Canada, U.S. caught in NAFTA ‘stalemate’ over patent protection
Canadian trade negotiators are fighting hard against U.S. demands to increase the patent protection for a fast-growing class of medicines, making it another “stalemate issue” in the NAFTA talks, says an advocate for generic-drug companies.
To encourage the government to stand firm, the Canadian Generic Pharmaceutical Association released a poll Monday that suggests Canadians want the issue given high priority in the bargaining. The group’s concerns stem from the revamped NAFTA deal that Mexico struck with the U.S. last month, requiring it to boost the “data exclusivity” period for socalled biologic drugs to 10 years. In Canada, that would mean two more years before cheaper generic copies of the medicines could be sold, potentially costing public and private drug plans tens of millions a year.
The U.S. is pushing Canada to adopt the contents of the Mexican agreement.
The generic association has been in close contact with federal negotiators and the prime minister’s office, who insist they are opposing the demand strenuously, said Jim Keon, the generic association’s president.
“We have been told that the government is pushing back hard on this,” he said Friday.
“The U.S. is pushing hard and Canada is defending hard. I see this as one of the ‘stalemate’ issues currently.”
Publicly, though, the pharmaceutical question has received relatively little attention, as dairy supply management, Canadian culture and dispute-resolution mechanisms dominate discussion. “Prime Minister (Justin) Trudeau and Foreign Affairs Minister (Chrystia) Freeland don’t seem to mention it,” Keon noted. The most recent round of negotiations to bring Canada into the U.S.-Mexico accord ended in Washington on Thursday without an agreement.
A spokesman for Freeland could not be reached for comment on the pharmaceutical issue.
In fact, this may not be the issue where Canada gets American negotiators to back down, said trade lawyer Mark Warner on Monday. Even a 10-year data protection period for biologics — still two years less than what’s offered in the U.S. — is unlikely to be accepted by a U.S. Congress eager to promote the country’s brand-name pharmaceutical industry.
“The branded/patented pharmaceutical lobby will be at least as engaged there as the generic lobby appears to be in Canada,” said Warner.
A representative of Innovative Medicines Canada, the brandname industry ’s local trade group, said the organization would not comment while NAFTA negotiations are ongoing.
But PhRMA, the American association including most of the same companies, has said substantial data protection is necessary to recoup the cost of developing biologics and keep research and development jobs from moving to other countries.
Data exclusivity for biologics in the U.S. — home to huge brandname firms like Pfizer — is 12 years.
“Data protection is critical to ensuring continued medical progress, R&D investment and economic growth,” said a 2015 PhRMA article.
Yet Canada enjoys relatively little of the industry’s spin-off benefits, with less than five per cent of sales here spent on research and development in the country, according to the Patented Medicines Price Review Board. One leading intellectual property expert says Canada’s eightyear period is a “sound balance” between letting firms pay for innovations and enabling patients to benefit from drugs that in most cases originated with governmentfunded research.
“Going up to 10 years of protection for biologics represents a cost to Canadians without any countering benefit,” said Richard Gold, a McGill University law professor. “Canada may have no choice in the current trade climate, but there should be no mistake that to accede to U.S. requests comes at a cost.”
Biologic medications are typically priced at tens of thousands of dollars per year and constitute the fastest-growing drug class. The data exclusivity term begins after a drug is approved by regulators, and overlaps with the separate patent-protection period. For the generic industry, having to wait another two years to sell biologic copies would come after a similar blow in the CETA free-trade deal with Europe. It extended overall patent protection for all drugs in Canada from 20 to 22 years.
The Parliamentary Budget Office has estimated the CETA extension would cost drug plans and patients at least $500 million a year. The biologics change would likely take a smaller bite, given it covers only one portion of the prescription drug market.
Canada may havenochoice in the current trade climate, but there should be no mistake that to accede to U.S. requests comes at a cost.