The Healthcare Battle You Don’t Know About

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While the very public battle over healthcare policy rages in Washington, teams of international negotiators in countries around the world are deciding a critical but much less well-known issue. The United States is leading an effort to build a free trade pact around the Pacific Rim, including Japan, Canada, Chile, and Australia, that represents over 40 percent of global trade. Wrapped up in these negotiations for the Trans-Pacific Partnership (TPP) is the issue of whether these countries will be able to free-ride on American innovation. We have a vested interest in ensuring they cannot.

The healthcare industry is a prime example of how failing to protect intellectual property in the TPP not only affects the U.S. economy, but would also have a lasting impact on patient health. The U.S. healthcare sector is the most innovative in the world, working every day to achieve breakthroughs to improve our quality of life. Some of the most cutting-edge technology is in biologic medicines – using biotechnology to improve human health. The advances we’ve made in this field led MIT researchers to believe it could usher in a revolution across scientific and engineering technology. These are the types of advancements that hold the promise of solving critical global issues like disease, hunger, and even energy.

These advancements, however, don’t come cheap. For medicines, it costs over a billion dollars to take an idea through research, clinical trials, and government approval before patients can reap the benefits. U.S. law is written to give innovators a fair opportunity to profit from the breakthroughs they achieve, through patent protection and confidentiality of clinical trial data. Our laws also provide streamlined processes for competitors to enter the market in a reasonable amount of time.

This balanced approach promotes innovation and competition, and brings new health solutions to consumers. It also promotes higher education. Many universities engage in research and then license their inventions to companies that bring the products to the marketplace. The Association of University Technology Managers estimates that schools received over $2.6 billion in licensing fees in 2012 alone, much of that coming from innovation in the pharmaceutical and biologic field.

Desiring to maintain this successful formula in our dealings abroad, Congress has instructed the Administration to seek standards in the TPP that are on par with U.S. law, and the Administration has committed to do so. But some see an opportunity for other countries to benefit from our ingenuity on the cheap. They are opposing the protections found in U.S. law and trying to force U.S. negotiators to accept lesser protections for our creativity, ingenuity, and what is often a decade or more of hard work.

At the core of this debate is a provision of U.S. law that protects confidential clinical data for biologics for 12 years. This was enacted with rare bipartisan support in Congress and is supported by research that found it takes between 12.9 and 16.2 years for innovators and their investors to cover the tremendous costs of bringing these products to consumers. This was paired with provisions to facilitate competitors entering the market after protection ends. In addition to promoting innovation and competition, the nonpartisan Congressional Budget Office found that this approach would decrease spending on biologics by a staggering $25 billion and reduce government spending by almost $7 billion, over ten years.

Countries that may seek to avoid U.S.-level standards are not only giving American innovators short shrift, they are engaging in self-defeating protectionism. Failure to provide an environment in which innovators can thrive may sustain an economy of imitators, but it hinders the development of homegrown innovation. In essence, they would be selling off their chances for future prosperity to bolster copycat industries today. That may be a tempting choice in a struggling economy, but it is not a wise long-term strategy. In addition, in an era of an aging American population, where diseases like Parkinson’s and Alzheimer’s are threatening an entire generation of our citizens, now is the time to encourage more innovation, not less.

In the United States, our innovative and creative industries support one third of all jobs – over 40 million. And they are responsible for over two-thirds of our exports to the rest of the world. Our protections for innovators and creators have a lot to do with that success. So, it is critical that in these final months of TPP talks, U.S. negotiators strongly resist the calls to diverge from the success of the U.S. approach and hold strong for the sake of consumers, jobs, and future innovation.

 

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About the author

Steven Tepp is the President and founder of Sentinel Worldwide. He is a globally recognized expert in intellectual property law and policy. Prior to forming Sentinel Worldwide, Steve was Chief Intellectual Property Counsel for the Global Intellectual Property Center (GIPC) of the U.S. Chamber of Commerce. In that role, he provided expert legal counsel across the GIPC at the strategic and operational levels. He was also responsible for leading the GIPC’s efforts, long term and short term, foreign and domestic, to reduce trademark counterfeiting and copyright piracy, especially in the digital and online environments. He also provided legal counsel to the broader U.S. Chamber of Commerce, including collaborating on amicus briefs to the Supreme Court on cutting-edge patent issues. Previously, Steve served as senior counsel for Policy and International Affairs at the U.S. Copyright Office, where he negotiated numerous free trade agreements and played a major role in drafting and negotiating the Anti-Counterfeiting Trade Agreement. He had principal responsibility for all copyright matters in the Asia-Pacific and Latin America regions and litigated the U.S.-China IPR dispute before the World Trade Organization. He also worked on domestic legislative matters and litigated many federal court cases. Steve co-authored the Copyright Office’s Digital Millennium Copyright Act Section 104 Report to Congress (2001), as well as its 2003 and 2006 Section 1201 Rulemakings. Earlier in his career, Steve was an attorney for the U.S. Senate Judiciary Committee on the staff of the chairman, Sen. Orrin Hatch (R-UT), where he specialized in intellectual property and was the lead Senate staffer handling the American Inventor Protection Act of 1999. Collectively, he has been in or around every copyright-related matter before the U.S. Congress since the mid-1990s. Steve taught copyright law at the Georgetown University Law Center and the George Mason University Law School. He is a graduate of American University’s Washington College of Law and received his undergraduate degree from Colgate University.