Ottawa Citizen, Canada
Canada’s other drug war
By Kate Heartfield, The Ottawa Citizen
4 May 2012
There’s a debate raging over Canada’s intellectual property regime. If one side’s right, Canada stands to pay $2.8 billion more every year in drug costs while it undermines its generic-drug manufacturing sector. If the other side’s right, what’s at stake is the viability of Canada’s pharmaceutical research sector and a trade deal that, the federal government crows, could raise Canada’s GDP by $12 billion a year.
It’s possible both sides are right, at least to some degree. That might be the scariest scenario of all.
Canada and the European Union are negotiating a free trade deal. There are a few sticking points, including Canada’s supply-management system in agriculture. You wouldn’t think it would be possible to find a trade issue with more acrimony, spin and brain-numbing complexity than supply management. But wait! The issue of pharmaceutical intellectual property (IP) has all that and more!
According to a recent House of Commons committee report, European representatives have said changes to Canada’s IP protection are “a critical priority in the Canada-EU CETA negotiations.”
Patents last for 20 years in Canada. That wouldn’t change under the Comprehensive Economic and Trade Agreement proposal, but Canada would allow extensions for up to five years, to compensate the patent-holder for regulatory and development delays while the patent clock was running.
Another change would be an extension to data exclusivity, which prevents generics from using information from clinical trials. Canada now has a data-exclusivity term (generally speaking) of eight years. Under CETA, Canada’s term would extend to match Europe’s, at 10 years.
The third change would be giving patent-holders a new right of appeal if they lose a patent-linkage proceeding. Patent linkage means that the same approval process that considers whether a drug is safe and effective also considers whether it violates a patent. That process is in addition to the patent-holder’s ability to fight an infringement in court.
The brand-name industry says these three changes would simply bring us up to where Europe is. Without a level playing field, Canada’s pharmaceutical industry will suffer. They argue that even if Canada weren’t negotiating a trade deal with Europe, these changes would be worth making. They have a point: Stronger IP protection could encourage investment in research. But translating that into a dollar figure, or trying to figure out exactly how long a patent or data-exclusivity term should be, is tricky.
The generics support the trade deal, too, just not this proposal. They say the changes would actually make Canada’s pharmaceutical IP regime the most stringent in the world, because it would combine Europe’s data protection terms with patent linkage, which Europe doesn’t have. The generics argue that this is all about pharmaceutical companies, many of which are headquartered in Europe, trying to squeeze Canadians.
“To suggest that Canada doesn’t already provide a good intellectual property market for pharmaceuticals is a lie,” says Jim Keon, president of the Canadian Generic Pharmaceutical Association.
Professors Paul Grootendorst and Aidan Hollis produced an economic analysis of the CETA provisions in 2011, a study commissioned by that generics association. They looked at some generic drugs that came on the market in 2010, and tried to figure out how much delay the CETA provisions would have added, had they been in place. On average, they estimated the delay would have been 3.46 years. They then put a dollar figure on that delay for both public and private buyers of drugs, and another on how much they would expect the brand-name industry to spend on research and development after the changes. They conclude that “the EU proposals would thus require Canadians to spend $2.8 billion extra to obtain an additional $345 million of investment into pharmaceutical R&D in Canada.”
The hit would be particularly nasty in Ontario, they say, at $1.2 billion a year. It’s no wonder this got the attention of the Don Drummond spending review and the opposition parties.
“That study is pure poppycock,” says Russell Williams, president of Rx&D, Canada’s Research-Based Pharmaceutical Companies. “It’s retro-active, it’s based on all kinds of loaded assumptions, and it’s fearmongering.”
Williams says it isn’t possible to say for sure how much these changes will increase drug costs.
But while it’s fair to say the $2.8 billion is just an estimate, it seems unlikely there could be no cost associated with these changes. There’s a reason the brand-name pharmaceutical companies support the idea. The longer a brand-name drug has exclusive access to the market, the less access Canadians will have to cheaper competitors.
When I tried to pin down Williams on that, he said, “Canadians don’t want just the cheapest. They want the best value … If you have no innovative drugs in your country, sure, you can drive down price. But you’re not going to have the innovative medicines that Canadians want.”
More innovation is a good thing. But if it’s going to cost the already strapped Canadian health care system, that’s something the federal government needs to acknowledge and address.
Of course, that’s assuming the government wants to agree to Europe’s demands.
It would be a fool’s game to try to make that decision based on which domestic industry we want to support the most. That’s the kind of question that tends to interest politicians. But the whole point of free trade is to allow consumers access to the best goods at the best price. The question that most concerns Canadians is whether these changes would affect our ability to access and pay for drugs. Whether your pill is European or Canadian, brand-name or generic, what matters is whether it works and how much it costs.
Kate Heartfield is the Citizen’s deputy editorial pages editor.