Biomedical Patents and Ethics:
A Canadian Solution
E. Richard Gold*
World Trade Organization member states are pre-
paring for the upcoming renegotiation of the Agreement on
Trade-Related Aspects of Intellectual Property Rights . One
of the important elements of that renegotiation is the ethical
considerations regarding the patenting of higher life forms
and their component parts (e.g. DNA and call-lines). The
interface between the genetic revolution, patentability, and
ethical considerations is the subject of this article.
The author identifies, explores, and critiques four
possible positions Canada may adopt in respect of patent-
ability of biomedical material. First, Canada could do
nothing. This approach would mean keeping biomedical
materials outside the patent system and outside te stream
of commerce. Canada would simply wait for an interna-
tional consensus to develop before adopting a position of
its own. Second, Canada could go it alone. It could imple-
ment a policy that balances the incentive effects of patents
with the need to incorporate ethical and social values into
the decision-making process regarding the use of biomedi-
cal materials. In respect of this option, the author proposes
a model whereby non-profit bodies would hold the exclu-
sive rights to research, use, and exploit biomedical materi-
als. Third, Canada could follow the United States, Europe,
and Japan by providing for almost unrestricted patenting of
biomedical materials. This would be the most industry-
friendly alternative. The fourth and final option is to use the
medicare system to promote discussion of ethical consid-
erations involved in the use of biomedical materials. The
power of provincial health agencies may be used as a lever
to ensure discussion of ethical considerations concerning
the use of biomedical materials. The author concludes that
the fourth and final option is the best alternative for Canada
while waiting for an international consensus to emerge.
Les tats membres de I’Organisation mondiale du
commerce se prdparent h la ren6gociation prochaine de
l’Accord sur les aspects des droits de propri iti intelec-
tuelle qui touchent au commerce. Celle-ci mettra en jeu des
considdrations dthiques concemant ]a possibilitd de breve-
ter des formes de vie sup 6rieures et leurs composantes (par
exemple I’ADN et les souches cellulaires). Cet article porte
sur l’interaction entre la rdvolution gdndtique, le droit des
brevets et les considdrations dthiques soulevdes.
L’auteur identifie, explore et critique quare positions
qua le Canada pourrait adopter As I’6gard de la possibilit6 de
breveter le matdriel biom~cical. D’abord, il pourrait ne den
faeir ce qui reviendrait Is maintenir le matdriel biom~dical
hors des limites do syst6me des brevets et du commerce. Le
Canada attendrait ainsi l’mergence d’un consensus inter-
national avant d’adopter sa propre position. Ensuite, il
pourrait mettre en reuvre une politique originale qui visemit
As mettre en 6quilibre, d’une part, le caractsre incitatif des
brevets et, de I’autre, la n6ecessit6 d’intdgrer des valeurs so-
ciales et morales au processus ddcisionnel entourant
l’utilisation do matiriel biomical. A cet Egard, I’auteur
propose un mod le par lequel des organismes 6. but non lu-
cratif ddtiendraient le droit exclusif de faire de la recherche
sur le matdriel biom.dical, de l’utiliser et de I’exploiter. En
troisibme lieu, le Canada pousrait suivre les Itats-Unis,
l’Europe et le Japon en permettant de breveter, en
I’absenca presque totale de contraintes, le mat driel biom-
dical. Cela constitoerait l’option
l’industrie. La quatuime et demisre alternative serait
d’uiliser le systbme existant de soins de sant6 pour pro-
mouvoir la discussion des considirations dthiques soule-
vyes par l’utilisation du matdriel biom~dical. Le pouvoir
des organismes provinciaux de soins de sant 6 servirait ainsi
de levier pour s’assurer que ces considErations soient prises
en compte. L’auteur conclut que cette demi &re solution est
la meilleure pour le Canada, en attendant I ‘Emergence d’un
consensus international.
la plus favorable &s
. Assistant Professor, Faculty of Law, The University of Western Ontario. I would like to thank Erin
Rogozinski for her research and editorial assistance, Timothy A. Caulfield and Florence Dagicour for
their comments, and the Law Foundation of Ontario and the Social Sciences and Humanities Re-
search Council for their financial support.
McGill Law Journal 2000
Revue de droit de McGill 2000
To be cited as: (2000) 45 McGill LJ. 413
Mode de rf6rence : (2000) 45 RtD. McGill 413
414
McGLL LAW JOURNAL / REVUE DE DROIT DE McGLL
[Vol. 45
Introduction
I. Option #1: Do Nothing (Non-Patentability of Human Biological
Materials)
II. Option #2: Go It Alone
Ill. Option #3: Follow the American and European Leads
IV. Option #4: Use the Medicare System
Conclusion
2000]
E. R. GoLD – BIOMEDICAL PATENTS AND ETHIcs
Introduction
If all the world is a stage, then the preparations now being undertaken in Ottawa
and other world capitals in anticipation of the upcoming renegotiation of the World
Trade Organization (“WTO”) agreements’, and the Agreement on Trade-Related As-
pects of Intellectual Property Rights’ in particular, must be the last rehearsals of a
multilingual, multidisciplinary script. And what a script it is, full of suspense, intrigue,
crime, and drama. There is something for everyone: bioprospecting, biopiracy, bio-
sphere, biodiversity, money, and information. Canada is in the midst of adding its part
of the script, knowing, as it does, what the lead actors are likely to say.
The genetic revolution-the discovery and commercialization of our genetic in-
heritance-will be the subject of at least one act in the upcoming round of WTO ne-
gotiations. Issues such as the European moratorium on the introduction of genetically
modified organisms and the degree to which nations can block the importation of
goods for health or environmental reasons’ will bring discoveries resulting from the
genetic revolution into trade debates around the world.
Although on a slower track than the general WTO negotiations,. the upcoming
round of TRIPs negotiations will likely concern the question of whether patent law
ought to apply to plants and animals, and if so, how. Under the existing TRIPs Agree-
ment, each member of the WTO is free to establish its own ‘policy with respect to the
patentability of higher-life forms, but must grant patents in micro-organisms.6 A
country may, however, exclude an invention from patentability in order to protect life,
morality, health, or the environment’ Therefore, not only is the question of the patent-
ability of whole animals and plants unresolved, so too is the degree to which a coun-
try may exclude or limit patents over components (for example, DNA and cell-lines)
of humans, animals, and plants.
Three of the lead actors in the drama, the United States, Japan, and the European
Union, have already recognized patent rights in novel plants and animals. The United
‘ Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, 15
(date
April 1994, 33 I.L.M. 1143, online: The Trading Floor
accessed: 14 February 2000) [hereinafter GATI].
2 lbid. at 1197, Annex IC: Agreement on Trade-Related Aspects of Intellectual Property Rights
[hereinafter TRIPs Agreement].
3H. Kempf, ‘VUE adopte sans le dire un moratoire sur les organismes gdndtiquement modifis” Le
Monde (26 June 1999) 3.
4 GATe, supra note 1, Annex 1A, s. 4: Agreement on the Application of Sanitary and Phytosanitary
Measures.
5 “U.S. Sees No TRIPS Negotiations at Seattle, Focuses on Implementation” Inside US Trade (6
August 1999) 17.
6 TRIPs Agreement, supra note 2, art. 27.
7Ibid., art. 27(2).
