Daily visitors to the WCIT website (those huge numbers of you who can’t start your day without checking for the latest updates on trade policy and its impact on the Washington state economy) may have noticed something unique this past Wednesday. And no, I’m not talking about all those retweets we did from Representative Larsen’s roundtable discussion on Ex-Im Bank re-authorization (although that also happened, and here’s the picture to prove it…looks like a very serious conversation).
Rather, you may have seen a headline in our Latest News section that said “FEATURED REPORT: Wealth, Health and International Trade in the 21st Century.” That’s odd, you might have said; WCIT never features reports from other organizations, you might have thought. And right you would be. Which is why this report – which focuses on the potential impact that the Trans-Pacific Partnership regional free trade agreement could have not only on our state’s economy, but also on the health of people everywhere – is doubly worth taking note of.
As you probably remember from such past State of Trade blog posts as “You Down with TPP? (Yeah, You Know Me!),” the Trans-Pacific Partnership regional free trade agreement is a potential major economic opportunity for Washington state. In 2010, 69% or $36.8 billion of Washington goods were exported to the Asia-Pacific region, and Washington exports to the 8 TPP countries increased by 50% in 2011.
But, as with all negotiations, the devil is in the details. What actually gets agreed to in the negotiations will determine whether the TPP is good for Washington businesses or really, really, really good (that’s a technical measurement term used by Congress to rate trade agreements, by the way). And the discussion of how TPP will treat high-tech pharmaceutical drugs is a fascinating and revealing example of this point.
The recent focus of the negotiations has been the length of “data exclusivity” protection afforded to high-tech pharmaceutical drugs produced in the member countries. Data exclusivity allows innovators to sell their treatments competition-free for a preset period of time, and thus safeguards the economic incentives for firms to create new medicines.
For Washington state – with our growing life sciences and global health sectors – a robust exclusivity provision is imperative to both the “health and wealth” of our companies and our residents. Strong protection for proprietary data will ensure that our state’s pharmaceutical sector remains vibrant and continues to generate both breakthrough treatments and new economic opportunities. This is because the exclusivity applies to the highly advanced class of pharmaceuticals called “biologics,” drugs derived from living organisms. Biologics have been developed to treat a wide range of devastating diseases, including Alzheimer’s, HIV/AIDs, and various cancers.
Creating a biologic, though, is a hugely expensive undertaking. The average development process — from in-lab “eureka” moment to FDA-approved drug — costs well over a billion dollars. Patent protections are supposed to help developers make up those costs in sales, but patents aren’t sufficient for biologics because these drugs are too complex. Without sufficient data exclusivity protection, copycats can be produced that are therapeutically similar, but different enough from the original to skirt patent protections.
That would be a huge problem for Washington, where the biomedical sector supports more than 64,000 jobs and is responsible for $11.6 billion in annual state economic output. If the exclusivity period is too short, many biologics manufacturers will wind up losing money on new drugs because these knockoff biologics will flood into the market and suck away sales. And if firms can’t make money on biologics, they’ll stop creating them, which means the loss of jobs and economic growth…not to mention the loss to people’s lives who would cease to benefit from these innovations.
The resistance on the other side is for obvious reasons. Other countries want to allow their companies easier access to these potentially lucrative markets. But such is a negotiation: we get some things that we want in exchange for some things that other people want. And, for Washington state, hopefully a strong protection for data exclusivity is one of the things we get.