Obama’s Pacific Trade Agreement Draws Criticism

Justin Haskins Heartland Institute
Published October 7, 2015

Consumer Power Report #476

After a decade of intense negotiations, the United States and 11 other nations, including Australia, Canada, Japan, Singapore, and Vietnam, reached a tentative trade deal on Monday in Atlanta. Dubbed the Trans-Pacific Partnership (TPP), the trade agreement, if approved by member nations, would be one of the most significant trade deals in world history, with nearly 40 percent of the world’s gross domestic product represented among the 12 nations involved in the talks.

Some have hailed TPP as a groundbreaking and innovative free-market advancement, while others say the agreement will benefit only wealthy business owners, corporations, and certain special interests. The powerful U.S. labor union AFL-CIO says TPP should be rejected.

“Unfortunately, it is becoming clear the TPP will not create jobs, protect the environment and ensure safe imports,” says AFL-CIO on its website. “Rather, it appears modeled after the North American Free Trade Agreement (NAFTA), a free trade agreement where the largest global corporations benefit and working families are left behind.”

One of the most contentious aspects of the agreement – a provision that would allow pharmaceutical companies to receive at least five years of information exclusivity before having to share key data about their new drugs with competitors – has drawn criticism from both big businesses and the advocacy groups who normally oppose them. Competitors will be prevented under the agreement from producing identical drugs prior to the expiration of pharmaceutical patents, which can often last for 20 years or longer, but they will be able to use data to produce imitations of their products, also called “biosimilars,” which could then be sold at much lower prices, within five to eight years of the drug hitting the market.

In the United States, pharmaceutical companies are guaranteed to have at least 12 years before having to turn over their data, but reports indicate many TPP member nations said they would refuse to sign a trade agreement that gave such significant protections to drug manufacturers.

Drugmakers say TPP would greatly hinder their ability to earn necessary profits from new and innovative drugs. Without data protections, competitors will be able to create imitations more quickly, reducing pharmaceutical companies’ incentive to produce new drugs, which are incredibly costly to develop.

According to a study by Tufts University, it costs about $2.6 billion to bring a brand new drug to the marketplace, and nine in 10 drugs fail the human trials phase of development, according to a report by Healthline. Myriad experts now say new drugs cost $5 billion or more to develop, according to a report in Forbes.

Although TPP would open up new markets for pharmaceutical companies and provide some additional protections, many drugmakers say the failure to provide at least 12 years of data protection could increase costs for new drugs prior to data protections running out.

Jim Greenwood, CEO of lobbying group Biotechnology Industry Organization, said, “The Congress set 12 years as the appropriate period to both foster innovation and provide access to biosimilars in a reasonable timeframe. While the TPP agreement will not impact the U.S. data protection period, we believe the failure of our Asian-Pacific partners to agree to a similar length of protection is remarkably short-sighted and has the potential to chill global investment and slow development of new breakthrough treatments for suffering patients.”

Global health advocates have also expressed serious concern about TPP, although for completely different reasons. Many drugmakers may be unhappy with TPP’s data protection agreement, but in some nations, pharmaceutical companies will now enjoy much greater protections for their new and innovative products compared to existing laws. This will almost certainly raise drug costs in some developing countries, and it could result in treatment reduction.

Doctors Without Borders, one of the world’s leading global health organizations, said in a statement, “TPP will … go down in history as the worst trade agreement for access to medicines in developing countries,” and “the additional monopoly protection provided for biologic drugs will be a new regime for all TPP developing countries. These countries will pay a heavy price in the decades to come that will be measured in the impact it has on patients.”

The fact that two groups – gigantic pharmaceutical companies and global health advocacy organizations – are both opposed to TPP shows just how complex free-trade agreements can be. When agreements are negotiated among nations with similar levels of poverty and economic development, or when agreements are reached among parties who have specific products or services both parties can benefit from trading, free-trade works. However, when free-trade accords involving thousands of regulations, tariffs, and stipulations occur among nations with wildly different levels of wealth, the unintended consequences can be dangerous, and in this case, potentially deadly.

The health care industry in the United States is radically different from what exists in Australia, Japan, Mexico, or Singapore, and the health problems faced in each of the 12 member nations in TPP vary significantly. To suggest a handful of government officials can gather together and establish a uniform set of rules that benefit all parties is wildly idealistic. Nations should instead focus on creating targeted trade agreements that work for everyone involved and don’t cause significant harm to an already turbulent health care marketplace.

