The Canada-European Union Comprehensive Economic & Trade Agreement: An Economic Impact Assessment of Proposed Pharmaceutical Intellectual Property Provisions

June 10, 2011 – Changes to Canada’s drug patent system proposed by the European Union (EU) would add nearly $3-billion annually to Canada’s prescription drug bill, according to a new study by two academics specializing in pharmaceutical policy.

The study, The Canada-European Union Comprehensive Economic & Trade Agreement: An Economic Impact Assessment of Proposed Pharmaceutical Intellectual Property Provisions, was authored by Professor Aidan Hollis of the Department of Economics at the University of Calgary and Paul Grootendorst from the University of Toronto’s Faculty of Pharmacy. The study was commissioned and released earlier this year by the Canadian Generic Pharmaceutical Association (CGPA).

Canada and the EU are currently in negotiations for a comprehensive economic and trade agreement (CETA). The report states that “as a part of these negotiations, the EU has tabled proposals that would significantly alter Canada’s intellectual property (IP) regime for pharmaceuticals.”

The EU’s proposal would considerably lengthen the period of market exclusivity for brand-name drugs in Canada and, according to the authors of the study, would provide “the most extensive structural protection for innovative drugs of any country in the world.”

The study’s key finding is that Canadian payers, such as the federal government, provincial governments, businesses and patients “would face substantially higher drug costs as exclusivity is extended on top-selling prescription drugs, with the annual increase in costs likely to be approximately $2.8-billion per year.”

The authors also found that, if implemented, the proposals would delay the availability of lower-cost generics in Canada by approximately 3.5 years.

Importantly, the study reveals that the EU’s proposed changes would not lead to a substantial increase in investment by brand-name drug companies in Canada. “The purpose of exclusivity rights granted to innovators is to create an incentive for research and development investments into new drugs. However, the amount of additional investment in pharmaceutical innovation that would result from the EU’s proposed pharmaceutical IP provisions would be a small fraction of the additional costs to Canadians.”

The proposed changes wouldn’t improve trade in pharmaceutical either, according to Jim Keon, President of CGPA. “The pharmaceutical intellectual property proposals tabled by the EU […] will not eliminate trade barriers, as pharmaceutical products from the EU already have unfettered access to the Canadian market. These proposals will simply increase profits for brand-name drug companies at the expense of Canada’s health-care system.”

If the federal government goes ahead with the EU proposals, and if the results of this study are accurate, Canada could be taking a step backwards on a key issue in healthcare, especially since we don’t know what, if anything, Canada will get in return for the concession.

At a time when drug prices constitute the highest growing element of healthcare costs, governments should be looking for ways to reduce costs and increase access for all Canadians to life saving drugs.

To read the full report, click here

Keywords: drugs, pricing, pharmacy, healthcare