The following statement can be attributed to James Love, Director, on May 11, 2018.
“The Trump Administration is proposing that the U.S. government advocate higher drug prices in foreign countries. We’ll have to see the details of how this effort will be managed, but the overall policy proposal is not new. Since the Reagan administration, every U.S. president has worked closely with big drug companies to advocate for broader, stronger and more durable intellectual property rights for new medicines, regulatory barriers to competition, and to weaken national efforts to lower drug prices through restrictions on reimbursements, price controls or other measures. For example, Presidents Obama, Bush and Clinton all sought similar outcomes, efforts that are easily documented by merely reading two reports published annually by the White House Office of the United States Trade Representative (USTR). These include:
- National Trade Estimate Report on Foreign Trade Barriers (see below for examples), and
- Special 301 Report (see: https://www.keionline.org/ustr/special301 for all 30 years of these reports).
There is much that can be said about this issue, but the following are the most critical points.
- Raising foreign drug prices, as was the result of early NAFTA negotiations in Canada or the WTO negotiations that lead to the TRIPS agreement, does not lower US prices. In fact, the higher foreign prices are, and the harder it is to obtain low cost generics outside the United States, the easier it will be to charge higher prices in the United States.
- Raising drug prices here or in foreign markets does in fact enhance global incentives to invest in R&D for new products. That said, it is not an efficient way to do so, since companies at best only reinvest a small portion of revenues in R&D.
- Governments around the world do not want higher drug prices, they want lower prices, so influencing foreign drug prices is hard, particularly when the higher prices lead to larger budget deficits and/or less access, and contribute to otherwise preventable death and suffering of the countries’ own citizens.
- The consequence of high drug prices is predictable access barriers, greater disparities of access (based upon incomes), and abandonment of all pretense that “access to medicine for all” is actually a goal.
- A less expensive and more effective way to promote innovation and to address freeriding is to focus on the low levels of public sector funding for biomedical research in many countries. Switzerland, for example, is getting rich off its policy of letting the NIH finance much of the R&D it licenses from universities and other NIH grant recipients, while providing very little government funding for biomedical R&D itself.
- The U.S. government should support rather than oppose new global norms that would require our trading partners to match the R&D subsidies that the NIH and other federal agencies provide, as well as the U.S. government-funded Orphan Drug Tax Credit. This is a way to address cross-border contributions to R&D without killing people.
We have watched several shifts in policies over the years in regards to foreign drug prices. The most constant has been the steady collaboration between the U.S. Congress and the Executive Branch to impose policies on foreign countries designed to raise drug prices, something that takes place year in and year out. There have been a few notable exceptions to the pro-pharma and anti-patient drift of policy, including decisions from 1999 to 2000 by President Clinton on HIV drug patents in sub-Saharan Africa (following considerable outside pressure from HIV activists), the 2001 Doha Declaration on the TRIPS Agreement and Public Health, and the 2007 new trade policy adopted by President Bush which relaxed trade pressures on some issues. The Obama Administration worked very closely with big pharma in ways too numerous to mention here, including involvement by Vice President Joe Biden among others, and the Trump Administration has taken a hard pro-pharma line on issues, almost immediately.
The whole state of affairs is appalling, given what is known about the human suffering associated with high and abusive drug prices, and the U.S. government’s continued opposition to work on an R&D agreement in the World Health Organization or other fora, and its opposition to work on the delinkage of R&D incentives from drug prices, measures that would, if embraced, provide for a more promising future where innovation, access, affordability and fairness would all be feasible.”
A PDF of this statement is available here.
Links to USTR Special 301 Reports
See: https://www.keionline.org/ustr/special301
Links to NTE reports
Several available via: https://catalog.hathitrust.org/Record/002061620
Obama Administration:
https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2016/2016-national-trade-estimate
https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2015/2015-national-trade-estimate
https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2014-NTE-Report
https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2009/2009-national-trade-estimate-report-foreign-trad
Bush Administration:
https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/archives/2008/2008-national-trade-estimate-report-fo-0
https://ustr.gov/archive/Document_Library/Reports_Publications/2005/2005_NTE_Report/Section_Index.html
https://ustr.gov/archive/Document_Library/Reports_Publications/2002/2002_NTE_Report/Section_Index.html
https://ustr.gov/archive/Document_Library/Reports_Publications/2001/2001_NTE_Report/Section_Index.html
Clinton Administration:
https://ustr.gov/archive/Document_Library/Reports_Publications/1995/1995_National_Trade_Estimate/1995_National_Trade_Estimate_Report_on_Foreign_Barriers-Acknowledgements.html