McGILL LAW JOURNAL / REVUE DE DROIT DE MCGILL
[Vol. 45
States did so through court1 and administrative decisions, Japan through a change to
its administrative rules covering the grant of patents,” and the European Union
through a directive (a European Union policy that must be implemented in each
member state) acknowledging patents in higher life forms.” Despite differences in
form, the United States, Japan, and the European Union provide for almost unre-
stricted patenting of these life forms.’2
Depending upon one’s point of view, the villain or the hero in the negotiations is
likely to be played by developing countries, in particular, India.” India is seeking
greater access to technology and a recognition of the contribution that indigenous
communities make to biotechnology.”
Non-profit groups, for their part, are largely taking a cautionary approach to in-
creasing the scope of patent protection in the areas of agriculture and human health,
arguing that increasing the scope of patent protection may cause further deterioration
in north-south relations and may even result in environmental harm.”
‘Diamond v. Chakrabarty, 447 U.S. 144 (1980).
‘ See e.g. U.S. Pat. No. 4,736,866 (12 April 1988) (patent on onco-mouse); Exparte Hibberd, et al.
(18 September 1985 as corrected 24 September 1985) 227 U.S.P.Q. 443-48 (Patent and Trademark
Office Board of Patent Appeals and Interferences), online: WL 71986. ‘
‘”Japanese Patent Office, Examination Guidelines for Patent and Utility Model in Japan (Tokyo:
1994).
” EC, Directive 98/44 of the European Parliament and of the council of 6 July 1998 on the Legal
Protection of Biotechnological Inventions, [1998] OJ.L. 213/13 [hereinafter Directive].
” Both the Directive and the U.S. court decisions provide that any inventor can apply for and re-
ceive a patent in plant and animal (including) DNA, partial strands of DNA, and other genetic infor-
mation with almost no restriction and without evidence of ethical practices, such as the demonstration
of informed consent or attribution of DNA. Both U.S. and European law recognize that there may be
some patents that are morally unacceptable. This is explicit in the Directive and the policy of the U.S.
Patent Office; see Directive, ibid. at 18, art. 6(l); R. Weiss, “What is Patently Offensive? Policy on
‘Immoral’ Inventions Troubles Legal, Medical Professionals” The Washington Post (11 May 1998)
Federal Page. While the Directive’s recitals discuss the need for informed consent and attribution (Di-
rective, ibid. at 15, recitals 26 and 27), neither of these has any legal force.
” See generally T.S. Vishwanath, “Sleepless in Seattle? Well, not Quite” The Economic 7mlnes of In-
dia (5 September 1999), online: WL (ALLNEWS) 23697872; Gumisai Mutume, “Trade: Seattle Of-
fers Opportunities for Developing Nations” Inter Press Service (25 August 1999), online: WL
(ALLNEWS) 5950227; see also R. Hegde, Minister of Commerce (of India), ‘Address” (Second
Ministerial Conference of the WTO, Geneva 18-20 May 1998), online: Ministry of Commerce, Gov-
ernment of India
Suggests WTO Help Amend TRIPS Section of Uruguay Round Pact’ (1996) International Environ-
mental Reporter, online: Trade News
“Hegde, ibid.
“See e.g. D. Downes & M. Stilwell, ‘The 1990 WTO Review of Life Patenting Under TRIPS: Re-
vised Discussion Paper-November 1998” Center for International Environmental Law (“CIEL”),
online: CIEL
Advancement Foundation International (“RAFr’), “Are Patents Out of Control? Human Rights and
2000]
ER. GOLD – BIOMEDICAL PATENTS AND ETHICS
Canada has yet to settle on a policy with respect to the patenting of higher life
forms.’6 Currently, Canadian courts are grappling with the issue of the patentability of
a genetically-engineered mouse,” an issue that has already been resolved in the in-
ventor’s favour in both the U.S. and the European Union.” And, while the patent of-
fice grants patents in genes, gene sequences, and cell-lines,” this practice has yet to be
reviewed by a senior court. Meanwhile, the Canadian government continues to study
the question of life-form patenting with no resolution yet in sight.’
The issue of patenting life forms and their components is a large one. It involves
agricultural patents that will affect the food we eat, the introduction of genetically en-
gineered plants and organisms into the environment (usually with unknown conse-
quences), and the nature of the business of agriculture. But the issue also applies to
the patenting of materials that are used to create new medications and develop new
tests, and to the finding of the environmental and social bases of disease. Many of
these materials are of human origin, but some may be derived from plants or animals.
While these two large areas-agriculture and the pharmaceutical industry-have
much in common (often the same companies are involved in both!’) they also raise
unique social and ethical questions given that their ultimate purposes, the provision of
food or of health care, are so different. In this article, I deal only with materials used
to promote human health.
In previous work, I have argued that, while we need to be mindful to establish ap-
propriate economic incentives to encourage biomedical research and development
(the traditional justification for awarding patents), we should not do so at the cost of
to Say
‘No”‘,
Predatory Patents… The Right
protection in these areas.
6 Department of Foreign Affairs and International Trade, “Discussion Paper Intellectual Property
Trade Policy Issues” 1999), online: Department of Foreign Affairs
online: RAF
” President and Fellows of Harvard College v. Canada (Commissioner of Patents) (1998), 146
F.T.R. 279,79 C.P.R. (3d) 98, online: QL (FCJ).
“U.S. Pat. No. 4,736,866 (12 April 1988); E.P.O Pat. No. 169,672 (13 May 1992).
“Patent Rules (1996), SOR/96-423, s.111-13; Canadian Patent Office, Manual of Patent Office
Practice, (1998), s. 16.05.
” “Canada and the Future of the World Trade Organization: Advancing a Millennium Agenda in the
Public Interese’ in Report of the Standing Committee on Foreign Affairs and International Trade
(1999) (Chair. B. Graham), online: Parliamentary Internet
(date accessed: 20 September 1999); Department of
Foreign Affairs and International Trade; Canadian Biotechnology Strategy Taskforce, “CBS Online:
Resource Document 1: Other Related Activities” (1998), online: Industry Canada
” Rural Advancement Foundation International (“RAFr’), “The Gene Giants: Masters of the Uni-
(date ac-
verse?” RAFI Communique online: RAFI
cessed: 25 August 1999).
MCGILL LAW JOURNAL / REVUE DE DROIT DE MCGILL
[Vol. 45
endangering ethical principles and commodifying the human body.’ I have sketched
out an approach to regulating these materials that involves the establishment of inde-
pendent boards to be composed of members of industry, the research community, pa-
tient groups, and the general community to decide how particular human biological
materials should be used?
The approach I proposed with respect to human biological materials can be ap-
plied to all biomedical material (whole plants and animals; human, animal, and plant
DNA; cell-lines; and tissues used primarily in health-related research, prevention, and
treatment). It is also an approach that is best implemented at the international level.
This is so for two reasons. First, social and ethical concerns surrounding biomedical
materials know no boundaries. While different communities around the world may
take different approaches to the social and ethical value of these materials, we can
agree that these values exist and that they are compromised by submitting these mate-
rials to an unregulated market. An international response to the biomedical materials
would thus signal the universal importance of biomedical materials to human culture
and society. Second, the biomedical industry is international, with research and devel-
opment occurring around the globe. A patchwork solution to the ethical and social
concerns surrounding biomedical materials will either result in a patchwork of ethical
and social policies that will be hard for industry to follow or will lead to a flight of re-
search and development to those countries with the least restrictive policies regarding
these materials.
