September 15, 2005

Trade associations representing research-based drug firms in Canada have continued to call on the government to reverse a reported decline in R&D investment. Claims of a downturn in local research are supported by the government's own pricing agency, the PMPRB, which notes that Canada's ratio of R&D spending to sales fell from 10% in 2002 to 8.5% in 2004.

Canada promised to create a new Pharmaceutical Industry Strategy in September 2004, but drug firms note that the plan's ministerial task force continues to meet behind closed doors, denying them the chance to participate. The R&D industry group also highlights studies showing less than a third of new drugs approved in Canada between June 2002 and May 2004 were eventually listed on public healthcare insurance plans.

US trade associations are even more outspoken in their criticisms of Canada's market regulation. PhRMA claims that loopholes in intellectual property laws and other obstacles "make Canada a free-rider on American innovation." The group also alleges that Canada's early working rules and other problems -- including approval delays and international reference pricing -- represented US$410mn in lost earnings for R&D-based firms last year. Nevertheless, given its sizeable home-grown generics industry, Canada's government will be aware that it has a diversity of interests to accommodate.