950 F STREET, NW • SUITE 300 • WASHINGTON, DC 20004 • 202-835-3420 • PhRMA.org

January 15, 2019
SUBMITTED ELECTRONICALLY
Mr. Edward Gresser
Chair of the Trade Policy Staff Committee
Office of the U.S. Trade Representative
600 17th Street, N.W.
Washington, DC 20508
Re:

PUBLIC DOCUMENT
USTR-2018-0036

Request for Comments on Negotiating Objectives for a U.S.-UK Trade Agreement,
83 Fed. Reg. 57,790 (November 16, 2018)

Dear Mr. Gresser:
The Pharmaceutical Research and Manufacturers of America (PhRMA) appreciates this
opportunity to provide the following comments in response to the notice of public hearing and
request for comments and indicate our interest in testifying at the hearing scheduled for January
29. A summary of the testimony to be given at the hearing is attached. As a general matter,
PhRMA and its members strongly support the negotiation of a high-standard trade agreement
between the United States and the United Kingdom (UK). PhRMA welcomes the expansion of
this significant trading relationship that already contributes to strong economic dynamism and
job creation on both sides of the Atlantic. The proposed agreement would provide an important
opportunity for the two sides to demonstrate international economic leadership and a steadfast
commitment to free trade, as well as to establish minimum benchmark standards that the United
States and the UK should seek vis-à-vis each other and in all future trade agreements.
PhRMA member companies are devoted to inventing, manufacturing, and distributing valuable
medicines that enable people to live longer, healthier, and more productive lives. The U.S.
biopharmaceutical industry is the world leader in medical research – producing more than half
the world’s new molecules in the last decade. As a key component of America’s high-tech
economy, the research-based biopharmaceutical sector supports nearly 4.7 million jobs across
the economy, including more than 800,000 direct jobs, and contributes nearly $1.3 trillion in
economic output on an annual basis when direct, indirect, and induced effects are considered. 1
Our sector also continues to be one of the most research-intensive in America, annually investing
an estimated $90 billion in researching and developing new medicines. 2 Innovators in this
critical sector depend on strong regulatory systems, robust intellectual property (IP) protections
and enforcement, and fair and transparent access to overseas markets through the operation of
competitive markets or the adoption or maintenance of procedures that appropriately recognize
1

TEConomy Partners; for PhRMA. The Economic Impact of the U.S. Biopharmaceutical Industry. Columbus, OH:
TEConomy Partners; July 2017.
2
Research!America, U.S. Investments in Medical and Health Research and Development, 2013-2016, Arlington,
VA, Fall 2017, available at https://www.researchamerica.org/sites/default/files/RA-2017_InvestmentReport.pdf (last
visited Jan. 15, 2019).

 the value of innovative medicines. With the right policies and incentives in place at home and
abroad, our member companies can continue to bring valuable new medicines to patients,
contribute meaningfully to the American economy, and reinforce our unparalleled contributions
to global innovation.
In 2017, the biopharmaceutical industry exported more than $55.8 billion in biopharmaceuticals,
making the sector one of the top U.S. exporters among IP-intensive industries. The UK is a
critical destination for U.S. biopharmaceutical exports, representing the seventh largest export
market for biopharmaceuticals in 2017, with exports to the UK valued at over $3.6 billion. 3 At
the same time, the United States imported over $5.5 billion of biopharmaceuticals from the UK
in 2017, 4 indicative of the significant need to negotiate a free and fair trade agreement that
eliminates non-tariff barriers and fosters greater exports to this important market.
Negotiations between the U.S. and the UK to enhance the trade relationship between these
partners should be as comprehensive and ambitious as possible, recognizing that the current
scope of the trade agreement remains uncertain pending the ongoing Brexit negotiations. The
United States and the UK are home to some of the most innovative biopharmaceutical companies
in the world, such that the further reduction of non-tariff barriers in both markets will spur future
and critical innovation. In addition to enhancing the partnership between the UK and the U.S.,
efforts should be made to ensure alignment in engagement with other countries, including
through the development of common understandings and, where appropriate and relevant, joint
approaches between the U.S. and the UK on key issues. Such alignment ultimately would allow
for compatible pharmaceutical regulatory and policy standards and access to innovative
medicines throughout the world.
With specific regard to the biopharmaceutical industry, PhRMA recommends that the
negotiations address several issues concerning (1) market access, (2) IP protection and
enforcement, and (3) regulatory compatibility. The recently concluded U.S.-Mexico-Canada
Agreement (USMCA) provides a very strong base from which to negotiate a trade agreement
with the UK. Addressing the UK’s trade impediments (discussed further below and in PhRMA’s
most recent comments on the National Trade Estimate Report) – including through the
establishment of rules to ensure that the UK appropriately values and protects innovation –
would facilitate greater access for U.S. biopharmaceutical exports in this market.
I.

