[Recorded by Electronic Apparatus]
Tuesday, March 4, 1997
.1531 
[English]
The Chairman: I call this committee to order. Pursuant to Standing Order 108(2), we are here to review section 14 of the Patent Act amendment, 1992.
First, there is some housekeeping business to deal with while we await the minister.
Mr. Parliamentary Secretary.
Mr. Bodnar (Saskatoon - Dundurn): Mr. Chairman, I move that the committee retain the services of Alan Alenxandroff as adviser, effective from March 4, 1997, to April 30, 1997, to assist in its consideration of section 14 of the Patent Act.
Mr. Lastewka (St. Catharines): I second the motion.
Mr. Schmidt (Okanagan Centre): What is the function of this person?
The Chairman: As we discussed in the steering committee, it's to help on trade issues and to provide advice.
Mr. Schmidt: So it is to act as a resource person?
The Chairman: Yes, to the whole committee. He will be available for meeting with you next week.
Motion agreed to
The Chairman: Ladies and gentlemen, I know there are people here who would like to know about the witnesses. We'll be having discussions with the opposition parties about this. We have a list of about 150 organizations and individuals who have asked to appear. It's the intent of the committee to be as accommodating as possible. We will discuss amongst ourselves how to proceed.
I have agreement in the committee for all members of the committee that starting next week we'll go into a witness mode, which means that as of next week, quorum is that which we have for seeing witnesses, and not a full committee.
Second, any motions government or opposition members wish to introduce while we're hearing witnesses will be discussed with the chair beforehand.
I'd like to thank the members for being here and for starting on time. On behalf of the Standing Committee on Industry, I would like to welcome the Minister of Health, the Hon. David Dingwall. It's not his first but his second visit to this committee on this very important review. We appreciate the due diligence shown by his department in participating in this review.
I believe, Mr. Minister, you have a short presentation. After about 45 minutes you have to leave for your next assignment in life. Your officials will stay here and be available for questions.
Our committee is scheduled to meet from 3:30 p.m. to 6:30 p.m. and to take a break and continue with Department of Health officials at 7 p.m.
Again, I thank you very much. I now turn it over to you.
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Hon. David C. Dingwall (Minister of Health): Thank you very much, Mr. Chairman.
I am joined today by colleagues André Juneau, assistant deputy minister of the policy and consultation branch, and Dann Michols, director general of the drugs directorate. You will be hearing from these persons later in the presentation. I'm sure when we get to the question and answer session they will want to respond to your interventions.
Mr. Chairman, I'm happy to be here. As you indicated, this is my second occasion to appear before the committee. I want to say at the outset that when Bill C-91 was first passed way back in February of 1993, I, like many other Canadians, was very concerned that it would lead to higher drug costs for governments and, yes, for individual Canadians.
Let me be clear. This government is committed to ensuring that patented drugs are available to Canadians at prices that are not excessive. We also believe the healthy development of the pharmaceutical industry in Canada can benefit our economy and the health of Canadians. We know that as a member of NAFTA and the World Trade Organization our drug patent policy has to conform with international standards of intellectual property rights. The committee's task is to weigh how well Bill C-91 meets the health, industrial and trade policy objectives.
I would like to make clear what my role is as Minister of Health with respect to the legislation and identify some of the health issues that I believe arise from it.
The Patented Medicine Prices Review Board, or PMPRB, reports through me to Parliament. It regulates the prices of patented drugs and ensures that they are not excessive. I understand its chairperson, Dr. Robert Elgie, will be providing you with details on the effectiveness of the board in controlling costs of patented drugs when he appears before this committee later today.
As many of you know, the Patented Medicine Prices Review Board is an independent, quasi-judicial agency. It reports annually to Parliament on price trends of medicines in Canada, the state of the pharmaceutical industry and on the ratio of research and development expenditure to sales by brand-name pharmaceutical companies.
The PMPRB encourages voluntary compliance by manufacturers but also has strong remedial powers. It can order the price of excessively expensive drugs reduced and can levy orders to offset excess revenues received from the sale of a drug at an excessive price. This board has controlled the introductory prices of new drugs. It has kept prices for patented drugs well within the rate of inflation.
Since its creation in 1987, prices of patented medicines have increased, on average, 1.6%, while the average increase in the consumer price index for the same period was 3.1%. The evidence indicates that the board has been effective in controlling the prices of patented - I wish to underline ``patented'', Mr. Chairman - medicines in accordance with factors established by Parliament. According to its recent report, the federal regulation of patented drugs has saved consumers in this country between $846 million and $1.1 billion in 1995 alone.
The other role I have regarding the Patent Act is with the administration by Health Canada of the patented medicines regulations, commonly referred to as section 55.2 of the act. My colleague,Mr. Manley, went into this in great detail.
These regulations govern the conditions under which a drug manufacturer can be given the notice of compliance needed to begin selling of a generic drug. My colleague, the Minister of Industry, has already provided information about these regulations and how they actually work.
Beyond these specific responsibilities, I'm working to preserve and improve Canada's health care system, and drugs are a part of that system.
As we sit here today, Mr. Chairman, drugs are tied with physicians, after hospitals, in terms of the costs in our health care system. Clearly, drugs are a crucial component of the system.
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I am tabling before this committee a paper that provides the facts about drug expenditures as well as further information about the factors that influence overall drug costs: drug prices and, yes, drug utilization.
The paper updates Health Canada's cost estimates to the year 1996 and encompasses all drug spending. Previously our estimates excluded spending on drugs administered in hospitals from total drug expenditures. However, to provide a complete understanding of the role that drugs play in the health system as a whole, I think we must look at the big picture and we must group all drug expenditures together.
With the recent exception of residential care facilities, where major investments have been made over the past two years, expenditures on pharmaceutical products in Canada have been increasing more rapidly than any other health expenditure. But in part due to the controlling effect of the board, the rate of increase has slowed considerably from annual averages of 13%, Mr. Chairman, from 1976 to 1992. It has gone down to 2.7% in 1996.
It is unlikely, though, that drug costs will stop rising. To understand why this is, we have to look at two factors that influence these costs: drug utilization and drug prices.
Seniors, for instance, are currently about 12% of the population, but they use anywhere between 20% and 40% of prescription drugs. As we age - and we all will age, Mr. Chairman, we're certain of that - we are susceptible to more chronic problems for which drug therapy can be very effective. Demographics means that drug utilization will increase, raising the overall drug costs.
Other utilization issues include a trend towards drug therapy instead of other treatment, such as surgery. And I think we might want to reflect on that statement for a moment, Mr. Chairman. It is, in 1997, common knowledge - and common practice in some instances - that drugs can be a good substitute, if you will, for surgery on a particular individual. This is usually a cheaper option, but since the costs are shifted from hospitals and physicians, it shows up as an increased drug cost. As well, switching from older, cheaper products to newer, more expensive ones, which may have improved therapeutic effect, will affect drug costs.
The price of drugs is the other factor influencing total cost. It is tempting to blame high drug costs on patented drugs, but in actual fact they are only a portion of the total drug marketplace. Granted, they are a big market, but they are not the total. Patented medicines represent 44% of drug company sales as of 1995. The price of non-patented drugs, the retail and wholesale mark-ups, and the pharmaceutical dispensing fees all have an effect on overall drug costs, and I don't think,Mr. Chairman, that we ought to lose sight of those particular facts.
It is clear that we want to maintain the high-quality, cost-efficient system that Canadians value. I believe that we ignore the issue of drug costs at our peril. It is equally clear, however, that while Bill C-91 has an impact on drug costs to the extent that it delays the availability of less expensive generic drugs, it is not the sole factor. As I just explained, the price charged by manufacturers for a patented drug is only one of the many factors that can lead to an increase in drug costs.
