EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, March 19, 1997

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[English]

The Chairman (Mr. David Walker, (Winnipeg North Centre, Lib.)): Pursuant to Standing Order 108(2), this is a review of section 14 of the Patent Act Amendment 1992, Chapter 2, Statutes of Canada, 1993. I call this committee to order.

I'd like to welcome our witnesses. Tonight we have an opportunity to look at the fascinating world of research. As a former university researcher, I welcome the opportunity to stay in touch with your world and to see what you're up to.

The committee really likes to get into some debate and some conversation with people. To start the round table as soon as possible, we'd ask you to make brief introductory remarks on the assumption that we will follow your brief and make sure that all the committee members read it - all those things that you expect from a good, hard-working committee. But the sooner we get into a good discussion, the more the committee members enjoy it and get involved.

Without further ado, I'd like to call upon Dr. Barry McLennan, from the Coalition for Biomedical and Health Research, to begin our proceedings. Welcome, sir.

Dr. Barry McLennan (Chair, Coalition for Biomedical and Health Research; Assistant Dean, Research, College of Medicine, University of Saskatchewan): Mr. Chairman, thank you for inviting the Coalition for Biomedical and Health Research - CBHR - to appear before the committee. My colleague Dr. Michel Bergeron and I will share the time allowed for the CBHR presentation.

Overall, our brief supports enhanced patent legislation based on the principle of the protection of intellectual property and as a competitive measure to enable Canada to keep pace with our G-7 competitors. The brief also highlights specific areas for improvement, such as extramural basic research and regional distribution of R and D expenditures and personnel support.

My first recommendation is on page 5. In order to attract further R and D investment and bring jobs to Canada, we recommend that the period of exclusivity for innovative products be fully protected and enhanced for up to five years for products developed in Canada through, for example, the selective introduction of patent term restoration.

I now refer you to a graph based on new data generated by the Patented Medicine Prices Review Board for CBHR. This graph shows an eight-and-a-half-fold increase in current R and D expenditures by the innovative pharmaceutical industry and in basic research performed in academic health science centres. Although this trend is encouraging, Mr. Chairman, it represents only 15.4% of all basic research expenditures made by industry. These numbers are important to Canadians, as the support not only contributes to innovation, but plays a crucial role in supporting researchers, health care specialists, and the development of new therapies at teaching hospitals across our country.

Recommendation 4, found on page 6 - I don't have time to refer to all of them - provides a basis for the federal government to negotiate a new agreement with the pharmaceutical industry by setting world-class targets for R and D investments in Canada in exchange for world-class patent protection.

There are four points to recommendation 4, which states that the government should set overall R and D spending targets for the innovative Canadian pharmaceutical drug industry to reach by the year 2000. These targets will be based on the industry average as a percentage of sales for the PMPRB reference countries.

The second point is that basic research spending should also reflect the industry average in reference countries. Extramural basic research performed in universities, hospitals, and affiliated research institutes should be increased by 1% per year to reach 25% of all basic research expenditures by the year 2007. In other words, that is a 1% increase per year for ten years.

The third point says to establish regional targets for extramural R and D investments, both clinical and basic science.

Finally, the fourth recommendation is to maintain the MRC-PMAC health program, but shift the partnership costs from MRC to SR and ED tax credits. Twenty-five percent of all health program funds would then be dedicated to personnel and training support.

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The PMPRB has proven to be an effective mechanism. I won't go into the details, but CBHR recommends the following enhancements - as found in recommendation 5 - to be implemented through the PMPRB: the PMPRB should monitor the prices of all drugs and R and D expenditures by both the innovative and generic pharmaceutical industries; the PMPRB should be empowered to recover from industry the equivalent of unmet R and D targets on a yearly basis and return that equivalent to Canada's research system through the MRC; finally, the PMPRB should be empowered to call for a review of the legislation by Parliament following two successive years of failure by the industry to meet the set targets for either prices or R and D expenditures in Canada.

Mr. Chairman, I'm sure you and your committee realize that reconciling the interests of Canada's health care system with the realities of fiscal management while trying to remain competitive globally is a difficult but achievable task. The academic community itself is not unfamiliar with this challenge. I extend to the committee our willingness to assist in any manner possible.

I now will turn to my colleague to complete the rest of our presentation.

[Translation]

Dr. Michel Bergeron (Member of the Board and President, Canadian Society for Clinical Investigation, and Chair, Department of Microbiology, Laval University; Coalition for Biomedical and Health Research): Mr. Chairman, committee members, ladies and gentlemen, the 20th century has been marked by the industrial revolution, and the 21st century will see another revolution stemming from technological innovation. This technological innovation will not be possible without major support provided to biomedical research, particularly for basic research.

