Anti-Counterfeiting Trade Agreement (ACTA)
The Canadian Generic Pharmaceutical Association (CGPA) represents Canada’s generic drug industry – a dynamic group of companies that specialize in the production of high quality, affordable generic drugs and fine chemicals and in conducting the clinical trials required for government approval of generic drugs. For more than 50 years, Canada’s generic pharmaceutical industry has played a key role in our country’s economy and health care system.
Canada is home to a vibrant generic pharmaceutical industry, which employs more than 11,000 Canadians in highly-skilled jobs. Most of the generic drugs sold in Canada are made in Canada. In addition, about 40% of domestic production is exported to more than 120 countries around the globe, with a large percentage exported to the United States. The industry expects to increase employment to 21,000 Canadians by 2012, and increase exports to 50-60% of domestic production over this same period. The industry also makes significant investments in domestic R&D activities to the tune of 15% of Canadian sales.
The generic pharmaceutical industry also makes significant contributions to the Canadian health care system. Drug costs are the fastest rising cost for Canadian governments and for employers that sponsor drug benefit plans for their employees. The use of lower-cost generic prescription medicines saves Canadian governments, employers and consumers more than $2.6 billion every year. Even though generic drugs are dispensed by pharmacists to fill more than 49.9% of all prescriptions in Canada, they account for only 21.9% of the $19.55 billion that Canadians spent on prescription medicines in 2007.
As a pharmaceutical stakeholder that is concerned about the public health risk posed by illegal counterfeit drugs, CGPA welcomes the opportunity to provide comment to Government of Canada’s participation in the Anti-Counterfeiting Trade Agreement (ACTA) negotiations.
Of particular concern to the generic pharmaceutical industry, the proposed content for this agreement does not indicate the discussions will address appropriate limitations on the scope and reach of intellectual property enforcement mechanisms. Patent disputes during the normal legitimate business development of a product could become – in the context of ACTA – a crime related to counterfeiting instead of remaining a private civil matter between two companies.
Such a change would have dire consequences for Canadian consumers, payers, governments, the economy and the generic pharmaceutical industry, and would not be successful in targeting counterfeit medicines. In fact, the resulting increase in drug costs through monopoly drug prices could lead Canadians to seek lower-cost alternatives through less-than-reputable sources, which in turn could put them into contact with counterfeit medicines.
As such, it is CGPA’s position that patent enforcement should not be considered during ACTA negotiations as a tool to fight counterfeiting.
Is ACTA Necessary?
Counterfeiting is a concern for Canadians, and CGPA supports international discussions regarding measures to combat counterfeiting.
CGPA questions the need for an additional trade agreement for intellectual property that is outside the scope of the traditional multinational venues for establishing standards of international intellectual property law. The countries currently involved in ACTA negotiations have sophisticated intellectual property regimes with robust enforcement mechanisms, and the generic pharmaceutical industry is unaware of any compelling arguments supporting the need for an additional agreement.
CGPA is concerned that the final agreement could be inconsistent with, or contradictory to, current international intellectual property policy interests, and could have unforeseen and negative consequences. It is important for ACTA negotiators to recognize that balanced intellectual property policies are the best means of advancing Canada’s interests, both domestically and internationally. As such, ACTA discussions should reflect existing intellectual property enforcement mechanisms.
What Are Counterfeit Medicines?
As defined by the World Health Organization (WHO), a counterfeit drug is:
The use of counterfeit medicines can result in unexpected side effects, dangerous drug interactions, incorrect dosages, allergic reactions or the worsening of medical conditions. It is important to note that both brand-name and generic drugs can be counterfeited. As such, a focus on patents in combating counterfeit medicines is inappropriate.
Regional Prevalence of Counterfeit Drugs
WHO’s International Medical Products Anti-Counterfeiting Taskforce (IMPACT) has observed that the prevalence of counterfeiting is greatest in regions where regulatory and legal oversight is weak.2 IMPACT estimates that more than 30% of medicines for sales in parts of Africa, Asia and Latin America are counterfeit, and the rate for all developing countries is estimated to be between 10% and 30%. Medicines purchased over the Internet from sites that conceal their physical addresses have been found to be counterfeit in 50% of cases.
In contrast, IMPACT has found that “most developed countries with effective regulatory systems and market control (e.g. USA, EU, Australia, Canada, Japan and New Zealand) currently have a very low proportion, i.e. less than 1% of market value.”3 As Canada’s Criminal Intelligence Service has observed, “Canada has a standardized, highly regulated pharmaceutical and public health care system that is largely affordable to most Canadians. This significantly lessens any potential market for illegitimate supplies of pharmaceuticals in Canada.”4
While counterfeit medicines represent a public health concern across jurisdictions, the domestic prevalence of these products is relatively low. As such, it is imperative that any additional measures to combat these illegal products involve strengthening existing regulatory controls and appropriately targeting the criminals engaged in counterfeit activities – without creating unintended consequences.
