E-drug: Canada loses patent case; higher drug prices feared
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Interim decision by world trade body favours Washington
HEATHER SCOFFIELD
Parliamentary Bureau; With reports from Leonard Zehr and Keith McArthur
Saturday, March 4, 2000
Ottawa -- The World Trade Organization has ruled against Canada in a
dispute over patents that could lead to more expensive drugs for
Canadians and have a major impact on the domestic generic drug industry.
Ottawa sources said that in an interim decision the WTO sided with the
United States, which had complained that Canada's patent laws for
inventions expired too quickly. The ruling will force Canada to
re-examine thousands of patents issued before 1989.
A final ruling is expected in April, although interim WTO decisions
generally do not change. After that, Canada will have a chance to appeal.
Relatively lax patent laws in Canada allowed a strong generic drug industry
to develop into a force that has gained control of 15 per cent of the
national prescription drug market by offering medication at a reduced price.
Losing the case could mean that some generic drugs about to come to market
will have to wait a few extra years before becoming available.
The fear in Canada is that the ruling will result in more expensive drugs
for Canadians, particularly senior citizens. Before October, 1989, the
patents that Canada usually issued expired after 17 years. After that
date, international trade rules forced Canada to issue patents that
lasted a minimum of 20 years.
The ruling pertains to all Canadian patents issued before October, 1989,
not only drugs. But pharmaceutical patents have much more market value than
patents on other inventions and, as a result, the Canadian pharmaceutical
industry has been watching this case closely.
Jim Keon, president of the generic drug industry's trade group -- the
Canadian Drug Manufacturers Association -- said yesterday that if the
decision went against Canada, then Ottawa should change the rules and make
all drug patents last 20 years from the date of filing.
"We'd be far better off because right now many [drug] patents run longer
than 20 years if calculated from the filing time," he said.
The United States argued at the WTO that Canada did not live up to its
international obligations because many pre-1989 patents expired before the
required 20-year period.
Government officials estimate that about 1.7 million patents issued before
October, 1989, are still outstanding. The ruling will affect about 40 per
cent of these.
Ottawa could remedy the situation by extending the patent terms, but
sources say the remedy will likely be more complicated than that since
some pre-1989 patents are actually much longer than the 20 years now
required. Ottawa may have to cut those patents back.
The ruling puts at risk the fragile drug-patent regimen devised by Industry
Minister John Manley to balance the competing interests of three powerful
groups: international brand-name drug producers, the homegrown generic drug
industry and advocates who want low-cost drugs for senior citizens.
In Canada, the rules governing generic drugs have long been a political hot
potato. The generic drug companies, which are mostly Canadian-owned, argue
that more lenient patent laws lead to cheaper, more accessible drugs.
The large pharmaceutical companies, mostly foreign multinationals, argue
that they need strong patent laws to make their research and development
worthwhile. Without strong patent protection, they argue, new remedies will
not be discovered.
In 1993, Ottawa toughened the rules for the generic drug industry with Bill
C-91, which removed the automatic right of generic drug companies to make
and sell cheaper copycat versions of popular branded drugs.
The law was designed to counterbalance regulations that allowed generic
companies to get access to their competitors' patented formulas and
stockpile lower-cost versions in anticipation of the patent running out.
In return, Ottawa won pledges from multinational drug companies to create
thousands of jobs, pump money into research and keep a lid on prices.
Canada's generic drug industry is dominated by Apotex Inc. and Novopharm
Ltd., two Toronto-based firms.
This is the second ruling from the WTO to affect the Canadian
pharmaceutical industry recently. In January, the WTO ruled on an
interim basis that Canada cannot allow generic drug companies to
stockpile copycat pharmaceuticals before a patent on the brand-name
medication has expired. But the WTO did say that it is okay to let
generic companies research and develop copycat products before the
expiry of the patent. A final ruling is expected in a few weeks.
Joel Lexchin
joel.lexchin@utoronto.ca
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