Canada has been neglecting biomedical research since 1990. As you can see from this chart, Canada is the only industrialized country that has decreased its investments in biomedical research.

While the United States increased the budget of the NIH, the American equivalent of the Medical Research Council of Canada, by nearly 63%, the budget of the MRC has been cut by 10% over the past seven years, that is to say, between 1990 and 1997. If we take into account an annual inflation rate of 2%, the MRC's budget has really decreased by 36% over the past seven years.

Biomedical research creates an extraordinary number of jobs, both direct and indirect. For example, the additional $30 million in annual funding to the MRC that we are asking for would create 1,000 highly skilled jobs as well as hundreds of jobs for support staff, and would allow for the training of at least 1,300 graduate and post-graduate students. At the same time, this additional funding would lead to discoveries that would improve health care to the population.

Above all, Bill C-91 has to protect inventions created here, because only inventions that are well protected can lead to major investment that will allow the pharmaceutical industry that's already present to develop further, as well as the creation of new Canadian firms in the areas of biotechnology and pharmaceuticals.

The Canadian biotechnology industry, which is expanding quickly, is the direct result of research funding by the MRC. In 1994, there were 121 Canadian biotechnology firms. Today there are 224, which create thousands of high-technology jobs and manufacture Canadian products that are distributed and exported abroad.

Canada is starting to see the potential of new technology. There is no reason why it could not become a powerful, giant silicone valley of biotechnology.

With Bill C-91, we can protect the intellectual property that comes from our inventions and discoveries, and we will be able to create Canadian jobs in our universities, our research centres and our own Canadian industry.

And finally, we will be able to export our products throughout the world. That is how Canada will become a prosperous, competitive and healthy country.

Thank you.

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The Chairman: Thank you very much.

[English]

I believe we now have Mark Bisby, professor and head of the department of physiology at Queen's University.

Professor Mark Bisby (Head, Department of Physiology, Queen's University): Thank you. Unlike may of my colleagues here tonight, I'm not representing anybody but myself. I'd like to give you one researcher's perspective on C-91, particularly on the relationship between Bill C-91 and the networks of centres of excellence program.

My argument - which I'll expand in a moment, although not at length - is that Bill C-91 was essential to create an environment in which the networks of centres of excellence could fulfil their mandate, first, to boost Canada's performance in science and technology, and second, to create a new era of collaboration with industry. I point out that since the government has decided to renew the networks program, it has to safeguard this environment in which the networks can flourish.

I'm a principal investigator in the neuroscience network, which is one of the networks of centres of excellence that were first established in 1990. My network was renewed in 1994. This neuroscience network links about 125 investigators and 70 trainees, graduate students, and post-doctoral fellows at 18 universities and research institutes across Canada. It focuses on disorders that arise from disease and injury to the nervous system, such as spinal cord injury, Alzheimer's disease, Parkinson's disease, and stroke.

In the early years after its foundation, the network discovered that there were in fact very few Canadian corporate partners that had the capability to develop intellectual property generated within the network. This lack of receptor capability posed a serious obstacle to the network fulfilling its obligations to develop strong university-industry linkages. After a flirtation with corporations in the United States and with other multinational corporations, the network decided that instead of licensing its technology overseas, it would try to develop home-grown receptor capability. It decided to set up a venture capital fund - now known as the Neuroscience Partners Fund - that would be used to develop this receptor capability in Canada to develop our intellectual property.

Several large institutional investigators were attracted to this fund based on the excellence and the novelty of the science that was going on in the network. Some of these investigators are major names in Canada: the Royal Bank of Canada, the Caisse de dépôt et placement du Québec, and MDS Health Ventures Inc. Together these organizations, along with others, provided $52 million and the Neuroscience Partners Fund was launched in September 1994.

The key point is that the generation of this fund would not have been possible without investors having the assurance that novel intellectual property that possessed therapeutic potential and was developed within the network would receive adequate patent protection. That was absolutely essential. Bill C-91 provides this critical element in the research and development environment.

Subsequently, a number of start-up companies have been launched with funding from the Neuroscience Partners Fund. I have included a partial list of some of the companies, but I won't read them out to you now. I'd like to point out, though, that this neuroscience network is just one of the networks in the Neuroscience Partners Fund, which is not unique in funding venture capital into research and development by creating new Canadian biomedical industry. There are several other sources of venture capital that have sprung up since the passage of C-91. The most notable of these is the Canadian Medical Discoveries Fund, which is a labour-sponsored venture capital mutual fund that was spearheaded by the Medical Research Council of Canada, some of whose difficulties you have just heard about from my colleague.

The Canadian Medical Discoveries Fund had similar objectives to that of the Neuroscience Partners Fund; namely, to ensure that the Canadian discoveries were commercialized within Canada. This particular venture capital fund now exceeds $250 million, and through January 1997, $57 million of that has been invested in new Canadian bioscience companies.

