ON Government seems to have "won" pharmacy war

This Globe and Mail article has a pretty good summary of where things have ended up in the generic drug/pharmacy conflict with the ON government.


"Ontario outplayed the pharmacies in game of hardball."

The Adam Radwanski lead:

They spent millions upon millions of dollars mailing flyers, commissioning polls, buying up ad space and busing protesters around the province.

For their trouble, Ontario’s pharmacies might have emerged in even worse shape than they appeared to be in two months ago.

Few insiders seriously expected that the provincial Liberals would back down on the basics of their plan to cut generic drug prices in half by eliminating the “professional allowances” – the large sums paid by manufacturers to retailers in return for selling their products, which is where pharmacies have until now made much of their money. But there was speculation that the government would offer concessions aimed at increasing other forms of revenues.

Instead, with the revised reforms announced Monday, Health Minister Deb Matthews barely conceded anything at all.

A quick review of the legislation (which will go into effect July 1) suggests the columnist is right. In particular, there is a section clarifying that the ban on rebates does not include benefits provided with ordinary commercial terms (such as a discount for promptly paying your bill or a discount for large orders). This is potentially a huge loophole for pharmacies to re-institute huge rebates, but the OBDA regulations will now cap this at 10% of the of the value of the produces based on the drug benefit price in the formulary.

Regulations on prices reducing the price of generics to 25% on the public side (i.e. paid by the ON government through various programs) take effect on July 1; the private prices (paid by the public, often the public's insurers) are to be introduced in phases culminating in 2013.

There has been some increase in the dispensing reimbursement aimed at assisting pharmacies in rural/under-serviced areas.

An interesting question is how much other provincial governments react to this. Ontario and Quebec have put in very aggressive regimes - and there is some concern that national-chain pharmacies may try to recoup losses in Ontario by increasing their reimbursement elsewhere. And of course, why would provincial government X want to pay twice as much for generic drugs than the Ontario and Quebec governments? I would imagine health ministries in other provinces have already considered their positions and are busy implementing their reaction.

Another tidbit on IP and trade deals

A footnote from my book:

Braithwaite and Drahos state that business regulatory contests are fought at the level of principles rather than details because “the informational demands of rule systems would make any contest at this level intolerably complex. Trade negotiators cannot, for example, walk into rooms in Geneva armed with their respective Telecommunications Acts under their arms and say to their counterparts ‘this is what we want.’ Often they will have very little idea about the details of their domestic systems. (One US trade negotiator told us that US trade people were ‘ignorant’ of intellectual property law. The US overcame this by sending several intellectual property specialists as part of its negotiating team on TRIPS.)”. Braithwaite and Drahos, GBR, supra note 13 at 527. Without the knowledge and detailed pre-existing discussions in the WIPO and other contexts, the TRIPs Agreement could not have achieved its high level of detail

In other words, Braithwaite and Drahos state that trade negotiators can't get too detailed in their negotiations... and then immediately note that Intellectual Property is an exception.

Assuming you agree with that... the next question is why is IP different?

One answer may be the presence of WIPO, where detailed international discussions do take place. In other words, there is intellectual capital - a consideration of the details of possible international IP agreements - present in another international institution that the WTO or other trade negotiators can draw on.

Another answer may be that since international cooperation in IP is driven by private interests who have an interest in their governments cooperating... the governments are forced down the path of a more detailed consideration of IP than in other areas.

This doesn't strike me as persuasive. There are lots of other areas in international economic agreements where governments are pushed towards cooperation by their national industries, but as noted by Braithwaite and Drahos they don't lead to considerations of the details of Telecom law, or whatever. If its in the interests of industry to have detailed IP treaties, I don't see why its not also in their interest to have detailed treaties in other areas.

Another answer - the one I like right now, though ask me again tomorrow ;) - is that it has to do with the inherent nature/history of the subject matter of the agreement - intellectual property. Its not the same as negotiating international agreements in Telecom, or the postal service, or tariffs, or ozone depleting chemicals or competition law (though its closer to that) or ... (you get the idea :) )

OK, but can I be more specific? and doesn't this just overlap with the first two suggestions anyway?

- IP is the subject-area with perhaps the longest history of international cooperation - unsurprisingly, it has developed the greatest detail in its consideration

- the nature of IP is such that general agreements are meaningless without the details

- in the absence of the ability to meaningfully write down core patent law principles, countries are forced to overly-detail the edges? (that doesn't strike me as right)

- a lack of trust between countries on IP matters? (but why more in IP than other areas?)

- very different domestic understandings of IP imply that detailed international agreements have to be concluded for everyone to understand (and accept) what they are agreeing to?

- some sort of capture of the USTR story?

IP a big issue in Canada/EU trade talks

A short but interesting note: The Spanish ambassador to Canada gave an interview last week where he said the prospects for an agreement are positive, but he highlighted three sticking points: agriculture, government contracts (specifically provincial government contracts), and intellectual property.

One article here: http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b3524582

Its a bit hard to know what to make of this. The text proposed by the EU would have an incredibly wide-ranging impact on Canadian intellectual property laws. It could be that this is the hold-up - simply the huge number of small to large changes on the table. The Canadians and Europeans might have difficulty getting their heads around the implications of so many changes. Intellectual property has historically been a very difficult thing to negotiate in these free trade deals - mainly because it demands a level of detail and specificity not demanded by other trade topics.

But, its also likely that specific items are contentious - but if so, which ones? One strong possibility is copyright - that's been in the news a lot - but the Canadian government is moving to implement new legislation. (a side question - is the government's new copyright legislation connected to the EU/CA trade negotiations? It wouldn't be the first time that the Canadian government changed IP laws ahead of an international agreement to try to smooth the trade agreement negotiations.)

Another possibility is border measures. Another is geographical indications. Both are big issues to Europe.

I would like to think that the proposed patent and pharmaceutical related issues are being given significant (and from my personal point of view, appropriate) weight in these negotiations.

In any case, it certainly highlights how intertwined intellectual property law and international economic law in general have become.