How Will the United States–Mexico–Canada Agreement Affect Biosimilars?

August 5, 2019

Since Democrats control the House, Speaker Nancy Pelosi, D-California, is a major factor in determining how fast this agreement moves through Congress. One of the major Democratic points of concern is how prescription drugs, namely biologics, are handled in the USMCA.

For years we have witnessed the fierce debate over whether the North American Free Trade Agreement (NAFTA) is serving the best interests of the United States. In following up on a 2016 campaign promise to renegotiate NAFTA, the new NAFTA, called the United States—Mexico–Canada Agreement (USMCA), is currently being debated by Congress, and there are concerns as to whether the agreement will be ratified.

Since Democrats control the House, Speaker Nancy Pelosi, D-California, is a major factor in determining how fast this agreement moves through Congress. One of the major Democratic points of concern is how prescription drugs, namely biologics, are handled in the USMCA.

The point of contention for biologics occurs in the agreement’s exclusivity period. Biosimilar manufacturers have raised concerns about the fact that the USMCA would award biologic manufacturers 10 years of market exclusivity.

The USMCA would not change the current biologic exclusivity in the United States. According to the current US law, “With regard to protecting new biologics, a Party shall, with respect to the first marketing approval in a Party of a new pharmaceutical product that is, or contains, a biologic, provide effective market protection...for a period of at least ten years from the date of first marketing approval of that product in that Party.”

However, the USMCA would raise the exclusivity timelines in Canada and Mexico, which could impact biosimilar manufacturers operating in those markets.

Supporters argue that the exclusivity period doesn’t change existing US law, innovators need time to recoup research and development costs, and drug costs may be reduced in the United States, since subsidization would be reduced due to the expansion of biologic exclusivity in Mexico and Canada.

USMCA critics, however, argue that the Administration’s Blueprint to Lower Drug Prices featured greater biosimilar utilization, and the USMCA contradicts this goal. The Association for Accessible Medicines (AAM) argues in its position that the “USMCA expands the definition of biologics, doubling exclusivity for certain medicines” and “expands the scope of drug exclusivities beyond US law.” According to AAM, “All of these issues should be conformed to the US Hatch-Waxman Amendments and the Biosimilars Law [the Biologics Price Competition and Innovation Act].”

So where does all this leave us? Negotiations between the Democrats and the Administration’s trade czar, Robert Lighthizer, continue. Going into an election year, the USMCA could serve as political fodder. Democrats may use this to criticize the President’s foreign policy while the President could make good on his threat to invoke the 6-month notice period and withdraw from NAFTA, but that action could be risky, since the economic effects are unknown going into 2020’s election.

One thing is certain; prescription drug prices remain a potent political issue where change has been called for by the electorate. Will the USMCA’s current form be enough or will further changes be realized?

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