I've given you a list there of some others related to the Genetic Diseases Network, the Canadian Bacterial Diseases Network, and the Protein Engineering Network, other life science-based networks of centres of excellence.

Typically, in excess of 80% of the money that is put into these start-up companies goes into job creation, into high-paying, good jobs. There is no question in my mind that the networks program - my own network and the others as well - succeeded in accelerating the development of a biotechnology industrial base in Canada. But like any other high-technology sector, innovation and discovery are the lifeblood of this particular industry.

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The renewal of the networks program, which was announced in the February 18 budget, ensures that discoveries will continue to flow from the research labs. Adequate protection of this novel intellectual property is essential. Without it, the private sector investment required to translate fundamental discoveries into useful therapeutic agents will not be forthcoming.

Any reduction in patent protection for the pharmaceuticals would therefore seriously undermine the whole rationale behind the government's own $47 million per year investment in the networks program. Thank you.

The Chairman: Thank you very much, sir.

Next we have Peter Thompson from the Clinical Trials Atlantic Corporation. Welcome,Mr. Thompson.

Mr. Peter Thompson (Chief Executive Officer, Clinical Trials Atlantic Corporation): Thank you, Mr. Chairman and members of the Standing Committee on Industry, for providing me with the opportunity to attend this session.

I'm chief executive officer of Clinical Trials Atlantic Corporation, the head office of which is based in Halifax, Nova Scotia. Tonight I'm here representing the board of directors of CTAC with regard to its position on Bill C-91.

I'd like to briefly give you an overview of CTAC and what its mandate is in Atlantic Canada so you can better understand our position. CTAC is a non-profit company that's owned and operated by the major academic institutions and key teaching hospitals in Atlantic Canada, and we're basically Atlantic Canada's advocate for research. We've developed a network of over 500 skilled clinicians at both the general practitioner and the specialist-based level. We also have 200 skilled coordinators on the clinical research nurse side who are united with the goal of attracting a greater level of clinical research to the Atlantic Canada region.

CTAC was incorporated in 1994 with the mandate of creating an enhanced and clinical trial infrastructure in Atlantic Canada and with the mandate of increasing the critical mass of investigators that are available to conduct clinical research in the region itself. The establishment of CTAC was made possible by funding through the MRC-PMAC health program, through the Atlantic Canada Opportunities Agency, and by the provincial governments of Nova Scotia, Newfoundland, and Prince Edward Island.

In terms of Bill C-91, the CTAC board of directors feels strongly that Canada must continue to provide the competitive national framework in which discovery, innovation, and development can thrive. A key component of this framework, obviously, is an internationally competitive set of intellectual property standards, and I submit to you that Bill C-91 provides that type of protection to the pharmaceutical and biomedical divisions.

With Bill C-91, Canada is now a full-fledged member of this multilateral trade framework that's been developed. The board of directors of CTAC basically feels that this type of protection should continue. We feel that the increased patent protection provided by Bill C-22 and later by Bill C-91 has substantially increased Canada's ability to attract investment to Canada. As a result, as I'm sure you're aware, R and D expenditures by the research-based pharmaceutical industry have increased dramatically on the national level. We're looking at increases somewhere in the area of 276% from 1988 to 1995, which totals more than $3 billion. Looking at the 1995 expenses, which is the most current information I have available, you're looking at about $624 million spent across Canada.

The obvious question there for Atlantic Canada is, what does that mean for us? As you know, we're a small region of Canada with a total population of somewhere in the area of 2.5 million. The R and D expenditures in Atlantic Canada have actually increased from $1.9 million in 1988 to $8.4 million in 1995. This represents a 341% growth rate, which is in fact the largest growth rate of any region in Canada, although you can argue that the small baseline that we have to start with helps to explain the phenomenal rate.

The board of directors of CTAC feels strongly that the high growth rate experience since the passing of Bill C-22 and, most recently, of Bill C-91 is encouraging, but there's still significant room for improvement in the area. We're also sensitive to the fact that the pharmaceutical industry is caught in somewhat of a classical catch-22 situation in Atlantic Canada, whereby in order to spend the money in the region, there has to be the infrastructure and the critical mass of clinicians available to spend the money on.

So we feel strongly that by funding the establishment of CTAC, the pharmaceutical industry has essentially helped the region in Atlantic Canada to help themselves, and this is basically sending us off in the right direction. We feel that with the continued support of the industry, we will see dramatic increases in research and development expenditures in Atlantic Canada. We feel that, in the past two and a half years of our operation, this type of activity has at least shown itself.

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In summary we feel that Bill C-91 is essential to ensure that global competitiveness continues within Canada. We feel that CTAC, in combination with Bill C-91, represents the best recipe for success in terms of Atlantic Canada.