The provinces, all of whom subsidize drug costs, at least for seniors and people on social assistance, have a direct interest in reducing their drug expenditures. To do this, they have required generic substitution. They have established formularies or lists of drugs eligible for reimbursement, with strict controls on adding new drugs to that list. They have set ceilings on the price they will pay for drugs and the amounts they will reimburse for prescription drug use. They have negotiated limits on pharmaceutical dispensing fees and they have discouraged dispensing drugs in large quantities to minimize these fees.
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Mr. Chairperson, both the federal and provincial governments are concerned about the appropriate and inappropriate use of drugs. A 1995 study estimated that beyond the cost of drugs themselves, inappropriate use of pharmaceutical products costs the health system between $3.5 billion and $4.5 billion each and every year in hospitalization, in physician visits, and in laboratory tests. Seniors are estimated to use anywhere from 18% to 50% of their medication inappropriately. As our population ages, this becomes of increasing concern for health as well as for economic reasons. Educating physicians on alternative, cheaper therapies and educating patients on the correct use of medication is vital to reducing drug costs.
Keeping drug costs contained is important because unlike some other areas of the health care system, a significant portion of drug costs is paid for in the private sector, close to two-thirds as of 1996. Employers in this country are concerned about the impact of rising drug costs on their benefit plans, and rightly so. For many companies, drug purchases account for two-thirds to three-quarters of claims to their health care plans. Their per capita drug expenditure increased by more than 26% between 1990 and 1994. The private sector knows that high drug costs will harm their competitiveness. They affect their ability to grow, to create jobs, and to contribute to public revenue through taxes.
The importance of drug costs to both the public health care system and the private sector has encouraged the federal and provincial and territorial governments to address this issue in a cooperative and meaningful way. Three federal-provincial-territorial task forces are now at work. One is examining prices; another utilization, marketing, consumer education, and wastage; and a third is looking at research and development. Their work will enable the federal and provincial and territorial governments to approach questions of drug use and costs in an integrated and effective way.
The question of research and development is equally as complicated as that of drug costs. Bringing Canadian patent protection for pharmaceuticals in line with that in other industrialized countries has contributed to an internationally competitive climate that encourages companies to invest in research and development in Canada. Pharmaceutical patentees have responded to that improved climate. According to the Patented Medicine Prices Review Board, in 1995 they invested $624 million in R and D, which is the equivalent of 11.8%. The biopharmaceutical sector has also been stimulated. It now consists of an estimated 64 companies and employs close to 4,000 people, including almost 1,600 research staff. Their goal is to develop new and we hope more effective ways of treating health problems, with fewer side effects. It follows, fairly simply, that research and development hold direct benefits for the health of Canadians and for the health care system as a whole.
But research and development are also good for the economy. They create jobs not only for researchers but also for those involved in manufacturing the new drugs, packaging them, marketing them - everything needed to get them from the laboratory to the consumer. We should not underestimate the indirect benefit of economic security on the health of Canadians. If we improve health we decrease the demand on the health care system. This is something we can't afford to forget.
The committee's work is not an easy task; I think that is clear. The government is committed to ensuring Canadians have an opportunity to express their views, and you have a mandate to listen to them.
In closing, Mr. Chairman, I personally attest to the tremendous depth of wisdom and experience that exists in the many stakeholders who will be appearing before you, and I urge you to take the fullest possible advantage of it. They will remind you, I'm sure, that the issues surrounding drug use and costs in Canada are incredibly complex and cannot be addressed solely within the parameters of Bill C-91. I would hope, Mr. Chairman, that you and other committee members will give due consideration to provincial ministers of health who wish to appear before this committee to provide their views on the bill but also that you will ascertain from them what they are doing in their own respective jurisdictions in drug costs, drug utilization, and the host of other issues I have raised.
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Equally important, Mr. Chairman, I hope you will afford senior citizens and the various groups that represent senior citizens in this country the opportunity to come forward and present their views on issues that they believe to be important, including price and also a variety of other things, whether it be dispensing fees, colour and shape, or a whole host of issues associated with that particular piece of legislation.
I am going to table the paper I had made mention of. I also want to table a second paper. This is a background paper I had discussed with the provinces in April of 1996 concerning the powers of the Patented Medicine Prices Review Board. It's called ``An Interdelegation of Powers in the Area of Non-Patented Medicines''.
The PMPRB only has jurisdiction as it relates to patented drugs. They are 44% - only 44% - of the total picture. The Patented Medicine Prices Review Board does not have the power to examine non-patented drugs. They don't have that authority.
Committee members might think it wise and important to give due consideration to the possibility of examining the additional powers that ought to be given to this board. How do we know what prices are in this country for brand-name and generic drugs? I think we should have that kind of information. I think the Patented Medicine Prices Review Board is in a good position to exercise that particular responsibility.
I have presented to the provinces a provision whereby they would delegate to the Patented Medicine Prices Review Board the power to go out and examine in their respective jurisdictions the cost of drugs in, say, the province of British Columbia, or the province of Saskatchewan, or the province of Ontario, so that we could have a full understanding of what the prices are as opposed to this being in the newspapers, one allegation against another allegation, and not coming up to bat with the real figures.
So I give the committee copies of the paper I've given to the provinces. It's sort of a different thing. It's not the federal government delegating to the provinces. But since the provinces are so concerned about drug costs, I thought it would make eminent sense for the provinces to delegate to the Patented Medicine Prices Review Board the opportunity to examine that particular issue.
That concludes my remarks, Mr. Chairman.
The Chairman: Thank you very much, Mr. Minister, particularly for your concluding remarks where you give us some ideas as to how we might proceed and what issues we might raise.
[Translation]
I believe Mr. Brien has some questions. I will give him 10 minutes.
Mr. Brien (Témiscamingue): I will start with the last part of your presentation, Mr. Minister. There is a worrisome aspect that we must discuss further.
You mentioned monitoring the price of generic drugs. When you talk about the provinces delegating powers to the federal government, you would have to start by ensuring you have their consent. Certain things come to mind. When we let the federal government enter a sector, we never know when or how it will leave. Taxation is a good example: the federal government got involved in this area and has never withdrawn. We will have to further examine this issue with the provincial representatives to see their positions. I rely on their spokespersons to understand their true position.
Mr. Minister, you are a member of the government. The time frame is very important to me. Do you plan to react, comment and disclose the government's intentions in response to the report before the next election campaign? Will citizens be aware of the government's response to the report before the election?
[English]
Mr. Dingwall: Mr. Chairperson, I thank my colleague for his question. I don't know if I got the full gist of the first question, but the interdelegation of powers from one level of government to another level of government is not an extraordinary event in itself. What would be extraordinary in these circumstances is if it didn't take place.
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I mean, we have heard in this country, from coast to coast to coast, that one of the biggest cost drivers in our health care system is drugs. If that is the case - and I believe provinces when they come to me and explain their situation - I would hope they would want to avail themselves of this opportunity, unless of course they wish to conduct within their own jurisdictions or duplicate the effort and the expertise of the Patented Medicine Prices Review Board in their respective provinces.
If they want to duplicate that, fine, but I think it's important that the country, all of us, knows what the costs are, whether it be brand name, whether it be generic or whether it be the dispensing fee that is being paid and the amount of money that is going forward.
I have raised this with the provinces. You'll have an opportunity when provinces come before you. I think British Columbia will be here fairly soon. They might want to provide a response to that.
