensive drugs known as biologics. That means the trade deal could delay the time it takes for cheaper generics to get to market.

Biologic drugs are complex medicines made in living cells. Examples of biologics include AbbVie’s Humira and Johnson & Johnson’s Remicade.

This trade deal would give biologic makers 10 years of patent protection in Canada and Mexico, which is longer than they enjoy now.

“The industry thinks that this is a real win,” said Brian Pomper, who heads Action for Trade, a group that represents pharmaceutical makers and others.

A win because it would fend off competition from generics for a few extra years. That, of course, means a loss for makers of lower-price meds known as biosimilars. In Canada, they’d have to wait an extra two years to get to market, and that would keep prices high, said Jim Keon of the Canadian Generic Pharmaceutical Association. He said some U.S. biologic drugs make a billion dollars every year in Canada alone. 

“If you could introduce a biosimilar effectively into the market, the savings could be in the hundreds of millions of dollars, just on that one product alone,” Keon said.

There could be another plus for U.S. biologics makers: using this trade deal to protect its monopoly period, which is 12 years, at home.

“If, say, a president comes into power that wants to really reduce drug prices, and do it by reducing the number of years of exclusivity, she would also have to potentially break NAFTA,” said Colleen Chien, professor of law at Santa Clara University. “The fact that we have a deal with Canada and Mexico that says 10 years makes it harder for us to make that change.” 

Click the audio player above to hear the full story. 

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