Claims that Canada's proposed trade deal with the European Union (EU) would add C$2.8 billion a year to Canada's drug costs are based on flawed assumptions and should be ignored, research-based drugmakers have said.

The claims, which were made in a study released recently by the Canadian Generic Pharmaceutical Association (CGPA), are "based on a flawed underlying assumption," according to Canada's Research-Based Pharmaceutical Companies (Rx&D), which adds that the study would be "unlikely" to "pass peer review if it were submitted to an academic journal for publication."

The CGPA study was commissioned to examine the effects of the Comprehensive Economic and Trade Agreement (CETA) now being negotiated between Canada and the EU. The deal includes proposals from Europe that would, according to the authors, considerably lengthen the period of market exclusivity for brand-name drugs in Canada and provide "the most extensive structural protection for innovative drugs of any country in the world."

As a result, they warn, Canadian payers including federal and provincial governments, businesses and patients "would face substantially higher drug costs as exclusivity is extended on top-selling prescription drugs, with the annual increase in costs likely to be approximately C$2.8 billion a year."

However, in an analysis of these claims published late last week, Rx&D says that the study contains "major flaws… makes numerous and highly debatable assumptions, is biased in its consideration of the issues and contains several methodological errors.”

The research-based drugmakers claim that the study advances the generics industry’s "self-serving position that weak intellectual property [IP] rules should be an effective way to control health care costs," and that it "ignores the fact that IP improvements over the past 25 years have generated an 800% increase in pharmaceutical R&D investment in Canada." 

CETA not only represents a unique opportunity for Canada to become the only country in the world with favoured trade status with both the US and the EU, but it also has the potential to give a C$12 billion boost to the Canadian economy and increase bilateral trade by over 20%, says Rx&D.

The group says it has identified five "major flaws" in the CGPA study, namely that it: - overestimates brand sales; - is biased in its selection of drugs to illustrate the potential effects of the CETA IP provisions on payers, as the six it has chosen are blockbusters and therefore unrepresentative of the overall market; - overstates the cost impact of the IP provisions by choosing 2010 as the baseline year, when in fact that was "a unique year" because around C$2 billion in innovative drug sales became exposed to generic competition; - exaggerates the impact of IP changes; and - employs a flawed pricing analysis which is, it says, "akin to back-of-the-envelope calculations" and based on "blanket assumptions."

As a result, the report's conclusions "should not be considered in any serious or even cursory respect by Canadian policy architect s and officials," says Rx&D. 

The CGPA has dismissed the research-based industry's attacks on its commissioned study. "Brand-name drug companies are trying to convince Canadians that if we do not concede to their demands for longer monopolies, and accept the resulting higher prescription drug costs, there can be no trade deal. That self-serving insinuation is patently false," Association president Jim Keon said late last week.

Extending market monopolies for brand-name drugs, as proposed by the EU, will raise trade barriers for Canadian generic manufacturers and "increase revenues for European-based drug companies at the expense of Canada's health care system," Mr Keon added.