The USMCA, biologics and Canada’s health system

Matthew Yau and Krish Bilimoria are medical students in the Class of 2022 at the University of Toronto

 

Yosef Ellenbogen is a medical student in the Class of 2020 at McMaster University

 

 

Canada recently entered a trade agreement with the USA and Mexico: the USMCA. The new agreement has been pitched to Canadians as a progressive way forward that will grow our economy and strengthen the middle class. Eclipsed by discussions on preserving dairy supply chain management and automobile manufacturing was the subtle extension of patent protections for biologic drugs. Chapter 20, Article 20.F.14 of the USMCA allows for the extension of patents for registered biologics by 2 years, a total of 10 years of patent protection (2). The subject of patent exclusivity has historically been a sensitive topic in diplomacy, and was a contentious negotiating point between the US and Australia in the development of the original Trans-Pacific Partnership (TPP) in 2015. This seemingly benign change has serious implications for the future of Canada’s health system.

Canada’s signing of the USMCA means that companies across the US, Mexico, and Canada that hold patents on biologics have an extended exclusive right for that drug, which affords these companies a time-limited monopoly over their production, sale, and licensing , and potentially the ability to arbitrarily price these drugs. Given that the vast majority of biologics patents are held in the United States, the USMCA will extend the length of protections held by US biologics patents in Canada for an additional 2 years.

The USMCA classification of biologics includes medications containing “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product”. Biologics are an important component in healthcare, and play a vital role in treating diseases such as rheumatoid arthritis and cancer. The growing movement towards personalized medicine and highly specific biologic drugs catered to genetic and metabolomic profiles means that biologics will see an increasing role in the care of patients.

While the stock value and year-over-year revenues for major biologics companies continue to increase, Canadian taxpayers will be forced to foot the bill. The Canadian Institute for Health Information (CIHI) Prescribed Drug Spending report outlined that in 2017, 22.1% of total public drug program spending by provinces was on biologics, compared with 21.6% in 2015, and 14.8% in 2011. Key drugs that were cost-drivers were anti-tumour necrosis factor for inflammatory bowel disease, Crohn’s disease, and rheumatoid arthritis (8.7% of total public drug spending on 0.5% of population) and anti-neovascularization drugs for age-related macular degeneration (4.5% of total public drug spending on 0.5% of population).

With Canada spending more money on prescription drugs than many other similar countries, appropriately managing drug prices is a key interest to both patients and the public. In particular, expensive medications like biologics have incurred substantial costs for patients. The USMCA has the potential to exacerbate our prescription drug crisis, adding a additional burden to an already strained system. Organizations like the Canadian Generic Pharmaceutical Association (CGPA) and the Association for Accessible Medications (AAM) have condemned the patent extension policy, stating that access to biologics would be reduced.

The ongoing discourse for a national pharmacare strategy led by Dr. Eric Hoskins should look to consider pricing strategy and national negotiation for our health system. Reform will involve agreement among the provinces (which purchase drugs) and the federal government (which sets federal drug prices through the Patented Medicines Prices Review Board) to determine collective purchasing of drugs, how Canada might be able to harness our collective negotiating power to meaningfully reduce drug prices. The impact that the USMCA will have on the ability to achieve national pharmacare will be interesting and relevant to the future of how we will practice medicine.

Both the Nobel Prize in Physiology & Medicine (Drs. James Allison and Tasuku Honjo for their discovery of PD-1) and in Chemistry (Drs. Frances Arnold, George Smith, and Sir Gregory Winter for their research in the application of evolutionary principles to improve biologic drug discovery) were awarded to researchers who made advancements in biologics. These discoveries aptly represent the new frontier of medicine and the importance of biologics in modern healthcare. Cultivating an environment conducive to innovation is an important priority, but should not be at the expense of patients’ health. We need to ensure that the benefits of these innovations can be accessed equitably. While trade partnerships are beneficial and necessary for our economic stability, Canada appears to have paid a steep price with the USMCA through the concession of an increased patent duration on biologics.

Editors’ note: this blog was updated on November 6, 2018

 

One thought on “The USMCA, biologics and Canada’s health system

  1. gordon friesen

    Cultivating an environment conducive to innovation is an important priority, but should not be at the expense of patients’ health.
    **************

    Ten years of patent protection is too much ? For ten years patients will be paying a premium in order to provide new capital for further research and products which will move the limits of medicine again (and again, and again) ?

    Frankly, thee is no “expense of patients health” there is nothing but benefit

    Without the USA capitalist system and markets, there would be very little in the way of new products, and hence very little in the way of treatment improvement. This article actually stipulates as much:
    “The vast majority of biologics patents are held in the United States.”.

    The bottom line, here, is that when a new product is developed, the price will come down in ten years. and become widely affordable. The alternative is a system where there are no new products, and the availability of the nonexistent products needed is never.

    Socialism is wonderfully equitable. Everybody is equitably impoverished.

    Here is a challenge : Use Canadian capital (taxes) to fund the development of the products we need, and then provide them at cost to all. Oh, I am sorry, we do not have that kind of capital.

    Therefore some method must be found to attract that capital. Oh shucks, that is capitalism.

    Yes. Economic engine of the modern world.

    Feel the Love,

    Gordon from Montreal

    Reply

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