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By the start of 2014, industry expects to have a clearer idea of how far the US-EU free trade pact is going.
So ceremonial was the launch in July of the EU-US trade talks that one might almost have misinterpreted it as a celebration of a hugely satisfying conclusion. EU leaders trilled excitedly about "a special moment," and "historic negotiations." The White House effused about "significant benefits" in international competitiveness, jobs, and growth. And both sides spoke of "a comprehensive trade and investment deal" and "strong political will." The transatlantic business community also threw its collective hat into the air, rejoicing at the prospect of "greater access to a huge market." And the pharma industry on both sides of the Atlantic has gone public with its own greeting for greater efficiencies through addressing regulatory differences and duplicative requirements, leading to expedited patient access to innovative medicines.
As the process gets underway on an 18-month bid to create T-TIP—the Transatlantic Trade and Investment Partnership—the European Union's chief negotiator Ignacio Garcia Bercero and his US counterpart Dan Mullaney have been more realistic, uttering cautiously optimistic noises, but acknowledging the scale of the challenge. However, after the first round of real talks, in Washington, DC, the mood is still upbeat. Garcia Bercero returned to Brussels still speaking of a deal that could be "transformative for our economies." So as negotiators prepare for the second round of talks, in early October, what is the likelihood of drug firms—and patients—reaping any rewards from the negotiations?
Much of the answer resides in the sheer complexity of T-TIP. Some 150 negotiators in two dozen working groups are focusing on distinct sectoral areas, and pharmaceuticals has to take its place on a long list ranging from agriculture to energy and raw materials. And on the horizontal issues, although pharma stands to be influenced by what comes out of the scheduled discussions on public procurement, trade facilitation, or competition, it is not the only sector bidding for attention.
In this context, there is an acknowledged risk that negotiators might go for an easy regulatory deal for pharma, the low-hanging fruit that would offer only limited gains from among the drug industry's agenda of real regulatory alignment, market access, and greater clarity on intellectual property. This risk is enhanced by the broad range of interests at stake. The pharma industry is not monolithic, and the emphasis differs widely in the distinct positions taken in the run-up to the talks. There is some common ground in seeking greater mutual recognition of audits and inspections, and of foreign data. But the research-based industry is looking not only for regulatory compatibility initiatives, but also intellectual property protections, market access provisions, and customs, tariffs, and public procurement measures. The generic sector has set its sights on a single development program and harmonization of data requirements for approval of generic medicinal products, as well as provisions allowing production of protected products prior to patent expiry, to allow for rapid launch. Non-prescription producers are chiefly interested in greater market exclusivity for products newly classified for over-the–counter access, and active ingredient manufacturers would like to see greater international harmonization of good manufacturing practices, and of pharmacopoeia.
Not all these ambitions overlap neatly. The joint submission by the European Generic Medicines Association and the US Generic Pharmaceutical Association is deeply reserved over harmonization of "the different regulatory intellectual property systems between Europe and the United States," while one of the focuses of the European Federation of Pharmaceutical Industries and Associations and the Pharmaceutical Research and Manufacturers of America is closer alignment of intellectual property regimes.
In addition, despite an unprecedented degree of transatlantic collaboration in establishing positions (the alliances forged by EFPIA/PhRMA and by EGA/GPA are mirrored in other healthcare sectors too), there is an inescapable reality in that while much of the industry may be international, the negotiators have a strong territorial affiliation. The United States and the European Union are both looking for advantages in terms of greater trade for firms based in their own territories, to boost their domestic economies. Consequently, any gains for EU exporters to the US market are unlikely to emerge without equivalent gains for US exporters to the European Union. There are also potential winners and losers among regulators, in terms of prestige and influence. Richard Bergström, the head of EFPIA, is conscious that some resistance is to be expected among national regulators. "Will there be sufficient senior-level political pressure to overcome that?" he muses. And some industry players are uncomfortably aware that risk of greater openness of trade in medicines could also lead to greater pressure for harmonization of prices—reinforcing existing downward pressures. The US industry has been vocal in its attacks on Europe's "short-sighted cost-containment measures."
For some of the inveterate critics of the industry, T-TIP is viewed with suspicion. Patients could be left out of the benefits, they fear—and patients in poorer countries might even suffer from reduced flow of drugs to their markets as manufacturers seek to maximize new opportunities in a bigger developed-world market. Consumer advocates, still outraged at what they see as drug industry sabotage of nominal concessions offered to poorer countries in earlier international trade agreements—notably TRIPS—are urging attention not just to the wording of any agreement, but to its implementation. "We should consider also how it could be used or abused by a stronger partner," warns Jim Murray, a leading European healthcare campaigner.
The industry's stance on release of trial data—viewed as grudging at best, and fiercely resistant at worst—plays into the climate. There are fears that the US side will use the negotiations to combat moves towards transparency, fuelling anxiety that big business is getting together to push for a raft of deregulation. PhRMA's president, John Castellani, told the House Subcommittee on Commerce, Manufacturing, and Trade in July of concerns over the current European environment because of the European Medicines Agency's "current and proposed data disclosure policy." Some of these concerns are recognized at a senior industry level, although Hugh Pullen of Lilly underlines: "We are not looking for deregulation. What we want is better alignment between EU and US rules."
At present, drug industry trade experts are genuinely impressed by the scope for the much-vaunted stakeholder involvement, promised to all comers for more than a year, and so far providing good access for industry views as the talks evolve. This is "not the old-school trade talks just focusing on tariffs," one closely involved Europe-based industry figure said. "The EU side is seeking real input and involvement." So in the heat of summer, pharma industry expectations—and hopes—remain high. Hugh Pullen of Lilly says it would be "a shame to lose what is a lifetime opportunity." But he recognizes that the industry is very much in the hands of the negotiators: "We have set out clear objectives. Now we rely on them to deliver." The autumn will be crucial. By the end of this year, pharmaceutical executives expect to have a clearer idea of how far T-TIP is going.
Reflector is Pharm Exec's anonymous columnist, a commentator so close to the action in Europe his identity must be kept secret.