Nearly two years ago, Delmar Chemicals Inc., a chemical manufacturer in suburban Montreal that employs 50 people, embarked on a bold initiative. In January, 1991, Delmar applied to the federal government for permission to produce cheaper generic versions of Vasotec and Prinivil, two brand-name, anti-hypertension drugs developed and marketed by pharmaceutical giant Merck Frosst Canada Inc. Last spring, Ottawa gave Delmar the green light—and the 51-year-old company proceeded to spend $2 million readying itself for production. Company officials said that the cost would be more than offset by a potential doubling of the firm’s total annual sales to $20 million. They also planned to use some of those profits to begin their own research and development of new pharmaceuticals. But Bill C-91, Ottawa’s new drug patent protection legislation passed by the House of
THE TORIES PASS A CONTROVERSIA BILL THAT CRITICS CLAIM WILL INCREASE THE PRICE OF DRUGS
Commons last week, has thrown Delmar’s plans into disarray. Said company president Jean-Guy Legault: “This was our primary source of income for the future—I fear for our survival.” Other generic drug manufacturers also say
that C-91, which is expected to receive Senate approval and royal assent before the end of the month, will drastically affect their future. Canada’s previous drug patent legislation ensured drug companies 20-year patents on their products. But under a system known as compulsory licensing, other manufacturers could buy the right to produce generic versions of brandname drugs within seven to 10 years of a drug being introduced. Bill C-91 will eliminate that system—effectively extending the monopoly that a major manufacturer enjoys in marketing its product. In the case of Delmar, C-91 will take away its right to market generic versions of Vasotec and Prinivil. The bill is retroactive to Dec. 20, 1991, four months before the company received its licence from Ottawa. That will give Merck Frosst a monopoly on the production of Vasotec and Privinil until its patent expires in the year 2007.
Indeed, Delmar is one of a group of five companies who last week launched a Federal Court challenge to C-91. For his part, Consumer Affairs Minister Pierre Blais claims that C-91 will foster the growth of Canada’s pharmaceutical industry by enhancing the industry’s profitability—which would lead to future research and development. In fact, multinational pharmaceutical companies have promised to invest $650 8 million in Canada if the bill passes by 1993. But critics contend that the investment will force Canadians to pay for higher-cost, brand name drugs. And they add that C-91 I will sound the death knell for Canada’s $400-million-a-year generic drug industry. Says Jack Kay, executive vice-president of generic drug manufacturer Apotex Inc. a Toronto-based company with 1,200 employees: “Companies like ours will shrink.” The bill represents a dramatic reversal of efforts by earlier governments to foster the growth of a domestic pharmaceutical industry. In 1969, the Liberal government of
ÍI Pierre Trudeau gave generic manufacturers the right to produce cheaper versions of g drugs as soon as they j£ were introduced. But in 1987, after vigorous o lobbying efforts by the £ multinationals, the Mul£ roney government in^ troduced the sevento 10-year restriction on compulsory licensing. Since then, the major drug companies have pressed their case harder, arguing that because of their massive investment in research and development, they should receive an even longer period of exclusive sales before other manufacturers could market generic versions of their drugs.
The result of the drug company campaign, spearheaded by the Pharmaceutical Manufacturers Association of Canada, is Bill C-91. Ottawa acknowledges that the bill will lead to higher drug costs for Canadian consumers, who currently spend $4 billion a year on prescription drugs. But federal officials claim that by the end of the century the overall increase will be no more than $500 million. Critics hotly contest that claim. They point to a current example, such as the tranquillizer Valium, which costs $9 for 100 five-milligram tablets. The same amount of Diazepam, a generic version, costs 60 cents.
In fact, Stephen Schondelmeyer, a pharmaco-economist at the University of Minnesota, told a Commons committee that the extra costs to Canadian consumers could be as high as $7 billion over 20 years. And U.S. consumer advocate Ralph Nader also appeared before the committee to state that C-91 would signal the end for Canada’s medicare system. The
U.S. health-care system, declared Nader, “cannot bear the presence of an alternative model north of the border that people in the United States can look to.” And, he added: “The destruction of compulsory drug licensing in Canada is the first wedge to undermine and bring down the universal health-care system as you know it.”
With the exception of Quebec, the provinces, which are responsible for providing health care, have campaigned against C-91, arguing that it will further strain their already beleaguered budgets. For one thing, most provincial health-care systems include drug plans for welfare recipients and senior citizens. Officials in New Brunswick, for one, estimate that C-91 will result in an extra health-care cost of up to two per cent, or well over $15 million a year for that province’s health-care system alone. Said one senior provincial health official: “This has the effect of negating all the other cost-containment measures, like hospital bed closures, that we’ve put in so far. It is very significant.”
Clearly, Ottawa faces a challenge in keeping health-care costs down while fostering pharmaceutical research and development. “It’s a very difficult issue,” says Ruth CollinsNakai, a professor of pediatrics at the University of Alberta in Edmonton and a member of that province’s Council on Science and Technology. “Canada is behind in terms of research money, especially in pharmaceuticals.” Collins-Nakai adds that the extra investment promised by the major drug manufacturers is needed. “But on the other 35 hand,” she says, “if you I look at health-care costs ïï over the past few years, the 5 sector that is increasing the fastest is drug costs. If there are not curbs on it, I am concerned those costs will continue to rise and the poor will not as easily be able to afford these medications.”
While the Senate twice sent the 1987 drug bill back to the House for revisions, a repeat performance this year is unlikely. Still, the Tories now hold only 49 of the seats in the upper chamber, with 41 Liberals and 5 Independents. Several Conservative senators have said that they intend to be more active and independent in their review of legislation following the defeat of the Charlottetown constitutional accord. Should they flex their muscles on the drug patent bill, the Prime Minister will likely respond by filling the 10 Senate vacancies with appointees who agree to support the new bill. In either event, Canadians will learn soon how serious the side effects of the new— and clearly costly—drug patent legislation will really be.
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