Pharmaceutical Reciprocity for Canada

by on May 24, 2017 at 2:38 am in Economics, Law, Medicine | Permalink

If pharmaceutical reciprocity is a good idea for the United States, it’s a great idea for smaller countries. Indeed, this is mostly what happens in practice, even if not by law, since smaller countries can’t afford or justify the expensive US process. Fred Roeder of the Montreal Economic Institute makes the case for reciprocity in Canada:

…reciprocal recognition of drug approval authorities on both sides of the Atlantic would incentivize Canadian, European and American authorities to spend less time and money conducting parallel reviews. If the HPFB, the FDA or the EMA approved a drug, patients in Canada, Europe and America would have immediate access to it — increasing consumers’ choice as new drugs are offered to patients faster and more affordably, with less red tape driving up costs.

A reduction in approval time can be a win-win for patients and firms because a decrease in approval time is an increase in effective patent length without an actual increase in patent length. The numbers below are optimistic, but the idea that streamlining approval can increase profits and stimulate investment is correct:

These market-oriented reforms would not benefit not only consumers, but the pharmaceutical companies as well, expanding the timespan of the patents. On average, new drugs have a mere 10 to 14 years of patent protection remaining by the time they are sold to consumers after they have successfully jumped over all the government hurdles. Streamlining the drug approval process would increase the timespan of patented drugs on the market by 50 to 70 per cent.

Roeder also mentions Bart Madden’s important book Free to Choose Medicine. (For those who don’t know, I am proud to be the Bartley J. Madden chair in economics at Mercatus at GMU.)

1 Luis Pedro Coelho May 24, 2017 at 5:25 am

It’s funny how this is always phrased as reciprocity, when there is no reason for it to be reciprocal. Canada could unilaterally declare that it’d accept FDA approval as valid independently of what the US did.

2 prior_test2 May 24, 2017 at 6:02 am

Yep – but the real end game is to get rid of all those regulatory hurdles to making as much money as possible selling to a market desperate to find a cure or prolong their life. That what is sold may not be a cure, or have severe side effects, or not prolong life, is not a pharma company concern, and never has been, especially in the absence of any regulatory oversight.

Time to bring back the glorious days of radium treatments in the name of patient choice.

3 Slocum May 24, 2017 at 6:46 am

Right. Pharma companies want to use the orphans laboring in their satanic mills to produce useless, dangerous drugs and sell them to people everywhere and Alex, of course, is a paid shill who’s trying to help them do it. And they’d get away with it too, if it weren’t for your trenchant analysis.

4 Jan May 24, 2017 at 7:26 am
5 prior_test2 May 24, 2017 at 7:46 am

‘ Pharma companies want to use the orphans laboring in their satanic mills to produce useless, dangerous drugs’

Interesting fantasy. On the other hand, let us check out Laetrile, for example, this passage – ‘Dr. Richardson’s arrest triggered the formation of the Committee for Freedom of Choice in Cancer Therapy (now called the Committee for Freedom of Choice in Medicine). The group’s founder and President was Robert Bradford, a former laboratory technician at Stanford University. Michael Culbert, who at the time of Richardson’s arrest was an editor at the Berkeley Daily Gazette, became a major spokesman for the Committee, editing their newsletter, The Choice, and writing two books promoting Laetrile: Vitamin B-17: Forbidden Weapon Against Cancer (1974) and Freedom From Cancer (1976).

Culbert was assisted in editing The Choice by Maureen Salaman, wife of Committee vice-chairman Frank Salaman. The Committee’s legislative advisor was Georgia Congressman Larry McDonald, a urologist who used Laetrile. CFCCT’s activities were closely allied with the John Birch Society, to which Richardson, Bradford, Culbert, the Salamans and McDonald all belonged. Soon after its formation, CFCCT established local chapters throughout the United States and used bookshops associated with the John Birch Society to hold meetings and distribute literature.

In May 1976 Richardson was indicted, along with his office manager, Ralph Bowman, and fellow CFCCT members Robert Bradford and Frank Salaman, for conspiring to smuggle Laetrile. A year later all were convicted of the charges. Bradford was fined $40,000, Richardson $20,000, and Salaman and Bowman $10,000 each. During the trial it was disclosed that Bradford had paid $1.2 million dollars for 700 shipments of Laetrile and that Richardson had banked more than $2.5 million during a 27-month period.’

No orphans in satanic mills, just a long running tradition of exploiting the desperation of cancer patients for a cure involving Laetrile, just a single drug. Which remains poised for market greatness, apparently, if just the FDA would get out of the way –

Anybody writing that the Bartley J. Madden Chair in Economics at the Mercatus Center ‘is a paid shill’ will only be read by a select few in this comment section.