Thanks for your attention.

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

I believe the next one is from Arnie Aberman of the Association of Canadian Medical Colleges. Our handwriting collectively here is... We could be writing prescriptions the way we write here.Mr. Walker, you are with the same group, are you?

Mr. Arnie Aberman (Member, Council of Deans, Association of Canadian Medical Colleges): Thank you.

I'm Arnie Aberman, dean of the faculty of medicine at the University of Toronto. My colleague is Peter Walker, dean of the faculty of medicine at the University of Ottawa. Neither Dr. Walker nor myself is speaking for the University of Ottawa or for the University of Toronto. Both the University of Toronto and the University of Ottawa have no position on Bill C-91. Instead we are speaking for the Council of Deans of the Association of Canadian Medical Colleges.

The council's membership includes the deans of medicine of all 16 Canadian universities with faculties of schools of medicine, and we appreciate this opportunity to express our views to the Standing Committee on Industry, which is presently reviewing Bill C-91.

The Council of Deans supports the principle of protection of intellectual property of those institutions and individuals involved in drug discovery. Such intellectual property deserves protection for the same fundamental reasons that we give protection to the intellectual property of songwriters, authors, software engineers, and inventors.

First, individual institutions have the right to their own work. Secondly, without the protection of these rights, many creative works, discoveries, and inventions of products would not be produced. In Canada and other developed countries, the intellectual property of those involved in the discovery and development of new pharmaceutical products is protected through a system of patents. The Council of Deans believes that our system of patents and patent enforcement should be comparable to those of our major trading partners.

It is the view of the Council of Deans that such a system of patent protection benefits the Canadian public by ensuring that effective new drugs be developed and made available. Such a system also ensures that Canadian scientists, whether they work in industry, in universities, in research institutes, or in teaching hospitals, are able to participate in the worldwide revolution of biomedical research taking place today. Without patent protection, a Canadian biotechnology industry will simply not develop.

The Council of Deans recognizes that the cost of pharmaceutical agents is a legitimate concern of patients and their insurers, whether in the private or public sector. However, when these drugs are used their costs rebound against all expenses avoided by the use of these drugs, including the cost of hospitalization and the loss of work. Where appropriate, the cost of the drugs can be decreased by using less expensive alternatives, by negotiating volume discounts, and by other usual business practices, rather than not recognizing intellectual property rights of those involved in drug discovery and development. Such non-recognitions will ultimately lead to either higher medical costs or less effective medical care.

Thank you for this opportunity to speak.

The Chairman: Thank you very much.

Peter, do you want to say something now or later on?

Mr. Aberman: My colleague will join us in discussion.

The Chairman: All right. That's very good. Thank you so much.

[Translation]

Mr. Réal Ménard (Hochelaga - Maisonneuve, BQ): Mr. Chairman, the interpreters are asking us to speak more slowly, since as you know, a 19th century philosopher said that speed is the enemy of comprehension.

[English]

The Chairman: Could the rest of the witnesses remember that we have translation? Sometimes you read too fast for them, so with your indulgence...

We now have, from the University of British Columbia, Mr. Bressler.

Mr. Bernard H. Bressler (Vice-President, Research, University of British Columbia): Thank you. I will talk a little slower. The interpreter has a copy of my notes as well.

I want to thank the members of this committee for providing me with the opportunity to participate in this round table.

I'm the vice-president of research at one of Canada's large research-intensive universities. Without specifically attaching a definition to the term research intensive, I'd like to point out that a survey taken in 1995 and published recently shows that five universities in Canada have annual sponsored research revenue above $100 million. One of them is approaching $275 million - the University of Toronto.

In addition, nine other universities have annual revenues above $50 million. The benefactor of this activity of universities congruent with their teaching mission is society at large and, more directly with respect to the training of a highly qualified work force and the commercial spin-off of intellectual property, the Canadian taxpayer. Therefore, the focus of my remarks this evening will be to provide evidence for the importance of the protection of intellectual property as being of primary importance for universities to fulfil their mission.

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I'm going to be summarizing parts of my presentation. I'm saying that largely for the interpreter, who has the entire presentation.

Intellectual property protection has one overriding purpose, that is, to foster innovation. By definition, patent protection recognizes a genuine invention. The rights that patent protection brings during the life of a patent are essential in providing the financial incentive necessary to turn ideas into reality. Without this protection, the incentive to create new technologies and inventions becomes curtailed. This is of particular importance in those industries such as the biotechnology and biopharmaceutical industries, where the cost of product development is very high, approaching on average $400 million Canadian.

It is also important to emphasize that there is a clear relationship between the principle of intellectual property protection - sometimes considered abstract - and the direct benefits to Canadians. As a fundamental economic tool in an industrialized society, it generates jobs and further investment, which in turn generates more jobs. That is the ``innovation circle'', which I know has been presented to you in the past.

