Canada and the European Union (EU) have now reached political agreement on their long-delayed Comprehensive Economic and Trade Agreement (CETA), the first free trade agreement (FTA) between the EU and a G8 nation.

CETA, which will remove over 99% of tariffs between the two economies, is “the biggest deal Canada has ever made,” said the country’s Prime Minister, Stephen Harper.

The agreement includes two life sciences intellectual property (IP) measures. They will provide up to an extra two years’ patent term restoration for branded drugmakers - EU negotiators had originally sought a five-year maximum - and a new right for patentholders to appeal court decisions where a patent is declared invalid.  This process has to date been available in Canada to challengers but not to patentholders.

CETA “strikes an appropriate balance between rewarding innovators and ensuring that Canadians are able to reap the fruits of such innovation, from the latest technologies to a wide range of affordable, life-saving drugs,” say Canadian government documents.

Canada’s Research-Based Pharmaceutical Companies (Rx&D) welcomed CETA’s provision of  “a more level playing field for IP protection” as “a catalyst for innovation.”

However, the Canadian Generic Pharmaceutical Association (CGPA) said that while the agreement falls short of the EU’s “original unnecessary demands on behalf of brand-name drug companies,” it will still delay Canadian market entry for generics, “increasing healthcare costs for provinces, employers that sponsor drug plans for their employees and Canadians who pay for their prescription medicines out-of-pocket.”

The patent term restoration clause applies only to new drugs and is unlikely to impact drug costs for 8-10 years. However, British Columbia’s International Trade Minister, Teresa Wat, says she has received a pledge from federal Health Minister Rona Ambrose that provincial governments will be fully compensated for any incremental increases in their drugs bills resulting from CETA.

A federal government report estimates that the patent clause will add up to C$1 billion annually to Canada’s drug costs.

• GPCA has also welcomed the “international precedent” set by CETA, as the first FTA “that permits an exception under the period of patent extension for the production and other activities related to the export of generic medicines.”

Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations (EFPIA), noted: “we understand and agree that the improved IP measure should not limit the export of generic medicines to developing countries.”