Building on Common Ground to Ensure Transparency, Due Process, and
Appropriate Recognition of Value in Pricing and Reimbursing Pharmaceuticals

Pharmaceuticals face unique market access challenges. In particular, in most markets, market
access for pharmaceuticals is dependent on manufacturers not only meeting strict regulatory
approval standards, but also obtaining positive government pricing and reimbursement
determinations. Due to long-standing market access barriers such as rigid health technology
assessments (HTA), government price controls, insufficient health care budgets, and
increasingly punitive and proactive national procurement initiatives and local barriers to
3

See PhRMA analysis of data from U.S. Department of Commerce, International Trade Administration (ITA),
http://tse.export.gov/tse/tsehome.aspx (accessed Dec. 27, 2018).
4
Id.

2

 uptake, the ability of UK patients to access the latest, innovative medicines can be difficult.
Recognizing these types of challenges in other countries, the United States has included
specific pharmaceuticals (and medical devices) chapters in its recent FTAs (see, e.g., USMCA
and the United States-South Korea Free Trade Agreement (KORUS)) to ensure that regulatory
procedures and decisions regarding the pricing and reimbursement of medicines (including
health technology assessments or other medical assessments of the clinical effectiveness of a
pharmaceutical, demand-size measures, and “clawback” mechanisms) are governed by
transparent and verifiable rules guided by science-based decision making.
These chapters also have recognized that there should be meaningful opportunities for input
from manufacturers and other stakeholders to health authorities and other regulatory agencies,
both in the development and the specific implementation of all relevant laws, regulations, and
procedures. Applications should be processed within a reasonable, specific period. If an
application is deemed inadequate, then the applicant should be advised concerning what
additional information is required to resume the application review process in a timely manner.
Furthermore, if an application is denied, then the applicant should be provided the right of
appeal to an independent and objective court or administrative body.
The pharmaceuticals chapters also have afforded a compelling opportunity to recognize the value
that pharmaceuticals can play in reducing other costlier medical expenditures and improving the
lives of patients. As such, innovative medicines should be priced and reimbursed at levels that
appropriately recognize their value to patients and society. Unfortunately, UK patients
experience materially longer delays in accessing new medicines than patients elsewhere because
of rigid national HTA processes, sub-national duplicative assessment or commissioning
processes, and prescribing policies and incentives aimed at containing costs to meet
unreasonable budgets. 5 For every 100 patients in comparable countries who get access to a new
medicine in its first year of launch, only 18 patients in the UK receive the same. 6 Moreover,
during the first 5 years after the launch of a new medicine, UK patients are significantly less
likely to have access than patients living in other countries. 7
Another key cause for the UK’s low and slow patient access to new medicines is the high rate of
rejections or imposition of restrictions by NICE, which operates using a standard costeffectiveness threshold of between £20,000 and £30,000 per QALY. This threshold has not been
revised – even in line with inflation – since NICE’s inception in 1999. This results in everincreasing requirements for protracted commercial negotiations. Innovative medicines exceeding
a cost per QALY threshold of £30,000 (or £50,000 for end-of-life interventions) are generally
viewed as not cost-effective, leaving clinically superior products that carry high development
costs and/or small populations from which to recoup expenses without access. In addition, as
companies develop new medicines, often in areas where there are many older off-patent
medicines that are much lower in cost, demonstration of “cost-effectiveness” becomes
exceedingly difficult by design.

