Pharmaceutical research has not increased as a ratio of sales in Canada in the past 25 years.wavebreakmedia/Getty Images/iStockphoto
Twenty-five years ago, Canadians saw the end of a bitter political debate about drug-patent laws and the future of pharmaceutical research and development in this country. The passage of Bill C-22 in 1987, a key part of a plan by Conservative prime minister Brian Mulroney to increase Canada's competitiveness, was a response to pressure from already profitable pharmaceutical companies to increase the life of the patents they held on the drugs they developed. In exchange for enhanced protection from low-cost generic drug manufacturers, the brand-name companies agreed to spend the equivalent of 10 per cent of their annual sales on R&D in Canada.
They lived up to their end of the bargain for a few years – and then they stopped. The ratio of R&D investment to sales has been consistently below 10 per cent since 2001, according to the Patented Medicine Prices Review Board, the independent quasi-judicial body created by Bill C-22 to keep track of the industry's R&D commitment and to monitor drug prices. Today, Canada is one of the lowest-ranking countries in the developed world when it comes to the ratio of pharmaceutical sales to R&D, well behind countries such as the United States, Britain, France and Germany.
Most tellingly, the ratio was 6.1 per cent in 1988, the year after Bill C-22 was passed. Twenty-two years later, in 2010, it was 6.9 per cent. The long-term effect of the bill has been negligible, and the trend is not promising: Since 2010, four brand-name manufacturers have closed or announced the closure of research labs in Canada, at a cost of more than 550 jobs.
Remarkably, the pharmaceutical companies are in the process of lobbying Ottawa for further patent protections that would bring Canada in line with regulations in Europe, where many of the largest drug manufacturers are based. More remarkably, the industry is again saying that acquiescence will result in increased R&D investment in Canada while hinting darkly that resistance could result in a decrease. Russell Williams, the president of Rx&D, the brand-name manufacturers' industry association, recently said in a speech that "history gives us a very good sense of what will actually happen."
One hopes he is wrong. If the last 25 years are our guide, Mr. Russell's members will continue to fall short of the standard they once embraced.