There are a lot of misconceptions and inaccuracies going around about the United States-Mexico-Canada Agreement (USMCA) and its implications for biopharmaceutical innovation and medicine prices. Some have claimed – incorrectly – that the USMCA will increase the prices that Americans pay for medicines. This claim is simply untrue. The facts concerning biologics, regulatory data protection, and how each is treated in the USMCA are discussed below.
What are biologics?
Innovative medicines have transformed the lives of patients around the world, and the pipeline of new therapies in development is robust. Among these innovations are biologics, medicines made using living cells that require complex manufacturing and special handling processes. Biologics can target molecular processes that other medicines cannot and are revolutionizing the treatment of many cancers, Crohn’s disease, multiple sclerosis and other diseases.
Developing innovative medicines requires substantial time, significant investment and years of scientific and regulatory uncertainty for biopharmaceutical innovators. Developing a new medicine takes an average of 10-15 years and costs approximately $2.6 billion. Less than 12 percent of medicines that enter lengthy and costly clinical trials are approved by the U.S. Food and Drug Administration and make it to patients.
What is regulatory data protection?
To receive government permission to market and sell a new medicine, an innovator manufacturer must demonstrate that the new medicine is safe and effective. Doing so requires generating and submitting new clinical trial and other data to government regulators. In contrast, a generic or biosimilar manufacturer seeking approval for a competing product submits an abbreviated application and can rely on the original inventor’s data after a certain period of time.
Regarding biologics and biosimilars in particular, the innovator manufacturer – and not the biosimilar manufacturer – has incurred the large and risky upfront investment expenses to research and develop the new medicine. To ensure that patients can continue to benefit from groundbreaking new treatments like biologics, the inventor is granted regulatory data protection (RDP) – a set period of time during which a biosimilar competitor cannot unfairly rely on the innovator’s regulatory data to obtain marketing approval for its biosimilar product.
Once the RDP period expires, however, the biosimilar manufacturer can use the original inventor’s data to support approval for a competing product. But it’s important to know that a biosimilar company can always develop and submit its own clinical trial and other data to regulators during the innovative manufacturer’s RDP period. As such, RDP does not block competition or provide market exclusivity. A biosimilar manufacturer simply cannot use the innovative manufacturer’s data during the RDP period to obtain approval for its biosimilar product.
To appropriately balance incentives for original inventors and competition from biosimilars in the United States, the Biologics Price Competition and Innovation Act established a 12-year period of RDP for biologics and created a clear process and timetable for biosimilar applications. The 12-year period was based on extensive analysis, was widely supported by Congressional Democrats and Republicans, and was signed into law by then-President Obama in 2010.
How is RDP treated in the United States-Mexico-Canada Agreement?
The United States has long recognized the important role that international trade agreements play in encouraging and valuing American innovation. That’s why Congress, in the Bipartisan Congressional Trade Priorities and Accountability Act (TPA), signed by then-President Obama in 2015, insisted that U.S. trade agreements contain high intellectual property protections – including for biologics. In fact, TPA specifically instructs the President to ensure that “the provisions of any trade agreement governing intellectual property rights that is entered into by the United States reflect a standard of protection similar to that found in United States law.”
The USMCA commits each country to provide at least 10 years of RDP for biologics, two years lower than the United States’ 12-year standard. As such, the USMCA does not require the United States to change any existing domestic laws concerning medicines and will not increase Americans’ medicine costs. Rather, the USMCA compels Canada and Mexico to raise their RDP periods to a level nearer to that which has existed in the United States for nearly a decade. In contrast, critics of this provision are arguing that Canada and Mexico should weaken their protection of American intellectual property.
Further, previous trade agreements have not led to higher drug prices – neither in the United States nor abroad. In fact, data compiled by the Council on Foreign Relations demonstrate that increases in RDP terms did not materially increase medicine costs relative to overall health care spending or hinder competition. In fact, more global competition leads to lower costs.
