COVID-19 has exposed serious weaknesses in the Canadian drug supply chain
Since the onset of the economic crisis caused by the COVID-19 pandemic, political and business leaders across Canada have advocated for a return to local purchasing policies as a means of reviving the economy. In a key sector such as pharmaceutical manufacturing, such a policy would not only have economic benefits, but it could also resolve a critical pharmaceutical supply problem our healthcare system is increasingly facing.
COVID-19 has exposed serious weaknesses in the Canadian drug supply chain. What was already present before the pandemic has been exacerbated by COVID-19, to such an extent that in April 2020, we came close to a supply breakdown of some essential medicines used in hospitals.
Since generic drugs represent 75 per cent of prescriptions filled in Canada, a focus on them should be prioritized to effectively combat this pandemic and any future crisis. At the heart of the problem is Canada’s growing dependence on pharmaceutical products manufactured abroad.
It wasn’t always this way. In the 1970s and 1980s, Canadian pharmacies and hospitals relied primarily on local manufacturing for drug supplies, both from multinational brand companies and from generic makers. Since then, however, multinational companies have reduced their investments in Canada in both production capacity and R&D, despite extended patent rights granted by the federal government.
At the same time, local generic companies have faced constant pressure on generic drug prices which have fallen by 60 per cent in ten years. The higher labour costs in Canada compared to countries like India or China (which supply almost 70 per cent* of raw materials and products to Canada) and stronger regulatory standards have made producing existing products domestically less competitive. New product introduction has been affected by increased drug patent protection that has delayed new generic launches and made them more expensive by having to be litigated. All these factors have disadvantaged Canadian manufacturing to such an extent that over time we have become importers of the drugs we need.
COVID-19 has reminded us of the precariousness created by this dependence. Lockdown measures imposed around the world have affected the production capacity of countries like India. Transportation has been partially interrupted, and production costs have skyrocketed. At the same time, we have witnessed growing protectionism on a global scale, raising concern about increased competition between countries and obstacles to the free movement of essential products like medicines.
Fortunately, there is still time to act. Despite the vulnerability of its supply chain, Canada has coped through the pandemic. But this should not mislead us into a false sense of security. The shortage risks have not been eliminated, and COVID-19 is still disrupting the functioning of our generic pharmaceutical industry. We still have time to implement measures to consolidate local production and supply, but we must act now.
The solution is greater Canadian self-sufficiency in drug manufacturing. Public policies must be put in place to stimulate local production capacity and build reserves of raw materials and finished products. The federal and provincial governments are the main direct and indirect drug purchasers in Canada. Through their procurement and economic development policies, they can stimulate local production and usage of Canadian-made pharmaceuticals and increase self-sufficiency.
Pharmascience Inc. is the second largest Canadian owned pharmaceutical company. Because of our Canadian roots, we have chosen to keep our head office and all of our production and R&D activities in Canada. We have the size, capacity, and human resources to make a tangible contribution to restore Canada’s pharmaceutical self-sufficiency for its current and future needs. This is why we have recently submitted a series of recommendations to the federal and provincial governments of Canada to promote concrete measures to increase local Canadian pharma manufacturing and supply.
While the main reason for implementing these measures is to protect the Canadian public against drug shortage risks, such a policy would also be a powerful stimulus for economic growth at a time when Canada needs it most. A policy favouring local manufacturing could boost investments in Canadian production and R&D activities, which have declined in the last 20 years as the major multinational manufacturers of innovative drugs have pulled out of Canada. If they result in a rebuilding of our domestic pharmaceutical manufacturing capacity, the lessons from COVID-19 may at last carry a few positive outcomes
David Goodman is the president and chief executive officer of Pharmascience Inc.
Advertising feature provided by Pharmascience Inc. The Globe and Mail’s editorial department was not involved.