Top government officials say Industry Minister Allan Rock's flirtation last fall with buying unpatented anthrax drugs hurt Canada's international business and trade reputation, and risked breaking the Food and Drug Act.
"The decision by Health Canada to circumvent Canada's Patent Act run[s]counter to this government's agenda of innovation, economic growth and fostering of a knowledge-based economy," says a memo addressed to Peter Harder, deputy minister of industry and now Mr. Rock's top bureaucrat.
Mr. Rock, who was minister of health at the time of the controversy, now says, as Industry Minister, that innovation in Canada's economy is his first priority. His staff would not comment yesterday on the documents.
It has become an accepted fact that Mr. Rock, health minister until last month, circumvented patent laws by putting in a $1.5-million order for the drugs with Toronto-based generic producer Apotex Inc. The patent for the drug, ciprofloxacin, is held by brand-name drug-maker Bayer.
While Mr. Rock has acknowledged that his officials made a mistake, the effects of the mixup go far beyond a company dispute over patents, say government documents obtained by the Canadian Alliance through access-to-information legislation.
The memo and other documents say that Health Canada's action prompted questions from around the world, including some from the office of the U.S. trade representative. "The biggest concern is the Prime Minister appointed someone to the innovation ministry who acted against the Patent Act and against the innovation policy," Alliance MP James Rajotte said.
The senior official whose name is on one key document as author, Andrei Sulzenko, says the memo was a draft written by junior officials and was never actually sent to the deputy minister. The document is not marked "draft" and has Mr. Sulzenko's name on it twice, but is not signed by him.
The papers also say that if Apotex had completed the sale to Health Canada, the sale "would appear to stand in contravention of the Food and Drug Act."
That's because three different court cases between Apotex and Bayer over the Cipro patent ruled against Apotex, clearly preventing Health Canada from approving the generic production of the drug, the documents say.
The conflict involving Health Canada, Bayer and Apotex was eventually resolved after Bayer complained bitterly that the government had violated its patent. Ottawa eventually ordered more Cipro from Bayer.
But Industry Canada still has had to deal with fallout, the documents show. In late October, when former industry minister Brian Tobin visited Merck Frosst Canada Ltd., Canada's largest pharmaceutical company, he was told by his officials to expect concern about the investment climate in Canada because of the Cipro matter.
The incident with Bayer has "negatively impacted on the brand-name's perception of Canada's commitment to competitive intellectual property and enforcement," the documents say.
A key aim of industry ministers over the past decade has been to sell Canada abroad as a great place for foreign, research-based companies to invest and do research and development. A crucial part of Canada's pitch is its commitment to uphold international trade rules that require countries to give inventors 20-year patents.
But internal politics has played havoc with that pitch. For years, former industry minister John Manley fought against Mr. Rock, as justice minister and then health minister, over how strict Canada's patent laws should be. Mr. Manley wanted to make them stricter in order to attract international investment; Mr. Rock fought on the side of making cheaper, generic drugs more widely available.
Canada has been taken to the World Trade Organization twice over its patent laws. The Cipro incident, for some business people, was the final proof they needed to see Canada as a country with a shaky commitment to the protection of intellectual property.