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Trade deals are bad medicine: Drug prices will skyrocket in absence of national pharmacare

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In a recent House of Commons committee on health, Health Canada finally acknowledged what health economists, academics and activists had been saying for some time: drug costs will rise under pending trade deals like the TPP.

Testifying before the committee was Abby Hoffman, Assistant Deputy Health Minister, who replied to questions stating, "High prescription drug costs will rise under pending free trade agreements....Yes, it's true that Canadians in general receive less public support for their drug costs than many comparable countries."

In the exchange, health critic and MP Don Davies asked it the department had done analysis on the impact of the TPP and CETA in relation to the likelihood it will increase the prices Canadians pay for pharmaceuticals (which it should be noted will this correlate to less people being able to fill their prescriptions at a time when up to 1 in 5 Canadians can’t afford to regularly).

Further, Hoffman acknowledged that some analysis had certainly been done on this topic by the government and agreed with MP Davies statement that, "Is it fair to say then that it's the department's position it is likely those two trade deals will increase the costs of drugs in Canada, we just don't know how much?"

In a previous blog, "Liberals veto national pharmacare as more Canadians can't fill their prescriptions," we expressed disappointment with recent statements from the federal health minister stating,

"It came as a major disappointment this week that Canada's Health Minister, Jane Philpott, indicated pharmacare is not part of her mandate. It has been reported that the minister believes pharmacare is too costly and she has highlighted it will not be introduced in this Parliament. Further Philpott stated, 'It sounds like it might be expensive and that's one of the reasons we're not in the position where we're about to implement pharmacare,' and, 'There are public drug plans across the country for people who can't afford medication.' It is hard to understand why the minister is ignoring the data that shows Canada could improve health outcomes and save costs with a universal pharmacare program; while she hinted her government would look at a national formulary this is a far from universal pharmacare (not to mention concerns over how the pharmaceutical industry could influence the formulary)."

It remains a head scratcher that improving the health of Canadians is claimed not to be in the mandate of the health minister. The blog goes on to discuss that these statements come at a time when according to Health Canada officials 10 per cent of Canadians are not covered under any type of plan, and drug costs are growing exponentially (Canadians spend $29 billion a year on prescription drugs -- the equivalent of $814 a year per capita). 

In a submission to the health committee, Professor Marc-André Gagnon outlined that,

"Out-of-pocket deductibles and co-payments vary from one private plan to another and from one province to another. This means that Canadians have different degrees of coverage depending on where they live and work, but not necessarily according to their medical needs...

"Both public and private drug insurance plans usually manage cost growth by raising the premiums of insured patients, increasing the co-payments or deductibles patients pay or restricting the treatments covered. As a result, out-of-pocket spending on prescription drugs by Canadian households increased by an average of 33 per cent (in constant dollars) between 1997 and 2009. Moreover, these costs grew far more for low-income households. Between 1997 and 2009, out-of-pocket spending on prescription drugs (in constant dollars) by the richest 20 per cent increased by 21 per cent; for the poorest 20 per cent, this figure was 64 per cent."

So if you're poor, don't get sick.

Since 2000, the government's own data shows that growth in drug expenditures in Canada has outpaced the growth in all other countries compared. Canadian drug expenditures increased by 184 per cent between 2000 and 2012, which is a rate of growth was higher than that of all  countries compared -- even the U.S.

Canada remains among the four most-expensive countries in the world for patented drugs. Overall we have the second highest drug costs in the OECD after the U.S. -- not an admirable position to be in. For patented drugs alone, there were $13.7 billion in sales in 2014 (the most recent data), which is an increase of 3.1 per cent from 2013.

It is known that,

"If Canada paid the same official price for drugs as the OECD median, Canadians would save about 25 per cent on patented drugs, equivalent to some $4.2 billion a year given that we spent $16.8 billion on patented drugs in 2014. Canada's fragmented drug insurance system (public and private, federal and provincial) is in large part responsible for our inability to benefit from better prices for patented drugs."