I want to say to my colleague, who makes a very valid point, that I concur. It would have to have the consent of the province. But since the provinces have said that this is such an important matter, to me the logic flows very nicely that they would see that the interdelegation of power to the Patented Medicine Prices Review Board to expand that and to ascertain the prices...
In terms of providing an answer on the recommendations this committee will make to the Minister of Industry and to me, and to the government as a whole, I don't want to be wishy-washy or vague, or to duck the question or issue, but for the life of me, I don't know when the next election is going to take place. There is some speculation that the election may take place at the end of 1998. It may even go longer than 1998. Some have even suggested it may come in 1997.
So I don't know. The only thing I do know is that we are anticipating that this committee will make substantive recommendations to the government. I can assure you that they will be given due consideration at every level of government. Statements will be made thereafter.
[Translation]
Mr. Brien: Mr. Minister, there are other issues where you have not been afraid to commit to respecting a deadline, namely in adopting an Act before the election, even if it meant inviting people to vote against your government. I do not know if that reminds you of something, but there has been some talk about it recently. I would like to know your position, since you are responsible for this department.
You know that international comparisons are an issue. When you look at commercial protection for patents, regardless of debates on numbers, you can see that we come in a little under our competitors. There are a few years less effective protection here than in the European countries or in the United States. The drug approval process is often called into question on two levels. First of all, it is slow, even if we must admit that there has been some improvement over the past few years. Then there is the fact that there is no compensation for the time it takes the government to approve a drug patent. Other countries grant a patent an extension to compensate for all aspects linked to government intervention in drug approval.
Is such an extension conceivable and do you have the mechanisms to speed up the patent approval process even more?
[English]
Mr. Dingwall: Again, Mr. Chairman, a substantive question. The fact of the matter is, when you review the whole history associated not only with this bill but with the whole issue of intellectual property rights, although it may appear to some that Canada should thumb its nose at the world community and the World Trade Organization as it relates to intellectual property rights, I don't think that's on. I don't think Canadians expect us to do that. I think Canadians expect us to work with international organizations. I know my friend and colleague, the Minister of International Trade, is very versed in this particular file.
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Canada cannot walk away from these international agreements, whether they be NAFTA or the World Trade Organization. That is a very important aspect. But secondly, we cannot deny that compulsory licensing has had a very positive effect on the Canadian economy in developing the generic industry in this country. I think there has to be a reasonable balance, so not only can both exist but in their own way both can flourish in the market they are attempting to serve.
As the Minister of Health, I think we should attempt to do everything we can to try to maintain a reasonable expenditure for the purposes of drugs. But I don't think Canada can walk away from the World Trade Organization. I don't think Canada can walk away from NAFTA. As much as maybe we would want to in some instances, I don't think we can do that. The regime we do have is one we're going to have to live with and we're going to have to work with. But I think there are many ways in which the committee could make recommendations that would effectuate some positive health goals as well as do some positive things in research and development for the industry as a whole.
[Translation]
Mr. Brien: I will come back to approval later, because I have more specific questions.
You are also responsible for linkage regulations. If a brand name drug manufacturer has 45 days to react to a generic, there is a big legal battle to obtain a notice of compliance. We have specific regulations here, linkage regulations, whereas several other countries use interlocutory injunctions if there is an infringement of a patent.
There are rumours, as there often are in this Parliament, that the government has created a working group consisting of people from your department, the Department of Industry and the Department of Justice to examine alternative solutions to the linkage regulations, to see if there are more effective mechanisms or mechanisms that are equally as effective that would make it possible to ensure that the spirit of the Patent Act is protected using different legal mechanisms.
Is this the case? If yes, it would perhaps be worthwhile for members of the committee to be informed of its work.
[English]
Mr. Dingwall: I'm not aware of any committee within the federal Department of Health Canada, or any individuals who are associated with the committee of another department, who would be examining that subject-matter. However, if the honourable member is making it as a representation that he thinks it would be important to strike a committee of departmental officials to examine that, I'll be prepared to take that under advisement.
About the notice of compliance and those regulations referred to under, I think, subsection 55(2) of the act, I want to be very clear here that these regulations essentially were formulated within the industry department and given to the federal Department of Health Canada for the purposes of administering, which we are doing at present. I have some thoughts about those regulations, which, if I'm asked, I might share with the committee.
The Chairman: Mr. Hill.
Mr. Hill (Macleod): Welcome here, Mr. Minister.
I've listened to both the industry minister and yourself say NAFTA and the WTO have really bound the hands of this committee. I wonder if you could let us know when you became aware that these major international obligations made the Liberal position in opposition, and your own position, meaningless.
Mr. Dingwall: First of all, I don't subscribe to your view that my positions, whether in opposition or in government, are meaningless. The fact is that we have to live in a real world. In opposition I made statements to the effect of my opposition to the bill in question based on the information we had at the time.
The fact of the matter is that Canada is now a signatory to the World Trade Organization and to NAFTA. It would be nice to bury one's head in the sand and say ``Well, we can thumb our noses at the world community.'' That cannot be done in 1997.
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In terms of the particulars and the details of the subject-matter you referred to, I have been the Minister of Health for nearly one year and one month. The first issue I had to deal with was making amendments to the NAFTA bill in January to ensure and to enshrine both in NAFTA, getting amendments from Mexico and the United States that our health care system would be protected.
If you wish to have Minister Manley and the Minister of International Trade appear, I'm sure they would give you all of the details surrounding what the rationale is, why it was done, and all of the other questions you might wish to put to them.
The Chairman: Mr. Hill.
Mr. Hill: One of the things many commentators say is that legislation when it's presented by the government now is often a framework, and the regulations actually fill in that framework. Bill C-8, the tobacco legislation, and the legislation we're reviewing on reproductive technology would all fit into that.
I have tried in every way I could to have the regulations reviewed by a parliamentary group such as the committee. And here we are today, reviewing both legislation and regulations. This committee is doing what I had hoped to see done with many bills.
I have been told that this is not the parliamentary way, that this would somehow usurp power from Parliament. Could you comment on that? In my view, this committee is doing something very important in reviewing the two together.
Mr. Dingwall: With respect to the review of the law, I think Parliament should exercise its power and its influence on laws that they deem appropriate, when they deem it appropriate. On this particular piece of legislation, it was a clear reference within the statute itself that it had to be reviewed. That's why we are here.
Intellectually, I have no difficulty with parliamentary committees. After all, we are legislators examining not only the law but the regulations and the effectiveness of those regulations. But what I would not want to see in the review of a law and a regulation is us abusing that process. I think you have to give a piece of legislation a certain period of time, in order for that review to take in...
On the substance of your intervention, would I agree with examining a bill and its regulations? The answer is yes. I think it's a good thing.
Mr. Hill: All right.
When PMPRB levies a penalty, the federal treasury receives that money. There are some expenses with PMPRB, but they are not the ones injured by the drug company that overcharged. Do you think the federal treasury should maintain and hold on to those funds?
Mr. Dingwall: Not in all cases. It's strange that you have raised this issue. In fact, just within the last month - and I stand to be corrected - the Patented Medicine Prices Review Board has provided to the provinces in excess of $10 million under voluntary compliance because of income that accrued to the federal treasury. We are apportioning, if you will, some of the revenues that accrue to the federal treasury to provincial jurisdictions.
Is it sufficient for the provinces? I think the answer is obvious, but in regard to your question, we do try to provide some moneys where the law provides for it.
Mr. Hill: I heard you say that patent drug prices in Canada have kept below the consumer price index in the last few years since the PMPRB was involved. Yet just the other day, in my office, for my staff, I received a notice from the public service union about the plan that all our employees have. It said that major changes were necessary to the way the plan would look after our employees if they were ill. One of the things that I noted very carefully was the statement that a rapid rise in drug costs was the problem.
