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Kristina AcriAs the old adage states, “You’ll be known by the company you keep.” As such, the implications for Canada’s biopharmaceutical sector are rather dismal.

While an extensive body of evidence demonstrates that patents and other intellectual property protections are critical to the future of innovation and the development of new treatments and cures, Canadian legislation fails to measure up. For example, Canada’s intellectual property rights protections more closely mirror those of China, Turkey, Poland and the United Arab Emirates than industry leaders such as the United States, the United Kingdom, Switzerland and Germany.

For Canada, the legal architecture surrounding intellectual property rights (IPR) protection and the national regulatory regime helps shape the biopharmaceutical industry, its profitability, productivity and innovative future. And for Canadian patients, it affects the availability of medicines in Canada and access to future breakthrough innovations.

A recent study by the Fraser Institute describes existing IP policy in Canada, compares it to global norms and regimes, evaluates the strengths and weaknesses of the Canadian system, and recommends improvements and reform.

Overall, there are numerous deficiencies that weaken intellectual property protections within Canada relative to other industrialized countries. While Canada may aspire to join the ranks of industrial leaders, shortfalls in Canadian legislation prevent that from happening. Those shortfalls include:

  • Onerous patentability requirements, specifically the patent utility doctrine, which creates significant uncertainty for innovative industries by requiring innovators to see into the future to “soundly predict” the usefulness of the innovation and demonstrate that the innovation will fulfill this promise.
  • Insufficient enforcement mechanisms, which make it difficult for biopharmaceutical companies to effectively appeal court decisions where a patent is ruled invalid.
  • And inadequate anti-counterfeiting measures, which increase risks of adulteration, counterfeiting and cargo theft.

Consequently, Canada sits in the middle of the pack in the global IP Index rankings. These rankings matter to prospective investors and strongly signal Canada’s lack of support for knowledge-based industries. Fundamentally, Canada is a global outlier, providing inadequate intellectual property protection for the biopharmaceutical industry. The result has been a striking decrease in pharmaceutical research and development and a drastic drop in pharmaceutical innovation and patenting in Canada.

How much does this really matter?

The study also outlines the potential effects of improving Canada’s IP architecture. Benefits will include reduced legal ambiguity and litigation through increased predictability, more money for research and development, increased foreign direct investment, additional job-creation in the biopharmaceutical and related industries, productivity gains, greater biopharmaceutical self-sufficiency, faster launch times for new medicines, and additional innovation on cutting-edge treatments and therapies. In the era of personalized medicine, antibiotic resistance and breakthrough biologic drugs, investments in a robust biopharmaceutical industry are critical to global public health.

Accordingly, the Fraser Institute study proposes several recommendations for Canadian IP legislation. Specifically, Canada should provide innovative biopharmaceutical firms with patent term extensions in order to recover time lost due to mandatory governmental regulatory and marketing approvals.

In addition, Canada should remedy issues of weak enforcement by providing patent owners with an effective patent linkage right of appeal, to provide biopharmaceutical companies the ability to appeal court decisions where a patent is ruled invalid. Changes should be made to Canada’s IP laws to restore certainty to Canada’s distorted patent system and clarify the expectations of the patent utility doctrine, which currently makes Canada the sole developed country in the world with a patent utility standard that is inconsistent with both NAFTA and the WTO and requires biopharmaceutical firms to exactly predict – in the patent application – how an innovation will be utilized in the future. Canada should also extend data protection regulations and increase the scope of products that may be classified as “innovative drugs.”

Finally, Canadian policymakers should enact legislation to define rare diseases and encourage Canadian firms to intensify their research and development of new therapies.

These changes would help bring the Canadian regime in line with international standards, signal a commitment to knowledge-based industries, and foster a robust biopharmaceutical sector.

Kristina Acri is an associate professor of economics at Colorado College and a senior fellow at the Fraser Institute.

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