Thursday, June 11, 2015
The New England Journal of Medicine
June 10, 2015
The Trans-Pacific Partnership — Is It Bad for Your Health?
By Amy Kapczynski, J.D.
International trade deals once focused primarily on tariffs. As a
result, they had little direct effect on health, and health experts
could reasonably leave their details to trade professionals. Not so
today. Modern trade pacts have implications for a wide range of health
policy issues, from medicine prices to tobacco regulation, not only in
the developing world but also in the United States.
The Trans-Pacific Partnership Agreement (TPP) is a case in point. A
massive trade deal now reportedly on the verge of completion, the TPP
has nearly 30 chapters. A draft chapter on intellectual property (IP)
alone runs 77 single-spaced pages.
The full health implications of the TPP are hard to judge, not only
because its provisions are complex but also because the draft text is a
closely held secret. Even members of the U.S. Congress can see it only
if they agree not to talk publicly about it and if they leave their pens
and phones (and, until recently, their expert staffers) at the door. But
several key chapters have recently been leaked and reveal that the TPP
could have a substantial impact on health.
Groups including Médecins sans Frontières and Oxfam warn, for example,
that the agreement could threaten the lives of millions of people in
developing countries. Their concerns stem primarily from the leaked IP
chapter and the effect that patents have on the prices of medicines. In
the context of human immunodeficiency virus, for example, patents
increase the annual cost of antiretroviral therapy from around $100 per
person to $10,000 per person.
The TPP could impose obligations on developing countries that go far
beyond any existing trade agreement. Indeed, some proposals in the
leaked IP chapter seem directly targeted against innovative measures
that developing countries have used to maximize the use of low-cost
For example, India allows patents on new drugs but not on new uses of
old drugs or new forms of known drugs that do not increase therapeutic
efficacy. These provisions have paved the way for generic versions of
lifesaving drugs such as the cancer treatment imatinib mesylate
(Gleevec) in that country. But such limits on patent eligibility could
be outlawed by the TPP. Reports suggest that there may be some kind of
phase-in period for developing-country members, but only for some parts
of the agreement. And at best, a phase-in period would merely postpone
some of the TPP's effects for a few years.
India is not a party to the TPP negotiations, which have been conducted
by 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan,
Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and
Vietnam. Why, then, would India's laws — sometimes word for word — be
targeted in the TPP negotiations? For one thing, other developing
countries have started to follow India's lead. For another, the TPP is a
platform agreement designed for other countries to join, and it will
establish a new baseline for future international negotiations. The risk
regarding access to medicines in developing countries is real.
Though it is less widely recognized, the TPP could also have a direct
effect on health in developed countries. For example, the leaked IP
chapter contemplates major extensions of "data exclusivity" provisions.
These laws prevent drug regulatory agencies like the Food and Drug
Administration from registering a generic version of a drug for a
certain number of years — and as a result can substantially affect the
prices of medicines.
In recognition of this fact, President Barack Obama's fiscal year 2016
budget proposes rolling back the data-exclusivity period for biologic
drugs in the United States to 7 years from 12 years, yielding a
projected savings of more than $4 billion over the next decade. In the
TPP negotiations, however, the United States is proposing a 12-year term
of exclusivity. Such a requirement would lock the United States into a
policy that many observers, including, apparently, the President
himself, believe inflates the cost of medicines unjustifiably. Even if
the number of years required by the TPP is negotiated downward, the
lock-in effect remains a concern, because trade agreements can be
extremely difficult to amend.
The cost of medicines is no small concern in the United States today:
spending on prescription drugs in the United States jumped 13% in 2014
alone. The recent experience with new hepatitis C treatments shows that
even lifesaving cures may be rationed in the United States — whether
implicitly or explicitly — if we fail to contain drug costs and promote
more efficient innovation. The TPP, however, could make moves toward
more rational drug pricing in the United States difficult and even
imperil existing provisions that help to contain costs for government
A 2011 "annex" to the TPP, apparently proposed by the United States,
would have mandated that all countries use "competitive market-derived
prices" or benchmarks that "appropriately recognize the value" of the
drug in question when establishing drug prices. A just-leaked December
2014 draft omits these provisions but still contemplates substantial
procedural obligations for governments and makes clear that these rules
apply to the Centers for Medicare and Medicaid Services (CMS). The text
is difficult to decipher and still in flux. But consumer groups argue
that the annex could create opportunities for interference in the
decisions of CMS and render health programs in all TPP countries more
vulnerable to drug-company influence and more difficult to reform.
In March 2015, a third bombshell dropped: a draft chapter on
"investor-state dispute settlement" (ISDS). It would empower foreign
companies to sue member countries for hundreds of millions of dollars in
damages in a wide range of cases in which they argue that their expected
future profits have been undermined. These challenges would be heard by
"arbiters" — typically private lawyers, many of whom cycle in and out of
industry — with no prospect of independent review by a national court.
Such provisions have been included in trade agreements before. But the
scale of the TPP would substantially increase the number of companies
that could bring such challenges. Firms have already used provisions
like these to challenge an astonishing range of laws, from minimum-wage
laws in Egypt, to tobacco regulations in Uruguay and Australia, to core
aspects of patent law as they apply to medicines in Canada. The ISDS
provisions alone could interfere with domestic health policy for decades
to come. Under their auspices, policies covering a wide range of issues,
from food and tobacco labeling, to patent law, to drug-pricing rules, to
environmental protection could be challenged in participating countries
— including, of course, the United States.
The course that the TPP takes is not yet set in stone. Negotiations
continue, and the Obama administration could work toward an agreement
that excludes provisions such as ISDS and the health care "annex" or
that incorporates robust safeguards to protect health. Congress has an
important role, too. As of early June, it was in the midst of a fierce
legislative battle over whether the TPP and deals like it should be
"fast-tracked." If Congress takes this route, its ability to influence
the treaty will be much diminished: fast tracking allows passage of a
trade treaty with only a simple majority vote in Congress and also
denies Congress any opportunity to make changes to the agreement's text.
Much hangs in the balance in the coming weeks and months. If the TPP
includes robust ISDS provisions and the expansive provisions proposed in
the IP chapter and the health care annex, the United States could be
signing away its authority to regulate critical aspects of health policy
for years to come.
June 10, 2015
GOP, Obama on cusp of fast-track trade victory
By Scott Wong and Peter Schroeder
House Republicans have set the stage for a high-stakes vote Friday to
grant President Obama fast-track trade authority.
While objections from some Democrats on a last-minute deal related to
the trade package raised some doubts about the outcome, Obama and the
GOP appear poised to earn a significant victory.
"We're moving because we feel comfortable moving," said Ways and Means
Committee Chairman Paul Ryan (R-Wis.), who has led efforts to secure GOP
votes for the measure.
If the vote on Friday is successful, the trade bill would head to
Obama's desk, weeks before many thought possible. Fast-track powers
would greatly enhance the president's ability to conclude negotiations
on a sweeping trade deal with Pacific Rim nations that is a key part of
his economic and foreign policy agenda. They would prevent Congress from
amending the trade deal, and stop the Senate from filibustering it.
Comment by Don McCanne
Every member of the House of Representatives needs to read this NEJM
article before the crucial vote tomorrow on fast-track authority. If
Congress grants the President fast-track authority and eventually
provides nonnegotiable blanket approval of TPP, "the United States could
be signing away its authority to regulate critical aspects of health
policy for years to come."
We cannot let that happen. Contact members of the House of
at 8:28 AM