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So if patent medicines are not the problem, where is the problem?
Mr. Dingwall: First of all, I made that statement in terms of the prices of patented drugs being below the cost of the CPI. A lot of people in the country just don't want to believe that. The reality is that, based upon the best information I have - as a minister, I get it from the Patented Medicine Prices Review Board - is that those companies have kept their prices down.
That's why - I hope you would agree - it's probably high time that we as a country took a look not only at the price of patented drugs in this country, but at that of non-patented drugs as well.
I'd like to see seniors come before you to tell you what they're paying for non-prescription drugs that are necessary for them, in many instances. That means brand-name drugs and generic drugs. I think it would be good to get that kind of information on the table so we know where the money is actually going and the prices that are being inflicted.
But from the evidence we have, unless there is contrary evidence out there that we haven't seen, under the Patented Medicine Prices Review Board, the prices have been kept below the CPI.
The Chairman: Mr. MacDonald.
Mr. MacDonald (Dartmouth): Thank you very much, Mr. Minister.
The issue of Bill C-91, drug patent protection, is one that has been before the public, as you're well aware, in the past on a number of occasions. It has caused a great deal of debate.
I think the debate continues today for the reasons you mentioned: Canadians are concerned about the affordability of the health care system, and pharmaceuticals or prescription drugs are increasingly taking up a larger portion of the health care envelope. So I think it's very timely that you're here today to discuss some of your ideas about what can be done.
There are two issues, Mr. Minister, that I'd like to raise with you. One deals with the PMPRB. I'm seeking some information perhaps from you or from your officials. I'm also seeking some comments.
One of the concerns I've had - I guess I still have it - is not that the Patented Medicine Prices Review Board is not able to regulate the increase in the cost of prescription drugs, but that they are not able to adequately assess whether or not the entry-level price of a drug is indeed at the right level of cost. If a patented medicine comes on the market in Canada at 50% more than what it should be, then it's easy for them to keep the increases below the cost of living.
I've always been somewhat concerned about the measure of the reasonable entry-level price of a drug. I would ask maybe the officials - it's rather a technical question - how the PMPRB does this. Do they look at the OECD countries and see what the average is on the introductory price, or do they look at the G-7 countries?
My understanding is that if you look at the G-7 countries with respect to the average entry price of a drug, you'll find that it's higher than what you would see if you looked at the countries in the OECD. I'm just trying to figure out how they do this. How do they determine what is a valid, reasonable, entry-level price of a new drug?
Mr. Dingwall: Mr. Chairman, the entry prices and the powers of the Patented Medicine Prices Review Board to evaluate them are based upon - the officials who will come later will be able to give the member the details - a unique basket, if you will, of an international comparison. Also, the class within that is looked at. So they have the power to do that.
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But the Patented Medicine Prices Review Board also has the power to select any basket it so wishes. So the unique basket that they may be referring to on an international level can be changed. They can make recommendations on those kinds of changes for the purposes of evaluation. But you're quite right that the entry price is a very key issue in terms of what flows thereafter.
Mr. MacDonald: Would it be fair to say, Mr. Minister, that when we have the officials of the PMPRB here - I intend to pursue that line of questioning - all of these issues are ones about which you would seek some guidance from the committee in our deliberations, such as whether or not there are better, or more appropriate, international comparisons on the entry-level price of drugs? Is this the type of thing you would wish to hear from us?
Mr. Dingwall: I think that because pricing is so important - the entry price is a pivotal point in terms of the process - I would hope that the committee, in looking at the subject-matter, would make some recommendations in that particular area. I think the government would be more than happy to look at those kinds of recommendations.
Mr. MacDonald: Mr. Minister, I'm also very intrigued and pleasantly surprised with the comments you made a little earlier with respect to the letters you sent out to the provinces with respect to the PMPRB getting the powers delegated from the provinces to look at prescription prices generally. I think this is very positive.
As you indicated, it's not just patent, non-patent or generic drugs; it's prescription drugs generally. Consumers should have a right... It's called jawboning, I guess, down in the United States. Even if we can't regulate the price, perhaps the PMPRB, by reporting on the price, would have a moderating impact on the marketplace.
Mr. Dingwall: Absolutely. I think if consumers, physicians and the makers of public policy were aware of the costs that consumers have to pay for medication and who's getting what and where it's at, then that could only add to a healthy debate. But this could ultimately lead into some changes in terms of public policy and hopefully some behavioural changes in purchases that are being made by citizens across the country.
At some point in time, we're going to have to look at the prices being charged. Our health care system, as of this fiscal year, costs $75.2 billion, of which $10.8 billion is for drugs in this country, which is 14.4% of the system. That's a pretty staggering amount. I think we should know about the costs, the various prices that are being charged and where they're going.
Mr. MacDonald: My other line of questioning, Mr. Minister, deals with the notice-of-compliance regulations, the link regulations. I'm very concerned about these. I was concerned back when Bill C-91's regulations were proclaimed, and I'm still concerned about them.
As everybody knows, one of the ways you get the cost of prescription drugs down for Canadians is by competition. But we also have to respect the right of the patentees to have their period of market exclusivity.
It has been alleged by some that the notice-of-compliance regulations, section 55.2, may be abused by some companies to keep competition out of the marketplace for a period longer than the patent would otherwise indicate.
Specifically, once a generic firm would file an allegation, then a lawsuit is started automatically by the patent holder. Automatically, there is 30-month injunction, subject to a review by the Federal Court. There may be 30 months during which a competitor is kept out of the marketplace. Indeed, I think in one case it's now up to 45 months because of some technical and legal implications. I think that's lovastatin.
Can you tell me your view of this section 55.2? Do you think it's something that should be fixed? Do you think it's working well? Do you have some suggestions for how to make it work better if indeed you don't think it's working?
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Mr. Dingwall: I certainly think the committee should be seized of the notice-of-compliance regulations, as Mr. Hill has referred to in his intervention and as Mr. MacDonald has. Go back and look at the history of how these regulations came on board without really having an effective consultation period when they were initially introduced. That warrants careful examination by the committee.
Some would argue that the notice of compliance in effect provides a de facto injunction of up to a maximum of 30 months. It doesn't have to be in each and every situation, but many would argue that.
The problem with the regulations is they don't provide any comfort to the generics and they don't provide any comfort to the brand names. I would be interested in hearing the committee's views on that.
You will have witnesses before you who will, I'm sure, dissect every aspect of those regulations, but one of the things we have to aim for, as public policy-makers, is some certainty. It's not very advantageous for the pharmaceutical industry to be in court every second day trying to fend off an attack or support a particular attack. I don't think that's... I don't want to use the word ``healthy'' - I might be out of line there - but I don't think that's good for the industry. I don't think that's smart public policy.
Because of the way in which the notice of compliance came in, this committee has to take a very hard look to see what purpose it actually provides to what is taking place in the whole patent sector.
Mr. MacDonald: Can I have one word?
The Chairman: Yes, a very short one.
Mr. MacDonald: Minister, are you in favour of the establishment, in consultation with the provinces, of a national formulary so the pharmacare programs across Canada would be buying in bulk and therefore negotiating the best price for consumers and for the taxpayers? Is this something you think the federal government could do and are they looking it?
Mr. Dingwall: I appreciate the question, because the evidence that has been adduced by the national forum on health provides some very interesting evidence that public policy-makers ought to take into consideration.