A quick survey of the investment decisions made by the private sector as is reflected by analysing the number of new biopharmaceutical companies listed on the world's major stock exchanges, including our own, and the size of their capitalization in the order of billions of dollars is very convincing evidence of the impact that this industry has on the economic well-being of a nation.

Since the passage of Bill C-22 and Bill C-91, Canada has benefited significantly in economic terms from the investment made by the traditional pharmaceutical industry and, as well, from the spark that this legislation has provided for the growth of the biotechnology industry. I'm repeating only slightly what Michel Bergeron said when I say that there are currently 224 core biotech companies in Canada, and since 1994 the number of publicly traded companies has risen from 21 to 59. In 1996, those companies represented a current capitalization of $8 billion.

Between 1991 and 1996, it was estimated that the total investment in the biotech sector reached $1 billion over that five-year period. It is currently predicted that for 1996 alone investment will reach $1 billion.

I realize that my message today is not a new one, but rather a renewed effort at this critical time to drive home the fact that Canada has a booming biotech industry that can compete on the world stage, but only if we understand and act on two things. Those two things are what it has taken and will continue to take for this industry to be successful, and the support it needs to achieve its potential.

What role do universities like UBC and others represented here this evening play? We participate at every step in the cycle, from the basic and applied research stages through to prototype development and market testing, to the point where we license the technologies created in our labs, many to regional spin-off companies we ourselves create.

Behind the research and commercialization activities at UBC and other universities are people and partnerships: top faculty researchers, graduate students training in the academic and technical disciplines, and technology transfer experts who provide the link between the science and its application.

Let me just give you some examples from the University of British Columbia. In 1995-96, UBC life sciences research received over half of the university's $139 million research budget. In the history of UBC technology transfer, which is a twelve-year period to the end of March 1996, life science research at UBC has accounted for 374 invention disclosures, 500 patent filings, and the licensing of 119 technologies. I repeat: that was life sciences research only. Roughly half of UBC's 77 spin-off companies have a life sciences origin.

Though still relatively young, these companies are contributing to the diversification and development of British Columbia's high-tech sector. Our most recent survey, completed in 1994, indicated that UBC life sciences spin-offs employee 364 people. We think that as of the end of last year the number will have reached over 500. The small investment by UBC of $2.9 million, along with an investment of $11 million from various government sources, was parlayed into capitalization of $173 million in private investment in British Columbia alone for these start-up companies.

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Parenthetically, if I may be permitted to brag, based on the most recent survey results, UBC is near the top in spin-off company creation in North America, third after only MIT and Stanford.

Finally, I know that while the data I'm presenting here is for the University of British Columbia, similar data exists for most of the research-intensive universities, which I refer to in my opening remarks, some of which are represented at this table.

I'm now moving on to the middle of page 6.

Technology transfer and growth of new industries is not without risks. UBC safeguards its investment in research prototype development and technology licensing by protecting its intellectual property, most often through patenting.

The cycle from initial research through to licensing of new companies and eventual financial return takes from seven to twelve years and is extremely complex. Investors in companies must know that their efforts are protected. UBC would not have such a strong commercialization record without this protection, and Canada would not have built up the biotechnology industry base it has. New start-ups especially need the support if they are to become the backbone of a new industry in this country, as they show so much promise of becoming.

Finally, I'd like to conclude by emphasizing the important linkages between the growth of the biotech industry and the presence of the brand-name pharmaceutical industry in Canada.

Since 1988 and the passage of Bill C-22, Canada has seen a dramatic growth in investment by this industry in research and development, both in the universities and in their affiliated research centres, but as well within their own - and in many cases newly built - laboratories. This investment has contributed the fuel, that is, the basic research, that drives the innovation engine.

With the passage of those two bills referred to, a partnership was created in which the industry agreed to invest 10% of its sales in R and D. We know that they had reached that target by 1992. But, more importantly, I believe that the growth and sustainability of a home-grown Canadian biopharmaceutical industry would not be possible without the synergy that is created by the presence of a mature pharmaceutical industry.

Thank you.

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

I was sitting here smiling when I listened to your presentation. I know UBC like a sister institution. I sat beside Doug Kenny for five years in the first years of the Social Sciences Council.

Mr. Bressler: Oh, yes.

The Chairman: He spoke with the same pride, but he never admitted that he was bragging, which at least you did.

Voices: Oh, oh!

Mr. Bressler: I had to admit it in front of all my colleagues because they would accuse me afterwards.

The Chairman: Thank you so much.

Mr. Bressler: Thank you.

The Chairman: Mr. Goyer,

[Translation]

Dean of the Pharmacy Faculty at the Université de Montréal, you are our next witness.

