Canada's new plan for generic-drug sales

Canada is on the verge of becoming the first country to allow drug companies to legally make and export cheap, generic medicines for needy nations.

Thursday, a parliamentary committee in Ottawa will review draft legislation that would let drugmakers seek licenses to make generic versions of patented medicines to fight AIDS, tuberculosis, and malaria in developing nations. The legislation could become a template for other countries to follow.

But what should be good news for poor countries is being overshadowed by a looming battle in Canada's Parliament. The battle pits pharmaceutical companies that have poured billions of dollars and countless research hours into developing these medicines against the generic-drug industry and nongovernmental organizations (NGOs) that say the world should "do the right thing." Canada's challenge is trying to strike the right balance between the two sides.

"The question is whether Canada gets it right," Richard Elliott of the Canadian HIV/AIDS Legal Network, the group spear- heading NGO lobbying efforts. "Will it be a good precedent or a bad one?"

Canada is the first country to act on the World Trade Organization's Aug. 30, 2003, decision to revise international patent rules to let developing nations import copies of brand-name drugs in cases where they can't make their own medicine. Strict rules prevent drugs from being diverted to wealthy countries.

The WTO's decision aimed to soothe the controversy sparked by Brazil and India, which have been exporting AIDS knock-off drugs to Africa, but in violation of WTO rules. Brazilian and Indian generic-drug firms must implement the WTO's patent rules by next year, which means they'll be following Canada's lead.

But not everyone is happy with Canada's prescription to tackle the world's health woes. Critics say the proposal undermines efforts to deliver affordable drugs to nations needing them most.

"The existing legislation is flawed because it includes the opportunity for brand-name companies who hold the patents on medicines to block or undermine potential competition in the marketplace," Mr. Elliott says.

The Canadian Generic Pharmaceutical Association (CGPA), which represents 22 companies, says generic drugmakers aren't interested in making medicine under these conditions.

"The government's intention is laudable, but it is unlikely that any generic pharmaceutical company in Canada will use it unless substantial amendments are made," says Jim Keon, CGPA president.

The chief concern has been a clause offering patent holders the "right of first refusal" - an option to take over a contract negotiated by a generic-drug company. Critics say this removes the incentive for a generic company to negotiate a deal, which take months and hundreds of thousands of dollars to pursue.

Canada's Research-Based Pharmaceutical Companies (Rx&D), which represents 55 multinationals, has countered with a proposal dubbed "equal opportunity to supply."

"This clause itself ensures that the research-based pharmaceutical companies are made aware of any discussions out there of any need for a developing country for the new medication," Rx&D spokesman Jacques Lefebvre says.

Rx&D says such measures are necessary to ensure that life-saving drugs get to a country in need as quickly as possible.

Mr. Lefebvre says pharmaceutical companies may be better equipped to supply drugs more quickly than generic firms, which may need three to five years to produce a generic drug.

"As long as affordable medicines are made available - whether it's the generic drugmakers or the research-based pharmaceutical companies - that's the priority," Lefebvre says. "Under the alternative we put forward, it does ensure that either one of us will be in a position to provide those medicines. This is an opportunity for both industries to put their traditional rivalries aside and work together."

Canada's minister of industry, Lucienne Robillard, has stressed the need for balance between aid and patents. "We must be true to the humanitarian nature of this initiative," she commented last month. "At the same time we must never forget the importance of intellectual property rights such as those embodied by patents. After all, such protection supports the continued advancement in medical science upon which we all depend."

The future of the bill lies with a parliamentary standing committee, which will review the draft legislation Thursday and suggest changes to break the deadlock before handing it over to Canada's lower House of Commons for approval.

"They have a tough job, there's no doubt about it," says Eric Dagenais, patent policy director at Industry Canada, the government ministry behind this bill. "They have three groups of stakeholders - the NGOs, the brands, and the generics - and all three have their own interests."