Pacific trade talks bogged down over pharmaceuticals

ATLANTA (Reuters) - Pacific trading partners remained deadlocked over protections for next-generation medicines on Saturday after a long night of negotiations, potentially extending talks on a sweeping trade pact into a fifth day, sources close to the talks said. Some delegates involved in talks on the 12-nation Trans-Pacific Partnership, which will create a free trade zone covering 40 percent of the world economy, were looking to re-book flights for Sunday in preparation for another day of negotiations. "It's very probable," one official said of the chance that talks would stretch into Sunday. Another said the timeline was not yet clear, with negotiations going down to the wire over intellectual property protections on biological drugs. Trade ministers, most of whom arrived in the southern U.S. city of Atlanta on Wednesday, had initially hoped to wrap up talks by Thursday. A push by the United States to set a longer period of exclusivity for drug makers who develop biological drugs like Genentech's Avastin cancer-treatment has run into opposition from other TPP economies. The United States allows pharmaceutical companies an exclusive period of 12 years to use clinical data behind the approval for a new biological drug. The Obama administration had previously proposed lowering that threshold to seven years but has pushed a proposal for an eight-year minimum in the TPP talks in Atlanta. Drug companies argue that a longer period is needed to create an incentive for developing treatments for diseases such as cancer and arthritis. Australia, along with others such as New Zealand and Chile, have been unwilling to offer more than five years protection for the medicines since longer terms will push up the cost of state-subsidized medical programs. The impasse is holding up a deal on dairy trade, the main other sticking point in the talks. New Zealand, home to the world's biggest dairy exporter Fonterra , is insisting on increased access to U.S., Canadian and Japanese markets. Canadian Prime Minister Stephen Harper, whose party faces a general election later this month, said the talks had made progress. "Let me assure everyone that we will only conclude a deal that is in the best interests of our country," he told reporters in Montreal. Harper's Conservatives are on course to win the most seats in the Oct. 19 election but may lose their majority, and the main opposition party has said it would not feel itself bound by any TPP deal that Harper negotiated. Canada's parliament also would have to approve any TPP pact. (Reporting by Krista Hughes and Ana Isabell Martinez; Additional reporting by David Ljunggren in Montreal; Editing by Raissa Kasolowsky)