Canada’s generic drug industry has a mixed reaction to the Canada-EU Trade Agreement, or CETA, as it faces a longer wait before brand-name drugs emerge from patent protection, but also a potentially better environment for litigation which a significant expense in the industry.

The full text of CETA has not been released and much of the impact on drug prices will depend on how it is implemented, says Jim Keon, president of the Canadian Generic Pharmaceutical Association.

Basing his opinion on information released last Friday after the official signing and what he learned from Ottawa insiders, Keon said he’s relieved the EU did not get the patent protection of 25 years it had originally demanded for its pharmaceutical companies.

“Given what the Europeans were asking for on behalf of drug companies headquartered in Europe, it’s not as bad as it could have been. The government did push back,” he said in an interview with CBC News.

The EU’s brand-name drugs makers did get an extension of up to two years on the current 20-year patent on new products, but the length of the extension appears to depend on how long the drug took to get its original Health Canada approval.

Drugs can take two to five years to pass the approval process and, after CETA comes into effect, up to two years of that delay may be tacked onto the patent protection of a new product.

'What the government said it would do is simplify and unify the patent litigation system and try to ensure a greater degree of predictability for the generic drug industry'- CGPA president Jim Keon

But how this will play for the generic companies, which must await the end of patent protection before they can start manufacturing a new drug, will depend on how regulations are worded, Keon said.

Since the federal government has not released the text of CETA, he said he is unclear exactly how it will work. The extended patent likely will be applied to new drugs approved for use in Canada after CETA comes into force in 2015. Health Canada typically approves about 20-25 new products a year.

Keon said the provinces were vocal advocates for the generic industry on the patent protection issues, as generic drugs cost about 18 to 25 per cent as much as brand-name pharmaceuticals.

Provinces pushed on patent issue

“We were told throughout the negotiations, we heard from federal negotiators, that they were hearing more from the provinces on pharmaceutical patent issues than other issues because of their concern over their drug budgets because as you know, it is the provinces who pay for drugs for seniors and people on social assistance,” Keon said.

A study done three years ago for the association found that a five-year extension of pharmaceutical patents would cost Canadian pharmaceutical buyers, including consumers and provincial drug plans, about $3.5 billion.

But there is no way of knowing how to calculate the cost of the two-year extension CETA proposes, because it will depend on how the legislation is written and applied.

One factor that makes the trade deal less painful is that drugs made by the Canadian generics industry for export are exempt from any extension.

“Our companies in Canada were concerned that if patents are extended they’re not going to be able to enter the market in a timely way as patents expire elsewhere. Patents are granted country by country and may expire at different times,” he said.

In effect, a producer of generic drugs can gear up to make a new drug for export bound mainly by the laws of the country where they are exporting.

End to multiple patent litigations

Plus there was good news on the question of patent litigation, a key demand for the generic industry which faces millions of dollars in litigation costs annually.

“What the government said it would do is simplify and unify the patent litigation system and try to ensure a greater degree of predictability for the generic drug industry,” Keon said.

Though some drugs may have multiple patents – for the formulation, the chemical compound, the coating, or a new use among others – brand name companies will be permitted to sue a generic that wants to make their drug that is emerging from patent protection only once, instead of multiple times. Multiple litigations have been used to delay the ability of generics to enter the market.