The model that I have proposed, or some other that provides a forum in which to
debate the economic, social, and ethical importance of biomedical materials, could
serve as a basis for Canada’s position in the next round of TRIPs negotiations. Canada
could put this model forward as a compromise between the rigidly market-based ap-
proach of the United States, Japan, and the European Union and the more interven-
tionist approach of India. This position is in line both with Canadian policies on
medical care (an approach based on a combination of a market and state intervention)
and on the inclusion of ethical and social concerns in relation to the renegotiation of
the TRIPs Agreement’ as well as with Canada’s reputation for mixing a U.S.-style
economic approach with more egalitarian and communitarian concerns.’
Despite its economic and social importance, it will likely be years before the in-
ternational community reaches a consensus on the patentability and scope of patent-
” E.R. Gold, Body Parts: Property Rights and the Ownership of Human Biological Materials
(Washington, D.C.: Georgetown University Press, 1996) [hereinafter Body Parts]; E.R. Gold, “Mak-
ing Room: Reintegrating Basic Research, Health Policy, and Ethics Into Patent Law” in T. Caulfield
& Williams-Jones, eds., The Commercialization of Genetic Research: Ethical, Legal, and Policy Is-
sues (New York: Kluwer Academic/Plenum Publishers, 1999) 63 [hereinafter “Making Room”].
“”Making Room”, ibid.
4Graham, supra note 20 at c. 9 (“Intellectual Property Rights in the Context of the WTO”).
Interview with J. Elisalde and L. Cordier (26 May 1998).
2000]
E. R. GoLD – BIOMEDICAL PATENTS AND ETHics
ability of biomedical materials.! In the meantime, Canada must settle on a domestic
patent policy to deal with these materials. Canada’s policy must not only be in accord
with its negotiation stance at the TRIPs meetings, but be economically and ethically
practicable while we wait for an international solution. Specifically, the position
should achieve three goals. First, Canada should continue to provide its residents with
access to a health care system that increases quality of life. Second, Canada should
strive to encourage biomedical research and development work in Canada both to
keep high-skilled, high-paying jobs in the country and to maintain independence in
the health care field. Third, ethical, community, and religious views about biomedical
materials ought not only to be respected, but reflected in the ways in which we deal
with those materials in Canada.
In this article, I review several positions Canada could adopt while waiting for the
international community to reach a consensus on the patentability of biomedical ma-
terials. There is a range of four options available: doing nothing (that is, leaving the
question unresolved), implementing a model such as I have proposed, following the
U.S. and European lead of placing these materials fully into the streams of commerce,
or implementing a partial and transitional solution based on Canada’s medicare sys-
tem. I conclude that doing nothing offers the worst of all worlds: it submits biomedi-
cal materials to the market while doing nothing to encourage investment in biomedi-
cal research and development. At the same time, the options of unilaterally imple-
menting my proposed model or of following the U.S., Japdnese, and European lead
are unappetizing: the first because it is unlikely to truly protect ethical and community
values while disrupting the biomedical industry and the second because it would fully
subject biomedical materials to the market. The only solution available, until an inter-
national consensus is reached, is to implement a partial solution based on our medi-
care system.
I. Option #1: Do Nothing (Non-Patentability of Human Biological
Materials)
The easiest thing for Canada to do, while waiting for an international consensus
to develop on the issue of patenting biomedical materials, is to do nothing. The pur-
pose of this would be to keep these materials out of the stream of commerce until the
international community has developed methods to preserve the ethical and social
values inhering in them.
The current round of WTO negotiations, which began in Seattle, Washington in November 1999,
are slated to continue for three years. K. Rockwell, Director, Information and Media Relations, World
Trade Organization, “A Window to the World Trade Organisation: Progress and Opportunities”
(Washington Council on
International Trade, Seattle, Washington, 9 July 1999), on-
line:
(date accessed: 20 September
1999); Washington Council on International Trade, “World Trade Organization (WTO): Q & A”, on-
line: WCIT Web
MCGILL LAW JOURNAL/ REVUE DE DROIT DE MCGILL
[Vol. 45
The “do nothing” approach could be accomplished in one of two ways. The first
is to simply permit the legal limbo in which these materials currently reside to con-
tinue through both legislative silence and resignation about the lengthy legal proce-
dures that will be followed until the Supreme Court of Canada rules on the patent-
ability of higher life forms. Even if the Supreme Court decides the issue, the uncer-
tainty can be preserved through legislative debate or through the establishment of a
committee to investigate the matter. Eventually, Canada would have to decide one
way or another on patentability, but if it chose, it could probably walt for an interna-
tional consensus. Alternatively, Parliament could explicitly provide that some or all
biomedical materials were, at least temporarily, not subject to patent law. In either
case, for the time being at least, biomedical materials would be unpatentable until it
was determined, at the international level, what to do with those materials.
Unfortunately, neither of the alternatives examined above would remove biomedi-
cal materials from the realm of commerce. In fact, it is likely that by completely re-
moving these materials from patent law, even temporarily, we risk subjecting them to
greater commercial pressures than if they were patentable. The reason for this is that
under a patent regime, the patent holder has an incentive to prevent others from using
or selling the material. In terms of a breach of ethical or social value, the only person
whose use of a patent we must worry about is the patent owner. And the patent owner
has at least some (albeit not necessarily strong) incentive to ensure that its use of the
material appears to the public to be in accordance with ethical standards.
If biomedical materials are unpatentable, nobody will have either the ability or the
incentive to control the uses to which these materials are put. This is so because patent
law provides only negative rights. Under patent law, the holder of a patent is given
only the right to exclude others from using the invention, but not the right to actually
use the invention him or herself. The right to use the invention comes from the general
legal principle that what is not prohibited is permitted. To the extent that nobody has a
specific right to prevent one from using an invention, one is free to do so. In the situa-
tion where there are no patent rights in biomedical materials, there will be nobody
with a right to exclude anyone else. Thus, barring legislation or regulation, everyone
will be entitled to use these materials as they will. In such an environment, no one
would have an incentive to be careful about ethical principle.
Canada’s current position of leaving the patentability of biomedical materials un-
resolved, at least if it continues for long, fails to remove these materials from com-
merce and from the potentially negative consequences of that commerce on ethical
and social values. The situation is made even worse since industry would be left in a
state of flux, not knowing whether these materials would eventually be held to be pat-
entable. While industry may hope that strong patent rights will eventually become
obtainable over these materials, it would likely prefer certainty to a long period of un-
certainty.
The solution of keeping biomedical materials outside of the patent system, and
thus out of commerce, does not work. Not only would industry be left unhappy, the
lack of patents would actually lead to greater commercialization of these materials
than if patents were available.
2000]
E R. GOLD – BIOMEDICAL PATENTS AND ETHics
I. Option #2: Go It Alone
If the option of doing nothing is unappealing, Canada could consider implement-
ing a policy that balances the incentive effects of patents with the need to incorporate
ethical and social values into the decision-making process regarding the use of bio-
medical materials. Canada could, for example, implement a model such as I have pro-
posed in my earlier articles or some other scheme where there exists a forum to ex-
plicitly consider ethical and social values.
The model that I have proposed uses one of the great strengths of the patent sys-
tem: the fact that it places the exclusive right to use an invention in the hands of an in-
dividual, company, or organization. This person may use the invention for virtually
any chosen purpose and also can prevent others from exercising the same right. In the
ordinary course of events, patents are used to pursue a profit, but this need not be the
case. A not-for-profit organization may, for example, use an invention for other pur-
poses, such as providing services to the poor or preventing disease. One not-for-profit
organization that holds a patent to a gene (BRCA2), a mutation of which is linked to
an increased incidence of breast and ovarian cancer, decided to use its patent to ensure
that genetic testing is provided free to those in the United Kingdom.”
