EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 18, 1997

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[English]

The Chairman (Mr. David Walker (Winnipeg North Centre, Lib.)): Pursuant to Standing Order 108(2), a review of section 14 of the Patent Act Amendment, 1992, Chapter 2, Statutes of Canada, 1993, I call this meeting to order. I take great pleasure in welcoming our witnesses from Prince Edward Island who are going to join us via the videoconference format.

This format is set up to facilitate hearing from all the witnesses across the country who've asked to be heard and to ensure that you feel you have had a chance to participate in this process. We're sorry we can't be in every province. There's a great deal of expense attached to travel, and we've used teleconferencing in other committees, so we're trying it in this committee. I hope it's suitable for you.

From the P.E.I. Health Coalition, we have Mary Boyd; from the P.E.I. Senior Citizens' Federation, we have Gary Naylor; and from Alert P.E.I., we have Brian Curley.

Perhaps I can turn to Mary Boyd and ask her to start her opening remarks.

Welcome.

Ms Mary Boyd (Chair, Prince Edward Island Health Coalition): Thank you very much. Mr. Naylor is going to start first.

The Chairman: That's fine.

Mr. Naylor.

Mr. Gary Naylor (Secretary, Prince Edward Island Senior Citizens' Federation): Thank you, sir. Good afternoon, ladies and gentlemen. I have a three- or four-minute presentation from notes.

My name is Gary Naylor. I am representing the Prince Edward Island Senior Citizens' Federation. Thank you for this opportunity to appear before your committee.

Drug costs to this province's seniors have increased by about 400% since 1993. Those seniors who belong to private or public service health plans have experienced large increases in premiums and in co-pay and deductible amounts during the same period. The reason: the ever-inflating costs of prescription drugs, in combination with a provincial government trying to recover some of these costs in the face of reduced federal health care transfers.

Canadian seniors, by far the great consumers of prescription drugs with the smallest chance of adjusting their income to cope with increased costs, are caught in the middle, both financially and medically.

I've watched many hours of the deliberations of your committee and the presentations to it on the cable television parliamentary affairs channel, mostly consisting of masses of statistics and amazing claims from the two major drug supplier groups, the multinational brand-name companies, and the Canadian generic drug manufacturers.

The multinational brand-name industry does not appear to me to have delivered on the jobs and economic benefits promised when Bill C-91 and its predecessor, Bill C-22, were passed. Your committee will have to decide if this perception is correct or not.

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But, hey, if we trusted these companies in the first place, it seems to me we would not need such large and expensive government health protection agencies to check the safety of their new products before they're available to consumers.

The 20-year patent protection is excessive. I suspect that the multinationals' profits are higher than they're telling you, and I find it very hard to understand the automatic, sometimes multiple, 30-month extensions by which the brand-name companies are able to keep generic drugs off the market.

Make no mistake, committee members, Canadians want to see cheaper prescription drugs on the market, be they generic or brand name. Considering the increasing percentage of health care dollars being paid for drugs, it is in the interest of all Canadians to see lower prices for prescription drugs.

Many of us watched the presentation to your committee by Industry Minister Manley and Health Minister Dingwall. In my opinion, the ministers were giving you marching orders in no uncertain terms, and those marching orders were to protect the multinational manufacturers and their market.

With all due respect, I found myself longing for the days of the old Liberal opposition rat pack. Holy cow! They'd be jumping over chairs, tables, and chandeliers to oppose Messrs Dingwall and Manley.

Committee members, Canadian seniors need and deserve lower-priced prescription drugs. Be fair to the people who are your constituents, because you will be held accountable.

Thank you.

The Chairman: Thank you very much, Mr. Naylor.

Ms Boyd, are you next?

Ms Boyd: Yes, thank you, Mr. Chairperson.

The goals of the Prince Edward Island Health Coalition are similar to those of the Canadian Health Coalition. You know those goals because you've already heard their presentation, so I won't repeat them.

In my first comment I want to express disappointment at the government's lack of democracy and its lack of respect for people who feel responsible enough for the health of our Canadian brothers and sisters, and indeed for their own health, to take the time to try to enter into dialogue with the government on such an important issue as the review of Bill C-91. We protest the use of this means of communication. You should be out across the country. There is money if there is the political will to do this.

In the 1980s, prior to the passage of Bill C-22, our coalition foresaw that the cost of prescription drugs would rise drastically and that patented drugs would be the culprit. We also protested the passage of Bill C-91 for the same reasons. We know that the cost of drugs has risen dramatically since then. New drugs, no matter what their quality, account for most of the rising costs of health care. Your committee has been given ample statistics to back this claim.

There are now greater inequalities in regard to access to necessary medicine in this country between provinces and within provinces. In Prince Edward Island, where the official unemployment rate is close to 16% - and therefore is really about 32% - and incomes have fallen due to the completion of the fixed link and other factors, seniors, the unemployed, and the working poor complain constantly about the price of drugs. Many are faced with the choice of whether to pay for prescriptions and sacrifice something else, usually an essential like food.

You may be interested to know that 64% of Island families earn $30,000 or less per year; 13% of families have incomes of $10,000 or less; 30.2% of families have incomes of $10,000 to $20,000 - we're already at 43.2% with those two categories - and another 20.8% earn between $20,000 to $30,000. Furthermore, 50% of families experience some form of unemployment every year, and our unemployment insurance has been gutted this year.

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What we're saying is affordability of expensive drugs is something Prince Edward Island is not predisposed to at all.

You can estimate from those figures that many people have no drug coverage and that they have hard choices to make. We know Canada and the United States are the only two industrialized countries without a national drug plan. It's a disgrace that so many people in this rich country are forced to live without such protection.

In fact, there was a woman suffering from multiple sclerosis who had to go and lie down at the bottom of the steps at Province House a couple of weeks ago because she was refused the medication she needed for her illness. She took the drastic step of going and lying down until the premier would have a meeting with her.

The P.E.I. Health Coalition implores the federal government and this committee to help to establish a national and universal drug insurance plan. A national pharmacare program would broaden medicare to assure universal access to health care.

At the present moment in P.E.I., seniors pay $14.85 per prescription for drugs that are covered, and prescriptions have to be renewed every month. They receive mostly generic drugs. If they need a brand-name drug that has a generic counterpart, they have to pay the difference. Also, they must pay for brand-name drugs that have not been approved. In this way, the government keeps its drug costs stable but leaves the sick to suffer the consequences, including having to do without medicine.

There is no doubt in our mind that a national drug plan is needed. Given the sharp rise in the cost of patented drugs, it is important that generic drugs become available as quickly as possible. Reductions of 25% to 30% to the first generic competition and 50% to 60% when four or five generic competitors appear would make the drug plan more affordable.

We agree with others, however, that in order to accomplish this, the ``de-commodification'' of drugs is required. On Prince Edward Island, we have been saying for years that land is a resource, not a commodity. The same is true for drugs. Although they are not limited in the same way as land is, their purpose - restoring people to health - has a high and noble purpose that requires that they be treated as a resource. They must serve people, not profits. We deplore the way drug companies market their products to doctors, and we do not always feel safe with some of those drugs.

We agree that compulsory licensing is permitted by both the World Health Organization, TRIPS, and NAFTA. There is no question that there are clauses that permit governments to introduce compulsory licences under limited circumstances. The federal government, in cooperation with the provinces, could license the production of generic drugs for non-commercial purposes.

Protection of new drugs for 20 years from the day of filing is irresponsible and, I agree with Gary Naylor, excessive - I would say very excessive. This practice creates illness, deprivation of treatment, and accompanying hardships. The trade minister and the industry minister can use the limited clause, TRIPS article 30, or the other-use clause, TRIPS article 31 and NAFTA 1709.10, both of which allow exemptions for compulsory licensing.

We therefore recommend, as does the Canadian Health Coalition, that compulsory licensing should be allowed after four years of exclusive patent protection. Why should the multinational drug companies be subsidized? It's a terrible reflection on the Government of Canada.

I want to end by saying that the talk of slash and burn, debt and deficit, and no money is making people feel so guilty about getting medical care that people are really apologetic about going to the doctor. They're apologetic about being sent for tests. There are all kinds of things being overlooked. People are encountering all kinds of suffering because we're not supposed to ask for these things any more; they are supposedly unaffordable. The reason for this is that this country has cut faster and sharper than any other of the industrialized countries, under the corporate agenda, and at the same time, it gives more generously to the corporations than the other industrialized countries and has been very generous to the drug companies.

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We submit, Mr. Chairperson, that those drug companies have had their day, and now it's time for the citizens of Canada to have their day and to have some justice. Thank you very much.

The Chairman: Thank you very much, Ms Boyd.

I now turn to Mr. Brian Curley from Alert P.E.I. Welcome.

Mr. Brian Curley (Representative, Alert P.E.I.): Thank you very much. First of all, I want to say that Alert is a loose organization of welfare recipients and others who share their beliefs and want to see a little better day for them, and I'm glad to be able to get a chance to speak to this committee.

Drug costs on P.E.I. are preventing poor people from getting prompt medical attention for themselves and their children because they figure it's of no use to go to see a doctor if you can't afford to pick up the medicine he's going to prescribe.

There are prescription drugs that are not covered under private drug plans or provincial government plans for welfare recipients. Some of these drugs are more expensive, like cancer drugs and AIDS drugs.

The provincial pharmacy, which supplies drugs under the Welfare Assistance Act, has a policy of using only generic drugs if they exist. New patented drugs are judged on a drug-to-drug basis. Very few make it onto the list of drugs regularly provided to welfare recipients. For welfare recipients, drugs from local drugstores are subject to a co-pay fee, which is not covered by welfare. Over-the-counter drugs are not covered for P.E.I. welfare recipients. This leads to unnecessary prescription fees and to people doing without simple, effective remedies for their ailments.

Drastic reduction of federal funding in the areas of welfare, health care, and UI is causing more people to forego needed medical attention until they are in deteriorated health, leading to a need of more expensive care or hospitalization.

There are many disabled and working poor on P.E.I. who are scraping by on less than welfare income, who cannot afford drugs they need for chronic conditions or early stages of illness. They have no plans covering them.

There are two possible cases to be made about patented drugs. The first is the overpricing of them. Ninety-two percent of the drugs released since 1991 are little or no better than drugs already on the market. However, they are allowed to come on the market at prices that have increased twice as much as the price of generic equivalents. Surely this could not happen in a competitive marketplace.

GM and other big auto makers have been doing research and development on electric cars for twenty years or more, but they have not been able to dump an inferior product on the market at higher prices than those of existing automobiles.

The second case is in regard to new drugs for which no generic equivalent exists. In this case, poor people are not able to take advantage of these drugs because of high prices, and as I've said, most of these are not covered by any drug plan available to the poor. These prices could be much lower in a shorter period of time if the length of patent protection were shortened.

Government and politicians have lied to Canadian people too many times. They must start to listen to people and carry out their wishes.

