BY ELYSSA LUKE – After five years of relatively secret negotiations, 12 Pacific Rim countries signed the world’s largest trade deal on Monday, October 5, 2015.[1] The Trans-Pacific Partnership (TPP) agreement cuts tariffs and fosters trade to boost growth amongst twelve nations already responsible for over 40% of world trade.[2]
The agreement encompasses most goods and services and could lead to the creation of a single market like that in Europe.[3] After talks in Hawaii failed to yield a deal earlier this year, many parties hoped this round, held in Atlanta, would result in a deal.[4] This final round of deliberation was delayed an extra day by negotiations over pharmaceuticals, specifically biologics.[5] These new biological drugs, currently in developmental stages, use living cells to treat anything from cancer to Crohn’s disease.[6]
The twelve nations were forced to compromise on a provision for patent exclusivity for biologics.[7] Patent exclusivity grants companies a specific length of time in which they can sell biologics exclusively without generic competitors being allowed to enter the market.[8] The current statutory exclusivity period in the U.S. is twelve years, as enacted by the Biologics Price Competition and Innovation Act of 2009.[9]
Countries such as Australia and New Zealand argued alongside several public health groups for a shorter five-year exclusivity agreement.[10] Proponents argued that shorter patent protection periods will allow more companies to develop their own biologics and generic biologics, thus allowing more patients to access life-saving medicines sooner and at lower costs.[11]
Conversely, large biotech companies across the board are siding with the U.S. and pushing for longer exclusivity periods.[12] They argued that longer exclusivity encourages greater investment into development on behalf of these companies.[13] This is especially crucial for biotech companies since the payback period for an investment into developing biologics could take 13 to 16 years.[14]
After extending the TTP talks for the extra day, all sides finally reached an agreement. Under the new deal, countries can decide between two biotech exclusivity options.[15] The first option gives countries eight years of full exclusivity, and the second option allows five years of exclusivity, plus an additional three years of semi-exclusivity.[16]
It is still unknown what effect the new regulations will have on US-based biotech companies—the TPP has yet to make its way through Congress. Earlier this year, President Obama was given special fast-track authority for the TPP agreement, limiting Congress’s ability to amend or filibuster the agreement.[17] The agreement will be open to public comment for sixty days before the President signs it, and Congress will have up to four months to vote on it.[18]
The domestic response to the deal has been lackluster, judging by the drop in biotech stock prices shortly after the final TPP deal.[19] This may not, however, be crippling to the up-and-coming biologics industry. It remains to be seen how the TPP will affect research and development efforts of the international biotech industry.
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[1] Trans-Pacific Free Trade Deal Agreed Creating Vast Partnership, BBC (Oct. 5, 2015), http://www.bbc.com/news/business-34444799.
[2] TPP: What Is It and Why Does It Matter?, BBC (Oct. 5, 2015), http://www.bbc.com/news/business-32498715.
[3] Id.
[4] See Anthony Fensom, Trans-Pacific Partnership: Hawaii Talks End Without Deal, The Diplomat (Aug. 2, 2015) http://thediplomat.com/2015/08/trans-pacific-partnership-hawaii-talks-end-without-deal/.
[5] Trans-Pacific Free Trade Deal, supra note 1.
[6] Laura Lorenzetti, TPP Trade Deal: Even More Bad News for Biotech Industry, Fortune (Oct. 5, 2015), http://fortune.com/2015/10/05/biotech-tpp-trade-deal-drug-prices.
[7] Id.
[8] Yaniv Heled, Patents vs. Statutory Exclusivities in Biological Pharmaceuticals – Do We Really Need Both?, 18 Mich. Telecomm. Tech. L. Rev. 419, 422 (2012).
[9] § 7002, 124 Stat. 119 (2010).
[10] Trans-Pacific Free Trade Deal, supra n. 1.
[11] Lorenzetti, supra n. 6.
[12] Id.
[13] US, Australia Drug Dispute is Holding Up Settlement of the Trans Pacific Trade Deal, Financial Review (Oct. 4, 2015), http://www.afr.com/news/politics/national/us-australia-drug-dispute-is-holding-up-settlement-of-the-trans-pacific-trade-deal-20151003-gk0r65#ixzz3rfXJbrMC.
[14] Lorenzetti, supra n. 6.
[15] Id.
[16] Id.
[17] Jonathan Weisman, Deal Reached on Fast-Track Authority for Obama on Trade Accord, N.Y. Times (April 16, 2015), http://www.nytimes.com/2015/04/17/business/obama-trade-legislation-fast-track-authority-trans-pacific-partnership.html?_r=0.
[18] Id.
[19] Lorenzetti, supra n. 6.
