Month: August 2009

A bio-pharmaceutical fact sheet prepared in May 2008 by Industry Canada senior policy officers Joanna Rosborough and Tereasa Chudy for then industry minister Jim Prentice and retrieved using federal access to information laws has these fascinating (to me, anyhow) facts on the costs Big Pharma incurs trying to find the next Viagra.
All of this was germane (at the time and, I assume, still is) to the government because the lobby group for the big pharmaceuticals had been pushing for an extension on their patent protections, promising, in return, to spend 10 per cent of Canadian sales on R&D in Canada. The Industry Canada policy officers note that: “… after peaking in 1997 at 12.9% [of sales], [Big Pharma spending on R&D] has declined to 8.5% in 2006. The dollar value of their R&D has been flat at about $1.2 billion while sales have continued to grow. However, it is important to note that this percentage does not include the S1.5 billion of biotechnology R&D in Canada undertaken by companies who do not yet have a patented product on the market.”

• Costs of research and Development R&D costs per drug in 2005 averaged US$605 million for chemical pharmaceuticals and US$559 million for bio-pharmaceuticals and took 12-13 years to reach market approval by health authorities (source: Tufts Center for the Study of Drug Development).
  Full costing {i.e., amortization of research failures and opportunity cost of capital) raises average costs to USS900 million for phannaceuticals and USSI .24 billion for bio-pharmaceuticals (the costs are higher for bio-pharmaceuticals due to longer development times).
  There is variability between firms depending on the drug, number of failures and government R&D funding. In Canada, drug R&D costs are lower due to lower R&D and clinical trial costs (KPMG).
  A generic drug may take 2 to 3 years and requires considerably less R&D to develop and prove equivalency with the original drug.
• Cost of marketing On average the cost of marketing, after health approvals, is double the cost ofR&D. However, these costs are much lower in Canada then in the U.S. because direct-to- consumer advertising is restricted.
• Risks and Ratios of Success: 1 in 10,000 molecules entering research are successfully developed into a marketable therapeutic drug.

The pharmaceutical industry in Canada, Industry Canada says, is largely based in Ontario and Quebec with 47 per cent of the country's 262 pharma firms based on Ontario and 43 per cent based in Quebec. Only 10 per cent — that's less than 30 firms — are located in other provinces. In 2006, pharma companies collectively employed 40,000 people and spent $1.3 billion on R&D. Canadian pharma companies had total sales in 2006 of $17.6 billion, with Pfizer, Johnson & Johnson, Apotex, AstraZenecas and GlaxoSmithKline leading the way, according to the Industry Canada fact sheet.
Of some note, one-third of the country's top R&D spenders are pharma/biotech companies. Apotex, the leader from that sector, placed 12th in a 2007 ranking by Research Infosource [PDF] among all companies in R&D spending with an estimated $179 million spent that year. GlaxoSmithKline was just behind it at 13th with $177 million.
I checked out the 2008 list from Research Infosource,[PDF] which quotes 2007 financial data, incidentally, and Apotex had jumped to the 10th spot with an R&D spend of $182 million that year but was second in the sector behind Sanofi-Aventis Group which, at number 9, spent $207 million on R&D. Who was number one? Nortel. Sigh. It spent $1.85 billion on R&D in Canada in 2007.

The federal government is conducting consultations across the country on the issue of copyright reform. A town hall-style event just wrapped in Montreal and another is already 'sold out' in Toronto at the end of the August. Other events are scheduled throughout the summer.

One of the issues that politicians will grapple with, as they balance the rights of content creators against those of content users, is the concept of fair dealing when it comes to satire and parody. The Copyright Act exempts research or private study, criticism or review, and news reporting as “fair dealing” but does not specifically say you can use copyrighted content in satire or parody.

This is no small matter as many political activists on all sides of the political spectrum have been making wide use — and will likely make wider use — of proceedings in the House of Commons and in House of Commons committees televised and broadcast/Webcast by ParlTV in a variety of partisan and often satirical video mashups. As University of Ottawa law professor Michael Geist has noted, parliamentary lawyers have already objected to this use — specifically in context of parody or satire.

I recently received a document, retrieved under Canada's Access to Information laws, that looks at that issue. The document, dated May 21, 2008, is a briefing note, prepared by Associate Deputy Minister Paul Booth (last seen leading the auto restructuring file for the federal government) for then-minister Jim Prentice. It's two pages long but here's my summary and additional points:

• In 1996, the Federal Court ruled there was no allowance for parody under the Copyright Act. At issue: A union, the Canadian Auto Workers, used the Michelin man in some of its leaflets and literature when it was trying to organize workers in 1994 at Michelin Canada's Halifax operations. Michelin sued, claiming copyright violations. The CAW argued it was a permitted use under fair dealing provisions, which allows users to use copyrighted works for “criticism”. The CAW argued that parody or satire should be considered criticism. The Federal Court rejected the CAW's argument, saying that if Parliament wanted to exempt parody or satire from copyright laws it would have expressly done so.
• In 2004, the Supreme Court weighed in for a case known as CCH Canadian Ltd. V Law Society of Upper Canada. The Supreme Court's ruling in that case, Booth said, suggests that courts would now allow parody to be exempt from copyright. The CCH case was focused on the issue of the “research” exemption in the Copyright act. CCH objected to the fact that the Law Society library in Toronto was photocopying some of its material on request by lawyers and researchers. The Supreme Court held that “Research”must be given a large and liberal interpretation in order to ensure that users’ rights are not unduly constrained, and is not limited to non-commercial or private contexts.” Booth suggest that if a court was subsequently asked, as the CAW did in 1996, to consider parody a form of criticism, the Supreme Court's exhortation to “a large and liberal interpretation” of the Act would mean that parody and satire are Ok. Booth notes though – and this brief was written in May, 2008 — that no court had yet tested that parody theory.
• Booth's conclusion: “Although the apparent shifttowards a more liberal interpretation of the fair dealing exception by Canadian courts, as represented by the CCH decision, may result in uses such as parody and satire being held to be within the scope ofthe exception, such an outcome is far from certain.” [Read Booth's brief for yourself: Advice to Minister – Treatment of Parody
• Indeed, it was far from certain because seven months after Booth's caution, the B.C. Supreme Court (which, my legal friends tell me, has an excellent reputation and rarely gets overtured by the Supremes) ruled, in a case involving my employer Canwest, that parody was not in fact an exempted consideration under the copyright act. The B.C. Court put more weight on Michelin and less on CCH.
• Copyright lawyer Howard Knopf has argued here and elsewhere that, as MPs consider how best to reform copyright, they ought to explicitly deal with parody and satire. Knopf says they should be exempted.