The Pharmaceutical Research and Manufacturers of America (PhRMA) is the lone major trade group not supporting President Trump‘s new North American trade deal after the drug industry lost crucial intellectual property (IP) protections in the agreement.
The loss was a blow to a powerful industry group that has long held sway in Washington, and while other industries are rallying behind the trade deal, PhRMA finds itself relatively alone in opposing it.
The House is set to vote this week to secure passage of the U.S.-Mexico-Canada Agreement (USMCA, which updates the North American Free Trade Agreement (NAFTA). Democrats in negotiations with the administration were able to eliminate language that would have given a certain class of drugs, biologics, 10 years of patent protections.
The drug industry fought the changes, arguing that they were necessary to encourage industry investments in research and development but lost.
That’s left PhRMA taking a stance against a deal that business groups across the board, including the National Association of Manufactures (NAM), U.S. Chamber of Commerce and the Business Roundtable (BRT), are backing. While those other groups have expressed disappointment over the changes to drug patent protections, they are still on board with the deal.
PhRMA said that the elimination of the patent protection “puts politics over patients.”
“Eliminating the biologics provision in the USMCA removes vital protections for innovators while doing nothing to help U.S. patients afford their medicines or access future treatments and cures,” PhRMA CEO Stephen Ubl said in a statement last week.
“The only winners today are foreign governments who want to steal American intellectual property (IP) and free ride on America’s global leadership in biopharmaceutical research and development,” he continued.
But advocates for generic drug manufacturers and other groups which want tougher action to lower drug prices cheered the move.
“[PhRMA] usually gets their way on everything else. This one time, they don’t get this one thing,” Cristina Antelo, CEO of Ferox, told The Hill.
“They were the sacrificial lamb this one time,” she added.
Ferox represents the global generic drug company Mylan, a member of the Association for Accessible Medicines (AAM), which was pushing to change the provisions.
Among other drug companies, which opposed the changes, Pfizer is letting PhRMA take the lead on discussing USMCA, a spokesperson told The Hill. Johnson & Johnson and Merck did not respond to request for comment.
Emily Felder, a senior policy advisor and counsel at Brownstein Hyatt Garber Schreck, pointed to the political pressure for lower drug prices, a goal backed by lawmakers in both parties and Trump.
“One big problem with the whole scenario is in this political climate, lawmakers pause at policies that can be perceived as benefiting the drug industry, despite the fact that it is good policy that protects research and innovation in the biopharma sector,” Felder said of the IP protections.
However, others argued that the removal of the provision has been a long time coming.
“I’m surprised [the provision] hung in there that long” before it was stripped out, an anonymous lobbyist told The Hill.
The lobbyist though downplayed the impact on PhRMA.
“It’s not a win for PhRMA, but it’s not a loss either,” the lobbyist said. “It’s something [Democrats] can spin as a win so Trump doesn’t get all the glory. It’s a face-saving measure.”
But many in the drug industry worry about the long-term fallout from the change, which makes it easier for Congress to reduce protections for those drugs in U.S. law, allowing generic versions to reach the market sooner.
PhRMA, as well as groups like NAM and the Chamber, are concerned that USMCA will set the standard for future trade agreements.
“We hope that Congress and the Administration will pursue international trade agreements that hold foreign governments accountable by ensuring that they protect and value the ongoing discovery of much-needed medicines to treat and potentially cure the world’s most devastating diseases,” Ubl said in his statement.
The changes have also rankled some in Congress, including some Senate Republicans who worry that Trump conceded too much in trade talks with House Democrats.
Sen. Pat Toomey (R-Pa.), who has emerged as the most outspoken GOP senator against USMCA, on Sunday called the agreement a “complete capitulation” to Pelosi, and said that he hopes Republicans will reconsider it.
McConnell has said the Senate will not vote on the deal until after the impeachment trial but expectations are high that it will pass with support from both trade groups and business.
“I don’t think there’s any chance in hell that Republicans don’t vote for this,” Antelo said. “This is Trump’s number one priority and he needs a win going into next year. There’s just zero chance.”
Groups pushing for cheaper drugs though hope to build on their victory.
“This is the template for what a modern trade agreement should be because it finally gets the provisions correct,” Jonathan Kimball, AAM’s vice president of trade and international affairs, told The Hill. “It is placing the interests of the health care system, the economy and patients at the forefront of a modern trade agreement. It is not just good for a small segment of the economy, but it’s good for the entire economy.”
He added that this trade agreement is a new gold standard.
“For us, this is a very important step where … the administration and Congress have recognized the value that trade agreements have on promoting greater competition,” he said.
AARP also applauded the deal, proclaiming it a victory against big pharma, and the Campaign for Sustainable Rx Pricing (CSRxP) also hailed lawmakers for removing easing the IP protections.
PhRMA though is focusing its efforts on highlighting how they think the deal will hurt Americans.
“I think it’s smart for the industry to emphasize that losing this provision means that other countries are getting a better deal than the U.S., because that really hits to the president and his constituency,” Felder said.
“But sometimes politics overrides good policy.”
Nathaniel Weixel contributed to this report.