One of the things I have found as Minister of Health at the federal level is you would be surprised to know that many of the different jurisdictions are not necessarily always informed of what is taking place in their respective jurisdictions. That's not to suggest the provinces don't know what's going on in Saskatchewan or what's going on in Manitoba, etc., but we can learn a lot from the provinces and each province can learn a lot from the province it's next door to.
If we're able to combine our resources and focus on a national pharmacare program, as I read the evidence of the national forum, there are tremendous opportunities for savings to our health care system, both in the short term and in the long term. Just think of the idea of bulk buying. That in itself... Companies wouldn't be dictating to governments; it would be governments dictating to companies. In some instances that's now taking place. Ontario has a pretty strong hand, being its size, but for smaller provinces such as Saskatchewan or Nova Scotia or others, it is very difficult.
We hope to be able to bring the various stakeholders together. I'm prepared to put some money on the table in terms of how to develop the right model. I don't know what the right model is. I would be misleading the committee and I would be misleading Canadians if I said I knew what the right model is for a national pharmacare program. But we should bring all of the various stakeholders - the private sectors, the generics, the brand names, the provinces - together to look at that as a real possibility for expanding our medicare system in this country.
The Chairman: Thank you very much.
Does the minister have another few minutes?
[Translation]
Do you have time for one more question?
Mr. Dingwall: Yes, certainly.
[English]
The Chairman: Mr. Ménard, would you like to ask one or two questions?
[Translation]
Mr. Ménard (Hochelaga - Maisonneuve): Yes, Mr. Chairman. I will be so sad to see the Minister leave. I will try to be nice to him, because he had a rough time in question period. I find him much more reasonable when he talks about the pharmaceutical industry than when he talks about tobacco. But that is another issue.
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I will ask the minister three questions. My colleague referred to the issue of approval. As you know, we examined the issue in other committees, including the subcommittee on HIV/AIDS. We all know that the approval process in Canada is not very competitive, if I may so, in comparison with the process in the United States. Several factors can perhaps explain this situation. Of course, resources are an issue. We cannot compare the resources that Canada allocates to the Health Protection Branch and the resources available to the FDA. I would like to hear your opinion on that.
As part of your functions or within your department, have you studied methods that would enable you to work more diligently on approval? You know that it can take up to three and a half years and that we have faced a paradoxical situation. I may perhaps be reminding you of something you'd rather forget in mentioning 3TC, which was discovered by a Quebec company, but initially marketed in the United States where it was more advantageous to do so because of the approval process. The process was expedited.
Would you support joint approval mechanisms between Canada and the United States and draw your inspiration from what is being done in the European Economic Community for example? That is my first question.
I will ask all three questions, Mr. Chairman, because I am afraid that you will cut me off. You would perhaps be more reluctant to cut off the Minister.
I tabled a private member's bill that I am very proud of. I would be very honoured to have your support. The bill concerns an extremely important element: compassionate access to drugs.
As you know, pharmaceutical companies are somewhat like government: the good and the bad are mixed together. Some pharmaceutical companies grant compassionate access to drugs and are extremely generous. When I talk about compassionate access, I am thinking about treatments that are not approved, but where a doctor has reason to believe that they could save the life of one of our fellow citizens. Some pharmaceutical companies, as part of their clinical trials or an emergency drug release program...
The Chairman: Mr. Ménard, do you want an answer, yes or no?
Mr. Ménard: Yes, Mr. Chairman. Would you be in favour of a mechanism, as set out in my bill, to give more power to the Patented Medicine Prices Review Board in order to force pharmaceutical companies to give compassionate access to drugs?
[English]
Mr. Dingwall: Those are two good questions.
With regard to the private member's bill, the member should be proud of the bill. I say to the hon. member that I like many provisions of his private member's bill. I think he is aware that we are examining that whole issue as we now speak, and hopefully we'll be able to come forward in due course with a decision he can be supportive of.
With regard to licensing, I have done a fair amount of work on that particular issue. Canada has a very good system, but I think we can be better. The committee might want to reflect on whether or not we go to a full cost recovery mechanism, whereby companies that wish to have drugs put on the market, as they do in Great Britain... It's a very efficient, high-quality type of system that addresses both the health and safety concerns.
We in Canada have what they call a mixture of some cost recovery and state financing of the approval of drugs, but I'm very much open to looking at that kind of approach, provided of course that the restrictions, namely safety and efficacy of the drug in question, are of the highest quality.
In terms of joint applications, we might want to take a look at that. I still want to be convinced that is the best way to proceed. However, as you're probably aware, with the introduction of the various new technologies, something that can be tabled or submitted in some other jurisdiction in the world can be done here almost simultaneously. So our jurisdiction would have ownership of that particular item as well and could make an adjudication in due course.
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I'm not sold on that idea at this point, but I'm open to hearing advice or suggestions both on the licensing renewal and on joint applications.
The Chairman: Mr. Schmidt, did you have any final questions?
Mr. Schmidt: Mr. Minister, you may have answered my question already. Your last statement I thought was a most intriguing one, about expanding the powers of the PMPRB. This is rather a different position from the one you took when you were on the other side of the House. Could you explain the reason for the shift?
Mr. Dingwall: Yes. The reason for the shift is that Canada is now part of the World Trade Organization, which you may be aware of. Canada is now part of the NAFTA agreement. Canada is part and parcel of the free trade agreement. Because of all of those international things that have taken place and that Canada is a signatory to we can't put our heads in the sand. We can't thumb our noses at these world trade organizations. I think it would be important that we look at the possibility of expanding the powers of the Patented Medicine Prices Review Board for the purpose of ascertaining additional information on pricing - on pricing - which I think can have a very positive effect on the public policy debate.
Mr. Schmidt: This is most interesting, because in both cases when you were not in power... I thought maybe this had something to do with shifting to the other side of the House, because I noticed that you were also opposed to the North American Free Trade Agreement. I find this fascinating. I don't disagree with you, by the way, but I think it's fascinating that you shifted. At which point were you...?
Mr. Dingwall: Mr. Chairman, is the honourable member suggesting that those of us who are involved in public life and in the public policy of this country, whether provincially or federally, should never, ever change our minds? If the honourable member is suggesting that -
Mr. Schmidt: No, you should be commended for changing your mind.
Mr. Dingwall: - I'm sure he's in the appropriate political party.
The Chairman: No, he's just giving you a compliment. He finds you fascinating.
Some hon. members: Oh, oh!
Mr. Schmidt: And I just commended you for changing your mind. That's good, Mr. Minister.
Mr. Dingwall: Mr. Chairman, I would stay for one question from the New Democratic Party.
The Chairman: Mr. Solomon.
Mr. Solomon (Regina - Lumsden): Thank you, Mr. Chairman and Mr. Minister. I appreciate that.
I guess one of the things I want to make as a point here is this. The Saskatchewan experience has been that we have evidence which shows that as a result of Bill C-87 and Bill C-91 being passed the cost of patented prescription drugs is much higher than that of generic ones, and it has cost our drug plan a lot of money.
The example I'll use is that when Bill C-91 was introduced the bill basically delayed the proposed entry of enalapril until the year 2007. enalapril was a generic drug. It's a commonly prescribed heart drug. As a result of this particular delay, when enalapril was available for one year it saved the province of Saskatchewan, with one million people, $2 million in one year as a result of the generic drug being on the drug formulary.
There are many other examples in Saskatchewan's drug plan to show that this patent legislation has had a very significant effect of driving up drug costs, ultimately resulting in the fact that there is hardly any prescription drug program left in Saskatchewan.