Mr. Robert Goyer (Dean, Faculté de pharmacie, Université de Montréal, Association of Deans of Pharmacy of Canada): Thank you, Mr. Chairman.

Gentlemen, committee members, I will be giving our presentation on behalf of Dr. Moskalyk, the chairman of the Association of Deans of Pharmacy of Canada. Then, with your permission and as the clerk's office suggested, I will make a few comments that I think are relevant as the former vice-chairman of the Patented Medicine Prices Review Board. I served in that capacity between 1987 and 1994.

I'm going to read the dean's statement in English.

[English]

The deans of Canada's nine faculties of pharmacy strongly support intellectual property protection. Research and innovation is critical in today's universities and knowledge-based industries and is absolutely essential in order to ensure future economic growth in Canada. Intellectual property protection is the key and critical component that lends support to and leads to promotion and innovation. Accordingly, we wish to go on record as strongly supporting patent protection legislation for the pharmaceutical and other knowledge-based industries in Canada.

In our view, the innovative pharmaceutical industry has met its commitment to increase research and development spending in this country.

However, the faculties of pharmacy would like to see greater support for basic research from the industry as well as from government. In terms of support for basic research in faculties of pharmacy, the industry's commitment to date has not been reached in the eyes of most deans of pharmacy.

The faculties of pharmacy in Canada intend to continue their close relationship with both sectors of the industry, and this letter of support for the principles embodied in Bill C-91 is not to be construed as a blanket endorsement or otherwise of either sector of the industry.

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In our view, the current legislation has been beneficial to Canada since its introduction, and in the future it will also serve the major Canadian generic companies as they bring their own patentable drugs to the market. Perhaps more importantly, the bill is good for the future of health care in Canada, both from the perspective of promoting new drug discovery and from the standpoint of career placement for the graduates of our undergraduate and graduate programs.

We strongly support the right and ability of any manufacturer to gain access to the marketplace for any product that has come off patent.

However, we cannot support any legislation that would in any way jeopardize intellectual property protection during the lifetime of the patent and thus permit market access to other manufacturers before a patent has expired. For that reason, we also support the intentions of the linkage regulations, providing the problem areas can be resolved to make an equitable mechanism to safeguard and enforce the intellectual property protection features of the legislation.

The linkage regulations must ensure that no products are marketed until patents have expired. On the other hand, they must provide timely access to the market once patents legitimately expire. Indeed, if the problem areas inherent in the current linkage regulations could be resolved so that they are equitable to both sides, they should then be enshrined in the legislation itself. This would hopefully also preclude the need for any future provision for automatic reviews of this legislation.

[Translation]

On my own behalf, and as the former vice-chairman of the Patented Medicine Prices Review Board, I must say that the innovative pharmaceutical industry is extremely important, because it is the sector that generates new drug therapies and allows for the use of generic medications later on.

However, the generic industry is also extremely important, because it is the sector that produces equivalent medications at lower prices. By so doing, it helps dampen the rise in drug costs, thus allowing the health system to reach its objectives of universality and accessibility.

In light of the essential and complimentary roles that the two sectors play, the innovative pharmaceutical industry and the generic industry, Canadians must ensure that the two industries enjoy optimal conditions so that they can fulfil their respective mandates. Bill C-91 restored full patent protection, and now Canada offers the same protection as all other industrialized nations. We believe that this approach must continue.

However, the marketing period has been extended considerably, and there are several reasons for that. Of course, regulatory requirements are greater; obviously, there are management problems within the Drugs Directorate and other regulatory bodies in the area of drug approval. There are also problems with managing drug development within the industry itself, which must ensure it can provide its products as quickly as possible so that it avoids any erosion of its own patents.

Delays have a major impact, because a one year delay, caused either by government or industry, is equivalent to three years of a patent. Faced with rising development costs, the governments of countries with a strong domestic pharmaceutical industry, particularly the United States, Japan and the European Union, decided to protect and maintain the ability to innovate. As a result, by 1984, the competitiveness of American companies was decreasing, because of major approval delays from the American FDA. This led to lobbying for the Waxman Bill in 1984 in the United States, which provided for additional patent certificates.

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The purpose of the American legislation was to allow the US to compete better with the industry in Europe, where drug approval is done much more quickly. Japan followed suit in 1988, and the European Union in 1992.

Traditionally, Canada has not had a strong domestic pharmaceutical industry, except for the generic industry, which is mainly located in Ontario. The traditional innovative pharmaceutical industry is mostly in Quebec and Ontario. On the other hand, an extremely large biotechnology sector is emerging. Over the past few years, there have been references to this sector.

If we look at the history of the Patent Act, we see that Canada has always wanted to promote the development of a local chemical and pharmaceutical industry, which is why it first took action in 1923. When Canada instituted mandatory licensing, it forced companies to synthesize their products in Canada.

