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GPhA Calls on Congress to Balance Pharmaceutical Innovation and Access in Free Trade Agreements

ARLINGTON, VA, January 30, 2007-- As the House Ways and Means Committee met to discuss trade globalization issues today, the Generic Pharmaceutical Association (GPhA) called on Congress to amend Trade Promotion Authority (TPA) to ensure that provisions in free trade agreements (FTAs) balance pharmaceutical innovation with access to affordable medicines. Trade Promotion Authority, which must be reauthorized this year, is an important tool in addressing trade globalization.

“The United States has achieved excellence in health care by balancing pharmaceutical innovation and access. Our trade officials should promote this balance in trade negotiations,” said GPhA President and CEO Kathleen Jaeger. “Failure to balance the need for both pharmaceutical innovation and access will hurt our economy, our health care system and the availability of affordable medicines worldwide.”

Jaeger noted that pharmaceutical provisions in free trade agreements should ultimately help consumers at home and abroad. Unfortunately, some agreements have frustrated this goal and have been at variance with World Trade Organization commitments and even, at times, U.S. law. For example, U.S. law provides that terms of patent extensions be no more than five years for a novel medicine (new molecular entity), with a limit of a single patent extension per product. Current FTAs provide for an unlimited number of patent extensions and can include “everyday” products. Just as bad, there are no limitations on the duration of each of those extensions.

U.S. law also mandates that generic companies have the right to research an innovator company’s drug during the patent term so that a more affordable generic version may be developed promptly upon patent expiration. This is commonly referred to as the “Bolar” provision. Recent FTAs fall short of U.S. law by not requiring the adoption of a Bolar principle and, instead, only allowing a permissive provision to be included in the agreement.

“These are just a few examples of how FTA provisions could block generic drug exports abroad, substantially delay the timely access of affordable pharmaceuticals in other countries, and even delay market entry of generics in the United States,” said Jaeger. “Consumers lose when FTAs allow brand companies to expand their patent protections beyond what is provided under U.S. law.”

Jaeger stated that Congress has a unique opportunity to restore the balance between drug innovation and access to affordable medicines through generic competition when it reauthorizes Trade Promotion Authority. TPA calls for FTAs to “reflect a standard of protection similar to that found in United States law.” But too many of the pharmaceutical provisions only reflect the protections U.S. law affords innovation and not the protections it affords consumers. The result can be a straight-jacket for generic companies, she noted.

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk active pharmaceutical chemicals, and suppliers of other goods and services to the generic drug industry. Generics represent 56% of the total prescriptions dispensed in the United States, but less than 13.1% of all dollars spent on prescription drugs.

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