Steps must be taken to nationalize pharmaceutical production in Canada

It’s time we stopped being prisoners of foolish economic orthodoxies. A publicly-owned pharmaceutical company always made sense – and does so now more than ever.

A medical technician working in a lab.
Photo by CDC on Unsplash.

We’ve lost so much due to Canada’s misguided embrace of privatization in recent years, but one loss that sticks out with particular rawness these days is the sale of Connaught Labs, our once-dazzling publicly-owned pharmaceutical company.

For seven decades, Connaught made stellar contributions to public health with its unique approach of putting human welfare over profits — in defiance of the norms of the notoriously rapacious pharmaceutical industry. 

The privatization of Connaught by the Mulroney government, for purely ideological reasons, has deprived Canada of an exceptional, beneficial institution for the past thirty years. 

But there’s no reason that a similar publicly-owned pharmaceutical company, built on the same public-interest premises and principles, couldn’t be built today. In fact, it should be. 

What distinguished Connaught was its commitment to bringing medically-necessary treatments “within reach of everyone” – a philosophy that made it a target of an industry where life-and-death decisions are typically based exclusively on profitability. 

The shortcomings of such a profit-focused approach have long been evident – but they’re even more glaring in today’s pandemic, as we see that it’s government, not the corporate world, that is propping up our economy and our lives. In the future, we’re going to need more government, not less.

What makes the case for re-establishing a publicly-owned pharmaceutical company particularly compelling is that Canadian taxpayers are already spending roughly a billion dollars a year on basic medical research – but we get no ownership or control over the medical treatments that come out of this research.

This means that, while Ottawa’s public investment pays for the crucial early stages of medical research — when private funding is hard to come by — Canadians end up with no say in what happens to the results. The private drug industry determines whether the final product makes it to market and, if so, at what price. These become purely market decisions, with no regard to the public good.  

This situation is obviously absurd, given the fact that we paid for so much of the costs.  

Take the case of Glybera, a very effective drug developed at Canadian public expense by a team of researchers at the University of British Columbia over a period of two decades. That research produced a drug capable of treating a rare, but deadly genetic disorder known as LPLD, which happens to be prevalent among people living in the area around Saguenay, Quebec.

Glybera was briefly marketed by a Dutch biotech firm. But, in April 2017, for purely business reasons, it was withdrawn from the market, and this highly effective drug is no longer available anywhere in the world. 

This tragic outcome could have been different If Connaught (or a new publicly-owned pharmaceutical company) had been operating. The research funding could have gone to Connaught scientists, or, Connaught could have taken over the production of Glybera after the UBC team had done its research. Either way, “a genuine made-in-Canada medical breakthrough” – as CBC-TV reporter Kelly Crowe has described Glybera – could have been brought “within reach of everyone” needing it, many of whom happen to be Canadians.

Similarly, Connaught (or a new public pharmaceutical enterprise modelled after it) could have produced a better result with the Canadian public funds that were used to develop a vaccine against the deadly Ebola virus.  

The crucial work in developing the Ebola vaccine was done by Canadian scientists at the National Microbiology Laboratory in Winnipeg – financed, of course, by Canadian tax dollars. But sole licensing rights to produce the vaccine were granted to a small U.S company, which then sub-licensed it to pharmaceutical giant Merck.  

The vaccine was not expected to produce much of a profit, and Merck was slow to get the vaccine into production during the 2014-2016 Ebola outbreak in West Africa, according to a recent paper published in the Journal of Law and Biosciences.

The paper argues that the vaccine could have been available sooner – when it was desperately needed — if Canada had not relied on a private sector partner.

Although the pharmaceutical industry reaps huge profits, the public bears the costs of developing most new drugs, in the United States as well as Canada. U.S. economist Mariana Mazzucato points out that most important new drugs – not copycat versions of existing drugs – are developed in labs funded by the U.S. government.

“While private pharmaceutical companies justify their exorbitantly high prices by saying they need to cover their R & D costs,” Mazzucato writes in The Entrepreneurial State, “in fact most of the really ‘innovative’ drugs, i.e. new molecular entities with priority rating, come from publicly funded laboratories.”

Canada became an early and remarkable player in the field of public health due to Connaught Labs, which was established during a deadly 1913 diphtheria epidemic by Toronto doctor John Gerald FitzGerald. Although there was a treatment available for the diphtheria, it was too expensive for all but the rich. A outraged Dr. FitzGerald set out to change that – and ended up changing much more. 

Connaught went on to establish a truly exceptional research capacity, with its scientists contributing to some of the biggest medical breakthroughs of the twentieth century, including the development of insulin, penicillin, the Salk and Sabin polio vaccines and heparin. And it  played a central role in the global eradication of smallpox.

It also helped establish the principles underlying Canada’s public health care system – with its commitment to health not profit. And those same principles could help guide the establishment today of a public pharmacare program, whose benefits have been amply documented. 

Canada made impressive contributions to public health care and global medicine through Connaught, until that outstanding public enterprise was privatized — for no reason other than the pro-business dogma that has asserted, without proof, the superiority of the private marketplace.

It’s time we stopped being prisoners of foolish economic orthodoxies. A publicly-owned pharmaceutical company always made sense – and does so now more than ever.

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