We were told that patent law would result in increased research and development in Canada and increased growth in jobs in drug manufacturing by big-name companies. Instead, government funding for R and D has been cut, and drug companies have fled the country for cheaper labour or other perks while still retaining their right to freely market their product in Canada at increased prices. The result is what they wanted: triple the average industrial profit margin and a loss of economy and tax revenue to Canada.

We were told that free trade would not lessen or weaken our sovereignty, but it has allowed this uncontrolled import of drugs into Canada while the patent allows the unreasonable prices to go unchecked by competition. Now the government tells us they cannot make changes to the patent protection because of trade agreements.

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For years government has spun the story that social spending is the cause of our deficit. The total federal government social program spending in Canada is 6% of the federal budget. There are more humane ways to deal with the deficit problem without limiting our ability to provide good social programs.

The alternate federal budget, a sound and well-thought-out work of the Canadian Centre for Policy Alternatives, has been consistently ignored by Canada's finance minister over the past three years. The press has been complicit in this heinous dismissal of sanity and in the spread of propaganda.

The solution is for the Canadian government to act on behalf of the majority of Canadians instead of dancing to the tune of the corporate lobby.

A national pharmacare program should be brought in that would ensure universal access to drugs for all people regardless of their financial status. In this case there would be a strong motivation for government to see that drug prices were controlled within reason in this country. There would be cost savings from lower prices, but there would be larger savings from having a population that is healthier and thus is staying out of hospitals more and incurring less days off work due to illness.

Except for the U.S., Canada is the only rich nation that doesn't have a national drug plan. It is time to sew the patches of the quilt together and to mend all the holes in the safety net where drug coverage is concerned. If any trade deal stands in the way of this small act of national justice, then that trade deal must be amended or, failing that, abrogated. Nothing should stand in the way of Canada amending its own national health act.

Thank you.

The Chairman: Thank you very much, Mr. Curley.

Now, the procedure is that we go around the table once, and the members have 10 minutes to ask questions and to hear your answers. If a question is directed to somebody else and you would like to be involved, just put up your hand and I'll recognize you.

[Translation]

Mr. Ménard, would you like to begin?

Mr. Réal Ménard (Hochelaga - Maisonneuve, BQ): Welcome to our hearings. I get the feeling you are well represented. I share your concern about what could be considered the excessive profits of multinational pharmaceutical companies. A little later, I would like to explore with you the linkage that should be made between pharmaceutical company profits and the obligations they should have with respect to the marketing of new drugs.

But first things first. Did I understand P.E.I. Health Coalition representatives to say that, according to their estimates, the price of drugs had increased by 400 per cent? I would like you to explain where you got this figure from, because it's quite alarming.

[English]

Mr. Naylor: Mr. Ménard, the 400% increase was caused by a combination of an increase in drug prices and an increase in the provincial government's cost per prescription for senior citizens under the seniors' drug plan. This was brought in in self-defence by a poor provincial government trying to keep up with the cuts in the federal health transfer payments.

[Translation]

Mr. Réal Ménard: So, what you're really saying is that the 400% increase you have referred to is the result of both market forces and cuts in transfer payments to the provinces. In that sense, you are critical of government cuts in provincial transfers.

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What I understand you do be saying, then, is that the primary cause of that 400% increase is not that the Patented Medicine Prices Review Board has not done its job, but rather that lower transfer payments have meant fewer resources for the provinces. Is that correct?

[English]

Mr. Naylor: The transfer payments forced the province to recover more of the money from the senior citizens under the seniors' drug plan. That was probably at least as much to blame for the increase as the basic cost of drugs to the province. I don't know the ratio of the two, but the total increase is over 400%.

[Translation]

Mr. Réal Ménard: Supposing today or tomorrow, you were to become deputy minister responsible for policy development at the federal Department of Health and were told you had the power to really influence the course of events. What would you consider to be an appropriate balance between the need to protect drugs and the need to ensure they are accessible?

The Canadian Health Coalition talks about four years of patent protection. Is that also the position of your organization?

[English]

Mr. Naylor: I don't quite understand the four-year protection. I understand that the 20-year protection is from the time of the patent.

Ms Boyd: The four-year protection is to go back to where it was before the patents, that is, 1993.

Mr. Naylor: Yes, we would agree with that.

[Translation]

Mr. Réal Ménard: That is the position of the Canadian Coalition, and I understand that it is also the P.E.I. Health Coalition's position. Is that correct?

[English]

Ms Boyd: Yes.

[Translation]

Mr. Réal Ménard: I see.

[English]

Ms Boyd: The statistics show very clearly that the part of health care that is the most expensive and that is rising the most rapidly, and even rising, is the cost of drugs. We attribute that to this 20-year patent that was given to the transnational corporations. We believe that we should do away with that legislation and go back to where we were before those patents were extended. Yes, four years is enough for those companies.

[Translation]

Mr. Réal Ménard: Without getting into technical considerations, I think you are in a position to provide the Committee with a very grassroots' view of things. I think it's important that we respect that. But as you know, we have a quasi- judicial tribunal, called the Patented Medicine Prices Review Board, that has to report to Members of Parliament and the Canadian public every year on changes in drug prices, by comparing them to prices in seven other reference countries. The Board tells us that over the past few years, the rate of increase in the cost of patented medicines in Canada has been far below the inflation rate. You question that methodology and do not accept that assessment.

[English]

Ms Boyd: I think the problem we have there is that this assessment has been limited to those particular seven countries. There hasn't been a comparison with the 24 OECD countries done. When you look at some of the other countries, you find that in fact Canada is much worse off. We don't know why those seven countries were chosen. We could say that it was probably in order to justify keeping this 20-year patent and keeping the price of drugs up. So if they say that about these seven countries, I think there are some questions about that. There are questions about the choice of countries. It does not mean that Canada is way ahead on this. Therefore, we would like to see fair reporting.

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I really appreciate, Mr. Ménard, your questions and how you are trying to draw us out. I really hope the answers to these questions are going to carry over into this report and into recommendations.

I want to say that we handle telephone calls to our coalition from the multinational drug companies asking to have them come down to Prince Edward Island and sit with our health coalition and explain some things. I consider this to be an attempt to brainwash us. I think that lobby is always there to brainwash and to try to distract people who care about people and who care about what's happening to the poor and the middle class in this country. With all that kind of pressure, I'm not surprised they would select seven countries and try to make Canada look best at that point. It's not fair.

[Translation]

Mr. Réal Ménard: As sitting Members of Parliament, we can reassure you about the fact that both sides are engaging in some pretty intensive lobbying. I can assure you that both the generic drug manufacturers and the brand name drug manufacturers each have their own psychological space. One group is on the left and the other is on the right, but both make sure they get noticed.

Would you be supportive of an amendment making it clear that the Review Board's mandate must be broadened to provide for comparisons of our drug prices with those in all OECD countries? I believe that's an amendment that would be in order and that we might want to bring forward. But don't worry about the lobbying.

[English]

Ms Boyd: Yes, it would. Please make that recommendation to broaden this. Thank you.

The Chairman: Thank you, Mr. Ménard.

Mr. Mayfield, please.

Mr. Philip Mayfield (Cariboo - Chilcotin, Ref.): Thank you very much, Mr. Chairman.

I'd like to thank you for your presentation this afternoon.

I suspect that no matter which way we look at this picture, we have a lot in common, and that is the best interests of our health care system and those who need to benefit from it. I hear very much your concern about rising costs for consumers. That's a concern for me, too. But I have another concern as well.

I have a couple of letters in my hand, one from an epidemiologist at the Vancouver Hospital and another from the neurology division at the University of Ottawa, who are saying that the changes in the bill in 1992 have greatly assisted them in their research efforts. Quite differently from you, they are strongly encouraging the committee to not make changes to reduce the patent period. That's basically what we're talking about, the Patent Act, and that's why you're talking to the committee on industry and not the committee on health.

My concern, having worked in supporting people with AIDS and other diseases in hospitals, is that the drugs that are needed are available as quickly as possible. I was talking to a person who is involved with the palliative care unit at St. Paul's Hospital in Vancouver - I'm from the west, as you might imagine - and this person was saying that for the first time since that unit opened there are no AIDS patients on the unit and gave credit to the new drugs that are being used to counteract that disease. I really felt a sense of victory that some progress was being made.

I also remember when some of these drugs were introduced, the difficulty people were having in even affording the drugs they needed to protect their lives and the fight that was put up to make these drugs available. Now, the scary disease is VRE, vancomycin-resistant enterococcis. The epidemiologist from Vancouver Hospital is concerned that reducing the patent protection period might jeopardize their research into the drugs that would be necessary to counteract this condition.

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I'm wondering how you see the production of new drugs being possible if the drug companies, as they say they have come as a result of the improved environment for research and development, will not be able to stay if that environment is diminished again. I'm wondering how you see the possibility of maintaining the necessary research for the diseases that seem to be threatening in a way that they have not in years past. How do we maintain that necessary research? Where is the money coming from?

Ms Boyd: First of all, we have to say that there isn't a contradiction. I don't think there will be less research as a result of going back to the four-year period, because I remember very well before Bill C-22 and Bill C-91 that the multinational drug companies promised more research.

That was one of the things they hooked the government on, that they would increase research and provide more jobs. They didn't increase research. They dropped jobs - they cut out a lot of jobs - and most of them were in research. That didn't materialize, so we cannot depend on these companies for more research and more jobs.

The other thing that is important is that these new drugs, when they come on the market, are so costly. That's a contradiction. I know that the Canadian Health Coalition did say that the money for research and improvement could be provided through putting a special tax on some of those companies from the sale of drugs in Canada, and that would specifically go toward the drug plan. It would specifically go to assure that there will be research.

To just leave research up to multinationals, who say they're going to do the research in return for this 20-year patent, is to leave ourselves in a very, very precarious situation, on a very slippery slope. We know that many of the new drugs that have come out - I think over 90% that have come out lately - are not an improvement on the old drugs. So there are a few drugs, but very few that have had any new effect.

I would submit that this way of doing it is not working and that we have much more hope of making it work by rearranging and changing, as we're suggesting.

Mr. Philip Mayfield: I'd like to make some comments on what you've just said.

One of the difficulties the committee has is that as various groups bring their information to us, it doesn't always say the same thing. For example, you have said that costs have gone up. One of your members mentioned that companies are leaving, that research is not being maintained, and yet there's other information that suggests that since this bill has come in, the brand-name pharmaceutical companies have met and exceeded their targets in research, in the number of people, in new people involved in research, the facilities, the number of programs.

Further to that, and this is not information from the drug companies, prices have actually declined - perhaps not costs, but consumer prices have declined - and that the system seems to be working better now than it was before the introduction of the bill.

That's the difficulty the committee has in looking at the information. We will have to decide, I presume, which information matches the research that we are independently doing ourselves.

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I would also like to mention that not only the pharmaceutical companies are involved in this research. For example, Vancouver Hospital and the University of Ottawa are not multinational corporations, but they are benefiting from research money provided by the large corporations.

