By Ruth Lopert
George Washington University
and Steve Morgan
University of British Columbia
A “modernized NAFTA” has significant implications for many sectors of the economy, including healthcare. What’s at stake? Canadians’ right to universal access to affordable medicines.
When negotiating with the U.S. and Mexico, Canadian trade and health officials would be well advised to be mindful of two things.
First, U.S. trade negotiators have long favoured the interests of pharmaceutical manufacturers. The U.S. trade agenda is heavily influenced by pharmaceutical industry advisers and lobbyists, with little or no input from opposing industries, health professionals or the public.
Canada has come up short in past trade negotiations where prescription medicines are concerned.
In the 1980s, the American pharmaceutical industry successfully lobbied the U.S. government to make the elimination of early generic drug competition in Canada part of the Canada-U.S. free trade agreement. In the 1990s, it made the dismantling of policies favouring Canadian drug manufacturers part of the original North American Free Trade Agreement (NAFTA).
In renegotiating NAFTA, experts expect the U.S. to press Canada for longer monopolies on patented medicines. This is intended to delay competition from low-cost generic medicines and would significantly increase costs for Canadians – without any benefits.
But changes in intellectual property rights for medicines may not be as bad for Canada as other objectives the U.S. will likely pursue on behalf of the pharmaceutical industry in NAFTA renegotiations. International experience suggests the U.S. will also attempt to constrain the pharmaceutical pricing and coverage policies of its trading partners.
Australia’s experience is noteworthy. In 2003, the U.S. entered Australia-U.S. Free Trade Agreement (AUSFTA) negotiations with an explicit mandate to seek “the elimination of government measures such as price controls and reference pricing which deny full market access for United States products.” The claimed threat to market access for U.S. products referred to Australia’s longstanding use of comparative cost-effectiveness assessment as criteria for coverage of new drugs under its universal public drug plan. The pharmaceutical industry typically views such cost-effectiveness considerations as non-tariff barriers to markets.
The Australian government successfully defended its universal public drug plan and its right to use rigorous, evidence-based processes to determine which medicines would be covered and which would not. The negotiations on pharmaceuticals were among the most contentious and controversial in the entire agreement, but a vigorous defence of existing policies was critical to the continued sustainability of Australia’s well established and popular universal drug plan.
Which brings us to the second thing that Canadian negotiators should be mindful of: the job of Canadian health and trade officials is not only to defend the existing healthcare system, but also recognize and protect Canada’s aspirations toward a better system.
Canada is the only high-income country with a universal healthcare program that doesn’t include universal coverage of prescription drugs. More than 60 years after such a plan was originally proposed for Canada, our provinces are finally demanding it from the federal government.
If Canada is to have universal pharmacare, NAFTA renegotiations must prioritize the protection of evidence-based coverage decision-making and price negotiations that will be essential to create a system that functions effectively and sustainably.
Canadian negotiators must be ready to deflect the rhetoric of U.S. trade negotiators and the pharmaceutical industry lobby, who will likely claim that eliminating value assessments and price negotiations will somehow magically “improve access,” instead of simply increasing prices and providing higher profits to the pharmaceutical industry.
The only way to ensure that all Canadians have affordable access to genuine pharmaceutical innovations is to assess each drug according to criteria that are rigorous but fair to every manufacturer.
It’s almost certain that the U.S. will pursue provisions in a renegotiated NAFTA that will undermine efforts to provide universal coverage of medicines on the basis of rigorous assessments of comparative clinical- and cost-effectiveness. Canada must be prepared to fight this.
Those tempted to react with skepticism would do well to remember that, in its efforts to repeal Obamacare, the current U.S. administration is willing to drive up healthcare costs while allowing tens of millions of Americans to lose their health insurance. This U.S. government is likely to attempt to coerce Canada to do the same to Canadians, through NAFTA provisions that prevent the implementation of an equitable and sustainable universal pharmacare system.
Ruth Lopert is an adjunct professor in the Department of Health Policy and Management at George Washington University; she is a former senior Australian bureaucrat and was principal Australian negotiator of the pharmaceutical provisions of the Australia U.S. Free Trade Agreement. Steve Morgan is a professor of Health Policy at the University of British Columbia School of Population and Public Health.