5

IQVIA. (2017). P&R Concise Guide: United Kingdom.
OHE analysis of 61 medicines launched in the UK since 2007 compared to 16 countries (2014).
7
Office for Life Sciences, “Life sciences competitiveness indicators,” Apr. 2017.
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 Using QALYs to rigidly measure cost-effectiveness in this way fails to recognize the full value
of innovative medicines and has turned the UK’s HTA into a blunt cost containment tool. In this
context, between March 2000 and December 2017, just 57% of all technology appraisals were
recommended by NICE in-line with marketing authorization; while 23% were recommended in a
restricted subset of patients, 1% under the Cancer Drug Fund (CDF), and 4% in research only –
and 15% were rejected altogether. Recommendations for cancer medicines were even more
restrictive with just 37% of cancer appraisals recommended in-line with marketing authorization;
while 32% were recommended in a restricted subset of patients, 4% under the CDF, 3% in
research only – and 27% rejected altogether. 8
To promote development of innovative medicines and thereby ensure patient access to those
medicines, the Parties must recognize that prices of medicines should be based on a variety of
value criteria that reflect considerations such as the tangible benefits to patients and health care
systems, patterns of disease burden, and national socio-economic indicators. Narrow approaches
to HTA, such as rigid cost-effectiveness methodologies, should not be the principle framework
for assessing value.
Finally, the proposed trade agreement should create a medicines and medical device committee
or working group to provide a venue for the Parties to discuss implementation issues and to
ensure ongoing coordination. PhRMA and its member companies strongly support the formation
of such a committee or working group as part of the proposed agreement.
II.

Reinforcing Strong Intellectual Property Protections and Enforcement

Biopharmaceutical innovators – and the millions of jobs they support in the United States and the
UK – rely on strong IP protection and enforcement to research and develop valuable new
treatments and cures for patients. To drive discovery and to maintain the global competitiveness
of their innovative economies, the United States and the UK should capitalize on this proposed
agreement to reaffirm their existing IP commitments and to secure the highest international
standards. Further, the UK and U.S. should seek similar commitments to strong IP from their
trading partners as part of their free trade agreements with other countries. U.S. trade negotiators
should prioritize results in the following areas:


Regulatory Data Protection – As part of the proposed negotiations, and consistent with
the negotiating objectives set forth in the Bipartisan Congressional Trade Priorities Act of
2015 (TPA), the U.S. Government should seek IP protections that meet the highest
international standards, including at least 12 years of regulatory data protection (RDP) for
biologics. Furthermore, contrary to recent proposals in the context of Brexit scenario
planning for a no-deal outcome, any RDP provided in the UK should be measured from
the date of first marketing approval in the UK, not in the European Union (EU) or
elsewhere. 9

8

National Institute for Health and Care Excellence (NICE), available at https://www.nice.org.uk/about/what-wedo/our-programmes/nice-guidance/nice-technology-appraisal-guidance/data (last visited Jan. 15, 2019).
9
See Department of Health and Social Care, How medicines, medical devices and clinical trials would be regulated
if there’s no Brexit deal (updated Jan. 3, 2019), available at https://www.gov.uk/government/publications/howmedicines-medical-devices-and-clinical-trials-would-be-regulated-if-theres-no-brexit-deal/how-medicines-medicaldevices-and-clinical-trials-would-be-regulated-if-theres-no-brexit-deal (last visited Jan. 15, 2019).

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 III.



Patent Standards – In view of the importance of IP for biopharmaceutical innovation,
the proposed U.S.-UK trade agreement offers an opportunity to affirm a number of highlevel IP principles. These are critical not only in the UK and U.S., but also at a global
level, and include principles relating to the three substantive patentability criteria (i.e.,
novelty, inventive step, and capable of industrial application (or utility)); the scope of
patentable subject matter (which should include medical process inventions, such as
methods of therapy, and plant or non-human animal inventions); the need for case-bycase determinations of whether an invention is not obvious; patentability must not be
negated by the manner in which the invention was made; greater clarity regarding what
constitutes adequate disclosure of the invention and the nature of what additional
information can be presented at a later date to support the patent application; and avoid
over-restrictive and/or artificial criteria for added matter. Finally, courts must not extend
their jurisdiction to adjudicate patentability or patent-worthiness of pending patent
applications or subject matters that have not been claimed in an issued patent.