I have a good deal of concern, because I believe we have seen this industry begin to grow, the research begin to grow, and I feel personally that there is a threat to this research. I'm wondering how you see avoiding that threat to the research that's necessary.

Mr. Naylor: I'd like to speak briefly to those letters you have.

I fully appreciate the difficulty you as a committee have, and you've quoted a couple of letters talking about the values of the patent protection. But I wonder how many letters could be provided to you by general practitioners all over the country telling you about senior citizens and welfare recipients who had to go to food banks to get food because they were spending all their money on drugs they can't afford.

How many letters would you require to offset the positive effect of patent protection that those two letters have obviously had on you, Mr. Mayfield?

Mr. Philip Mayfield: I have one last question. Would it be helpful to make a distinction between new drugs and old drugs? I think you mentioned - and I would agree - that it's the newer drugs that are costing the money compared with the older drugs. How could we make a distinction in pricing these for the benefit of all concerned?

Mr. Curley: They shouldn't be priced out of whack with other drugs that treat illness just because they're new. When the drug companies are earning three times the profit of other industries, it seems a little excessive to me.

I don't have a big research library or anything to come up with a whole lot of statistics, but those drug companies lived that were here in Canada before the 20-year patent was given to them. While four years may be a little short, I think 20 years is definitely excessive. As I say, I can't substantiate all these things with a lot of statistics, but I think the drug companies being left to do all the research is not totally a good thing. They tend to focus all their research on areas where they have a large target group to market their drugs to. I think there's a place for government to do some research in those hospitals, for government to fund some research into some diseases that are very bad, that are very, very tough diseases but only affect smaller portions of the population.

The Chairman: Thank you very much for that.

Ms Boyd: Just to continue that, I think you have the facts reversed. The older drugs are not the expensive ones. The older drugs are less expensive. In the last few years, 404 drugs were patented and only 33, or 8%, were a breakthrough. Yet of those 404 that were patented, they all went up in price, even though they weren't a breakthrough at all. So it's not the older drugs that are more expensive. It's this 404, most of them useless. Let's zero in on that.

The Chairman: Thank you very much.

Mr. Patry, please.

Mr. Bernard Patry (Pierrefonds - Dollard, Lib.): I have a couple of questions. First of all, you mentioned that some new drugs are not available on the provincial formulary.

As far as I understand it, the board of doctors, pharmacists, and senior officials of government decide if a drug is on or not on the formulary. If it's not on the formulary, it is because the board feels this drug is either not a new drug or can be easily replaced by a generic or other brand-name drug. Do you feel that such a control of the formulary by provincial governments is right, or that all drugs should be on the formulary?

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The Chairman: Would anybody like to take a stab at that one?

Go ahead, Mr. Curley.

Mr. Curley: I think it's probably right, if their considerations were not influenced so much by the price of the drugs. As I said, the provincial pharmacy that supplies drugs to welfare recipients here and to.... They don't supply it, but the same policy pretty well applies to seniors here on the Island. The government will supply only generic drugs if they are available. That's probably fine in most cases if it saves money, but when you get into the patented drugs, some are on the list and some are not. For the ones that are not, I suspect that in some cases it's because of high costs.

I know a man who was going to have cancer treatment and he was to have needles of chemotherapy. I think they cost about $300 a shot. He was on welfare and welfare wouldn't cover them.

There's definitely a gap in the system because of high prices.

Ms Boyd: All useful drugs should be on that list. They should be generic in order to cut the costs, which means that four years is enough for the patent. That's why we do need a national universal drug plan, because in fact we can't break through some of this bureaucracy, and we can't get the right kind of medicine to the people when they need it. Brian's example is one example of what's going on, of the suffering because they're not on this list.

The Chairman: Thank you.

Monsieur Patry.

Mr. Bernard Patry: Mrs. Boyd, you just mentioned that four years is enough for the patent. Where do you start the four years? What's your explanation about this? Where did you take this four years from?

Ms Boyd: I know that you count from the time the drug is registered and they start working on it. Then, of course, there is the time at which it comes onto the market. So I guess it is from the time the drug appears on the market. Four years is enough for sales, and then there should be a generic copy. Yes, that's what I think.

Mr. Bernard Patry: Thank you.

You are also talking a lot about the huge costs of medication. You represent seniors' groups, so you probably remember hearing years ago about a friend of your parents who had an operation for stomach ulcers and stayed in the hospital for a couple of weeks, at a huge cost for governments. Now we don't have such operations any more because of a new medication for ulcers.

Now the focus is on cholesterol. We're talking, and seniors are talking, about good and bad cholesterol. With the new drugs, thousands of patients have been saved from having bypass surgery. A bypass operation costs over $20,000.

The costs of health care and the costs of medication are increasing, but they're increasing for a few reasons. One of the reasons is the aging of the population. Also, we have good medication and we have people taking this medication instead of having surgery. We have prescriptions and they reduce the surgery and the hospital costs. People are returning from hospital to home and to work much faster.

Do you feel that not only the brand-name companies but the generic companies should be under the jurisdiction of the Patented Medicine Prices Review Board?

Mr. Naylor: Goodness, I have no idea.

Ms Boyd: Could you repeat the last part of the question, please?

Mr. Bernard Patry: You mentioned the huge cost of the medication, and you seem to focus more on the new brand-name drugs that are expensive. They are expensive for many reasons. They could be expensive because, as the witnesses told us, it costs roughly between $400 million and$500 million to find a new drug, a breakthrough drug. On the other hand, you have the generic companies who are coming into the market and having 100% success. They are coming into the market with drugs at 75% of the cost of the brand-name drugs.

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Do you feel that both the generics and the brand names should be under the jurisdiction of the Patented Medicine Prices Review Board?

Ms Boyd: I think both of them certainly need to have the scrutiny. Generic drugs are starting to increase a bit too, so yes, the cost of generic drugs should be controlled as well as the cost of new drugs.

You brought up the anti-cholesterol drug, and yes, you can say that the anti-cholesterol drug will save people from bypass surgery and so on, but remember that the anti-cholesterol drug has side effects. These side effects can cause other problems. Because of the cost of these new drugs, whether it's the anti-cholesterol one or not, and because of the side effects, a lot of people are trying to find other solutions to lower their cholesterol in order to protect their health. In fact, people don't have a lot of confidence in these drugs, for all the hoopla about them being new and so great.

That's the thing. Is it a breakthrough drug or is it a drug with side effects that causes other kinds of harm to people?

Mr. Curley: The advertisements -

Ms Boyd: Yes. We're hearing all these advertisements about how great these things are, but in actual fact, when it comes down to the person wanting to take that drug, that person has to know quite a bit about whether this is going to be good for their health or whether it's going to create other health problems as well.

We're in favour of holding the price on generics as well as the new drugs. We're in favour of a lot of study on those things.

When you say there are a lot of savings because people are not in the hospital as long and they can go home earlier, this is becoming another cost to people because of privatization. People are not admitted to the hospital or they're released from the hospital early. They go home, but now there's a fee for home care. We've taken people out of the hospitals before we've put in an adequate home care program, and now we're going to start having fees for home care service, which people can't afford.

Let's have a universal drug plan and let's strengthen our universal medicare. Let's put the patient first. Let's put the sick person and their needs first, not the companies that are producing and selling.

Mr. Bernard Patry: Thank you very much, Mr. Chairman.

The Chairman: Thank you very much. I speak on behalf of all of the committee members when I say that we very much appreciate both the time you've taken to be with us and the time you've obviously taken in preparing your report. I thank Mr. Curley in particular. We need to hear from people on welfare and their representatives, because often they don't get an opportunity to come before the committee. That's why we try to use this format, to make sure we reach into every city.

I just want to say for the record that there will not be one Canadian who wrote to the committee or phoned the committee who won't be heard from. We're setting up a very open process. It takes one or two sessions to get used to teleconferencing, but I think most people, by the end, feel they've had an opportunity to present their ideas.

Mr. Curley, Ms Boyd, and Mr. Naylor, thank you very much again for taking the time to be with us. We appreciate your words and they will be taken into account when we make our recommendations. You can tell that many of the members are sympathetic to the issues you have raised with us.

Goodbye.

The committee is suspending its activities until 5 p.m. Members, please try to be back at about 4:50 p.m.

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The Chairman: The committee resumes its deliberations pursuant to Standing Order 108(2), a review of section 14 of the Patent Act Amendment 1992.

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We continue today with another round table, this time with people from Manitoba. As a fellow Winnipegger, I'd like to welcome you to the committee deliberations and the use of videoconferencing. We've found this to be a very successful technique in the last year in the House of Commons, and I hope you all feel comfortable with the technology by the time we're finished. We can see you clearly, and we look forward to your comments.

Did you have anybody among yourselves who wanted to start first? If not, I'll call uponMary Pankiw from the Manitoba Society of Seniors to start. Is that okay with you, Mary?

Dr. Mary Pankiw (President, Manitoba Society of Seniors Inc.): That's fine.

The Chairman: Thank you.

Dr. Pankiw: Thank you for the opportunity to participate in a round table discussion. My name is Dr. Mary Pankiw. I'm the president of the Manitoba Society of Seniors Incorporated, MSOS, a non-profit advocacy organization founded in 1979 by seniors who felt that older Manitobans needed a united voice on the issues affecting them.

The mission of MSOS is to obtain the highest possible quality of life for Manitoba seniors, age 55 plus, by advocating their needs and concerns.

In its review of Bill C-91, the Manitoba Society of Seniors urges you to consider the interests and needs of seniors on limited incomes along with Canadian taxpayers and consumers. In 1996, Manitoba's pharmacare program cut out $20 million in benefits. This essentially eliminated benefits to all but the poorest Manitobans with chronic illnesses. Pharmacare is now based on family income, rather than age, resulting in drastic deductible jumps.

This pharmacare has caused hardships. Some seniors can no longer afford to take their medication every day as required. Others are trying to stretch their prescriptions in ways that aren't medically sound.

Even small increases in prices of drugs have a significant impact on seniors with limited incomes, especially those with lower incomes. Every dollar they spend is for the purchase of some basic requirement or service. Consequently, seniors are forced to give up some other necessities in the context of their limited financial resources and be deprived of basic needs.

In the past five years, prescription drug costs have skyrocketed. The price of prescription drugs rises 12% a year because Bill C-91 delays the introduction of cheaper, no-name, generic drugs. More generic competition lies in the public interest.

If generic drugs come on the market, lower-priced drugs become available. The availability and affordability of prescription drugs play a significant health role in the lives of seniors when basic health services are being cut.

With reference to a promise in the federal red book, the Liberals state:

Liberals cannot and will not accept a health care system that offers a higher quality of care for the rich than for the poor.

The Liberal government now has the opportunity to do something positive and respond to the challenges in the health care system because of its commitment.

Further, government is saying that NAFTA prevents it from having compulsory licensing. However, there are opinions of several legal trade experts who do not agree with this viewpoint. Accordingly, if government wants to do something, it can, because it has the power.