In earlier articles, I proposed the establishment of a governmental or a non-profit
body (or bodies) that would hold the exclusive rights to research, use, and exploit
biomedical materials. Like the holder of a patent right, this body would be able to
prevent others from using these materials without permission. Unlike ordinary patent
holders, this body would have to adopt a mechanism to consider the ethical and social
values inhering in biomedical materials, with respect to their intended use, in its deci-
sion-making processes. At the same time, economic incentives would be provided to
researchers and industry to invent new therapies, diagnostic procedures, and preven-
tive measures.
Under my proposal, all decisions of this body, with respect to the use of biomedi-
cal materials, would be made by a panel or board consisting of representatives from
industry, the research community (scientists and managers of government or univer-
sity laboratories), government (Industry Canada, Health Canada, the provincial health
ministries, and the provincial health insurance plans), patient groups (particularly
those whose illness or disease is linked to the particular material in question), and the
general community (representatives from the general public, environmental groups,
religious groups, etc.). The body may have one or multiple boards, depending on the
degree of diversity of the materials controlled by the body. While too large a number
of boards would be unwieldy, it seems preferable that the boards are at least some-
what specialised either by type of material or by use of material.
The board would need to make decisions fairly efficiently in order to respond to
the needs of researchers and industry. Thus, the board should be kept small with em-
27 Interview with M. Stratton (12 December 1998). Dr. Stratton was one of the investigators who
discovered the BRCA2 gene.
MCGILL LAW JOURNAL!REVUEDE DROITDE MCGILL
[o.45
phasis placed on general policy, rather than case-by-case reviews. These policies
would, for example, establish the ethical requirements imposed on all researchers us-
ing the material (the nature of informed consent, compensation of donors, require-
ments for genetic counselling, etc.), the uses of any licensing revenue received (to as-
sist patient groups, to conduct research into environmental or public health measures
that could be undertaken to prevent the occurrence of disease, public education, etc.),
and limitations on the uses of the materials (for example, prevention of sex selection,
human cloning, etc.). Some of these policies would probably be appropriate for a
wide range of materials and research; some will be more finely directed at the par-
ticular issues involved with a specific disease or material type.
So far, I have only discussed the role of these bodies and boards with respect to
the ethical and social values inhering in biomedical materials. Of equal importance is
the establishment of economic incentives for researchers and industry to conduct fur-
ther biomedical research and to distribute the results (information, tests, medications)
of that research to relevant communities. To accomplish this, we return to the bargain
underlying patent law: through the grant of limited monopolies to exploit the com-
mercial value of an invention, researchers and industry are motivated to invent more.
At the same time, these monopolies must not be so large as to stifle research through
the grant of too many overlapping rights (the so-called tragedy of the anticommons)
or to interfere with the board’s ability to preserve ethical and social values.
Appropriate economic incentives to encourage biomedical research need not be
the broad rights granted to a patent holder. As I discussed in previous work, there are
significant reasons to believe that the economic incentives granted to inventors of
biomedical materials are too strong.’ A more limited monopoly right would likely
provide a sufficient economic incentive to conduct biomedical research without either
stifling other research or compromising ethical and social values. This limited right
could, for example, take the form of an automatic right held by the inventor to be
granted a licence to use the invention in respect of certain fields of use. If sufficiently
narrow, the licence could be exclusive; if broad, a non-exclusive licence would be
more appropriate, perhaps with restrictions placed on the board’s right to licence to
competitors or with an accompanying right of first refusal over the grant of additional
rights that the board may give from time to time.
The suggestion that more limited monopoly rights be granted instead of greater
monopoly rights runs counter to industry requests to “strengthen” the patent system
by giving industry greater rights.” Industry’s general argument is that the stronger we
” See M.A. Heller & R.S. Eisenberg, “Can Patents Deter Innovation? The Anticommons in Bio-
medical Research” (1998) 280 Science 698.
2, “Making Room”, supra note 22.
See e.g. C. Ludlam, Vice President for Government Relations, Biotechnology Industry Organiza-
tion (“BIO”), “Patent Term Amendments to Protect Diligent Patent Applicants and 18 Month Publica-
don of Patent Applications” (Testimony before the Courts and Intellectual Property Subcommittee,
House Judiciary Committee, 26 February 1997) online:
2000]
E R. GOLD – BIOMEDICAL PATENTS AND ETHICS
make the patent system, the more innovation will take place in Canada. But stronger
patent rights may actually undermine the amount of innovation that is likely to take
place.’
The argument for greater patent protection should be understood for what it is: an
attempt to maximize profit, not to maximize levels of innovation. Clearly, a company
would prefer to have as large a monopoly as possible. This gives it ultimate control
over how and when to market its product and the ability to garner monopoly profits 2
But patent law is not about individual profit maximization; it is about maximizing the
overall level of innovation in society. The two do not necessarily go together. We can,
for example, maximize profit by extending patent terms and the nature of rights at-
tached to patents, but we do so at the cost of impeding others from conducting re-
search. Thus, our goal is to not to maximize profit, but to establish appropriate eco-
nomic incentives to induce researchers and industry to invest in the research and de-
velopment needed to invent and bring to market new health-enhancing discoveries.
The level of incentive required to induce sufficient research and development in
the biomedical field is unknown.’ Statements to the contrary are mere acts of faith
based on uncertain or self-serving empirical evidence.’ Nevertheless, I suspect that
the grant of an exclusive licence in a narrow field of use (for example, using a gene to
develop a screening test or to develop a vaccine) or a non-exclusive licence over a
larger field of use (for example, all diagnostic uses of a gene) should be sufficient to
achieve appropriate levels of investment in biomedical research.’ This is because
smaller biotechnology companies will, as part of their normal business planning proc-
ess, focus on a narrow field of use anyway. Larger companies have several methods,
besides patents, to protect their market shares, such as relying on their reputations,
contacts, and existing distribution channels.
‘
(date accessed: 25 August 1999); E.S. Micek, Chairman of Cargill, Inc., and Chairman of the Emer-
gency Committee on American Trade (Testimony before the House Ways and Means Trade Subcom-
mittee Hearing on U.S. Negotiating Objectives for the WTO Seattle Ministerial Meeting, 5 August
1999), online: WL 20011148.
3 Heller & Eisenberg, supra note 28; “Making Room”, supra note 22.
2 While a company may use this control unwisely, and thus fail to profit as in the case of the mo-
nopolies held by Sony in Betamax videotapes or Apple with respect to its Macintosh computers, no
company would admit that it would use its monopoly except to maximise profit for its shareholders.
See PH. Lewis, “Clan Macintosh Feels the Pain” The New York imes (2 April 1998) G1.
” See “Making Room”, supra note 22.
3, bid.; J. Mokyr, The Lever of Riches: Technology Creativity and Economic Progress (New York-
Oxford University Press, 1990) at 251-52; R.C. Levin et aL, “Appropriating the Returns from Indus-
trial Research and Development’ in Brookings Papers on Economic Activity 783 (special issue vol. 3)
reprinted in E. Mansfield & E. Mansfield, eds., The Economics of Technical Change (Brookfield, VL:
Edward Elgar Publishing, 1993) at 247, 275; RP. Merges, “Uncertainty and the Standard of Patent-
ability” (1993) 7 High Tech. LJ. 1 at 5; D.C. Mowery & N. Rosenberg, Technology and the Pursuit of
Economic Growth (New York: Cambridge University Press, 1989) at 293-94.
