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Big Pharma Spending Continues To Decline As IP Demands Increase

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The large international pharmaceutical companies continue their campaign for new patent rules that the provinces fear will cost taxpayers billions of dollars in additional costs. The lead lobby for the companies, RxD, brought former Prime Minister Brian Mulroney to Ottawa earlier this month to praise reforms from the 1980s that he argued have worked well for Canada. Yet those reforms came with a condition: in return for reforms that granted the companies far stronger patent rights, RxD companies promised to increase their spending on research and development in Canada so that it would rise to 10% of total sales by 1996.

Now the same companies are lobbying relentlessly for a new round of patent reforms that they say will lead to further growth in research and development. However, a new report from government's Patented Medicines Prices Review Board shows that RxD spending to sales ratio continues a decade-long decline, hitting its lowest level since the 1987 reforms.

According to the PMPRB released data (which is gathered from the companies themselves), the R&D-to-sales ratio for members of Rx&D was 6.7% in 2011, down from 8.2% in 2010. The Rx&D ratio has now been less than 10% for the past nine consecutive years and is approaching its lowest level since tracking began in 1988. From a global perspective, Canada fares very poorly, ranking ahead of only Italy with countries such as France, Germany, Sweden, Switzerland, the U.K., and U.S. all seeing greater expenditures. In fact, the PMPRB notes that "several comparator countries, which have patented drug prices that are, on average, substantially less than prices in Canada, have achieved R&D-to-sales ratios well above those in Canada."

Earlier this week, the chief Canadian negotiator on CETA appeared before the Standing Committee on International Trade and acknowledged the pressure from the EU to reform Canadian patent laws in support of RxD companies. He indicated that Canada has not responded to those demands. The time to respond has come: the RxD companies have failed to live up to their commitments for years and Canada will not offload billions in additional costs to taxpayers by implementing unnecessary patent reforms.