Big Pharma Spending Ratio on Canadian R&D Continues To Decline As IP Demands Increase

The large international pharmaceutical companies continue their campaign for new patent rules that the provinces fear will cost taxpayers billions of dollars in additional costs. The lead lobby for the companies, RxD, brought former Prime Minister Brian Mulroney to Ottawa earlier this month to praise reforms from the 1980s that he argued have worked well for Canada. Yet those reforms came with a condition: in return for reforms that granted the companies far stronger patent rights, RxD companies promised to increase their spending on research and development in Canada so that it would rise to 10% of total sales by 1996.

Now the same companies are lobbying relentlessly for a new round of patent reforms that they say will lead to further growth in research and development. However, a new report from government’s Patented Medicines Prices Review Board shows that RxD spending to sales ratio continues a decade-long decline, hitting its lowest level since the 1987 reforms.

According to the PMPRB released data (which is gathered from the companies themselves), the  R&D-to-sales ratio for members of Rx&D was 6.7% in 2011, down from 8.2% in 2010. The Rx&D ratio has now been less than 10% for the past nine consecutive years and is approaching its lowest level since tracking began in 1988.  From a global perspective, Canada fares very poorly, ranking ahead of only Italy with countries such as France, Germany, Sweden, Switzerland, the U.K., and U.S. all seeing greater expenditures. In fact, the PMPRB notes that “several comparator countries, which have patented drug prices that are, on average, substantially less than prices in Canada, have achieved R&D-to-sales ratios well above those in Canada.”

Earlier this week, the chief Canadian negotiator on CETA appeared before the Standing Committee on International Trade and acknowledged the pressure from the EU to reform Canadian patent laws in support of RxD companies. He indicated that Canada has not responded to those demands. The time to respond has come: the RxD companies have failed to live up to their commitments for years and Canada will not offload billions in additional costs to taxpayers by implementing unnecessary patent reforms.

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  1. Why should they spend?
    When the government is such a pushover.

    Time for legislation.

  2. Someone somewhere in one or more of those companies’ leadership must be muttering the infamous declaration: “If we can’t bankrupt the government with our product price tags, then this isn’t a free country!”

  3. pat donovan says:

    R+D spending MIGHT be a function of how much of it gets leaked /or hacked.

    Quebec was attempting to get in on the-population-as -a-Guinness-pig train by buying up co’s and moving it ‘home’

    Now let’s hear it for micro-bewery research… and it’s


  4. Ray Saintonge says:

    High anxiety
    A government that looked after Canadian interests would say, “When you live up to your commitments we’ll consider your requests.” That’s too much to hope for with the current regime.

  5. Andrew Cichocki says:

    An alternative model for producing pharmaceuticals
    What if the government created a crown corporation to produce pharmaceuticals, which charged less than private pharmaceutical companies for its products and focused all its (minimal) profit on R&D? Everyone hates how much profit pharmaceutical companies make so the government would definitely have public support for such a policy, alot like how everyone was against the big banks merging in the 90’s.

    The fastest growing cost in health care is pharmaceutical prices. Why are we letting something essential to public health have its price determined by for profit corporations? If the government is serious about keeping our health care system sustainable they need to do something to lower the cost of pharmaceuticals and increase research and development.

  6. Great idea, Andrew!
    I thought of something like that for out-of-patent drugs that Big Pharma no longer want to produce, but are still required.