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The TTIP Prescription: Expanding Trade Can Speed The Flow Of New Medicines

This article is more than 9 years old.

With all the bad news around the world this summer, little attention has been given to one very positive story – important ongoing progress to expand trade across the Atlantic and Pacific.

In early September, the most recent round of negotiations on the Trans-Pacific Partnership (TPP) – which I’ve previously discussed in this space – were held in Hanoi.

And in coming weeks, the United States and the European Union will meet again, this time in Washington, for talks on the Transatlantic Trade and Investment Partnership (TTIP).

Negotiating a trade agreement is a long, complicated, arduous process – the upcoming TTIP talks represent the seventh round of negotiations, and the Hanoi TPP talks were the 21st round. I can’t cover all the issues in this space, but I want to offer a brief look at some real-world impacts of trade policy – and, in particular, TTIP – on the development of new medicines.

It helps to think of discovery and development of new medicines as a liquid flowing through a pipeline. The volume of what emerges, and the speed at which it arrives, has to do with the size of the pipeline and the amount of friction or blockages inside of it.

Freer trade can enlarge and smooth out the pipeline.

It starts with the resources necessary for investment in R&D, and in health care itself—driven first and foremost by economic growth. At present, the simple fact is that economies on both sides of the Atlantic need to create jobs and growth – enlarging the pipeline – and freer trade is a great way to do that. In fact, trade has played a key role in the dramatic increase in incomes we’ve seen in recent decades in countries around the globe.

On top of cutting tariffs across all sectors, the EU and the U.S. want to tackle barriers behind the customs border that can cost unnecessary time and money for companies who want to sell their products in both markets. Specifically, there are three areas where TTIP can be a prescription for reducing friction in the drug development pipeline: regulatory harmonization, intellectual property protection and enforcement, and market access.

Regulatory harmonization: There is much that we could do through TTIP to reduce duplication and align practices between the European Medicines Agency and the U.S. Food and Drug Administration.

Lilly recently made a decision to advance a new molecule into Phase 3 development – the final stage of large clinical trials which represents hundreds of millions of dollars. We estimate that up to 20 percent of that investment is to satisfy differing regulatory requirements between the FDA or EMA. This represents a de-facto tax on innovation.

For example, the two agencies conduct plant inspections of our facilities on a regular basis to ensure good manufacturing practices (GMP). These inspections are time-consuming and expensive – and often redundant – and they could be reduced if regulators would agree to mutually recognize each other’s findings.

We estimate that each GMP inspection of one of our plants costs in excess of $125,000. Across all of our European and American sites, what we spend on duplicative FDA and EMA inspections is a significant and unnecessary financial burden that adds to the cost of bringing new medicines to patients.

And it’s not just us. Overlapping GMP inspections by EMA and FDA cost all companies millions of dollars each year. Mutual recognition could cut inspections by 40 percent – freeing up resources for inspections in priority countries like India or China.

There are many other examples –in clinical trials and manufacturing certification – where regulators working together could serve to reduce costs and speed development time without compromising safety.

Some argue that harmonizing regulation through TTIP will open up a “race to the bottom.” We are seeking an agreement to set high global standards. Lower standards for approval of medicines are not in anyone’s best interest and are not going to happen – with or without this agreement. Our priorities are to reduce duplication and to increase predictability.

Intellectual property protection: The U.S. and EU lead the world in biopharmaceuticals, but the global environment is very competitive. Our industry depends on strong, enforceable patents to secure investment for the time-consuming and expensive R&D process.

While both the U.S. and EU have high IP standards, those standards are different in a number of areas. And the evolving EU system for patent enforcement remains time-consuming and expensive. A unified approach to IP would take out some of the twists and turns in the drug development pipeline for innovators on both sides of the Atlantic.

Perhaps most importantly, the EU and U.S. need to work together on IP challenges in other countries where inconsistent standards and arbitrary enforcement threaten investment and growth prospects. TTIP provides an opportunity to enshrine the highest IP standards for future trade agreements in other parts of the world – while cutting time and lowering cost.

Market access: It costs more than a billion dollars to bring a medicine to market today. An effective new medicine stands a chance of recouping that investment – but only if it can gain market access, along with reimbursement that corresponds to its value.

TTIP is a great chance to ensure that the process for reimbursing medicines throughout the EU is clear, predictable and transparent. Of course, health care market access and reimbursement remain in the purview of the EU member states. But TTIP could establish an important benchmark. Industry recommends a “pharmaceuticals annex” to TTIP – similar to the one included in both the US and EU trade agreements with Korea – establishing principles for reimbursement that reward innovation and creating more equal access to new medicines for patients across Europe.

Certainly the biopharmaceuticals industry would benefit from a TTIP focused on these areas. But so would its hundreds of thousands of employees and suppliers in the U.S. and EU. So would the cities and regions in which it operates. As would the universities, research hospitals, and other partners with whom it collaborates.

And – most importantly – patients would benefit if the pipeline of new medicines flows more rapidly with a higher volume of treatments that meet the needs of people in America, Europe, and around the world.

English: EU and free trade agreements countries (Photo credit: Wikipedia)