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New NAFTA must promote medical innovation

by Andrew Spiegel, opinion contributor - 12/09/17 11:20 AM ET

Recently the Trump administration updated its NAFTA negotiating objectives and completed the fifth round of trade talks with Canada and Mexico in the latest round of NAFTA re-negotiations. Reworking the Clinton-era trade deal is at the heart of the Trump economic agenda.

In its push for fairer, smarter trade agreements, the White House must focus on halting abuses of American intellectual property, particularly those associated with medicines. Promoting policies that foster medical innovation will boost patient access to breakthrough drugs and treatments.

{mosads}The United States is a global leader in drug research and development, creating nearly half the world’s new medicines. American researchers are in the midst of testing drugs for devastating diseases like cancer and Alzheimer’s — and are making incredible strides in the search for new treatments for neglected illnesses. In the colon cancer community, I’ve seen us come from one drug to a dozen in the past decade and a half, and that has translated into people living years longer — some being completely cured.

Patents, data exclusivity and other intellectual property protections make this work possible. They provide drug companies with the incentives they need to pursue risky research.

Drug development is dicey. Only one in 5,000 drugs that enter preclinical testing ever gets approved. Drug makers spend, on average, $2.6 billion to create this approved drug — and they often have toiled over the research for more than a decade.

America’s IP laws promote research by ensuring that innovators have a chance to recoup their upfront investments. American firms spend more than $60 billion on drug research every year, steadily advancing medical knowledge and regularly producing new medications.

Many of our major trading partners, however, take advantage of this research and violate IP laws. They break drug patents, impose price controls on innovative medicines, or pursue other anti-competitive measures that undercut American drug manufacturers.

Consider Canada, one of the nations in NAFTA. Its Patented Medicines Prices Review Board requires that a drug’s price be no higher than its median price in seven other countries. That price often ends up being less than what it is in the United States.

Or consider the practices of our trading partners in Asia, where President Trump recently visited.

The South Korean government imposes price controls on American drugs, often in violation of the terms of the U.S.-Korea Free Trade Agreement. Most notoriously, the country’s public insurance program groups drugs by “therapeutic class.” It reimburses all products in that class the same, drawing no distinction between decades-old generics and breakthrough medicines.

As a result, the average reimbursement for a new drug in South Korea is less than half the average for the overall Organization for Economic Cooperation and Development, one of the world’s key trading blocs.

And the problems don’t end there. Korean courts recently have absurdly reinterpreted longstanding rules that restore patent life for innovative medicines lost due to unreasonably long regulatory approval delays. Rather than restore the term of the patent, as Korea’s bilateral trade commitments require, the courts have drastically limited the scope of protection in a manner that seriously undermines the value and utterly confounds the intention of this critical safeguard.

When our partners don’t play by the rules, they reduce drug makers’ returns on successful research and dampen their incentives to innovate. Patients lose access to future cures.

That’s why trade deals need to strengthen and create policies that provide incentives for drug development. For instance, they could create policies that encourage drug companies to develop drugs for our generation’s most dangerous threats — such as “superbugs” that are resistant to today’s antibiotics.

My organization, along with 100 other research and patient-advocacy groups, just sent a letter to President Trump and Congress encouraging them to come up with such policies. Strengthening IP protections and encouraging innovation would ensure that drug makers find cures to the diseases that most threaten global health. They also would guarantee that patients across the world — and for generations to come — have access to lifesaving treatments.

Andrew Spiegel, Esq., is co-founder and executive director of the Global Colon Cancer Association.