Ensuring TPP Doesn’t Derail Innovation

9/19/12

From e-commerce and the iPad to new medical devices and cutting edge manufacturing breakthroughs, American innovation has been on hyper drive over the last decade and has dynamically altered the ways in which we work and live in today’s modern economy. Yet, now there are questions as to whether the United States will continue to lead the world in innovation or allow other nations to reap the benefits that we have long been afforded in terms of jobs and economic growth, and key milestones to be addressed in the very near future may answer this question for us.

September 15th marked the conclusion of the 14th round of negotiations for the Trans Pacific Partnership (TPP) agreement—a multilateral free trade agreement between 11 countries that include some of the fastest growing economies in the Asia-Pacific region. Although negotiators made progress on a number of different fronts, one important issue was not addressed: the need for binding, strong intellectual property (IP) protections. If it is not given appropriate consideration, it could severely impact U.S. innovation; diminishing economic opportunities at home and our competiveness abroad. The next round of negotiations will take place in December in New Zealand.

Intangible assets such as IP comprise an ever-increasing proportion of an organization’s value. Accordingly, it is critical they protect future innovation by ensuring strong IP provisions as part of the TPP agreement. If they fail to do so, it will have long-lasting implications for a number of sectors, including the biopharmaceutical industry, at a time when mass economic uncertainty and regulatory challenges are threatening much-needed medical innovation and high-quality, high-wage jobs here at home.

The final TPP language, if constructed in the right way, would help usher in a new era of American-innovation-fueled economic growth and domestic job opportunities, as well as serving as a catalyst to fight and cure today’s most challenging diseases on behalf of patients across the globe. Failure to achieve this objective could have the opposite effect. Whether or not we are able to facilitate increased innovation to expedite the former largely depends on the scope of the IP provisions that are negotiated as part of the TPP.

Strong IP protections that are enforceable and reflect U.S. law must be in the final language of the agreement because they are vital for the U.S. to remain the world’s leader in innovation and new technologies. For the biopharmaceutical industry, in particular, a critical IP issue involves a newer and extremely promising class of drugs called biologics, complex medicines that are produced using living cells, nucleic acids and proteins. One of the pending issues facing negotiators is establishing a period of regulatory data protection before a competing firm may rely on an innovative manufacturer’s scientific data to develop and seek marketing approval of what many mistakenly call a generic version of the biologic.

Given the high costs of capital for startup and emerging biotech companies and the massive costs associated with building specialized manufacturing facilities for biologics, it stands to reason that an appropriate length of IP protection, in this case data protection, is both reasonable and necessary.

Congress agrees. As policymakers debated the Affordable Care Act, data protection was vigorously and thoroughly discussed, and Congress enacted the current U.S. law of 12 years biologics data protection in a bipartisan vote.

Shorter regulatory data protection periods could constrict the flow of domestic research dollars into new biologic drug development, as innovating companies and venture capital shift investments into friendlier markets. But even worse for the U.S. economy is the potential loss of jobs that could ensue as the best scientists conduct their groundbreaking research overseas. And it’s not just the R&D jobs that may suffer. Derailing the flow of innovation and stifling the new drug pipeline for biologics could also mean fewer facilities for research and manufacturing being built in the United States, resulting in a loss of high-paying construction and other good jobs that the labor market has come to depend upon.

The TPP has the potential to open new markets for the U.S. economy, spurring the innovation that will be needed to advance the field of biomedicine well into the 21st century and sustaining and generating valuable jobs here in the U.S. However, this will only happen if our foreign counterparts are playing by the same rules. The best way to safeguard this is to secure the strongest protections for American innovation by establishing an agreement that adheres to the laws already on our books.

Anything less will shortchange medical innovation R&D enterprises and nearly all other sectors of our economy, at a time when we need to be doing more to support them, their research, their employees and the countless U.S. communities they call home.

Chester “Chip” Davis, Jr. currently serves as Executive Vice President for Advocacy at PhRMA. 3 Follow @

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