Bill C-22 had a similar effect for periods of exclusivity. In my opinion, it is not appropriate to grant an additional protection certificate for all products marketed in Canada, since the countries that held the period of exclusivity were the ones that had a very strong domestic pharmaceutical industry.

However, given Canada's historical concerns, I think it is important to support efforts to encourage our contributions to the discovery of new medications by giving Canadian and foreign firms that are involved in such work the same advantages as those provided by the three other major producing countries.

So I would therefore suggest that it would be in Canada's interest to consider extending the effective period of protection by means of a complimentary patent certificate for products discovered and developed in Canada. By ``developed'' I mean development up until phase II, that is, the clinical phase.

As for patent linkage, there has been a great deal of talk about a delay in marketing and its impact on the generic industry. But the impact is not felt just there. Society in general feels this impact. Two thirds of the cases are settled in favour of the innovative industry, and one third in favour of the generic industry. When the approval of generic medicines is delayed, consumers and the provinces are the ones who actually pay the price.

The United States has something similar, but the other way around, with damages that can be three times higher in cases of patent infringement.

So the provinces and other consumers must be protected, first of all against patent infringement by generic manufacturers, but also against falsification of records by the innovative companies.

As a result, the current regulation must be reviewed. I would suggest that once a court rules in favour of a generic manufacturer for a particular drug, the Patented Medicine Prices Review Board should estimate the extra amounts that the provinces and consumers paid for this drug during the period of time that marketing of the generic drug was delayed. That amount would be set according to sales volumes and could be paid back in the same way as when prices are excessive.

To conclude, I would like to suggest that the current legislation be maintained for what is called hasty use of a patent, like the Bolar provisions in the United States and like the provisions the European Union just approved in April 1996, which will allow generic companies to manufacture drugs so they can market them once the patent expires.

Finally, I will be sending a written presentation to the committee, and in it I will certainly be dealing with the problem of patent dedications, which the Board certainly told you about. Perhaps I will also discuss a suggestion that was made here, namely, to have all drugs covered by the Patented Medicine Prices Review Board. That would be an administrative nightmare. In fact, the Patented Medicine Prices Review Board is the most powerful one in the world, but its procedures require a phenomenal amount of time. Without major changes to its regulations, it would be impossible to implement that.

Thank you.

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The Chairman: Thank you, Mr. Goyer.

I would now like to ask Mr. René Simard and Ms Suzanne Bisaillon from the Université de Montréal to give their presentation.

Mr. René Simard (Rector, Université de Montréal): I will be giving my presentation on behalf of the Université de Montréal, which is one of the largest universities in the health sciences sector in Canada, both in terms of teaching programs and research and development. With me is Ms Suzanne Bisaillon, a professor at the Pharmacy Faculty, who is at quite an advantage here, because she is both a pharmacist and a lawyer.

In 1991, at the request of the Health department of the day, I chaired the Advisory Council on Pharmaceutical Research, which Dr. Bernard Bressler belongs to, by the way. This council was made up of 13 members from the drug industry, both the pharmaceutical industry and the generic companies, as well as people from academia and government. The members of the council came to a consensus on 27 recommendations which paved the way for development of Bill C-91. This bill was to provide Canada with a competitive infrastructure and regulatory framework to develop pharmaceutical research and the pharmaceutical industry. The recommendations are found in a report, which was entitled It's Time to Act - A Strategy for the Development of a Growing Sector: Pharmaceutical Research. The French title of the report was, Le temps d'agir - une stratégie pour le développement d'un secteur en croissance: la recherche pharmaceutique.

I don't want to reiterate all the discussions that were held at the time about the cost of patent and non-proprietary drugs for consumers and our health system. Nor will I elaborate on the very important role that the generics play, as my dean from the Pharmacy Faculty was saying a few moments ago. Obviously, they have their place in the health care system, helping to keep costs down, and the contribution they make to the drug industry must not be underestimated.

However, I will spend a few moments reviewing a number of recommendations that were made at the time, reviewing the path that was taken and attempting to demonstrate how Canada could maintain its position on the world pharmaceutical market and even improve its position.

[English]

My first comment has been dealt with. It relates to the level of protection awarded to patents. I can only say that Canada must offer a competitive regulatory environment, and I mean competitive with our commercial partners, countries that we are in competition with, such as the United States, France, the U.K., and the European Community.

It has been said, and I repeat it, that the 20-year protection period is the minimum required in order for Canada to meet its obligation with regard to the agreement signed with the World Trade Organization. Therefore, there could be no way back.

I repeat that if we wish to remain competitive with regard to our trade partners and if we are to honour our commitments, Canada cannot afford to question this minimum protection of 20 years. It should even consider extending it.