Grace Period – Within the rubric of the European Patent Convention, seek the provision
of a one-year grace period in the UK that strikes a fair balance in ensuring that an
inventor does not lose rights to a patent after a first disclosure to the public, but also
provides for sufficient legal certainty for third parties by ensuring that information that
has been publicly disclosed but not made the subject of a timely filed patent is freely
available.



Restoring Lost Patent Life – Delays at the patent office and the time taken during the
marketing approval process reduce the effective patent life over which an innovative
manufacturer can seek to recoup the significant investments required to bring a new
medicine to patients. To encourage efficient review processes and to return some of the
patent life lost to those delays, the patent term should be adjusted/restored to compensate
for these delays. Such adjustment/restoration – whether accomplished through
Supplementary Protection Certificates (as currently employed in the UK) or similar
mechanisms – must provide the same protections, scope, and rights as those enjoyed
during the regular patent term.



Pharmaceutical Patent Enforcement Standards – High-level IP standards are
meaningless without strict enforcement of those standards. This is particularly true in the
case of pharmaceuticals, given the significant cost over many years required to develop a
new medicine and the relatively short remaining period over which a manufacturer can
potentially recoup this investment. If a patent-infringing product is allowed to enter a
market while a patent-infringement dispute is ongoing, the innovative manufacturer, even
if successful in that dispute, is rarely restored to the position that it would have been in
but for the launch of the patent-infringing product. It is essential, therefore, that the UK
maintain an effective patent enforcement system that allows for early resolution of patent
disputes before an infringing product is launched on the market.
An Opportunity to Increase Regulatory Compatibility in the Pharmaceutical Sector

The innovative biopharmaceutical industry strongly supports efforts to address incompatible or
duplicative regulatory requirements that can impede efficiency in global drug development,
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 manufacturing, review, and evaluation. Addressing these important issues can help to enhance
drug development, optimize deployment of limited regulatory agency resources, and lead to
expedited patient access to new, innovative, and life-saving medicines. In this regard, the
biopharmaceutical industry would like to emphasize the significant historical partnership and
coordination between the U.S. Food and Drug Administration and the UK Medicines and
Healthcare Products Regulatory Agency internationally through the International Council for
Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), with the
participation of the UK previously facilitated through its membership in the EU. The
development and implementation of ICH’s technical and regulatory guidelines remain the
cornerstone of international regulatory cooperation. Both the U.S. and UK currently have a high
degree of implementation, and both should continue to seek global implementation of ICH
guidelines.
Building on the regulatory provisions included in the recently concluded USMCA, the U.S.-UK
Trade Agreement should include a Mutual Recognition Agreement (MRA) on Good
Manufacturing Practices (GMP) (similar to that concluded between the U.S. and the EU in
2017).
Similarly, an MRA for Good Clinical Practice inspections between the U.S. and UK would
increase regulatory authority capacity to inspect clinical investigator sites and sponsors by
avoiding inefficient duplication of work and eliminate redundant time spent by clinical
investigators hosting inspections from UK and U.S. regulatory authorities. Better alignment of
pediatric scientific approaches between the UK and U.S. would reduce duplication and
streamline medicines development for children, reducing the time and costs of conducting trials
for industry while avoiding redundant clinical trials in children, and ensuring that children have
faster access to new medicines. Finally, science and technology are rapidly presenting new
opportunities in the development and use of medicines, and aligned regulatory approaches are
important to avoid duplicative or inconsistent regulatory requirements that may inhibit patient
access to new medicines. Therefore, it is important to prioritize upstream discussions between
the UK and U.S. on evolving science and technology (e.g., for new sources of evidence) to
support the development of medicines and their assessment.
IV.

Conclusion

In summary, PhRMA and its members strongly support the negotiation of a comprehensive and
ambitious trade agreement between the U.S. and the UK that is aligned with and leads emerging
global standards. The proposed partnership offers an important opportunity for the two countries
to demonstrate international economic leadership and a steadfast commitment to free trade, as
well as to establish minimum benchmark standards that the U.S. and UK should seek in all future
trade agreements with other countries.

***

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 We thank you for the opportunity to provide these comments and look forward to being an active
stakeholder throughout the negotiations.
Sincerely,
/s/
Jay Taylor

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