The trade agreement recently approved by President Trump and leaders of Mexico and Canada to replace the North American Free Trade Agreement (NAFTA) would strengthen the economic incentives for American drug companies to develop new life-saving treatments for many serious diseases.
The U.S. Congress and the national legislatures of Canada and Mexico can strike a blow against cancer, Alzheimer’s disease, multiple sclerosis and many other diseases by approving the United States-Mexico-Canada Agreement (USMCA). Ratification by all three legislative bodies is needed for the new agreement to take effect.
America’s biopharmaceutical industry has already saved countless lives. Breakthroughs in cancer treatments have helped drive down death rates from the disease by 26 percent just since the 1990s.
Advances in anti-retroviral therapies have transformed HIV/AIDS from a death sentence into a manageable health condition. Today a 20-year-old diagnosed with the disease and treated with the latest drugs can expect to live nearly as long as someone without HIV/AIDS.
And within the last decade, drug companies have pioneered the first therapeutic vaccine for cancer, along with new treatments for hepatitis C that cure more than 90 percent of patients.
Despite these successes, continued medical research is needed. Half of all American adults battle a chronic disease. And 25 percent of the adult population has at least two chronic conditions.
If the new trade agreement between the U.S., Mexico and Canada is ratified, the prospects for future medical discovery look much brighter.
The new trade deal enhances intellectual property protections for biologic drugs, which are sophisticated medicines made from living organisms. They are among the most effective treatments ever devised for conditions like cancer and rheumatoid arthritis.
Creating a new drug is expensive and risky. Bringing a new drug to market costs $2.6 billion on average and takes around a decade. Of those drugs that actually reach patients, only about one in five earn back their development costs.
Intellectual property protections help make these financial risks worthwhile for investors. Here in the United States, drug companies that create new biologics enjoy a 12-year window during which their research data is protected from use by competing firms.
This “data exclusivity” period gives drug companies a chance to recoup their initial investment in a biologic drug before rival firms flood the market with copycat products.
Currently, Canada and Mexico enforce less aggressive intellectual property protections. Canada’s data exclusivity period is eight years, while Mexico’s is only five years. Under the new trade agreement between the three countries, Mexico and Canada would be required to protect biologic research data for a full decade.
The increased protections will encourage drug companies to invest in additional research projects.
This isn’t the only way the USMCA sets the stage for medical innovation. The trade deal also cracks down on foreign price controls. Currently, both Canada and Mexico artificially control the price of drugs.
Price controls erode the incentive for drug companies to develop new treatments. When governments cap the price of medicines, innovators may struggle to recoup their development costs. Biopharmaceutical companies become far less eager to fund research into future treatments and cures or bring their drugs to new regions.
Thanks to the United States’ relatively free market for medicines, Americans patients could access 192 of the 220 new drugs launched globally from 2011 to 2017. Canadian patients, meanwhile, had access to only 106 of those medicines due to their government’s price controls.
The USMCA encourages Mexico and Canada to value new medicines fairly, thereby fueling medical progress.
Breakthrough drugs have added years to the lives of American patients. But future medical progress isn’t a foregone conclusion. Luckily, the U.S.-Mexico-Canada Trade Agreement would give our drug industry precisely what it needs to continue innovating.