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In essence, drugs play a fundamental role in our health. The price of drugs is preventing some seniors and consumers from accessing them. Our seniors are greatly concerned about the high cost of drugs and the savings potential by utilizing generic drugs that are the equivalent of the brand names. The statistics suggest that this cost saving is in the 40% to 50% range. Furthermore, not all seniors and consumers are covered by a drug benefit plan.

In conclusion, a nation's most valued resource is its people, healthy people. It's worth noting that 3.6 million Canadians are not covered by any drug benefit plan. Let's make health a priority and keep our nation healthy.

The Chairman: Thank you very much for that, Mary.

I'll turn to Vera Chernicki. Is Vera there?

Ms Vera Chernicki (President, Manitoba Nurses Union): Yes, I am.

The Chairman: Would you like to give your presentation now?

Ms Chernicki: Thanks for the opportunity to present at this video teleconference.

The Manitoba Nurses Union represents approximately 11,000 nurses across the province, including registered nurses, licensed practical nurses, registered psychiatric nurses, some operating room technicians, and some community health workers.

Our brief is short, only about nine pages long, but I'm going to provide a quick overview of our three main concerns and why we believe Bill C-91 must be amended to allow the compulsory licensing of drugs. I also want to stress that we're concerned about the democratic process, because the issue of pharmaceutical drug costs is one of the most critical ones facing the health care system, affecting virtually every Canadian and family in this country.

It's most unfortunate that Canadians have not been more widely consulted as part of this review, which impacts us all. I was pleased to see that you were having these conferences, at least.

I was also concerned that public input might not be seriously welcomed at this point, as Health Minister Dingwall has made the government's position on Bill C-91 fairly clear, which is that there will be no change to the length of the patent protection. But we're hoping our input will be heard.

Our first issue is that health care needs should be a priority. The federal government must address the question of how to create a balance between the public interest and the corporate interest, a concept that says the public good, and the role of government in defending it, is at the heart of our medicare system. Equal access to quality health care for all Canadians depends upon fairness and balance in our laws and government policy.

Unequal access to needed medications is unjust and causes unnecessary suffering and pain, if not loss of life. The provision of drugs should therefore be seen as a public service, and in many cases a medically necessary one. It's an unacceptable reality that many Canadians do not have access to medications they need, for financial or other reasons.

The second concern is drug costs. The cost of drugs makes up an increasing portion of total health care spending in Canada as prices and utilization rise. Rising costs are driven in part by the high prices of patented medicines, particularly new patented drugs introduced onto the market. Patent-protected drugs make up 62% of all prescriptions but account for 86.6% of drug costs. That's a 1995 statistic.

The National Forum on Health made it clear in its final report that rising drug costs are partly caused by Bill C-91 and its impact on the availability of cheaper generic drug alternatives. The forum also pointed out that the Canadian public is well aware of the significance of Bill C-91. It recognized that its extended effect is to limit competition and raise prices and industry profits, thus contributing to the overall escalation of health care costs in Canada.

Federal government policy on drug patent protection has hurt Manitobans who need prescription drugs. In Manitoba, rising drug costs have played a role in the almost total erosion of what was once the best pharmacare program in Canada.

A third issue is that we need to look at alternatives. Health Minister David Dingwall and others have stated that Bill C-91 must be left unchanged in order for Canada to meet its international obligations under NAFTA and the WTO, but the federal government does have alternatives.

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Trade experts have argued that compulsory licensing could be covered under a limited exception clause in both NAFTA and TRIPS. Compulsory licensing could be argued under clauses of NAFTA and TRIPS, which endorsed the other use of the subject matter of a patent. This may be justified for the purpose of correcting anti-competitive practices and for public non-commercial use.

For the government or a non-profit agency to apply for a licence to manufacture patent-protected pharmaceuticals, Canada's trade obligations could arguably be met. This interpretation is supported by Barry Appleton, an expert in international trade law. In addition to the possibilities under limited exception and other use clauses, Appleton argues drugs could be excluded from patent protection under a law with language protecting the order of public or the general public benefit, including the protection of human, animal, or plant life or health.

Again, the creation of a national universal drug plan would, in Appleton's view, allow Canada to alter C-91 and allow compulsory licensing.

In conclusion, the Manitoba Nurses Union urges the government to reconsider its position on patent protection. We must strike a reasonable compromise, one that is fair to the research and development commitments of pharmaceutical companies but also safeguards the public interest.

Compulsory licensing with properly drafted legislation and regulation can serve the needs of all Canadians, as it has done in the past. The government also has other means at its disposal to limit the cost of drugs and to implement responsible and progressive policies, including a universal national drug plan.

I thank the committee for its consideration of our concerns.

The Chairman: Thank you very much, Ms Chernicki. You had some very, very good ideas there. I know the committee members have discussed it with other witnesses and I'm sure we'll get back to you.

Now I'd like to call upon Dr. John Langstaff from the Health Care Products Association of Manitoba. Welcome, sir.

Dr. John Langstaff (Representative, Health Care Products Association of Manitoba): Thank you. I'm John Langstaff. I'm the president and chief executive officer of Cangene Corporation, a publicly traded biotech company based here in Manitoba.

I'm not here to speak in my capacity as president of Cangene. Rather, I am here as a representative of a small group of biotech companies in Manitoba, which are members of the Health Care Products Association of Manitoba, or HCPAM.

Interestingly enough, we hope to end up with the same conclusion, but we will take a different route there. HCPAM is an organization whose focus is much different from the biotech organizations in the rest of Canada. This is true of the biotech portion of our association as well.

We have a global focus, with the key element being the manufacture or eventual manufacture and distribution of our products. We perform a considerable amount of research and development, but in general the current and future value of our companies is in the manufacture and production of our products. This research and development phase of product development appears to be discussed far out of proportion to its importance in the development of the industrial components of the biotechnology industry in Canada.

The industry here in Manitoba is strong. It has a tremendous potential to expand and become a major contributor to Manitoba and to Canada. Do we feel the Canadian government should assist us, nurture us, and help us to beat our competitors? You betcha.

Do we feel the Canadian government should worry about how it can take advantage of aspects of international agreements for the benefit of Canadian companies and Canadians at the expense of foreign companies? Of course we do.

Are we asking for the government to pamper us and make us uncompetitive? No. We're asking the Government of Canada to do its part in making Canadian companies successfully compete with other companies from other countries.

Do we believe changes can be made that would benefit Canadian industry and contribute to its ability to grow in Canada? Yes, and I believe with these changes we will see an industry that, instead of having a huge deficit in pharmaceutical products, will develop a strong export industry and have the ability to truly support long-term innovative research and development in Canada.

What changes do we believe are required? Here in Canada we need rapid licensing of our product by the health protection branch. We do not want, nor do we need, patent term restoration. This is of tremendous importance, as it allows us to rapidly get our products into the market. Also, it allows us to more rapidly enter certain markets elsewhere in the world where the regulatory systems are not as advanced.

The HPB has made tremendous strides in the past couple of years, and with some of the recent operational changes such as pay for service, etc., we see this as only getting better.

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[Technical Difficulty - Editor]...Is this part of the Bill C-91 review? Absolutely. We understand there is considerable pressure for a patent term extension due to regulatory delays at HPB. This does not make sense in the context of encouraging the development of small biotech firms. We only have one, two, or three products and usually a smaller amount of money in the bank. If we get a delay in licensing by HPB, restoration does nothing. It is no good for us because we're out of business.

Does it benefit big, foreign-owned multinationals? They have multiple products and a huge bankroll, albeit mostly in their head office. They like to stagger product introductions. But more importantly, they get to acquire the small company that went out of business and its products, because selling it off is the only way to survive.

This concept of patent term restoration does not in any way address the problems facing small Canadian biotechnology companies and is an obvious grab for control of our small emerging industry by the larger multinational groups.

We need rapid licensing and rapid market entry. We believe this is impinged upon by section 55.2 and we would like to see it removed. Much of the biotech industry is made up of broad patents that overlap both the processes and products many companies are developing. Patents in our industry are in a state of flux. Interestingly enough, many of the patents specific for the major biotech products have not issued as yet, even though they issued in the United States in the mid-1980s.

It is important to note that patents are not simple things. They contain multiple layers of invention and exclusivity. Many of the patents we have today and we will have tomorrow interact with each other. This is important for small biotech companies.

Again, a law such as this has the potential to delay entry of a product into the market. This causes small companies much greater harm than it causes large companies. Additional planning delays and the receipt of a notice of compliance are of critical importance to small companies with limited resources.

Fighting the validity of patents was always intended to be done in a court of law, and in the past this has sufficed. Another aspect of this is that courts are generally unhappy with the review of many unrelated patents that are submitted purely to delay and will likely focus the issue on the patents of issue. This simplifies the tasks for small companies, as well as the decisions and the investments these small companies must make.

As I indicated before, this has not been a problem as yet. But the horizon is clouded by these issues and by the fact that everyone agrees in Canada and elsewhere that there is tremendous confusion surrounding biotech patents.

We would also like to see the government develop a strategy that encourages export of products and allows export of products to jurisdictions where there are no patents or the patents have expired. As a small group of biotech companies located in Manitoba and with a focus on manufacturing and export, we believe this to be a critical component.

Why is this law in place? This again appears unclear, since compensation for patent infringement is only dependent upon loss of potential income. The manufacture of products in Canada and the export to other countries where the patent is expired seems to benefit Canada and hurt no one.

Of interest in this regard, the company I work for performs contract manufacturing. Now many small companies are looking at contract manufacturing with foreign companies and the shipment of the product back to these countries. In many cases they have no intention to develop this product in Canada, and as such they do not become subject to review by Health Canada.

Many biotech patents in Canada are issued much later than elsewhere, and this will restrict our small companies from potentially developing and manufacturing these products in Canada while our competitors in other parts of the world get a head start.

The biotech industry in Manitoba is largely supported by the Canadian generic industry. Cangene, my company, is majority-owned by Apotex. We have put huge amounts of money into Manitoba and believe it is a great place for the industry to develop. We believe we have made in the past, and potentially will make in the future, tremendous contributions to the development of industry in Canada as a whole.

Thank you.

The Chairman: Thank you, Dr. Langstaff.

I'd like to turn now to Mr. Al Cerilli. Welcome, Mr. Cerilli. You are from the Congress of Union Retirees of Canada. There are two other gentlemen with you. Are they making their own presentations, Al, or they with you?

Mr. Al Cerilli (President, Congress of Union Retirees of Canada (Manitoba)): They might make some comments later, but they're with me right now. I'll be speaking. You know John Pullen, our first vice-president. Bryant Gunhouse is the chairperson for the networking committee of a retirees' organization representing some 40,000 Manitobans.

The Chairman: Thank you very much. Please go ahead with your presentation.

Mr. Cerilli: This is to the House of Commons Standing Committee on Industry reviewingBill C-91 at this Winnipeg, Manitoba, round table. It is submitted by the Manitoba Federation of Union Retirees (CLC, Manitoba Federation of Labour, and Congress of Union Retirees of Canada).