The USMCA’s provisions prioritize innovation and competition and do not increase medicine costs, despite what a few loud critics have said. PhRMA is committed to working with policymakers on both sides of the aisle to ratify the USMCA and push for solutions that will improve patient access and affordability. With the right policies and incentives in place – both here and abroad – innovative biopharmaceutical companies can continue to bring valuable new medicines to patients worldwide and contribute powerfully to the U.S. economy.
To learn more about the United States-Mexico-Canada Agreement, please click here.
Douglas Petersen
Douglas Petersen is PhRMA’s Vice President for international trade. Previously, he was international trade counsel for the U.S. Senate Committee on Finance, an international trade attorney with White & Case LLP and a trade policy analyst at the Cato Institute. He received a law degree from New York University, a graduate degree from the London School of Economics, and undergraduate degrees from the University of Utah.
Douglas Petersen
Bayh-Dole: The fuel for America’s innovation engine
Setting the record straight: 3 facts about drug patents
New PBM principles don't change the fundamental challenge: Access to lower-cost medicines
MFN could disrupt the affordable medicines patients depend on
Intellectual Property and Hatch-Waxman: A blueprint for American leadership and patient savings
Argentina sets course to enable innovation by rejecting failed patent rules
16 years later: How BPCIA continues to expand competition and lower costs
Key context is often missing from the debate over the Patent Trial and Appeal Board
MFN undermines U.S. biopharmaceutical innovation
Updated Analysis Underscores the Need for Brazil to Address Patent Backlogs
How post-approval innovation keeps delivering for patients
PhRMA calls on USTR to ensure foreign nations pay their fair share
Three things to know about Bayh-Dole: Innovation that pays off for taxpayers
Delivering breakthroughs and lower costs for patients
PBMs, not patents, are blocking access to lower-cost medicines
New report: How intellectual property drives U.S. innovation and biopharma's impact
New report: Post-approval innovation delivers substantial patient benefits
Tariffs on medicines would harm American competitiveness, industry and patients
The biopharmaceutical industry is one of the highest contributors to America’s economy among all manufacturers
USTR 2025 Special 301 Report corrects course
From sound to science: How IP powers innovation in music and hearing
How the IRA is impacting the generic drug market
3 myths critics get wrong about intellectual property
ICYMI: PhRMA submits comments to White House on artificial intelligence
Strong Trade Policies Protect American Workers and Biopharmaceutical Innovation
USTR remembers—three years later—that it announced a trade initiative with Europe
PhRMA submission calls for USTR to correct course on trade policy, enforcement
40 Years of Hatch-Waxman: How Can We Secure its Legacy?
40 Years of Hatch-Waxman: How does the Hatch-Waxman Act help patients?
40 Years of Hatch-Waxman: What is the Hatch-Waxman Act?
New research: American biopharmaceutical investment in R&D drives transformational innovation
Biden Administration report debunks myths around patent “evergreening” and “thickets”
What to know about the latest effort to break patents using a legally dubious avenue
WTAS: Proposed Unsubstantiated USPTO Rule Change is a Threat to American Innovation
No Region Left Behind: USTR expands its unambitious trade agenda to the western hemisphere
PhRMA launches education campaign on the benefits of America's IP system
ICYMI: Innovation transforms lives but misguided federal policies threaten patient outcomes
Experts discuss the value of IP at Senate Judiciary Committee hearing
World Trade Week 2024: Time for a more ambitious U.S. trade agenda
World IP Day 2024: Supporting an innovative and sustainable future
Why won’t USTR strengthen medical supply chains with America’s allies?
