TPP heightens urgency for national drug coverage in Canada
With the U.S. presidential candidates actively debating America’s participation in the Trans-Pacific Partnership (TPP), it is time for Canada to begin reconsidering its role in the trade agreement. The TPP may leave significantly more Canadians without medications, causing a heightened urgency to create and implement a national plan that ensures access to necessary drugs for all Canadians.
The TPP, a free-trade agreement between 12 countries that account for 40 per cent of the world’s gross domestic product, was drafted in October 2015 and signed February 2016. Currently, the TPP is waiting to be ratified.
Although the ratification will probably spur GDP growth by reducing barriers to trade, the agreement will also have many negative side effects. Regarding health care, the TPP could increase pharmaceutical prices and thereby decrease access to medications among Canadians.
Pharmaceutical development can reach costs as high as $1.3 billion. To ensure firms are motivated to innovate, they are granted patent protection on their drugs. This intellectual property protection gives firms a monopoly over their drug’s market, allowing them to control the sales price. Eventually, patent protection expires and prices are brought down by generic drug production.
The TPP influences drug prices by strengthening intellectual property rights and preventing generic drug production. Two ways such rights are strengthened include making “evergreening” easier for innovative firms and by granting data exclusivity to pharmaceutical products.
Evergreening is the renewing of patent protection on pre-existing drugs through minor adjustments. Previously, the Trade-Related Aspects of Intellectual Property Rights flexibilities under the World Trade Organization, allowed countries to control patent term length through high requirements for patent renewal. However, the TPP makes it much more difficult for countries to control the patent renewal process. By requiring all countries in the trade agreement to grant patents for minor innovations to existing drugs, the threshold of innovativeness in the pharmaceutical industry is lowered. As a result, firms can extend the protection on certain medications, delaying the production of generic drugs and keeping prices high.
Data exclusivity refers to the protection companies are granted on information related to their patented medications. The TPP requires that new pharmaceutical products receive at least five years of data protection — and existing products that have new uses receive at least three years — which can extend beyond the patent period. As a result, generic drug manufacturers must wait until exclusivity ends, or conduct their own expensive and time-consuming clinical trials, before being able to sell generic drugs — once again, keeping drug prices high.
By raising the prices of medications, the TPP makes it more difficult for patients to access their medications. Today, one in 10 Canadians are unable to afford medications as a result of costs — a problem that affects nearly a quarter of Canadian households. In addition, employers have difficulty sustaining the high costs of the employee health-care coverage responsible for a third of Canada’s drug expenditure.
The potential for the TPP to leave significantly more Canadians without medications heightens the urgency to create a national pharmacare plan that ensures universal drug access.
Pharmacare returned as an issue last year after the CMAJ published results showing a universal public drug coverage plan would reduce spending on prescription drugs by about $7.3 billion. Currently, Canada spends a disproportionately high amount on prescription drugs, as compared to other developed countries. For example, in 2013 Canada spent $713 (U.S.) per capita on retail pharmaceuticals, compared to the Organization for Economic Co-operation and Development average of $515.
By switching to a single-payer purchasing system, rather than the expensive multi-payer system we currently use, the bulk savings and reduced administrative costs are substantial.
Such a system would effectively neutralize the price increases of the TPP while providing Canadians with fair and equitable access to resources that will restore their health.
Dr. Eric Hoskins, Ontario’s minister of health and long term care, is a particularly strong supporter of national pharmacare.
Additionally, the federal government has acknowledged our country’s high cost of medicines by creating a working group to research these costs further. Now we need a bold push from the federal and provincial government to develop a pharmacare program appropriate for Canada. Policy developers must take the lead and push forward progress using the best available evidence. Doing so will not only allow us to remove our status as the only country with a universal health care system that does not cover prescription drugs, but will also ensure the welfare of many Canadians is not put further at risk by the TPP.