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Our organization supports the recommendations outlined in the brief by the Canadian Health Coalition in association with the Medical Reform Group dated March 4, 1997. We also support the recommendations that will be presented to your committee by the Congress of Union Retirees of Canada on March 19.

Many of the comments that are being made in regard to world trade organizations are included in most briefs, so I'm not going to repeat them. I'm simply going to highlight our position as Manitobans.

In this presentation to the committee we wish to deal first with the Manitoba experience with cheaper generic drugs and the saving of millions of dollars in health care costs. The title of our presentation is ``Health Care & Cheaper Drugs''.

In review, during the first NDP government under Premier Ed Schreyer, an advisory committee on central drug purchasing and distribution was established by Order in Council 62/71 dated January 27, 1971. Health Minister Toupin and Industry Minister Len Evans were responsible for it. It was made up of four doctors, an economist, and six pharmacists. Its report was made public around April 1972. It might be worth while for your committee to read that report.

I had the opportunity to interview one of the pharmacists on that committee, Mr. Archie Orlikow, in regard to those recommendations and to ask what the Manitoba drug standards and formulary has meant to the Manitoba government and Manitobans. I also asked if he could suggest with whom I could talk at the Manitoba pharmacare administration. First, Mr. Orlikow, a semi-retired pharmacist, informed me that because of the mandatory interchange replacement formulary for the use of cheaper generic drugs as prescribed by doctors, Manitoba has had an estimated savings in real dollars of about $345 million to $460 million from January 1974 to December 1996, a 23-year period.

Manitobans, who, like other Canadians, feel that for the last 12 years our weak federal government has been hell bent on dismantling health care, education, and so on in this country, were jolted with the present Tory provincial government's introduction of an income-based deductible for the Manitoba Pharmacare Plan, which took away any dollar advantage for the sick and the needy.

This federal government has to take responsibility for dividing Canadians and for tearing this country apart, and for saying one thing while in opposition and then implementing some of the most draconian laws that exist in modern society. The federal government's change in the way it transfers money to the provinces will eventually break up Canada and result in eight to ten territorial standards, which will govern the health care system and other provisions.

The federal government should also be held accountable for the jobs that may be lost in the generic drug industry. The committee is well aware of the problems that exist here in Winnipeg in regard to the income of the generic drug maker, Apotex.

The Liberals can't go around the country at election time promising jobs for everyone and then, once in government, govern like the government they replaced. Young Canadians expect a better deal from their government at all levels. The generic industry could mean research and development for those young Canadians.

I did say earlier that in my interview with Mr. Orlikow it was suggested that I also contact the Manitoba Pharmacare Plan for information. I quote:

Pharmacare estimates prescription drug price increases of about 50%-60% over the last 10 year period. However, because of the generic substitute, over the last two years tracked the average increase in price has been 4% to 5%.

Manitoba Pharmacare also concluded that with the interchangeable replacement in the Manitoba drug formulary for compulsory generic drugs, it has saved $15 million-plus a year, and that over the last five years it has saved $75 million. Yet, in 1996 the provincial Tory government introduced a family income-based deductible, leaving young and old families with a user fee structure unparalleled in modern, rich Canada. What pharmacare introduced in the 1970s was undone by the unethical governments of the 1990s. We are not pleased with the about-face by the Minister of Health in abandoning the fight for just change in Bill C-91.

Mr. Dingwall, we shall not forget, and you as well as Industry Minister John Manley will go down in history as those who could have made a difference towards making progressive and bold change in order to save and expand our Canadian health and drug care system and chose not to.

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The federal government, in its action to balkanize this country, in destroying and disregarding the plea for a change by young Canadians, is guilty of the worst type of cruelty and abuse. Employment allows older workers to retire in dignity and allows younger generations an opportunity to strive for paying their own way. When this opportunity is snatched away from them, their health is affected. Whether this government or any other level of government likes it or not, they become responsible for all the stress-related mental and physical problems that come about.

There is a need to re-think government direction of destruction, and we have witnessed many changes in our lifetime. However, the direction your government has chosen is one-sided towards the corporate belief of this country and this planet. Stop and do the right thing.

We hope you will have as read into the record the two briefs and other documents that I will be forwarding to your committee, along with the first letter I wrote the chairperson here for national hearings on a wider scope. Thank you very much.

The Chairman: Thank you very much, Mr. Cerilli, and I remember receiving your letter.

I'm now going to turn to Ellen Kruger, who is here from the Manitoba Medicare Alert Coalition. Would you please read your presentation.

Ms Ellen Kruger (Co-Chairperson, Manitoba Medicare Alert Coalition): Thanks,Mr. Walker. I'm representing the Manitoba Medicare Alert Coalition. We are a coalition of21 member organizations and have probably about 800 individual members as well. We are a member of the Canadian Health Coalition, and as such a member we support all of the proposals in the brief that is already before the committee.

I'd also like to remind the committee that in the Canadian Health Care Coalition press statement of March 10, there were 72 organizations that supported the proposals in the Canadian Health Care Coalition brief. I think it is well researched, well documented, and gives the government wide scope to be able to do the right thing to improve the health of Canadians by making changes to Bill C-91.

We would call on the government and this committee to establish a drug insurance plan for all Canadians. As you know, this has been recommended by the National Forum on Health, which is the Prime Minister's own committee.

We would call on this committee to recommend and ensure that cheaper generic drugs are available quickly, and we would also support the four-year guideline that's recommended by the Canadian Health Coalition.

It is the government's responsibility to be monitoring the quality and effectiveness of the research done in our country and for the health of Canadians. We want to see that the drug approval process is safe, publicly accountable, and quick, efficient, and expedient.

We also believe it's the government's responsibility to control prices for all medicines, including generic medications.

I think it's important for the committee to know that the people of Canada do not accept what was presented by Health Minister Dingwall, and in fact we would call on the Prime Minister to override the health minister and to be sure that changes are enacted in Bill C-91.

We do know that the Prime Minister said in April 1993 when he opposed the increase in patent legislation that the sick in our society have to pay these high prices; the country cannot afford to deduct big sums of money for the big international corporations.

It's 1997. Nothing has changed except the position of the Prime Minister. So we would call on him and on this committee and this government to act with integrity.

We would also like to point out that we do not buy the mainstream pharmaceutical manufacturers who said they were going to create jobs in Canada. In fact, there has been a net loss of about 1,500 jobs. The job creation in Canada in drug manufacturing has come from the generic firms. We also know that it's the generic firms that are exporting medications and pharmaceuticals around the world. The multinational corporations appear to be importing from their subsidiaries, and the manufacturing is being done outside our country.

So for the good of the economy of Canada, it looks like we should be supporting generic drug companies and in fact ensuring that these medications come to the market sooner, not only for the health of Canadians but for the economy, and we know that a healthy economy that creates jobs in fact helps to keep people physically healthier.

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In Manitoba, we know generic drug manufacturing is very important to our economy, and for another reason. We would then support that there be a reduction in the patent length in patent legislation to four years.

Because such a large part of our medical system relies on pharmaceuticals these days, it is imperative that this legislation be changed to allow all Canadians to have equal access to medical treatment. What we have in Canada today is a situation where the wealthy not only have lots of money to provide the best quality health care; they also have all the drug plans. We need to change that situation so that all Canadians indeed have an affordable, accessible, portable medicare system and a national drug plan to ensure that they get the best quality medication, and available to everyone.

I would also like to thank this committee in closing for at least having the videoconferencing. We work hard to have a movement across Canada to ask for a more democratic process in these hearings, and we do appreciate the videoconferencing meeting today. Thank you.

The Chairman: Thank you very much. We appreciate your words.

Is Laurie there?

Mr. Mel Graham (Communications Officer, Council of Canadians with Disabilities): I'm not Laurie. I'm Mel Graham, the communications officer. I think we had arranged that I would replace Laurie, who unfortunately is at a health care board meeting this afternoon, so I'm pinch-hitting for him.

The Chairman: All right, thank you. Welcome to the proceedings, and perhaps you can give us a few opening remarks.

Mr. Graham: There's a brief to come, and what I have is some notes that I'd like to provide for your interest before we get the brief together.

The Council of Canadians with Disabilities is a consumer organization advocating on behalf of Canadians with disabilities. Its members constitute organizations doing similar work, either in relation to provincial governments or on behalf of disability groups. CCD and its member groups are entirely run by and for persons with disabilities.

Our first point is a background in history. In 1986, CCD vigorously opposed the passage ofBill C-22, which seriously limited competition in Canada's drug industry and added a substantial burden to the cost of our health care system. In 1993, we were outraged when federal Tories put an end to compulsory licensing and extended patent restriction from 10 to 20 years. Thus, even more Canadian dollars went as profits into the coffers of mostly multinational brand-name drug companies, with no subsequent advantages to ordinary Canadians.

Like millions of other Canadians deleteriously affected by the termination of the enlightened legislation of 1969, disabled Canadians have long waited for the review of Bill C-22 built into that legislation and scheduled for 1996. We believe history can show few legislative acts that so directly assault the incomes of Canadians with disabilities.

We look to this review to recall the truism that since everyone is only temporarily able-bodied, to ignore the interests of the 14% of the population having one or more disabilities can be nothing else than a fundamental error in judgment.

Our second point involves the impact on people with disabilities. In terms of the many Canadians with disabilities who are neither well off nor entitled to the benefits of a social assistance plan, predatory brand-name drug prices strike at the very core of access to opportunities, as well as to one's general ability to maintain a decent quality of life.

People with psychiatric involvements are just one example from our community of those who report that the expensive drugs they are prescribed often leave them with literally nothing to spend on recreational and social events. Sometimes far more basic needs like balanced diets can be affected, and that's absolutely true.

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We believe a fundamental duty of government, that of protecting consumers from undue corporate exploitation, has been breached with the passage of Bills C-22 and C-91. This is all the more reprehensible when we consider who are the victims of these artificially high drug costs. They are people with AIDS, epilepsy, manic depression or schizophrenia, lupus and similar forms of arthritis, heart, liver, or kidney diseases, etc.

Our third point involves the imbalance of interests. In 1969, federal legislation devised a fair method whereby Canadians could enjoy affordable drugs while the industry, based on 4% royalties paid by licensed generic drug manufacturers in Canada, would receive sufficient remuneration for profits as well as R and D purposes. The impetus at that time was the appallingly high cost of drugs for consumers. But in remarkably similar circumstances in 1997, what is the situation?

First, the matter is being disposed of in a perfunctory, low-profile rush by the wrong parliamentary committee; it should be health, not industry. Next, we have current ministers extolling what has to be termed the worst excess of a totally discredited former Tory government. And finally, we have opposition parties that seem completely unconcerned about redressing what is, for Canadians who are poor and disadvantaged, a blatant and tangible economic injustice.

CCD wants to know: are the interests of multinationals and foreign corporations the only ones that count in Parliament any more?

