Spin Cycle: Will joining the TPP trade deal increase drug costs?

Tom Mulcair's New Democrats have listed rising drug costs among the party's reasons to oppose Canada's participation in the Trans-Pacific Partnership. But would drug prices really go up?

NDP warns Pacific Rim trade deal will increase pharmaceutical costs, but EU trade deal already set to do that

NDP Leader Tom Mulcair is campaigning against the risks of higher drug costs if Canada joins the Trans-Pacific Partnership. But are his warnings well-founded? (Ryan Remiorz/Canadian Press)

"The Conservatives negotiated the TPP agreement in secrecy and without a mandate. The TPP will drive up the cost of life-saving drugs and slow down the introduction of generic drugs to the market."

— NDP press release, Oct.15

Want to understand the repercussions of the Trans-Pacific Partnership agreement? Good luck, voters. 

There will be no text of the TPP deal available before Monday's election. Confidential briefings offered to the Liberals and the NDP late this week were turned down, amid allegations of partisan gamesmanship.

Twelve Pacific Rim countries, including Canada, are poised to enter a trade pact representing 40 per cent of the world's economy. It goes far beyond tariff reductions and includes a broad range of laws and regulations. 

Stephen Harper's Conservatives are campaigning on it. Justin Trudeau's Liberals haven't fully embraced it yet, but are willing to give it a good look.

But Tom Mulcair's NDP appears to oppose it, even without seeing all the details. Among the reasons cited are increasing prescription drug costs. Is that objection well-founded?

The spin

Two aspects of the TPP might factor in.

The first was one of the stickiest issues in the TPP's final, marathon talks in Atlanta two weeks ago: the data exclusivity period for biologic drugs.

That's different from a patent, which determines the length of time clinical trials data belongs to brand-name manufacturers, and would delay those who wish to create cheaper generics. 

The TPP offers several "paths" for countries to comply, Canada's Trade Department has disclosed. One path provides eight years of data exclusivity, while another path, negotiated at the 11th hour to accommodate countries like Australia, requires five years plus additional country and market-specific measures. 

As data exclusivity periods increase, the overall drug costs for some countries could rise.

The second issue came to a head in June, when WikiLeaks published an alleged draft of the TPP's transparency chapter, which includes an annex with new rules for the pharmaceutical industry.

It suggested countries would have to be more transparent about their now-confidential bulk rebate negotiations with drug companies or risk being sued.

New Democrats and other critics say this leak suggests governments would have difficulty negotiating lower bulk purchase prices for drugs. Canada's premiers have been collaborating on such an approach since 2010, and the federal government — which buys drugs for prisoners, First Nations, soldiers and veterans — asked to join last July.

The counterspin

The Canadian Generic Pharmaceutical Association tracked the TPP talks closely. Its reaction so far is positive.

In a release, it welcomed assurances "that the final TPP text will require no changes to Canada's intellectual property laws for pharmaceuticals, beyond the commitments that have already been made under the Comprehensive Economic and Trade Agreement (CETA) Canada has reached with the European Union."

Canada has yet to implement changes CETA requires. Legislation waits until European countries are closer to ratifying Canada's 2013 deal — something that might be up to two years away.

But what TPP requires on drug patents and data exclusivity is either already done, or pending for CETA. Canada already provides eight years of data exclusivity for biologics, for example. 

On bulk purchases, Canadian officials confirm there is a "Transparency and Procedural Fairness for Pharmaceutical and Medical Devices" annex. But for now, there's only few vague paragraphs of summary on the trade department's website.

"Neither this annex nor any other part of the agreement will affect the ability of the federal, provincial or territorial governments to negotiate drug prices or undertake bulk purchases," a departmental spokesman wrote to CBC News.

The final rinse

Without seeing the final text, it's impossible to know if the leak accurately represents the TPP. 

Marc-André Gagnon, a health policy expert at Carleton University, has been studying both trade deals.

"TPP itself, especially after CETA, will have very little impact right now in terms of the cost of our drugs," he said. However, his analysis suggests CETA could hike brand-name drug prices by roughly six per cent.

And that's where things get confusing in terms of understanding the NDP's position. It hasn't opposed CETA, at least not yet, but it is campaigning against the TPP. 

CETA, New Democrats argue, offers more new markets in return for this sacrifice. Further, the NDP muses about the possibility of reopening CETA, provided Canada hasn't already locked in changes by ratifying TPP first.

Gagnon thinks that what the provinces are doing now to negotiate bulk drug rebates likely won't be harmed by the TPP.

But he's concerned about clauses limiting how far Canada might be able to go down the road on pharmacare.

Gagnon called the leaked transparency requirements "very problematic."

"Companies can sue the governments if they're unhappy with the decisions because the decision is not transparent enough, but at the same time the states do not have the capacity to sue the drug companies," he said.

Drug companies have set artificially inflated prices, with little recourse for purchasers. At the very least, TPP should be reciprocally transparent, he said. 

All four federal parties say Canadians pay too much for drugs, but disagree on what to do about it.

New Democrats and Greens propose a national drug plan. The 2015 Liberal platform doesn't go that far, but suggests working with the provinces to cut costs. The Conservative platform has nothing on the issue, but Health Minister Rona Ambrose approached provinces this summer seeking collaboration.

"This type of position is a little bit contradictory," Gagnon said. On the one hand the Tories have moved to support or even join provincial efforts toward bulk drug purchasing, while on the other negotiating a trade deal that could undermine the provinces' capacity to do so.


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