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Free Trade Agreements Should Offer Access to Affordable Medicines

February 18, 2009

Kathleen Jaeger, President and CEO of the Generic Pharmaceutical Association

When it comes to the negotiation of U.S. free trade agreements (FTA), much of the debate has centered on agricultural and labor concerns. A less public—but no less important—debate concerns the intellectual property provisions for pharmaceuticals, which have a major impact on the lives of millions of people. With the passage of the U.S.-Peru Free Trade Agreement, the U.S. Congress approved for the first time pharmaceutical provisions that will improve the access of our trading partners to affordable generic drugs. These are provisions that should be included in any FTA the United States negotiates.

Until early 2007, U.S. bilateral free trade agreements increasingly afforded brand pharmaceutical companies greater intellectual property rights than they have under U.S. law. These pharmaceutical intellectual property provisions failed to acknowledge the legitimate role of access to medicine provisions, even when specific proposals being put forward by our trading partners had their origin in U.S. law.

This changed for the better in May 2007. Under the bipartisan New Trade Policy for America agreement reached between the Bush Administration and the Democrat-controlled Congress, trade agreement provisions designed to foster pharmaceutical innovation will also ensure that our nation’s free trade partners have access to safe and affordable medicines.

At the same time, this policy makes our free trade agreement with Peru and pending agreements with Colombia and Panama consistent with U.S. law. Contrary to claims that the new policy harms brand pharmaceutical companies, the added flexibilities in these Latin free trade agreements do nothing to hinder innovation and, in fact, bring our trading partners more in line with the research and development incentives that these pharmaceutical companies currently enjoy in the United States.

In addition to restoring balance to the pharmaceutical intellectual property provisions, the Latin agreements contain an explicit assurance that the intellectual property rights protections afforded pharmaceuticals do not conflict with the public health exceptions permitted by the World Trade Organization Declaration on the TRIPS Agreement and Public Health. This is an assurance that should be part of any template for future free trade agreements.

The United States enjoys a virtuous circle between innovation and competition: as competition from generic pharmaceutical companies has grown, so has investment by the brand industry in new drug development, with new blockbuster drugs regularly coming to market. Taken together, consumers benefit not only from the innovations, but from affordable generics as well. This is a concept that has worked well for more than 20 years in the United States, and now is a key part of U.S. trade agreements with recent Latin partners.

Thanks to provisions in the New Trade Policy for America, the U.S.-Peru Free Trade Agreement takes significant steps to promote competition, which is good for consumers and good for a strong, vibrant pharmaceutical industry. Congress and U.S. negotiators must now ensure that these provisions will be a key part of future trade agreements, including those with Asia.