The fourth point involves what we have been getting for the sacrifice. The gift of 20 years of patent protection to the brand-name industry was supposed to provide many new jobs, a thriving national pharmaceuticals/chemicals industry, and international mandates. The extent to which brand-name drug corporations were equity employers was never brought into that discussion. Instead, we note that jobs have actually declined in that portion of the drug manufacturing sector. As for the promise of a thriving new industry, it is now recognized as the pipedream it always was.

Unless something can turn current government thinking around, Canada's elderly, sick, and disabled citizens with chronic conditions will continue to augment already outrageous profits to the tune of $7 million until the year 2000. We know of no cost-benefit comparison that comes anywhere close to justifying the enormous negative impact on Canada's health care system of Bill C-22, let alone its even more atrocious successor, Bill C-91.

Our fifth point is about the Patented Medicine Prices Review Board. CCD objects to any and all supposed consumer protection devices that serve as window dressing and are otherwise ineffectual. The PMPRB should set prices, but does not. It could guard the public interests vis-à-vis the gradual reintroduction of thalidomide into use in Canada, but has chosen so far to say nothing publicly on that subject.

In terms of the current topic, the PMPRB employs guidelines that refer to neither product, actual cost of production, nor to their financial impact on consumers. These guidelines are further weighted against consumer interests in that patent drug prices are paid to a median of similar product prices in seven industrialized countries, including the United States.

If we must have a system that uses patent protection to thwart the competitive pricing that an untrammelled generic drug industry would otherwise stimulate, at least it should include a PMPRB that would leave Canada's health care system as something more than a cash cow for multinational brand-name drug companies.

A final two-point conclusion. A secure, affordable health care system is any disabled population's first line of defence against re-segregation and re-isolation that we have fought so hard over the past quarter century to vanquish. Not surprisingly, when a health care system experiences severe strains, there is an immediate reflection in terms of some disabled person's capacity to cope within that larger environment. Facilities and services shortages translate into serious security issues, into questions of whether in some circumstances the lives of the most vulnerable are worth the costs, for example.

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CCD believes that it is incumbent on everyone connected with making decisions about health policy, including in this case a parliamentary committee whose prime concern is industry, to recognize the consequences of automatically setting foreign trade advantages ahead of domestic health concerns.

The export of literally billions of health dollars that could be employing more workers, maintaining more programs, or simply augmenting the nutrition of the most marginalized in our population is a luxury we can clearly not afford. Let this committee's recommendations do more than curry favour with trading partners or with international bond markets.

We look to you to undo the damage initiated in the mid-1980s by inordinately influential brand-name drug industry lobbyists. We need you to set standards, making it clear that bottom lines are to be found in more places than multinational balance sheets, that elected officials still have some real concerns about the needs of ordinary human beings as well.

Thank you very much.

The Chairman: Thank you, and thank you for the passion you've brought to the table. Obviously, the proof will be in the final recommendations made by this committee.

I'd simply like to clarify one point. This bill came to the industry committee because the Patent Act is administered by the Department of Industry, which reports through this committee to the House. The membership of the committee was changed to accommodate the health issues you've suggested. We have the parliamentary secretary to the Minister of Health here; we have a doctor who has joined us; and on the opposition side, Mr. Ménard, who will be asking questions in a minute, has a private member's bill dealing with some health issues. So you have people here who are genuinely concerned with the health of Canadians and not just the industry issues.

I have one more person, Mr. Sean Richens. Are you here representing somebody or are you on your own?

Mr. Sean Richens (Individual Presentation): I'm here as an individual, speaking on how the issues affect the employees of the Canadian generic industry, and also to bring a different perspective from those that have been presented to the committee so far.

The Chairman: Mr. Richens, can I just ask you...? This is a very contentious issue and we're trying to make it as transparent as possible. Even if you don't want to identify the company, let me ask you a question directly. Are you in the employ or are you a consultant to or providing professional services for one of the companies influenced by Bill C-91?

Mr. Richens: I personally work for Apotex Fermentation Incorporated here in Winnipeg.

The Chairman: Thank you.

[Translation]

Mr. Richens: Good afternoon everyone.

[English]

Good afternoon, everyone on the committee. I have come to speak as an employee of the generic industry because our executives appearing before you speak in terms of finances, markets, patents, regulations, and so on. Though all these figures might be objective, they don't tell the story of a particular Winnipeg extended family, and other people like us across the country, and of how our lives and our work depend on you.

Naturally, my interests are mostly congruent with those of my employers, but there are differences. For example, I'd like to see tougher competition to hire experienced pharmaceutical people, whereas my employer might wish to do otherwise.

I have worked for Apotex Fermentation for nearly five years in research and development, in construction and in production, and from these capacities I would like to speak.

The impact of Bill C-91 to date, the retroactivity of the patent changes, has had a serious impact. The abolition of compulsory licensing was tough, but there was a range of more challenging products that were coming off patent and they've kept us busy. In fact, that's why APFI exists.

The change of the patent term from 17 years to 20 years would be expected to cause three lean years for a company, but any well-run organization should have a plan to handle such things. However, the change was retroactive. As well as it being generally agreed that retroactive laws violate fundamental justice, this law seems designed to cause the maximum possible disruption rather than the smooth phase-in of changes that we would expect from a competent government.

My colleagues have suffered years of instability as a result of this. Moving the goalposts after the game has started is just the kind of thing that leads employers to close up shop. We have seen changes of leadership, ultimately caused by the pressure to produce instant results, to remedy the cashflow of our employer. The goals of a company from an investors gamble to a going concern can only be accomplished by a team of people committed to their own success, and this commitment has been hard to maintain when our own government seems to be against us.

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Section 55 of the regulations is a perfect example of the undemocratic trend towards enabling laws. Clauses that could never stand up to review by a full Parliament can be passed by bureaucracy and by committee, safe from appeal, over the heads of the lobbyists, and directly to the Canadian public.

After years of hard work and personal commitment to research and development, my colleagues have developed a process to make lovastatin. This drug is not patented in Canada. Despite this, we are not permitted to sell it. I have heard the honourable Minister of Industry express before this committee his own surprise that this was the result of the regulations, but it is true. The mere allegation that we are using an infringing process has shut us out, and not just for the 30 months provided for by the regulations.

The Department of Health is still ignoring a court decision that Apotex be allowed to make and sell lovastatin. As if we would use another company's process when we have our own better one, and one that we've patented. I have seen the originator's processed patents and wouldn't dream of using them. No wonder they have to charge so much for their products.

Forgive us if we're bitter and distrustful of politicians who promise to support us. We played by the rules. We worked hard. We believed that what we were doing is good for Manitoba, good for Canada, and now we find that we'll be lucky if we're employed next year.

As far as the impact of Bill C-91 in the future is concerned, in the anticipation that Bill C-91 would be amended to be fair and predictable and would allow businesses to operate in a businesslike manner, my employer asked the team that built the existing AFI plant to design a plant that would take us to the world stage as a major Canadian exporter of high-tech pharmaceuticals. This team consisted not only of my colleagues but of various Winnipeg contractors and engineering firms. We face internal competition from a sister company with interests overseas. We can compete with their labour costs if we work smartly, and we quickly made a proposal to match the start-up costs of their proposals. We feel we have a better proposal simply on the basis that it's tough enough to implement the new technology in production even when you're all in the same building, never mind in a different country.

This advantage is one of those intangibles, and it's competing with intangibles such as the perception of government attitudes. If a government says it's trying to restrain health care spending, if it says it wants to build up Canadian jobs in high technology, but then passes retroactive laws and acts like it's the best friend of foreign-owned multinationals, it creates a certain perception. We fear our owner will choose to go overseas. I know I don't go back to stores that don't seem to want my business.

So what is this going to cost? Winnipeg is about to lose a valuable asset that's more than Apotex Fermentation. The federal and provincial governments have made great efforts to create in Winnipeg a centre of excellence, including our teaching hospitals, our universities, and our health care industry.

Medical R and D is sexy, but it has not accomplished anything on its own. The construction of AFI has so far created a group of engineering construction companies with some special skills. Unlike multinationals, who keep an expert somewhere in the world for each technology, we build the knowledge here at home. For example, our plumbing contractor installed the first fuse-sealed polypropylene pure water system in Canada. Adapting that technology to our needs was R and D.

For a building contractor, learning to combine the conflicting needs of drug manufacturing - these included pipe purity work, fire prevention and the handling of hazardous and exotic chemicals, all on a fast-track project - has been a learning experience that leaves Manitoba with expertise that it did not have before. In engineering and management, that's R and D.

As well as learning new skills, the tradespeople who worked on our project were given a new level of empowerment by their employers because of the needs of meeting our schedules. Instead of working from all-ready blueprints, they were given the chance to use their experience, and contributed to the design of what they built. But this team, for lack of a current project, is slowly drifting apart. The employment situation in Winnipeg is not that great. These individuals will move, they will change careers, or they will give up. Because of C-91, the real centre of excellence in Manitoba, the people who make up the real infrastructure that could attract other pharmaceutical manufacturers from any segment of our industry, is vanishing. Unless the punitive measures in Bill C-91 and the regulations are rescinded quickly, the huge number of taxpayer dollars that have been invested for this centre of excellence are going to be just another big government waste.

Why are generics particularly important? The popular perception that the lower cost of generic drugs reflects no more than the cost of the medical R and D is false. Even our own executives seem to forget this, but when I'm working in the lab and in the plant, I see the real reasons for lower prices. Firstly and most importantly, all of our products compete in the open market. We never have a monopoly to lean on. We always need to satisfy customers at the lowest price possible. Our cost targets are not just guidelines. We must meet them and then go on to outdo them if we are to survive. This is a discipline that employees and management in the multinational companies are not subjected to.

We do our R and D in a completely different manner. Instead of relying on a scattered network of the world's best biochemist, the world's best synthetic chemist, the world's best this and that, and twenty some other experts, each doing one small part of the project, we use small, focused teams that can keep an integrated view and come up with a better process than the multinationals. Working this way keeps our overheads down and allows quick response to market changes.

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We build our plants differently. We don't maintain an expensive design-build team in Switzerland.

We establish relationships with companies that we work well with. If they don't have all the expertise, we trust them to develop with us, and we learn as we go. And since we're always learning, we're always getting better, and these companies can go on to compete more and more widely with their new skills.

We go from first sketches to final production in one year, with the process development running in parallel. This has higher risks but lower costs, and is quicker to meet the market.

So what about medical research and development? If you read the journals, the real breakthroughs in medical sciences - the ones that make previously incurable diseases now curable - are not often made by the drug companies. The U.S. National Institutes of Health have been one of the single largest sources of these advances. The pharmaceutical manufacturers, the brand-name companies, have acquired rights to these inventions, however, and their drug development is very often just trying out a few minor modifications to the active molecule. The bulk of their R and D costs is in the clinical trials after development.

The generic industry has to do clinical trials, too. If I were a medical researcher, that might be important to me. But the R and D effort in microbiology, biochemistry, chemistry, engineering, and technology is just as important in generics as it is with the brand names. We do just as much of it, but we do it more cheaply because we're smarter.

