A little over a week ago, the Fraser Institute, a prominent and independent Canadian public policy think tank, released a report calling for a strengthening of intellectual property protection for pharmaceuticals in Canada. The report claims that the changes would produce an increase in trade opportunities and access to foreign markets that would generate an economic benefit exceeding any costs that the changes would have on domestic pharmaceutical expenditures.
Impending Free Trade Agreements Present an Immense Economic Opportunity
In the report, analysts at the Fraser Institute claim that enhanced pharmaceutical intellectual property (IP) protections can serve to strengthen the domestic innovative pharmaceutical industry while facilitating Canada’s ability to enter and negotiate free trade agreements. The report focused on the economic benefits of two prominent international agreements that are currently in the midst of negotiations, the Comprehensive Economic and Trade Agreement (CETA) with the European Union, and the Trans-Pacific Partnership Agreement (TPP) which involves many nations across the globe.
The report also explains that a key unresolved issue in these discussions has been the status of Canada’s pharmaceutical IP protection, which is currently much lower than its main trading partners and other industrialized nations. By aligning their pharmaceutical policies with the EU and the USA in an effort to complete the CETA and TPP trade agreements, the report estimates that these two trade deals alone can create an annual economic benefit of nearly $22 billion, which would easily offset an estimated $367 – $903 million annual increase in domestic pharmaceutical expenditures.
Another Source of Pressure on Canada to Strengthen its Pharmaceutical IP Laws
In addition to the Fraser Institute report, there has been an abundance of pressure put on Canada to strengthen its pharmaceutical IP policy by its largest trading partner, the United States. A recent report by the United States Trade Representative (USTR) expressed serious concerns about Canada’s pharmaceutical IP laws, and US based organizations such as the Pharmaceutical Research and Manufacturers of America (PhRMA) have criticized Canada’s pharmaceutical IP laws as posing a threat to the American innovative pharmaceutical industry and to US jobs.
Another intriguing component of this issue is that the US itself recently started negotiations with the EU over a free trade agreement similar to the CETA. This has led to concerns from some diplomats that the CETA negotiations may be lost in the shuffle or negatively affected as the EU concentrates on the US agreement, in a situation similar to what happened in talks with South Korea in 2007. Although the CETA is still expected to be completed eventually, this development has undoubtedly created some urgency in the ongoing negotiations and has increased the pressure to get a deal done promptly.
Although there has been large support for the strengthening of Canadian pharmaceutical IP policy among many industry and diplomatic representatives, this view is not universally shared. One concern about the move is the disagreement regarding the resulting cost increases on domestic pharmaceutical expenditures, with some reports putting the cost at nearly $3 billion. In addition, the distribution of the costs and the potential income from the agreements could be a concern of the provincial governments, as they primarily administer the health care system in Canada and many of the benefits of the agreement may be realized primarily on a federal level.
There is, however, a more subtle issue beyond economics and one that is undoubtedly a consideration in this debate – Canada’s role in the global access to medications regime and as a global health care provider. A move towards stronger IP and the subsequent increased drug costs can be seen as a move away from these types of initiatives, which may not be compatible with Canada’s commitment to Canada’s Access to Medicines Regime (CAMR) and its historical role as the first and only nation to utilize flexibilities under the Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement to export generics under a compulsory license to developing countries (with no shortage of controversy and criticism). Associations like MSF (Doctors Without Borders) have come out and asked Canada to speak out against a strengthening of pharmaceutical IP policy in the ongoing TPP negotiations. In an open letter to Prime Minister Stephen Harper, they explained that this development they may have a deleterious effect on the available of cheap generic medications for millions of their patients around the Asia-Pacific region.
So What Should Canada do?
With Canada moving forward in the CETA and TPP negotiations and a recent cabinet shuffle instituting a new industry minister that is expected to support the strengthening of IP in Canada, all indications point towards an enhancement of pharmaceutical IP protection in these free trade agreements. Also, as commentators have pointed out, strengthening pharmaceutical IP will only bring Canada to the global norms among industrialized nations, which seems like a fair concession in an international free trade partnership of this sort.
On the other hand, as illustrated by the calls for Canada to act against these changes by associations like MSF, it is clear that Canada is distinctively seen as a nation at the forefront of supporting access to affordable medications for developing countries. A momentous policy change of this sort will undoubtedly alter the image that Canada retains in the global healthcare front. The question now remains: will Canada sacrifice an apparent illustrious economic benefit or continue with its seemingly Robin Hood-esque stance to pharmaceutical IP policy?
Adam Falconi is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.