All that having been said - and I know Mr. Schmidt has indicated you've changed your mind since being in opposition, and everyone knows that - Mr. Minister, you were also part of the government that signed some of these trade agreements after you were elected. I'm curious to know why when you were so strong on Bill C-91 in opposition before 1993 and you were involved with signing these agreements and you had a chance to make amendments in the House of Commons in other areas with other countries, you didn't try to make some amendments to soften the blow by not allowing competition for some of the generic drug companies in Canada.
Mr. Dingwall: Mr. Chairman, I'm always impressed with the selective memory of those who serve for the New Democratic Party. But I want to thank my colleague for the question. Keeping in mind that it would be nice if Canada could thumb its nose at the World Trade Organization, if that is the position of the leader of the New Democratic Party and my colleague, I think you should say it. If that is your position, you are in direct opposition to my party. We believe that Canada cannot be isolated. We believe that Canada cannot thumb its nose at international agreements.
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What I may or may not have said in cabinet will remain in cabinet documents. But to suggest that somehow our support for international agreements was done without due regard and due understanding of the implications for Canada as a whole I think is a false implication you are trying to portray to the committee.
What I would ask my colleague to reflect on is whether he perhaps could have his friends in British Columbia and his friends in Saskatchewan who are so concerned about the price of drugs in this country come before this committee and share with members their rationale for wanting to open up the process whereby we can examine fully not only patented drugs but non-patented drugs and the cost of those drugs and what it means to the Canadian public.
I'm glad the honourable member has that information, or alludes to having that information, and I'm sure he will forward it to me and to my officials so we may reflect upon it. But I hope that my colleague representing the New Democratic Party will have those respective jurisdictions join in supporting an interdelegation of power to the Patented Medicine Prices Review Board so that we can examine in its entirety the cost of drugs in this country. I hope you'll be able to do that as well.
The Chairman: Thank you very much.
Thank you again, Mr. Minister; we appreciate it. The officials are staying. We're going to be having a vote at 5:15, so I'd like the members who continue their questioning to be very precise.
Before the people behind us leave, perhaps I could apologize to you for having a small room. When the committee is not meeting at its regular time it's hard to find a room. We're trying to accommodate people as much as possible, and understand we'll be getting larger rooms as we go along.
In that regard, if you check your notice board I think you'll see a time change for the meeting on Thursday from morning until after lunch at 3:15 in a bigger room. If the witnesses from the Pharmaceutical Manufacturers Association of Canada can confirm they can come in the afternoon, we'll make that announcement as soon as possible.
Let's continue. I believe we go to Mr. Lastewka to continue the questioning of witnesses.
Mr. Lastewka: Thank you, Mr. Chairman. I'm kind of stuck a little bit with the minister leaving, but maybe the officials can explain.
I guess I want to go to the federal and provincial task forces that have been set up. Are all the provinces and the territories participating in these task forces? When you talk about examining prices, does that mean you're examining the prices from the start of research to dispensing to the consumer? When will these task forces be finished? Would it be possible for us to hear from them?
I might as well go on to my next question. There was a remark made by the minister concerning the total cost of drugs. He mentioned $10.8 billion, I think. You'll have to correct me on that, perhaps. He did mention some question concerning inappropriate use of pharmaceutical products costing the health system between $3.5 billion and $4.5 billion. Does this mean we do have - I'm not sure if the right word is wastage - inappropriate usage of about 35% of the cost of drugs in Canada?
The Chairman: Mr. Juneau, I'll direct the questions to you and then you can redirect them to whomever you want.
Mr. André Juneau (Assistant Deputy Minister, Policy and Consultation Branch, Department of Health): Thank you, Mr. Chairman.
On the question with respect to task forces, we are running those task forces through a federal-provincial committee of officials I sit on and on which all provinces and territories are represented. We have struck task forces and provinces have chosen to sit or not to sit on the task forces, but all of the provinces and the federal government are on the mother committee, if you will.
.1640
With the provinces, we are doing quite a comprehensive review of all of the questions that touch on price, to answer your particular question.
Naturally, because they were struck as a result of a meeting of federal and provincial ministers that the minister chaired last year, the task forces will be reporting to deputy ministers and then to ministers. After that it will be possible for the minister to share some of those findings with the committee. It will be up to him to decide how he wants to do that.
Mr. Lastewka: What is the timeframe?
Mr. Juneau: The timeframe is an interim report to ministers at their next regular meeting, which is usually held in September. In the meantime, there will be progress reports to deputies and ministers.
You asked about the $10.8 billion. That's the right number. That's what we estimate we spent on drugs in 1996 in Canada.
Your other question was about inappropriate use. I think what you've picked out of the minister's speech was a reference to the cost of inappropriate use to the health care system. That number should not be expressed as a share of spending on drugs but as a cost to the system as a whole.
Mr. Lastewka: Could you expand, then, on the comments that were made concerning the inappropriate use? Can you give us some examples?
Mr. Juneau: The document we tabled gives the reference to the work we were quoting. The task forces you are aware of are studying that, but we are referring to situations where there are multiple prescriptions or to cases where people don't take the drugs that were recommended to them. The task forces are studying any number of factors.
Mr. Lastewka: Thank you, Mr. Chairman.
[Translation]
The Chairman: Mr. Brien.
Mr. Brien: I would like to go back to linkage regulations. Earlier on, the Minister clearly expressed his wish that we analyze alternative solutions or at least examine the current mechanism closely.
I asked him a question that I am now asking you, although from a slightly different angle. Alternatives were undoubtedly examined, since our objective is to ensure that protection granted by the Act be implemented as efficiently as possible.
Have you examined alternatives to the current linkage regulations? If yes, what are they and can you tell us about them?
[English]
The Chairman: Mr. Michols.
Mr. Dann M. Michols (Director General, Drugs Directorate, Health Protection Branch, Department of Health): At Health Canada we are responsible for administering the regulations that came from Bill C-91 and the Patent Act. Those regulations were put in place to ensure that the provisions for working a patent prior to the actual patent expiry were not abused. We ourselves have not looked into alternatives to those particular regulations. I think it's the minister's view that the committee could examine potential alternatives to that set of regulations as they exist.
[Translation]
Mr. Brien: I want to make sure that I've understood you well. I would like to know what would happen if amendments were made to the linkage regulations. At present, generic drug manufacturers are allowed to manufacture drugs prior to the expiry of a patent and to market them immediately after that date. In the end, all the regulations do is ensure that generic products do not end up on the market prior to the expiry of a patent.
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On the other hand, if we make amendments that make it possible to manufacture generic products earlier without marketing them, will we also have to make consequential amendments? There is a very close link between the two.
[English]
The Chairman: Mr. Michols.
Mr. Michols: There's a very tight link between the two. The regulations are unique in the world specifically because the opportunity for the generic companies to work that patent is unique. I think if you did examine the possibility of changing the regulations you would also have to examine the possibility of some mechanism to ensure the protection of the patent.
[Translation]
Mr. Brien: I would like to go back to approval, which was referred to on several occasions earlier. Do you feel that we are currently competitive in comparison with our international competitors, such as the G-7 countries, the European countries and the United States? Do you feel that drug approval here in Canada meets the criteria to be competitive with our competitors?
[English]
Mr. Michols: I thank the member for the question, because it's an opportunity to speak to the documentation that has just been circulated to the committee, and I guess in response toMr. Ménard's question earlier in terms of the length of time it takes for the Canadian regulatory process to approve drugs.
The six sheets of paper that have been circulated, the first one entitled ``The Drugs Program'', have been written to explain to you the Canadian drug review process and to give you data on some of the performance measures, the actual performance times, of the Canadian system as a result of a significant re-engineering program we've run over the last year. In that package you have a sheet on the performance targets. We certainly think those are competitive in terms of the targets we are aiming at in the various review processes. There is a comparison with our principal trading partners, the United States, the United Kingdom, and Australia.
