A report last week claiming the proposed Canada-EU free trade agreement could increase the cost of public health care in Canada by $2.8 billion has provincial opposition parties speaking out. This weekend, BC NDP leadership hopeful Adrian Dix told CKNW radio he is shocked but not surprised the ruling Liberals have said nothing. Dix says in the February 13 interview the provincial Liberals have a long-standing policy of supporting Big Pharma, and they are big supporters of CETA — the Comprehensive Economic and Trade Agreement Canada is negotiating with the European Union.
According to the report from the Canadian Generic Pharmaceutical Association, the B.C. tab for drug costs would go up by $249 million. About 45 per cent of that would be soaked up by government drug plans, with the rest incurred by consumers, businesses and unions. This is in a context of rising drug costs in Canada, to the point where “the drug sector will be the second largest component of Canadian healthcare spending in 2010 – ahead of physicians – at more than $31 billion,” according to the report. CETA would add to that cost by significantly increasing patent and data exclusivity protections to EU-based pharmaceutical companies, which export $5.3 billion in products to Canada annually.
Says the generics association report:
The intellectual property provisions in CETA currently proposed by the EU would require substantial changes in Canada’s IP laws for pharmaceuticals. If Canada agrees to the EU’s proposed pharmaceutical provisions in CETA, it will have the highest legislative or structural protection for new pharmaceuticals in the world… Canada would become the only country to combine a patent linkage regime, automatic patent term extensions, and ten-plus years of data exclusivity.
With help from the report, some definitions:
Patent linkage: To get regulatory approval for a generic competitor drug, the generic firm must “address patents asserted to be relevant by the patent owner (the ‘brand company’), before Health Canada will issue market authorization.” The generic can either wait for a brand name patent to expire or challenge the validity of the patent in Federal Court. In Canada’s unique system, after this process either the brand name or generic drug firm can then sue the other for infringement under the Patent Act. This double litigation creates additional costs that are passed on to the consumer. Canada and the U.S. both have patent linkage systems but the EU doesn’t. There is also no requirement in CETA that the EU offer patent linkage — all requests in the intellectual property chapter are of Canada.
Patent term extension: “Canada currently does not provide patent term extensions for delays in attaining marketing approval for a product. Canadian patents in all fields of technology have 20-year terms from the date the patent is filed, which is the uniform patent term standard set under TRIPS (Trade-Related Aspects of Intellectual Property Rights)… The EU‟s proposed language [in CETA] would result in Canada effectively granting up to 25.5 years of patent life for many pharmaceutical patents on approved products. The language is vague and it is not clear whether it could be made to apply retroactively to patents that have already expired. Patent term extension would appear to be available even in circumstances where a company delays the initial filing of its Canadian product submission.”
Data exclusivity: Until 2006, in accordance with TRIPS and NAFTA, Canada provided five years of data exclusivity to brand name drugs. This slows down generic competition by keeping clinical research data out of Health Canada’s hands so the regulator cannot use it to approve generic drug applications. In 2006, that was bumped to six years before a generic could submit an application, plus eight years marketing protection for “innovative drugs,” or “a drug that contains a medicinal ingredient not previously approved in a drug by the Minister of Health that is not a variant of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph.” The EU’s proposal in CETA will extend protection to all drugs, not just proven innovative drugs, and increase the term to 10 years, which “means that minor changes to a product could result in 10 years of new protection.” There will be trade and drug availability implications in the Canada-U.S. context. According to the report: “The EU’s proposals for data exclusivity go beyond Canada’s international trade obligations in TRIPS and NAFTA. The United States provides for five years of data exclusivity for small-molecule drugs, meaning that generic drugs available in the US may not be available by statute in Canada for a further five years if 10-year exclusivity is introduced in Canada.”
Already getting generics to market is a hassle, with application, challenge to the application, and possible lawsuits under the Patent Act by brand name companies. In CETA, on top of automatic extensions on patents and data exclusivity, EU pharmaceutical companies will get even more rights of appeal to further slow down the introduction of generics.
The generics association report concludes with an alternative approach to drug innovation that doesn’t involve extending monopoly protections:
…there are certainly other approaches that should be considered – such as directly sponsoring research through grants and tax incentives, or rewarding successful research on the basis of actual improvements in health through an institution such as the proposed Health Impact Fund, or establishing national support for drugs for rare diseases. If Canada wishes to increase its support for pharmaceutical innovation, there may be ways of achieving this goal that are more efficient, and less burdensome on government budgets, businesses and consumers than extending monopolies.
Of course any alternative will depend on either rejecting CETA outright or removing its intellectual property chapter. There is no good reason for Canada to adopt the EU regime for protecting pharmaceuticals and now a very good reason to say no — $2.8 billion in extra costs to already stressed Canadian public health systems.
To read the generic drug association report: The Canada-European Union Comprehensive Economic & Trade Agreement: An Economic Impact Assessment of Proposed Pharmaceutical Intellectual Property Provisions
To read a CBC article about the report: EU trade deal could cost Canada’s drug plans: report
