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November 12, 2019

Congressman Brindisi and Congresswoman Rice’s Wrong Stance on USMCA (NAFTA 2) Trade Agreement

A letter from 11 Democrats, including two from New York, expresses support for a drug patent provision in the NAFTA update that most of their caucus opposes.

House Speaker Nancy Pelosi had been wavering in recent weeks, repeatedly stating that her caucus was “on a path to yes” in negotiations on the deal with U.S. trade representative Robert Lighthizer. Cheri Bustos (D-IL), the head of the Democratic Congressional Campaign Committee (DCCC), has been pressuring leadership to hold a vote on USMCA, arguing that it’s needed for swing-seat Democrats to show their ability to work with Republicans. Bustos has reportedly talked up the agreement at corporate fundraisers, saying that unions and progressives “will have to get over it.”

More brazenly, at the same time that a Democratic working group is negotiating with Lighthizer, members from the Blue Dog and New Democrat coalitions have written directly to the U.S. trade representative, asking him to preserve a key sticking point in the deal.

The letter, which has not been previously reported, encourages Lighthizer to keep the pharmaceutical exclusivity provisions in USMCA. Several of those on the letter are the kind of first-term frontline members that Bustos wants to protect. More than simply wanting to pass USMCA as a political show of “getting things done,” the letter reveals that these conservative Democrats actively want to export to Mexico and Canada the broken monopoly patent system that has generated such high drug prices in America.

Two representatives from New York State  Representative Anthony Brindisi (D-NY), who is a chair of the Blue Dog Coalition, took the lead in authoring the letter. Ten other members have signed on, all of them from the right flank of the caucus. Six of them belong to both the Blue Dogs and the New Dems: Lou Correa (D-CA), Henry Cuellar (D-TX), Joe Cunningham (D-SC), Josh Gottheimer (D-NJ), Kendra Horn (D-OK), and Ben McAdams (D-UT). Jeff Van Drew (D-NJ ) is a Blue Dog, while Al Lawson (D-FL), Scott Peters (D-CA), and Kathleen Rice (D-NY) are New Dems. Cunningham, Horn, McAdams, and Van Drew are freshmen.

Six of these members (Peters, Brindisi, Horn, Cunningham, McAdams, and Correa) previously signed a letter supporting bringing USMCA to the floor this year. But this effort specifically takes a stance on the drug provisions opposed by most of their fellow House Democrats. That obviously strengthens the White House’s hand in negotiations.

While the letter begins with words of support for the working group that is attempting to resolve “outstanding concerns” with USMCA, it then goes into the pharmaceutical provisions. Currently, USMCA includes a 10-year data exclusivity period for new biologic drugs, which are complex manufactured drug therapies that come from living entities like cells or tissues. These drugs would be protected from “biosimilar” generic versions for those 10 years. The USMCA also expands the definition of a biologic, giving more drugs this exclusivity period.

Biologics happen to be the most expensive drugs on the market: Despite being 2 percent of all prescriptions, they represent 37 percent of all net consumer spending on drugs. Nearly all of the growth in net prescription drug spending since 2014 comes from biologics.

The 10-year data exclusivity period, which means that biosimilars could not be tested during this time, is actually shorter than the current 12-year period in the U.S. But Canada currently has an eight-year exclusivity law, and Mexico’s is five years. So the USMCA provision would increase patent monopoly periods throughout North America, and threaten affordability for expensive life-saving medications, particularly in Mexico. Similar protectionist provisions in a U.S. trade agreement with Chile increased unit prices for biologics in that country.

Moreover, locking in a 10-year exclusivity period in a trade agreement could pre-empt future congressional efforts to change the length of exclusivity in the United States. The other signatories to the agreement would be able to sue over violations arising from such changes in law.

In the letter, the authors write: “While we all have concerns with high drug prices, it is also clear that trade deals should not be designed to inherently undermine U.S.-based industries, but rather to raise standards abroad … we hope this provision will be used to push Canada and Mexico to shoulder their share of the burden in paying for innovation.” So Brindisi and his Blue Dog and New Democrat colleagues explicitly want to export these longer patent protections to Mexico and Canada, threatening access to drug treatments in those nations.

Most Democrats are opposed to the pharmaceutical provisions. Over 110 members wrote to Lighthizer in July requesting that the biologic provision be dumped out of the trade deal. Many first-term members in swing districts, such as Max Rose (D-NY), Jared Golden (D-ME), and Elaine Luria (D-VA), signed that letter; they clearly believe that lowering drug prices is a political win for Democrats in tight races, as well as the right policy choice.