You have a sheet in there that is specifically on international comparisons of actual times in the processing of new active substances which are the principal new drug submissions we approve in a given year. You have a chart in there on the Canadian review times, which I think we're particularly proud of. It shows that while our workload has almost doubled in the area of new drug submissions, we have halved the processing time in the last three years. And you have a sheet in there on the drug review backlog over the last four years.
In short, I guess the answer to your question as far as the regulator is concerned is yes, I believe we are competitive with our peers, if you like, in drug regulation around the world, despite being somewhat at a disadvantage in resources available.
The Chairman: Mr. Murray, please.
Mr. Murray (Lanark - Carleton): Mr. Chairman, in his remarks the minister was looking at a number of utilization issues and he mentioned a trend towards using drug therapy instead of other treatments, such as surgery, methods that are usually a cheaper option. Are there any statistics on the extent of this change over the last few years? Is it a trend that's growing at a rapid rate?
Mr. Juneau: Unfortunately, in Canada we don't have a good or comprehensive database on drug utilization. One of the things I'm hoping will come out of the work of the task force, as we were talking about earlier, and of various other initiatives we could think of, is that we would be able to answer that kind of question. There is a fair amount of partial evidence, and that's what the minister was referring to, but what is not known is basically the overall system answer to your question.
It's probably fair to say the trend is in the direction you're suggesting, and that's what the minister was referring to. I can give you some examples of some of these things. For instance, a drug introduced in the 1980s has reduced the rate of rejection of transplanted organs. Obviously that is beneficial to the person and it reduces the need for dialysis in this particular example, so it saves some money. But we don't know that in a comprehensive way.
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Mr. Murray: Mr. Lastewka already asked this, but I was struck as well by the question of the inappropriate use of pharmaceutical products: $3.5 billion to $4.5 billion is a staggering amount of money. Then the minister made the statement that anywhere up to 50% of seniors use their medication inappropriately.
This question of educating physicians in how to prescribe the drugs is perhaps a big part of the solution to this problem. I understand that pharmaceutical companies already spend a great deal of time and money on educating physicians, something that has to be rolled back into the cost of the pharmaceutical products at some point.
Would the government suggest that it's the role of the pharmaceutical companies, the producers, to educate the health care professionals in the proper use of drugs, or is that not where the problem apparently lies? Do you have any suggestions on that?
The Chairman: Mr. Juneau.
Mr. Juneau: I would say the issue you raise is one that has to involve the interests of a lot of the participants in the system. The pharmaceutical companies, the professional associations of providers, governments, consumer organizations, consumers themselves - a lot of the players have a responsibility in this area. I wouldn't want to assign it to only one of the players.
Mr. Murray: Do you think, for example, the Canadian Medical Association would agree with these figures, that most physicians would be aware of them and agree they are accurate?
Mr. Juneau: I think it would be better to ask the Canadian Medical Association that question. I know, because I have talked about these issues with representatives of the CMA, that they have a great interest in this question. They have thought about it. I know they have some views on exactly those questions, but I think it would be better to ask them.
Mr. Murray: That's all for now.
[Translation]
The Chairman: Mr. Ménard.
[English]
and then Mr. Volpe.
[Translation]
Mr. Ménard: Thank you, Mr. Chairman. I know that you will be nice with me, so I will do the same.
I would like you to quantify the approval process. Beyond what can be said about it, you know that it will be a factor that will be present throughout this debate. I believe that the deputy minister also appeared before my subcommittee on HIV/AIDS. I know that there is a fast track process under which it is possible to move a little more quickly and thanks to which we have succeeded, in my view, at being competitive. With the exception of this process, do you feel that the process Canada uses between the time the monograph is filed and the time a notice of compliance is issued makes the country competitive?
Let's look at the numbers on the table that you distributed, Mr. Deputy Minister, entitled ``International Comparisons''. I see that in Canada, the total review time for the normal process is 531 days. Am I to understand that in the United States, for a comparable process, the approval time is 483 days, that in the United Kingdom it is 547 days and that in Australia it is 507 days? Is that how the table is to be read?
[English]
Mr. Michols: Yes, it is. The figures you have just quoted are the average review times for a particular year across the full range of products. We do have in Canada a fast-tracking process whereby if a particular submission for a particular product meets a number of criteria, and those criteria are fairly straightforward - breakthrough drug, no other therapy available - then we do fast-track it. And we have had a number of successes that are in the order of 100 to 140 days for some of the fast-tracked drugs.
The figures you have are averages, and they do include company time, should we have to go back to a manufacturer for further information involved.
[Translation]
Mr. Ménard: Although we are talking about the approval process, you are going to great lengths to tell us that we are more or less competitive. I am under the impression that at any rate changes to the process are pending and some amendments have already been made further to the report by Denis Gagnon Working in Partnerships: Drug Review for the Future, published in 1992.
I would like to ask you another question on a slightly different topic.
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Do you agree with some of the activists who claim that one of the distinctive characteristics of clinical trials in Canada is that as we speak, most of the trials conducted are dictated directly by pharmaceutical companies, because the government does not truly fund these trials?
For example, under the AIDS prevention strategy 3.3 million dollars has been set aside for research infrastructure. This research infrastructure is a competitive factor that has led a certain number of pharmaceutical industries to conduct clinical trials here.
But essentially, the government does very little research on clinical trials. It is in the hands of the pharmaceutical industry, with the advantages and disadvantages involved. Do you agree with that statement?
[English]
The Chairman: Mr. Michols.
Mr. Michols: I would agree with the statement that the predominant funding for clinical trials in Canada is the drug industry, yes.
[Translation]
Mr. Ménard: Does that worry you? Mr. Chairman, it is a good question. Suspense is building.
The Chairman: All of your questions are very good.
Mr. Ménard: Mr. Chairman, you are so kind.
The Chairman: But it was your last.
[English]
Mr. Michols: I'm not sure, in my role as the regulator -
[Translation]
Mr. Ménard: Don't be shy.
[English]
Mr. Michols: - of the drug process in Canada, that it's something for me to worry about. It's not anything that is within the control of the regulator in this particular case.
[Translation]
Mr. Ménard: [Inaudible]
The Chairman: Again, Mr. Ménard.
[English]
Mr. Volpe, please.
Mr. Volpe (Eglinton - Lawrence): Thank you, Mr. Chairman.
I want to return to two themes: first, the minister suggested that we take a look at the linkage regulations; secondly, something you said a few moments ago, that you viewed your role as essentially enforcer of the regulations to prevent an abuse of the patent by the generics. I wonder if you'd elaborate on that. My understanding of a patent holder's rights and access to remedies is such that if a patentee feels the patent has been infringed, they can bring suit, and if there is an assertion of infringement and it is sustained, there will be an injunction, damages and costs awarded. Wouldn't that be enough?
Mr. Michols: I guess my response to that would be that when the government of the day was reviewing Bill C-91 and putting into place the various mechanisms that were a result of Bill C-91, they reviewed the situation of the injunctory power and the mechanisms that had existed prior to Bill C-91 and I assume determined them not to be sufficient because they brought in the measure of the regulations.
Mr. Volpe: If one were to take that just one step further and refer to a question that was raised by one of my colleagues a little earlier, there is a view in some quarters that perhaps the regulations give a patent term extension, a de facto extension of up to 30 months. I think one of the cases you've highlighted in your presentation to members indicates one that is now running 40 months. Do you share that view? If not, why not?