What will Canada get for changing Bill C-91? If we can continue to grow in Winnipeg, or in other Canadian cities, we can fulfil the dreams of the networks of centres of excellence and regional economic diversification. Some of my colleagues may have ambitions of starting their own companies. They certainly have a lot to offer. For example, one of our mechanics - a refugee, by the way - led the design and construction of the production fermenter. That's the kind of job a big American company would hire a big Swiss company to do.

Winnipeg could be the home of a pharmaceutical design and fabrication industry that sets the toughest standards for on-time delivery and cost-effective service. The smallness of our local market can be an advantage, because everyone here knows who is the best welder for a particular kind of work, or who can apply the latest in high-technology flooring compounds. But all of this hangs in the balance. Depending on the results of these hearings, I might buy a house and plan my future here, or I might have to change to a more traditional Canadian engineering career, extraction of non-renewable resources. Or I might have to choose to leave my country and brush up on my Spanish.

I thank the committee for your attention and your time. Merci à tous. I think we are now ready for the round table discussion.

The Chairman: We will begin with the questions from Mr. Ménard. As I said to you before, if he directs it to one person, that person can answer it. If he directs it in general, just indicate to me that you have an interest in answering the question.

Mr. Philip Mayfield: Mr. Chairman, how long is this round of questioning going to last?

The Chairman: We'll give each of the parties ten minutes, and then we'll see from there.

Mr. Philip Mayfield: Thank you.

The Chairman: Mr. Ménard.

[Translation]

Mr. Réal Ménard: You are certainly the first group of witnesses to have felt the need to attack both the government and the opposition, but that is allowed in our parliamentary system. I imagine it's part of a particular strategy. But that isn't what I want to talk to you about.

I clearly understand the logic of the people you represent and I agree with you that we must be vigilant as parliamentarians in order to avoid an undue increase in drug prices.

On the other hand, it's a bit too easy to just come before a committee like ours and tell us over and over again that drugs are too expensive. There is no magic in this. There are a certain number of reasons for it.

Assuming, then, that research and development don't just happen magically, that people actually have to invest and buy equipment, and that the government or governments may or may not support that, what is your estimate of the number of years required to market a drug and of the investment required?

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[English]

The Chairman: Would anyone like to start?

Mr. Richens, you might. You probably have some experience in this.

Mr. Richens: My work has been in engineering rather than medical science, but from what I've seen, depending on the drug, clinical trials can take place over a period of two to three years. I count that period only from the time the approach to a disease is covered. So if you figure it takes a year to identify the compound, two to three years to go through clinical trials and another two years for regulatory...that would be about six or seven years, and that's the number I've heard quoted elsewhere.

The Chairman: Monsieur Ménard.

[Translation]

Mr. Réal Ménard: From time to time, we have a duty to show some rigour. As the Official Opposition, we are perfectly prepared to entertain any proposal that might bring down the cost of drugs, but first of all we have to know what we're talking about.

On average, in order to market a drug, some ten years of research and development are required, including, of course, the Health Protection Branch process, as well as an investment of about600 million dollars. I would like one of you to explain where you got the figure of four years of protection for patented drugs.

If you have any reason to assert that this kind of investment could be recovered in a four-year period, then we can entertain such a proposal. But if there is no information to support that, it seems to me that it's almost irresponsible to make that kind of assertion.

[English]

The Chairman: Would anybody like to answer first?

Perhaps, based on his work, Dr. Langstaff has some comments.

Dr. Langstaff: The development time of drugs and the cost for the development of drugs is an interesting debate. The multinational companies throw around figures like $500 million over seven to twelve years, but those are really singularly uninformative figures. That covers the investment that went into all of the drugs that they were unsuccessful with, and they've been very successful at being unsuccessful.

In reality, most of the new drugs that we have now come from universities in Canada, the United States, Europe, and places like that - from academic institutions. That's where the innovation grows. That's largely supported by the Canadian government as far as the infrastructure goes. It has been in the past and hopefully it will be in the future.

The actual drug development time and the cost of developing drugs is six years and, we would calculate, $30 million. We have some experience. Our company here in Winnipeg has decided not to undertake to repeat the mistakes of the large companies. We do most of our innovative research in universities that we fund here in Canada.

The reality is that these multinational companies are not hard done by. Where the four years came from I'm not sure, and where the twenty years comes from, I'm also not sure.

[Translation]

Mr. Réal Ménard: I would like to pass on two pieces of information, if you don't mind. I think we would be doing each other a favour if we asked our clerk to send you the following information.

We know that at the present time, approximately 70% of the money spent on research comes from private industry. The government and universities play an increasingly marginal role in the discovery process, so I think it would be a good idea for you to have those figures.

However, I would also like you to provide us with information that would allow us, as a committee, to accept your argument that four years is an adequate period of protection for patented medicines.

I would be interested in getting more information on that. All the witnesses that come before the Committee and oppose the brand name drug manufacturers have every right to do that in our society, and clearly you have every right as well to try and convince Committee members you are right.

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However, I would like to be given arguments other than the fact that the Canadian Health Coalition happens to have written this down on a piece of paper. On what basis are you suggesting a four-year period of patent protection? I would like to hear substantive arguments to support that.

[English]

The Chairman: Would anybody like to respond?

Mr. Richens: Perhaps I should clarify that. My understanding is that the four years means four years in the market, not four years from the original discovery. That should clarify things a bit.

The Chairman: So the group is talking about eleven years, that is, seven years in development and four years in marketing. Is that your assumption?

Mr. Richens: I believe that's what they're talking about. Those numbers aren't mine, but I think that's what they mean.

The Chairman: This comes from the Eastman study in the 1960s, and that's what he meant.

[Translation]

Mr. Ménard, do you have one last question?

Mr. Réal Ménard: You have raised a question that's extremely worrisome and certainly very topical, so I want to thank you for raising it. It's the issue of humanitarian access to drugs.

I would like to share the following with you. I tabled a Private Member's Bill. I'm sure you are aware that all Members of Parliament can bring forward bills. I see my Liberal colleagues nodding assent; I guess that means they're going to pass it. Ultimately, it will allow the Patented Medicine Prices Review Board to initiate an investigation in cases where a company marketing brand name drugs did not provide fair and reasonable access to unlicensed drugs.

As you know, every year thousands of Canadian men and women want humanitarian access to drugs. Some pharmaceutical companies, like Glaxo Wellcome Inc., behave very responsibly, but others are extremely uncooperative. Do your Coalition and the other witnesses around the table see this kind of initiative as something positive? Would you be in a position to support what I've just described?

[English]

The Chairman: Mr. Graham, has your organization given any thought over the years to whether or not the government should be more involved in arranging for people to have access to non-patent drugs for humanitarian purposes?

[Translation]

Mr. Réal Ménard: There are currently three ways of accessing unlicensed drugs. There is the Emergency Drug Program, there are clinical trials that provide humanitarian access, and in some clinical trials, even though there may be no provision for humanitarian access, drugs are occasionally made available to people who require them.

So, the Board could initiate an investigation in cases where a person had AIDS or another kind of degenerative disease. I think those are the types of things we could ask pharmaceutical companies to do, while at the same time providing them with a comparable level of protection to what is available internationally. I would remind you that the Liberals are moving to support me on this.

[English]

The Chairman: Perhaps we could leave it at that. If it's a new question for you, you may wish to write to Mr. Ménard in care of the House of Commons in order to follow up on that. It is a very interesting issue, and we look forward to the debate in the House of Commons on it.

I'll now turn to Mr. Mayfield.

Mr. Philip Mayfield: Thank you very much, Mr. Chairman.

I appreciate your comments and the freshness you bring with them and the energy. One thing about people presenting their views to this committee is that they do it with a good deal of vigour and energy, and you're no exception to that. I appreciate your forthrightness.

There is an area, though, that does cause me some concern, and that is that not all the information that comes to the committee has been the same. For example, we've heard that since Bill C-91 the pharmaceuticals have actually spent more money on research, have increased the number of researchers, have lived up to their commitments in this and have even gone beyond that.

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On the other hand, we have heard others say that this is not the case and that in fact some of the pharmaceuticals have even left the country, the amount of research money they have spent has diminished, and the number of people involved in research has decreased.

I've heard your position, but I have in my hand a couple of letters, one from an epidemiologist from a Vancouver hospital who is concerned about research and mentions VRE, vancomycin-resistant enterococcis, and I also have one from a member of the neurology department at the University of Ottawa. Both of these people make a very strong case for the preservation of the present bill as it is, for not decreasing the patent period time, with the thought that if it is decreased, the research funding being provided to them by the pharmaceutical companies will diminish.

My concern in this is not for the pharmaceuticals, but for the research and for the drugs and the medications that are necessary to fight the diseases we are encountering.

There's a bit of a Gordian knot here and I'm not sure how to cut it.

The pharmaceuticals say if you decrease the patent period time they will leave, so the funding will be reduced. I've asked other people who are saying that the patent period should be reduced and they say they simply don't believe the companies would leave Canada.

I don't know any more about this than you do, perhaps, but I want to know your opinion. If we do reduce the period of patent protection and the drug companies do as they say they will do, that is, decrease funding and take their business to other parts of the world, what do you think the consequences will be to Canada and to our Canadian health system if we lose the research and the dollars these companies are now providing?

The Chairman: Does anybody care to begin?

Okay, sir.

Dr. Langstaff: The funding of medical research in Canada is a complex question and an interesting one.

We just heard a few minutes ago that about 70% of the funding from the multinationals actually goes into clinical trials. That really doesn't deal with the issue of whether or not we're going to get a new drug developed for some type of an antibiotic-resistant bacteria or for the development of an Alzheimer's drug, or for something else.

There is a lot of debate about the funding for medical research - the research part of medical research, not the clinical trial and testing part of medical research. We know that the Medical Research Council of Canada and the rest of the granting agencies have had their grants cut. One of the solutions to that is to have the research funded by multinationals or by local companies in Canada. The fact of the matter is that neither multinationals in Canada nor local companies will put a heck of a lot of money into basic research.

If you're asking me if this change in the Patent Act will inhibit or help or do anything when a researcher at the Hospital for Sick Children in Toronto or in the Vancouver General Hospital discovers a new antibiotic that will treat disease-resistant bacteria, let me tell you that I believe it will have no effect whatsoever. If there is a drug that has any value - Canada only pertains to about 1% to 2% of the world market for pharmaceuticals - it will make no difference. At least, I can't see it making any difference.

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Mr. Philip Mayfield: May I deduce from your answer that the research going on in Canada makes no difference and we may just as well forget about it?

Dr. Langstaff: That's not what I intended to say. What I was saying is that the research will be done in Canada, if it's of value. The research that's being done in Canada, the clinical research, will be done if it's required for licensure. The vast expenditures of money that are spent on clinical research are done in Canada because our health care system has been in the past, and continues to be, an excellent one, especially the clinicians in the hospitals and the ability for them to treat the record keeping they do. Just in general, the clinical research in Canada is excellent. It is a requirement to get a drug licence.

