How the TPP Could Stifle the Discovery of New Drugs

There’s been a lot of talk about how the trade deal could affect drug prices, but it could also hinder new discoveries.
August 23, 2016, 12:00pm

There's not much presidential nominees Donald Trump and Hillary Clinton agree on, but they both take a similar stance when it come to the Trans-Pacific Partnership: they say it stinks.

The international trade agreement between the United States and 11 other nations was reached last fall, but has yet to be approved by Congress. It's a dense trade deal with pros and cons, but one of the biggest concerns is the effect the agreement will have on pharmaceuticals, and their ability to innovate, research and produce new drugs.

The deal beefs up intellectual property laws for drug manufacturers, extending the US's already substantial patent laws to each partner country, and adding news laws that would bolster Big Pharma's ability to hold monopolies on some drugs while making it harder to fight flimsy patent claims.

President Barack Obama has said these changes will help spur innovation, because it gives pharmaceutical companies even more incentive to invest in research and development: come up with a new drug, and you'll get to reap all the benefits for years to come. But some economists argue beefed up IP protections could actually have the opposite effect of stifling innovation, while preserving unaffordably high prices for existing drugs—particularly in developing countries that have signed onto the deal.

"There's a balance to be struck between promoting second generation innovators and protecting first generation innovators," said Todd Tucker, an economist and a fellow at the Roosevelt Institute, a liberal think tank in DC. "On the one hand it's important to protect patents to help encourage innovation, but then if you make it too restrictive and costly it can inhibit innovation."

Tucker explained that currently, drug patent holders facing a dispute—like from a competitor wanting to make a generic version of the drug—have to settle it domestically. In the past, this has lead to important safeguards for drug innovation, like when the Supreme Court ruled against Myriad Genetics. The company had claimed it held the sole rights to test for a genome it first sequenced, which is linked to breast cancer. Following the Supreme Court's decision, multiple new, more affordable tests were created and released to the market. But under the TPP, companies could settle these disputes outside the courts, through an Investor State Dispute Settlement that would be determined by a tribunal of three arbitrators appointed to the case.

"We go from a system where national courts are very involved in determining how and when generics can come to market to a system where ad hoc arbitrators are going to be making a lot of those decisions," Tucker told me.

And that's not the only threat the TPP poses to drug innovation. Right now the US has pretty generous drug patent laws—companies have a monopoly on new drugs for 20 years, with an additional five years before the company has to release its research for generic drugs to be developed. These laws would be extended to all TPP countries, and new ones were added, too. Though Big Pharma has complained that it didn't get the 12 year protections on new biologics—cutting-edge biomedical drugs often used to treat cancer—the TPP would guarantee five to eight years of a monopoly on these discoveries.

The TPP also lowers the requirements for companies to hold "evergreen" patents on drugs, where slight tweaks are made to the formula or delivery of the drug to allow companies to renew patents about expire, preventing affordable generic versions or new drugs built off these discoveries. It has groups including Doctors without Borders very worried, saying developing nations in the TPP would be particularly vulnerable.

The plumping up of drug patent protections and outsourcing the legal decisions on these monopolies threatens medical innovation because it makes it harder for researchers to build off of previous discoveries. Along with keeping expensive brand-name drugs as the only option on the market for longer, it slows down the discovery of new treatments and technology. More and more, researchers are starting to embrace the benefit of sharing data and working together to solve health problems, as has been demonstrated through the rapid development of a Zika vaccine.

Of course private drug companies will always want to turn as high of a profit as they can, but there's a way to protect that without throwing innovation out the window—something many are worried the TPP would do.