U.S. pushing for provision on fair medical device, drug reimbursement in free trade agreement with Asia

Negotiators are debating a section of the planned Trans-Pacific Partnership free trade agreement that would commit the 12 member countries to transparent procedures and fairness in federal medical device and drug reimbursement decisions, AdvaMed Senior Vice President Philip Agress told FierceMedicalDevices.

The annex "would only ensure that the procedures used to make those decisions at the national level are fair and transparent," Agress said. For example, it would call for timely reimbursement decisions, appropriate public comment periods, and transparent processes, according to Agress.

It "would not in any way set prices for reimbursement or require that specific devices be reimbursed," Agress said. In addition, the section would not apply to state or provincial reimbursement decisions.

The U.S. is leading the push for a section on fair and transparent reimbursement procedures in the agreement but is meeting resistance from Japan, said Agress, former deputy assistant secretary for Japan at the Department of Commerce.

"My understanding is that they (the Japanese government) have not been as supportive as we would like to see. We hope to see them decide that these provisions are something that they would like to promote and adopt," Agress said, adding that the country's reimbursement process already meets the conditions of the proposed annex.

Agress said he is unaware of other countries' stances on the issue.

The TPP negotiations are not being conducted publicly, making the final text a constant source of rumors and speculation. However, a leaked section of the TPP from June 2011 called "Annex On Transparency and Procedural Fairness for Healthcare Technologies" contains provisions consistent with Agress's comments, although the actual text has likely changed since that time.

In addition, the completed U.S.-Korea bilateral Free Trade Agreement contains a chapter on medical devices and pharmaceuticals, and is said to be a model for other trade agreements. The chapter commits both countries to being timely, fair, and transparent in reimbursement decisions by, for example, publishing all rules and explaining decisions to affected parties.

It does not explicitly bind either country to offering reimbursement at a specific level, but (somewhat vaguely) calls for payments to be determined "based on competitive market-derived prices." If the determination is not made based on market prices, then the countries are supposed to allow the manufacturer to apply for additional reimbursement.

Whether the section on reimbursement makes it into the final text or not, the section on reducing nontariff, technical barriers to trade will impact the device industry because it promotes "regulatory coherence," Agress said.

Negotiations over that section are now closed. "Those provisions will be extremely important for the medical device industry and we're very pleased to see that they've been agreed to by all of the TPP members," Agress said.

Of course, the section on healthcare reimbursement is only a tiny hurdle toward ratifying the free trade agreement, a goal that has proven elusive so far. In fact, issues affecting the biopharma industry, such as the exclusivity period of biologic drugs, have so far been one of the main stumbling blocks. Other countries have their own sensitivities. For example, Japan wants to protect its rice industry and is wary of granting the U.S. access to its auto market.

Public suspicion of free trade deals is another barrier. The anticorporate group Public Citizen says that the aforementioned, leaked section of the TPP is "Orwellian," and raised the specter of the free trade agreement trumping politically popular Medicare and Medicaid provisions because they use government-mandated prices or discounts that are not "market-derived." -- Varun Saxena (email | Twitter)

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