CAGW Urges USTR Lighthizer to Keep Drug Protections in USMCA | Council For Citizens Against Government Waste

CAGW Urges USTR Lighthizer to Keep Drug Protections in USMCA

Letters to Officials

December 5, 2019

The Honorable Robert Lighthizer
U.S. Trade Representative
600 17th Street, N.W.
Washington, D.C.  20508

Dear Mr. Lighthizer,

On behalf of the more than 1 million members and supporters of Citizens Against Government Waste, I am writing to inform you of our strong objection to dropping the 10-year market protection for biologic drugs in the U.S.-Mexico-Canada Agreement (USMCA).

Currently, exclusivity on biologics is 12 years in the United States, eight years in Canada, and five years in Mexico.  The 10-year exclusivity provided in USMCA is a fair compromise and should not be changed.

The February 9, 2018 Council of Economic Advisers (CEA) report, “Reforming Biopharmaceutical Pricing at Home and Abroad,” called out other countries for free-riding on U.S.-funded research.  The CEA press release stated, “Preserving incentives for biopharmaceutical innovation can be achieved while still promoting lower prices for Americans.  Global financial returns from product development drive innovation.  But those returns are unfairly low today. This is because most foreign governments, which are the primary buyers in their respective pharmaceutical markets, force drug manufacturers to comply with pricing rules to gain market access.  Through this leverage, foreign governments are able to set drug prices below those that prevail in the United States and erode the returns to innovation manufacturers might otherwise see from selling in their markets.”

The CEA recommended enhanced trade policies to stop other nations from taking “unfair advantage of American innovation.”  The 10-year market exclusivity in USMCA is an example of an enhanced trade policy that should be emulated in other trade deals, not rejected.

There is a reason why Canada and Mexico have miniscule biopharmaceutical research.  They have less regard for intellectual property and use price controls to keep their drug costs low.  USMCA as written would encourage them to produce more biopharmaceutical innovation in their own countries, not less.

Just as President Trump was correct in calling out member countries of the North Atlantic Treaty Organization, such as Canada that pays 1.27 percent, for not contributing the minimum 2 percent of their gross national product, it is time for other countries to pay their fair share for biopharmaceutical research.  Dropping the 10-year biologic market protection would subvert that objective.

Sincerely,

Tom Schatz
President, CAGW

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