Opinion: China chases U.S. on wooing innovators
America is the world's richest and most innovative country — but China is nipping at our heels.
In just a few decades, China has transformed itself from an impoverished country into the world's second-largest economy. Since beginning its transition to a more market-oriented economy in the late 1970s, China's GDP has risen nearly 10 percent annually, on average.
The Chinese have no plans to slow down. In 2015, China launched "Made in China 2025," a plan to channel state resources into high-tech industries. China seeks to become the world leader in 10 areas, ranging from IT, AI, electric autos and aerospace to rail transportation and even drug development.
The United States currently leads the world in bio-pharmaceutical investment. The U.S. bio-pharmaceutical industry invests about $90 billion in research and development each year. And our startups attract 75 percent of the world's bio-pharmaceutical venture capital. Not surprisingly, the United States produces roughly half the world's new medicines.
Drug development is expensive and time-consuming. Investors will only fund research if IP protections, like patents and data exclusivity periods, give them a reasonable chance to earn a return on any resulting drugs.
America has the world's strongest IP protections. For instance, the United States offers 12 years of regulatory data protection for sophisticated medicines known as biologics. During this time, rival companies can invent and manufacture competing products but are prohibited from using an inventor's clinical trial data to create cheap knockoff drugs.
Ironically, America’s model of IP protections has proven so successful that China wants to copy it. The Chinese government recently proposed matching our 12-year term of data exclusivity for biologics. China is already investing more than the United States in late-stage R&D. After years of stealing American IP, the Chinese are now trying to lure bio-pharmaceutical innovators away from us by granting them strong IP protections.
And yet some lawmakers in Washington are bashing the exact IP protections the Chinese want to emulate. Consider the recently negotiated United States-Mexico-Canada Agreement.
USMCA would require Canada and Mexico to provide 10 years of data protection for biologic drugs. Today, Canada only offers eight years, while Mexico offers none. These shorter data protection terms discourage U.S. companies from selling their medicines in Canada and Mexico.
Some members of Congress have criticized this provision, inaccurately claiming it would raise drug prices. Some have even threatened to vote against USMCA unless the biologics provision is eliminated or changed.
Their concerns are unfounded. There is no evidence that U.S. trade deals have driven up drug prices at home or abroad, according to a recent study by the Council on Foreign Relations.
Congress should beware of reducing incentives for continued innovation for lifesaving, revolutionary medicines.
Holding the new trade deal hostage over this data protection provision would hurt U.S. scientists, manufacturers and exporters, while strengthening China. Funding for R&D will flow to whichever country has the strongest IP protections.
American patients would suffer, too. Without the promise of data protection, U.S. innovators would lose the incentive to fund groundbreaking R&D. Cures for Alzheimer's, cancer and countless other diseases may be delayed or never come to fruition.
America's intellectual property laws are so impressive that Chinese leaders want to copy them wholesale. It makes no sense for our own lawmakers to discard the IP protections that have made America the world's most innovative nation.
Gary Locke is honorary co-chairman of the Pass USMCA Coalition, and previously served as governor of Washington, U.S. ambassador to China and secretary of commerce.