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Innovation Ohio · August 2, 2019

Trump Trade Deal Helps Big Pharma At Consumer Expense

It’s a dilemma that far too many Americans face every day: people rely on prescription medication to live comfortable lives, yet the cost of their prescriptions is cripplingly high. For many, buying life-saving treatments means quality-of-life reductions in other parts of their lives – fewer vacations, after-school activities or college savings. That’s why it was encouraging when President Trump promised to roll out plans to lower prescription drug costs. Taking Big Pharma to task for their dominant role in raising prescription drugs through increased transparency and accountability is something most people would support. However, any gains the president achieves through his drug-pricing initiative could be undone by one obscure provision in the new NAFTA framework known as the U.S.-Mexico-Canada Agreement (USMCA). If approved as it is, the President’s USMCA plan would give big pharmaceutical companies monopoly power over the most significant sector of the drug market for at least a decade, if not indefinitely. The plan as currently drafted would give big pharma 10 years of market exclusivity – as in, a monopoly – for any new biologic drug they develop. Some of the most important, life-saving treatments for diseases like cancer, Crohn’s disease, and diabetes, to name a few, are biologics. Millions of people quite literally can’t live without them.  What happens when only one company makes a product, especially one that people have to have? The prices will go up. In fact, they already have. According to recent research, “While 1 percent to 2 percent of the nation’s population is treated with a biologic each year, the drugs accounted for 38 percent of prescription drug spending in 2015. In addition, biologics accounted for 70 percent of the growth in prescription drug spending in the U.S. between 2010 and 2015.” The solution to this monopolistic price-gouging is simple: competition. For biologics, competition comes in the form what’s called a “biosimilar,” which is a scientifically identical version of the biologic that costs consumers less. It’s like the off-brand ibuprofen sold at Target that sits on the shelf (at a lower cost) next to name brands like Advil.  But thanks to an entrenched regulatory and market structure built through years of Pharmaceutical industry cronyism in Washington, very few biosimilars are available on the market, despite the fact that far more have been approved. The USMCA would make this problem worse, requiring ten years before cheaper alternatives could be introduced. And because it would be included in a binding treaty, it would be incredibly difficult to reverse. Efforts to reform our international trade policies are needed, but monopoly provisions for pharmaceutical manufacturers is a troubling development that threatens to enshrine high prices of life-saving prescriptions for years to come.   

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