Globalization, trade deals and drugs

November 26, 2001

Canadian government concessions to the big multinational pharmaceutical companies, including an extension of their monopoly on new drugs to 20 years, have resulted in sharply escalating prices for drug prescriptions, the potential blocking of a national Pharmacare program, and Canadian complicity in denying life-saving drugs to developing countries.

Those are the chief findings of a recent study done for the Canadian Centre for Policy Alternatives by Dr. Joel Lexchin, who has written extensively on the subject of prescription drugs. He is an associate professor in both the School of Health Policy at York University and the Department of Family and Community Medicine at the University of Toronto.

The study--Globalization, Trade Deals and Drugs--notes that the longer monopoly given the drug companies was one of the concessions made in the original Free Trade Agreement with the United States, and was also a condition for Canadian participation in NAFTA and the General Agreement on Tariffs and Trade (GATT).

"Since 1993," says Dr. Lexchin, "the increase in prescription costs for new patented drugs has averaged 20.9% a year, compared to a rise of 6.6% per year prior to 1987. The percent growth in drug spending between 1985 and 1998 was more than twice as high as for overall health expenditures.

"Controlling these costs is essential to ensure that Canadians get the medications they need when sick, and that goal could best be achieved by a national public drug insurance program--for the same reason that Medicare is the best way to ensure access to needed medical treatment. According to my calculations, such a Pharmacare plan could cut overall prescription drug costs by over $650 million a year, while providing coverage to the entire population."

Dr. Lexchin's study, however, found that the trade agreements have erected barriers to the adoption of such a public drug insurance program. Under Chapter 11 of NAFTA, for example, if a Pharmacare program were to prevent foreign companies, such as Liberty Mutual, from continuing to sell drug insurance in Canada (as it would), they could file a multi-million-dollar suit against the federal government for the loss of actual and anticipated profits.

Dr. Lexchin denounces Canada's decision to side with the United States in backing the pharmaceutical companies' attempt to prevent poor countries in Africa from obtaining cheap generic versions of HIV/AIDS drugs. That was a violation of the commitment Canada made, he says, when it signed and ratified the International Covenant on Economic, Social and Cultural Rights. That covenant guarantees "the right of everyone to the enjoyment of the highest attainable standards of physical and mental health."

Dr. Lexchin says bluntly that, in supporting the U.S. in this dispute, Canada is guilty of putting its commitment to trade agreements ahead of its commitment to health in the developing world.