USMCA's Biologics Provision Is An Important Step Towards Stronger IP Protections

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Posted by Alex Hendrie, Tom Hebert on Monday, October 28th, 2019, 10:08 AM PERMALINK

The United States-Mexico-Canada Agreement (USMCA) represents a much-needed update to the 25-year-old North American Free Trade Agreement (NAFTA).

The global economy has changed significantly since the United States, Mexico, and Canada signed the NAFTA in 1992. The new USMCA recognizes this reality and modernizes trade relations between the three nations to better fit the new realities of the 21st century.

Importantly, the USMCA includes 10 years of data protection for lifesaving biologic medicines. This change will bring Mexico and Canada’s intellectual property protections up to U.S. standards that have existed for nearly a decade. 

Strong protection for biologics is critical. Biologics are the next generation of medicines, and are more costly and complex to produce than other cures. Data protection recognizes the extraordinary time, resources, and opportunity cost that innovators must devote to go through the FDA approval process. 

A recent study from the Tufts Center estimates that it costs an average of $2.6 billion over the course of 10 to 15 years to develop a new medicine. The USMCA’s 10-year period allows innovators to earn a positive rate of return on the immense costs associated with research, development, and the FDA approval process. The USMCA’s 10-year standard has bipartisan support and was signed into law by President Obama. 

America is a world leader in medical innovation. In 2017, the U.S. exported $51.2 billion in biopharmaceuticals. Such exports have grown 174 percent from 2002 to 2017. This research and development supports high-paying U.S. jobs across the country.

IP rights are also key to the U.S. economy at large. The U.S. Department of Commerce and U.S. Patent & Trademark Office found that IP-intensive industries contributed $6.6 trillion to the U.S. economy in 2014, or 38.2 percent of GDP. These industries directly and indirectly support 45.5 million jobs, account for $842 billion in merchandise exports, and generate $81 billion in service exports—well over half of all US exports.

While the USMCA will better ensure that North America remains a centerpiece of innovation, the agreement’s strong protection of IP rights is not universal. Many countries have policies that restrict innovation and punish ingenuity. 

As the Trump administration continues to negotiate better trade deals, the USMCA’s strong protections for biologics should serve as the model.

Photo Credit: Marco Verch

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