The TPP and the Dire Threat to Affordable Drug Prices

Part of the Series

Fighting for Our Lives: The Movement for Medicare for All

Drug prices in the US are already approaching a crisis point for many patients unable to afford their prices, often despite being insured. These examples indicate how serious this problem has become:

• The use of prescription drugs by Americans, partly driven by direct-to-consumer advertising since the 1990s, has reached an all-time high.

• Many people take five or more medications, especially those with chronic conditions.

• Under the catastrophic drug coverage plan enacted in 2003, the Medicare Part D program, beneficiaries pay just 5 percent of the bill when their drug costs pass $4,850; insurers pay 15 percent of the remainder, with taxpayers paying 80 percent, thereby incenting drug companies to drive their prices sky-high.

• Yearly out-of-pocket costs and expenses for cancer drugs often amount to one-half the average annual household income, and many cancer patients are forced to reduce the frequency of their prescribed drugs and cut their spending on food and clothing to get by.

• The cost of Gleevec, a 15-year old pill for leukemia, averaged $10,893 per month in 2014, four times its initial price.

• According to the Milliman Medical Index, the cost of prescription drugs for a typical family of four covered by an average employer-sponsored preferred provider organization (PPO) in 2016 came to $4,270, about four times higher than in 2001.

• The US Department of Health and Human Services projects that total drug spending will reach $535 billion in 2018, almost 17 percent of all health care spending.

• Between May 2015 and May 2016, prices received by drug makers rose by nearly 10 percent, the second highest increase among the 20 largest components in the Producer Price Index, despite pushback from insurers, scrutiny by US lawmakers, and growing public concerns about drug costs.

Now enter the Trans-Pacific Partnership (TPP), a massive, pro-corporate “free trade” agreement negotiated mostly in secret by large corporate players in the world economy. It was negotiated over seven years in closed-door sessions excluding the press, policy makers, and the public. Its 30 chapters were released in November 2015, with most chapters granting specific new rights and powers for corporations. As a regional trade agreement, it includes 12 countries — the US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam — all of which signed the document “in principle” earlier this year. None have yet ratified it.

If ratified, this is what the TPP would do:

• Require every signatory nation to grant a new 20-year monopoly for new uses of old medicines.

• Provide other options for patent extensions, or “ever greening.”

• Give companies marketing exclusivity protections that create monopoly even when a drug is off-patent.

• Provide drug companies with greater opportunities to influence government drug coverage and reimbursement policies.

• Lock in rules that would limit competition and contribute to preventable suffering and death.

In effect, the TPP would give drug companies wide latitude to jack up prices and costs of medications with their expanded monopoly rights and keep lower cost generics off the market. Its rules could not be altered without consensus by all signatories to the agreement. Moreover, even in countries such as Canada and Australia, where the pharmaceutical sector and drug prices are regulated by the government, the TPP could have profound effects on the criteria these countries use in decisions about drug safety and effectiveness, the approval process, listing of drugs on public formularies, post-market surveillance and inspection, and the future pricing of drugs.

We have an epidemic of prescription drug use with harms not just to affordability of necessary care but also to patient safety. As the drug industry rolls on with its advertising and lobbying campaign for increased revenues for its CEOs and shareholders, adverse drug reactions have become the fourth leading cause of death in the United States, killing more than 2,400 people every week. Dr. Donald Light, professor of comparative health care at the University of Medicine and Dentistry of New Jersey, sums up the problem this way:

Flooding the market with hundreds of minor variations on existing drugs and technically innovative but clinically inconsequential new drugs, appears to be the de facto hidden business model of drug companies. In spite of its primary charge to protect the public, the FDA criteria for approval encourage that business model … The clear conflict of interest and approving so many new drugs with few clinical benefits serve corporate interests more than public interests, especially given the large risks of serious harm.

The TPP will make all this even worse. If ratified in this country, as it could be in a lame duck Congress after the November elections, the TPP would drive drug prices in the US even higher than they now are, limit competition further, and prevent the government from negotiating drug prices, as the Veterans Administration has done for many years, successfully gaining discounts of about 42 percent. The drug industry’s trade and lobbying group, PhRMA, would be the main beneficiary of TPP policies, all at patients’ and taxpayers’ expense:

The current political landscape regarding the TPP raises worrisome concerns. It has had the support of most Republicans and many Democrats, including Hillary Clinton until she recently changed her position. President Obama has been pushing for its passage as part of his legacy. PhRMA is lobbying heavily for its enactment, including $238 million in 2015 and campaign contributions of some $50 million in this last year.

There are some bright spots that give us hope that the TPP can be defeated and that an expanded role by government can alleviate this crisis in drug costs and prices. Since the TPP will also ship more jobs overseas to lower-cost labor markets, push down U. S. wages and increase income inequality, a growing number of organizations have joined together to oppose it, including labor unions, consumer, senior, health, human rights, and civil rights organizations. According to a recent AARP survey, 81 percent of respondents over age 50 think that drug prices are too high and 90 percent want politicians to do something about it. Proposals have been made in at least 10 states demanding transparency in drug pricing, while California has Prop 61 on the November ballot, which would block state agencies from paying more than the prices negotiated by the VA for prescription drugs. The American Medical Association and the American Association of Health-System Pharmacists have joined together in calling for a ban on direct-to-consumer drug advertising.

TPP is a danger to this country. It would only serve corporate masters, and must be defeated.