As details of the new Trans-91原创 Partnership trade agreement emerge, one thing seems clear: This deal will significantly increase the cost of prescription drugs in Canada.
On a per capita basis, we already have the second-highest pharmaceutical bills in the world. By some estimates, the new treaty will add $1.8 billion to that burden. And it will do so by weakening, or in some cases disabling entirely, our price-control mechanisms.
Some of this was inevitable. Any treaty that reduces trade barriers always intrudes on sovereign powers.
But this agreement goes further. It leans decidedly toward the corporate sector in potential conflicts with government. This preference is clearest in the sections on pharmaceuticals.
One reservation: The language of the agreement, all 6,000 pages of it, is often obscure. That makes any interpretation, at this stage, open to debate.
The pharmaceutical section begins by stipulating that licensing agencies must include industry representatives in their deliberations. To some extent, that already happens.
However, those agencies, such as Health Canada, are now told they must award equal weight to their industry partners. Some might think this is giving the fox joint management of the chicken coop.
Next, pharmaceutical companies are allowed to extend patents by making successive small changes in their drug formulas. Called 鈥渆ver-greening,鈥� this provision allows manufacturers to lengthen their patent rights well beyond the usual 20-year term.
That will make it much more difficult for generic drug firms to market cheaper versions once a patent expires. But substituting generics for brand-name products has been, by far, the most effective way provincial drug plans have held down their costs.
The treaty also stipulates that licensing agencies may not consider the price a drug will sell for, when deciding whether to approve it. But Canada鈥檚 Patent Act explicitly gives Ottawa the power to do just that. Under the legislation, a price-review board may roll back charges it deems excessive.
Because this section of the treaty is badly written, it is uncertain how much of this cost-control mechanism, if any, will survive. But though the wording is unclear, the intent shines through.
Pharmaceutical companies are being relieved of the need to reveal pricing information when seeking markets for their products. This cannot help but push up drug costs.
Finally, and this is not unique to the Trans-91原创 deal, the treaty places dispute resolution in the hands of an arbitration board.
At present, companies that disagree with licensing or patent rulings may take their case through federal court. While arbitration is allowed in some circumstances, this is usually a last resort.
The concern here is that the Trans-91原创 treaty places much more emphasis on the use of arbitration. And the process would give equal representation to government and industry, with a neutral third party holding the deciding vote. This effectively takes price-management out of our hands.
The treaty is not yet binding. It only takes force after all 12 member countries ratify it.
That means Parliament has its work cut out. It is essential to understand exactly what this agreement entails.
Of course, every trade deal has winners and losers. It might be that overall, this one is a net gain for Canada, drug costs notwithstanding.
It would also be prudent to wait for the U.S. Congress to reach a decision before choosing our own course. If the deal fails there, we can do as we wish. If it passes, we might find it more difficult to step out, since the U.S. is by far our largest trading partner.
In the life of the current Parliament, there will be no more vital issue to deal with. We must get this deal right.
