Canada and the European Union (EU) are currently negotiating a comprehensive economic and trade agreement (CETA), which is expected to be concluded by 2012. As part of these negotiations, the EU has tabled proposals that would lengthen the period of market exclusivity for brand-name drugs in Canada by an average of 3.5 years and add nearly $3-billion annually to Canada’s prescription drug bill.

Go to the following link to learn more and send an email telling your MP that you are concerned that Canadian’s health-care money is at risk of being given away to brand-name drug companies based in Europe.

http://www.canadiangenerics.ca/en/news/euProposal.asp

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When you visit our page on Facebook, please visit the “Take Action” tab; here you can find information about the EU’s drug patent proposals under the current trade negotiations with Canada. By clicking on the “Like” button on this tab you will help spread our message about this important issue.

John Weekes

Globe and Mail

Thursday, October 25 2012

Matthias Brinkmann, the European Union’s ambassador to Canada, says it’s “crunch time” for the Canada-EU Comprehensive Economic and Trade (CETA) negotiations and identified patent protection for pharmaceuticals as one of several thorny issues still on the table. It is time for the Harper government to determine its position.

The EU and the U.S. have agreed not to reconcile their differences on intellectual property rights in their upcoming free-trade talks. Ottawa should insist on the same approach, as the Canadian regime offers more protection in important areas than that of the EU – and the U.S.

Much of the world’s production of pharmaceuticals comes from companies based in the U.S. and Japan. Article 4 of the WTO TRIPS (Trade Related Intellectual Property) Agreement requires that any patent concessions granted to the EU shall be accorded immediately and unconditionally to the nationals of all other Members [i.e. member governments]. Canada should not give a free ride to companies in the United States and Japan. That is exactly what would happen if Canada agreed to the EU proposals.

Before putting all its cards on the table the Canadian government should determine if EU negotiators are in danger of being repudiated by their own Parliament. The EU Parliament may decide not to ratify the CETA if it contains pharmaceutical patent provisions which exceed the following markers that both the Parliament and the EU Commission have set down. After all, the Parliament rejected the anti-counterfeiting trade agreement (ACTA) in July. Two markers stand out.

First, in its resolution of June 8, 2011, on EU-Canada trade relations the Parliament specifically addressed generic drugs stating that it: “ Considers that the chapter on intellectual property should not negatively affect the production of generic medicines and must respect the TRIPs exceptions for public health .”

Second, the European Commission in its December 16, 2011 “Pharmaceuticals Sector Fiche” – a sort of authoritative negotiating brief – set out the position that “the EU should also seek to find the correct balance in bilateral and multilateral trade agreements, in order that it does not impose TRIPS+ requirements on countries where this may have an adverse effect on either public health or the ability of the EU to import its own generic medicines.”

It is not clear whether the EU has considered how CETA would constrain the EU’s ability to change its own patent regime – and that of its member states – in response to rising health care costs.

On the other hand, the interest of the brand-name industry in Canada is very clear. The industry and its supporters have been arguing strongly that Canada should yield, contending that increased patent protection will encourage more investment in research and development in Canada, a proposition refuted by successive annual reports of the Patented Medicine Prices Review Board and the realities of global drug development. The brand-name companies and their foreign parents would be the double beneficiaries, reaping both increased revenues from the extension of their product monopolies, and at the same time watching the erosion of the position of their generic competition and their associated infrastructure investments in Canada.

It’s crucial that Ottawa continues its work to determine the real cost of the European Commission’s request for Canada to extend the life of pharmaceutical patents. One detailed study – commissioned by the generic industry – estimated the potential cost at $2.8-billion a year. The brand industry rejected the report without offering any analysis.

Canada must be prepared to tell the European Commission that its demands go too far. Controlling the increasing cost of health care is a top concern of governments around the world. Every country has a bottom line in trade negotiations. This is a logical one for Canada to draw.

John Weekes, a senior business adviser at Bennett Jones LLP, was Canada’s ambassador to the WTO and chief negotiator for the NAFTA. He provides advice to the Canadian Generic Pharmaceutical Association (CGPA).

iPolitics

By Tim Gilbert and Nathaniel Lipkus

October 26, 2012  

http://www.ipolitics.ca/2012/10/26/maximizing-drug-innovation-and-access-requires-balance/

In our August 2012 article titled “Controlling drug costs … one lawsuit at a time”, we explained how generic drug companies face a perfect storm of competitive pressures in Canada. Current market conditions undermine their incentives to challenge weak patents and bring low-cost drugs to market as soon as possible. We emphasized the role of generic companies in ensuring that patent protection does not last longer than appropriate.