International meetings hold big implications for Americans and our innovation ecosystem
Proposed march-in framework would chill American innovation
PhRMA 2024 Special 301 submission: USTR needs to support American innovation, global access to medicines
Powering the next generation of therapies: A conversation with Astellas US President Mark Reisenauer
New poll: Americans agree that expanding the TRIPS waiver will harm U.S. global manufacturing and innovation leadership
What they are saying: Experts agree that proposed march-in framework would jeopardize innovation
The Biopharmaceutical Industry Still Needs Clarity from the FDA on Orange Book Listings
The White House continues to attack American innovation
Biden Administration’s Indo Pacific trade dialogue is a missed opportunity to bolster American exports, innovation
Misuse of march-in could stifle innovation
WHO Pandemic Agreement offers opportunities and risks for American innovators
Word of the Month: The Bayh-Dole Act
PhRMA submission: USTR needs more ambition to combat unfair trade barriers
It’s PBMs, not patents, blocking competition
What you need to know: COVID-19 public health emergency is over, but ideological attacks on IP remain
The Biden Administration has failed to advance an inclusive, worker-centered trade agenda
WTAS on reasonable pricing and public-private partnerships
Key considerations as Congress works towards PAHPA reauthorization
Reject efforts to undermine America’s R&D ecosystem
Four ways that America’s biopharmaceutical industry supports jobs and fuels economic growth
Setting the record straight on the Bayh-Dole Act and March-in
World IP Day 2023: Celebrating women leaders in innovation
What they are saying: Experts reinforce that TRIPS waiver expansion is harmful and unnecessary
New global analysis shows patient access challenges around the world
PhRMA provides comments and testimony to USITC investigation on COVID-19 medicines and the TRIPS Agreement
U.S. biopharmaceutical exports support jobs, innovation
Will the administration capitalize on the Indo-Pacific Economic Framework to drive medical innovation?
PhRMA submits comments to USPTO highlighting important role of patent system in medicine development
U.S. must address IP and market access barriers abroad to protect American innovation
Biden administration should prioritize innovation in U.S.-Taiwan Initiative on 21st-Century Trade
Expanding TRIPS waiver would jeopardize biopharmaceutical research and development
Six ways I-MAK is lying about biopharma patents
TRIPS waiver expansion risks public health
Expanding the WTO intellectual property waiver will hurt American jobs
PhRMA submission to USTR calls for urgent defense of American innovation abroad
The law driving technology transfer and fostering innovation
Don’t take anti-innovation, activist funded academics at their word
New report ignores benefits of patent system to innovation and patients
Partnerships are driving global COVID-19 treatment access
The dangers of expanding the TRIPS waiver
ICYMI: New research builds upon growing body of evidence on value of COVID-19 treatments and vaccines
Patent policy changes proposed by USPTO and FDA would leave patients behind
ICYMI: PhRMA’s Ubl pens op-ed on IP waiver for COVID-19 technologies
Intellectual Property waiver on COVID-19 innovation is unnecessary and harmful
Biden Administration details inadequate protection of American intellectual property and foreign barriers to innovation abroad
PhRMA encourages Biden administration to pursue ambitious Indo-Pacific Economic Framework
Research and development continues long after a medicine is initially approved
Protecting U.S. innovation abroad to support economic and pandemic recovery
Legislation threatens patent protections and future innovation
Global COVID-19 vaccination matters now and for the future
New report highlights importance of IP-intensive manufacturing industries to the U.S. economy
PhRMA submission to 2022 National Trade Estimate Report underscores need for pro-innovation U.S. trade policy to combat COVID-19
Strengthening the WTOs global trade and health agenda
Patients and innovators lose if the government pursues ‘march-in’
Supporting country readiness to boost global vaccine access
Ensuring global vaccine equity requires eliminating trade and regulatory barriers
Increasing global access to vaccines by optimizing production
Dose sharing as a part of the COVID-19 global vaccine equity strategy
Promoting global vaccine equity while protecting innovation
New polling shows Americans are sounding the alarm on the TRIPS IP waiver
The Biden Administration allows politics to upend a pragmatic pandemic response
