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Big drug firms seek to extend Canadian patent protection

Brand name drug manufacturers in Canada are again asking Ottawa to extend patent protection. However, unlike the last time they won expanded protection, in 1993, they won't commit to invest 10 per cent of domestic sales in research and development spending here, after failing to meet that pledge for the past decade.

"In principle, we are making a commitment" to keep investing in research and development, Russell Williams, head of Rx&D, the brand name manufacturers' industry association, told The Globe and Mail editorial board Wednesday. "At this point in history it's difficult to say it is X percentage based on an older way of thinking."

Rx&D, whose membership is dominated by foreign-owned giants such as Novartis AG and Roche Holding AG, is pushing the Canadian government to agree to demands from Europe in free trade negotiations to increase intellectual property protections. The proposed changes would bring Canada in line with European regulations by providing patent holders with stronger appeal rights in proceedings against generic rivals and by allowing them to keep data collected during drug development a secret for 10 years, up from eight.

The generic industry argues extended protections would just enrich European-based drug companies and add billions of dollars to already high Canadian drug costs, while costing jobs and exports. "Longer market monopolies do not lead to more investment in Canada," said Jim Keon, president of the Canadian Generic Pharmaceutical Association.

When Rx&D's predecessor body asked for increased patent protection 20 years ago, it pledged its members would invest 10 per cent of sales by 1996 in R&D and stay above that level. R&D spending did jump from less than 7 per cent in 1988 to more than 10 per cent in 1993 and stayed in the double digits through 2001. But the global industry since then has produced fewer new blockbuster drugs, forcing a sweep of consolidation and cost-cutting, including a shift of jobs to emerging markets.

Spending on R&D in Canada fell below 10 per cent in 2002 and has stayed there, dropping to 6.9 per cent in 2010 – although the number was 8.2 per cent for Rx&D members, representing a total of $1.3-billion, according to the Patented Medicine Prices Review Board. Rx&D says its members' spending has exceeded the 10 per cent level, but only after including a grab-bag of spending items ranging from school breakfasts to wildlife preservation.

Mr. William said overseas head offices would look more favourably upon increasing R&D spending here should Canada increase its patent protection. "History has proven that...there is a direct line in terms of what our investment is in the country relative to the intellectual property regime," he said.

Some industry experts said that is a false argument. "In a practical sense you could do all your research in a place that has no patent protection," said David Griller, a partner with Secor Consulting in Ottwaa specializing in the life sciences industry.