Washington Insider- Wednesday

Big Pharma Flap Worries Administration

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Poultry Dispute Continues Between US, South Africa

A review of South Africa’s access to trade benefits under the African Growth and Opportunity Act (AGOA) will move ahead after South Africa and the US failed to finalize an agreement on poultry trade issues that has been festering for years.

South Africa has banned US poultry imports since last December after an outbreak of bird flu. The measure came on top of 15 years of punitive import duties on some US chicken products.

The two countries had set an Oct. 15 deadline to agree on new animal health and food safety rules, which also affect US beef and pork exports and are estimated to cost the US more than $80 million a year. A spokesman for the US. Trade Representative said South Africa missed the deadline and Washington had no choice but to move on with a review of South Africa’s eligibility for trade benefits under the African Growth and Opportunity Act (AGOA). Cutting access to AGOA could see South Africa lose as much as $1.7 billion of exports a year.

There is no set deadline to complete the review.

National Chicken Council president Mike Brown urged the administration to take the necessary action to get US chicken back in South African markets as soon as possible.

The development comes after reports out of South Africa last week that the two sides were close to signing an agreement to facilitate the shipment of 65,000 tonnes of US poultry to South Africa. “We’re very close to finalizing these technical outstanding poultry issues that need to be resolved,” Ambassador Faizel Ismail, South Africa’s special envoy for AGOA, told Reuters. “The vets are making progress. Our vets are in constant communication with the vets from the US on how the US can continue to export poultry in the event of another outbreak in one or other states.”

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USDA: Census Data Reveals Benefits of Farm-to-School Programs

According to the preliminary Farm to School Census data from the 2013-2014 school year, 75% of schools with farm-to-school programs reported seeing at least one positive benefit — either reduced plate waste, better acceptance of healthier meals, increased participation in school meal programs, lower school meal program costs or more support from parents and community members.

USDA said there are 42,000 schools with farm-to-school programs operating in conjunction with the National School Lunch Program and other school meal programs.

“Farm to school partnerships have a proven track record of encouraging kids to try, like and eat more healthy foods and creating new market opportunities for the farmers that grow them,” Agriculture Secretary Tom Vilsack said. “Congress should act quickly to reauthorize the Healthy, Hunger-Free Kids Act to build on the success of farm to school and the healthier school meals and continue our momentum towards a healthier next generation of Americans.”

USDA also found that farm to school programs present economic opportunities for farmers and ranchers. Census data show that the value of local food purchases by schools increased by 55% in just two years, from $385.8 million in school year 2011-2012 to $598.4 million in school year 2013-2014. And, USDA said that the census data revealed that nearly half (47%) of respondents indicated that they plan to increase local food purchases in the coming years.

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Washington Insider: Big Pharma Flap Worries Administration

The 12 negotiating members of the Trans Pacific Partnership say they have a deal, but apparently a lot of details remain to be hammered out. For example, the Hill is reporting that the highly controversial pharmaceutical provision, which involves a class of drugs called biologics, is already threatening to drag out the approval process for the overall deal.

Under the TPP deal, pharmaceutical companies could get up to eight years of exclusive rights to their clinical trial data, compared to 12 years currently in the United States, five years in Australia and little to none in developing nations, the Hill says.

However, big Pharma and its supporters are not inclined toward concessions. “They were supposed to come back with US law on [intellectual property] rights, and they didn’t, and our board is very disappointed,” complained Mark Grayson, a spokesman for PhRMA, which represents dozens of top pharmaceutical companies.

This puts the US pharmaceutical industry in a bitter standoff with the administration as the industry is reported to be searching for an approach to keep Congress from ratifying the agreement next year. Because the deal will be considered in an up-or-down vote, PhRMA could have an outsize impact on its overall approval.

While the administration is preparing to publish a copy of the deal with all the gory details this month, Sen. Orrin Hatch R-Utah, who led the fight this spring to provide the President’s fast-track trade authority, now is being watched carefully as a bellwether in the approval process. So far, he has been sharply critical of what he has seen, including the pared-down monopoly protections for drug companies.

“What’s going to happen is that a lot of companies are just going to go out of business because they cannot recoup the monies,” Hatch told National Public Radio three days after the deal was struck. “Everybody would like lower drug costs, but the drug costs are going to skyrocket, Hatch asserts.

Biologics, described as the next frontier of pharmaceuticals, are among the most complicated and expensive types of drugs to produce. Companies have said it takes between 12.9 years and 16.2 years to break even on the costs. The drugs also hold a life-saving potential that remains out of reach for many populations outside the United States’.

The biologics provision is drawing criticism from all sides: It’s been condemned both by Republicans siding with Big Pharma and Democrats advocating for global health groups that want to end monopoly rights altogether.

Obama can only afford to lose support from a handful of lawmakers from the GOP, a party has been reliably pro-­pharma over the years. The powerful lobby spends about $10 million a year, not including campaign contributions. During the last election cycle, the biggest recipient of PhRMA cash was Senate Majority Leader Mitch McConnell R, Ky., the Hill reports.

Hatch already has warned that the trade deal is losing support in the Senate. Though the TPP approval vote cannot be filibustered and needs only a simple majority to pass it, the potential losses could undercut the deal. Hatch pointed to dairy and tobacco as industries who are beginning to walk back their support. “We passed it with 62 votes. We’re already starting to lose those.”

Certainly, drug-makers’ exclusivity rights have been one of the toughest points for trade ministers during the years-long negotiations. As negotiators worked out the final details in Atlanta earlier this month, they twice had to extend their stay because of disagreement over the matter.

Observers also note that the drug issue is a fight Obama is familiar with following the battle in 2008, his administration agreed to 12 years of exclusivity during the crafting of the Affordable Care Act. The administration said then that seven years would be a “generous compromise.”

Since striking the deal last week, the president has personally tried to court the powerhouses of the pharmaceutical industry by inviting a coalition of CEOs to the White House last Thursday. After the session, the executives said Obama’s remarks did not break the stalemate. “They told the president the companies still need the 12 years.”

So, already the deal is involving the hardest of hardball by massive companies with enormous stakes—and, by the administration that is fighting to preserve a key accomplishment. Observers note that the temptation to characterize every conflict as pivotal is powerful, but in fights like this, the stakes mount quickly and neither side can survive losses of more than a few supporters.

Still, the President has moved the talks this far, past at least a couple of hurdles once thought to be certain deal-killers. Thus, once again, the trade fight should be watched carefully by producers as it proceeds, Washington Insider believes.


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(GH/SK)