Longer periods of market exclusivity for a new breed of pharmaceutical drugs, agreed to under the proposed United States-Mexico-Canada Agreement (USMCA), has the potential to stall or even reverse a trend of falling medication prices in Canada.
As part of the proposed trilateral trade pact, the companies that produce biologic drugs will be granted market exclusivity for 10 years, up from Canada’s current eight-year window – but down from 12 years in the United States. The new 10-year exclusivity window is the longest of those included in major trade deals that Canada has recently negotiated, including the trade pact with the European Union and the now-defunct Trans-Pacific Partnership.
Unlike simple, oral-dose drugs, biologics such as Humira are complex and created from living cells. The proposed exclusivity window will give the producers of these medications, which are at the cutting edge of pharmaceutical development and are often used in new treatments for diseases such as cancer and arthritis, two more years to profit off their research before generic-drug producers can market their own versions at much lower prices.
Currently, more than two-thirds of all prescriptions in Canada are dispensed with generic medicines. By granting brand-name manufacturers two more years of market exclusivity, biologic prices will remain higher for longer, offsetting gains provinces have recently made when negotiating purchasing agreements for generics. These governments are wrestling with soaring health-care costs as baby boomers grow older, and this burden has pushed them to purchase drugs used in hospitals and health-care plans at lower prices.
"Biologic medicines represent the fastest-growing cost segment of health-care spending, and these [exclusivity] delays will be costly to patients, businesses that sponsor employee drug plans, private payers and our industry,” Jim Keon, president of the Canadian Generic Pharmaceutical Association, said in a statement.
The longer exclusivity window also comes at a tough time for generic-drug manufacturers, such as Canada’s Apotex Inc., which have struggled to remain profitable as competition to produce simple, oral-dose drugs has intensified amid the emergence of low-cost producers in countries such as India. To restore profit margins, many generic-drug companies have pivoted to producing biosimilars, which are the generic version of biologic drugs and are much more complex to manufacture.
The proposed exclusivity window follows an initiative from U.S. President Donald Trump to force other countries to pay more for innovative drugs developed in the United States. In a special report released earlier this year, the Office of the United States Trade Representative cited a "weak patent and pricing environment for innovative pharmaceuticals” as well as "deficient copyright protection” as some of its ongoing concerns with Canada.
However, Mr. Trump is also trying to lower drug prices in the U.S., and the Food and Drug Administration has been increasing the number of generic drugs it approves for sale, with the hope that greater supply will drive drug costs lower.
While these policies can seem at odds with one another, the President’s Council of Economic Advisers wrote in a report in February that "the two goals of reducing American prices and stimulating innovation are consistent,” adding they “can be achieved through a combined strategy that corrects government policies that hinder price-competition at home, while at the same time limiting free-riding abroad.”