The innovative research that goes on for new drugs will be done if those new drugs are valuable. In the past they were funded largely through the Medical Research Council. Some of the moneys that the government or Canadians save from paying high prices on pharmaceutical drugs can be turned back into medical research in Canada that's controlled and owned by Canadians.

Mr. Philip Mayfield: Then, sir, may I ask you, would you speculate on why these research facilities in medical institutions, not drug companies, are arguing so strongly for the preservation of the patent period that now exists?

Dr. Langstaff: I can speculate, but the fact of the matter is that it comes down to - and we can take western Canada as an example - the 12% and the 10% that the Pharmaceutical Manufacturers Association of Canada puts back into medical research. It is now considerably more in Canada than the Medical Research Council of Canada invests. In fact, if you look at the figures in western Canada alone, on a per capita basis, we did not get about 50% of the Medical Research Council of Canada's budget. The equivalent of 50% of the Medical Research Council of Canada's budget, which should have been invested in western Canada, was not by the multinationals. That's the significance of the dollar. And if you're asking me, do I think the dollars make any difference as to who they're going to support, I absolutely think that the dollar.... Medical research in many of the smaller universities in Canada is in the throes of a very significant change. They're trying to cope with reduced dollars and reduced funding for research. I think they're all scared for their future.

Mr. Philip Mayfield: Thank you very much.

The Chairman: Thank you very much, Mr. Mayfield.

Next, Mr. Joe Volpe, parliamentary secretary to the Minister of Health.

Mr. Joseph Volpe (Eglinton - Lawrence, Lib.): I'm glad you introduced me that way,Mr. Chairman, because during the course of these presentations...and I found them very worthwhile. Obviously, they were very vigorous, very well researched and expressed, but I think there was a perception, perhaps, that Health Canada was not involved in this debate or that the Canadian government was not pulling up to the bar with its own fair share of commitment to the infrastructure for intellectual development in the country.

I wonder, Mr. Chairman, if you'll permit me, over the course of the next couple of minutes, to do my best to set the record straight so that we can engage in a rational and, hopefully, intelligent conversation with some of our interveners.

First, on the question of investment in basic research, medical research, biomedical research, and scientific research that's necessary for the development of any product including, obviously, pharmaceuticals, I think it's important for some of our members - unfortunately, Mr. Ménard had to step out for a second, so I might have to repeat it in French when he comes back - to keep in mind that the federal government recognizes a certain obligation and responsibility and discharges it.

Those who have looked at the budget in the course of the last couple of years will know the following figures. This is not inventiveness on my part, although I wish it were; these are actual figures in the budget of the last couple of years. For example, funding for basic research, scientific research, a good bulk of it going for development of pharmaceuticals through the Medical Research Council, was increased. This year, in the last budget, it rose to about $240 million per annum.

It's true as well that the PMAC companies had an arrangement with the MRC that was tied to the passage of Bill C-91 for matching on some peer review issues. They made a particular obligation. They think they're meeting it. It's not for me to say whether they are or not at this moment, but let me focus on the federal government's commitment.

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There's an additional $50 million to study the impact and the potential of a national pharmacare program that involves gathering all of the information required, including not only the logistical information but also the scientific information required in order to effect an appropriate program as it relates to the health of Canadians. There's an additional $150 million for centres of excellence, much of it for health research, for scientific research, for biopharmaceutical research.

There is an additional - and I hope my colleague from the Reform Party will remember this figure - $800 million given to institutions of higher learning for innovative research, a good portion of it for medical and biopharmaceutical research. That $800 million, if you will recall the debates of only a month ago, is spread out over three years.

The MRC has also done something as part of its mandate to encourage greater investment in innovation at the basic research and development level, at the basic research level for both medical and scientific, and, so far, through the Canadian Medical Discoveries Fund over the course of the last three years. They started off with an idea that generated very little interest at first but now has already surpassed the $200 million mark, moneys that are earmarked for investment in medical research at the basic level.

For our witnesses who have instructed us in some of the dynamics of the marketplace, I think it's important for them and for others who preceded them to have an appreciation that the Government of Canada is discharging some of its obligations. There are political decisions and we're making them, and we're putting dollars where they should be put.

If we can go back to the discussion at hand, which is why this industry committee is dealing with an issue that obviously has health implications, witnesses have been right to ask that question, and I'm glad the chairman indicated why that is happening. We're looking at the Patent Act and we're looking for implications of the Patent Act as it currently exists from my perspective as a representative of health interests for the health of Canadians. My questions are directed in that regard.

I want to focus for a moment on one of the implications of the Patent Act, because as I said,Bill C-91 carried with it a particular obligation on the part of the companies that urged its passage. For them, the trade-off was that they would promise additional investment in basic research. As I say, it's not for me to determine just yet whether they have fulfilled that obligation.

Dr. Langstaff, are you part of the IBAC group?

Dr. Langstaff: I was, yes.

Mr. Joseph Volpe: We had a presentation by the IBAC group about ten days ago, I think. Their position was diametrically opposed to your own.

Dr. Langstaff: I know that.

Mr. Joseph Volpe: Did they consult with you or did you consult with them?

Dr. Langstaff: We disagreed.

Mr. Joseph Volpe: Why?

Dr. Langstaff: Why did we disagree?

Mr. Joseph Volpe: Yes, sir.

Dr. Langstaff: IBAC is the Industrial Biotechnology Association of Canada. They have a certain perspective on what they believe will enhance biotechnology in Canada. I have a different perspective on that. I believe my perspective is the one that's more in tune with what will benefit Canadians in the long term.

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The biotechnology industry in Manitoba, which I'm representing today, has a different perspective from that of IBAC, the Industrial Biotechnology Association of Canada. One of the differences is that the majority of the biotechnology that IBAC is involved in right now - although not all of it, and there are some excellent examples - is in the research phase.

Industry is not defined as a research phase. Industry is the manufacture and distribution of goods. Research is not generally described as a good. Products are. We here in Manitoba are more focused on the distribution and manufacture of products. In actual fact, the majority of the products my company makes is exported.

Mr. Joseph Volpe: I was just interested in the dynamics. I'm not sure if they will have an impact on how I view it, because I was very negative.

Perhaps you could give me a quick yes or no answer. You are part of that organization. Were you consulted when the organization presented its brief?

Dr. Langstaff: I was consulted when the brief was being constructed

Mr. Joseph Volpe: Thank you.

I was quite taken by the presentation of Mr. Mel Graham. Mr. Graham, you pointed some fingers, and some of those have to do with, I think, the balancing of interests and protecting consumers from undue exploitation.

This committee has had numerous interveners come forward with figures supporting their position that on the one hand would indicate that there is a fair return on investment and that therefore the word ``exploitation'' should be seen in its proper light, that is, legitimate market development, and that on the other hand, the word ``exploitation'' applies with all of its negative connotations.

I'm wondering what figures you might have at your disposal to share with this committee that would give us an indication as to whether or not we should take your finger-pointing with either a grain of salt or serious deliberation.

The Chairman: Mr. Graham, do you have any comments?

Mr. Graham: The figures I have the best access to are those that were provided by Mr. Carman Baggaley in the paper that has been mentioned by the coalition. Those are the ones that I tended to work with. I presume the committee is well aware of that brief. I tend to think that was a very well-researched paper. I have heard that it has received plaudits from everyone who has seen it. I tend to stand by what it states.

I would simply buttress that by saying that just from the anecdotal evidence we've heard at some meetings here in Manitoba from people who have had to pay extremely high prices, it appears that to the extent to which the 20-year patent protection is pulling all prices, no matter what the circumstances, to a somewhat higher rate than they could be, it is certainly breaching the spirit of the legislators of the bill when it was passed in 1969, who seemed to me had the best interests of Canadian consumers at heart.

Mr. Joseph Volpe: I have one last question, and this one is directed to Mr. Richens andDr. Langstaff. Both of you mentioned exports and the export exemptions, but if I recall correctly, Mr. Richens indicated the company he works for may have to move at least outside of Manitoba, and probably outside of Canada, in order to do something he says his company is involved in already, and that is export.

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Could you just take a moment to explain to us why you brought up the question of the export exemptions - and I think that was first Dr. Langstaff - and why you take such exception to that after you've acknowledged that you do a lot of exporting?

Mr. Richens: All this is a product-by-product case. Right now we have a facility that meets Canadian needs, and we would like to go beyond that, certainly. It's difficult to keep straight one's actual employer with the owner and sister companies related at various places. But certainly one can get around the export provisions on any given product by simply moving all your operations to a country where that just doesn't come up.

We could sell some products in the U.S., even if they're not off-patent in Canada right now. This is, of course, one of the major considerations in whether or not my employer decides to go ahead and build a large facility here in Winnipeg to add to our current capacity.

Mr. Joseph Volpe: Dr. Langstaff.

Dr. Langstaff: The current product we export now is actually a product that's patented in Canada. We export it to about 20 countries around the world. We have a number of other products under development. Some of them will come off patent elsewhere in the world much earlier than they will in Canada. Because we're a manufacturing-oriented company, the value that we bring is in manufacturing. So we would like the manufacturing centre for these products to be here in Manitoba and to export these products out of the country.

The Chairman: Thank you very much. I'd like to thank the participants from Winnipeg.

Mr. Mayfield would like to make a final comment.

Mr. Philip Mayfield: It's to Mr. Volpe, who drew my particular attention to the government's $800 million addition to research.

I'd like to say my contention is not with that. My contention and Reform's contention is with the Liberal government financially gutting the health care program.

The Chairman: Thank you. We always like to end on a non-partisan note.

If somebody hasn't had a chance to talk and they'd like to say something now, we've been on for an hour and a half, but whatever you have to say in final terms, please go ahead.

Ms Kruger: I want to respond to the question regarding pharmaceutical profits. In the paper that Joel Lexchin did for the Canadian Centre for Policy Alternatives, he notes that even during the recession, when most companies' profits were decreasing, the pharmaceutical industry's profits remained 300% above the industrial average of 10.7%. That was between 1988 and 1995.

I would suggest that patent protection contributes quite widely to that great profit, and it's not just what one might call a reasonable return on investment.

The Chairman: That point is well taken.

Mr. Cerilli: To add to that comment, we can ask Mel Graham about the exploitation end of it. I think that sums up the question of profit versus drugs that are for the human condition of a better society.

That sort of gives us the impression that your committee is certainly going to deal with those things, I hope, not only for the cheaper drug or for somebody else to use another system as a cash cow, but simply for the human good. I think the multinationals have to take into consideration the human condition in the research and development of the generic and other drugs.

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The Chairman: Thank you very much. I think it's fair to say, as we try to reassure you, that this committee is concerned with both the health issue and the actual industrial issues and intellectual property. We hope to achieve, as Mel referred to, the balance, and we hope you see a balance in the end.

Thank you very much to everybody in Winnipeg. We wish you well. Goodbye.

For the committee, we'll resume with the next session at 7:15 p.m. Let's meet between7:05 p.m. and 7:10 p.m. to get started right on schedule. Thank you very much.

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