Ottawa Citizen

Study condemns slow approval of generic drugs

Andrew Duffy The Ottawa Citizen

Patent fights and government red tape are costing Canadians millions of dollars every month in forgone savings on generic drugs, a Queen's University researcher has found.

In his study, to be presented today at an Ottawa symposium on rising drug costs, Professor Malcolm Anderson examined the experience of 34 generic drugs as their manufacturers fought to have them approved between 1995 and 1999.

Canadians, he concludes, lost about $5 million a month in potential savings during that time because of approval delays.

"There's an explicit cost issue here," Mr. Anderson said yesterday. "The question is, with rising drug bills, how can we keep more money and reallocate our resources to where it's needed in the health care system? This would seem to be one way."

Generic drug prices are about 60 per cent of the cost of brand-name prices in Canada.

According to Mr. Anderson, generic drugs are impeded from entering the market by brand-name manufacturers that guard patents and by governments that duplicate regulatory steps.

The federal government is responsible for ensuring generic drugs have the same chemical attributes as brand-name medicines, but it's up to the provinces to decide whether a new product will be added to their drug plans, or formularies.

In his study, Mr. Anderson found a wide discrepancy in the speed with which provinces dealt with new generic products. British Columbia was the fastest, taking an average of 84 days to list a new generic drug; Ontario was the slowest, taking 314 days.

"There are four different committees within the Ontario government that have to put their stamp of approval before the products go on to the formularies," Mr. Anderson said. "All of that takes time."

And those approval delays, he warned, will only become more costly as heavily used drugs, such as the leading ulcer drug Losec, come to the end of their patent protection. Losec alone has annual sales of about $350 million in Canada.

Canadians last year shelled out $14.7 billion on pharmaceuticals -- more money than was paid to the nation's physicians.

The fastest growing component of health-care spending, prescription drugs now account for 15.2 per cent of all health-related expenditures in Canada, making them second only to hospitals.

Large pharmaceutical companies, however, contend that high prices are not the driving force behind those increases. Canada's drug expenditures, they say, reflect an increased number of products and an ever-expanding number of medical applications.

"There's more therapies and there's an aging population, so of course we're spending more on drugs," said Anie Perrault of Canada's Research-Based Pharmaceutical companies, the association representing many major drug makers.

In Canada, the cost of drugs still under patent are controlled by the Patented Medicine Prices Review Board, a federal tribunal that has kept prices in this country considerably lower than those in the U.S.

Canadian prices, Ms. Perrault said, are on average 11 per cent lower than international prices.

"The market in Canada is the best available market in the world right now for generics," she noted. "It's well known that Canada is always going to be the first country where a generic will come out, except for maybe India."

Canadians will hear more of these arguments in coming weeks as the Commons considers Bill S-17. Both the brand-name and generic-drug manufacturers are gearing up for a protracted fight over the bill, designed to amend the Patent Act to bring it into compliance with two World Trade Organization decisions.

The WTO, ruling on complaints made by the U.S., said Canada must extend protection from 17 to 20 years on all of its patents, including the 30 that cover prescription medicines.

Generic-drug manufacturers contend the new rules tip the scales too much in favour of the big brand-name drug makers and they want the Liberal government to use Bill S-17 to rebalance the situation.

Currently, a brand-name manufacturer has only to accuse a generic maker of patent infringement to preserve its monopoly for an additional two years. Under regulations of the Patent Act, an automatic court injunction against the new manufacturer is granted until the patent issue is settled in court.

Generic drug makers contend that since 1993, 60 generic drugs have fought patent challenges, costing Canadians nearly $300 million in foregone savings.

"What we're trying to tell parliamentarians is that these regulations are being abused," said Jim Keon, president of the Canadian Drug Manufacturers Association, which represents the generic drug makers. "They're being used to support frivolous patents and multiple patents."

Mr. Keon said big drug companies now seek new patents every time they update an old medicinal formula, a practice known as "evergreening."

"Increasingly," he said, "we're finding that patents are being added at very late stages, even after litigation has started. And the effect of that is to start the two-year clock again -- so long after original patents are expiring, generic competition is not happening."

Ms. Perrault, however, said the system is only fair since brand-name companies can lose 90 per cent of their market overnight once a generic drug is introduced. And there's no compensation down the road if it's later found the generic drug infringed on a legitimate patent.

"I'm not trying to say we're pure-white virgin people," said Ms. Perrault. "But Industry Canada issues patents, not the pharmaceutical industry."

-- Rachel Gibson (rgibson@hotmail.com), May 01, 2001