This week marks a crucial moment for consumers around the world who depend on affordable medicines to stay healthy and treat debilitating conditions. Negotiators from a dozen countries -- representing 800 million people -- are meeting in Hawaii to potentially finalize the terms of the massive trade agreement known as the Trans-Pacific Partnership (TPP). Unfortunately, the current draft of the agreement benefits the brand drug industry at the expense of those who most need access to affordable medicines, including America's seniors.
As leaders in the fight to bring safe and lower-cost medications to Americans and the global community, AARP and GPhA have serious concerns that the draft agreement's intellectual property provisions threaten to dramatically restrict access to affordable generic drugs and biosimilar medicines by delaying or preventing their entry into the market in various ways. As it stands, TPP runs counter to the dramatic progress that we have made in the United States in making pharmaceuticals more accessible to consumers.
In 1984, Congress passed the Hatch-Waxman Amendments which struck a careful balance designed both to encourage innovation and to promote competition in the drug industry. Brand name drug companies were given incentives to develop innovative new drugs, while generic drug companies were allowed to challenge weak patents and take their products to market, bringing down prices for everyone.
That balance has served Americans well, particularly seniors on a fixed income. Generic drugs currently represent 86 percent of the drugs dispensed in the U.S. (up from 19 percent in 1984). This competition saved consumers and taxpayers nearly $1.5 trillion in the last decade -- $239 billion in 2013 alone. Seniors can now choose lower-cost generic drugs to treat a host of conditions such as high blood pressure, high cholesterol, and diabetes.
As part of the Affordable Care Act, Congress created an approval process for less expensive versions of biologic drugs, or biosimilars, which are commonly used to treat chronic conditions that affect seniors, including rheumatoid arthritis, multiple sclerosis and cancer. However, these products represent some of the most expensive drugs on the market -- some costing hundreds of thousands of dollars per year, per patient. Market competition from biosimilar products in the U.S. will have a dramatic impact on reducing health care costs -- by some estimates up to $250 billion over 10 years.
Yet, rather than continuing the forward momentum toward greater access to affordable medications for all, the TPP threatens to take a significant step backward by including a number of provisions that solely benefit the brand name drug industry. The impact will be felt both here in the U.S. and in other countries.
The current draft includes language that would delay competition by linking approval to market generic or biosimilar products to existing patents in a way that protects only brand name drugs, providing patent extensions without necessary limits to deter "evergreening," and increasing data exclusivity periods for both traditional generic drugs and biosimilars. All of these mechanisms are designed to ensure that the brand drug industry maintains monopoly control. And without market competition, high prices for pharmaceutical products will be locked in.
These increased drug costs threaten the sustainability of health care systems and strain national budgets, even in some of the most developed countries. As drafted, the TPP will result in hundreds of billions of dollars in unnecessary spending. We cannot let the pharmaceutical provisions in the current agreement remain in place, nor can we let them serve as a benchmark for future agreements.
The good news is that there is a way forward, based on a model that has already been crafted, that will address concerns about limiting access to affordable medicines. The U.S. free trade agreement with Peru, Panama, and Columbia includes compromise language based on a deal known as the May 10th Agreement, which gave our trading partners the flexibility they needed to foster both innovation and competition in the market. TPP can and should be adjusted to strike a similar balance.
As it stands, TPP is a windfall for the brand drug companies because they will be insulated from competition and will reap enormous profits as a result. But it's a very bad deal for consumers for whom affordable medicine can sometimes mean the difference between life and death. We are at a crossroads where we need to determine exactly whose interests the U.S. is representing. As the negotiators meet this week, they should be well aware of what is truly at stake.