The Trans-Pacific Partnership and Its Potential Impact on Exclusivity Periods for Biological Products

After five years of negotiations, the twelve member countries of the Trans-Pacific Partnership (TPP) agreement have reached consensus on its general terms. While the TPP encompasses a broad array of trade-related issues, exclusivity periods for biological products was one of the most controversial issues, and, according to reports, was the “final sticking point” before coming to an actual agreement.¹

In the United States, the Biologics Price Competition and Innovation Act (BPCIA) provides a twelve-year period of exclusivity for biologics. Similarly, the European Union, though not involved in the TPP, has a ten-year term of protection for biologics, made up of eight years of data exclusivity and two years of marketing exclusivity.² During the negotiations, the U.S. trade representative proposed twelve years of exclusivity, mirroring the BPCIA. Australia, however, led opposition to the U.S. proposal and instead fought for a five-year period, which reflects its domestic law.³  Among the TPP member countries, the United States has the longest period of biologics exclusivity, followed by Japan and Canada, both providing eight years. By contrast, the remaining countries, including Chile, Malaysia, New Zealand, and Singapore, provide five or fewer years of data exclusivity, and Brunei, Mexico, Peru, and Vietnam do not grant exclusivity periods for biologics. ^4,5,6,7

According to reports and leaked texts, the TPP sets forth two possible market exclusivity schemes for biologics. Under the first option, parties must provide eight years of regulatory data protection for new biologics, beginning on the date of first marketing approval.⁸  Under the second option, parties must “deliver a comparable outcome in the market” through a five-year period of regulatory data protection and “other measures.”⁹  In effect, the second option appears to formally require only a five-year period of data exclusivity. Statements by Australia’s trade minister reinforce that interpretation, as he has said that Australia will not need to change its laws to comply with the TPP biologics provisions.¹⁰  The TPP, as currently proposed, mandates minimum protections for biologics, but does not set a maximum term. Therefore, a country might still comply with the TPP even if its exclusivity period is greater than five years.¹¹  

Even though the twelve member countries reached a consensus, implementation of the TPP in the United States is far from a certainty. Like other U.S. trade agreements, the TPP is treated as a congressional-executive agreement rather than a treaty.¹²  As a result, the President and his trade representative may negotiate the agreement, but it has legal force only if it is approved by Congress.¹³  However, Congress does not vote on the actual TPP; rather it must approve “implementing legislation.” Implementing legislation contains provisions that amend existing and create new U.S. federal laws in order to comply with the TPP.¹⁴ 

The 2015 Trade Promotion Authority (TPA) dictates most of the procedural steps for implementation of the TPP. Once the text of the TPP is finalized, the TPA requires the President give Congress 90 days’ notice before signing the agreement. Once the President has signed the agreement, he must draft the implementing legislation and submit it to Congress. However, before submitting the legislation, the President must: (1) obtain an ITC assessment of the probable economic effect of the agreement; (2) submit a list of required changes to U.S. law to comply with the agreement; and (3) submit a statement of administrative action proposed to implement the TPP.¹⁵  Once the bill is introduced, Congress has 90 days to pass or reject the legislation, during which time the bill must get through the House Ways and Means and Senate Finance Committees, and each house of Congress must vote to approve it.¹⁶  If Congress passes the TPP and the President signs it, the TPP takes effect only after the President notifies Congress and all TPP member countries that U.S. law conforms with the TPP.

In light of widespread criticism, it may not be easy to win congressional approval of the TPP.¹⁷ Separate from other political issues concerning the effect of the TPP, members of Congress have expressed support for strong intellectual property protections, and specifically a twelve-year period of data exclusivity for biologics.¹⁸ Most notably, Senator Orrin Hatch, who chairs the Senate Finance Committee, had demanded strong protections for American pharmaceutical products, including biologics.¹⁹  Thus, it is still unclear as to whether biologics in the United States will lose their current twelve years of exclusivity.

Since reaching an agreement on October 5, 2015, the member countries have been drafting the final text. Much of the pharmaceutical industry has expressed disappointment that the TPP would not mandate a twelve-year exclusivity period.²⁰  However, manufacturers of biosimilars have applauded the five-year period as balancing patient access and economic growth.²¹  The ultimate effect of the TPP internationally is still unclear and will be contingent on the final text of the agreement.

Endnotes
¹ James Glenday and Anna Vidot, “Trans-Pacific Partnership: '50/50' chance of trade deal today as negotiators lock horns over medical patent protection,” ABC News Australia (Oct., 4, 2015, 11:17 PM), http://www.abc.net.au/news/2015-10-05/pharmaceutical-patent-protection-deal-to-end-tpp-talks/6826956.

² U.S. Chamber of Commerce, GIPC International IP Index 102 (3d ed. 2015), http://www.theglobalipcenter.com/wp-content/themes/gipc/map-index/assets/pdf/Index_Map_Index_3rdEdition.pdf.

