When US trade negotiators agreed the United States–Mexico–Canada Agreement (USMCA) with their peers from north and south of the border, the plan was to require all three countries to give biologics at least 10 years of market exclusivity.
The market exclusivity requirement has not survived negotiations between the Trump administration and the Democrats it needed to win over to get the deal through Congress.
Acquiescing to the Democrats demands, the White House removed the exclusivity provision, much to the annoyance of Jim Greenwood, the outgoing CEO of trade group BIO.
Greenwood said, “Today’s announcement declares open season on these innovators and sends a clear message that the US government will stand idly by while foreign entities attack American intellectual property, American jobs and America’s global leadership in medical innovation.”
Removing the provision from the trade deal will not have an immediate effect on the situation in the US, where companies will continue to enjoy 12 years of patent protection.
However, if the provision had been kept in the final USMCA agreement, Canada and Mexico would have been required to extend the period of market exclusivity they grant to biologics. Under current rules, Canada grants eight years of exclusivity and Mexico offers even less.
In the longer term, the removal of the provision could influence practices in the US. If a Democrat is elected president next year, it is possible that one of their objectives will be to lower drug prices.
Reducing the length of market exclusivity for biologics, many of which carry headline-grabbing prices, could be one way to try to achieve that goal. The original version of USMCA would have restricted the new president’s ability to expose more biologics to biosimilar competition.
The change to the trade deal comes months after leading Democrats detailed their opposition to the exclusivity provision, which they argued would drive up healthcare costs for Canadians, Mexicans and Americans “who have opportunities to procure their medicines” from across the border.
Having secured the changes, Democrats are expected to back the deal in sufficient numbers to get USMCA over the line when Congress votes on it next year. The legislatures in all three countries need to approve the deal.