Generic Drugmakers Push Back on Trump’s Renegotiation of NAFTA

Rubix cube concpet of NAFTA, with one side American Flag, one side Canadian Flag, and one side Mexican flag

As President Donald Trump attempts to revise the North American Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada, generic drugmakers have expressed concern over some of the negotiating points.

Bloomberg writes, “In the abstract, the theory behind President Donald Trump’s renegotiation of NAFTA makes sense. His view is that multilateral trade agreements require the approval of too many parties, take too long to negotiate and end up watered down. So the U.S. might do better with bilateral negotiations. America might even have more bargaining power, due to its size and its resulting ability to dictate terms.”

So far so good, except there are reasons to believe that won’t work. The Trans-Pacific Partnership (TPP) was already in place, which would have revised NAFTA, because it also includes Canada and Mexico. Trump, however, chose to pull the U.S. out of the TPP, even though the TPP would have solved some of what Trump views as “the China problem.”

To date, the revisions to NAFTA are modest. Bloomberg notes, “To avoid tariffs, 75 percent of a car has to be made in either the U.S. or Mexico, as opposed to the previous 62.5 percent. Some 40 to 45 percent of the content has to be made by workers earning at least $16 an hour, which would cover U.S. but not Mexican workers. That would shift some production back to the U.S., but would also raise the price of cars for U.S. consumers. Rules on intellectual property protection would be enforced more strictly, which has been the global trend in any case. The pact does not resolve the ongoing tariff crisis between the U.S. and Mexico on steel and aluminum, nor is Canada at the moment included.”

In terms of generic drugs, U.S. and Mexico agreed to 10 years of data protection for biologics and expanded the categories of products eligible for protection. Generic drugmakers, however, oppose the deal, because that would be longer than what both Mexico and Canada already have. Mexico has a period of five years of data exclusivity for biologics and Canada has 10 years.

“The announced trade understanding between the U.S. and Mexico to extend brand name biologic data protection to ten years will harm patients who seek more affordable medicines,” the Association for Accessible Medicines, Canadian Generic Pharmaceutical Association and Mexican Association of Generic Medicines said in a statement. “The U.S., Mexico and Canada should reject these provisions, which would benefit brand name drug companies to the detriment of public health and the affordability of medical care.”

Brand-name drugmakers have actually pushed for 12 years of protection, which is the case in the U.S., and didn’t act particularly enthused by the preliminary announcement of 10 years.

Trade industry group PhRMA stated, “We encourage the administration to continue pushing for strong trade deals that protect and value the life-saving medicines our companies develop and deliver to patients. We look forward to analyzing the final text of the agreement once completed to ensure it includes policies that protect against global free-riding, promote research and development and reward the innovation being pioneered by America’s biopharmaceutical companies for patients across the globe.”

Tyler Cowen, a Bloomberg Opinion columnist and professor of economics at George Mason University, writes, “Overall, this is probably a better deal for the U.S., economically speaking. It may improve if Canada joins, and given the legislative calendar, Trump can be expected to present Canadian officials with a take-it-or-leave-it offer. Note also that many parts of the deal are likely to bear a resemblance to TPP. But again: At what price? Canadians and Canadian politicians now feel slighted, and it will be harder for Canada to support U.S. initiatives, especially those led by Trump, in the future. It may be a long time before Canada feels like an even vaguely equal partner again.”

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