Lives Depend on a Fair Trade Protecting US Medical Innovation
Stephen J. Ubl is president and chief executive officer of the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents America’s leading biopharmaceutical research companies.
America is the undisputed leader in biopharmaceuticals and medical innovation, at least for now. In countries around the world, governments are taking steps to weaken their U.S. competitors while advancing their own domestic industries – hampering continued investment in innovative new therapies for patients. This is why it is so vital that America’s trade negotiators ensure that we enter into deals with true reciprocity and tough enforcement – something echoed by both the recently released Special 301 Report and President Trump’s April 29 executive order targeting trade abusers. We are happy to compete on a level playing field, but we have to do so with our eyes wide open – recognizing that other countries may not always share our commitment to fair play.
America has built its robust medical innovation ecosystem with a potent combination of factors: a free-market economy that rewards innovation, strong intellectual property protections, public sector investments in education and basic sciences, and a reliable rule of law. As long as we keep these elements in place, we are likely to maintain our leadership; however, remove any of these and the engine of U.S. innovation is compromised, and we fall behind other countries with an interest in overtaking the United States as a leader in the space.
One thing we can do to ensure we maintain our leadership is to prevent other countries from taking advantage of us by abusing bilateral/multilateral trade agreements with the United States. For example, India, Indonesia, and other countries have begun seizing patents – stealing the intellectual property of American companies – simply because the medicines aren’t manufactured domestically. In South Korea, the government recently announced a policy that would pay higher prices for locally developed new medicines, but not for foreign competitors. Turkey and Russia both have policies to give preferential treatment to local firms providing medicines to the government health systems, and to coerce international firms to manufacture products locally. Australia ignores our trade agreement in its dealing with biopharmaceutical companies by creating a “poison pill” measure that effectively prohibits American and other innovator companies from challenging the theft of their patents.
These policies have demonstrable impact: they limit our ability to invest in research and development here at home, thereby threatening U.S. jobs and the development of new medicines for the world’s patients. For example, the U.S. Department of Commerce notes removing one trade barrier, price controls, from 10 member countries of the Organization for Economic Co-operation and Development could yield an annual increase in R&D expenditures of between $5.3 and $8 billion. Yet, for too long, the United States has fallen short in enforcing its agreements. Failure to protect our national interest threatens the nearly four and half million jobs that depend on the U.S. biopharmaceutical industry. That needs to change.
While these countries are abusing their trade agreements, they are investing heavily in education, infrastructure, and basic sciences, in addition to creating a raft of preferences for local industry. These countries recognize what many U.S. states also recognize: that biopharmaceutical jobs are good jobs with tremendous multiplier effects, and that they are worth attracting. U.S. states do that the positive way – by creating the right environment and incentives; foreign governments often do it by discriminating against U.S. competitors while they attempt to build their local industry.
Perhaps even more galling is that organizations that are charged to be custodians of an international rules-based system are increasingly seeking to undermine or eliminate the intellectual property protections that allow biopharmaceutical innovation to thrive in the United States and other nations. The World Health Organization, the United Nations Development Programme, the United Nations Conference on Trade and Development and other organizations often work to promote policies that weaken intellectual property protections and put U.S. companies at a disadvantage. It’s hard to have a level playing field when the referee is biased.
Fortunately, the United States has the power and resources to push back on foreign governments who seek to abuse U.S. companies. Washington can start by insisting that any new trade agreements protect the intellectual property and market access rights of U.S. companies. Our competitive advantage as a nation is our innovation and it will slip away if we don’t protect it. We must also ensure that the U.S. trade representative vigorously protests violations of trade agreements, and that our representatives to multilateral organizations stand up to the activists who have seemingly hijacked those organizations to advance their own anti-intellectual property agendas.
America’s biopharmaceutical companies aren’t looking for special treatment in trade; we only want to ensure that the United States negotiates trade deals that are in the national interest – and that U.S. policymakers actively monitor those deals to ensure other nations are adhering to their terms. We stand ready to work with President Trump, his administration, and Congress to maintain our leadership in biopharmaceutical innovation, and to preserve the four and a half million jobs that come with it.