Could Canada-EU deal lead to increased costs for new drugs?

Patent extensions allowed by CETA provisions could possibly benefit pharmaceutical companies

A 2008 study estimated that the Canada-EU Trade Agreement could save the Canadian economy $850 million in annual savings from eliminated tariffs on EU imports into Canada. However, another study projects drug costs will rise by at least that amount because of other CETA provisions, reports CBC News.

Roughly one-quarter of the clauses in the legislation for CETA deals with drug patent term restoration, which will extend patent lengths by up to two years as a way to recover time lost to delays in regulatory approval. The measure is not retroactive, so only new drugs will be eligible for patent extension. “The benefit of extra revenue goes to [EU-based drug] companies, so they pushed for it,” said Canadian Generic Pharmaceutical Association President Jim Keon.

Projecting the provision’s final cost is not simple. It won’t take effect for eight years or so, during which time developments such as an increase in biologics or niche drugs, as well as changes in government pricing policies, could happen. “We're finding it very difficult to conduct that kind of analysis,” said Canada’s chief negotiator, Steve Verheul.

Previous estimates of annual costs vary. The Canadian Press reported a price tag between $795 million and $1.95 billion in 2012. Citing work from researchers of York University and the University of Ottawa in 2013 and 2014, NDP MP Tracey Ramsey said drug costs would rise between 6.2% and 12.9% annually, which author Joel Lexchin previously told the Commons international trade committee would result in $2 billion to $3 billion in increased drug costs by 2023.

According to Keon, other changes that Canada’s patent linkage system is going through – specifically, simplified patent enforcements for new drugs and a new right of appeal extended to brand-name drug companies – could lead to reduced regulatory costs and drug prices. But the full details won’t be known until cabinet-approved changes are published.

If drug prices were to rise as a result of CETA, they could change the dynamic of federal-provincial health care funding negotiations. Federal Health Minister said last spring that she wasn’t “in the business of off-loading expenses to the provinces and territories that are not appropriate,” though last week she said the cost of CETA would be discussed “at the appropriate time.”

Speaking for brand-name drug manufacturers in Canada, Innovative Medicines Canada Vice President Declan Hamill said that a future rise in drug costs should not be a foregone conclusion. “If the thesis that IP improvements drove drug prices was true, then you would expect people in jurisdictions [with longer patent protection] like the European Union and Japan to pay more,” he said.

In fact, drug costs paid by Canadians are the second highest in the world, behind only the US.

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