They wouldn’t admit it publicly, for fear of compromising their negotiating position in the months ahead.
But privately, officials in Ontario’s government breathed a sigh of relief at the end of last week, when they saw that their worst fears about the health-care costs of the new free-trade deal between Canada and the European Union had not been realized.
Through negotiations, it had been speculated that in order to achieve the Comprehensive Economic Trade Agreement (CETA), the federal government might be prepared to cave in to European demands to extend patent protections on brand-name pharmaceuticals by as many as five years. That would have eliminated much of the savings Health Minister Deb Matthews achieved back in 2010 in a successful fight with pharmacies to lower the cost of generic drugs, which as a result are now only priced at 25 per cent of their brand equivalent and in some cases even less than that.
As it turned out, Ottawa evidently didn’t need to offer that much of a concession, despite the Europeans’ desire to help the brand manufacturers on their soil. When the deal was announced last Friday, it was reported that if it is ratified by both sides, patents would only be extended by two years. But even that may overstate it. According to provincial sources familiar with the agreement, the patents will only be extended up to two years, if manufacturers are able to demonstrate delays in getting federal approval prevented them from coming to market quickly and making the most of what is usually a seven-to-nine-year window.
The ability of Big Pharma to make such a case should not be underestimated, so an extra two years before the generics can replace their brands may indeed become the norm. But further encouragement for Ontario and other provinces came with Prime Minister Stephen Harper’s pledge to provide compensation for additional costs to public drug plans.
For all of that, there is a good reason why despite quickly coming out in support of CETA on Friday, Ontario maintained publicly that drug costs – along with the impact on the province’s wine and dairy industries, both of which should be a little harder for anyone without a vested interest to get worked up about – remain areas of concern.
Because the new policy would only affect brand drugs patented after CETA is ratified, the additional costs won’t hit for roughly a decade. On first glance, that may seem to offer further reassurance about the impact – and given that Ontario is currently battling a budget deficit in the range of $10-billion, perhaps it does. But for anyone concerned with the long-term sustainability of health-care budgets, that extra time could be a mixed blessing.
The people currently running the federal and provincial governments won’t be around forever. So unless the commitment is somehow carved in stone, it might not much matter what Mr. Harper promises to the provinces now about helping shoulder the burden.
Come the early 2020s, meanwhile, all those warnings about an aging population will have caught up with us. Considering that the provincial drug plan provides coverage to most (if no longer quite all) Ontarians over the age of 65, even relatively brief extensions of widely used brand pharmaceuticals could cumulatively wind up costing well into nine figures annually.
It could have been a lot more onerous than that, and Mr. Harper deserves considerable credit for not allowing it to be so. But those quiet provincial sighs of relief shouldn’t be confused with declarations of victory just yet.