Dec 10, 2019

Trump's fine with ditching USMCA prescription drug provision

House Minority Leader Kevin McCarthy (R-Ca.) was among the lawmakers who watched Game 5 of the World Series with President Trump in October. (Photo: Toni L. Sandys/The Washington Post via Getty Images)

As they took in Game 5 of the World Series together, President Trump told House Minority Leader Kevin McCarthy he doesn't want to fight for the most prominent prescription drug component of the administration's trade pact with Mexico and Canada — despite it being a key priority for Republicans.

Why it matters: The biologics provision has been one of the final sticking points keeping the USMCA from finalization, with Democrats fighting for it to be removed or watered down. But McCarthy has known for more than a month that Trump probably won't go to bat to keep it.

Where it stands: The announcement of a deal acceptable to House Democrats appears imminent, with Politico reporting last night that U.S. Trade Representative Robert Lighthizer is traveling to Mexico today to sign a revised version of the pact.

  • The details of the deal hadn’t been released as of Monday night.

Details: Trump and McCarthy (R-Ca.) discussed the USMCA at the World Series game that they attended on Oct. 27, according to three sources familiar with the conversation, including a source in the room.

  • McCarthy told Trump they didn't need to alter the biologics provision of the trade deal for Democrats to eventually agree to finalize it because House Speaker Nancy Pelosi needed to pass the trade deal to show Democrats could get things done amid impeachment.
  • In other words, the White House had enough political leverage to not cave to Democrats' demands.
  • The original provision would have given biologics 10 years of market exclusivity in each country.

But Trump told McCarthy he had no interest in keeping the provision.

  • Trump instead talked about how he wants lower drug prices, and doesn't want the argument out there that he did anything that made them higher.
  • "His number one goal is he wants drug prices lower, he wants no hurdles out there…from his point of view, just don't have it in there, period," said a source who was at the baseball game with the president. "Why even argue over it? It's better…just not having it in there."

Between the lines: Republicans and their supporters in the pharmaceutical industry have long pushed for prescription drug protections to be included in trade deals. It was one of the main clashes between the GOP and then-President Obama over the Trans-Pacific Partnership — the defunct trade deal among Pacific Rim countries.

  • Republicans argue that it helps drugmakers reap financial benefits from research and development, thus incentivizing innovation, and spreads the burden of financing this innovation among other countries.

Trump has indicated he is more interested in lowering prices than in rewarding drugmakers.

  • "The president's concern is and always has been the high cost of medicine, so his primary concern is finding ways to drive down those costs," said a former senior administration official still in contact with key decision-makers on the trade deal.
  • "If it came to the president and the president alone, if one provision stood in the way of a larger package that would be, in his opinion, a boon to the U.S. economy...he'd be inclined to lose that provision and not lose the larger deal," the source added.

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