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Enhanced intellectual property protection for medicines will help Canada with trade agreements

By Contributor
July 10th, 2013

The Fraser Institute

Canada’s protection of intellectual property in the pharmaceutical industry falls short of international standards and could hinder its ability to negotiate new free trade agreements with the European Union and the Trans-Pacific Partnership, argues a new report from the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Pharmaceutical innovators face shorter effective periods of patent protection in Canada, fewer years of data exclusivity, and an unequal court appeal process compared to the property protections available in the United States and European Union,” said Dr. Kristina Lybecker, Fraser Institute senior fellow and associate professor of economics at Colorado College.

“By strengthening IP protection, Canada has a greater chance of increasing trade, gaining access to foreign markets, and reducing tariffs and trade barriers.”

The Trade and Economic Benefits of Enhanced Intellectual Property Protection for Pharmaceuticals in Canada examines whether the higher cost of medicines that would result from enhanced IP protection are outweighed by potential gains from trade and economic growth. The report comprises essays by Lybecker and Dr. Laura Dawson, international trade specialist and former senior advisor to the US government.

Lybecker argues that enhanced intellectual property protections will strengthen the innovative pharmaceutical industry and facilitate Canada’s accession to the international trade agreements under negotiation, specifically the Comprehensive Economic and Trade Agreement (CETA) with the European Union, and the Trans-Pacific Partnership Agreement (TPP) with Australia, Brunei-Darussalam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.

Increasing Canadian levels of IP protection for medicines to more closely align with those in other developed nations would also provide valuable non-trade benefits to Canadians including: reduced legal ambiguity and litigation, greater research and development expenditures, additional job creation in the pharmaceutical industry, greater pharmaceutical self-sufficiency, improved access to medical innovations, and additional innovation in cutting-edge treatments and therapies.

Overall, Lybecker finds the trade and economic benefits of enhanced IP protection would more than compensate for the estimated $367 million to $903 million annual increase in pharmaceutical expenditures.

“Estimates of increased trade through CETA alone suggest a $12 billion annual benefit to the Canadian economy,” she said.

CETA offers access to the European Union, the world’s largest single market with a population of more than 500 million and a GDP of $17.4 trillion. According to a joint study by the Canadian and EU governments, CETA is estimated to boost Canada’s exports to the EU by 20 per cent, reduce tariffs and non-tariff barriers, and provide Canadian companies access to the EU’s $3 trillion government procurement market.

The Trans-Pacific Partnership Agreement (TPP) is the other major trade agreement where enhanced IP protection could improve Canada’s negotiating position. TPP offers access to the large and dynamic Asian market, including China’s potential future inclusion.

Dawson calculates that having access to the Trans-Pacific Partnership Agreement could increase Canadian exports by nearly $16 billion, with TPP countries representing a prospective free-trade zone of more than 785 million people and GDP in excess of $26.4 trillion.

“When it comes to CETA and TPP negotiations, the benefits of trade — including annual estimated benefits of nearly $22 billion for Canada — far exceed any increase in health expenditures that might result from bringing Canada’s IP protection regime in line with those in other developed nations,” Dawson said.

“Additionally, strengthening Canadian IP protection for pharmaceutical innovators may also improve Canadian access to future free trade and preferential market access agreements in other regions including Asia and Latin America.”

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