WASHINGTON — The United States is keeping Canada and its plans to overhaul its drug-pricing system on a "watch list" of countries deemed a peril to American intellectual property rights — just as a world racked by COVID-19 takes an interest access to in a California company's experimental new drug treatment.
In its annual report on foreign threats to U.S. copyright holders, the office of the U.S. Trade Representative is raising concerns about Canada's plan to change how it calculates the fair price of prescription drugs, though stopping short of Big Pharma's demand that it be deemed a "priority" trouble spot.
Canada's plan has drawn "significant concern from stakeholders" because it would "dramatically reshape" how the arm's-length Patented Medicine Prices Review Board evaluates drugs, says the report. The board plans to stop using the U.S. and Switzerland, home to the world's highest drug prices, to help it determine what Canadian patients should pay.
"If implemented, the changes may significantly undermine the marketplace for innovative pharmaceutical products, delay or prevent the introduction of new medicines in Canada and reduce investments in Canada’s life sciences sector," the U.S. report says.
The report acknowledges that Canada has agreed to intellectual-property reforms in the forthcoming U.S.-Mexico-Canada Agreement, which the USTR announced last week would become the law of the land on July 1.
That agreement may be Canada's best defence against the escalating dangers of pandemic-fuelled protectionism in the United States, experts say — especially as the challenge of procuring weapons against COVID-19 moves from face masks to therapeutic drugs.
Prime Minister Justin Trudeau, for instance, has pointed out that finding treatments for COVID-19 might take less time than finding a vaccine to prevent it.
The existence of the USMCA, along with Canada's recently proven track record in negotiating with its stateside neighbours, could bode well for "Buy American" becoming "Buy North American," said Scott Paul, president of the Alliance for American Manufacturing.
"It would not at all be unusual to have some regional exception or inclusion with respect to domestic preferences," Paul told a panel discussion hosted earlier this week by the Washington International Trade Association.
"The fact that we do have a USMCA entering into force soon ... provides a pretty good framework for that."
That's likely to be even more important in the coming months as cross-border procurement concerns start to focus on issues like drug therapies and vaccine supplies. Already, remdesivir — an experimental drug made by California-based Gilead Sciences — is causing a buzz after a recent clinical trial suggested it could prove effective in mitigating the symptoms of COVID-19.
The antiviral drug has been on the World Health Organization's list of promising treatments getting special attention since March.
Just days after U.S. infectious-disease expert Dr. Anthony Fauci expressed cautious optimism about the drug from the Oval Office, the U.S. Food and Drug Administration on Friday authorized the emergency use of remdesivir on patients infected with the novel coronavirus, buoyed by evidence that it shortens recovery times.
If it pans out, global demand will be enormous and countries with strong trade relationships with the United States may benefit.
Not everyone is happy to see the USMCA, known variously in government circles as CUSMA, ACEUM in Quebec and "the new NAFTA" elsewhere in Canada, taking effect sooner than anticipated.
Conservative Sen. Don Plett, the Opposition leader in the upper chamber, doubled down Friday on his charge that the Liberal government had promised both Canada's dairy processors and Conservative senators that the agreement would not kick in until Aug. 1.
And in an interview with The Canadian Press, Plett said he believes the government amended its schedule to help expedite the delivery of U.S.-made N95 face masks — the subject of an export ban imposed last month by President Donald Trump — and to beat back the idea of stationing American soldiers near the Canadian border.
"We were told directly that Trump had threatened to withhold N95 masks," he said.
"The second argument, troops at the border ... he wasn't going there to declare an act of war, he was going to prevent illegal immigrants from crossing the border. And so to sell out our dairy industry, in order to make their negotiations with Trump easier, I don't accept."
The government has denied that it swapped an earlier implementation date for an exemption to the Trump administration's export ban on protective medical gear or an end to the short-lived idea of sending U.S. troops to the border.
The July 1 date is expected to cost the processing industry an additional $100 million because the dairy sector's "quota year" for a number of key products begins in August, and many of the terms of the agreement are tied directly to the production calendar.
"Your government threw Canada's dairy farmers under the bus," Plett fumed at Sen. Marc Gold, the government's representative in the Senate.
The government has denied that it ever promised an Aug. 1 come-into-effect date. Gold did not; instead, he refused to discuss "private discussions" with other leaders.
But he did made it clear that Canada's fraught relationship with the unpredictable Trump administration was top of mind when the COVID-19 crisis began to intensify in mid-March, when the government fast-tracked the USMCA implementation bill through both the House of Commons and the Senate and began negotiating a mutual ban on non-essential cross-border travel.
"In the context of this new reality, I don't have to remind senators that maintaining a good close collaborative and stable relationship with the United States, our most important trading partner and our neighbour, has become even more important than it already was," Gold said.
"Ensuring that the deal passed when it did, and that protectionism didn't take greater hold on this continent, if not beyond, was a major accomplishment of this government for which I believe Canadians, including the dairy sector, should be grateful."
Gold did promise that the dairy sector would be compensated for the impact of the deal, although he provided no specifics.
This report by The Canadian Press was first published May 1, 2020.
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James McCarten, The Canadian Press