IDBS Blog | 9th October 2015

Trade Deals and Pricing Controversies Highlight R&D Industry Pressures

The TPP trade agreement involves 12 Pacific Rim nations accounting for 40% of the global economy including the US and Japan – with an accumulated population of roughly 800 million people. While business has broadly supported the deal and the slashing of trade tariffs that it entails, many biotech stakeholders have taken a dim view of the intellectual property provisions. Compared to the US’s twelve-year rule on exclusivity for biologics – the time that a drug can be sold exclusively by one company with sole access to the data collected on treatments – the new treaty offers only eight years of full exclusivity. According to industry bodies, this erosion of the exclusivity that companies enjoy when developing biologics “has the potential to chill global investment and slow development of new breakthrough treatments.” Proponents of shorter exclusivity terms argue that the development of biosimilars (medicines that aren’t exact copies but are very similar to the original drugs) are reliant on access to the data locked down under exclusivity and that national health services and consumers stand to benefit from lower prices and faster innovation as a result. The debate continues and will likely grow as the US heads to the polls next year.

The controversy surrounding the TTP comes hot on the heels of the storm provoked by Turing Pharmaceuticals’ announcement that it would hike the price of a drug in its portfolio, Daraprim, by 5,000%. This led US presidential candidate Hillary Clinton to back plans to lower prescription drug costs, putting an instant dent in the stock price of the pharmaceutical majors.

While the echoing chamber of an election and the extreme example of Turing Pharmaceuticals have certainly helped to hype the recent stories concerning the pharma and biotech industry, the fact remains that it is an industry under pressure.

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