New report demonstrates development of new medicines relies on private sector expertise and investment
American leadership on innovation policy is essential to global health progress
Key excerpts: PhRMA submits comments to NIST in effort to safeguard intellectual property protections
Intellectual property is the key to vaccine development, manufacturing and technology sharing
The latest: What they are saying: Intellectual property protections vital to COVID-19 research, development and manufacturing
Preserving U.S. innovation worldwide is more important than ever
New video: See how strong IP protections lead to stronger treatments for patients
U.S. trade policy must prioritize American biopharmaceutical innovation and patient access
Why the U.S. biopharmaceutical industry is leading the charge against COVID-19
New Graphic: Public-Private collaboration fuels the U.S. biopharmaceutical ecosystem
The latest: What they are saying: intellectual property protections critical as we work to defeat COVID-19
R&D Focus: 5 things to know about the biopharmaceutical research ecosystem
The latest: What they are saying: Importance of intellectual property protections to combat COVID-19
The latest: What they are saying: Intellectual property protections critical as we work to defeat COVID-19
IP Explained: Intellectual property system working to combat COVID-19
What they are saying: Intellectual property protections are critical as we work to defeat COVID-19
The continued imperative to protect U.S. innovation worldwide
IP Explained: Four key takeaways from new Bayh-Dole white paper
Trump administration must defend and protect U.S. innovation
PhRMA submission to 2020 National Trade Estimate Report: Urgent action required to protect U.S. biopharmaceutical innovation
IP Explained: By the Numbers: How reliable IP protections promote a strong U.S. economy
IP Explained: FACT CHECK: March-In Authority and the Bayh-Dole Act
IP Explained: Four things to know about the Bayh-Dole Act
IP Explained: Understanding biopharmaceutical innovation
IP Explained: Why IP protections are important for biologic medicines
Setting the record straight on international reference pricing
IP Explained: What is Section 101 and why reforms are needed
IP Explained: How Hatch-Waxman successfully balances affordability and innovation
World Trade Month: How we can expand world-class pro-innovation standards
IP Explained: Myth vs. fact about strong patent protections in the biopharmaceutical industry
IP Explained: What they are saying on the importance of strong intellectual property protections
IP Explained: Why patents are so critical to biopharmaceutical innovation
New report: Using march-in authority would jeopardize U.S. innovation
Special 301 submission calls for a level playing field for American innovators
PhRMA submission to the 2019 National Trade Estimate Report urges action to protect U.S. biopharmaceutical innovation
Five myths about global efforts to combat tuberculosis
Here’s how America’s biopharmaceutical companies lead the way in development of innovative new medicines
PhRMA submission to HHS on blueprint to lower drug prices and reduce out-of-pocket costs
Celebrating U.S. innovation as USPTO issues the 10 millionth patent
To continue to drive the innovation economy and exports, American biopharmaceutical sector depends on fair trade agreements
What is inter partes review and why does it matter?
Supporting opportunities for enhanced competition in the marketplace
Biopharma leads sustained economic growth driven by IP-intensive industries
Opportunities to build upon enhanced competition for medicines in the marketplace
Poll respondents appreciate economic benefits of innovation and call for more protections
As U.S. looks to modernize NAFTA, strong enforcement of existing obligations should be a top priority
Foreign government price setting by any name harms innovation and access to medicines
Compulsory licensing: A misused and abused international trade law
Government-imposed price controls threaten innovation and access
ICYMI: Ubl weighs in on how fair trade protects US biopharmaceutical innovation
Illegal trade barriers discriminate against U.S. innovators
Trading fair means upholding the law: A focus on patents
Enforcing unmet trade obligations protects U.S. innovation
NAFTA tribunal fails to rule on Canada’s patent utility doctrine
PhRMA urges USTR to protect American innovators abroad
"Fact Check: Biologics, regulatory data protection and the United States-Mexico-Canada Agreement"
Trade
Intellectual Property
Fact Check: Biologics, regulatory data protection and the United States-Mexico-Canada Agreement
"Fact Check: Biologics, regulatory data protection and the United States-Mexico-Canada Agreement"