How the USMCA’s IP Provisions for Drugs Will Help American Workers

Regardless of what one thinks about President Donald Trump, we should all be able to agree that he has been right to insist that U.S. trade policy should serve America’s interests first. This should not be controversial. After all, Democrats have long argued the same, worrying that bad trade agreements would encourage offshoring of American jobs.

If we want to put America first in trade agreements, then Congress should ratify the proposed United States-Mexico-Canada Agreement (USMCA) and in particular support its provision requiring 10 years of data protection for biologic drugs (which protects an innovator’s clinical trial data results validating the drugs’ safety and efficacy). This is a provision that puts America first, by ensuring that Mexican and Canadian drug companies follow existing U.S. rules so they cannot unfairly copy American innovations. The result will be a more competitive U.S. biopharmaceutical industry, more high-paying American jobs and more incentives to produce new cures. 

Yet, some liberal opponents of USMCA argue that enshrining U.S. intellectual property (IP) law into trade agreements only helps “Big Pharma” and hurts workers and consumers in other nations by making it harder for them to produce and consume generic drugs. Writing about similar provisions proposed in the Trans-Pacific Partnership agreement, economist Joseph Stiglitz argued, “if big pharmaceutical companies hold sway … the T.P.P. could block cheaper generic drugs from the market.”

First, not to quibble, but it’s not just big biopharma companies that depend on IP rules to earn back the billions of dollars they invest to bring new drugs to market; 1,600 biopharma start-ups in 48 U.S. states depend on these provisions as well. In fact, these start-ups are as or more focused on ensuring U.S. IP protections are in trade agreements than big biopharma companies.

Second, Stiglitz and others who oppose including IP protections in trade agreements miss the fact that trade agreements don’t change U.S. IP law, which already provides 12 years of data exclusivity for biologic drugs. Rather, the agreements simply ensure that U.S. trading partners have somewhat adequate rules. Democrats insist on such reciprocity when it comes to labor and environmental standards, because they rightly want a level playing field for American workers. Yet when it comes to protecting the fruits of American workers’ output, too many seem willing to turn a blind eye.

One reason is that over the last several decades many on the left have become labor globalists, who place their allegiance with workers of the world. It didn’t use to be that way. For George Meany, longtime president of the AFL-CIO, the U.S. labor movement stood for “decency and justice and dignity for all Americans.” Today, some on the left at least admit that they put class ahead of country, placing a higher priority on workers everywhere than on U.S. competitive advantage and economic prosperity. But all too often, advocates like Stiglitz and Paul Krugman do not, obscuring their labor-globalist views by claiming IP provisions in trade agreements will not be good for Americans. If they want to forthrightly argue that U.S. trade policy should be in the service of foreign consumers and workers as much as Americans, that is certainly their right. But they should not hide their agendas. I suspect that if they were open about their sympathies most Americans would reject their counsel and push for a USMCA that is in American workers’ interests.

Ensuring 10 years of IP protection for biologics data will help more American workers than just high-income scientists in lab coats. In fact, an analysis by the Information Technology and Innovation Foundation (ITIF) of the Census Bureau’s American Communities Survey shows that over one-third of the biopharmaceutical industry’s workers do not have a college degree, and their average annual wage is $55,000 — 60 percent higher than the mean U.S. wage. So, when Democrats talk about being the party of the middle class, especially the non-college educated middle class, they need to be talking about how to help the biopharmaceutical industry grow.

If we can do that through a robust USMCA, and if that leads to increased drug sales in Canada and Mexico, it will create good jobs here in America. In fact, using sales and employment data from the Bureau of Labor Statistics and Government Accountability Office, ITIF has found that for every $260 million in foreign drug sales for a biopharmaceutical firm in the United States, 100 jobs are created in the industry in America, with five more jobs created indirectly. And let’s not forget that every dollar of foreign drug sales also reduces the U.S. trade deficit by one dollar.

For the benefit of U.S. workers and American competitiveness, Democrats should drop their objection to the inclusion of 10 years of data protection for biologics in the USMCA.


Robert D. Atkinson (@RobAtkinsonITIF) is president of the Information Technology and Innovation Foundation, the leading think tank for science and technology policy.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Morning Consult