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Big Pharma breaking R&D promise to Canadians: federal drug watchdog
20-year anniversary of controversial patent law changes shows little gain for Canadians

Toronto, September 4, 2007 – 20 years after the federal government increased market monopolies for brand-name drug companies, a report form the federal government’s drug watchdog shows that, for the sixth consecutive year, Big Pharma is breaking its commitment to spend at least 10 percent of its sales revenue on research and development in Canada.

“On the twentieth anniversary of the introduction of Bill C-22, which gave brand-name drug companies longer periods of market monopoly, it is evident that the shift in Canada’s pharmaceutical policy in favour of brand-name drug companies has been a failure in virtually every measurable outcome,” said Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA). “It’s clear that 20 years of concessions to the multi-national brand-name pharmaceutical industry by the Government of Canada has not served the interests of Canadians

On July 19, 2007 the Patented Medicine Prices Review Board (PMPRB) tabled its 2006 Annual Report to Parliament on the price of brand-name patented drugs and on research and development spending in Canada. The following is a summary of the report’s highlights:

• Big Pharma breaking its R&D commitment to Canadians
  
  With the adoption of the 1987 amendments to the Patent Act (Act), Canada’s Research Based Pharmaceutical Companies made a public commitment that brand name manufacturers would increase their annual research-and-development (R&D) expenditure to 10% of sales revenue by 1996. The PMPRB’s 2006 Annual report shows that for the 6th consecutive year big pharma’s R&D-to-sales ratio is below the level the industry promised when the Mulroney government passed Bill C-22 in 1987, increasing their market monopolies in Canada.

  Pharmaceutical patentees spent only 8.1% of their revenues on R&D in 2006, below the 10% threshold the industry committed to in 1987. It should also be noted that this figure includes research expenditure funded by government grants. If the government-funded component is excluded, the R&D-to-sales ratio for 2006 drops to 7.9%.

• Less than 2% of sales revenue spent on basis research into new drugs
  
  

  While total R&D spending by pharmaceutical patentees was $1.2-billion, spending on basic research into new drugs was only $232-million, or less than 2% of their Canadian sales revenue.

• Canada’s pharmaceutical R&D spending well behind other countries
  
  

  The PMPRB’s 2006 Annual Report also shows that the ratio of R&D to domestic sales in Canada remains well below values in the United States and Europe. In 2000, the Canadian ratio was 10.1%. Only Italy (6.2%) had a lower ratio in that year. Switzerland had the highest ratio at 102.5%, followed by Sweden at 44.4%. France, Germany and the U.S. were in the 16 – 18% range, while the U.K. was more than double (35.1%). A very similar pattern emerges in the ratios for 2004. Italy (6.6%) remained at the bottom of the range, with Canada second lowest at 8.3%. Ratios in all other comparator countries were again well above Canada’s ratio.

• Most “new” drugs not truly innovative
  
  There were 99 new patented drug products, or DINs, for human use introduced in 2006. Some are one or more strengths of new active substances (NAS) and others are new presentations of existing medicines.
  
  

  In 2006, there were 29 new active substances. Of these, only 4 were Category 2, which the PMPRB defines as “the first drug to treat effectively a particular illness or which provides a substantial improvement over existing drugs products, often referred to as ‘breakthrough’ or ‘substantial improvement’”. The vast majority (21 new active substances) were Category 3, which the PMPRB defines as “a new drug or new dosage form of an existing medicine that provides moderate, little or no therapeutic over existing medicines.” The remaining four new active substances were not categorized as of March 2007.

  Of the 131 new active substances introduced in Canada from 2001 to 2006, only 11 were categorized by the PMPRB as a “breakthrough” or “substantial improvement” over existing drug products.

“Despite all of this evidence, the federal government continues to pander to brand-name drug companies by giving them even more monopoly rights,” Keon said.

In October 2006 the Government of Canada again increased monopoly rights for brand-name companies through regulatory amendments to “data exclusivity” provisions of the Food and Drug Regulations. Under the new rules, a generic drug cannot receive Health Canada approval for eight years from approval of the equivalent brand-name drug.

This new regime goes far beyond provisions in the United States, and exceeds Canada’s trade commitments under NAFTA and TRIPS. Under data protection in the U.S., a generic drug submission cannot be filed for four years, and the generic is prevented from obtaining approval for only five years. Canada’s proposed eight years is 60 percent longer.

This increased ban on competition will worsen the problem of soaring prescription drug costs in Canada. It is estimated that, had the eight-and-a-half-year ban on competition been in place over the past five years, it would have added at least $600-million to prescription drug costs in Canada, more than $100-million every year, and blocked Health Canada’s approval of lower-cost generic equivalents of block-buster medicines such as anti-depressants Zoloft and Wellbutrin and cholesterol reducer Pravachol.

Additional information about pharmaceutical research and development spending in Canada is contained in a new CGPA report. Download the document below.

Download PDF Document
	The Real Story Behind Big Pharma's R&D Spending in Canada
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