Multinational Pharmaceutical Companies Shortchange Canada in Research and Development Investments: Is It Time to Pursue Other Options?

Abstract

In 1987, the government passed legislation to protect brand-name pharmaceutical firms against competition from generic drug brands in exchange for economic investment in Canadian pharmaceutical research and development (R&D). Since 2002, brand-name pharmaceutical companies' R&D investments have fallen short of their commitment, while Canadians now pay the fourth highest drug prices of all the Organisation for Economic Co-operation and Development member countries. In this article, we examine the degree to which brand-name pharmaceutical companies have fallen short of their promises, discuss whether a patent policy is the best strategy to secure Canadian pharmaceutical R&D funding and propose practical alternatives to this arrangement. RésuméEn 1987, le gouvernement adoptait une loi pour protéger les entreprises pharmaceutiques de médicaments de marque contre la concurrence des médicaments génériques, en échange d'investissements économiques dans la recherche et le développement (R et D) pharmaceutiques au Canada. Depuis 2002, les investissements en R et D effectués par les sociétés pharmaceutiques de médicaments de marque ont été inférieurs à leurs engagements, alors que le Canada figure en quatrième position des prix les plus élevés pour les médicaments parmi les pays membres de l'Organisation de coopération et de développement économiques. Dans cet article, nous examinons dans quelle mesure les sociétés pharmaceutiques de médicaments de marque ont brisé leurs promesses. Nous nous demandons aussi si une politique sur les brevets constitue la meilleure stratégie pour garantir le financement canadien dans la R et D pharmaceutique et nous proposons des alternatives pratiques à cet arrangement. NoteAll currencies are in Canadian dollars unless noted otherwise.

Commentary: Reconsidering Pharmaceutical Research and Development Investments

“…In this context, critical appraisal of the R&D investments in the Canadian sector, as proposed by Lee et al (2023), is completely relevant and necessary.…”

“…Accordingly, the final report (Statistics Canada 2022) does not include any mention of R&D intensity or R&D-to-sales ratio in section 2.2.2. Lee et al (2023) are right to claim that IMC' s commitment to R&D investments is unfulfilled and that measures to redress broken IMC promises should be considered. However, by adding context and analysis, this rejoinder appends two other very problematic elements.…”

“…Overview Lee et al (2023) emphasize how, in spite of lobbyists' claims, Canadians are being shortchanged by drug companies when it comes to investments in research and development (R&D). There is nothing new in having drug lobbies push narratives to boast the "greatness" of their contribution to the Canadian economy, but a reminder about the discrepancy between wishful narratives and actual numbers is important.…”

“…There is nothing new in having drug lobbies push narratives to boast the "greatness" of their contribution to the Canadian economy, but a reminder about the discrepancy between wishful narratives and actual numbers is important. Lee et al (2023) argue that the ways Innovative Medicines Canada (IMC) and Statistics Canada use to calculate R&D investments are problematic and that these calculations should be made by adhering to the original definition of R&D investments, which includes R&D activities eligible for Scientific Research and Experimental Development (SR&ED) tax credits. The Patented Medicine Prices Review Board (PMPRB) uses the same definition, and drug companies have also committed to the 10% R&D-to-sales ratio based on this definition.…”