On October 5, 2015, agreement was reached on the text for the Trans-Pacific Partnership (TPP) trade agreement. The 12 signatories (United States, Canada, Mexico, Australia, New Zealand, Japan, Malaysia, Vietnam, Singapore, Brunei, Chile, and Peru) now have two years to ratify the agreement in order for it to take effect. The White House released the text of the agreement to the public on November 5, 2015. While many U.S. industries would likely welcome the apparent willingness of the signatories to ensure robust intellectual property protection in their jurisdictions, the pharmaceutical industry, in particular, is likely to be dissatisfied with some aspects of the agreement.

Chapter 18 of the TPP sets forth the Intellectual Property provisions. This chapter specifies a variety of minimum trademark, copyright, and patent provisions that must be enforced by the member states. Most of the patent provisions align well with U.S. law, including features such as a one-year grace period that prevents disclosures by an inventor, or disclosures derived from the inventor(s), from being considered prior art. The agreement also requires that each state provide a form of patent term adjustment, both to account for patent office delays in issuing a patent and “unreasonable curtailment” of patent term during the marketing approval process for pharmaceutical products.

However, unlike the 12 years of market exclusivity provided by the U.S. Biologics Price Competition and Innovation Act of 2010 (BPCIA), the TPP caps the period of market exclusivity provided to biologics at eight years. The agreement also indicates that the period of data exclusivity is limited to only five years (as opposed to eight years in the U.S.), meaning that generic/biosimilar applications relying on such data can be submitted to the relevant approving bodies significantly earlier than current U.S. law allows. In addition, there are no provisions in the TPP for additional periods of exclusivity for “orphan” drugs. The U.S. provides at least seven years of market exclusivity for such drugs.

The eight years of exclusivity provided by the TPP is also shorter than the corresponding exclusivity provided by the European Medicines Agency. In Europe, biologics, like small molecule drugs, receive eight years of data exclusivity, plus two years of market exclusivity, and are also eligible for an additional one year of exclusivity for pediatric studies. For orphan drugs, the period of data exclusivity is 10 years.

The 12-year exclusivity provisions of the BPCIA were the subject of considerable debate and lobbying efforts during legislative consideration of the Act, and represented a hard-fought compromise between those who argued against passage of any approval pathway for “generic” versions of biologics and those who argued for exclusivity provisions equivalent to those afforded to traditional small molecule drugs (five years, plus an additional six months for pediatric studies). Indeed, it seems unlikely that the BPCIA would ever have passed Congress absent the 12-year exclusivity provisions.

But since Congress granted the President “fast track review” of the TPP, it is not subject to amendment at this point, and must be ratified or rejected as is. Whether the exclusivity provisions are considered to be “deal breakers” for pharmaceutical companies, and whether their position either for or against the TPP turns out to be dispositive for U.S. ratification, remains to be seen. The debate will be interesting to witness.