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© Copyright 2000 Rogers Media. The following article first appeared in the May 2001 edition of
BENEFITS CANADA magazine.
Turf wars
Generic drug makers want to reform patent legislation. But the cost of pharmaceuticals is only one
reason why drug expenditures are high.
By Kathryn Dorrell
The Canadian Drug Manufacturers Association (CDMA) says it receives regular calls from private drug plan
managers inquiring about when generic versions of commonly used brand name drugs will be available. Jim Keon,
president of the CDMA which represents generic drug makers, says this illustrates the need for generic drug
manufacturers to have fair access to the market in what he describes as "a steadily worsening legal and
regulatory environment for generic drugs in Canada."
Turf wars between generic and brand name drug entities are nothing new. These days, however, the focus is
on Bill S-17. The Patent Act introduced by Ottawa earlier this year to comply with a World Trade
Organization (WTO) ruling forces Canada to extend all 17-year drug patents (the norm prior to October 1989)
to 20 years. The CDMA accepts that Canada must abide by the WTO ruling, but says Bill S-17 will make the
"problem of skyrocketing drug costs even worse"--a bold statement that's sure to pique plan sponsors'
interest.
Keon is urging Ottawa to use Bill S-17 to address aspects of the legislation that present roadblocks for
generic drugs. He argues that any patents beyond the 20-year mark should be rolled back to that limit, and
says brand name pharma companies should not be allowed to challenge a generic from coming on the market
once a patent has expired. "The basic patent on Losec [an ulcer medication] expired in July 1999 but almost
two years later, there are no generics because our generic manufacturers are held up in litigation," says
Keon, adding the Senate was surprised to hear this.
TWO-SIDED STORY
The CDMA is shrewd to play the cost angle. But according to Murray Elston, president of Canada's
Research-based Pharmaceutical Companies, Industry Canada estimates that the impact of Bill S-17 on domestic
drug purchases will be about one-tenth of a per cent. He adds that reforms to curb generic manufacturers'
practice of stockpiling (making a generic drug before patent expiry to prepare for market demand) won't
have a significant impact on prices either.
Elston also calls the generic manufacturers on the issue of a 20-year maximum patent, stating that,
worldwide, it is common to have patents exceeding this duration. And after all, he says, isn't Bill S-17
about Canada's need to come in line with international standards? "They [generic manufacturers] try to
shorten the term of any patent product they think they can get to market before the patent has expired,"
adds Elston.
Like any legitimate industry, both the generic and brand name manufacturers deserve a fair playing field.
And consumers and payers deserve a system that keeps prices competitive. However, the dramatic rise in drug
expenditures cannot simply be attributed to patent protection.
REAL BATTLE
Ruth Mallon, senior director of pharma services at the Ontario Pharmacists Association in Toronto, says
that the Patent Medicine Pricing Review Board, which monitors pricing of brand name drugs in Canada, lists
a slew of reasons for the increase in overall expenditures. Unit price is just one of them. The others
include the usual list of culprits: demographics, prescribing habits and increased use of drug therapy over
surgery.
Mallon adds that extending patents isn't likely to have a major impact on drug costs because once most
drugs are on the market their usage has usually decreased considerably as newer, more popular drugs in that
class of therapy have replaced them.
Currently, Bill S-17 sits with the House of Commons' Industry Committee and it is expected to be passed
before the House breaks in June. Whether or not Ottawa hears the generic drug makers' plea, the need to
address the sustainability of drug plans in light of cost increases will remain. This is the real battle
for plan sponsors. Both sides of the drug industry can ensure employers win by helping them reap and track
real advances in productivity from their products.
Kathryn Dorrell is associate editor with BENEFITS CANADA.
kdorrell@rmpublishing.com.
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