Impact of trade agreement may spark renewed interest in universal public drug plan

Last week Globe and Mail columnist Margaret Wente said the Harper government’s “consumer friendly” agenda was at odds with the pharma provisions in the new European trade agreement.

As critics had been warning, the new agreement will effectively extend drug patents by about two years. The deal allows pharmaceutical companies to apply for extensions to take into consideration the gap in time between their initial patent and the federal approval required to market new drugs here.

Everyone is in agreement that this will raise the cost of prescription drugs in Canada even though Canadians already pay among the highest drug costs on the planet.

The decision is also at odds with the work of the provincial governments to bring down the cost of their public drug programs by placing a cap on the cost of generics, limiting them in Ontario’s case to 25 per cent of the cost of the brand name alternative.

At first it was difficult to understand why the provinces were applauding the deal, although the Globe reports this week that the Harper government has agreed to provide some level of compensation for the effects of this deal on the public plans. Whether successor governments will do the same is unknown, and it is likely that no compensation will emerge until such time Canadians next go to the polls.

Prime Minister Stephen Harper has made no such plans to offer parallel compensation to the majority of Canadians who are not covered under a public drug plan.

As Wente pointed out last week, there is much at stake here. When Lipitor came off patent the generic alternative provided savings of $1 billion to Canadians. Considering our overall drug spending is almost $28 billion a year, that is significant.

Worried about the impact of the trade agreement to undo savings already achieved by the provinces, it may add wind to the sails of those advocating for a national Pharmacare program.

Most European countries already pay less in drug costs than Canada due to the scale of their far more generous public drug programs. Canada is very much the outlier in excluding drugs from our universal Medicare programs. Only 45 per cent of drug costs in this country are covered by the public purse compared to 94 per cent in Switzerland. Ironically, it is Switzerland that is considered to be the hotbed of pharmaceutical research, not Canada, despite the continuous crowing by big pharma in this country.

Carelton University’s Marc Andre Gagnon developed four different scenarios in which Canada could adopt a European-style pharmacare program. Net cost savings ranged from $2.67 billion to $10.7 billion – or about 42 per cent of total costs in 2010. That should make every policy wonk sit up and take notice.

Further, Gagnon points out that we never received the investment big pharma was supposed to make in return for maintaining an industrial policy that promotes high drug costs. Gagnon writes in 2010 that R&D spending in Canada was $1.31 billion of which 59 per cent of it consisted of tax subsidies. In short, most of that research we were paying for anyway.

With the adverse effects of the new European Trade Agreement (CETA – Comprehensive Economic and Trade Agreement) and drug costs that have already been rising by about 10 per cent per year, politicians really do need to take a hard look at an alternative that would be both popular, save money, and bring us into the mainstream of developed nations.

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