Levin, ibiL; contra, R. J. Gilbert & C. Shapiro, “An Economic Analysis of Unilateral Refusals to
License Intellectual Property” (1996) 93 Proceed. Nat’l Acad. Sci. U.S.A. 12749.
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It will generally be appropriate for automatic licencees of biomedical materials to
pay some form of licence fee. This fee may be low and simply cover operating costs,
such as the legal expenses and government fees involved with prosecuting and main-
taining the exclusive right over the material. It may also be appropriate to charge a
higher licence fee: one that provides the board with the ability to fund other research
projects.
The ability to sanction alternative research projects is one area in which the board
can take affirmative steps to enhance ethical and social values. While its general poli-
cies with respect to research can help maintain these values, the board’s ability to li-
cense and fund projects will ensure that the board contemplates broad health policy
and social policy goals in its deliberations. For example, as I have explained else-
where, market forces are likely to lead to an under-investment in finding ways to pre-
vent disease, even though prevention has historically been a more efficient means of
increasing health status than has therapy. ‘ The board could, for example, use the fees
it receives from a therapeutic licensee to fund research into environmental contribu-
tions to disease. The goal of this research would be to reduce environmental contribu-
tion to disease and thus prevent or reduce the occurrence of disease in the population.
In this way, the board can balance the uses to which biomedical materials are put.
This model is not without its difficulties. One of the prime difficulties is the
method of choosing representatives to sit on the board. The board must at once repre-
sent the different interests involved with the biomedical material without being so
large that it fails to reach a decision. The board must also be protected from being
taken over by interest groups who seek control to pursue a narrow set of goals. These
difficulties are not unique to these boards and, in fact, are shared by many other deci-
sion-making bodies, from legislatures, to commissions, to ethics boards. Thus, while
this concern is important, it is far from intractable.
I believe that this model is an appropriate one for Canada to advocate at the up-
coming TRIPs negotiations. It provides both economic incentives and a forum in
which to debate the ethical and social values inhering in biomedical materials. Fur-
ther, it provides a way to use the power of exclusive use to pursue ethical and social
goals rather than taking a passive regulatory approach to these goals.
Despite the strengths of this model in the international setting, I do not believe it
is an appropriate route for Canada to follow unilaterally. Canada should only imple-
ment this model once it has been agreed upon at the TRIPs negotiations. The reason
for this conclusion is not an obvious one. For example, the argument that people will
simply avoid patenting biomedical materials in Canada to avoid this scheme is with-
out merit. Inventors are unlikely to avoid patenting in Canada since these inventors
will still get more protection by submitting to the scheme than by doing nothing. First,
the inventor will be entitled to use the invention in its chosen field of use. Second, the
fact that the board has exclusive rights over the material means that the inventor’s
6Body Parts, supra note 22 at 36-37.
2000]
E. R. GOLD – BIOMEDICAL PATENTS AND ETHICS
competitors will not automatically have the right to use the invention. This is, in itself,
a market advantage. Even if inventors decided, however, not to submit to this scheme,
Canada could provide in its legislation that the government could apply for the patent
in the place of an inventor whenever the inventor applied for a similar patent else-
where. This way, there would really be no way to avoid the scheme.
Nor is the reason for my reluctance to recommend this scheme for Canada while
waiting for an international consensus to emerge based on any concern that the level
of innovation would decrease in Canada. As argued before, there are sufficient rights
being granted to inventors to encourage them to invent. But in the end, this does not
matter because the patentability or non-patentability of a particular biomedical mate-
rial in Canada is unlikely to affect levels of research and development in Canada. This
is because those who are interested in commercially exploiting a biomedical invention
will want to do so in the principal world markets: the United States, Europe, and Ja-
pan. Given the relative insignificance of the Canadian biomedical market, whether or
not inventors get Canadian patents is almost irrelevant. Since an invention made in
any country that is a signatory to the Paris Convention for the Protection of Industrial
Property’ or the TRIPs Agreement can be patented anywhere,” the real determinant of
whether research is conducted in Canada is not Canadian patent rights but access to
researchers, research facilities, and know-how within Canada. This lack of connection
between the strength of patent rights and the level of innovation in Canada can be
easily illustrated. In 1993, the pharmaceutical industry promised Canadian researchers
that, in return for their support for Canada extending patent terms from 17 years to 20
years, the industry would invest $200 million in university research. Even though
Canada extended patent terms, industry invested barely half of the promised amount.”
This failure is hardly compatible with an assumption that with strengthened patent
rights, industry will invest more in research and development in Canada.
Therefore, Canadian patent law is, at best, loosely connected with the amount of
biomedical innovation occurring in Canada. The only exception to this may be in rela-
tion to treatments and procedures that are unique to Canada. In these limited cases, Can-
ada may be a significant market for the product. These cases can, however, be treated
separately from the ordinary patent system through orphan drug-type legislation. ‘
This lack of relevance of the Canadian market points, however, to the problem
with Canada implementing the proposed model with respect to biomedical materials
in the absence of an international consensus. The model would likely fail to truly
promote the ethical and social values for which it is designed because research and
development based on biomedical materials occurs throughout the world. In the ab-
sence of an international consensus to the contrary, research undertaken in the rest of
the world may well be conducted without regard to ethical and social concerns. Nev-
20 March 1883,74 U.KF.S. 44 as rev’d at Stockholm on 14 July 1967.
TRIPs Agreement, supra note 2, art. 4.
W. Kondro, “Drug Industry Misses Target for Funding Work on Campus” (1997) 275 Science 23.
4’See e.g. 21 U.S.C.A. 360cc.
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ertheless, the results of that research would find its way into Canada as medications,
services, and other end-products that do not, in and of themselves, violate ethical or
social concerns.
The implementation of the proposed model will not, therefore, lead to harm, but
simply be ineffective in ensuring that ethical and social concerns are addressed. Thus,
while there is no danger to Canada by implementing such a scheme before other
countries follow suit, there is also little advantage to doing so. Because the proposed
model might not be implemented internationally, Canada might have to adopt a new
model later on in conformity with whatever international consensus was reached. This
problem, combined with the difficulties in establishing the model internally (the need
for consultation, balancing of interests, drafting and passage of legislation, etc.) and
the absence of tangible benefit, would make it unwise for Canada to implement the
model unilaterally.
Ill. Option #3: Follow the American and European Leads
If industry had its way, Canada would neither adopt a “do nothing” approach nor
implement a model that gives industry less than the most robust patent rights in the
world. What the biomedical industry would prefer is for Canada to follow the leads of
the United States, Japan, and the European Union in permitting the grant of patent
rights over all biomedical materials!’ Industry believes that’patent rights as strong as
those in the United States, Japan, and the European Union are necessary in order to
stimulate biomedical research and development in Canada and to increase the ability
of Canadian biomedical companies to compete worldwide. Patents stimulate innova-
tion by offering those who invest in research and development a way of recouping
their costs and making a profit during the time when they alone can market the inno-
vation.” Patents also attract investors to small companies as they provide an objective
standard of the science behind the innovation and provide for a monopoly period
during which the investor can hope to profit.’ While biomedical innovation does raise
ethical and social issues, these issues do not relate to patenting, but to the manner in
4 National Biotechnology Advisory Committee, Sixth Report, (1998) at c. 4 (“Market Access, In-
tellectual Property: Rights and Regulation”), online:
Industry Canada
“Potential Impacts of Patenting Lifeforms on the Aquatic Products Sector in Canada” at 4 (“Protect-
ing
Industry Canada
Intellectual Property”), online:
2 See H.E. Bale, Jr., “Patent Protection and Pharmaceutical Innovation” (1996) 29 N.Y.UJ. Int’l L.
& Pol. 95; Danish Council of Ethics, Patenting Human Genes: A Report (Copenhagen: Danish Coun-
cil of Ethics, 1994) at 32-33.
