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Impact of the Trans-Pacific Partnership on the Healthcare Industry

November 30, 2016
Recently, President-Elect Trump announced that he would end the USA’s involvement in the Trans-Pacific Partnership. This could have effects on a number of industries, including healthcare. Join PPISG in examining how the TPP affects different aspects of the health industry.

The Trans-Pacific Partnership is a controversial trade agreement which has yet to be ratified by the United States. This partnership is a multifaceted agreement between twelve countries along the Pacific Ocean, including the US, Mexico, Canada, Australia, Japan, and, notably, not China. This trade deal has become heavily politicized, in part due to the rhetoric of the 2016 US Presidential candidates, Hillary Clinton, and Donald Trump, both of whom have agreed not to pass the TPP.

The leaders of the states in the Trans-Pacific Partnership. Photo Credit: Wikipedia

The Trans-Pacific Partnership has many advantages for the United States, including boosts to trade, lessening of tariffs, and strengthening of US patent laws. The TPP implements many measures which help keep countries accountable for the environment, as well as for labor rights. However, there is also a great deal of criticism regarding the deal, with concerns about US industry moving overseas, as well as concerns about online privacy. One major industry which would greatly benefit from the TPP would be the pharmaceutical and biotech industries.

The TPP would open new markets for US exports such as pharmaceutical products and therapies. This agreement protects pharmaceutical patents more than any other previous trade deal. Largely, regulations would not change much for the US, but the change comes from the US exporting its intellectual property legislation to other countries. Pharma companies must be able to request extensions for new uses of old drugs, and if these companies feel that their rights are being violated, they can take the nation to court. Currently, US companies already have this right in some countries, due to current trade agreements, including NAFTA. This has been utilized several times, including recently by Eli Lilly and Company in 2012 to sue the Canadian government for $100 million for invalidating one of their patents.

This would allow US pharmaceutical companies to have far more power and influence over other countries affected by the TPP, and would likely have widespread economic benefits for the healthcare industry. China is the second largest pharma market next to the United States, and currently dominates the Asian market. The TPP makes it easier for US companies and healthcare products to break into this market, due to decreased tariffs and streamlining of regulations among countries.

Many US Congressmen, including Sen. Bernie Sanders (I), have raised concerns about the affordability of these medicines in developing countries such as Vietnam. The strengthening of US intellectual property laws abroad means that the TPP would allow companies to increase costs and barriers so that developing nations would be less able to purchase and distribute these medicines. The TPP could delay companies creating ‘generics’, or chemically identical medicines which are far cheaper and more accessible to the public.

There are additionally many public health concerns that go along with the ability for companies to sue foreign governments. This could potentially give multinational corporations the opportunity to challenge foreign governments on their laws to prevent domestic toxicity and cigarette labelling, and the ability to sue these governments for their “expected future profits” had these laws not be put in place.

Ultimately, the TPP has several pros for big pharma corporations, but with significant drawbacks. Not only does the agreement open up large new markets for pharmaceutical industries, it also protects their parents and allows them to request extensions of old drugs. However, this comes at the cost of the developing nations themselves, who may face significant economic barriers and loss of governmental control over certain health laws.

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  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

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