Mr. Michols: I guess it's my view, as the administrator of the regulations, that the timing in large measure is in the hands of the generic manufacturer. The 30-month period does come into play after an innovator has brought suit that it believes that a generic manufacturer potentially would infringe a patent. It only can determine that after it has received a notice of allegation from the generic manufacturer concerning the submission that the manufacturer wants to make. So the timing of when the notice of allegation is made is in the hands of the generic manufacturer. The generic manufacturer determines that when it serves the notice of allegation.
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If that notice of allegation is served prior to the expiry of the patent, potentially 30 months prior to the expiry of the patent, then in and of itself it would not result in patent term extension, because we are empowered to issue a notice of compliance if we determine that the generic product deserves a notice of compliance. We are empowered to issue that 30 months after the court case has been commenced if the courts have not made a decision during that period. So when the 30 months come into play depends on when the notice of allegation was served on the patent holder and whether or not the patent holder determines to claim infringement.
Mr. Volpe: But there could be essentially a de facto patent extension.
Mr. Michols: There could be a de facto patent extension if the generic manufacturer chooses to serve the notice of allegation later in the term of the patent than the 30 months.
Mr. Volpe: I would like to come back to the word ``abuse'', which you introduced a few moments ago. In your experience, or at least in the experience under Bills C-22 and C-91, has there been a case brought forward of patent abuse by a patentee?
Mr. Michols: Are you asking me whether within the history of the Bill C-91 regulations - because that's the period of the regulations - a patent holder has ``abused'' the process? My understanding is that in the cases the courts have dealt with and have made decisions on some 30% to 35% of the cases have been found for the generic manufacturer, whereas 60% to 65% of the cases have been found for the innovator. So I guess simplistically I would have to say yes, in 30% of the cases the court believed the suit brought by the innovator was not valid and found for the generic, but in 60% of the cases they found the suit valid for the innovator. That would be the only way I could determine ``abuse''.
The Chairman: Thank you very much for a very interesting pursuit of questioning there.
Mr. Schmidt.
Mr. Schmidt: Thank you, Mr. Chairman.
I have two questions, or an interest in two particular areas. The first one has to do with the work that is being done either by the generics or by the brand name manufacturers on the utilization and the application of drugs in the field of treatment of disease. What is being done by these companies in this particular area?
Mr. Michols: I think a great deal is being done by both the innovators and the generics. I would suggest perhaps the question would be best addressed to the representatives of those two industries when they come forward.
Mr. Schmidt: My next question has to do with the research these companies are doing. It's related to the first question. Much of the research the brand name manufacturers agreed to do as a result of Bill C-91 in 1992 was that 10% of the sales would in fact be devoted to research. What proportion of that 10% is actually research they are doing of a really innovative nature and how much of that is really clinical trials, which are really compliance to meet the requirements of the health licensing approval?
Mr. Juneau: My suggestion, Mr. Chairman, is that you pursue those questions with the representatives of the PMPRB, who actually report on those figures.
Mr. Schmidt: Don't you know?
Mr. Juneau: I can tell you what I hear from the companies, but I'm not the source of the information on these sorts of things.
Mr. Schmidt: This is very interesting, because one of the points that have been made is that the numbers you accept, or the minister accepts - and he reported them just half an hour ago - were numbers that come from these very people. I believe the figure of $628 million was suggested. Of that $628 million...
This is a self-reporting system, I agree. Are you suggesting you're really not quite comfortable with those numbers?
Mr. Juneau: No, I'm not suggesting that.
Mr. Schmidt: Then why don't you know?
Mr. Juneau: It's just that the PMPRB has the mandate to report on those figures, so I thought if you wanted to have a more expert discussion on that you could pursue it with them.
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This is an area where there is room for debate on whether research is of an innovative nature or whether it serves the purposes of the clinical trials. I understand there is a view that somewhere between 20% and 30% of the research you were quoting is considered to be of a more basic nature, but again, there is room for interpretation on the extent to which this is innovative research.
Mr. Schmidt: Mr. Chairman, I would like to follow up on Mr. Volpe's question. He went a long way along the line that I was hoping to pursue as well, but I think there's one area that he perhaps didn't have time to ask about. Had he had the opportunity, he would have. It has to do with the 30-month period of a notice of allegation.
As a regulator, do you not have the authority to extend that period if a decision isn't reached?
Mr. Michols: No. The only body that has a authority to extend the 30-month period is the court.
Mr. Schmidt: It's the court. Okay.
Mr. Michols: We have very little discretion, if any, in terms of the administration of those time periods.
Mr. Schmidt: And can the court extend those indefinitely?
Mr. Michols: The court can review petitions by either party and can make a decision to extend that period if it so chooses.
Mr. Schmidt: Is there a limit on the length of the extension?
Mr. Michols: There doesn't appear to be a limit. The earlier reference to the case that has now run 40, 42 or 43 months does involve a court decision to extend that 30-month period and then involves an appeal to deny that extension. So there's no jurisprudence yet as to whether or not there's a limit.
Mr. Schmidt: During which time the generics are not able to sell that drug but the brand-name companies are.
Mr. Michols: Yes. The brand name has the patent. It's on the market -
Mr. Schmidt: Let's get the facts straight here.
Mr. Michols: That's true.
Mr. Schmidt: Okay.
The Chairman: Thank you very much, Mr. Schmidt.
[Translation]
Mr. Patry.
Mr. Patry (Pierrefonds - Dollard): I have one last question regarding notices of allegation. It seems that a generic drug company has adopted the practice of issuing several notices of allegation, as many as five for the same product.
In your view, was the issuing of several notices of allegation what the legislator had in mind when it designed the Act in 1993, or are we heading towards abuse of the procedure on either side, if this is not already the case?
[English]
Mr. Michols: In my view, the regulations allow for that process, so then it would be a legitimate process.
Mr. Patry: But are we now reaching a certain level of abuse from either party - from the generics or from the brand names - according to you, or should we try to find another solution?
Mr. Michols: In my opinion, the legislation and the regulations are being used to maximum effect by both sides. And just by the indication of the amount of litigation in the courts... It's my hope that this committee in its deliberations will be able to provide some guidance on the application of those regulations and perhaps provide some different mechanisms or recommendations on mechanisms, different from the amount of litigation now under way.
Mr. Patry: Thank you.
[Translation]
Thank you, Mr. Chairman.
[English]
The Chairman: Mr. Lastewka, do you have one final question?
Mr. Lastewka: I want to look at the summary of compliance cases that you presented. Or did we get this from somebody else?
Mr. Michols: That's not my -
The Chairman: I don't think it's presented by these -
Mr. Lastewka: Okay. I'll withdraw that, Mr. Chairman.
The Chairman: I'd like to thank Mr. Michols and Mr. Juneau, our witnesses, for staying and for addressing some of the questions. I think you've opened up some interesting avenues for the committee members.
Committee members, if you don't mind, I want you to pay attention to these changes in details. Rather than start with our next witness, we're going to adjourn now. The Patented Medicine Prices Review Board will be meeting with us as soon as the vote is finished. I anticipate meeting at 6 p.m. at 253-D, Centre Block, right beside the House. It will be televised.
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At the will of the committee, we'll meet for an hour and a half with that group and then with the Canadian Health Coalition.
If the representatives of the Canadian Health Coalition are here now, you're scheduled to start somewhere between 7:30 and 7:45, depending on what time the vote ends for us. The vote begins at 5:30.
For the many spectators, perhaps you can take your break and get yourself a sandwich. For committee members, who won't get a break, there will be some sandwiches at about 7:30.
The committee is now adjourned until after the vote.