Canada-EU drug patent demand in trade talks costs almost $2B
Extending drug patents could boost provinces' annual drug costs by $795 million-$1.95 billion
The Canadian Press
Posted: Oct 15, 2012 10:55 AM ET
Last Updated: Oct 15, 2012 12:04 PM ET
Members of a coalition of unions demonstrate against ongoing free trade negotiations between Canada and the European Union last December at Quebec's National Assembly, using a Trojan horse as a symbol of their concerns. (Jacques Boissinot/Canadian Press)
Related
Confidential federal research on free-trade talks with Europe shows that giving the European Union just one part of what it wants on drug patents would cost Canadians up to $2 billion a year.
The Department of Foreign Affairs and International Trade has always insisted it's a "myth" that the Canada-EU free trade deal would increase health costs.
But in September, officials at Industry Canada and Health Canada combined forces to examine the cost of the European demand to implement a patent-term restoration system, The Canadian Press has learned.
They found that based on past history of approval patterns, the EU proposal would add an average life of 2.66 years to a typical drug patent, and increase Canadian drug costs by between $795 million and $1.95 billion annually.
The range of projections is large because government analysts have no way of knowing exactly what kind of drugs will be in line for patents in the future, and had to make some broad assumptions.
The analysis also looked at the cost of a compromise that would see patent terms extended to cover the time between application for regulatory approval and market authorization.
Such an option would likely add an average of 1.23 years to patents, and cost Canadians between $367 million and $903 million annually.
A third option would just extend patents to cover off any delays beyond Health Canada's benchmark guidelines. It would extend patent terms by 18 days on average, and cost Canadians between $14.7 million and $36.2 million a year.
Generally, the extra costs stem from patients having to rely on brand-name drugs longer than they do now, rather than turn to cheaper generic drugs that would be available sooner if patents were not extended.
The costs would have to be covered by provincial drug plans, employee insurance plans and individuals who buy drugs.
Negotiators at table this week
Ottawa has not yet formally responded to the EU demands on drug patents or announced its position on intellectual property. The EU and its many large brand-name drug producers say Canada's patent regime is too lax and not up to global standards.
Negotiations on the topic are kicking into high gear this week in Brussels, but given the controversial nature of the talks, negotiators are expected to leave any final decision-making on drug patents to ministers later this fall.
Adam Taylor, a spokesman for Trade Minister Ed Fast, would not comment directly on the bureaucrats' number-crunching.
"Our government has always sought to strike a balance between promoting innovation and job creation and ensuring that Canadians continue to have access to the affordable drugs they need," Taylor said in an email, reiterating the government's standard message on the drug patent regime.
"Our government will only sign an agreement if it is in the best interests of Canadians."
Still, the fact that federal officials are costing out options for compromise suggests strongly that Ottawa is considering a move — despite vociferous opposition from many provincial governments, the generic drug industry and some health-care advocates.
The Canadian generic drug industry has financed its own research that indicates the EU proposals would cost Canadians about $3 billion a year.
"These specific EU proposals are nothing more than an attempt at a cash grab on the backs of hard-working Canadians," Jim Keon, president of the Canadian Generic Pharmaceutical Association, said recently.
"Extending market monopolies for brand-name drugs will not reduce trade barriers. It will, however, increase revenues for European-based drug companies at the expense of Canada's health-care system. It will also increase trade barriers for Canadian generic pharmaceutical manufacturers."
Generic drugs typically cost less than half the price of their brand-name equivalents.
Provinces want compensation
Keon's arguments have the ear of several provinces wrestling with rising health-care costs. They have written the federal government demanding compensation if the trade deal drives up drug costs.
But an equally vocal lobby led by the brand-name companies argues that Canada's intellectual property regime is not as strong as its competitors, and makes Canada a less attractive place to invest as a result. Brand-name drugs are one of Europe's top exports to Canada.
"The notion of strengthening intellectual property as a way to drive investment and innovation faces criticism. But history tells us that it works," Russell Williams, president of Canada's Research-based Pharmaceutical Companies, said in a speech earlier this year.
He argued that patent-term restoration is fair because it pressures bureaucrats to be more efficient in approving new drugs.
"It simply ensures that if government regulatory and denial processes take longer than agreed, then the patent holder gets credit for the extra delay on the term of their patent."
Patent-term restoration is just one of three EU demands on Canada in the realm of pharmaceuticals. Europe also wants brand-name companies to have more legal rights of appeal in case of unfavorable approval decisions. The EU also wants to increase data protection standards by two years.
Patent-term restoration is widely considered to be the most important demand of the three.
Canada's position on intellectual property and drug patents in the European free-trade agreement will serve as the basis of negotiation in broader free trade talks in the Trans-Pacific Partnership.
Share Tools
Top News Headlines
- Unknown remains found on Dellen Millard's farm
- Police searching the farm of Dellen Millard, the 27-year-old charged with first-degree murder after the remains of Ancaster, Ont., man Tim Bosma were discovered, have found other remains on the property, but it's unclear if they are human or animal. more »
- Canadian on EI shut out amid foreign worker influx
- A jobless Canadian IT professional who is collecting employment insurance is upset because he now suspects several recent jobs he applied for went to temporary foreign workers. more »
- Can the Senate fire a senator?
- An expert on parliamentary rules says the Senate has the power to turf a senator from the chamber, as long as a majority approves the expulsion, and as long as there is cause. more »
- Tornado churns through Oklahoma City suburbs
- A tornado churned through Oklahoma City suburbs, destroying homes for the second day in a row Monday, as part of a severe weather outbreak that was expected to spread in other parts of the Plains and Midwest. more »
Must Watch
Latest World News Headlines
- North Korea fires weapons after 'rocket launching tests'
- North Korea continued firing short-range weapons over its own eastern waters today after a weekend of what it called "rocket launching tests" intended to bolster deterrence against enemy attack. South Korean officials were investigating exactly what the North was testing. more »
- Yahoo buys Tumblr blogging site for $1.1B
- Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an internet icon that had fallen behind the times. more »
- D-Day beaches wind turbine proposal seeks Canadian comments
- Canadians are being given the opportunity to voice their opinions on a plan to build 75 wind turbines off the D-Day beaches in France. more »
- Nahlah Ayed: Vote-wary Iranians mull Ahmadinejad's successor
- Iranians go to the polls in less than four weeks to choose a new president. The reform movement is still smarting from its bitter defeat four years ago, but the jockeying for power is no less intense, Nahlah Ayed reports. more »
- Tornado churns through Oklahoma City suburbs
- A tornado churned through Oklahoma City suburbs, destroying homes for the second day in a row Monday, as part of a severe weather outbreak that was expected to spread in other parts of the Plains and Midwest. more »
The National
The Current
- PM's chief of staff resigns as Senate expense scandal unfolds May. 20, 2013 1:22 PM After a week of political turmoil over the Senate expense scandal, the Prime Minister's chief of staff Nigel Wright has resigned. But questions about the $90,000 cheque he cut for Senator Mike Duffy continue to swirl.
- Unknown remains found on Dellen Millard's farm
- Canadian on EI shut out amid foreign worker influx
- Central Newfoundland digs out from freak snowfall
- Petition looks to rename Victoria Day
- Missing Toronto woman's parents unfazed by Millard link
- Vancouver man attacked, killed in Costa Rica
- Edmonton driver, 62, charged in boy's patio death
- Jeep driver apologizes after stunt kills Edmonton woman
- Rob Ford should resign if allegations true, councillors say

