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Provinces want compensation for increased drug costs from CETA

Canadian Press reports this week that provincial premiers “have undertaken a letter-writing campaign to demand compensation from the federal government for any increase in drug costs that might come of a free trade agreement with Europe.” The article continues that “while Ottawa has not formally agreed to any of the demands, it has not ruled anything out — leaving many provincial and federal insiders, as well as trade experts, to suspect the federal government will bend to at least part of the EU ask.”

“All premiers have sent letters, I’m told, to the federal government, expressing our concern about this specific issue, because we want to make sure, as I said, that British Columbia’s interests are represented,” said Clark in the BC legislature, in response to questions from opposition NDP leader Adrian Dix, according to the CP article. (For the full Hansard record here, or see below.)

“This is something that we’ve brought to the federal government’s attention. . . . If this agreement is not concluded in a way that meets British Columbia’s concerns, we would like them to reimburse us for those added costs.”

Among the EU demands are a patent term extension (from 20 to 25 years), allegedly to compensate for the amount of time it takes to bring a drug to market, and a further extension of about two years to the data protection period during which time brand name firms can keep their drug recipes secret. These changes to Canada’s drug regime, as well as EU demands to create a new right of appeal for brand name companies to challenge the introduction of generics, are estimated to increase the cost of public and private drug plans in Canada by almost $3 billion annually.

The federal government refused to say where it stands on the matter, claiming that “Negotiations are ongoing and we are down to focused sessions on outstanding issues,” and that, “Solutions to the outstanding issues are being actively explored.”

As the CP article notes, CETA negotiations continue in Ottawa this week, “although it’s not known whether drug patents will be part of their discussions.” (According to the latest DFAIT briefing on CETA, rules of origin will be the main topic during this week’s round of talks.) The story also suggests the Harper government may be tempted to agree to EU demands on drugs to pave the way for Canada’s entry into Trans-Pacific Partnership talks where the U.S. is making equally problematic intellectual property demands of the countries involved, which are also resisting.

EXCHANGE BETWEEN DIX AND CLARK (from the Hansard)

A. Dix: I guess I had a further question I wanted to ask, since there’ll be no public consultation. So we’ve gone from public consultations last year to none. Was the particular issue of CETA’s impact on health care discussed at the Council of the Federation meeting in January?

Hon. C. Clark: …on the member’s question: yes, it did come up. The Premiers talked about it. The Premiers are all concerned about the impact that it could have on pharmaceutical drugs and the cost of pharmaceutical drugs, the impact that negotiations could have on that. All Premiers, all governments, have sent a letter to Canada expressing our concerns about that.

A. Dix: One of the key questions involved in the CETA agreement and a key problem in provincial jurisdiction relates to EU demands to extend brand-name patents for prescription drugs in Canada.

The pressure from other provinces that have taken clear positions on this issue has had some impact. As the Premier will know, a recent House of Commons trade committee report stated that at least in March the federal government had not yet made concessions on these questions. However, we’re entering into a further phase in the negotiations, and there are signals that that may change, that Ottawa may agree to some measures that would lengthen the life of drug patents, measures that would clearly negate recent savings – for example, the savings that have been proposed and pursued under revised generic drug deals.

B.C. is a strong supporter of the agreement, but I want to ask the Premier specifically, because the EU has asked Canada to accept patent term restoration, which is also known as a supplementary protection certificate, which would extend patent terms by up to 5½ years. I’m wondering if B.C. will oppose that and would see that as a deal-breaker in terms of supporting the overall agreement with the European Union.

Hon. C. Clark: This is an area of federal jurisdiction. I should actually say, too, that provinces have not until now had even the role that we have at the table in any free trade negotiation, and I know that when I speak to my fellow Premiers across the country, we all consider this to be a very positive development. Particularly as we look forward to the agreements that I certainly consider to be more crucial to B.C.’s interests – free trade agreements with our Asian neighbours – this is a good development, because we do want to be at the table, although we are not negotiating the agreement ourselves.

The federal government has come some way in making sure that we have a chance to work closely on this, although we aren’t – as the member, I think, knows quite well – actually at the table. We aren’t actually the negotiators of the agreement. It is an area of federal jurisdiction, and as I said, we’re paying close attention to where we’re at in the negotiations about intellectual property.

We are concerned about how or whether that will impact on provincial drug health care costs. That discussion on patents is still ongoing. No decisions, I’m informed, have been made yet on that, but as I said, we want to make sure that we are protecting our budget, that we are protecting innovative industries. We want to make sure that we’re getting the best deal for British Columbia. We have sent a letter. All Premiers have sent letters, I’m told, to the federal government, expressing our concern about this specific issue, because we want to make sure, as I said, that British Columbia’s interests are represented.

