Canada risks becoming technologically and economically irrelevant if regulations are not updated to protect innovative drug makers’ discoveries and intellectual properties.
Canada is well down the road of becoming technologically and economically irrelevant – and that can only hurt Canadians. We no longer attract the investment we used to in innovation; and being totally reliant on oil and gas does not a strong future ensure.
So why is this? Simply put, Canada has fallen behind all of its competitor nations in the protection of intellectual property (IP). And if we do not have the laws and regulations necessary to protect investors’ intellectual property (which is the core of innovation) then we shall become importers of the future and exporters of the past.
As our country negotiates free trade agreements with the European Union and the Trans-Pacific world, our companies and governments are ill-equipped to do battle where knowledge is more important than an abundance of natural resources. Canada does not compare well with its sister high income, English-speaking countries, namely, the US, the UK and Australia. In fact we are more comparable to middle income countries like Mexico, Malaysia, India and Russia when it comes to our protection of intellectual property.
One proxy for a strong IP environment is the filing of patents for products and processes, and Canada has only one company in the world’s Top 100 for patent-filing and this is Blackberry which is currently undergoing a major strategic retrenchment. Yes, Canada is good at government-sponsored, tax-funded, university research where serendipity prevails, but Canada is a failure when it comes to commercializing discoveries into profitable products and services.
There is a well-known causal relationship among IP, innovation and economic growth. Patents and other IP instruments provide protection to a firm while it accrues its profits from a patented product or process. As the patent nears expiration, those retained profits are then invested in new research and development activities to further grow the firm, the taxes it pays, and the jobs it creates.
Take for example the business of making life-saving, life-improving drugs. New, brand- name pharmaceuticals today require upwards of $1.2 billion to develop, due to the complex and expensive science involved, the cost of conducting patient trials to ensure safety and efficacy, and the cost of complying with government regulations. Brand- name drug manufacturers must collect an overall amount of revenue to pay for the development of those drugs so that they can stay in business to produce new drugs yet to be discovered.
The innovative pharmaceutical industry is the most research-intensive industry in the world. Every medicine we take was developed by a research-based drug company in the private sector. Not by government. Not by generic drug manufacturers who just copy, at near-zero marginal cost, the brand-name once the latter’s patent has expired.
We want drugs; we need drugs. Innovative medicines today are conquering cancers and rare diseases that were thought to be unconquerable 10 years ago. The stronger innovative drug-makers are, the better they will be positioned to respond to the public health needs of all. Not the other way around. They are not going to invest in Canada if their discoveries, their IP, are better protected elsewhere; they may not even apply to sell their products here. And then we lose; we all lose. We lose lives, we lose health, we lose high-paying jobs, and we lose tax revenues to fund social programmes and infrastructure.
Canada must step up and harmonize, with the rest of the industrialized world, its rules that protect intellectual property, incent and reward innovative risk-taking. Patents, which give a producer market exclusivity for a period of time, are absolutely necessary for the innovative firms to cover their costs and invest in the future before generics come to market. Patent term extensions, data exclusivity, and a common definition of utility will create a level playing field amongst nations and will stimulate greater innovation, lower compliance costs, and reduce the uncertainty that Canada`s discriminatory regime creates.
Canada needs to address the following immediately:
- Most countries have patent term extension to allow companies extended patent protection beyond the normal length of time to compensate for the time it takes for a company to bring a product through the regulatory process – Canada does not, and needs to do so if Canadian firms are to compete on a level playing field;
- In addition to patents there is data exclusivity – the protection of the patent holder’s registration file’s product/process data; Canada has some but limited data exclusivity provisions and needs to harmonize its regulations with other nations;
- Canada is weak in its anti-counterfeiting efforts and needs to strengthen this area as well if Canadian firms are to scale production and sell innovative products abroad; and finally,
Court injunctive relief for patent infringement is almost non-existent in Canada whereas it is a major legal instrument in many other countries with which we compete and trade – this practice too needs to be harmonized.
Without these improvements it is not likely that Canadian businesses will be incented to compete on an innovative basis with their US, EU and Pacific counterparts in our rapidly-changing world of technologies. Canada must raise its IP standards to match the global norm if we are to benefit.
Arguing against innovation and IP, and for the status quo, makes absolutely no sense either in economic terms or on compassionate grounds. Tell the mother of a child with a disease for which there is yet a cure to be discovered that we don’t need innovation. Arguments against patent protection and the innovation that it creates are blind to the facts.
D. Wayne Taylor, PhD, recently retired from McMaster University, serves as the Executive Director of The Cameron Institute, a not-for-profit think tank specializing in health, economic, and social issues.