As Canada and the European Union (EU) appeared close to finalizing a Comprehensive Economic and Trade Agreement (CETA) in December 2012, Canada’s generic drug industry remained concerned about possible Canadian concessions on patent protection for brand-name pharmaceuticals.
The European Commission had proposed that Canada extend intellectual property (IP) protection for brand-name drugs, which would mean a longer wait for generic versions to enter the market.
“The Canadian government has said it doesn’t support these measures per se because they would drive up drug costs in our health care system,” says Jim Keon, president of the Canadian Generic Pharmaceutical Association (CGPA). “But our concern is that these proposals are still on the table; the government hasn’t ruled out accepting them as a trade-off for some other benefit — expanded access for Canadian beef exports, for example.”
Mr. Keon cites a study by health economists Paul Grootendorst and Aidan Hollis, which estimated the EU proposals would delay introduction of generic pharmaceuticals by an additional 3.5 years in Canada, increasing drug expenditures by $2.8 billion a year. It has been reported that federal studies have estimated the extra drug costs would be up to $900 million each year.
The Europeans are pushing patent protection that goes beyond not only current World Trade Organization (WTO) requirements, but also beyond Europe’s own IP standards, says the CGPA president. “Many brand-name drug companies are headquartered in Europe, so what they are doing is advocating on behalf of those companies and trying to get maximum profits and business for them in Canada,” he says. “Not only would these measures increase drug costs, but they would harm the generic industry in Canada — generic manufacturers would move their development and manufacturing to other jurisdictions, where they could begin exporting their products earlier.”
Concerns about drug-patent proposals not grounded in evidence: CHPI
Dr. Brett Skinner, with the Canadian Health Policy Institute (CHPI), has a different perspective on the impact of the patent proposals on Canadian health care costs. The Canadian government might lose the chance to make a deal with the Europeans, he says, by worrying about drug costs that are “exaggerated.”
“If we are not willing to accept these drug IP proposals, we are risking an opportunity to build a trade agreement with the world’s wealthiest market,” says Dr. Skinner. “Such an agreement will increase jobs, investment and economic activity in Canada that will dwarf any concerns about patented drug prices.”
Dr. Skinner analyzed provincial/territorial drug and total health care spending for the past 38 years. He found that although drug spending as a proportion of total health care budgets increased from 1.2% to 8.0% over that period, there was no correlation with the rate of growth in overall health care expenditures.
“Despite a steadily increasing share of total health expenditures going toward drugs over time, there was no relationship between the percentage spent by provinces in any given year on drugs and the rate of growth in overall health expenditures in that year,” he says. Spending more on drugs tends to produce compensating savings elsewhere in the system, he argues.
Additionally, says Dr. Skinner, since 1987 — when Canada last increased patent protection for brand-name drugs — Canadian prices for those drugs have increased 1.9 percentage points slower than the general rate of inflation and Canadian patented drug prices have averaged below median international prices since 2001.
“The argument that adopting stronger IP rights for pharmaceuticals will drive up health care costs is not supported by the evidence,” he says.
Meanwhile, Canada’s generic industry plans to continue to make its concerns known to the federal government and to advocate for a deal that doesn’t extend drug-patent protection.
“Going into the final days of negotiating, we will continue promoting our interests and remain hopeful that Canada will sign a trade deal with the Europeans,” says Mr. Keon. “We support the government’s trade agenda — we are free traders ourselves — but we don’t want these heavy-handed restrictive aspects for pharmaceuticals.”