The White House recently finalized the United States-Mexico-Canada Agreement, a major trade deal that will replace NAFTA.
This pact is great news for patients. It strengthens the economic incentives for American drug companies to develop new cures. Congress can strike a blow against cancer, Alzheimer’s, and other deadly diseases by approving the deal.
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 since the 1990s. Advances in anti-retroviral therapies have transformed HIV/AIDS from a death sentence into a manageable health condition.
Within the last decade, drug companies have pioneered the first therapeutic vaccine for cancer and 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.
Thanks to the USMCA, the prospects for future medical discovery look much brighter. The new 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 cure is expensive and risky. Bringing one new drug to market costs $2.6 billion and takes around a decade, on average. Of those drugs that actually reach patients, only one in five earn back their development costs.
IP 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 before rival firms flood the market with copycat products.
Canada and Mexico, however, enforce less aggressive IP protections. Under the USCMA, however, both countries are required to protect biologic research data for a full decade.
The increased protections will encourage firms to invest in research projects.
The deal also cracks down on foreign price controls. Currently, both Canada and Mexico artificially control the price of drugs.
Price controls erode the incentive to develop new treatments. When governments cap the price of medicines, innovators struggle to recoup development costs. Companies become far less eager to fund research or bring their drugs to new regions.
Thanks to the United States’ relatively free market for medicines, patients could access 192 of the 220 new drugs launched globally from 2011-2017. 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. With the USMCA, America’s leaders have given our drug industry precisely what it needs to continue innovating.
Peter J. Pitts, a former Food and Drug Administration associate commissioner, is president of the Center for Medicine in the Public Interest.