Now, let me just close on this, though. I think we’ve discovered another area of profound disagreement between the opposition and the government. That is on the issue of free trade. We believe in freer trade, and that is clearly the position of my party. I think it’s a position that British Columbians would overwhelmingly support. We believe in free trade because, as a small, open, trading economy, we depend on trade in order to make sure that British Columbians can go to work every day. That is what has built British Columbia, so we want to make sure we get the best possible trade deals that we can and look at every individual deal differently.

Having said that as a matter of principle, I know the Leader of the Opposition and I disagree on that – just like we may disagree on the question on resource development, just like we may disagree on the question of trying to make sure that we’re exporting every individual deal differently. But having said that, as a matter of principle I know the Leader of the Opposition and I disagree on that, just like we may disagree on the question of resource development, just like we may disagree on the question of trying to make sure that we’re exporting more of our commodities – just like we may disagree on all of those questions.

I think we also disagree on whether or not free trade is a good thing to pursue. On my side, in my government, we believe in free trade. We think it’s good for British Columbia, and we’re going to continue with that position in this agreement and in future agreements that I’m sure the federal government will be negotiating on behalf of Canada. We want to see more free trade agreements concluded, because we believe that freer trade is good for British Columbia workers and good for British Columbia families.

A. Dix: The question, I guess, the specific question…. This really has nothing to do with free trade – the extension of patent protections beyond which had been already provided and extended over the years by the federal government that have cost provincial jurisdiction significantly. In this case what’s at risk is hundreds of million in additional costs and the sustainability of the PharmaCare system.

So if it’s disagreeing with the Premier that selling out the public health care system for a deal with the European Union on drug patents…. There’s a disagreement, because I would rather spend public health care dollars in British Columbia on British Columbians. If the Premier wants to send that money to European drug companies, well, there you go, hon. Chair. I hope that’s not the case, though. The Premier has indicated that it might not be the case.

I don’t know whether the federal government, under the agreement – because the reason the provinces are more involved is partly at the request of the European Union itself, because provincial jurisdiction is so significantly involved in these matters – has made any offer to compensate British Columbia for such costs under the agreement.

Hon. C. Clark: The member is quite right about how the provinces came to be involved in this. Nonetheless, I think it’s important to note that it is a very, very good precedent for British Columbia. As one of the most trade-dependent provinces in Canada, as a province that has traditionally relied on free trade and open markets overseas, as a province that is increasingly looking to those emerging markets in Asia, free trade really matters for the future of our province.

I raise that because the member is speaking about some specifics of this agreement, but as far as I understand it he isn’t in favour of free trade agreements, for the most part. I think he’s opposed almost every free trade agreement that this country has entered into, and I think he’s done it publicly. He can correct me if I’m wrong. I don’t know if he supports even being part of a CETA negotiation as a matter of principle. He hasn’t said that.

But I believe, and we all do, in freer trade around the world, and we want to get the best deals. The details of the deals definitely matter. But as a principle, we are certainly not opposed to pursuing these kinds of negotiations.

The other thing that the member said was that I said that it “might not be the case” that we’re concerned about the impact on drug costs. I want to be clear about that. It is not the case that we want this to have an impact on increasing our drug costs. That is why, as I’ve said a couple of times, we wrote the letter expressing our concern about this to the federal government. We wrote that letter because we are concerned about the impact that this agreement could have on drug costs in British Columbia.

We wrote that letter. As I understand it, every other Premier across the country wrote a similar letter. This is something that we’ve brought to the federal government’s attention, and in that letter we told the federal government that we thought one of the…. If this agreement is not concluded in a way that meets British Columbia’s concerns, we would like them to reimburse us for those added costs. Of course, just as he said. That’s one of the things that we’ve suggested to the federal government.

Now, I hope that the agreement will be concluded in a way that doesn’t impact our drug costs. We haven’t yet received an answer from the federal government about that, but we’ve expressed it very, very clearly, and we’re monitoring these negotiations very closely. It’s one of our primary areas of concern with respect to this particular free trade agreement.

A. Dix: What was the date on the letter, and will the Premier share it with the opposition?

Hon. C. Clark: I don’t have the letter here, so I can’t confirm the date for the member. I am advised, though, that we will likely be able to share it with the opposition, subject to concerns about confidentiality. But my understanding is that we’ll likely be able to share that. If we’re able to, I’ll make sure we do.

A. Dix: The Premier will be interested to know that we were just looking at pictures of the Premier in an anti-free trade rally in 1988. This just shows how our positions evolve sometimes…