President Trump has declared lowering our nation’s drug costs a high priority. But his renegotiated North American Free Trade Agreement, which has now been rebranded by Trump as the US-Mexico-Canada Agreement (USMCA), will actually prevent him from reducing the exorbitant costs of prescription drugs for America’s patients. That’s because a provision of the proposed agreement would increase the monopoly period for certain high-priced brand name biologic medicines while banning competition from lower-priced alternatives.
Among other protections for Big Pharma, the USMCA would ensure that pharmaceutical companies have at least 10 years of exclusivity for their biologic medicines in Mexico and Canada before lower-cost, FDA-approved clinically equivalent alternatives known as biosimilars can compete. Far from rewarding innovation, the agreement preserves and strengthens brand name pharmaceuticals’ monopolistic stranglehold on the market, allowing them to keep prices high and failing to require reinvestment in the development of new, life-saving cures.
When the president announced his plans to reduce prescription drug prices, he emphasized the need for a more competitive marketplace for prescription drugs. In no area is competitive relief needed more than in the biologics market. According to a recent report by the prescription drug analytics firm IQVIA, the class of drug that includes branded biologics represents roughly 2 percent of the prescriptions in the U.S., but account for a disproportionate 26 percent of total drug spending.
The American experience with biosimilars has shown significant promise toward lowering prices as it increases patient access. For example, the current list price of Amgen’s Neupogen, a biologic that increases white blood cell count during a course of chemotherapy, is roughly $2,500. There is one biosimilar to Neupogen currently on the market, Zarxio from Sandoz, whose list price is roughly $750, less than a third of Neupogen’s. Because a patient’s out-of-pocket costs are directly linked to the list price of the product, these lower prices mean significant savings for patients and payers alike.
A robust biosimilars market is vital to spur future innovation while ensuring health care costs benefit from the competition of lower-priced alternatives. America’s patients currently have access to only four biosimilar drugs, but more than 40 are available in Europe, where increased access to biosimilar drugs has lowered treatment costs by an estimated 40 percent. Savings from FDA-approved biosimilars could mean millions of patients in the U.S. would no longer have to risk bankruptcy or their quality of life to afford the life-saving medicines they need.
A 10-year exclusivity provision as is presented in the new NAFTA agreement—together with other barriers to generic and biosimilar entry that were proposed in the TPP— would block fair competition and ensure that big pharmaceutical companies can keep their prices high if they choose. And as a binding treaty, USMCA could make it much more difficult for Congress to increase competition from biosimilars by adjusting the exclusivity period for brand name drugs.
So who would bear the ultimate costs? Patients, because they would not be able to benefit from lower-cost biosimilars the way they have from affordable generics. The top 11 most promising biosimilars in production alone are projected to create $250 billion in savings in the next 10 years. Yet, as FDA Commissioner Dr. Scott Gottlieb has stated, the biosimilars market is already being stifled by unfair market restraints, and few biosimilars are actually making it to market. The USMCA proposal would further hamper this nascent market.
We have already seen what the impact of generic drug competition can have for patients. Over the last 10 years, the use of generic drugs has resulted in a staggering $1.67 trillion in savings, and it is estimated that drug prices are reduced by 60 percent a year after the introduction of a generic drug. And generics benefit taxpayers too – these drugs save Medicare and Medicaid billions of dollars every year.
According to a recent Kaiser Health tracking poll, a majority of Americans think the increasing costs of prescriptions should be a top priority for the Trump administration and Congress to address, and a full 90 percent consider the issue important. Further, 72 percent of Americans across party lines think that prescription drug companies have too much influence in Washington.
The Trump administration and members of Congress (many of whom are currently facing a competitive midterm election) should take heed of these numbers. America’s patients are tired of their prescriptions costing so much, and they want their leaders to do something about it. Using USMCA to supersede any U.S. efforts to reduce drug prices is not only counter to the will of the American people but to the Trump administration’s own doctrine of “America First.”
The president’s pledge to reduce prescription drug costs and free up the marketplace is an admirable goal. However, the inclusion of 10-year exclusivity protections, as well as other roadblocks to generic and biosimilar competition to benefit big pharmaceutical companies, in the proposed USMCA agreement would stifle any efforts to reduce drug prices and restore market freedoms for a decade or more.
This is something that America’s patients can’t afford, which is why everyone should call on the Trump administration and Congress to remove additional monopoly time for brand-name drugs from any new free trade agreement.
This op-ed first appeared in The Hill on October 8, 2018.