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Emerging Trade Agreement Would Make Drugs Less Affordable

May 6, 2014 at 10:15 AM

The Trans-Pacific Partnership (TPP) — a trade agreement that the United States and 11 other Pacific-rim countries are negotiating — threatens to make prescription drugs less affordable for consumers and taxpayers.  CBPP recently joined with ten other organizations, including AARP and Consumers Union, to express our concerns to the Office of the U.S. Trade Representative. Our concerns fall into three main areas. First, the draft TPP would restrict Medicare’s ability to limit the prices it pays for drugs for Part B beneficiaries.  The recent release of Medicare physician payment data has vividly illustrated the large sums spent on Part B drugs, such as Lucentis, a macular degeneration treatment that costs $2,000 per monthly injection.  The TPP could allow drug companies to challenge existing Part B payment policies that hold down costs and foreclose some future cost-containment steps, such as discouraging the use of new drugs that are costlier but no more effective than existing alternatives. Second, the draft TPP would raise health care costs further by expanding patent protections for drugs and medical devices.  Drug companies use various strategies — such as making small changes in their products — to extend their patents and fend off competition from generic drugs.  The TPP could limit efforts to combat these “evergreening” strategies.  It would also make it easier for companies to obtain patents for therapeutic and diagnostic techniques that now aren’t patentable. Third, the draft TPP would give companies a new legal avenue to challenge U.S. pricing and patent policies for drugs and medical devices:  the ability to sue the U.S. government before an international arbitration panel that wouldn’t be subject to normal democratic checks and balances.  Under a similar provision of the North American Free Trade Agreement, for example, the drug company Eli Lilly is suing the Government of Canada for $500 million because Canadian courts invalidated patents for two drugs that didn’t meet Canada’s legal standards. Click file type icon here for the full text of our letter.