TPP Exit Forces New Look at Global Biopharma IP Challenges

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By John T. Aquino

Nov. 30 — President-elect Donald Trump’s planned U.S. withdrawal from a controversial Pacific rim trade agreement robs biopharmas of certainty and requires revisiting biopharma IP trade challenges, analysts and attorneys said Nov. 29.

The Trans-Pacific Partnership Agreement (TPP) negotiated among the U.S. and 11 other countries had its proponents and detractors, but two commenters told Bloomberg BNA withdrawal from the pact is likely to reduce U.S. influence on international trade of biopharma products and help U.S. companies’ competitors.

Prior to the Nov. 8 election, passage of the TPP by the U.S. Congress seemed probable. Biopharmas had some issues concerning data exclusivity for biologics that the Obama administration and Congress were working to resolve. And then, two weeks after his surprise election, Trump promised in a Nov. 21 video the U.S. would withdraw from the TPP “from day one” of his administration and instead “negotiate fair bilateral trade deals that bring jobs and industry back.”

Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee, who described the need for strong intellectual property protection in the TPP in a July 2015 blog post, had been part of the pre-election negotiation of the pact’s provisions on biologic exclusivity. He acknowledged in an e-mail to Bloomberg BNA that there appears to be no viable path for the TPP to go forward, but also confirmed his and his Senate colleagues’ commitment to working with the new administration toward strong trade policies.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said in Nov. 14 remarks Trump should renegotiate the TPP on issues that remain of “strong” concern to lawmakers, such as IP protection for biologics, rather than forsake it completely .

Adverse Impacts

But some commenters indicated damage from the withdrawal might not be easily undone. Caitlin Webber, a Bloomberg Intelligence analyst, told Bloomberg BNA in an e-mail the most immediate impact of the U.S. TPP withdrawal will be that U.S biopharmas will lose the assurance that participating countries will change their laws to provide the five to eight years of data exclusivity for biologics required by the agreement. The TPP covers the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

“The bigger impact will be that the U.S. will lose influence over the length of the biologics protection period in future trade deals,” she said.

Kevin Noonan, a partner at McDonnell Boehnen Hulbert & Berghoff LLP, Chicago, told Bloomberg BNA in an e-mail: “The protectionist tendency is strong and has apparently prevailed. The failure of this treaty, and withdrawal from other treaties as promised by Mr. Trump, will forego any of these benefits and provoke counter-protectionist reactions from our trading partners. It is difficult to see how we can reverse the globalist tide unilaterally and, by withdrawing [from the TPP], we will concede the benefits of global cooperation to our competitors.”

Noonan said: “The TPP might have been a paradigm for a broader treaty because countries who were not part of the negotiations had inquired about joining.”

Biologic Exclusivity Issue Remains

The Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) identified trade issues unique to biopharmas that will continue to be concerns, including the need for early resolution of patent disputes and the patentability of biotechnology inventions.

Both BIO and PhRMA have stressed the importance of strong global support for IP protection in the competitive global environment. Noonan noted that the the TPP would provide advantages for U.S. biopharmas, whose IP rights are important to their business. These advantages include giving a minimum term of regulatory exclusivity for traditional and biologic drugs in countries where there was no exclusivity.

BIO and PhRMA’s main concerns about the TPP centered on biologic exclusivity ( 09 LSLR, 11/13/15 ). A biologic is manufactured in a living system such as a microorganism and therefore is structurally complex and often extremely expensive to invent and manufacture. In the U.S., a biosimilar is defined as a biologic product that is approved for market by the Food and Drug Administration based on a showing that it is highly similar to an already approved biologic product. Data exclusivity refers to the amount of time after approval of a drug or biologic by a country’s regulatory agency during which no generic drug or biosimilar maker can rely on the brand manufacturer’s safety and efficacy tests.

