A Dose of TPP's Medicine: Why U.S. Trade Deals Have Not Exported U.S. Drug Prices

Council on Foreign Relations Working Paper

10 Pages Posted: 30 Mar 2016

Date Written: March 22, 2016

Abstract

The United States has trade deals with pharmaceutical terms that go beyond the requirements in World Trade Organization (WTO) agreements with 17 countries. Some are more than a decade old, but just two studies have ever assessed how those trade agreements affected prices in practice.

This working paper examines a decade’s worth of pharmaceutical sales data for 15 of the 17 countries with recent U.S. trade deals, assessing their drug spending as a share of overall health expenditure, per capita pharmaceutical spending, consumption of medicines, and the market shares devoted to on-patent and generic medicines. For four of these countries, we were able to compare the prices of off-patent originator drugs launched before the U.S. trade deal with the prices of off-patent originator drugs launched after the deal and subject to its expanded exclusivity terms.

The results do not match the large claims made for and against these pharmaceutical provisions in U.S. trade deals. More substantial price effects might well arise over a longer time and for certain classes of medicines, but we were unable to find evidence of this starting to occur. This working paper explores the possible explanations for these findings and their implications for the Trans-Pacific Partnership, a twelve country trade deal set to go before Congress with pharmaceuticals at the center of the debate over its passage.

Keywords: Trans-Pacific Partnership, trade, pharmaceutical, medicine, drug prices, TPP, access to medicines, patent, FTA

JEL Classification: F1, F10, F13, I1, I18, K33, L65, O31, O34

Suggested Citation

Bollyky, Thomas J., A Dose of TPP's Medicine: Why U.S. Trade Deals Have Not Exported U.S. Drug Prices (March 22, 2016). Council on Foreign Relations Working Paper. Available at SSRN: https://ssrn.com/abstract=2755754

Thomas J. Bollyky (Contact Author)

Council on Foreign Relations ( email )

1777 F Street, NW
Washington, DC 20006
United States

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