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While providing benefits to Mexico’s biologics system, the USMCA may also increase costs for citizens, argues Margarita Guerrero Gonzalez of Uhthoff, Gomez Vega & Uhthoff.
Free trade between countries dates from the first industrial revolution at the end of the 18th century. On the basis of free trade, several of the current theories of international trade and world trade policies have been built.
The World Trade Organization has registered nearly 400 existing regional agreements or treaties and in all of them the purpose is to release commercial exchanges. The vast majority refer to agreements between neighbouring countries or those belonging to the same geographical region; a few, about a quarter, exist between developed and undeveloped countries.
Free trade agreements are important to end economic protectionism as they constitute an effective means to guarantee access to products to foreign markets, in an easier and barrier-free way.
On November 30, 2018, the US, Mexico and Canada signed the USMCA agreement, an update of the North American Free Trade Agreement (NAFTA) created in 1994. This agreement contains significant trade changes among the three nations in industries such as automotive, farming, manufacturing, and pharma. This last sector will be affected thanks to the amendments made to the IP fields of this trade deal.
Data and more
USMCA includes a detailed section about data protection and in this case, the Mexican Industrial Property Law (MIPL) does not contemplate data exclusivity. Nevertheless, it is worth noting that in 2012 the Federal Commission for Protection against Sanitary Risk (COFEPRIS, its acronym in Spanish) published an internal decree providing a five-year term of data protection for new chemical entities only. Thus, Mexico is now granting five-year protection periods for new chemicals.
In connection with data protection terms, under the USMCA, Mexico has agreed to extend the term for data protection of new agricultural chemical products, new pharmaceutical products, new indications and biologics. In this regard, USMCA has a specific section establishing that parties should not permit generic manufacturers referencing undisclosed test or other data concerning safety and efficacy of new pharmaceutical products that contain a “biologic” for at least ten years from the date marketing approval was first granted.
"It is important to also consider that these new provisions limit the access of these products to the Mexican population."
Going deeper into these definitions, a biologic is defined at the USMCA as a product that, at minimum, is “produced using biotechnology processes and that is, or, alternatively, contains, a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, for use in human beings for the prevention, treatment, or cure of a disease or condition”.
In the case of data protection exclusivity for new and previously approved non-biologics products under the USMCA, bear in mind that USMCA prohibits generic manufacturers from referencing undisclosed tests or other data concerning safety and efficacy of “new pharmaceutical products” for at least five years from the date marketing approval was first granted.
Returning again to definitions, a “new pharmaceutical product” is defined at the USMCA as “a pharmaceutical product that does not contain a chemical entity that has been previously approved for that party”.
In addition, USMCA also establishes at least three years of data protection for new clinical information submitted for a previously approved pharmaceutical product covering a new indication, formulation, or method of administration.
Pros and cons
This change to the USCMA deal has advantages and disadvantages for the Mexican pharmaceutical industry. It is beneficial for the biologics sector now to have the legal tools to protect the clinical data of these specific products, nevertheless, the tradeoff of this positive consequence may be the high costs Mexican population will have to pay in order to access biologics.
With this in mind, positive and negative effects can be seen for the next years in the Mexican pharmaceutical industry. Whether there are more positives than negatives will depend on whether Mexican investment in innovation can outsmart foreign biologics products.
On the other hand, it is important to also consider that these new provisions limit the access of these products to the Mexican population, because it was agreed that this exclusivity will be given from the registration of these products in Mexico instead of since the first registration in the world.
This means that if a company decides to delay the register of its product in Mexico for 15 years, for example, Mexican citizens will not have access
to lower prices for this biologics product for 25 years (15 years of the register delay plus the 10 years agreed in the USCMA).
Regarding this, the Mexican Ministry of Economy stated that the deal has clear limits to avoid artificial delays of the entry of generic medicines to the Mexican market.
Nevertheless, not all the experts and analysts consider that these changes will negatively affect the Mexican pharmaceutical industry. According to the Mexican Association for Industries of Pharmaceutic Innovation (AMIIF, in Spanish), this agreement will bring juridical certainty to the protection of clinical data promoting more investments in the pharmaceutical industry. Under this provision, laboratories of biologics medicines will have to present their own studies and clinical data in order to be able to sell these products.
These modifications will enable the Mexican pharmaceutical industry to have, from the legal perspective of clinical data protection, a situation that will promote more investment in the pharmaceutical industry, mainly in innovation.
The USMCA has provisions impacting several sectors, healthcare being just one of many. The key issues of the impact the trilateral agreement has for healthcare are mainly:
New protections for biologics including a minimum of ten years of data protection from the date of first marketing approval of the product. The ten-year period of exclusivity represents a requirement that surpasses the current periods in effect in Mexico and Canada, but which is shorter than the current period in the US.
Enforced digital trade guidelines in connection with privacy and cross-border data transfer laws and specifically the restrictions on data localisation requirements may not extend to “sensitive government information”, which may include patient and other medical data.
Margarita Guerrero Gonzalez is a chemical engineer at Uhthoff, Gomez Vega & Uhthoff. She is the author of “Design of a Man-Machine Interface for a Diagnostic Maintenance System Applied to Thermoelectric Plants” (1999) and is a member of Mexican Association for the Protection of Industrial Property. She can be contacted at: firstname.lastname@example.org
Uhthoff, Gomez Vega & Uhthoff, biologics, free trade agreements, WTO, economic protectionism, foreign markets, NAFTA, pharma, MIPL, data protection, USCMA