Our main concern was that generic revenues have dipped so low while patent challenge costs have remained stubbornly high, making the return on investment from patent challenges not worth the risk in most cases. We suggested a stronger incentive tailored to rewarding the social value that generic companies provide to patients and taxpayers through lower drug costs.

Jason Markwell and Patrick Kierans in an article on October 16, challenging the premises in our position and suggesting that our proposed solution will increase litigation. They took the position that patents are important, Canada’s pharmaceutical policy is good for Canada, the patent system is working well and patents are not a key driver of drug costs.

The timing of their response is interesting, particularly in relation to their latter point that patents do not drive drug costs. Just a day earlier, Industry Canada and Health Canada revealed that extending patents would increase drug costs up to $2 billion per year.

While there is merit to their view that, generally speaking, patents promote innovation, it is a fact that patent protection imposes costs on Canadians. The purpose of patents is to provide an exclusivity incentive to innovators, which has the byproduct of keeping prices high. It should come as no surprise that conferring patent protection would have such a dramatic effect on prices.

Patents have been a critical tool to promote innovation for hundreds of years. However, the drug industry presents a unique challenge. Our Canadian pharmaceutical policy for a generation has been to balance the competing goals of incentivizing new drug development and maximizing access to available drugs. It is a constant struggle to achieve this balance, and the marketplace continues to change around the balance we strike. Without generics on the horizon, brands have less pressure to introduce new drugs. Without new drugs, generics have nothing to bring to market.

Generic companies are expected to invest time, energy and resources in costly patent litigation to overcome weak patents. Yet they know that other companies can free-ride on their efforts and enter the market on the same day without incurring sunk litigation costs. This system, by design, encourages competition, but only as long as there is an incentive for generic patent challengers to start the ball rolling. Particularly, in small and medium-size markets, the returns increasingly do not justify the investment. Messrs. Markwell and Kierans did not have anything to say about these concerns.

Our current system does not make sense. Patent holders in Canada have the opportunity to sue generic companies twice on the same patents – first, to prevent the drug from being approved, and then again after the drug is approved. Canada is the only country in the world with this kind of duplicative litigation system. Each court case is likely to cost each side well over $1 million. Increasingly, the cost of litigation exceeds the profits the generic company stands to make from selling the drug.

Recent generic price reductions across Canada, though undoubtedly beneficial for consumers, make it increasingly prohibitive for generics to contend with this double-litigation system. Companies are foregoing or delaying the development of certain products that used to be ripe for patent challenges. Consumers are then forced to pay high prices on these drugs for a lot longer. Messrs. Markwell and Kierans are incorrect in suggesting that generic companies do not need additional incentives to succeed.

The challenges to generic drug industry health are real and are getting more formidable, even since we published our article. The Ontario government recently negotiated additional savings on generic drugs, beyond those achieved when prices were cut in half in 2010. The provinces have jointly announced that they will tender for supply of three to five large blockbuster drugs, calling into question the entire generic patent challenge business model. Why spend money challenging a patent on a product that you may never be able to sell?

It is legitimate for us to question whether generic company incentives have been destroyed, and whether some counterbalance is needed to ensure the continued vitality of the industry.

Where we and Messrs. Markwell and Kierans appear to find common ground is in acknowledging the link between Canada’s drug patent policy and provincial drug prices. Effective drug policy in Canada requires an integration of pricing and patent policy to provide the right incentives for both brand and generic drug companies to do what each of them does best – maximize innovation and access, respectively.

What Messrs. Markwell and Kierans do not seem to appreciate, though, and what policymakers and regulators need to be careful about, is the very real prospect of eliminating generic incentives completely.

Timely access to generic medicines would then cease to play its critical and irreplaceable part in Canada’s pharmaceutical policy balance.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

By Jim Keon
CGPA Blog
http://www.canadiangenerics.ca/blog/blog.aspx?ID=50

The announcement by Canada’s Premiers that they intend to pursue bulk purchasing of some generic prescription medicines is a troubling development that, if not abandoned, could actually lead to higher prescription drug costs for Canadians and exacerbate shortages of prescription medicines.

Bulk purchasing or tendering schemes can create a “winner-take-all” scenario that removes incentives for generic manufacturers to bring new cost-saving products to market. Consider that fully eight of the 10 top-selling generic drugs in Canada came to market through generic drug companies challenging patents which the Canadian courts determined were invalid or non-infringed. This litigation by generic drug companies saved Canadians an additional $33-billion. It also exposes generic manufacturers to enormous liability should the courts subsequently determine that the generic product infringes one or more of the brand-name company’s patents.