We also hold the dubious title of the only nation with public medicare that does not have a pharmacare component. Evidence from health economists shows that Canada can save anywhere between  $4-11 billion through a national pharmacare program.

The above figures should be enough to spur any rational government into action. Instead, our government is eagerly attempting to sign trade deals that will further compound this problem. The reason for this, that above all else, health care is political. 

While inaction on health policy and health care is often dressed up in fiscal excuses, pseudo-scientific buzzwords and ideological jargon to explain why we can't provide better health outcomes for Canadians, it comes down to values and choices at the end of the day.

Sadly, it is becoming increasingly clear that this government's priorities and values don't align with those of Canadians. Whether it is side-stepping the responsibility to implement a universal drug plan (first recommended in a the 1964 Royal Commission on Health Services) or signing trade deals that government's own officials acknowledge will negatively impact the health of the nation, something wrong is definitely occurring.

When leaked text from the CETA and TPP trade deals first started to appear some time ago, the Council of Canadians put together an analysis on how the ISDS component and changes to intellectual property provisions for patents in these deal would serve no benefit to the people residing in the countries of the signatories (see here for the TPP and here for the CETA).

We further highlighted that going beyond the legislative chill from potential ISDS lawsuits (like the $500 million dollar NAFTA lawsuit against Canada from pharmaceutical company Eli Lilly), these trade deals have the possibility to preclude the creation of a national drug program/pharmacare.

In his analysis of the TPP, law professor Michael Geist has explained that, "Should Canada decide to establish a national program [for pharmacare], the policy choices will not be limited to domestic considerations. Instead, the TPP will be waiting to mandate many program requirements, including appeals and reconsideration of decisions for the benefit of pharmaceutical companies."

Two recent CCPA reports, "Involuntary Medication -- The Possible Effects of the Trans-Pacific Partnership on the Cost and Regulation of Medicine in Canada," and  "Major Complications -- The TPP and Canadian Health Care," provide a further robust analysis of the negative ramifications from these trade deals. 

Other groups have pointed out that "provisions requiring data exclusivity, linking patent status with medicines regulation, patenting of new uses and new forms of known substances, and the prohibition of pre-grant oppositions, all of which go well beyond the minimum requirements of the TRIPS agreement."

Among many frightening topics, the reports show that depending on whether the TPP or the very similar CETA is ratified first, drug costs are expected to rise by between five per cent and 12.9 per cent start­ing in 2023. Without doubt, the TPP's single biggest direct impact on the Canadian health care system would be to increase drug costs as a result of extending pat­ents (this is even though we already have an industry-friendly system of intellectual prop­erty protection for pharmaceutical patent holders).

Other groups have pointed out that "provisions requiring data exclusivity, linking patent status with medicines regulation, patenting of new uses and new forms of known substances and the prohibition of pre-grant oppositions, all of which go well beyond the minimum requirements of the TRIPS agreement.”

In regards to CETA, in the most recent annual report of the Patented Medicine Prices Review Board (PMPRB), chairperson Mary Catherine Lindberg stated in her message that, “implementation will require amendments to the Patent Act to provide pharmaceutical patentees with up to two years of additional market exclusivity. Such a change would come at a time of high drug prices and record low R&D, causing some to question the effectiveness of the PMPRB and whether a policy balance conceived over 25 years ago continues to serve its intended purpose.”  The PMPRB, which -despite its issues- should be noted is an independent government body that monitors patented drug prices and pharmaceutical trends. Our government’s current ideological zeal of trade deals will be directly undermining and handcuffing the very agencies who are is tasked with setting the maximum prices that can be charged in Canada for patented drugs and regulates drugs that are still under patent and which yet have no generic substitutes. The TPP would further erode any policy independence, health decisions and oversight which Canada could legislate.

So what (or who) is driving this Liberal government to follow the Harper governments path in championing trade deals that are not in the interest of the country and why is this government evading its responsibilities to improve health of Canadians? 

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