Pharma and the Peril of Europe’s Trade Policies

How should pharmaceutical executives adjust as things become increasingly grim for that unprecedented experiment in trade cooperation, the European Union? With one of its key member states already heading for the departure gate, and with the EU’s entire external commerce policy under new challenge, is this just something the healthcare sector should shrug its shoulders about and quietly accept, in the pious hope of better times coming back later?

The latest threat-which was being played out in September-is that the bloc’s ability to strike trade deals abroad will be undermined, and even entirely neutralized, by public opposition to two ongoing discussions: CETA-the Comprehensive Economic and Trade Agreement with Canada-and TTIP, the better-known Transatlantic Trade and Investment Partnership with the US. Much has already been written, in this column and elsewhere, about the importance of TTIP to the pharmaceutical industry on both sides of the Atlantic, and about the growing grass-roots campaign to derail it. But the TTIP story now risks becoming irrelevant, because in the event of a collapse of CETA, which is virtually a done deal, there is almost no prospect of successfully concluding the TTIP negotiations-or, indeed, any further EU trade agreements around the world. CETA does indeed threaten to make the EU teeter, very dangerously.

Hanging by a thread

The fate of CETA is in the balance. It survived-but only by a whisker-a potentially fatal challenge from the German social democrat party, whose support will be crucial in national endorsement of the deal. Anxieties have been acute over perceived threats to public services, labor rights and environmental protection, and over the possibility that foreign investors could sue EU governments for any alleged discrimination, but at the last minute the party gave its conditional backing. 

But a week of massive demonstrations in European capitals are highlighting the depth of feeling about what are seen as pro-industry agreements cooked up behind closed doors without taking account of public interests. More than 150,000 people demonstrated against CETA in Berlin and six other German cities last month, calling it “TTIP by the backdoor.” Nine out of 10 members of Austria’s Social Democratic Party want to reject CETA, according to a poll launched by Chancellor Christian Kern. In France, the populist Marine Le Pen is heading strong opposition to these transatlantic alliances. Slovenia and Hungary are both awaiting the outcome of parliamentary debates before taking a position. And in Belgium, the three French-speaking parliaments are still resisting giving their blessing.

Pharma extolls virtues

In the face of gathering hostility, the European pharmaceutical industry is putting its weight behind what look increasingly like last-ditch efforts to salvage CETA and TTIP. Along with a dozen other business organizations, they issued a plea for “strong political commitment from the EU and US governments” to keep the talks on track and to “deliver an agreement that boosts growth, competitiveness and jobs.” A so-called Business Alliance for TTIP held special media briefings in European capitals in a bid to win over opinion-formers, with an uncompromising message that “the TTIP negotiations have not failed, that they must continue.” And business leaders are stressing that “continued and vocal support by EU and US political leaders is critical.” According to Emma Marcegaglia, the head of the pan-Europe industry grouping BusinessEurope, “TTIP is too big to be allowed to fail.”

The European Federation of Pharmaceutical Industries and Associations (EFPIA), the generic drug makers, now under their new title of Medicines for Europe, and the devices industry represented by MedTech Europe are making common cause with major organizations representing the IT, clothing and chemical industries, carmakers, bankers, and a host of trans-sectoral business groups.

For EFPIA, the EU’s external trade agenda is “essential to ensuring market access for exports of innovative medicines developed by European pharmaceutical companies.” It claims that “an ambitious pharmaceutical chapter in TTIP that aligns regulatory regimes and reduces duplicative costs will increase EU pharmaceutical exports by €9 billion and provide 19,000 highly productive and qualified jobs in the EU pharmaceutical industry and 60,000 additional jobs in related industries in the EU.”

The TTIP discussions of pharmaceuticals are at present covering good regulatory practices linked with the marketing authorization of medicinal products, regulatory cooperation provisions, the exchange of confidential information between regulators, as well as the recognition of good manufacturing practice (GMP) inspections, and a joint EU-US task force is assessing the equivalence of EU and US GMP inspection systems. On generics, negotiators have been taking stock of the latest developments on regulatory collaboration in the framework of the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use and the International Generic Drug Regulatory Program. A first expert discussion between the European Medicines Agency (EMA) and FDA on the evaluation of complex generics took place in the summer.

But EFPIA knows it is up against a lot of negative prejudice. Its own “mythbuster” brochure recognizes (although it attempts to rebut) the most common criticisms-that TTIP is negotiated in secret and is driven by the interests of multinational companies, or that it will reduce regulatory standards to the lowest common denominator, or limit clinical trials transparency, or create longer monopoly periods, higher prices and less generic competition, or undermine national competence on pricing and reimbursement and limit government policy options. Hence, its alliance with other industry groupings in its efforts to head off the opposition.

Mixed country support

Business leaders’ urgings are mirrored in a formal letter of support for TTIP and CETA that 12 governments addressed to the EU negotiators in mid-September. “Today, more than ever, there is a need for a strong and positive voice in the discussions on trade issues,” wrote the senior ministers from the Czech Republic, Denmark, Estonia, Finland, Ireland, Italy, Latvia, Lithuania, Portugal, Spain, the UK and Sweden. But conspicuous by their absence from the signatories were ministers from 16 other EU countries, where there is less unequivocal support for the belief expressed in the letter that “Europe needs to demonstrate clear leadership in negotiating free trade agreements if we are to generate the growth we need to meet future challenges.”

CETA was high on the agenda of EU trade ministers when they met in Bratislava in late September for a final discussion before a scheduled signing of the deal at the EU-Canada summit on October 27. But a political agreement among all member states in Bratislava will be needed to authorize the signature. And the fear among industry and officials is that failure here will put an end to any further similar deals. As European Trade Commissioner Cecilia Malmström has remarked: “If we can’t approve CETA, who can we make trade deals with? If we don’t approve it we are not a reliable partner.”

One-sided battle?

The question for industry-and for the pharmaceutical industry-is whether enough has been done to counteract the strong feelings of rejection among the public in the run-up to this dénouement. If industry is so convinced of the merits of these agreements (and they have said throughout that they are), why have they let hostile campaigners persuade a largely uninformed public that these deals will damage public interests? The hundreds of thousands of

demonstrators on the streets of Europe last month were not calling for CETA and TTIP. They were saying “stop these deals!” Where are the demonstrators that the industry has been able to mobilize, saying “these deals are good news?” It is a sadly familiar scenario of European industry being outflanked by activists with plenty of imagination and energy, often enough to compensate for the poverty of arguments. After the GMO debates and the debacle over the anti-counterfeiting treaty, ACTA, is Europe witnessing a final battle that will leave it incapable of conducting a coherent trade policy? And who in the healthcare community cares enough to do anything about it?

Reflector is Pharmaceutical Executive’s correspondent in Brussels