A unique opportunity for
Canada to reduce drug costs by eliminating the automatic injunction that delays
competition from lower priced drugs
The Government of Canada has introduced amendments to the Patent Act to comply with a ruling by the World Trade Organization (WTO). These changes will extend patents on at least 30 brand name prescription drugs and add millions to already skyrocketing drug costs. While the Patent Act is being amended, the Government has a unique opportunity to offset the cost increases of the patent extensions. It can do so by repealing the automatic 24-month injunction under regulations of the Patent Act that keep lower cost generic equivalents off pharmacy shelves.
What
the WTO ruling means:
The
World Trade Organization (WTO) ruled in October 2000 that Canada has 15 months
to extend patents from 17 to 20 years. To comply with this ruling, the federal
government has introduced legislative changes to the Patent
Act.
The
extension of patents on brand name drugs means that individual Canadians,
provincial governments and private insurers will pay higher drug prices due to
the extra three years that lower cost generic drugs (priced on average 50% less
than the brand name equivalents) are kept off the market.
Drugs
expenditures are already the fastest rising cost in Canadian health care:
During
the 1990's, provincial drug costs rose by 87%— the fastest growing cost for
provincial health ministries. In March 2001, the Canadian Institute for
Health Information reported Canadians
now spend more on drugs ($14.7 billion for 2000) than on any other sector of
health care other than hospitals, and even more than on doctors (drug spending
overtook physician expenditures in 1997).
WTO
ruling tips balance of federal patent regime:
Successive
federal governments changed patent legislation in the late 1980's and 1990's to
strike a “balance”’ between the need for adequate patent protection to
encourage important research, and the need to control the rapidly increasing
cost of prescription drugs. The introduction of legislation to comply with the
WTO ruling means this balance has now been undeniably tipped, with Canadian
consumers and taxpayers paying the price!
There
is an answer: One other Patent Act change would generate huge health care
saving:
While
Canada is required to change the Patent Act because of the WTO ruling,
the government can reduce the impact on drug costs by changing another part of
the Act at the same time. The brand name drug industry is systematically
abusing the intent of Notice of Compliance (NOC) Regulations to further
extend their monopolies beyond their legislated
period of patent protection — often for several years.
Currently
a brand name manufacturer only has to accuse a generic manufacturer of a patent
infringement to keep competition off the market for at
least two years. Unlike the settlement of patent disputes in any other
industry in Canada, this provision can lead to an automatic 24-month stay
that allows brand name drug companies an additional two years on the market
regardless of a sound legal case. These provisions give brand name companies an
incentive to accuse generic firms of patent infringement.
Courts
have ruled in favour of generic manufacturers in 80% of these cases. However, it
is in the interest of brand name companies to pursue a stay under the
regulations because an extra two years of monopoly means millions more in
profit. These profits translate to higher drug costs for Canadians - $300
million since I993.
According
to Fortune Magazine. the brand name pharmaceutical industry is the richest, most
profitable industry in the world. Consequently, why does such a lucrative
industry need its own special patent dispute rules—particularly when these
rules add millions of dollars to health care costs?
By
eliminating the automatic injunction against generic competition provided by the
Patent Act’s Notice of Compliance Regulations, the Canadian government
can mitigate extra health care costs resulting from the patent extensions. This
amendment not only keeps Canada in full compliance with international trade
obligations but more importantly, will significantly lower health care costs
while practicing fair and affective patent enforcement. #
Material
provided by the Canadian Drug Manufacturers Association