The Brindisi letter nods to the idea that the USMCA “must not diminish Congress’s ability to enact subsequent legislation in the areas of intellectual property and pharmaceuticals.” They reference a “counter-proposal that would effectively address this concern.” That was reported by Politico last month; it would stipulate that if Congress pushed down its biologic exclusivity period to five or seven years, that would be binding on Canada and Mexico as well. While Canada and Mexico didn’t ask for biologics changes and would presumably be unconcerned with such a ratcheting down to a level closer to their current law, other countries with large pharmaceutical manufacturers, like in Europe, may not accept that as a template.

The authors even suggest that keeping the biologics component of the USMCA is critical to passing the signature Democratic drug-price legislation, H.R. 3. That bill would allow Medicare to directly negotiate prices on 25 prescription drugs per year. “Protecting the biologics data exclusivity component of USMCA in a manner that preserves our ability to legislate to lower the cost of prescription drugs without undermining American innovation is essential for the agreement’s prospects,” the letter states.

The conservative Democrats’ push to maintain the drug provisions in USMCA is occurring while a working group composed of a broad cross-section of the—Blue Dog Mike Thompson (D-CA) and New Democrat Terri Sewell (D-AL) are part of it – works with the Trump administration on the very same issues. Earl Blumenauer (D-OR) and Jan Schakowsky (D-IL) have taken the lead on the drug pricing issue. Neither responded to a request for comment. Representative Brindisi also declined to respond.

Representative Ro Khanna (D-CA), one of the more outspoken members on the issue, gave this statement to the Prospect: “Big Pharma drafted this provision of the USMCA to lock in an extra decade of their price-gouging monopolies. I stand with more than 100 of my fellow members of Congress opposing these sweetheart giveaways to the drug companies that are responsible for bankrupting countless sick Americans.”

Industry analysts suggest the votes already exist to pass USMCA out of the House, and Mexican officials have said publicly they expect approval soon. With lobbying teams plucked from Congress to defend corporate interests—including former Democratic leadership member Joe Crowley and former Senator Heidi Heitkamp, along with former officials from the U.S. trade representative’s office under President Obama—the full-court press is on. And the corporate wing of House Democrats, attempting to undermine negotiations on the drug provisions, is pitching in.

NYSARA President Responds To Congressman Brindisi and Congresswoman Rice on USMCA’s Drug Patent System

Dear Congressman Brindisi,

I write on behalf of my 500,000 members in New York and 34,000 in the 22nd  Congressional District to express our disappointment with your current stated position on the USMCA trade pact that the Trump administration is seeking to get the House to agree to. When we met with you on August 27, 2019 you were adamant that one of the major priorities for you was to lower the cost of prescription drugs and that you would do everything in your power to accomplish it. That gave us great hope as during our meeting we discussed and you agreed that a major negative component of the USMCA was the section that protects and expands prescription drug patent monopolies and therefore increase costs for seniors We were therefore disappointed that in your position as chair of the Blue Dog Coalition you authored a letter, with 10 other members including Kathleen Rice (D/4th District of New York)(29,000 NYSARA members in her District) supporting bringing USMCA to the floor this year without correcting the provisions of the negotiated bill that specifically export to Mexico and Canada the broken monopoly patent system that helped to generate such high drug prices in America.

The letter you authored encourages keeping pharmaceutical exclusivity provisions in the USMCA that allow pharmaceutical prices to have risen for seniors nearly 10 times the rate of inflation over the past 5 years which is opposed by most of your fellow house democrats. The current USMCA agreement would protect and expand the definition of biologics; the most expensive drugs manufactured which represent 2% of all prescriptions but 37% of total drug cost. This provision increases patent monopoly in North America and could pre-empt future congressional efforts to change the length of exclusivity in the United States. This delays low cost generics from reaching the market and increases prescription drug costs to American seniors who cannot afford it.

The USMCA agreement also allows Evergreening. It requires countries to grant “evergreen” patents or patent extensions for small changes in the formula, dosage or administration of a drug, regardless of whether these minor alterations improve the efficacy of the drug. This also keeps generic versions from being developed and extends corporate monopolies and increases costs.

The New York State Alliance for Retired Americans urges you to reconsider the positions you have espoused that increase prescription drug costs for seniors and all consumers and to vote against the USMCA unless the provisions mentioned are removed.

Sincerely Yours,

Barry A. Kaufmann

President, New York State Alliance for Retired AmericansCon

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