” Blewett & MacDonald, supra note 41 at 5 (“Patenting Higher Life Forms”).
2000]
E. R. GOLD – BIOMEDICAL PATENTS AND ETHics
which the innovation is used. Thus, patent law is not, according to industry, the place
to deal with these ethical and social issues.”
This approach is probably best implemented through a combination of federal
legislation and court decisions expanding the scope of patent coverage. Parliament
could, for example, amend the Patent Act’ in a manner similar to the European Di-
rective on biotechnology.” This legislation would state that, provided that the patent
criteria of novelty, utility, and non-obviousness are met, a biomedical invention is pat-
entable in Canada. We may also wish to follow the European lead of acknowledging a
morality clause in the Patent Act that would hold a very limited number of innova-
tions to be unpatentable because they violate narrow moral principles (for example,
innovations linked to eugenics).’
While the legislation may also address some technical aspects of patent law (the
provision for the deposit of biomedical materials, refining the meaning of utility), the
actual manner in which patent law would apply to biomedical inventions would be
left to the courts. That is, courts would address issues such as the amount and nature
of disclosure required, what constitutes novelty in the context of biomedical innova-
tion, and the proper interpretation of the morality clause. Whether Canada proceeds
by court decision alone or by a combination of legislation and court decision, Canada
would soon conform with the standard of patent rights established in the United
States, Japan, and the European Union with respect to biomedical materials. There are
serious problems with this approach, stemming from its underlying assumptions and
extending to the claim that ethical and social issues do not relate to the patenting of
biomedical materials.
As discussed earlier, there is little reason to believe that the grant of patent rights
in Canada will actually stimulate research and development in Canada. There are two
reasons that this is so.
First, there is little evidence that patents actually increase the level of innovation
at all;” for all we know, biomedical patents may actually decrease the overall level of
innovation. There are many reasons why people invent and, while patents may en-
courage some, they may also prevent others who are discouraged by the patent anti-
commons discussed earlier. To the extent that evidence exists of a link between pat-
ents and innovation, it is based on the self-serving opinions of biotechnology and
2:7 Nature Medicine (July 1996) 728.
“Ibid. at 6 (“Conclusions and Recommendations”); A. Marcus, “Owning a Gene: Patent Pending”
4″R.S.C. 1985, c. PA.
“Directive, supra note 11.
41Ibid. at 18, art. 6.
” Mokyr, supra note 34 at 247-52; Levin et aL, supra note 34 at 275; Merges, supra note 34 at 5;
Mowery & Rosenberg, supra note 34 at 294.
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pharmaceutical leaders who would evidently personally benefit from an increase in
patent protection. ‘
There are, in fact, some concrete examples of biomedical innovation proceeding,
and proceeding quickly, at the costs of many millions of dollars, without the avail-
ability of patents. The Human Genome Project, the international project to map all the
genes in human beings, was originally scheduled for completion in 2005. Due to se-
vere competition from the private sector, that schedule has been moved up to 2000 for
a preliminary draft and 2001 for a final draft of the human genome!’ All this is being
done without the likelihood of patents being available on the vast majority of the
genes discovered through this study. A consensus has emerged within the patent
community that genes will be unpatentable unless the discoverer can point to a con-
crete use of these genes’ Since the current stage of the Human Genome Project aims
at sequencing the genes, but not describing their function, most genes will be unpat-
entable.
Second, given the global nature of biomedical knowledge, even if patents do en-
courage research and development, Canadian patent rights are unlikely to have a sig-
nificant incentive effect given the small size of the Canadian economy. Canadian en-
terprise will be far more affected by United States, Japanese, and European patent
rights than by Canadian patent rights. Provided that Canada stays on-side of the WTO
agreements, there is no reason to believe that these other countries will withhold pat-
ent rights in biomedical materials from Canadian companies even if those rights are
not granted here. So far, even though Canada does not issue patents on higher life
forms, there is nothing to stop a Canadian from applying for and being granted a pat-
ent on a higher life form in the United States.
The assumption that investors are drawn to companies with patents is also over-
stated. It is generally assumed that a public company’s stock price increases when that
company announces the grant of a patent.” But like any other phenomenon in the
market, this should be taken with a grain of salt. Almost any event may lead to short-
term fluctuations in the market; what is important is not a short-term gain, but long-
term trends in a stock. Isolating the effect of any one event, like the grant of a patent,
on this long-term trend is impossible. And it is the long-term trend with which we
should concern ourselves, not the profit available to arbitragers or day-traders from a
public announcement that a patent has been granted.
” “Making Room”, supra note 22.
‘ C. Wills, Exons, Introns, and Talking Genes: The Science Behind the Hwnan Genome Project
(New York: Basic Books, 1991) at 10.
” N. Wade, “One of 2 Teams in Genome-Map Race Sets an Earlier Deadline” The New York Times
(16 March 1999) A21.
52See Directive, supra note 11 at 18, art. 3(1) & 5(3).
‘ See e.g. “BIOSPHERICS INC.: Stock Price Soars on News of Patent for D-Tagatose” The Wall
Street Journal (7 September, 1995) Business Brief.
2000]
E. R. GOLD – BIOMEDICAL PATENTS AND ETHIcs
Investors look at a large number of factors in deciding whether to invest Highest
on the list of factors is the background and skill of management. A company with a
wonderful invention, strong patents, and good market prospects but poor or inexperi-
enced management is probably a bad investment choice. Some of the other factors
that investors look for in choosing a company in which to invest include market size,
marketing strategy, distribution channels, and exit strategy?’ Patents certainly are a
factor, but so too are any market advantages (tradename, market lead, backing by an
established company, etc.)?” While the failure to hold a patent in a field where all
one’s competitors hold patents may discourage some investment, the same is unlikely
in areas where patents are rare or unavailable.
It is also wrong to conclude that there is no link between the patent system and
the ethical and social values inhering in biomedical materials. For example, as I have
discussed elsewhere,” the patent system deeply affects health policy in a number of
ways. One area where this occurs is genetic testing. These tests tell a patient whether
she or he carries a genetic mutation that, statistically, increases that patient’s chances
of contracting a particular illness. Patent law encourages those who hold patents over
the underlying gene to create these tests and to distribute them as widely as possible.
While good health practice would place significant limits on the use of the tests (so
that only those that are at a substantial risk of carrying the genetic mutation receive
the tests and that all those who take the tests receive genetic counselling to help them
interpret the results) the patent holder has a strong incentive’to ignore or at least push
these limits.”
A patent owner can only profit from a patent if he or she sells a good or service
based on that patent. In biomedical research, this means that the owner of a biomedi-
cal material will profit only if he or she uses that material to create a medication, a
test, or a service that can be sold to patients, or if the owner sells the material to re-
searchers who in turn use it to develop a medication, test, or service. Thus, patent
owners have a strong economic incentive to pursue research that is most likely to lead
to profit. Unfortunately, not all necessary and good health research is likely to deliver
this profit. Public health measures such as better sanitation, ensuring that children eat
‘4 See R Standeven, “Financing Canadian Software Company Development Observations and
Trends” in Financing Your Software or Multimedia Company (Ottawa: Industry Canada, 1998), on-
line: Industry Canada
(date accessed: 9 September
1999).
mIbid
5Ibid; Industry Canada, Demonstrate Your Investment Potential, online: Industry Canada
57Industry Canada, ibid.
