This month, negotiations over the Trans-Pacific Partnership resume in Australia. Officials from the United States and 11 other major economies are meeting to settle the final details of the trade pact, with the hope of passing the final deal by year’s end. The particulars of the agreement could have a massive impact on the Connecticut economy.
One contentious issue is the intellectual property rights afforded pharmaceutical firms. These businesses play an essential role in our state economy. Without sufficiently strong intellectual property protection, the drug industry would be unable to continue its innovative work to develop new drug products. Local workers could lose out on jobs, and patients all over the world could lose out on new lifesaving medications.
The biopharmaceutical sector plays an essential role in our state economy. It directly supports nearly 13,000 jobs and drives about $9 billion in annual economic output.
Developing new, lifesaving drugs is a long, research-intensive, and often unpredictable process. The drug industry invests more than $50 billion in research and development every year. The advanced class of drugs called “biologics” — extremely complex treatments derived from living organisms — cost more than $1 billion on average to develop. These sums are particularly impressive considering that most of the drug compounds under development never reach the market.
Strong intellectual property rights are crucial to the health of the state pharmaceutical industry, because these rights enable drug firms to offset part of their massive research and development expenditures. And because they are so research-intensive, biologics are accorded an extra intellectual property right called “data protection,” which provides innovative drug developers with a temporary exclusivity period during which their data is protected from unfair access by would-be biosimilar or generic manufacturers.
Small firms account for the majority of new biologic drugs. Typically, they’ve put all their money into a single promising compound in the hope it will eventually grow into an important new treatment. Smaller operations are particularly in need of guaranteed market exclusivity to have any chance of making back their investment.
Right now, American law provides biologics with 12 years of data protection. Research indicates this is just the right amount of time to preserve the incentives for innovation. This period represents a very fair and necessary provision that is consistent with the 12-year period afforded in the United States under the Affordable Care Act. If the protection term were set any shorter, the rate of drug development could drop dramatically. American officials need to fight to preserve this 12-year period in the Trans Pacific Partnership.
Fortunately, Connecticut Gov. Dannel P. Malloy has recognized as much, and joined six other governors in signing a letter to the president urging him to “include very strong intellectual property rights provisions” in the final deal. The letter smartly notes that drug firms “depend heavily on their ability to secure and enforce intellectual property rights for a fair playing field with competitors.”
Unfortunately, trade officials from several other countries are pushing hard to ratchet back data protections. They want to allow low-cost, generic versions of popular biologics to unfairly enter the market sooner. Such a move may well save drug costs in the short run. But it will force drug firms to dramatically scale back their research operations, leading to fewer breakthrough drugs and worse patient health over the long run.
Once passed, the Trans-Pacific Partnership could provide Connecticut companies with expanded access to some of the world’s fastest-growing economies, including Malaysia, Singapore, Japan and Australia. This development should spur local growth for decades to come. However, as trade negotiators meet to hammer down the final details of the pact, they need to fight to retain fair rules of commerce — and chief among them is a robust data protection period for high-tech biologic drugs.