May 3, 2019 - Economy

U.S. trade deals have had mixed results for pharmaceuticals

American consumers may not have benefited all that much from the pharmaceutical components of trade deals, a new article in the New England Journal of Medicine argues.

The big picture: Starting with NAFTA, every U.S. trade agreement made since has included a pharmaceutical component.

Details: The article's authors — the Council on Foreign Relation's Thomas Bollyky and Brigham & Women's Hospital's Aaron Kesselheim — write that the inclusion of these provisions has had "a mixed record in delivering on its goals."

  • The Trump administration's NAFTA replacement — the USMCA — gives biologics 10 years of market exclusivity, a huge industry win.

By the numbers: The pharmaceutical trade deficit has swelled to $52 billion, and the number of Americans employed by the drug industry hasn't changed much since 2001.

  • The Food and Drug Administration estimates that we import 80% of active drug ingredients and 40% of finished drugs, and drug companies have increasingly shifted patents and manufacturing abroad to avoid paying U.S. taxes.
  • While our pharma industry is very profitable, we're also spending more for their brand products, while other countries are still paying less than us for drugs.

The bottom line: "Americans and their representatives are ignoring history if they expect the inclusion in the USMCA of longer exclusivity for biologics to redress the U.S. trade deficit, loss of manufacturing jobs, and high prescription-drug prices," the authors conclude.

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