Effective Measures to Combat Counterfeit Drugs
IMPACT, which includes representation from both the brand-name and generic pharmaceutical industries, has made a series of recommendations on how countries can deal with the problem of counterfeit pharmaceuticals.5 These include stringent regulatory procedures, improved training for customs officers and quality control inspectors, improved policing, and increased public and health professional awareness. A number of these areas will be considered in the context of the ACTA negotiations.
Patent enforcement was not regarded as an appropriate measure to combat counterfeit drugs by IMPACT. Counterfeit drugs are regarded as a public health issue in which organized or local criminals carry out counterfeit activities, rather than infringements of private rights.
Scope of ACTA Enforcement Provisions
The Department of Foreign Affairs and International Trade issued a news release on October 23, 2007 regarding its participation in the ACTA negotiations, which states:
The need to reform Canadian trademark and copyright laws to better combat counterfeiting and piracy has been a topic of public discussion in recent years. To this end, both the House of Commons Standing Committee on Public Safety and the Standing Committee on Industry, Science and Technology released reports in 2007 that recommended amendments to the Trade-marks Act and the Copyright Act.
The ACTA Fact Sheet published by the Government of Canada suggests, however, that ACTA is taking a much broader approach by generalizing measures to combat counterfeiting and piracy as applicable to all forms of intellectual property rights, including patents.
CGPA is concerned that common enforcement practices proposed by ACTA could be misapplied and misused by intellectual property holders against legitimate competition in the area of patents.
1. The Counterfeiting of Pharmaceutical Products is a Public Health Issue
Both brand-name and generic medicines can be the target of counterfeiters and, as such, counterfeit medicines do not necessarily represent an infringement of domestic patents.
Criminalizing legitimate patent disputes would not address the serious public health risk posed by counterfeit products, and would have serious a serious negative impact on the affordability of Canadian health care and Canada’s generic pharmaceutical industry.
2. Patent and Counterfeiting Issues Should Not Be Confused
Patent disputes are an everyday commercial risk for both brand-name and generic companies due to the technical complexities of drug development and the domestic regulatory system. Patent disputes are – and must remain – a private civil matter between two legitimate companies. The products in question are not counterfeit – they are produced by legitimate companies, have received regulatory approval by Health Canada, and are sold in regulated markets.
In contrast, copyright and trademark infringements are generally deliberate criminal acts. The two concepts should not be confused.
Any potential confusion between generic drugs and counterfeit medicines must be avoided.
3. Article 61 of TRIPS
Abolishing the internationally accepted distinction between piracy/counterfeiting and alleged infringements of patent rights would set a dangerous precedent.
4. Public Resources Should Be Used to Fight Crime – Not Finance Patent Disputes
A more effective approach to combating counterfeit medicines is to place a strong emphasis on the recommendations made by IMPACT in areas such as public education, border measures, inspections, and policing.
5. Serious Consequences if Patents Not Excluded from ACTA
Balanced intellectual property policies are the best means of advancing Canada’s interests, both domestically and internationally. CGPA does not support the abuse of the intellectual property system to extend monopolies for brand-name pharmaceutical companies, nor do we support the expansion of intellectual property rights in the area of patents under the guise of combating counterfeit medicines. Such measures would be ineffective and represent a generous gift to brand-name pharmaceutical companies at the expense of Canadian consumers, payers, and the generic pharmaceutical industry.
The following are just a few of the consequences Canadians could expect if pharmaceutical patent disputes were to become a crime related to counterfeiting instead of remaining a private civil matter between two companies:
Chill Effect on Generic Competition
Generic companies would be forced to delay product development until all patents expire, even if those patents were potentially invalid or would not be infringed. This would have the effect of delaying generic competition from a few years to more than a decade.
Extension of Brand Monopolies
Increased Drug Costs
Increased Attractiveness to Counterfeiters
Harm to Generic Pharmaceutical Industry
Generic Export Markets
CGPA and Canada’s generic pharmaceutical industry support appropriate and targeted measures to combat the prevalence of illegal counterfeit drugs worldwide.
While we believe the Government of Canada’s intent is to expand enforcement provisions for trademarks and copyright only, CGPA is concerned that entering into a trade agreement that does not clearly distinguish between trademarks/copyright and other forms of intellectual property would ultimately have serious unintended consequences for all Canadians.
Expanding the enforcement provisions for patents would be a completely ineffective measure in combating the prevalence of counterfeit medicines in Canada, and would undermine well-established policies and business practices that support competition in the Canadian pharmaceutical industry. As such, patents should be explicitly excluded from the scope of ACTA.
The Canadian Generic Pharmaceutical Association thanks the Government of Canada for this opportunity to comment on Canada’s involvement Anti-Counterfeiting Trade Agreement. The Association remains available to assist the Government of Canada in the development of effective measures to combat the counterfeiting of pharmaceuticals, both at home and abroad.
For further information contact:
Overview of Canada’s Generic Pharmaceutical Industry