The TPP would provide up to eight years of data exclusivity for biologic products and let countries develop an approval system for generic drugs and biosimilars. Under the TPP, the U.S. would retain its 12-year term for biologic data exclusivity, while this exclusivity for other signatory countries would likely range from five to eight years. The agreement also would allow countries to develop either an approval system for generics and biosimilars that is similar to that of the U.S. or an even more difficult approval process that wouldn’t authorize marketing of a generic or biosimilar unless the patent holder approved.

PhRMA and BIO opposed the TPP exclusivity provisions but the Generic Pharmaceutical Association (GPhA) supported them.

Redefining U.S. Trade Agenda

Regarding Trump’s TPP announcement, “PhRMA looks forward to working with the new Administration and the Hill as they refine/define the U.S. trade agenda, and we will continue to push for smart agreements that support strong IP and market access protections. We have a number of outstanding enforcement issues and look forward to mapping out solutions to those with the new Administration,” a PhRMA spokesman told Bloomberg BNA in a Nov. 21 e-mail.

These issues are best described by referencing the association’s U.S. Trade Representative (USTR) Section 301 submission expressing its country-specific trade-related concerns, the PhRMA spokesman said.

BIO declined Bloomberg BNA’s request for comment on the TPP situation but also made a Section 301 submission on its trade-related concerns. GPhA didn’t respond to Bloomberg BNA’s e-mail and phone request for comment.

BI’s Webber said an even lower standard of biologic exclusivity than the TPP’s could be set in the Regional Comprehensive Economic Partnership (RCEP), a deal under negotiation that includes China, Japan and India, among other current TPP members, not including the U.S.

Issues Unique to Biopharmas

Section 301 of the Trade Act of 1974 provides the U.S. with the authority to enforce trade agreements, resolve trade disputes and open foreign markets to U.S. goods and services. The congressionally-mandated annual Special 301 Report is the result of an extensive multi-stakeholder process. Under the statute mandating that report, the USTR is charged with designating Priority Foreign Countries that have the most onerous or egregious acts, policies or practices having the greatest adverse impact on relevant U.S. products. The USTR solicits Section 301 submissions.

In its 2016 Section 301 submission PhRMA wrote: “Where markets are open and intellectual property is protected and enforced, biopharmaceutical innovators have the predictability and certainty they need to collaborate with partners, compete successfully and accelerate the launch of new medicines.”

To continue to invest in the research and development of new medicines, biopharmaceutical innovators must be able to effectively enforce patents on their inventions, PhRMA said. “Mechanisms such as patent linkage that provide for the early resolutions of patent disputes before potentially infringing follow-on products enter a market are essential for effective enforcement. The premature launch of a product that is later found to infringe a patent may disrupt patient treatment and require governments to adjust and re-adjust national formularies and reimbursement policies. For biopharmaceutical innovators, it may cause commercial damage that is impossible to repair later.”

In its 2016 301 submission, BIO said the biotechnology industry faces challenges that are common to all industry sectors: counterfeiting; large backlogs and patent office inefficiency; differing administrative, legal and judicial standards for patentability; compulsory licensing; inadequate protection of regulatory and test data; and a need for harmonization of substantive standards and processes across patent offices around the world. BIO also said the biotechnology industry has unique challenges that include the patentability of biotechnology inventions, double patent review systems, genetic resource access and benefit regimes and technology transfer issues that involve IP.

BIO asked that the USTR place Argentina, Brazil, Canada, Chile, China, Colombia, Ecuador, India, Indonesia, South Korea, Russia, Thailand, Turkey and Venezuela on the Priority Watch List and Australia, Egypt, the Eurasian Economic Union, the European Union, Mexico, New Zealand, Peru, Romania and Vietnam on the Watch List. It also asked the USTR to continue monitoring developments in Southeast Asia.

PhRMA indicated that it will continue to pursue its 301 issues with the new administration.

To contact the reporter on this story: John T. Aquino in Washington at jaquino@bna.com

To contact the editor responsible for this story: Randy Kubetin at RKubetin@bna.com

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