— Justin Haskins


IN THIS ISSUE:


HILLARY CLINTON WANTS TO KILL OBAMACARE’S ‘CADILLAC TAX’

Democratic presidential candidate Hillary Clinton today called for scrapping the Affordable Care Act’s so-called Cadillac tax on pricey health care benefits.

In what amounts to a major break with the Obama administration, Clinton said the tax ought to be junked while promising to replace the estimated $91 billion hole that would blow in the government’s budget.

“I encourage Congress to repeal the so-called Cadillac tax,” she said today in a statement. “My proposed reforms to our health care system would more than cover the cost of repealing the Cadillac tax, while also reining in skyrocketing prescription drug costs and out-of-pocket expenses for hard-working families. As president, I will continue to fight to make our health care system more value-driven and cost-efficient, and to drive down costs for patients and families.”

It marks the first time Clinton has proposed nixing part of the health care law, and it makes her the most prominent Democrat on a growing list of lawmakers opposed to the tax.

SOURCE: By Brian Faler, Politico


HEALTH CARE EXECUTIVE SALARIES ON THE RISE

Base salaries for healthcare executives climbed a modest 3.1 percent in 2015, a new survey from Sullivan, Cotter and Associates found, as the expanded responsibilities C-level execs face in healthcare is causing compensation packages to swell.

SullivanCotter collected salary information from more than 1,300 hospitals, the agency said.

Overall, executives in large health systems saw a larger increase in salaries, climbing 3.6 percent compared to the prior year, while single-hospital execs saw their base pay rise by a lower 2.6 percent.

SOURCE: By Henry Powderly, Healthcare Finance


THREE SHARE NOBEL MEDICINE PRIZE FOR NEW TOOLS TO KILL PARASITES

Three scientists from Ireland, Japan and China won the Nobel Prize in medicine on Monday for discovering drugs against malaria and other parasitic diseases that affect hundreds of millions of people every year.

The Nobel judges in Stockholm awarded the prestigious prize to Irish-born William Campbell, Satoshi Omura of Japan and Tu Youyou – the first-ever Chinese medicine laureate.

Campbell and Omura were cited for discovering avermectin, derivatives of which have helped lower the incidence of river blindness and lymphatic filariasis, two diseases caused by parasitic worms that affect millions of people in Africa and Asia.

Tu discovered artemisinin, a drug that has helped significantly reduce the mortality rates of malaria patients.

“The two discoveries have provided humankind with powerful new means to combat these debilitating diseases that affect hundreds of millions of people annually,” the committee said. “The consequences in terms of improved human health and reduced suffering are immensurable.”

SOURCE: Associated Press


STUDY: OBAMACARE PREMIUMS RISING 4.4 PERCENT IN 14 CITIES

Premiums on ObamaCare plans in 14 major cities are set to increase by an average of 4.4 percent in 2016, according to a new analysis.

The analysis from the nonpartisan Kaiser Family Foundation looks at 14 cities where complete data on rates from all insurers on ObamaCare’s marketplaces is available, and will be updated as more states release data.

While the average increase is relatively modest, some cities are seeing much larger spikes. It is also clear that premiums are increasing more than they did last year, when premiums in these 14 cities on average actually fell by 1.3 percent.

On Thursday, Minnesota announced that its premium rates would increase by as much as 49 percent, news that was seized on by Republicans.

Minnesota Commerce Commissioner Mike Rothman said the state approved the higher rates because the insured population ended up being sicker and more costly than insurers expected.

SOURCE: By Peter Sullivan, The Hill


CONGRESS AND OBAMA ADMINISTRATION SEEK TO LIMIT INCREASE IN MEDICARE PREMIUMS

Congress and the Obama administration are frantically seeking ways to hold down Medicare premiums that could rise by roughly 50 percent for some beneficiaries next year, according to lawmakers and Medicare officials.

The administration has criticized commercial insurance companies for seeking rate increases much smaller than that.

Aides to Representative Nancy Pelosi of California, the House Democratic leader, and Speaker John A. Boehner are quietly exploring a possible deal that would limit the expected increase in Medicare premiums.

“Congress has a responsibility to act,” Ms. Pelosi said by email on Monday. “If we do nothing, millions of American seniors will suffer. Democrats continue to press the Republican leadership to bring a fix to the floor so we can prevent the serious harm this increase will have.”

The cost of avoiding such big premium increases, $7.5 billion by some estimates, could be a problem for conservative Republicans. Aides to Mr. Boehner have told Ms. Pelosi’s staff members that the cost would have to be offset by savings elsewhere in the federal budget.

SOURCE: By Robert Pear, The New York Times