³ Randi Hernandez, “Patent Exclusivity for Biologics: Seven or Twelve Years?”, BioPharm International (Jan. 30, 2015), http://www.biopharminternational.com/patent-exclusivity-biologics-seven-or-twelve-years.

⁴ Brookings Institution, “Health policy 101: How the Trans-Pacific Partnership will impact prescription drugs,” Health360 Blog (May 19, 2015, 11:20 AM), http://www.brookings.edu/blogs/health360/posts/2015/05/19-trans-pacific-partnership-prescription-drugs.

⁵ Alejandro Luna, “Mexico Issues Regulations to Approve Biologic Drugs,” Olivares, http://www.olivares.com.mx/En/Knowledge/Articles/PatentArticles/Mexicoissuesregulationstoapprovebiologicdrugs (last visited Oct. 13, 2015).

⁶ U.S. Chamber of Commerce, GIPC International IP Index 66 (3d ed. 2015), http://www.theglobalipcenter.com/wp-content/themes/gipc/map-index/assets/pdf/Index_Map_Index_3rdEdition.pdf.

⁷ Michael Mezher, Trade Talks Stumble Over Biologics Data Exclusivity, Regulatory Affairs Professionals Society (Feb. 11, 2015), http://www.raps.org/Regulatory-Focus/News/2015/02/11/21309/Trade-Talks-Stumble-over-Biologics-Data-Exclusivity/.

⁸ Brett Norman and Sarah Karlin, “Pharma’s Next Steps on TPP,” Politico (Oct. 12, 2015, 12:02 PM), http://www.politico.com/tipsheets/prescription-pulse/2015/10/pharmas-next-steps-on-tpp-210674.

⁹ Zachary Brennan, Leaked TPP Chapter on IP Sets Terms of Biologics Data Exclusivity, Regulatory Affairs Professionals Society (Oct. 9, 2015), http://www.raps.org/Regulatory-Focus/News/2015/10/09/23363/Leaked-TPP-Chapter-on-IP-Sets-Terms-of-Biologics-Data-Exclusivity/.

¹⁰ Transcript, U.S. Trade Representative, Trans-Pacific Partnership Atlanta Ministerial Closing Press Conference (Oct. 5, 2015).

¹¹ Randi Hernandez, “TPP Discussions Conclude; Biologics Now Have Shorter Data Protection Periods,” BioPharm International (Oct. 8, 2015), http://www.biopharminternational.com/tpp-discussions-conclude-biologics-now-have-shorter-data-protection-periods.

¹² Jane M. Smith et al., Why Certain Trade Agreements Are Approved as Congressional-Executive Agreements Rather Than Treaties (CRS Report No.  RL97896) (Washington, DC: Congressional Research Service, 2013).

¹³ Id.

¹⁴ Ian F. Fergusson, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy (CRS Report No. RL33743) (Washington, DC: Congressional Research Service, 2015) 22.

¹⁵ Bipartisan Congressional Trade Authorities and Accountability Act of 2015 19 U.S.C. § 4202

¹⁶ Fergusson, 22.

¹⁷ Zachary Brennan, Final TPP Agreement Draws Ire from Both Sides over Biologics Exclusivity, Regulatory Affairs Professionals Society (Oct. 5, 2015), http://www.raps.org/Regulatory-Focus/News/2015/10/05/23325/Final-TPP-Agreement-Draws-Ire-from-Both-Sides-over-Biologics-Exclusivity/.

¹⁸ Note to Media on Elected Officials Support for 12 Years of Data Protections in TPP, http://phrma.org/note-media-elected-officials-support-12-years-data-protection-tpp.

¹⁹ Hatch, Orrin, Hatch Calls for TPA Passage, Seeks Strong Outcomes on Trade Deals in Speech at American Enterprise Institute, Orrin Hatch United States Senator for Utah (Jan. 30, 2015), http://www.hatch.senate.gov/public/index.cfm/2015/1/hatch-calls-for-tpa-passage-seeks-strong-outcomes-on-trade-deals-in-speech-at-american-enterprise-institute.

²⁰ BIO Statement on Data Exclusivity Provisions Within the Trans-Pacific Partnership, Biotechnology Industry Organization (Oct. 4, 2015), https://www.bio.org/media/press-release/bio-statement-data-exclusivity-provisions-within-trans-pacific-partnership.

²¹ Statement by Chip Davis, President and CEO, GPhA, Regarding the Trans-Pacific Partnership Agreement, Generic Pharmaceutical Association (Oct. 5, 2015), http://www.gphaonline.org/gpha-media/press/statement-by-chip-davis-president-and-ceo-gpha-regarding-the-trans-pacific-partnership-agreement.