New Data Shows Brand-Name Drug Companies Breaking R&D Commitment to Canadians Canada Must Reject EU’s Demands For Longer Market Monopolies

Toronto, June 27, 2012 – New data on research and development spending in Canada by brand-name drug companies provides further proof that there is no link between longer market monopolies and increased investments. Demands for even longer monopolies in Canada must be rejected, Jim Keon, President of the Canadian Generic Pharmaceutical Association (CGPA) said today.

The latest annual report from the federal government’s Patented Medicine Prices Review Board (PMPRB) shows that in 2011, member companies of Canada’s Research-Based Pharmaceutical Companies (Rx&D) spent only 6.7 percent of their Canadian revenues on research and development in Canada. This marks the ninth consecutive year that Rx&D member companies have broken their promise to spend at least 10 percent of their domestic sales on research and development.

The PMPRB also reports that total research and development expenditures by member companies of Rx&D were lower in 2011 than in any year since 2000. Over the same period (2000-2011), sales revenues by Rx&D members increased dramatically from $7.7-billion to $13.5-billion. Total research and development spending by Rx&D members in 2011 declined by 9.9 percent from 2010.

The PMPRB’s findings are highlighted in a new report released today by CGPA. Copies of
The Real Story: R&D Spending by Brand-Name Drug Companies in Canada: 1988 – 2011
are available at

“No proven link exists between increased intellectual property protection and increased Canadian R&D investments by brand-name pharmaceutical companies,” said Keon. “In Canada, market monopolies for brand-name drug companies have increased eight times since 1987, yet investments continue to decline, with R&D spending in Canada by brand-name drug companies at its lowest level since 1988.”

Canada and the European Union (EU) are currently negotiating a comprehensive economic and trade agreement (CETA), which the federal government hopes to conclude by the end of 2012. As part of these negotiations, the EU has tabled proposals on behalf of brand-name drug companies that would considerably lengthen the period of market exclusivity for brand-name drugs in Canada.

A report by two of Canada’s leading pharmaceutical policy researchers estimates that the adoption of the EU’s drug patent system proposals would lengthen periods of market monopoly for brand-name drugs by an average of 3.5 years and add approximately $2.8-billion annually to Canadians’ prescription drug bill.

Keon said that, as global players, Canada’s generic pharmaceutical industry is a strong advocate for enhanced trade, and supports efforts by the Government of Canada to reduce barriers to trade. Fully 40 percent of the Canadian production of generic prescription drugs is for export to more than 115 countries. Raw materials and other inputs are sourced on the international market.

“These specific EU proposals are nothing more than an attempt at a cash grab on the backs of hard-working Canadians,” said Keon. “Extending market monopolies for brand-name drugs will not reduce trade barriers. It will, however, increase revenues for European-based drug companies at the expense of Canada’s health-care system. It will also increase trade barriers for Canadian generic pharmaceutical manufacturers.”

Keon pointed out that Canada’s current intellectual property regime for pharmaceuticals exceeds our international treaty obligations and provides greater protections to brand-name drug companies than those afforded any other industry in Canada.

According to a May 2011 report by Edward M. Iacobucci, the Osler Chair in Business Law at the University of Toronto’s Faculty of Law, Canada’s current intellectual property system for pharmaceuticals is already stronger than that in any other industrial sector in Canada, and is in many ways stronger than pharmaceutical intellectual property in the EU and United States.

“Claims that further increasing Canada’s high intellectual property standards for pharmaceuticals would lead to more domestic research and development ignore the realities of global research and development investments by the brand-name pharmaceutical industry, which are typically done near corporate headquarters in the EU or in emerging markets that are not renowned for their intellectual property protection,” Keon said.

About the Canadian Generic Pharmaceutical Association
The Canadian Generic Pharmaceutical Association (CGPA) represents Canada’s generic pharmaceutical industry. The industry plays an important role in controlling health-care costs in Canada. Generic drugs are dispensed to more than 60 per cent of all prescriptions but account for only less than 24 percent of the $22-billion Canadians spend annually on prescription medicines.

For more information, please contact:

Jeff Connell
Vice President, Corporate Affairs
Canadian Generic Pharmaceutical Association (CGPA)
Tel: (416) 223-2333
Mobile: (647) 274-3379