Office
of Health and Consumer Goods and the Pharmaceutical Industry
Shalizeh Nadjmi
The International Trade Administration at the U.S. Department of Commerce provides support and assistance to expand the growth of the U.S. pharmaceutical industry, and allow U.S. companies to compete on a fair and level global playing field. The international pharmaceutical industry, with sales in 2004 totaling an estimated $550 billion*, is a leading innovative manufacturing industry. The U.S. pharmaceutical industry contributes significantly to U.S. competitiveness globally, being the leading producer of new innovative pharmaceuticals, with about 20 new drugs approved per year in recent years.**
Due to several key factors, including the largest free market for pharmaceuticals ($235.4 billion in wholesale prices) and a favorable regulatory regime, the U.S. has a major competitive advantage in pharmaceuticals. Although about 70% of the production of active pharmaceutical ingredients (APIs) takes place in China and India, the research and development arm of the pharmaceutical industry (also its bread and butter) remains in the U.S. This is due to a strong biomedical scientific and research base, an innovative biotechnology industry, and a favorable patent, regulatory, and pricing climate.
The ability to successfully launch new products keeps the U.S. industry growing globally, with a reported 7% increase in sales from 2003 to 2004.*** The international market offers opportunities for expanded sales; however, market access barriers limit this growth potential. This is where the industry looks to the government for support and assistance.
The Department of Commerce, in cooperation with the U.S. Trade Representative and other U.S. agencies, works to address issues affecting the industry's growth in foreign markets such as: reimbursement approvals, price and volume controls, transparency in regulations, parallel trade; intellectual property rights and enforcement, compulsory licensing, counterfeiting, patent linkage, data exclusivity; lengthy regulatory review times and duplicative testing requirements; enforcement of counterfeit drugs, as well as discriminatory preferential treatment for national manufacturers.
The Office of Health and Consumer Goods (OHCG), which is part of the Manufacturing and Services unit of ITA, undertakes analysis of domestic and international pharmaceutical and biotechnology issues to support U.S. bilateral and multilateral trade negotiations and develop initiatives to improve the trade and investment climate for the U.S. pharmaceutical and biotechnology industries.
A major issue of concern for the Administration and Congress has been the large discrepancy between innovative pharmaceutical prices in the U.S. and those abroad, which are lower due to a variety of factors. As such, Congress mandated that the Secretary of Commerce study the impact of drug pricing systems in Organization for Economic Cooperation and Development (OECD) countries on, inter alia, R&D funding, consumer prices, and innovation.
OHCG contributed significantly to the Drug Pricing Study, which was completed and submitted to Congress in December 2004. The study found that drug-pricing systems in OECD countries reduce the amount of R&D funds available globally, which in turn, reduces new drug launches. The study also found that as a result of regulatory and pricing barriers in major OECD countries, U.S. consumers are paying the majority of the global development costs of new drugs.
A USG interagency Health and Trade Initiative group has been formed to address the problems highlighted in the Drug Pricing Study with OECD economies. The initial focus of this interagency team is Germany. Through its contribution to the interagency group, OHCG assists the U.S. pharmaceutical industry to maintain its competitive advantage and grow its export opportunities.
In addition, the collective units of ITA, including OHCG, Market Access and Compliance, and Commercial Service Foreign Offices, also address non-tariff trade barriers for the pharmaceutical industry by promoting internationally accepted standards. For example, ITA develops training programs in emerging markets to promote the harmonization of pharmaceutical regulations to reduce the need for costly and duplicative regulatory practices. Recently, OHCG staff organized a JCCT Pharmaceutical Good Clinical Practices (GCP) Workshop in Beijing to facilitate China's implementation of its GCP regulations in accordance with international practice.
ITA also works closely with the pharmaceutical industry to insure transparency and pricing decisions in foreign markets reflecting the "value of technology." This is a difficult task since most global markets try to control pharmaceutical prices, which in the long-term limits their citizen's access to medicine and reduces global R&D for new drug launches.
ITA also ensures compliance with international trade agreements by actively engaging in promoting strong intellectual property protection in bilateral and multilateral trade agreements and advocating for patent linkage between local patent authorities and drug marketing-approval authorities. Furthermore, ITA supports protection of data submitted for marketing approval of new pharmaceuticals.
By utilizing these and other mechanisms for greater access to market entry, ITA works with the U.S. pharmaceutical industry to eliminate trade barriers, and address key international issues. OHCG continues to work in cooperation with the other ITA units to support this mission. In this way, the U.S. Department of Commerce supports innovation and the competitiveness of U.S. pharmaceutical companies and products globally.
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*Press release, IMS Health, March 30, 2005.
**Rick Mullin, Biotech Firms See New-Drug Upswing, Chemical and Engineering News, June 27, 2005, Volume 83, Number 26, p. 11. Twenty-one new drugs were approved by FDA in 2003. Alex Berenson, Pricey Drug Trials Turn Up Few New Blockbusters, The New York Times, December 18, 2004. http://www.tuscaloosanews.com/apps/pbcs.dll/article?AID=/20041218/ZNYT01/412180349
***IMS Health