The Toronto Star
The World Trade Organization has taken a potshot at our health-care system, one that threatens to add to the already high cost of drugs.
To understand what the WTO has done, a bit of background is necessary. The story begins in the Mulroney era.
In the negotiations that produced the 1989 Canada-U.S. free trade agreement, Ottawa changed Canada's pharmaceutical policy in two ways:
First, the Conservative government pledged to give multinational drug companies increased patent protection for new drugs sold in Canada. It extended patents - which give the manufacturer the exclusive right to market any new drug - from 17 to 20 years.
Second, Ottawa freed these global giants from a requirement that they allow generic drug makers to manufacture cheaper copies of their products for a royalty.
The new 20-year rule applied only to drugs patented after 1989. Those patented before then were left under the old regime.
The multinationals accepted the terms of this deal. They increased their research spending in Canada in return for the lengthened patents.
But in 1993, Ottawa participated in another set of trade negotiations under the auspices of the WTO.
These talks resulted in a global trade agreement covering all intellectual property, not just pharmaceutical patents. Under this deal, Canada agreed once again to extend its minimum patent protection to 20 years.
This appeared consistent with the Canada-U.S. deal. Indeed, Ottawa assumed it was. It saw no reason to impose the 20-year rule on drugs patented before 1989.
The U.S., however, saw it differently, and complained that Canada was not honouring its WTO commitment on pre-1989 drugs.
That bit of history brings us to the present.
Last week, in a preliminary ruling, the WTO sided with the Americans. If this decision is confirmed in the final ruling, Canada will be ordered to impose the WTO rules retroactively to drugs patented before 1989.
This is at odds with the Canada-U.S. deal. On this basis alone, Ottawa should appeal the ruling. But it raises a more fundamental issue.
Drug costs are the fastest-growing component of medical spending. Federal and provincial health ministers can't begin to fix the health-care system if they have no control over pharmaceutical prices.
It's time Ottawa recognized that it can't keep making all its other policies subservient to international agreements on trade.
Copyright 2000 Toronto Star Newspapers, Ltd.:
