AbbVie head criticizes Canada’s patent laws on drugs

The new head of the Canadian operations of AbbVie Inc., the U.S. drug giant that recently scuppered its proposed merger with Shire PLC, said Canada will not get more research and development work from big pharmaceutical companies until the country reforms its intellectual property rules.

Stéphane Lassignardie, who was named head of AbbVie Canada in June after running the company's southern European operations, said the Canadian patent protection environment "is not in line with the standards we expect from a Western country."

In Canada, most new drugs get eight to 10 years of patent protection, compared to 15 years in Europe, Mr. Lassignardie said. "If we could improve that and have a clearer and more predictable system, it would add to the incentive for the industry to invest in research in Canada."

Abbvie, which has about 500 of its 25,000 global employees in Canada, does no manufacturing in this country. Its research here is limited to clinical trials of new drugs – about 120 of those trials are currently under way in Canada, involving about 10,500 patients.

In an interview after giving a presentation to MBA students at the University of Toronto Thursday, Mr. Lassignardie said countries need to create an environment that attracts innovation, if they want to get R&D projects from big drug companies. One problem with Canada, he said, is the splintered regulatory environment, where provinces compete with each other to offer incentives, and each has a different approach to running its drug benefits.

He said he finds it odd that drugs get different treatment in different provinces – in some, a patient may have the entire cost paid for, while in others it may not be covered by insurance or there may be a co-payment. "You can have a disease, and it is better to be in this province than another province, because you are going to get better coverage here," he said. "To me, as a European, it is quite weird."

Canada's Research-Based Pharmaceutical Companies, the industry organization that represents brand-name drug makers such as AbbVie, Pfizer and Sanofi, has been fighting for years for greater patent protection. The issue has also been one of the key sticking points in the negotiation of a free trade deal with the European Union. The EU has been pushing for additional protection in Canada.

Still, some critics say that increasing patent protection will increase the cost of drugs in Canada – by delaying the availability of generic copies – and thus drive up overall health spending.

Mr. Lassignardie would not comment directly on the recent $55-billion bid by AbbVie for Irish drug company Shire, a takeover which collapsed after the United States said it was going to crack down on the "tax inversion" strategy that had driven the deal. But he said there will definitely be more international restructuring of the drug business, as big companies try to create the kind of critical mass they need to support expensive research efforts.

Aside from the tax gains, a takeover of Shire would have added a number of drugs to AbbVie's portfolio of products that treat rare diseases. Its current blockbuster product is Humira, a drug that treats rheumatoid arthritis and other autoimmune diseases, and makes up about 60 per cent of the company's sales.

Mr. Lassignardie said he also expects to see some drug companies swap portfolios with each other to build up their specific businesses, while others will spin off assets into new ventures. That is essentially what Abbott Laboratories did in 2013 when it spun off its pharmaceutical arm to create AbbVie, keeping the medical devices, nutritional products and diagnostics under the Abbott name.

Mr. Lassignardie said one of AbbVie Canada's priorities is to work more closely with patients to make sure its drugs are taken properly, and for the appropriate length of time. He said that improper use of drugs – people forgetting to take them, or stopping too early – has enormous consequences to patient health and society as a whole.