OTTAWA REQUESTS GUIDANCE ON LEGISLATION ADDRESSING

UNCLAS SECTION 01 OF 02 OTTAWA 003709

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ETRD ECON SOCI TBIO CA SIPDIS
SUBJECT: OTTAWA REQUESTS GUIDANCE ON LEGISLATION ADDRESSING
CROSS-BORDER DRUG TRADE

REF: A. OTTAWA 3482

B. OTTAWA 1803


1. (SBU) Summary and action request: The U.S.
pharmaceutical industry has repeatedly asked for Embassy
support for Canadian legislation to ban bulk exports of drugs
from Canada, in anticipation of Congressional action to
legalize bulk imports into the United States. A Canadian
drug export ban, pre-emptive or reactive, raises NAFTA
national treatment issues and is not necessarily in our
interest at a time when we are trying to develop systematic
policy responses to avian flu or other potential pandemics.
Action request: While the legislation will not progress
until Parliament returns, Post requests USG guidance on how
to respond to inquiries about our position on this
legislation. Post believes that USG should remain neutral on
this issue and requests guidance supporting that position.
End Summary.


2. (U) Bill C-83, "An Act to amend the Food and Drugs Act
(drug import restrictions)" had the dubious honor of being
the last legislation to be tabled before Parliament was
dissolved at the end of November. Stakeholders generally see
the introduction of the legislation as a political ploy,
allowing the Health Minister to take credit for action
without committing much political capital. The issue has
played no role in the political campaign so far, and one
industry contact describes it as "more of a shield than a
weapon". Because it was introduced but not passed before the
government fell, it will need to be re-introduced after the
January 23 elections.


The mechanism: shortage-based restrictions
--------------

3. (SBU) Bill C-83 gives the Health Minister the authority
to prohibit "...export of a drug or class of drugs if the
Minister is of the opinion that there is a shortage or likely
shortage of a drug or class of drugs (in Canada)." The bill
attracted minimal press coverage and seems to have
disappointed most major stakeholders, many of whom (including
internet pharmacies and the pharmaceutical industry,
traditional adversaries) supported a pre-emptive bulk ban.
The Canadian pharmaceutical industry dislikes C-83's approach
because of its uncertainty and selectivity, while the
internet pharmacy industry had hoped that the bill would
specifically address "contrived shortages" (that is,
counteract major drug companies' decisions to restrict sales
to internet pharmacies.) Patient and doctors' groups worry
that the proposal to monitor for potential shortages is not
workable, pointing out that once a shortage or even a threat
of a shortage is evident, it may be impossible to react
quickly enough.

Other provisions
--------------

4. (SBU) The bill specifically excepts from any potential
export restriction any "individual in Canada if the drug is
for the use of the individual or an accompanying dependent
and the quantity of the drug sold or exported....does not
exceed the quantity required for a 90-day period." This
exception seems to leave the door open to Americans who
physically cross the border to buy drugs in Canada. Bill
C-83 does not address Health Minister Dosanjh's personal
campaign against co-signing (the practice of a Canadian
doctor signing masses of American prescriptions with little
or no contact with the patient). However, Health Canada
states that it is still assessing feedback on the co-signing
issue. Based on our consultations with stakeholders, we
suspect that the feedback ranged from lukewarm to strongly
opposed.


Public reaction and potential anti-American rhetoric
-------------- --------------

5. (SBU) The cross-border drug trade is not, so far, an
issue in Canada's current election campaign. Anti-American
rhetoric is popular at the moment, however, and it is
possible, although not probable, that the cross-border drug
trade issue could re-emerge. During President Bush's visit to
Canada last year, press commentary treated suggestions that
Canada might consider regulating prescription drug exports as
U.S. "bullying" of Canada to enforce U.S. laws. During the
last round of attention to the issue, Health Minister Dosanjh
told the House of Commons Health committee that "one faction
(of U.S. politicians) wants to actually openly smash our
pricing regime..."

Action Request
--------------

6. (SBU) A number of Canadian stakeholders, as well as U.S.
pharmaceutical manufacturers and their subsidiaries, continue
to seek ways to stem the tide of low-priced drug re-exports
to the United States. Some are genuinely concerned about
shortages and price pressures in Canada, while others may be
hoping to short-circuit pending U.S. legislation to legalize
bulk exports of price-controlled drugs from Canada, which
could disrupt the traditional regulatory segmentation of the
two markets that allows pharmaceutical companies to maintain
large price differentials in the two countries. However, in
our view an export ban could raise NAFTA national treatment
concerns down the road. It is also a potentially
complicating factor in future efforts to develop effective
North American responses to potential pandemics or other
heath crises, especially as there is no mirroring U.S.
legislation. As such, we do not believe it is in our
long-term national interest to promote the potential use of
export bans, and we recommend maintaining USG neutrality on
this issue. Action Request: We request guidance from
Washington agencies and recommend that the guidance be to
remain neutral on the issue.

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http://www.state.sgov.gov/p/wha/ottawa

WILKINS