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Alan Gunderson, Nov 24, 2014
Health care is a very important sector within the Canadian economy. A recent report estimates total health care spending at CDN $211.2 billion in 2013 which represents 11.2 percent of the Canadian economy or approximately CDN $5,988 per capita. Pharmaceuticals comprise the second largest component of total health care spending, estimated to be 16.3 percent of such spending in 2013 (CDN $34.5 billion). A significant percentage of pharmaceutical spending is for prescription drugs (84.6 percent in 2011) and, unlike spending on hospitals and physicians, most pharmaceutical spending is from the private sector. Private sector spending includes spending by both private health insurance plans, estimated at 59.6 percent in 2011, and households who pay out-of-pocket, estimated at 40.4 percent.
Among Canadian prescription drugs in 2013, generics were estimated to have a 66 percent share of retail prescriptions but only 23.5 percent of total prescription drug expenditures. These figures reflect the dramatic savings that consumers who pay out-of-pocket and drug plan providers experience from the availability of generic prescription drugs.
Given the importance of pharmaceuticals to Canada’s health care sector and the role that generic drugs have played in limiting pharmaceutical spending, the Canadian Competition Bureau has focused its advocacy and enforcement efforts in this sector on continuing to ensure that competition from generic drugs is not delayed or foreclosed through anticompetitive conduct. This article discusses two topics related to this effort. First, it discusses a recent Bureau enforcement investigation relating to a product life-cycle management strategy commonly known in competition circles as “product hopping” or “product switching.” Second, this article provides some preliminary thoughts as to how Canadian competition law could apply to patent litigation settlements in the pharmaceutical industry. To set the stage for what follows, a brief overview of Canada’s competition statute is provided in the following section.
