Trade deficit on drugs a harbinger of higher costs under Canada-EU deal: experts

OTTAWA – Canada’s deficit in its prescription drug trade with Europe swelled to more than $25 billion over the last five years. And experts say that’s one more sign that consumers will face higher drug prices once the recent Canada-EU free trade deal comes into effect.

The figure emerged in an analysis by The Canadian Press of Canada’s pharmaceutical trade with the European Union from 2008 to 2012, the most recent year statistics are available.

The analysis shows Canadian exports to Europe being dwarfed by imports from the United Kingdom, France, Germany and Sweden among others.

Last month, the European Union won key pharmaceutical concessions from Canada after four tough years of free-trade negotiations.

Canada agreed to EU demands to extended patent protection for up to two years on brand-name drugs, and gave European firms the right of appeal against unfavourable court rulings, which could add 18 months to a patented drug’s lucrative life.

Prime Minister Stephen Harper acknowledged last month in Brussels there could be some “upward pressure” on drug prices, which would come in 2023 if the deal is made final by 2015. But he pledged that Ottawa would compensate the provinces.

Joel Lexchin, a York University health policy specialist, said that will be no help to Canadians with lower-paying jobs, or who don’t have drug insurance plans.

He said Ottawa caved to the EU’s tough pharmaceutical demands in exchange for gaining greater access for Canadian pork and beef in the heavily protected European market.

“The big push was to get Canadian access for some of our agricultural products to Europe, and if drugs are going to cost an extra billion or two billion a year, that was seen as the price we were going to pay for it,” said Lexchin, who co-authored a recent study on how the trade deal would affect drug prices.

It estimated the cost to Canadians from delaying introduction of cheaper generic medicines to be between $800 million and $1.65 billion, once the patents on new drugs expire starting in 2023.

The Harper government, along with the Canadian industry group, R&D Canada, has maintained that the enhanced intellectual property protection for drugs would attract European research and development dollars to Canada.

“I do not believe in magic so I do not think that major drug companies will all of a sudden start to invest in Canada. They will pocket the additional earnings and redistribute it to shareholders,” said Marc-Andre Gagnon, a Carleton University expert on pharmaceutical innovation, who co-authored the recent study with Lexchin.

Adam Taylor, spokesman for Trade Minister Ed Fast, said the government believes that stronger patent protection will lead to greater investment in research and development.

“The additional protection provided to new drugs aligns Canada with other countries seeking to provide competitive environments for innovative and high paying jobs.”

Taylor said the trade deficit in drugs is due to the EU’s much larger global footprint in the sector, but he said Canada maintains superiority in the fish and seafood sectors.

“The Canada-European Union trade agreement levels the playing field and will help grow Canada’s pharmaceutical exports to the massive EU market. We’ve also preserved the export opportunities for Canada’s vibrant generic drug sector.”

Amid much fanfare, Harper signed the deal with the EU last month in Brussels, and his ministers have been selling the deal across Canada since then.

Earlier this month at a House of Commons committee, the NDP trade critic Don Davies pressed Trade Minister Ed Fast to release internal government documents that may predict potential soaring drug costs for Canadians under the agreement.

“Mr. Davies,” Fast replied, “we are not going to provide you, or the public, with information that is speculative in nature.”