Thank you for inviting me here to speak today. It's an honour to be talking about this with you all. As mentioned, my name is James Hutt, and I'm the provincial coordinator of the Nova Scotia Citizens Health Care Network.
We are a coalition of health care committees: doctors, nurses, labour unions, and concerned citizens all across the province of Nova Scotia. We work with a broad population here in the province, but also with our partners across the country, be it other provincial bodies, and the Canadian Health Coalition.
We were founded over 20 years ago. Our priorities are to protect, strengthen, and extend medicare. That means to strengthen our public health care system to work better, to protect it from privatization, and to expand what is covered under medicare. That has been our mandate, and we've been very successful at that. We're acting as the voice for Nova Scotians to meet their government and to express concerns and hopes for the health care system.
As the health network, we are non-partisan, but we are political.
If you look at my speaking notes you'll notice they are a bit brief and in bullet point, so I will be speaking a little off the cuff. I'll ask you to bear with me on that.
We have three concerns with CETA. One, it will commit Canada to creating a system of patent term restoration for pharmaceuticals that would delay the entry of generic drugs by up to two years. Two, locking in Canada's current term of data protection will make it difficult or impossible for future governments to reverse. Three, it will implement a new right of appeal under a patent linkage system that will create further delays to the entry of generic drugs.
Taken together, these three concerns spell increased drug costs to Canadians of between $850 million to $1.645 billion.
To put that in context, Canada already has the second highest drug costs in the world, trailing only the United States. We currently spend over $900 per capita. We also have one of the fastest rising drug costs in the OECD countries.
More locally, Nova Scotia spends the second highest on drugs per capita of all the provinces in Canada, and we consume the highest number of drugs per capita in the country. We have an aging population with a quarter of the population projected to be over 65 in a decade. With above average rates of heart disease and cancer, this has disastrous implications for Nova Scotia.
It is no secret that the comprehensive economic and trade agreement has spelled out greater drug costs for Canada, and while the government is committed to compensating provinces for the increased drug costs, that is only for public drug plans. What this means is that taxpayers end up paying more at the federal level to offset these costs. Those people who pay out of pocket for drugs, or through private insurance, will not see any relief. They'll see drug prices increasing, either out of their own pockets or from private insurers, as well as increased federal taxes to pay for the same drugs.
In terms of the first concern about creating a system of patent term restoration that will delay the entry of generic drugs, patents for pharmaceuticals currently run for 20 years from the time a patent application is filed. CETA will add up to two years to that patent, supposedly to account for the time between filing a patent and when the drug is marketed, even if the company or a patent filer is responsible for that delay.
On the second concern, about locking in the current terms of data protection, in 2006 Canada extended data protection to eight years of market exclusivity for brand name pharmaceuticals with an extra six months if companies have studied drugs in a pediatric population. CETA will not extend this data protection, but will lock it into place, making it impossible for future governments to shorten this period.
Furthermore, it is unclear if CETA will expand the range of products that receive this data protection. Right now it is only for new chemical entities, that is, drugs that have not previously been sold in Canada. With the uncertainty surrounding CETA this could encourage companies to tinker around the edges, engaging in minor molecular manipulation that offers no therapeutic advances in drugs, simply to gain increased data protection.
In terms of the financial implication, the estimations before the CETA negotiation is completed suggest that the agreement would delay the entry of generic drugs by 3.46 years, on average. The annual loss for every additional year of entry was estimated at $811 million, and the increase in annual cost to payers to be $2.8 billion per year. However, all this assumes that CETA's provisions apply to drugs currently on the market, which means they are conservative estimates given that the patent term restoration will apply to drugs approved only after CETA is ratified.
An important point to consider is that the comprehensive economic and trade agreement caters to brand name pharmaceutical companies that have so far been unwilling to fully invest in the health of Canadians. Canadian brand name manufacturers have shown a complete unwillingness to uphold their end of the bargain.
When Canada introduced generous pricing and broad protections in 1987, companies pledged to invest 10% of their sales revenue in research and development. That was in 1987, and that has not happened. In 2012 the ratio of research development to sales fell to 6.6%. It has never met the net 10%, and it has been declining. Instead of penalizing these companies, the comprehensive economic and trade agreement will only worsen this by increasing market exclusivity, and thus drug costs, without increasing research and development expenditure.
In conclusion, the comprehensive economic and trade agreement is designed to cater to large European multinational pharmaceutical companies. Their benefit comes at a greater cost to Canadians. Canada has chosen to extend market exclusivity for brand name drugs without requiring any commitment from drug companies to increase the already failing sales to research and development ratio.
At no point does this agreement benefit Canadians, neither in drug prices nor in research expenditure. All CETA will do is make it harder for Canadians to get the drugs they need. Already one in four Canadians have no drug coverage, with 8% of Canadians admitting they haven't filled prescriptions in the past year simply because they can't afford it. Making it even more unaffordable spells disaster both for the health of our population and for the increasing costs to our health care system in Canada.
Given the lack of a new health accord, the agreement about how the federal government funds provinces' health care systems, it is estimated that the health care system in Canada will lose about $36 billion in funding over the next decade. Given these failing costs, given this declining funding, and given the fact that the second highest escalating cost in health care is pharmaceuticals, the effects of this will be disastrous both for our health care system and for Canadians.
Furthermore, the whole process of looking at the comprehensive economic and trade agreement is tarnished by a lack of transparency. NGOs haven't been able to provide a full analysis of the implications and costs of CETA because we haven't been able to see the text. This means we can't properly articulate our concerns or the damage this will do to our health care system or to the health of Nova Scotians and Canadians.
Thank you very much.