” “Making Room”, supra note 22.
‘9 In ER. Gold, “Hope, Fear, and Genetics: Judicial Approaches to Biotechnology” 83 Judicature
132 at 134-35, 1 discuss the example of the test for a mutation in the BRCAI and BRCA2 genes, both
linked with breast and ovarian cancer. The example illustrates that where the patent owner is a for-
profit company, these limits are much more likely to be stretched.
MCGLL LAW JOURNAL/ REVUE DE DROIT DE MCGLL
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well, and education do not lead to profit, at least not profit linked to a patent. But
public health measures have done far more to increase health than has treatment. The
patent system is, unfortunately, blind to this. It merely encourages research into areas
where profits can most easily be made, not research most likely to increase overall
health.
Following the lead of the United States, Japan, and the European Union is not
only unlikely to encourage biomedical research and development in Canada, it also
threatens the construction of a sound health policy within Canada. This approach per-
petuates and entrenches the very market forces that endanger the ethical, health, and
social concerns related to biomedical materials. In addition to these negative conse-
quences, this approach would undermine Canada’s ability to argue for a more careful
approach to biomedical materials in the upcoming TRIPs negotiations. If Canada sup-
ported a purely economic approach to patenting biomedical materials within its own
borders, it could hardly call on other countries to incorporate ethical and social con-
siderations into international patent law.
Option #4: Use the Medicare System
As discussed in previous sections, the right of exclusive use is one of the strongest
provided by the patent system. It provides the patent owner with the ability to prevent
competitors from entering the field for a period of twenty iears, thus opening up the
opportunity to recoup costs and make a profit without fear of direct competition. In
Canada there is, however, another regulatory scheme that impacts on the patent
holder’s ability to sell her product or service: the medicare system.
The largest purchasers of medications and health tests and services in Canada are
the provincial medicare systems. While patients, in consultation with their physicians,
actually decide which medications, tests, and services to use, it is the provinces that
determine which of these medications, tests, and services will be covered by the pro-
vincial health insurance plans.” There will be a financial incentive for physicians and
patients to choose medications, tests, and services covered by these plans. Thus,
where there is a choice between a medication, test, or service listed for payment or
reimbursement by the provincial plan and a medication, test, or service not listed by
the plan, patients will tend to choose the former. So while nothing prevents a patient
from choosing any medication, test, or service (provided that it has been approved for
use in Canada), for practical reasons, patent owners will find it more difficult to sell
medications, tests, and services that are not covered by the provincial health plans.
Given the purchasing power of the provincial health insurance plans, vendors of
medications and biomedical tests and services will have a strong incentive to ensure
that their medications, tests, and services are listed for payment or reimbursement by
Body Parts, supra note 22 at 37.
61 For example, in Ontario see Health Insurance Act, R.S.O. 1990, c. H.6, ss. 10-11.
62 See Food and Drugs Act, R.S.C. 1985, c. F-27, s.12.
2000]
E R. GOLD – BIOMEDICAL PATENTS AND ETHIcs
those plans. This practical need for provincial-government approval provides Canada
with a unique (at least as compared with the United States) opportunity to incorporate
ethical considerations into debates over the use of biomedical materials. The provin-
cial insurance plans could, as a condition to listing a medication, test, or service, re-
quire the vendor of that medication, test, or service to conform to requirements de-
signed to encourage discussion of ethical considerations.
There are two sets of ethical considerations that apply to a particular test, service,
or medication. First, there are ethical concerns arising from the research that led to the
test, service, or medication. These include standard concerns over informed consent,
environmental safety, and animal welfare.’ Given the nature of human biological ma-
terials, these concerns also include the rational development of health policy, equity of
access to health services, and the commodification of the human body.” Second, there
are ethical concerns that arise from the administration of the test, service, or medica-
tion itself. For example, the provision of genetic testing raises ethical issues such as
the premature implementation of the test, the population that ought to receive the test,
who (family, employers, insurers) ought to have access to the results of the test, and
how the test results ought to be communicated and interpreted. Any scheme that we
develop ought to address both sets of ethical considerations.
To a certain degree, the question of to whom a medication, test, or service ought
to be offered is already one of the foci of decisions related to the listing of new tests,
services, and medications under the guise of medical necessity.” While vague, the no-
tion of medical necessity means that only those tests, services, and medications with a
demonstrated level of utility to the patient ought to be covered by the health insurance
plans. The vagueness of the notion becomes apparent once one starts asldng what
level of utility must be demonstrated, how that utility is to be demonstrated, what
counts as utility to the patient, and whether it is appropriate for society to place any
limits (for financial reasons, for example) on providing that level of utility to patients. 7
What I suggest here is that we apply a broader standard than medical necessity in
determining whether a test, service, or medication is approved for coverage under the
provincial health insurance plans. I believe that it would be appropriate for us to look
See e.g. Tri-Council Policy Statement, Ethical Conduct for Research Involving Humans (Ottawa:
Medical Research Council, August 1998); Canadian Council on Animal Care, Guide to the Care and
Use of Experimental Animals, vol. 1, 2d ed., (Ottawa: Canadian Council on Animal Care, 1993);
Health Canada, Laboratory Biosafety Guidelines, 2d ed. (Ottawa: Minister of Supply and Services
Canada, 1996) (Editor M.E. Kennedy).
” See generally, Body Parts, supra note 22.
6′ See T.A. Caulfield, “The Commercialization of Human Genetics: A Discussion of Issues Rele-
vant to the Canadian Consumer” (1998) 21 J. Consumer Pol’y 483; K. Birmingham, ‘”Myriad’s Ra-
tionale for Wider Testing” 3:7 Nature Medicine (July 1997) 709; 0. Smith, “Breast Cancer Suscepti-
bility Tests Still Valid, Companies Argue’ 3:7 Nature Medicine (July 1997) 709.
“T.A. Caulfield, “Wishful Thinldng: Defining ‘Medically Necessary’ in Canada” (1996) 4 Health
LJ. 63 at 84 [hereinafter “Wishful Thinking’].
67Ibid, at 70-85.
MCGILL LAW JOURNAL/ REVUE DE DROIT DE MCGILL
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at the overall contribution of a test, service, or medication to the health care system as
a whole, and not simply to the individual receiving the test, service or medication be-
fore deciding to list it as an insurable expense. In particular, I suggest that tests, serv-
ices, and medications based on or produced using biomedical materials only be listed
if the person having patent rights (directly or through licence from the patent holder)
to the biomedical material demonstrates that ethical concerns have been appropriately
dealt with. These concerns would include requirements related to the conduct of the
research leading to the development of the medication, test, or service (informed con-
sent, animal welfare, etc.), to .the availability of the biomedical material to other re-
searchers on an equitable basis, and to the manner in which the medication, test, or
service is marketed and distributed. For example, the vendor may be required to dem-
onstrate that university researchers and competitors have access to the biomedical
material to develop preventative measures or alternative therapies to the illness in
question. In the case of genetic tests, vendors could also be required to establish that
their marketing is limited in scope, that all those who take the test will be given ge-
netic counselling, and that issues of family access to the results of the test be dis-
cussed with patients prior to the administration of the test.
