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Bristol-Myers Holds Canadian Patients Hostage, Richard Gold, The Globe and Mail, June 21, 2006

Bristol-Myers Squibb Canada’s ability to prevent the distribution of its anti-cancer drug, Erbitux, illustrates what is wrong with Canadian patent-law. In doing so, it is not only acting in bad faith with respect to Canadian patients, but is breaking its deal with the Canadian government. Canada dramatically increased its patent protection in the late 1980s but in return, the pharmaceutical industry agreed to price controls and investments in research and development.

Bristol-Myers Squibb Canada decided not to sell Erbitux – a drug that may save thousands of Canadian lives – in Canada because Canada’s independent agency, the Patent Medicine Prices Review Board (PMPRB), determined that the company’s price for the drug was too high given international comparisons. Consequently, Bristol-Myers Squibb Canada is holding Canadian colorectal cancer patients hostage because it wants to make more money off its drug than Canadian law, and the law of most countries, allows.

The research-based pharmaceutical industry has, it is true, been complaining about price controls for years. However, except in the United States, all Western countries regulate pharmaceutical prices, and many, much more significantly than in Canada. France, for example, keeps prices considerably lower than here. Given the public nature of health care, rampant market failures in the provision of health care (one has only to look at the US market-system which has the highest expenditures on health with some of the worst results in the Western world), it is all too natural for countries to regulate the industry to protect consumers and public health care systems. There is thus nothing new in countries regulating the price of pharmaceutical products and nothing new in companies complaining about it.

What is new is industry tactics in overcoming price controls. Up until 1987, Canada awarded so-called ‘compulsory’ licenses that allowed generic pharmaceutical companies to manufacture and sell pharmaceutical products even during the term of the patent. This made medicines easily accessible to Canadians. However, when multi-national pharmaceutical companies complained that Canada’s patent laws undermined their incentive to conduct research in Canada, Parliament drastically reduced Canada’s use of compulsory licensing. Since 1992, the Canadian government has not once issued a compulsory license.

In order to get this concession from Parliament, the pharmaceutical industry, of which Bristol-Myers Squibb Canada is part, agreed to two things. First, that Canada would create an independent agency, the PMPRB, to control the price of pharmaceutical products in Canada based, in a significant way, on a comparison of prices for the drug in other countries. Second, that the industry would significantly increase its investment in research and development in Canada to 10 percent of revenues.

Bristol-Myers Squibb Canada’s decision to not market Erbitux flies in the face of these commitments.

First, the industry has not met its promise to sustain a 10 percent investment in research and development. While investment increased in the 1990s, the most recent statistics that the PMPRB has collected indicates a dip in the 2000s to the point that investment today is at the same level as in 1989 when the new regime was just put in place. To make matters worse, most of the investment made is in clinical trials rather than original research. The problem with this is that clinical research does develop local research capacity as does research on finding new drugs.

Second, industry had agreed to the current system of price control based on comparisons with other countries. Canada’s price controls are, in fact, moderate compared to those of other countries. While it is understandable that Bristol-Myers Squibb Canada complains about the system, it did agree to it. It is thus unethical, at the very least, for it to put the lives of Canadians at risk because it does not like part of the bargain it made in 1987.

The problem with the current Canadian patent scheme is that industry knows that the government will do nothing to stop these tactics. While the Canadian government could still use provisions of the Patent Act – namely, the much restricted but still existing compulsory license provisions – to convince Bristol-Myers Squibb Canada to sell the drug, the government remains unwilling to pursue these rights even when the lives of Canadian are at stake. The same is not true of other countries, such as France, which are willing to threaten industry with compulsory licenses to bring industry to the negotiation table.

It is time for Canada to stop pandering to the pharmaceutical industry and US lobbyists. There are important differences between Canada and the United States. Most obvious of all is that Canada has a public health care system. But equally important is that the Canadian market for pharmaceuticals is very small: they constitute only about 2 percent of the world market.

The Canadian government should make clear that if Bristol-Myers Squibb Canada does not put Erbitux on the Canadian market at prices that the PMPRB agrees upon, it will issue a compulsory license. Canadians gave something up to industry in order to secure reasonable drug prices. We should not let Bristol-Myers Squibb Canada go back on this deal. Nothing short of a real threat of issuing a compulsory licence will force the company back to the bargaining table to ensure a fair price to it and to Canadians.

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