Canada's pharmaceutical sector could get boost from FFA with Europe

OTTAWA, March 26, 2014 /CNW/ - The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union could improve investment in Canadian pharmaceutical research and development (R&D), according to The Conference Board of Canada's new report, Too Much or Not Enough IP? CETA and Changes to Canada's Pharmaceutical Regime.

With this accord, Canada has agreed to extend patent protections, which should provide a more encouraging environment for domestic innovation.

"There has been much debate about CETA's intellectual property provisions and their possible effects on Canada's pharmaceutical industry, prices, manufacturing capacity, and exports," said Gabriela Prada, director, health innovation, policy and evaluation.  "As negotiated, CETA's intellectual property provisions could make Canada a more attractive place for R&D investment, because it extends the length of time during which a patent is valid. However, various factors contribute to pharmaceutical investment, of which patent length is just one."


Canada's business expenditure on research and development in pharmaceuticals is less than half the average of key comparator countries.

CETA should make Canada a more attractive place for companies to make investments in research and development.

Despite initial concerns, it is unlikely that provincial or territorial drug costs will rise significantly as a result of CETA, at least in the short-to-medium term.

The Conference Board report also indicates that provincial or territorial drug costs should not rise significantly as a result of CETA, at least in the short and medium terms. The Canadian government estimates it will be eight years after ratification before a drug can become eligible for the additional patent protection that it negotiated with Europe. As such, it should be 2023 before CETA might start to affect drug costs.

Even in the longer term, moreover, trends observed in peer countries suggest that CETA may not cause significant price inflation. Other jurisdictions with stronger intellectual property (IP) provisions (like the EU and Switzerland) do not have higher or much higher drug prices than Canada and have not seen their drug prices increase at a faster rate over the last several years.

Signed in principle in October 2013, CETA seeks to establish freer trade between Canada and the EU and includes a section on IP in relation to pharmaceuticals. European negotiators asked Canada to move toward their somewhat stronger standards of pharmaceutical IP protection.

Canada met the EU halfway.Europe asked Canada to provide brand-name pharmaceutical companies with five years of patent term restoration, whereby they are given back some of the time lost between filing a patent application and gaining market approval for a new drug. Canada agreed to a maximum of two years of patent term restoration, and negotiated an exemption for generic exports. This measure should provide a more encouraging environment for capital investment in health innovation in Canada, while protecting generic manufacturing.

The Canadian government also locked in its current data protection period of eight years, but did not accede to Europe's 10-year standard. Finally, Canada committed itself to streamlining its patent litigation system, with attention to the issue of right of appeal for both brand-name and generic pharmaceutical companies in the Federal Court.

The publication, Too Much or Not Enough IP? CETA and Changes to Canada's Pharmaceutical Regime, assesses available evidence to determine the likely effects of CETA on Canada's innovation ecosystem and drug prices. The findings are based on interviews with representatives from both sectors of the pharmaceutical industry, as well as a literature review.

The research was funded by the Conference Board's Centre for the Advancement of Health Innovation (CAHI), which aims to improve Canada's health care system and commercialization capacity through innovation.

SOURCE: Conference Board of Canada.

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