Relationships between the academic community and the pharmaceutical industry: the legislative background and its effect on spending on medical research and development

Patent legislation governing drugs has evolved through a series of amendments to the Patent Act. From 1923 until 1993, Canada operated a system of "compulsory licensing," allowing generic copies of patented medicines to be manufactured within Canada and, by 1969, to be imported. In 1987, the act was amended (Bill C-22) to provide patented medicines with a fixed period of market protection before a compulsory license could be issued and to create a price review board to monitor and control prices charged. In return for patent protection, brand-name drug companies promised to invest a growing percentage of sales revenue in research and development in Canada. A 1993 amendment to the Patent Act (Bill C-91) brought a fundamental change to the legislation by abolishing the system of compulsory licensing and applying general patent regulations to medicines, thereby bringing Canadian law into line with that of its trading partners. It is now illegal to sell a copy of a drug until the patent expires (20 years after the patent is filed). This means that marketed drugs are protected for 8 to 13 years, since drug development takes a large proportion of the life of the patent. Since this amendment was passed, the brand-name drug companies have made major contributions to research and development in Canada, increasing from 6.5% of sales revenue in 1987 to 11.6% in 1994. Major irritants in the legislation remain. Generic drug companies have complained about "linkage regulations" that allow brand-name drug companies to legally challenge generic drug production on the basis of alleged infringements of linked patents, delaying the marketing of the generic drug. The act also prohibits Canadian manufacturers from exporting a generic drug to a country where it is not protected if it still protected in Canada. Brand-name manufacturers want some means of patent term restoration if regulatory authorities prolong the time taken before marketing a drug. This legislation is being reviewed by parliament beginning in 1997.