USMCA Makes its Way to Full Senate Vote After Lobbying Win

The Senate Finance Committee passed the US-Mexico-Canada (USMCA) Trade Agreement of 2019 on Tuesday, in a 25-3 vote.

Other senate committees are now are set to debate the trade agreement, beginning next Tuesday through Wednesday. Momentum around the revised deal built up after being stripped from the provisions industry argued would worsen pricing problems. 

The original version of the agreement was met with sharp criticism from lobbying groups like the Association for Accessible Medicines (AAM) and PhRMA over concerns with creating additional challenges to providing more affordable drug products to consumers across the three counties. 

As USMCA inches closer to ratification, it is poised to cut through the noise around drug prices.  

USMCA is expected to result in tens of billions in cost savings with new sales for domestic manufacturers. It aims to eliminate certain imperfections existing in the old NAFTA Trade Deal that allowed for a free flow of foreign components, parts, and products to the US market at US producers’ expense. An increase in domestic rules-of-origin under the new USMCA is intended to generate new investment in domestic factories to bring those that shifted to Asia back to North America, as well as open new markets for US producers of agricultural products like eggs. 

Additional provisions concern intellectual property rights, particularly for generic drugs and biologics. New provisions set forth under USMCA seek to support a policy framework that restricts other countries’ ability to illegally trans-ship goods to the US via Mexico and Canada. It was specifically designed to target those countries outside the region stealing business within it. 

The US federal government has been grappling with soaring drug prices for years, with last year seeing a 131 percent spike in the number of bills introduced in Congress versus the year prior. It failed to pass meaningful drug pricing legislation in 2019 and prices increased this year already. 

Replacing the 1994 NAFTA Trade Deal with USMCA was largely focused on tackling the high costs of drug products when the agreement was originally crafted in 2018. Yet pushback from industry and the government of Canada, among others, led to such provisions being removed.

AAM previously said it was “extremely concerned” that the USMCA “will decrease prescription drug competition, inevitably leading to increased drug prices in the United States.”

In a reversal, the industry trade association representing generic drug manufacturers then touted USMCA as it “sets a new standard for lowering drug prices and expanding access to medicines” after the House of Representatives approved the revised agreement in a vote of 385-41 last December. 

The new USMCA does not lock in high drug prices, as the older version reportedly did, nor protect pharma monopolies, according to AAM. It does, however, remove barriers to market access for generic drugs and biosimilars and incentivize greater competition for generic drugs. 

But not everyone was satisfied with the changes. Following its initial support when the countries signed the agreement in 2018, PhRMA expressed disappointment with the removal of biologics protections. The amendment “puts politics over patients,” said PhRMA President and CEO Stephen J. Ubl.

“Eliminating the biologics provision in the USMCA removes vital protections for innovators while doing nothing to help US patients afford their medicines or access future treatments and cures. The “only winners” are foreign governments looking to steal American IP and “free ride on America’s global leadership in biopharmaceutical research and development.”

Canada and Mexico approved USMCA last year after revisions eased Canada’s concerns over inconsistencies with the existing legislative frameworks for regulating prices on drug products. 

Senate Finance Committee Chairman Chuck Grassley (R-IA) and ranking member Ron Wyden (D-OR) praised the passage of the “historic USMCA” and urged the agreement's full approval.  

Grassley pointed to USMCA as a “modernized trilateral trade agreement” that “will open new markets for American exporters, create hundreds of thousands of new jobs, grow the national economy and protect US workers.” He expects that the “final approval is just around the corner.”

The “overwhelming bipartisan” vote is a “testament to all of the members who put in the elbow grease to make sure the new NAFTA puts American workers front and center,” Wyden added. 

The Senate Committee on Environment and Public Works and the Senate Committee on the Budget will hold business meetings to consider and to markup USMCA on Jan. 14, respectively. The Senate Committee on Health, Education, Labor and Pensions, followed by the Senate Committee on Commerce, Science and Transportation, are set to consider USMCA Jan. 15.