House Subcommittee Hears Testimony About Trade Deal Opposed by Biosimilar Industry

The biosimilar industry and their allies, including trade unions, are hoping to convince legislators and the administration to redo a pharmaceutical intellectual property provision in the renegotiated trade agreement with Canada and Mexico that they say will create higher drug prices in the United States.

Although the president secured agreements with the 2 countries last year on the United States—Mexico–Canada Agreement (USMCA), an updated version of the North American Free Trade Agreement (NAFTA), Democrats now control the House of Representatives. On Tuesday, the House Ways and Means Subcommittee on Trade heard testimony from labor leaders and others on USCMA.

Under the deal, US drug companies will be able to sell pharmaceutical products in Canada for 10 years without facing generic or biosimilar competition, an increase from the 8 years of exclusivity under NAFTA. Mexico currently has no exclusivity period.

The protection for brand-name biologics will hurt workers and retirees financially, the subcommittee heard. Employer groups, including unions, have made rising prescription drug costs a focus as late.

“Because this agreement contains provisions locking in a minimum of 10 years of data exclusivity for biologic drugs and guaranteeing strong protections for evergreening of existing drugs, it will lock in high drug prices going forward, and Congress would need to renegotiate the agreement to fix that. [Communications Workers of America, CWA] members and retirees face steep increases in health insurance premiums and out-of-pocket expenses related to escalating drug costs and we are deeply opposed to provisions that would block Congress from addressing those costs,” according to prepared testimony from Shane Larson, the director of legislation, politics and international affairs at the CWA.

In its testimony, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) said the new trade deal would extend “monopoly power” for pharmaceutical companies.

“We cannot limit the future health policy choices for North American countries simply because Big Pharma seeks to use NAFTA to lock in and increase its profits,” according to testimony by Celeste Drake, the AFL-CIO’s trade and globalization policy expert.

The Pharmaceutical Research and Manufacturers of America (PhRMA) says these beliefs are misconceptions and says that biosimilar manufacturers are free to develop their own products—they just can’t use any of the innovator companies’ original data and must shoulder the cost of their own clinical trials. They also question why Canada and Mexico’s timeframe before competition is allowed should be shorter than that of the United States.

But Representative Earl Blumenauer, D-Oregon, who chairs the trade subcommittee, told The New York Times that he and other subcommittee members are not likely to support the deal as written.

However, Democrats have not come to a consensus on the deal, and the White House has reportedly said it is not renegotiating it.

The New York Times also said other disagreements about the trade pact include the definition of biologics, as well as rules governing other ways drug companies can extend patent protections, a process known as "evergreening."

The Association for Accessible Medicines (AAM) says the agreement, as it stands, would worsen the biosimilar market in the United States and runs counter to the administration’s own plans to reduce drug prices by encouraging generics and biosimilars. In addition, the agreement is inconsistent with US law, AAM believes. It cites the 180-day period of exclusivity to the first biosimilar challenger of a reference product; conversely, the USMCA would allow such competition to be blocked.