PHM-Exch> Inside US Trade on Pharma Chapter in Trans Pacific Partnership

[Claudio Schuftan]

From: David Legge <D.Legge at latrobe.edu.au>

*From:* TPP-ALLIES [mailto:TPP-ALLIES at LISTSERVER.CITIZEN.ORG] *On Behalf Of
*Sean Flynn
**

Inside U.S. Trade - 07/15/2011

*U.S.** Circulates Draft TPP Proposal On Drug Pricing & Reimbursement *

Posted: July 14, 2011



The Office of the U.S. Trade Representative is circulating a draft proposal
among stakeholders that would impose stricter disciplines on national
pricing and reimbursement programs for pharmaceuticals in Trans-Pacific
Partnership (TPP) countries than what the United States secured in previous
trade deals with South Korea and Australia.



This is a positive development for U.S. pharmaceutical companies, which
favor TPP provisions allowing for more discipline and private-sector
involvement in national drug pricing and reimbursement programs, mainly to
allow for better access to markets that have highly regulated programs.



But civil society groups and access to medicines advocates argue that the
draft proposal would not only cause problems for access to medicines in the
developing countries that are party to the TPP talks, but would also run
counter to U.S. state-administered drug pricing and reimbursement programs
such as Medicare and Medicaid.



One notable difference between the TPP draft proposal -- which USTR has not
yet formally tabled in the talks -- and the Korea FTA has to do with
requirements that countries set reimbursement prices for drugs on
"competitive market-derived prices," sources said.



While that language is also found in the Korea FTA, the TPP draft proposal
would limit these market-derived prices to those found in the party's
territory.



This means that a national health agency would be unable to reference prices
in other countries when determining reimbursement rates, a practice known as
"reference pricing." Prices in other territories may be lower than home
market prices, and referencing them could allow for lower reimbursement
rates to companies and therefore cheaper prices for consumers.



One source noted that several U.S. states have considered using reference
pricing when determining the reimbursement rate for medicines used in
programs like Medicaid, and questioned whether this new proposal would
preclude this possibility.



U.S. drug manufacturers have long argued that the mission of the
Pharmaceutical Management Agency of New Zealand (PHARMAC) to drive down
prices comes at the expense of respect for intellectual property,
transparency to the public and patient access to better health
outcomes (*Inside
U.S. Trade*, April 29).



PHARMAC is responsible for negotiating pricing and managing reimbursement
for drugs for the country's national healthcare system.



The TPP draft proposal also differs from the Korea FTA in that it includes a
new section that would require countries to permit direct-to-consumer
marketing, which would allow drug companies to directly market their
products to consumers via the Internet. The Korea FTA did not include any
such provisions, sources said.



Most countries do not permit direct-to-consumer marketing for
pharmaceuticals, even for "on-label" uses. This means that that companies
cannot advertise their drugs to consumers even for the uses that are
approved by the country's regulatory authority.



This provision appears to go against a longstanding effort by Rep. Henry
Waxman (D-CA) to try to limit direct advertising for prescription
pharmaceuticals. Waxman has pushed a proposal that would prohibit
direct-to-consumer marketing for the first three years a drug is on the
market.

**


*The TPP draft proposal is similar to the Korea FTA in that it gives
manufacturers the ability to appeal* pricing and reimbursement decisions
through a notice and comment process when products are being included on a
national drug list and will, as a result, be available to the population at
a cheaper price.


The draft proposal would allow drug manufacturers to apply for an increase
in the reimbursement price that national agencies assign to a specific
pharmaceutical. The company could provide evidence showing the drug is more
effective and safe as evidence for why the reimbursement price should be
increased, sources said.



Under the draft, manufacturers would also be able to receive reimbursement
for other uses of the drug, also known as additional indications. If the
drug company can provide information showing that the drug can be used for a
secondary use, they may be able to apply for reimbursement for that use in
addition to the initial use the drug was approved for.




The Korea FTA contains a standalone chapter titled "pharmaceutical products
and medical devices," which covers national pricing and reimbursement
programs.
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