6 Slocum May 24, 2017 at 3:55 pm

“Laetrile, just a single drug. Which remains poised for market greatness, apparently, if just the FDA would get out of the way”

Uh, huh. We’re talking about reciprocity with places like Canada, Japan, and the EU. Do you think the regulatory agencies in those places are untrustworthy? Would you be afraid, right now, of being treated in any of those countries using drugs approved by their ‘dodgy’ regulators? Which of those ‘corrupt’ places would you expect to approve Laetrile first?

7 GoneWithTheWind May 24, 2017 at 5:56 pm

The problem is that in the zeal to protect us and take 4-10 years to figure out if a drug works and causes no harm that people who could have been helped die. We don’t know how many patients die every year from the slow process to approve new drugs (not to mention drugs that are eliminated due to the class action law suits and trial lawyers), but it could be 100,000 a year. The law should allow a dying patient to choose to try an unapproved drug that “may” save their life. But the law is an ass.

8 GoneWithTheWind May 24, 2017 at 5:50 pm


9 rayward May 24, 2017 at 6:52 am

It’s always wise to be careful what one asks for because one might just get it. If those advocating less “regulation” of pharmaceuticals get their wish, it will mean much lower requirements for the safety and efficacy of pharmaceuticals, which will increase the likelihood of a very bad result. Today, patients take their meds with little thought of their safety, confident that they are in the FDA and its “regulation”. All it would take is one thalidomide catastrophe and patients would lose that confidence in the safety of their meds and the consumption of meds would likely plummet. That might just be a good thing for patients, but it would be terrible for the pharmaceutical industry.

10 pierson May 24, 2017 at 10:25 am

“It’s always wise to be careful what one asks for because one might just get it.” — Indeed; if one implores government “experts”, regulators, and politicians to forcibly restrict one’s personal choices in life— one might well get a life without significant choices available.

11 The Other Jim May 24, 2017 at 7:25 am

Given that Canada is already free-riding off of US drug research, I see no reason why they should not also free-ride off of US drug approval.

Oh wait – I can think of two reasons. Some taxpayer-funded jobs would disappear, as would some of their highly-prized ability to pretend they are a separate country from the USA. These are two things you’d have to pry from their dead, frozen Canadian hands.

12 dearieme May 24, 2017 at 7:34 am

Would Canada be wise to accept promulgations from countries as corrupt as the USA or Germany?

Our should Canadians hope that the corruption somehow doesn’t affect drug approvals?

13 Roy LC May 24, 2017 at 1:53 pm
14 Ian Vasquez May 24, 2017 at 9:57 am

That’s right, this is a great idea for small and developing countries. In 2009, the Republic of Georgia unilaterally began accepting the drug approval of developed countries, with much success:

15 mulp May 24, 2017 at 10:57 am

“…authorities to spend less time and money conducting parallel reviews.”

So, it’s the reviews of safety and effectiveness drug trials that cost the hundreds of millions, not the running of the studies designed to meet the requirements of the FDA, Canadian, EU nation, Japanese, et al that cost lots of money?

If the world education system agreed to abide by the assessment of a high school or grade school teacher instead of lots of teachers each reviewing student performance, the cost of teaching students k-16 would be cut?

16 collin May 24, 2017 at 12:58 pm

If pharmaceutical reciprocity is a good idea for the United States

I will completely agree with pharmaceutical reciprocity as long as our insurance companies are also allowed to source their pharmacy drugs at foreign prices for our consumers. The US consumers need to be able to competitively buy drugs as well.

17 Slocum May 24, 2017 at 3:51 pm

It would be a good idea to have import reciprocity for the same industrialized countries where we’d accept approval reciprocity (e.g. Canada, Japan, and the EU). We do, however, want to allow pharma companies to sell drugs at lower prices in poor countries which, of course, they could not do if the U.S. allowed re-importation from those countries

18 Jay May 24, 2017 at 4:33 pm

Our Commander in Chief has declared imports evil and exports holy (at least from the perspective of the US). Why impoverish the American people by importing drugs for prices less than what is currently charged by US manufacturers? Think about the manufacturing jobs we must protect!

19 Jay May 24, 2017 at 4:29 pm

Buttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt, RACE TO THE BOTTOM! Untested drugs that kill people!

20 Troll Me May 26, 2017 at 5:58 pm

Ha ha ha.

Canadian voters trusting the American FDA.

30 minutes American TV is enough to know that there’s a truckload of horseshit in all things pharmaceutical in that country.

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