The advantage of using the medicare system rather than domestic patent legisla-
tion is that the former permits us to address a wider scope of ethical concern than does
patent law. The reason for this is that domestic patent legislation is territorially limited
since it can only deal with activities taking place in Canad. The medicare system is
not so inherently limited: we could, for example, deal with ethical breaches in both
the research and development stage as well as in the sale and administration of medi-
cations, tests, and services whether occurring in Canada or elsewhere. Thus, unlike
the patent system, medicare policy can effectively catch unethical activity regardless
of where it takes place.
The medicare system can respond to ethical concerns through the process of list-
ing medications, tests, and services for payment or reimbursement under provincial
health insurance plans. In particular, provincial legislation could address both types of
ethical concern raised earlier, namely, those related to the research and development
of the underlying biomedical material (informed consent, equitable sharing of the fi-
nancial and other benefits of the research, and prevention of harm to animals and the
environment) and those attaching to the actual marketing and sale of the medication,
test, or service (definition of population to receive the medication, test, or service, re-
quirements for genetic counselling, and sharing of results with family and other inter-
ested parties). If the vendor of the medication, test, or service cannot establish that the
biomedical material underlying its medication, test, or service meets both sets of ethi-
cal concerns, the medication, test, or service would not be listed for payment or reim-
bursement.
There are two potential hurdles to overcome in implementing a medicare-based
solution to the ethical concerns raised in this article. The first is the anticipated reac-
tion of patients who suffer from an illness that may benefit from treatment from the
medication, test, or service. The result of the solution proposed above is that a medi-
cation, test, or service can be effectively denied (through non-coverage) to a Canadian
patient even where that medication, test, or service is medically necessary from that
2000]
E R. GOLD – BIOMEDICAL PATENTS AND ETHICS
patient’s point of view. That is, patient groups will most likely, and quite naturally, fo-
cus on their own needs and will measure medical necessity in terms of that.
The response to these patients groups is that medical necessity ought not to be de-
fined solely in terms of individual patient needs, but also in terms of the health care
system as a whole. While the needs of patients is certainly of high importance, of
equally high importance is the stability of the entire system. That is why we accept
rationing of services and wait lists. Nobody likes to wait to receive an operation or
treatment, but we accept it because we cannot do everything for everyone at the same
time. We accept that it is in the interests of the health care system as a whole, and thus
in our own interests in the long run, that the system be operated for the benefit of all
rather than each and every individual. On this view then, it is appropriate not to list a
medication, test, or service where to do so undermines the integrity of the health care
system as a whole. Given the trust relationship implicit in the provision of health
services, a breach of ethical considerations may well result in undermining public
confidence in the health care system.
Despite the force of this argument, several trial-level court decisions place it in
doubt. In Canada, both legislation and court decisions make it clear that medical ne-
cessity, narrowly defined, is to be considered in determining whether a particular
medication, test, or service is to be listed for payment or reimbursement under provin-
cial health insurance plans.” Courts have interpreted the notion of medical necessity
to be synonymous with whatever the physician recommends’ and are unsympathetic
to claims that the health care system has insufficient resources to provide all services0
One recent Ontario decision required, for example, the provincial government to pay
for genetic tests for mutations in the two genes related to breast cancer despite the
significant costs of the test.’ If provincial governments, therefore, agree to include
factors other than patient benefit in the decision to list a medication, test, or service
under provincial health insurance plans, they will need to pass clear legislation to
specify that these factors are to be considered.
The second difficulty presented by the proposal of using the medicare system to
resolve ethical concerns is one of harmonisation. Given that health care falls within
provincial legislative jurisdiction, each province could, in theory, set up its own
scheme under which different standards are set with respect to the ethical concerns
raised in this article. While the list of insured services varies from province to prov-
Canada Health Act, R.S.C. 1985, c C-6, s. 2.; Regulations under the Health Insurance Act,
R.R.O. 1990, Reg. 552; Stein v. Qudbec (Rigie de l’Assurance-malade) [1999] QJ. No. 2724 (Sup.
Ct.), online: QL (QJ); C. Abraham, “Tenacious Woman Scores Medical Victory: Fiona Webster’s
Fight Opens Access to Genetic Breast-Cancer Test” The Globe andMail (27 August 1999) Al.
“Wishful Thinidng’, supra note 66 at 76.
7a See Estate ofLaw v. Simice (1994), 21 C.C.L.T. 2d 228, B.CJ. No. 979 (S.C.), online QL (BCJ).
7′ Abraham, supra note 68.
McGiu LAW JOURNAL!REVUEDE DROITDE MCGILL
[Vol. 45
ince today,” the situation would likely be worse if provinces were to adopt different
ethical standards. This could give rise to a real patchwork of health care coverage
across the country and a concomitant movement of patients from one province to an-
other to take advantage of the differential standards.
Federal legislation could provide some assistance in bridging the gap between
provinces. While health care is not within federal jurisdiction, the federal government
can, through its spending powers, influence provincial policy on health care. A more
direct approach, and one less likely to raise provincial ire, would be for the federal
government to pass enabling legislation should the provinces agree to participate. This
legislation could establish a framework of ethical considerations or, better still, a pro-
cess to reach consensus on the ethical considerations that provincial health insurance
plans could adopt in deciding whether to list a particular medication, test, or service.
Those provinces wishing to participate could then, as a condition to listing a medica-
tion, test, or service involving biomedical materials, require that those materials meet
the ethical standards adopted through the federal legislation.
By using the power of defacto control on the sale and distribution of medications,
tests, and services within the province, provincial health insurance plans can go a long
way to ensure that ethical concerns have been addressed with respect to research and
development, and marketing and distribution of the products of biomedical materials.
While not all provinces may opt to participate in the plan, one can hope that the pres-
ence of a federal standard will at least alleviate great differences between the prov-
inces.
Conclusion
In the period leading up to the renegotiation of the TRIPs Agreement, Canada
must formulate a policy with respect to rights in biomedical materials that satisfies
three goals. The first is to provide Canadians with ongoing access to health medica-
tions, tests, and services where this access is likely to increase quality of life. This
means that there must either be an economic incentive to sell these medications, tests,
and services in Canada or some non-market mechanism to ensure that they are dis-
tributed within Canada. The second goal is that Canada continue to foster a strong
biomedical research and development community. This is important not only because
it provides Canada with a level of independence in the health care field, but also be-
cause it is a source of well-paying, highly-skilled jobs. The third goal is to take into
account the diversity of ethical and social concerns regarding biomedical materials in
any decision about these materials.
At first glance, there appears to be a contradiction between economic efficiency
and accounting for diverse values. Economic efficiency does not generally coincide
with actively taking into account a diverse set of views and values. The options of ei-
2 See e.g. Ontario’s list of covered services in Regulations under the Health Insurance Act, supra
note 68.
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ther doing nothing (holding that biomedical materials are not subject to intellectual
property rights) or following the U.S., Japanese, and European lead in holding these
materials to be unreservedly subject to patents do much to allow the market to work
its magic, but undermine any real chance to discuss the values inhering in these mate-
rials. The option of implementing my proposed model, under which biomedical mate-
rials are controlled by non-profit organizations, does better but, in the end, will be un-
likely to address ethical concerns should Canada be the only country to implement the
model. The best option is to use the market power held by provincial health insurance
agencies to negotiate with those supplying biomedical materials or medications, tests,
or services based on those materials for the inclusion of ethical considerations in the re-
search, marketing, and distribution of those materials, tests, and services.
