President Trump speaks on the phone with Mexican President Enrique Pena Nieto in the Oval Office. Photo: Win McNamee/Getty Images

The Trump administration's announcement of a new trade "understanding" with Mexico yesterday included a bullet point on drug patents that could have big implications for the pharmaceutical sector, but is severely lacking in detail.

Why it matters: The issue of drug companies' patent exclusivity period was a huge deal as the Trans-Pacific Partnership was being debated, and there are warning signs that the same lawmakers who took issue with the handling of biologics in that deal also are worried about this one.

  • “I’m not real happy with it," Senate Finance Chairman Orrin Hatch told me yesterday. "It’s not a long enough exclusivity. But it’s a step in the right direction. No question.”

What we know: The understanding "includes 10 years of data protection for biologic drugs and expanded scope of products eligible for protection," according to a press release from the United States Trade Representative.

  • Current U.S. law protects drug patents for 12 years, but there are currently no data exclusivity protections for biologics in NAFTA.
  • TPP included 5 years of market exclusivity, which was a huge problem for the industry because it wanted more.

Pharma's reaction: “We look forward to analyzing the final text of the agreement once completed to ensure it includes policies that protect against global free-riding, promote research and development and reward ... innovation," said a spokesperson for the Pharmaceutical Research and Manufacturers of America.

What they're saying: “We feel this is bad news for patients who are seeking more affordable biologics. It would delay biosimilar competition," said Jeff Francer, general counsel for the Association for Accessible Medicines.

  • The other side: "That’s significant movement from where [former President] Obama was," said a former GOP Hill aide who was close to the TPP debate. "It’s a big deal because it resets the norm and trade template under [President] Trump."

The bottom line: If pharma gets an expanded class of products eligible for patent exclusivity, it could be a very good deal for them — even if it is shorter than U.S. law.

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