Patent Protection for Drugs Should Come at a Price
, Marc-Andre Gagnon, Winnipeg Free Press
As Canada gets deeper into negotiations to open greater trade with Europe, we should scrutinize what this country might well agree to when it comes to pharmaceutical patents and generic drugs.
Extending patent protection the way it is being suggested, would lump more cost onto Canadian consumers, and that would be doubly harmful given the system Canada uses now to curry investment from the industry.
The innovation system in the Canadian pharmaceutical sector is broken. Expenditures in pharmaceutical research and development (R&D) in this country have significantly declined in recent years and many major research labs have closed down -- all in a context where drug companies are increasingly focusing their investment in emerging countries.
The industry is now saying if Canada wants to preserve R&D investments, it should use the ongoing negotiation of the Comprehensive Economic and Trade Agreement (CETA) with Europe to extend patent protection.
This solution seems to forget that the Canadian pharmaceutical sector already benefits from the generosity of the state.
In Canada, drug companies can recoup around half of all R&D expenditures through tax credits. At the same time, Canadians pay 20 per cent more for patented drugs compared to France or the UK -- amounting to an incredible extra $2.1 billion a year. Compare this to what the pharmaceutical sector spends on R&D: around $992 million per year (before taking tax credits into account).
In spite of already having these important business advantages, the R&D-to-sales ratio in Canada, a common measure of R&D intensity in the sector, has declined by half since 1997. It is now 5.6 per cent, the lowest rate since 1988.
The negotiations to implement CETA are confidential. However, leaked versions of draft agreements present different European requests for changes in the Canadian intellectual property regime for patented drugs, while these clauses would have no impact on existing European regulations.
The different demands are very technical: Patent restoration to recoup regulatory time necessary for approval; extension of data exclusivity to encourage research on existing drugs; supplementary protection certificates to encourage clinical trials with children; right of appeal under the Notice of Compliance regulations, often referred to as patent linkage.
The complexity of these issues, which may make patent lawyers happy, usually ensures the public cannot participate in the debate. One simply needs to keep in mind each request would extend the monopoly power of drug companies in our country one way or the other.
A 2011 study estimated introducing the suggested changes in terms of patent protection could indeed increase pharmaceutical R&D investment by around $345 million. …