TPP: years in the making, years to go

The Trans-Pacific Partnership (TPP) was signed by the trade ministers of 12 nations on February 4, 2016, in New Zealand, and thus, the world’s largest trade deal is now waiting for ratification of the treaty’s text in each nation. Here in the United States, President Obama has called upon Congress to vote on and pass the TPP before he leaves office in early 2017. In 2009, the U.S. began negotiating the TPP, seeking to boost U.S. economic growth with Canada, Mexico, and several Asian and Pacific countries considered key destinations for U.S. manufactured goods, agricultural products, and services suppliers. As a group, the TPP countries are the largest goods and services export market of the U.S., accounting for $698 billion in 2013, or 44 percent of total U.S. goods exports. U.S. exports of agricultural products to TPP countries totaled $58.8 billion in 2013, 85 percent of total U.S. agricultural exports. The TPP seeks to slash tariffs and trade barriers in this region, but pointedly does not include China.

At the core of the debate over the TPP, concerns have been raised about its application and impact on countries’ regulations—in particular the TPP’s key feature of regulatory coherence for the promotion of trade. For the pharmaceutical industry, issues concerning intellectual property (IP) protection in the TPP have focused primarily on patents, but there are concerns that the patent protection schema is not as effective for some classes of drugs such as biosimilars because these products do not require exact identity with the reference product. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established a pathway for biologics that employs a 12-year exclusivity period, which is in stark contrast to the five years for generic small-molecule drugs.

A difficult question to answer is whether an inventor of a new drug measures the cost of invention against the revenue that might be made in the “poor” world in calculating whether to undertake the research and development of the drug. Supporters of the TPP argue that the greater cost and difficulties involved in research and development of biologics required a longer exclusivity period as incentive for innovation. Critics look at the TPP as an attempt to use trade law and treaties to extend the “rich” world IP protections to the “poor” world.

In addition, there is strong opposition from many congressional Democrats and some Republicans, which could mean a vote on the TPP is unlikely before President Obama leaves office. These concerns and a myriad of others will still require years of tough negotiations before the TPP becomes a reality.