Monopolies on New Medicines & Trade with the U.S.

Deborah Gleeson and Ronald Labonté object to lengthening market exclusivity for biologic medicines in the United States-Mexico-Canada Agreement.

__________________________________________

With the recently re-negotiated North American Free Trade Agreement, now re-branded as the United States-Mexico-Canada Agreement (USMCA), Canada has agreed to several intellectual property provisions that could reduce the affordability of medicines by delaying the market entry of cheaper competitors. This is short-sighted at a time when very expensive new therapies for cancer and other serious illnesses are creating unprecedented challenges for health budgets around the world.

For Canada, Article 20.F.14 of the Agreement, which applies to biologics (medicines made from living cells and other biological materials), is most concerning. Biologics include new treatments for cancer and other serious diseases. Examples include the breast cancer drug Herceptin (trastuzumab) and Humira (adalimumab), a drug commonly used to treat autoimmune conditions like rheumatoid arthritis.

Damien Hirst at Newport Street Gallery. Photo Credit: Francoise Baylis. Image Description: On left side of the photo, stainless steel and glass cabinets display various kinds of medical supplies. On the right side of the photo, a white shelving unit holds pharmaceutical drugs.

Biologics make up an increasing share of the global pharmaceutical market and an increasing share of pharmaceutical expenditure in many countries. In Canada, sales of biologics increased from $0.8 billion to $3.6 billion CAD in the period from 2006-2016, making up 15.9% of pharmaceutical sales in Canada by 2016. And in 2015-2016, biologics accounted for over 21% of medicine expenditures for Australia’s Pharmaceutical Benefits Scheme. These upward trends are likely to continue, as biologics are predicted to make up almost 28% of the global pharmaceutical market by 2020.

Since biologic medicines are extremely complex, it’s not possible to make exact copies of them in the way that generic copies can be made for traditional medicines that are smaller molecules. In many cases, however, it is possible to make lower cost ‘biosimilars’, which (as the name suggests) are similar to the originator (original biologic) and would have the same effect in the human body.

Because biologics are so expensive, there’s a lot to be gained by making biosimilars available on the market as early as possible. Research in Australia suggests that if biosimilars were introduced in a timely way, annual expenditure on biologics by the Australian Government could be reduced by up to 24%. In the United States, it is predicted that biosimilar competition for a single drug, filgrastim, could save $256 million USD over five years, including $47 million USD in out-of-pocket costs for consumers. And in Canada, potential savings from biosimilars are estimated at between 8-43% of the cost of the original drug.

The timing of biosimilar entry into the market can be affected by two different types of intellectual property protection: patents and data protection. Data protection, the type targeted by the USMCA, is a monopoly on the test data submitted to the regulator (e.g. Health Canada) in order to demonstrate that the drug is safe and effective. Biosimilar manufacturers rely on this data to gain marketing approval for their own products, as it would be both prohibitively expensive and unethical to repeat the clinical trials.

Canada currently provides eight years of market exclusivity for drugs that are deemed eligible for data protection, with an additional six months for drugs where tests have been done in children. During this time, generics and biosimilars can’t enter the market, even if the patent protection on the originator has expired.

The USMCA will extend the market exclusivity for biologics from eight to at least ten years in Canada. The USMCA’s biologics provisions also apply to a broad range of products, so it’s not clear whether this will expand the scope of products eligible for market exclusivity in Canada.

Even an incremental increase to the monopoly period, especially for high cost drugs, can come at a high cost to society. There may be cases where the patent protection is weak and could be successfully challenged, but biosimilar entry will still be prevented until the market exclusivity period ends. This is why after the US pulled out of the Trans Pacific Partnership Agreement, the remaining 11 countries – including Canada – suspended its biologics provisions.

Adopting ten years’ market exclusivity for biologics can be expected to hit health budgets hard in the longer term as more expensive biologics come onto the market. At a time when governments need more levers – not less – to contain drug costs, Canada seems to have agreed to tie its hands behind its back. Canada’s decision also sets the world a step further back from achieving universal access to medicines. This Agreement sets a precedent that will reverberate around the world as more countries – including low and middle income countries – face pressure to adopt longer and broader monopolies, placing affordable medicines further out of reach.

While the trade negotiations have concluded and an in principle agreement has been struck, the Agreement has not yet been ratified. There is still time for the Canadian Government to reconsider and revise the biologics provisions in the USMCA.

__________________________________________

Deborah Gleeson is a Senior Lecturer in the School of Psychology and Public Health, La Trobe University, Australia, and an Associate at La Trobe University’s Centre for Health Law and Society. She is currently a Visiting Researcher at the University of Toronto. @DrDebGleeson

Ronald Labonté is Distinguished Research Chair in Globalization and Health Equity and Professor in the School of Public Health and Epidemiology, University of Ottawa. @LabonteRonald