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    No Deal (Yet) on Canada - EU Trade Agreement

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    Friday November 23, 2012
    Canada's International Trade Minister Ed Fast traveled to Brussels this week hoping to secure a deal on the Canada - EU Trade Agreement. It looks like he'll be coming home empty handed as the EU has issued a release indicating that there are still gaps on key issues. The EU's take on the talks:

    Commissioner De Gucht and Minister Fast had in-depth discussions on the trade deal and made substantial progress. Both sides will now instruct their negotiators to narrow the gaps on the outstanding issues, aiming for a deal in the coming weeks. "I am pleased that our meeting at a political level has provided the momentum needed to spur on the negotiations into the home strait. It's clear that there has been significant progress but some important work remains to be done", stated Commissioner De Gucht. 
Both Commissioner De Gucht and Minister Fast decided to meet again very shortly and to continue discussions until an agreement is reached.

    That is a far cry from a done deal with more "work to be done" and the agreement going back to the negotiators for more talks.
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    Study Debunks Chamber of Commerce Claims on Canadian Patent Law

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    Thursday June 09, 2011
    Yesterday I posted on how the Canadian IP Council, the Canadian Chamber of Commerce's IP lobby arm, floated false claims about the scope of counterfeiting in Canada in an attempt to bolster claims for increased border measures. The Chamber placed Canadian countefeiting costs at $30 billion per year, a figure that has no basis in fact and that even RCMP no longer supports.

    The Chamber's false claims on counterfeiting are not the only intellectual property issue where their arguments have been debunked as inaccurate.  My weekly technology law column (Toronto Star version, homepage version) focuses on the proposed trade agreement between Canada and the European Union, which could have big implications for the costs of pharmaceutical drugs, on which Canadians spend $22 billion annually.

    The E.U. is home to many of the world's big brand name pharmaceutical companies and one of their chief goals is to extend Canada's intellectual property rules to delay the availability of lower cost generic alternatives. Earlier this year, the Chamber's IP Council released a report claiming that Canada lags behind other countries and encouraging the Canadian government to follow the European example by extending the term of pharmaceutical patents and "data exclusivity."

    The CIPC (which counts several brand name pharmaceutical companies as members) claims the reforms would lead to increased pharmaceutical research and development in Canada. But last month University of Toronto law professor Edward Iacobucci released a study that thoroughly debunks the CIPC claims, predicting increased consumer costs and noting that there is little evidence the changes would increase employment or research spending. 

    Iacobucci's blunt assessment of the report:

    The CIPC Report does not offer objectivity in its assessment of Canada’s patent regime.  It rather is a straightforward piece of advocacy on behalf of the branded pharmaceutical sector. The Report makes no effort to place Canada’s patent law in an international context or address international relations, but instead simply asserts without justification that Canada would suffer if it fails to grant the same concessions to the pharmaceutical industry that the EU and US have made. The flaws in this basic approach undermine each of the CIPC Report’s recommendations. 


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    Why Ed Fast Holds One of The Keys To Health Care Costs

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    Thursday June 09, 2011
    Appeared in the Toronto Star on June 5, 2011 as EU/Big Pharma Deal Would Raise Health Care Costs

    Ed Fast, Canada’s new Minister of International Trade, may not be household name, yet the B.C. Minister is set to play a key role in one of Canada's top domestic priorities - health care costs. The link between international trade and health care is not immediately obvious, but a proposed trade agreement between Canada and the European Union could have big implications for the costs of pharmaceutical drugs, on which Canadians spend $22 billion annually.

    The E.U. is home to many of the world's big brand name pharmaceutical companies and one of their chief goals is to extend Canada's intellectual property rules to delay the availability of lower cost generic alternatives. Earlier this year, the Canadian Intellectual Property Council, an advocacy group within the Chamber of Commerce, released a report claiming that Canada lags behind other countries and encouraging the Canadian government to follow the European example by extending the term of pharmaceutical patents and "data exclusivity."

    The CIPC (which counts several brand name pharmaceutical companies as members) claims the reforms would lead to increased pharmaceutical research and development in Canada. But last week University of Toronto law professor Edward Iacobucci released a study that thoroughly debunks the CIPC claims, predicting increased consumer costs and noting that there is little evidence the changes would increase employment or research spending.  

    The Iacobucci study, which received support from the Canadian Generic Pharmaceutical Association, is a must-read for Fast, trade negotiators and policy makers since it clarifies the likely costs associated with the EU demands.

    Iacobucci points out that competition from generic pharmaceuticals can have an enormous impact on consumer costs. For example, when generic alternatives to the cholesterol medication Lipitor appeared on the market in 2010, annual revenues for the drug dropped by $350 million. Given the billions spent on pharmaceuticals each year, rules that delay generic competitors can lead to huge additional costs.   

    Iacobucci also questions the premise that increased intellectual property protection for pharmaceuticals will invariably lead to job growth and increased research and development spending. On the employment front, he notes that the brand name and generic pharmaceutical companies are both big employers in Canada - 15,000 employees for brand name and 10,000 for generics - and policy changes might not yield any net new jobs.

    Iacobucci challenges the notion that because intellectual protection is good, more protection must be better. The report notes that this is particularly true in the Canadian context, which is a small player in the global pharmaceutical market.  Canada represents only 2.5 percent of the world market, meaning that Canadian laws have little impact on international incentives to innovate.

    In fact, Iacobucci reveals that previous Canadian attempts to use policy levers to generate increased pharmaceutical research have largely failed. In 1987, Canada began enacting a series of reforms with the promise from brand name pharmaceutical companies that their research and development budgets would equal at least ten percent of domestic sales. The government kept its end of the bargain with changes that delayed the entry of generic drugs by up to two years and granting eight years of data exclusivity. Yet despite the reforms, Canadian research and development spending has regularly failed to meet the ten percent target.

    Moreover, while the percentage of research and development spending may not have increased, Canada's pharmaceutical trade deficit certainly has. In 2000, the Canadian pharmaceutical trade deficit - the amount that imports exceeded exports - stood at $3.7 billion. By 2009, the trade deficit had grown to a record $6.4 billion.

    Those numbers help explain why Canada will face great pressure to favour brand name, predominantly foreign-based pharmaceutical companies. As Fast tallies the costs and benefits of further pharmaceutical reforms, the Iacobucci study confirms that there is little in it for Canada.


    Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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