Singh's claim that Liberal trade concessions will drive up drug prices oversimplified

As part of our federal election coverage, CBC News is assessing the truthfulness and accuracy of statements made by politicians and their parties.

The Claim: "Mr. Trudeau made those concessions that are going to drive up the cost of medication."

— NDP Leader Jagmeet Singh on how the Canada-United States-Mexico Agreement on trade could impact prices of some drugs in Canada.

The Facts:

The NDP leader has frequently criticized several aspects of the Canada-U.S.-Mexico Agreement (CUSMA), a trilateral trade deal negotiated over an 18-month period by the current Liberal government. 

The deal hasn't been ratified and, given the caustic political climate south of the border, it faces an uncertain fate.

Precarious future aside, Singh has taken issue with several contentious provisions in the agreement, including one that would influence the development and sale of some pharmaceuticals in Canada.

Specifically, a part of the deal that involves the "data protection" period for a burgeoning class of drugs called biologics.

Let's break that down.

Biologics are used to treat a wide range conditions, such as Crohn's disease and forms of arthritis, as well as some autoimmune-related diseases. They are among the most costly drugs available today, and represent a growing share of pharmaceuticals sold in Canada.

Biologics expensive

By 2017, for example, seven of the top 10 medicines contributing to growth in patented drug sales in Canada were biologics, according to the Patented Medicine Prices Review Board. Annual treatment costs that year ranged from $2,948 to $57,928. 

A protection period refers to the amount of time that data generated in clinical trials for a new medicine is off-limits to generic drug manufacturers.

Pharmaceutical companies are required to submit that data to regulatory bodies before a drug can be approved. After a certain duration, generic drug makers can access it to help produce cheaper alternatives.

In other words, the longer the data protection period, the longer a pharmaceutical company can exclusively profit from the sale of a brand-name drug without the threat of competition from generic options.

During the CUSMA negotiations, Canada agreed to extend the data protection period for biologics to 10 years from eight.

The change would mean that, in some instances it would take at least two years longer for cheaper alternatives to brand-name drugs to become available.

There's an important distinction here: the prices of currently available drugs would not go up, rather Canadians prescribed future biologics would need to purchase the name-brand version for two years longer than if CUSMA was never negotiated. 

Won't be felt for years

The effects of the change wouldn't be felt until eight years after the agreement is ratified, because even without it, data on biologics is already protected for that long in Canada.

The concession was pursued by representatives from the U.S., where clinical data on biologics is protected for 12 years.

Lengthening Canada's data protection period has long been a goal of the American pharmaceutical lobby, said Joel Lexchin, a professor emeritus at York University's School of Health Policy and Management and emergency room physician. 

"Just follow the money. The drug companies that make biologics wanted the change," he said. "And the drug industry in the U.S. is very powerful."

Just how much a 10-year timeframe would cost the Canadian health-care system is difficult to estimate, Lexchin said. 

In an April report, the Parliamentary Budget Office found that, by 2029, the data protection period extension for biologics could increase total annual costs for Canadian consumers and drug plans by at least $169-million. The added costs would continue to rise each year after, the PBO said.

But, as the PBO noted, any analysis of potential future costs is complicated by patents. 

Pharmaceutical patents can last for 20 years. Therefore in instances in which a drug is covered by a 20-year patent, the data protection period will expire years before the patent does. That is to say, a longer protection period wouldn't be the most important factor in when cheaper alternatives could become available.

Many variables in the mix

This had led some experts to project that the change could have little impact on health-care expenditures in the future, assuming many future biologics will have a 20-year patent. 

But biologics are complex drugs, and the patent process is not always straightforward. There are a number of foreseeable scenarios in which the protection period is the limiting element, Lexchin said. 

The number of variables in the mix means that projections are, at best, educated guesses.

Verdict: It's complicated. If CUSMA is ratified, Canadians would likely have to pay more for some biologics for longer than they would have otherwise. But how much it will ultimately cost individual Canadians and the Canadian health-care system will depend largely on future pharmaceutical patents.

Sources: Ratification of new NAFTA in 2019 looking unlikely amid trade tensions, CBC News; Will USMCA affect Canada's drug prices? Depends on what happens next, experts say, CBC News; Annual Report 2017, Patented Medicine Prices Review Board; The impact of the Canada – United States – Mexico Agreement on prescription drug expenditures in Canada, Paliamentary Budget Officer