Why would generic pharmaceutical manufacturers assume these risks to bring new cost-saving products to the Canadian market if they do not know if they will be able to achieve significant market share should they not subsequently win a large public tender? In fact, tenders favour companies that make the least investments in product development.

This means, that public and private payers would be forced to pay for the higher-priced brand-name drug for longer, sometimes years, because generic companies will not risk challenging invalid or non-infringed patents. The risk versus reward proposition will have been too dramatically altered. Prices of generic prescription drugs matter very little if they do not come to market. Payers will have no choice but to pay for the more expensive brand-name versions.

Furthermore, recent experience in Canada and other markets has demonstrated that tendering for pharmaceuticals can contribute to drug shortages by eliminating competition for certain products. If the sole supplier has production or other issues, there could be few, if any, alternatives.

Increased Risk of Drug Shortages and Later Market Entry of Cost-Saving Prescription Drugs

Toronto, October 24, 2012 – Tendering for generic prescription medicines, as announced by Canada’s Premiers in July 2012, could result in drug shortages and delayed savings to Canada’s health-care system, according to a new study by two of Canada’s top academics on pharmaceutical policy.

The study, Tendering generic drugs: What are the risks?, was authored by Professor Aidan Hollis of the Department of Economics at the University of Calgary and Paul Grootendorst from the University of Toronto’s Faculty of Pharmacy. The study was commissioned and released today by the Canadian Generic Pharmaceutical Association (CGPA).

At their meeting of July 26 and 27, 2012 in Halifax, Canada’s Premiers announced that they will identify three to five generic drugs to include in a national competitive bidding process, or "tender", by fall 2012 and that lower prices would take effect by April 1, 2013. The paper released today evaluates the risks of this proposal.

According to the study, if implemented in Canada, tendering will have a substantial impact on the market and could result in some undesirable consequences, such as:

• Potential drug shortages because of less redundancy in the drug supply system
• Less patent litigation by generic manufacturers resulting in delayed availability of lower-cost generic drugs
• Less manufacturing of generic drugs in Canada
• The closure of some generic drug manufacturing plants in Canada
• Less competition in generic drug markets in Canada
• Less customer service offered by generic suppliers to pharmacies
• The closure of some pharmacies
• Less "free" customer service in the remaining pharmacies

The study points out that tendering removes the incentive for generic pharmaceutical manufacturers to mount legal challenges to invalid or non-infringed patents on brand-name drugs. Payers for prescription drugs in Canada, whether they be government- or employer-sponsored drug plans, or uninsured patients, are the chief beneficiaries from early generic entry enabled by this litigation.

The study notes that New Zealand’s tendering system is often viewed as a model for Canada due to lower per-unit prices for some medicines. However, many important drugs are genericized much later in New Zealand than in Canada. For example, the top-selling drug atorvastatin was genericized only in February 2012 in New Zealand, almost two years later than in Canada. Olanzapine and venlafaxine became generically available in New Zealand approximately four years later than in Canada.

"We estimate that early generic entry on five of the top-selling drugs results in billions of dollars of savings to drug plans and consumers. Tendering will reduce margins and hence the advantages of early entry. It will also expose the early entrant to additional damages in the event that a brand firm successfully sues a generic firm for patent infringement. We thus predict that tendering will result in the delayed arrival of lower-cost generic drugs."

The authors found that competition amongst generic pharmaceutical manufacturers also results in another valuable benefit to consumers: multiple generic firms producing medium to high volume drugs, which in turn affords some redundancy in the system. Should one manufacturer be unable to supply, others can normally fill the gap. This competition results in generic drug companies producing a wide range of low-volume drugs, not because they are particularly profitable, but rather to offer pharmacies a wide range of products and the convenience of "one-stop shopping". If, however, high-volume drugs are procured via tender, some low-volume drugs or drugs with high development or manufacturing costs may no longer be produced.

The international experience with tendering indicates that, over time, tendering reduces the number of domestic manufacturers and increases the supply of foreign-produced generic drugs. In New Zealand, for example, almost all tenders are sourced by foreign manufacturers; there is only one domestic generic manufacturer remaining.

The study concludes that, "It is obviously important for provinces to explore these issues carefully, since tendering has important implications for overall costs, patients, generic manufacturers and pharmacies. Tendering is but one of the approaches that can be used to procure generic drugs. We believe that there are other approaches that could be used to control prescription drug costs in Canada that are better aligned with Canada’s existing systems of patent litigation, generic manufacturing and distribution. These deserve serious consideration."

To view the full report, please visit http://www.canadiangenerics.ca/en/news/docs/10.24.12%20Tendering%20Generic%20Drugs%20-%20What%20Are%20the%20Risks_FINAL.pdf