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A Dose of the TPP's Medicine

Why U.S. Trade Deals Haven't Exported U.S. Drug Prices

Various medicine pills in their original packaging are seen in Ljubljana, February 14, 2012. Srdjan Zivulovic / Reuters

Pharmaceuticals are at the center of the debate over the Trans-Pacific Partnership (TPP), as they have been for every recent U.S. trade deal. Democrat Hillary Clinton, former secretary of state and current presidential candidate, has highlighted overly generous terms for drug companies as one of the main reasons she opposes the TPP. Republican Orrin Hatch, chairman of the Senate Finance Committee, has said that the TPP does not match the incentives for drug research that exist in U.S. law, which may justify waiting for a new president to negotiate a better deal. Meanwhile, both health activists and drug companies oppose the TPP, as they have three of the last four U.S. trade deals.

Underlying the fight over trade and medicines is an assumption held by both sides of the debate: that the drug patents and other guarantees of exclusivity in recent U.S. trade deals will operate in practice as those rules do in the United States. If so, one would expect to see higher prices on patented and branded medicines, resulting from the delayed competition with low-cost generics. In short, the pharmaceutical markets in countries with recent U.S. trade deals should become more like that in the United States.

As indicated by new evidence from 15 of the 17 countries with recent U.S. trade deals with pharmaceutical terms that go beyond World Trade Organization (WTO) requirements, however, these markets have not become more like that in the United States. Some of these deals are more than a decade old, but there has not been a discernible shift in pharmaceutical spending in these countries away from cheap generic drugs.

More substantial effects might arise over time, but the current evidence suggests that it may be time to move beyond the large pricing and spending claims made for and against the pharmaceutical provisions in U.S. trade deals and to focus the trade and medicines debate elsewhere.

DRUG DATA

One factor that has perpetuated the long fight over trade

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