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May 29, 2003

NOW MAGAZINE

 

DRUGSTORE COWBOYS

BRAND-NAME GIANTS' HOLD ON FEDERAL LIBERALS COMES UNDER COMPETITION BUREAU SCRUTINY

BY ADRIA VASIL

 

After sitting through a decade of political stalling on reforming Canada's pharma-friendly drug patent laws, a coalition of unions, seniors groups and consumer watchdogs is sidestepping Parliament and taking their concerns over runaway drug costs to the Competition Bureau. It's the first time citizen groups have taken this route, aimed at taming brand-name pharmaceutical firms that abuse patent laws to keep cheaper generic drugs off the market. And it signals a renewed form of consumer clout - the entrance of unions as key players, and potentially bosses, too, both hoping to lower the rising cost of company health plans.

 

In mid-May, six of the coalition's organizations, including the Canadian Health Coalition and the National Union of Public and General Employees (NUPGE) filed complaints about Big Pharma practices with the Competition Bureau. At the heart of the matter stand the Mulroney-era Patent Medicines Regulations, which grant brand-name pharmaceuticals 24-month injunctions against generic competitors if they simply launch a legal action alleging a patent has been violated.

 

According to the Canadian Generic Pharmaceutical Association (CGPA), which obviously has a lot to gain from changes to the regulations, these easy legal manoeuvres "provide an enormous financial incentive to the brand-name companies to allege patent infringement, regardless of the possible outcome of litigation." It is, they charge, an easy stalling strategy.

 

But that's just part of the problem. Both the association and the coalition charge that the present system encourages Big Pharma to file for new patents on minor variations on old products, like a new colour or coating or time-release formula. This kind of finagling, or "evergreening" they say, helps companies strategically stave off generic competitors for years after the initial 20-year patent expires.

 

"The practice is anti-competitive, and we think it's the Competition Bureau's jurisdiction to deal with unfair competition," says NUPGE spokesperson Mike Luff. He and other pharma detractors point to a report by the Canadian Institute for Health Information that demonstrates that the cost of new drugs increased by 344 per cent between 1985 and 2000, making drug costs the second-largest component of health care expenditures.

 

"From a union perspective, this is an increasingly contentious issue at the bargaining table," says Luff. He says rising drug costs are behind increasingly expensive employee health benefit plans, and employers have been trying to pass the costs on to workers in the form of lower wage increases or the introduction of co-payment schemes for premiums.

 

This conflict has erupted into strikes on both sides of the border. In January, 20,000 workers at General Electric (GE) plants in 23 states walked off the job over plans to increase worker contributions to a health care plan by 40 per cent - a move GE claimed was necessary to cover a 45 per cent increase in health care costs from 1999 to 2002. Here in Ontario, 1,300 automotive workers at a Freightliner plant went on a month-long strike in February over similar issues.

 

Jacques Lefebvre, the spokesperson for Canada's Research-Based Pharmaceutical Companies, an organization representing Big Pharma, says brand-name pharmaceuticals should not shoulder the blame for the rising cost of drug plans.

 

"Our prices on average are 5 per cent below the international median." He adds that only three out of 10 drugs that make it to market actually recoup investment in their research and development, and that the practice of adding multiple patents is not, in fact, evergreening, but "ongoing innovation."

 

South of the border, pressure to address patent rules has emerged from surprising sources. Major corporations like Wal-Mart and General Motors, saddled with the skyrocketing costs of employee health plans, have been lobbying the administration for change. Last summer, the Federal Trade Commission (FTC) issued a 400-page report concluding that big-name companies have been abusing the system by using automatic injunctions repeatedly, and both the FTC and the Food and Drug Administration initiated hearings into the matter.

 

The furor over drug costs culminated last fall when U.S. president George W. Bush declared that he would put a stop to patent law abuses so cheaper generics could be available more rapidly. Three months later, drug maker Bristol Myers Squibb settled an unprecedented anti-trust lawsuit with all 50 states for $55 billion, suit over the company's alleged attempts to stave off the generic equivalent of a cancer-fighting drug.

 

"It's a rare day when, in a country like the United States, you can get the left and the right agreeing that this is wrong, and a right-wing president saying he's going to do something about it. Now there is no excuse in Canada," says Liberal MP Dan McTeague, who adds that the Romanow Report's recommendation to review evergreening and Canada's patent laws is yet another call for change.

 

McTeague has been spearheading motions to re-examine Canada's drug rules since 1994, including more recent attempts in the House of Commons industry committee, where such motions have been shelved three times. "There's a very firm and substantial lobby with some powerful voices that does not want this issue to be revealed or studied," says McTeague.

 

NDP industry committee member Brian Masse suspects that Industry Canada has been exercising its influence over the committee to protect the big-budget industry and keep the issue off the table. Just last month, the committee voted once again to push a drug patent review to the bottom of its timetable - possibly postponing any hearings until after the House breaks for the summer, effectively squashing a review. "There's good indication that there's been meddling here," says Masse. "These committees are highly politicized and are instruments for ministers."

 

Industry Minister Allan Rock's spokesperson maintains that the industry committee is "master of its own schedule," but critics take Rock's public silence on the issue of patent law reform as a sign of the minister's loyalty to Big Pharma - and the continuation of a long-pursued strategy of inaction by the ministry.

 

The recent unveiling of former industry minister John Manley's list of political contributors, which included a number of brand-name pharmaceutical companies, has only exacerbated concerns over the cozy relationship between the Liberal party and major drug companies. McTeague says nearly every spokesperson and lobbyist for the brand names is a former Liberal cabinet minister staff person, including Chretien's former speechwriter and Paul Martin's strategist.

 

"You have the proverbial fox monitoring the chicken coop, with the public walking about oblivious," adds McTeague. But public outcry from the coalition of civic groups eventually pushed the industry committee to reverse its decision and pencil in the hearings for early next week.

 

As for the submissions to the Competition Bureau, reps there have, according to Luff, signalled that looking into the pharmaceutical industry's anti-competitive practices falls outside its jurisdiction. But that's not going to stop what drug patent critics say is mounting momentum toward change. Once the Bureau's decision is final, says Luff, the coalition will take the matter to the courts. "We'll get the courts to tell them it is their jurisdiction."