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A leaked document about UK-US free trade deal discussions back
in 2017 has dominated UK media coverage over the past few days and
may yet affect the outcome of the 12 December parliamentary
elections. The issue that has captured the media attention is the
potential for UK drugs prices to rise dramatically if the country
enters a free trade agreement with the US. The risk has been seized
upon by opposition politicians claiming that the incumbent
Conservative government is willing to "sell" the National Health
Service (NHS) in exchange for a post-Brexit trade deal with the
US.
Privatisation plans for the NHS have been repeatedly denied by
Prime Minister Boris Johnson, but the focus of news coverage since
the papers leak has shifted from outright privatisation concerns to
the risk of price rises for medicines. Specifically, language in
the leaked papers related to intellectual property protection and
providing US companies full access to the UK market has been
interpreted as a clear indication that the NHS would have to
purchase US-made medicines at higher prices following a free trade
deal.
The language in the leaked document is suitably
vague, as would be expected from a country setting out its opening
gambit in, what is likely to be, a lengthy negotiation process.
However, a look at other US trade deals may provide some indication
of the risk to UK pharmaceutical prices.
Pharma-related provisions in US free trade
deals
The North American Free Trade Agreement (NAFTA) between the US,
Canada and Mexico in 1994 was the first to include specific rules
for IP protection. Since then, the US has signed trade deals with
Jordan (2001), Chile (2004), Singapore (2004), the CAFTA-DR deal
(2006-2009), Australia (2005), Morocco (2006), Bahrain (2006), Oman
(2009), Peru (2009), Colombia (2012), Panama (2012) and South Korea
(2012) - in all of which there were specific provisions for
pharmaceuticals. A recent review of pharma protection by Bollyky
and Kesselheim, published in the New England Journal of Medicine,
shows that patent term extensions and patent linkage (which stops
approval of a generics until the originator's patent has expired)
were included in all deals except NAFTA and data protection
requirements were included in all deals except the 2001 agreement
with Jordan. Data protection regulations - which prevent producers
of copy products from relying on the originator drug's clinical
trial data for a certain period of time after approval - provide an
even stronger protection for the originator company than the patent
because data protection cannot be challenged and invalidated in
court.
The newly-negotiated free trade deal with Canada and Mexico -
known as the United States -Mexico-Canada Agreement (USMCA), which
is set to replace NAFTA, goes a step further by providing data
exclusivity specifically for biologics. Under the USMCA, the period
of data exclusivity for biologics (during which no biosimilar
versions can come to market) is set at 10 years. This is five years
longer than the current protection term in Mexico and two years
longer than in Canada. While it is two years shorter than the
current data exclusivity for biologics in the US, signing the USMCA
will halt in their tracks US domestic attempts to shorten the
exclusivity period for biologics to seven years, as Bollyky and
Kesselheim point out. Thus, the USMCA may result in higher spending
on biologics in Mexico and Canada as a result of the delayed entry
of cheaper biosimilar versions. At the same time it would
perversely - in light of the great emphasis on reducing high US
pharmaceutical prices - lead to lost savings in the US itself from
delayed introduction of biosimilars. In the US, biologics account
for 30% of pharmaceutical spending, despite making just 1% of
prescriptions, according to Bollyky and Kesselheim.
Potential impact on UK pharmaceutical
spending
Herein lies the greatest danger to UK pharmaceutical spending
following a US-UK free trade deal! The UK already has 20 years
pharmaceutical patent protection, and its 8+2 years of data
protection for originator drugs matches the 10 year period of data
protection in the USMCA deal. However, the UK, in line with other
EU countries, does not offer additional data exclusivity to
biologics, meaning that its data exclusivity protection is shorter
that the 12 years the US currently provides. There is also a real
possibility that the US requests longer data exclusivity in a trade
deal with a weakened, internationally-isolated UK post-Brexit than
what has been negotiated under the USMCA.
To recap, the clear and present danger for UK healthcare
spending, may not be from rising drugs prices or from reducing the
ability of the NHS to negotiate drug prices, but from the lost
savings as competition from cheaper medicines, particularly
biosimilar versions of originator biologics, is delayed.
Posted 02 December 2019 by Milena Izmirlieva, Director, Life Sciences Research, IHS Markit
