Bulletin, Member News

TPP Provides Challenges, Opportunities for Life Sciences Companies

Written By: Hogan LovellsWarren H. MaruyamaJonathan T. StoelAjay Kuntamukkala and Timothy J. Ford

On November 5, the U.S. Trade Representative (USTR) released the text of the Trans-Pacific Partnership (TPP), a trade agreement between twelve Pacific Rim nations representing nearly 40% of global GDP. The complex document spans more than 6,000 pages across 30 chapters and many bilateral side agreements between Parties to the agreement. The Agreement offers opportunities to all industries, including life sciences,  because of its promise of a dynamic, expanding Asia-Pacific marketplace. At the same time, the draft TPP text poses particular challenges to life sciences, because of TPP’s intellectual property rights (IPR) chapter and the changes from past U.S. FTAs to the transparency chapter’s annex on government pharmaceutical and medical device pricing and reimbursement schemes.

Not surprisingly, the negotiations over pharmaceutical IPR were some of the most difficult and controversial in TPP. The IPR chapters of U.S. free trade agreements (FTAs) are “TRIPS-plus” in that they build on the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). But some of the additional TRIPS-plus obligations sought by USTR proved enormously contentious.

The U.S. industry’s main goal in TPP was 12 years of data exclusivity for biologic medicines, consistent with U.S. law. But U.S. proposals for an extended term of biologics protection were fiercely opposed by several TPP countries, particularly Australia, which sought to limit any additional period of exclusivity to five years and rejected any changes to its existing law.  The U.S. proposals were also criticized by anti-drug industry and anti-trade activists. In the closing negotiations in Atlanta, the U.S. compromised, conceding that TPP countries would have an option to choose either a five-year or eight-year term.  Not surprisingly, PhRMA and BIO expressed “disappointment” with the final outcome, while Senate Finance Committee Chairman Hatch (R-UT) called it “woefully short.” While the TPP text recognizes that “market circumstances also contribute to effective market protection to deliver a comparable outcome in the market,” this is not a binding obligation and only recognizes that marketing approvals for generic biologics typically take longer than small molecule drugs, because of the greater difficulty of evaluating bio-equivalency. Complicating the text, countries from Mexico to Malaysia negotiated country-specific annexes, which delay their effective dates for implementing additional biologics protection.

Read More at Lexology.