Mexico's Pharmaceutical Industry and The USMCA Deadline

Following the enactment of the USMCA, Mexico was granted a five-year grace period, which expired on July 1, 2025, to implement obligations related to pharmaceutical products, providing a window to align its regulatory framework with international standards. 

Two protection mechanisms deriving from Articles 20.46 and 20.48 of the USMCA are pending local regulations: Patent Term Adjustments to compensate for regulatory approval delays (PTA) and regulatory data protection exclusivity (DPE).   Implementation must seek to balance innovation incentives with timely market access for generics and biosimilar and the results will have significant importance for Mexico’s pharmaceutical industry.

Patent Term Adjustment to Compensate for Regulatory Approval Delays

Article 20.46 underscores the importance of efficient processing of marketing authorization applications for pharmaceutical products to avoid unreasonable or unnecessary delays and sets forth compensation when those delays occur. Key obligations include:

• Efficient Processing: Each party must strive to process regulatory approval applications promptly to prevent undue delays that could hinder market entry.
• Patent Term Adjustment: For pharmaceuticals under patent protection, an adjustment to the patent term is mandated to compensate patent holders for unreasonable reductions in the effective patent life resulting from the marketing authorization process.
• Conditions and Limitations: Parties may impose conditions, such as limiting adjustments to the first marketing authorization, capping the extension at five years, or implementing a sui generis protection period of up to two years.

The adjustment may involve extending the patent term or granting a supplementary protection certificate (SPC), as seen in Europe, limited to specific claims embodied in the authorized product. In Mexico, discussions favor patent term extensions. 

The definition of “unreasonable” delays remains under debate, as innovators would benefit from a shorter timeframe -e.g. a consideration that an application is delayed right after the regulatory period for approval expires. This period currently stands at 180 days for new products and 60 days for equivalence agreements. On the other hand companies and associations in the generics side of the industry, will argue for a longer period to be considered as “unreasonable” (for example, three years after an application was filed). Delays not attributable to the authority, such as preventions or judicial suspensions, are expected to be excluded from compensation.

Data Protection Exclusivity / Regulatory Exclusivity

Article 20.48 establishes protections for undisclosed clinical data concerning the safety and efficacy of new pharmaceutical products, preventing third parties from relying on such data without consent.

• Protection for New Products: If undisclosed test data is required for marketing authorization, third parties cannot market the same or similar product based on that data or prior authorization for at least five years from the approval date in the territory.
• Reliance on Foreign Approvals: If evidence of prior marketing authorization from another territory is submitted, the same five-year protection applies from the date of local approval.

The scope protects against third-party requests, regardless of whether the reference product is Mexican or foreign. It encompasses new chemical entities, with ongoing discussions about extending coverage to combinations, specific indications, formulations (interpreted broadly), and biologics. The original wording of the treaty included a 10-year protection for biologics, which was removed in a modifying protocol. New indications and pediatric indications, while protected in the United States, are not referenced in the treaty.

Currently, pharmaceutical companies have the possibility to secure regulatory exclusivity through litigation, which usually leads to both lengthier and costly proceedings for innovators, and lack of transparency for generic manufacturers.  Regulations clarifying the scope of protection will provide a clearer path for industry participants. 

Main Points of Controversy

Key issues in implementing these provisions include:

• Compensation for Delays: Debates focus on when the compensation period begins, which patents are affected, identifying patents claiming the innovator product, and timelines for requesting and responding to adjustments.
• Data Protection Exclusivity: Controversies involve coverage for indications, combinations, formulations, biologics, orphan drugs, and pediatric indications.

These unresolved issues highlight the need for clear regulatory guidelines to ensure fair implementation for all industry participants.

What’s Next? 

Mexico is likely to implement changes to its laws and regulations in the short term. These changes will have deep impact on loss of exclusivity analysis by companies in the innovator and generic spaces. We anticipate that, regardless of the outcome of implementations, either industry associations or individual companies will file judicial challenges against either the legal texts or the individual determinations by authorities.