I would like to take this opportunity to thank you for inviting the generic pharmaceutical industry to appear as part of your work on the CETA negotiations.
My name is Barry Fishman. I'm the chair of the Canadian Generic Pharmaceutical Association and the chief executive officer of Teva Canada.
I'm joined by two CGPA staff members, Jim Keon, who is the president of the association, and the federal affairs director, Jody Cox.
Let me start with a few words about our industry.
First of all, our industry is a strong supporter of increased international trade as well as trade agreements. Generic companies manufacture for the Canadian market, and we export more than 40% of our output to more than 100 countries.
Generics employ more than 11,000 Canadians, mostly in highly skilled scientific, research and development, quality control, and manufacturing positions. Our strong Canadian presence also supports a large group of local suppliers, creating thousands of additional jobs. Our member companies have a strong presence in Ontario and Quebec, as well as in Manitoba.
It may surprise you that Canadian generic companies produce most of the pharmaceutical manufacturing output in Canada. We invest hundreds of millions of dollars in Canadian R and D each year, in product development, and in challenging invalid patents to ensure that new generic medicines are introduced to the Canadian market.
Generic medicines provide excellent value for Canadians. After several rounds of recent provincial drug reforms, our products now typically sell at a 60% to 75% discount to the equivalent brand-name products. This creates several billion dollars of annual savings for the Canadian heath care system.
The EU has tabled a series of proposals in the CETA negotiations aimed at increasing market monopolies for brand-name companies, many of whom are headquartered in Europe. An academic study commissioned by CGPA estimates that these proposed measures would delay generic competition, on average, for an extra three and a half years. This would cost Canadians an additional $2.8 billion each year in prescription drug prices.
These EU proposals also fail to recognize that Canada is already home to one of the strongest IP regimes for pharmaceuticals in the world. Canada's domestic IP measures have increased no fewer than eight times since 1987, yet brand-name R and D investments as a percentage of sales continue to slide and are now at their lowest level in a decade. As Minister Gary Goodyear noted in a recent interview with The Hill Times newspaper, Canada already has strong intellectual property protection for pharmaceuticals, and there are other factors that guide R and D investments.
Historical evidence supports that extending patent life does not increase R and D investment by brand-name companies in Canada. It's interesting to note that the countries experiencing the highest growth in R and D jobs in recent years, India and China, have the weakest IP regimes. Low costs coupled with skilled labour, not IP protection, appear to drive global decisions by brand-name companies with respect to research and innovation.
The profit motivation behind these proposals is clear, and the EU did not table the proposals to increase pharmaceutical R and D spending in Canada. They are making these proposals to increase the profits of pharma companies, many based in Europe.
The Canadian IP regime already exceeds international standards. We have an automatic two-year injunction period that keeps generics off the market even if we don't infringe their patents. The EU does not have this type of restriction, and our data exclusivity period is already three years longer that of the U.S., the largest available market for export mandates for Canadian generic manufacturers.
An unworkable system of dual litigation already exists in the Canadian pharmaceutical industry. After patents are successfully challenged in court under the PMNOC regulations, brand-name companies have the chance to re-litigate, starting the day the generic company enters the market, on the same patents under the Patent Act. This is a costly, wasteful, and complex system, unheard of in any other country or any other industry.
This system adds significant, unnecessary cost to our health care system. Several stakeholder groups have expressed concern. The Health Council of Canada, the Canadian Life and Health Insurance Association, most provincial governments, seniors associations, and other groups have signalled to the Government of Canada that Canadians cannot afford to absorb the significant increases in drug costs that these EU proposals will create.
One case study of the real impact of these proposals is on Lipitor, the world's top-selling drug, made by Pfizer, which sold over $1.3 billion of product in Canada prior to the launch of generics in mid-2010. Had these proposals been in place, the introduction of generics would have been delayed by two years and would have cost the Canadian health care system an additional $1.9 billion.
These proposals would also negatively impact upon Canada's successful generic drug industry and the ability of our companies to compete on a global stage, as domestic IP has a direct impact on the ability of generic manufacturers to develop and manufacture new products for export markets.
Increases in domestic IP protection for pharmaceuticals, as demanded by the EU, would make Canadian manufacturers less competitive internationally. They clearly threaten our industry's critical need to manufacture products in Canada for export to the larger U.S. and European markets and would also delay the introduction of new generic products in Canada.
Simply put, these proposals effectively eliminate the business return required to justify our current level of investment and litigation to challenge brand patents, which have historically allowed our industry to introduce lower-priced generic pharmaceuticals, saving billions of dollars a year, and which are a critical solution for a sustainable Canadian health care system. The result is that Canadian generic company manufacturing export mandates, investments, and also jobs would ultimately move to other jurisdictions.
Canada's pharmaceutical IP regime already exceeds international standards. It's not a perfect system, and the generic industry agrees that this system requires urgent review and changes by the Government of Canada.
The generic industry has been advocating for improvements to this system for several years. Canada should use the opportunity presented by the CETA negotiations to streamline the patent linkage regime and eliminate the system of dual litigation that exists in Canada.
In conclusion, I want to stress that the EU proposals related to pharmaceuticals are not about innovation or reducing trade barriers. They are about increasing profits for brand-name companies headquartered in Europe at the expense of private and public payers and consumers and at the expense of manufacturing jobs and R and D investments in Canada.
Now is certainly not the time for costly IP changes that drive unsustainable cost increases to our health care system, a health care system that is already under intense pressure, by further extending brand monopoly periods.
These changes will also further restrict trade on exporting generic pharmaceuticals, resulting in a significant reduction of advanced manufacturing jobs and manufacturing plants in Canada.
Thank you for your attention. We welcome your questions at the end of the session.
