GlaxSmithKline Canada's Mississauga manufacturing facilityFred Lum/The Globe and Mail
Canada risks losing out on the next wave of lucrative pharmaceutical investment and jobs unless it matches tougher patent protection for drug makers in the U.S. and Europe, says a new report for the Canadian Chamber of Commerce.
Canada has fallen behind many other leading advanced countries in patent protection, impairing the country's investment climate, concludes the report by the Canadian Intellectual Property Council, an arm of the Chamber composed of drug makers, consumer product companies, technology companies and lawyers.
The report, being released Wednesday, urges Ottawa to give patented drug makers up to five years of "restored" patent life to offset regulatory delays, exclusive use of drug trial data for an extra two years plus new legal tools to fight patent challenges launched by generic manufacturers.
"The world has continued to move on. We haven't," Chamber president Perrin Beatty said in an interview.
Any move to strengthen patent protection would be extremely contentious because it would mean higher prices for many new drugs, raising costs for consumers, insurers and provincial health plans. And Canada's generic drug industry, along with several provincial governments would likely fight them vigorously.
The Canadian Generic Pharmaceutical Association (CGPA) warned that the patent changes sought by the industry could cost Canadians up to $3-billion a year in higher drug costs.
"It's unfortunate that the Chamber has chosen to support [the patent changes]" CGPA spokesman Jeff Connell said. "They purport to be the voice of Canadian business, yet they are taking only a very narrow view of the brand-name pharmaceutical industry."
There's anecdotal evidence that many Canadian subsidiaries of multinational drug makers are having a tougher time convincing their head offices that investment should occur here because of the legal climate, Mr. Beatty added. He said it's an area of "growing concern" and a "consistent theme" among multinationals with operations in Canada.
The prospect of a free-trade deal between Canada and the European Union is likely to put added pressure on Canada to improve its intellectual property protections. European negotiators are seeking near-identical patent changes.
The makers of patented drugs spend $1.2-billion a year on research and development in Canada and employ 15,000 people, according to the report.
Current Canadian law provides 20 years of patent protection, in line with other developed countries. But the actual length of market exclusivity is typically much shorter - seven to nine years in Canada - because of extensive research and regulatory hurdles, as well as legal challenges.
Both Europe and the United States provide up to five years of what's called "patent term restoration." That gives drug makers an extended monopoly on new treatments before cheaper generic equivalents can be sold.
The report points out that drug makers lose two or more years as a result of "government-required procedures," such as clinical trials, new drug reviews and listing requirements with federal and provincial authorities.
Drug makers are also pushing for changes to Health Canada's notice of compliance regulations, which under some circumstances allow generic versions of brand-name drugs to be sold before a 20-year patent expires. The industry has long complained that the system is unpredictable and leaves them with inadequate tools to appeal these IP challenges.