Canada

Photo: The Canadian Press. All rights reserved.

International Trade Minister Ed Fast speaks with the media during an announcement in Ottawa, Monday October 1, 2012. THE CANADIAN PRESS/Adrian Wyld

Confidential federal research on free-trade talks with Europe shows that giving the European Union just one part of what it wants on drug patents would cost Canadians up to $2 billion a year.

The Department of Foreign Affairs and International Trade has always insisted it's a "myth" that the Canada-EU free trade deal would increase health costs.

But in September, officials at Industry Canada and Health Canada combined forces to examine the cost of the European demand to implement a patent-term restoration system, The Canadian Press has learned.

They found that based on past history of approval patterns, the EU proposal would add an average life of 2.66 years to a typical drug patent, and increase Canadian drug costs by between $795 million and $1.95 billion annually.

The range of projections is large because government analysts have no way of knowing exactly what kind of drugs will be in line for patents in the future, and had to make some broad assumptions.

The analysis also looked at the cost of a compromise that would see patent terms extended to cover the time between application for regulatory approval and market authorization.

Such an option would likely add an average of 1.23 years to patents, and cost Canadians between $367 million and $903 million annually.

A third option would just extend patents to cover off any delays beyond Health Canada's benchmark guidelines. It would extend patent terms by 18 days on average, and cost Canadians between $14.7 million and $36.2 million a year.

Generally, the extra costs stem from patients having to rely on brand-name drugs longer than they do now, rather than turn to cheaper generic drugs that would be available sooner if patents were not extended.

The costs would have to be covered by provincial drug plans, employee insurance plans and individuals who buy drugs.

Ottawa has not yet formally responded to the EU demands on drug patents or announced its position on intellectual property. The EU and its many large brand-name drug producers say Canada's patent regime is too lax and not up to global standards.

Negotiations on the topic are kicking into high gear this week in Brussels, but given the controversial nature of the talks, negotiators are expected to leave any final decision-making on drug patents to ministers later this fall.

Adam Taylor, a spokesman for Trade Minister Ed Fast, would not comment directly on the bureaucrats' number-crunching.

"Our government has always sought to strike a balance between promoting innovation and job creation and ensuring that Canadians continue to have access to the affordable drugs they need," Taylor said in an email, reiterating the government's standard message on the drug patent regime.

"Our government will only sign an agreement if it is in the best interests of Canadians."