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PATENTLY ABSURD: New Report Shows Canadians Paying More for Prescription Drugs Due to “Evergreening” of Drug Patents

Toronto, December 6, 2004 – Canadians are paying higher prices for prescription drugs for years longer than they should because of abusive strategies used by brand-name pharmaceutical companies to extend their market monopolies, according to a new study. Patently Absurd: Evergreening of pharmaceutical patent protection under the Patented Medicines (Notice of Compliance) Regulations of Canada’s Patent Act, was released today by commercial litigation lawyer Edward Hore.

These regulations, which have been described as “a draconian regime” by the Supreme Court of Canada, apply only to pharmaceutical products. They give brand-name drug companies ways to extend their market monopolies that go far beyond what is available to patent holders in other industries.

The evidence in the study could influence changes that the federal government is now considering for the Regulations.

Auditor General Sheila Fraser noted in her recently released report that the federal government is the fourth largest payer for prescription drugs in Canada, and that costs have risen by 25 percent over the past two years. One of Ms. Fraser’s criticisms of federal drug programs is that generic drugs are not fully utilized to save money.

The Regulations have enabled many abusive strategies, which allow brand-name drug companies to prolong their market monopolies at the expense of all purchasers of prescription medicines in Canada, including the federal government, provincial governments, employers that sponsor drug plans and the public.

The impact is large. The report finds that pharmaceutical products with annual sales totalling nearly $1-billion in Canada have had their monopolies extended by strategies under the Regulations. These strategies have been used to extend exclusive marketing rights on blockbuster drugs such as anti-depressant Paxil, heartburn drug Losec and Taxol, the leading treatment for breast, ovarian and lung cancer.

The study explains the legal tactics used by brand-name drug companies to extend their market monopolies. It also notes that since 1998, generic pharmaceutical manufacturers have won at least 75 per cent of the court cases under the Regulations.

“Brand-name drug companies’ evergreening strategies under the Regulations have an obvious downside: non-infringing lower-cost generic products are kept off the market,” said Mr. Hore. “This raises drug costs in Canada and creates a disincentive to the challenging of potentially invalid patents, although such challenges have the potential to benefit the public at large, and are indeed essential if the patent system is to function as intended.”

The study points out that multiple-patent strategies are increasingly used by brand-name drug companies to prolong market monopolies beyond the expiry of the patent on the basic medicine. For example, Health Canada approved only 16 new active substances in 2003, yet brand-name drug companies added 103 patents to Health Canada’s Patent Register in that same year.

About the Report and its Author

Edward Hore practices almost exclusively in the area of intellectual property with the firm Hazzard & Hore in Toronto. He writes frequently on intellectual property law, and is a sometime columnist on intellectual property law for Lawyers Weekly and for many years wrote annual reviews of patent, trademark and copyright law for Canadian Lawyer magazine. He frequently represents the Canadian Generic Pharmaceutical Association (CGPA) and generic drug manufacturers. This study has been reproduced and distributed by CGPA with the permission of the author.

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	Patently Absurd 2004
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