Fear-mongering on the TPP and prescription drugs isn't supported by data

Drug prices in Jordan went up 20 percent in the four years after a U.S.-Jordan trade deal took effect in 2002. Photo / Getty Images

No argument against the proposed Trans-Pacific Partnership trade agreement packs more emotional punch than the claim that the deal would be bad for people's health — and even result in avoidable deaths — both in the United States and in the 11 other signatory nations.

The argument, repeated most recently in a letter to Congress from the U.S. branches of Doctors Without Borders, Oxfam America and about 50 other organizations, is that the TPP would unduly extend U.S. patent and intellectual property protections for the pharmaceutical industry, thus driving up prices for lifesaving medicines. In fact, the letter argues, the "TPP would do more to undermine access to affordable medicines than any previous U.S. trade agreement."

A good way to evaluate such warnings would be to examine data about the impact of those past agreements. There haven't been much, however — until now. Thomas Bollyky of the Council on Foreign Relations examined statistics on global pharmaceutical sales from the IMS Institute for Healthcare Informatics, including for 15 of the 17 countries with recent U.S. trade deals that enhanced pharmaceutical intellectual property protections.

Basically, national drug spending remained flat as a share of the countries' total health spending, and per capita drug spending growth was comparable to that of nations of similar income that did not make trade deals with the United States. Meanwhile, the volume of pharmaceuticals consumed increased, with no particular uptick in more expensive, branded medicines over generics. Significantly, drug spending growth decelerated the most in the poorest nations, those of Central America and Peru.

By no means are Bollyky's numbers conclusive. As he acknowledges, the full effect on drug markets of more recent U.S. trade deals may not appear until more years have gone by.

Certain drugs or classes of drugs may be disproportionately affected by trade deals, but that wouldn't necessarily be reflected in aggregate spending numbers. Still, the report fills in some blank spots in the evidence, adding context to the previous finding, widely touted by the TPP opponents, that drug prices in Jordan went up 20 percent in the four years after a U.S.-Jordan trade deal took effect in 2002.

In short, the biggest compilation of information so far suggests that trade deals do not drain national drug budgets and that the public-health threat from the TPP may be overblown. Indeed, the United States already has free trade, including some pharmaceutical patent provisions, with six of the 11 prospective TPP nations, so it would not change the status quo with them much.

Meanwhile, the deal gives the poorest countries, such as Vietnam, more time to adapt to the most stringent provisions. As it happens, the Obama administration struck a compromise on the issue and the results were not as protective of the U. S. drug industry as the industry would have liked.

The United States and the world need medical innovation, but it costs money — billions of dollars sometimes — to develop a drug. One way to spur investment is to offer innovators a temporary government-guaranteed monopoly on commercial exploitation. Fundamentally, critics are quarreling with that system as much as with the trade deal itself. The data we've seen so far don't support their worst-case scenarios.