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White House said to be frustrating drug companies in Asia trade talks

By Doug Palmer

WASHINGTON (Reuters) - The Obama administration's reluctance to push for 12 years of data protection on "biologic" medicines in free-trade talks is a growing concern for U.S. drug manufacturers who employ about 4 million Americans, an industry official said.

"The biggest challenge we're facing right now is the White House," Harrison Cook, a vice president at Eli Lilly, told Reuters in an interview on his company's goals for the TransPacific Partnership (TPP), a proposed regional free trade agreement covering 11 countries in the Asia-Pacific.

"The White House, for whatever reason, is pursuing a trade policy that (potentially is at odds with) U.S. law. It is difficult to understand, given the strong support and the realization this that kind of protection is needed for the future of the industry," Cook said.

Negotiators from the United States, Canada, Mexico, Australia, New Zealand, Chile, Peru, Vietnam, Malaysia, Singapore and Brunei will meet in New Zealand in December for the 14th round of negotiations on the TPP.

Biologics are medicine made from human or animal proteins grown in living systems, such as the cancer drug Avastin.

Unlike traditional pharmaceuticals that operate largely on the basis of chemical reactions and that treat the consequences of a disease, biologics work by blocking diseases earlier in their development, the Information Technology and Innovation Foundation explained in a recent report.

President Barack Obama's healthcare reform legislation, the Affordable Care Act, provides 12 years of data protection for biologics, in line what many experts say is needed to recoup the average $1.2 billion cost of developing the drugs.

But in annual budgets, the Obama White House has proposed lowering the period of data exclusivity to seven years to encourage faster development of generic versions of the drugs and to save billions in Medicare and Medicaid costs.

In August, a bipartisan group of governors including Republican Chris Christie of New Jersey and Democrat Deval Patrick of Massachusetts pressed Obama in a letter to push for 12 years of biologics data protection in the TPP. Many pharmaceutical companies are based in those two states.

VITAL PROTECTION

The protection is vital for 901 biotechnology medicines and vaccines under development, the governors said.

But after 30 months of talks on the TPP, the United States still does not have a formal position on the number of years of data protection it wants for biologics in the agreement.

"Discussions on issues relating to biologics are continuing because we want to get the substance right," a spokeswoman for the U.S. Trade Representative's office said.

The United States wants to learn more about how other TPP countries "address the issue of biologics and biosimilars before proposing any specific provisions," she said.

The issue is a concern for Lilly because about 70 percent of new products it has under development are biologics.

"A pharmaceutical only has value in the market if you can demonstrate to regulators that it is safe and effective. In order to prove that, you must generate a great deal of costly clinical and pre-clinical data," Cook said.

If generic manufacturers get early access to the data, "We're never going to gain that investment back and be able to discover the next medicine," Cook said.

Stephen Ezell, senior analyst with the Information Technology and Innovation Foundation, said the European Union requires 10-11 years of data protection in its trade pacts.

If the United States settles for less, growth in the industry could move to Europe, Ezell said.

(Editing by Philip Barbara)

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