Assorted pharmaceuticals by Global Panorama (CC BY-SA 2.0)

Assorted pharmaceuticals by Global Panorama (CC BY-SA 2.0)


Canadian Government Officials Confirm TPP Will Raise Pharmaceutical Costs

Critics of trade agreements such as the TPP and the Canada-EU Trade Agreement has emphasized that a key concern is that deals will lead to increased costs for pharmaceutical drugs. At a recent Standing Committee on Health hearing on the development of a national pharmacare program, officials with Health Canada confirmed that they expect prices to increase but remain unsure about how much (hat tip: Blacklock’s Reporter). The exchange came from questions by NDP MP Don Davies:

Mr. Davies: Canada has just signed two trade deals, CETA and the TPP, which have new intellectual property provisions. All the literature and opinions I’ve read indicate that this will delay the introduction of generics to market for some time. I’m seeing estimates of two years as about what it’s going to take. Ms. Hoffman, has the department done some analysis on the likely impact of TPP and CETA, and is it true that those trade deals will likely increase the prices that Canadians pay for pharmaceuticals and add a little bit of mud to that already dirty picture?

Ms. Hoffman [Health Canada]: Yes, some analysis has been done. There’s a large number of people, not the least of whom are in the generics industry, who are attempting to estimate what incremental costs will be. The maximum amount of extended protection that brand drugs could get in the Canadian marketplace would be two years. In reality, given the intersection of data protection, patent remaining, patent life, and so on, it’s likely to be considerably less, on average, for most products. But every day that a patent product remains in the marketplace beyond what is currently the case is a day when the generic equivalent is not in the marketplace. One can calculate the incremental cost. This is why measures such as the work being done through the pCPA , and some changes that may be in the offing for PMPRB, are so important.
It is difficult to estimate the global cost. We can do modelling based on drugs that are in the marketplace today and try to imagine what would happen with the same mix of data protection and patent life remaining, but we’re actually talking about drugs that will be in the marketplace five, six, seven, eight, ten years and beyond. The profiled drugs and their costs and whether or not there even are generics that could replace them will depend on what’s going on in that drug marketplace.

Mr. Davies:  Is it fair to say, Ms. Hoffman, that it’s the department’s position that those two trade deals will likely increase the costs of drugs in Canada and we just don’t know how much?

Ms. Hoffman: That’s correct.

The acknowledgement that costs will go up but that the government isn’t sure how much provides further evidence that the full costs of the TPP (and CETA) are not known. Estimates of gains from the agreement are difficult to square with government evidence that there will be increased consumer costs with payments to go to foreign pharmaceutical companies.

The comments from Health Canada are also not a surprise. KEI obtained a document last month sent by the Obama Administration describing how the TPP will increase protections for pharmaceutical companies, leading to higher consumer costs. The TPP is opposed by dozens of health care groups.

Not only will the TPP and CETA lead to increased prices, but comments from the Patented Medicine Prices Review Board, an independent, quasi-judicial body created by Parliament in 1987, paint a disturbing picture of current Canadian pharmaceutical pricing. Officials from the PMPRB told the committee:

Canadian drug prices are the fourth highest of the 31 countries in the OECD, and on average Canadian prices are 26% higher than the OECD median. Canada spends more on drugs per capita and as a percentage of GDP than most other OECD countries. On the other hand, R and D in Canada continues to decline and currently stands at 5% of sales. This is the lowest recorded figure since 1988, when the PMPRB first began reporting on R and D. In contrast, the average R and D ratio for the PMPRB7 countries has held steady at about 20%.

In other words, Canada’s already high pharmaceutical costs are about to get even higher.


  1. Paul Sadler says:

    Great article as always, but the conclusion that drug costs will go higher AND that we’re fourth out of 31 is a bit incomplete, isn`t it? Wouldn`t we also need to compare what % of prescription costs are paid by citizens vs. covered by benefits?

    • Devil's Advocate says:

      Whether your prescriptions are paid out of pocket or “covered” by a benefit plan, a price increase affects everyone.

      With a plan, any rise in costs will be passed on to the members via the rates and terms of the plan. The plan will cost everyone more, and some coverages may be reduced.

      And it’s not like everyone has a plan, either. Most people are not even offered benefits these days.

  2. Brent Beach says:

    Cost of prescription drugs is out of control.
    I was required to buy three prescription drugs – all eye drops – for use before and after my cataract operation. They cost a total of $110. Very small bottles – a few ml each. None of these drugs was new. A search showed they had been around for years. Prescription generics.
    We are being had by both big pharma and our local generics monopoly. We are getting no local R&D in return for these out of control generic prices.
    Canada should allow unrestricted imports of generics from any country in the world with a solid regulatory environment.

  3. OneEyedPirate says:

    Nothing will change the direction we’re headed in until people start rioting in the streets. It will not make any difference which political party is elected, they will each do exactly the same things, except for some window dressing that does not actually matter very much. Look at the CONS vs the “new” LIBS, I don’t see any difference except for a few selfies and some “feel good” items that do not involve money from the corporations that have bought all of these politicians.

  4. The TPP is not a fair trade it’s a global treaty that allows a 3 panel tribunal change our laws and court orders while suing the country, it’s a terrible deal takes away free speach and we need to vote down the TPP

  5. OneEyedPirate says:

    “we need to vote down the TPP”

    Last I checked, there’s no vote for us on the matter, only MP’s get to vote, but that’s not really a vote is it.

    • Fiona McMurran says:

      No, we don’t get a vote on the TPP, but we can send in comments on it to the Standing Committee on International Trade which has been holding hearings and studying this deal pretty well full-time since mid-February. Thousands of Canadians have already commented, and the Liberals on the Committee are much less sure of the “benefits” of the deal than they were at the start — so, PLEASE, add your voice. Commenting on one specific issue, like pharmaceutical costs, is fine. Here’s some info:

      Ottawa, June 15, 2016 –

      The House of Commons Standing Committee on International Trade is extending the deadline for Canadians to submit written comments on the topic of the Trans-Pacific Partnership (TPP) agreement. Canadians who wish to provide a written submission in the context of the Committee’s TPP public consultation must do so before 23:59 EDT on October 31, 2016.

      Please note that written submissions exceeding 10 pages must be accompanied by a summary of no more than 1,500 words. The Committee may decide to translate, distribute and/or publish only the summary.

      More information on the process for providing a written submission can be found in the Guide for Submitting Briefs to House of Commons Committees. Written submissions should be emailed to:

  6. Pingback: Jim Balsillie fears TPP could cost Canada billions

  7. Gregory Clarke says:

    This is an extremely dishonest article. An official was asked about the impact that patent terms in two treaties would have upon pharma costs. He answers in the general.

    And then you go ahead and write an article in which you lay the bulk of the blame upon the treaty which *doesn’t* call for patent extensions on pharmaceuticals. CETA is the treaty that will require us to extend those patents. TPP does not. And in this article you only mention CETA in passing.

    The title of the article is simply put, a bold-faced lie. I refuse to belief that you’re ignorant enough to have forgotten which of the two treaties will be affecting our legislation on this topic, so I must say Dr. Geist, shame on you for publishing such claptrap. You are a scaremonger of the worst kind.