Your committee will have the opportunity to study this question. It is not for me to prejudge your recommendations, but we should be reminded that countries such as the United States, Japan, and the European Union already extend this protection on pharmaceutical products by an extra five years in order to compensate for the delays involved in the development and approval of new drugs.

[Translation]

Not much has been said about the second comment that I was going to make, which has to do with the smooth development of the pharmaceutical industry over the past four years, that is, since the passage of Bill C-91. Some people predicted a catastrophe in some cases, as well as catastrophic price increases, which often happened. I think that the industry has developed smoothly thanks to the monitoring of the Patented Medicine Prices Review Board, whose mandate is basically to review the price of patented drugs when they first come on the market.

Since it was created, the Board has also had a strong influence, particularly since its powers were expanded in Bill C-91, on the entire Canadian Health Care system, thanks to its analyses of price trends for both patented drugs and all pharmaceuticals. In some ways, the Board serves as a watch-dog and warns of price increases. Its main functions must be maintained.

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The Board also reports on the R & D expenditures of patented drug manufacturers. In its 1995 report, the Board pointed out the patented medicine price index dropped by 1.75 % since 1994, whereas prices for all patented and non-proprietary drugs rose by .09 %, as compared with a 2.14 % rise in the consumer price index.

One must conclude that the Board's intervention kept the increase in the patented drug prices under the inflation rate. We also must remember that the Board concluded that the price of patented medicines increased less than the consumer price index, that the prices increased less than the prices for non-proprietary drugs and that they increased less than the price of drugs in the United States.

[English]

My third comment addresses the very nature of R and D in development spending. It is apparent that the increase of gross R and D internal spending incurred by pharmaceutical companies resulted in changing the subsidy plan of health research in Canada. The breakdown of research moneys shows that most is invested in clinical and applied research. Fundamental research, on the other hand, remains underfunded at a level of 22.2% of total R and D spending, even though fundamental research has led to the recruitment - past, present, and future - of high-calibre researchers who build a foundation from which new clinical and applied research can emerge.

There should be an increase in the funds injected in R and D through MRC and NSERC. The limited availability of research funds allocated by these agencies is such that the rate of success of applications presented to them is unacceptable, being only at the 25% level for MRC in 1996 when it is common knowledge that approximately 40% of the applications submitted met the required quality level.

It would be advisable to consider a substantial increase in R and D money allocated to fundamental research by the pharmaceutical industry since facilities are available, employment will be created, and university laboratories constitute an ideal environment for the training of highly qualified manpower, which is to Canada's benefit.

I admit that it might be difficult to set an ideal threshold, but I think we should have as an objective to try to reach a level of spending that is comparable to countries that are leaders in pharmaceutical research. The 4.3% reduction between 1991 and 1995 in sums allocated to fundamental research is deplorable. In 1991 the proportion was 26.5% compared to the total amount invested in R and D. There is a lot of room for improvement there.

[Translation]

My fourth remark has to do with the drug approval processes. I'll be very brief, even though we haven't already discussed this matter. The Health Protection Branch of our Health Department handles the drug approval process. Even though a great deal of progress have been made since passage of Bill C-91 and since the time of the recommendations found in the report It's time to Act, the drug approval period is longer than in many other countries. The slowness of our approval process means that the 20-year protection provided by our patents is reduced just as much. Yet delays in getting new products onto the market are an important factor when the time comes to decide where a research and development facility should be set up. If Canada wants to draw more capital in, it will have to shorten the evaluation and approval process, while at the same time continuing to guarantee safe drugs for Canadians.

My fifth and final remark has to do with harmonization of drug approval mechanisms at the federal and provincial levels, an issue that the people who spoke before did not touch upon. The pharmaceutical companies are concerned because the provinces are requiring more and more data on the safety, effectiveness and interchangeability of new products. In some cases, these requirements are redundant, because the Health Protection Branch' process covers them. In particular, the provincial formulary committees are asking for more and more epidemiological data on health and safety, and their work partly duplicates the review that is done by the federal department.

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There are reasons why approval criteria for marketing and criteria for inclusion on a provincial list may vary, but we should avoid having the same studies done one after another and we should find some sort of joint mechanism to speed up responses.

In conclusion, I must point out that Canada is not the only country that offers advantages to the pharmaceutical industry. Other countries that we are competing with for investment offer much the same advantages, or even more. The protection we offer for the intellectual property of pharmaceutical products as compared with what other developed nations offer is one such example. Furthermore, we must remember that the Canadian pharmaceutical market is fragmented because the 10 provincial governments have different policies, and this does not work to our advantage. That is why we believe the government of Canada should pay close attention to the development of pharmaceutical research.

Thank you.

The Chairman: Thank you, doctor Simard.

[English]

We now move to the round table part. We will go around the table and the members will ask questions. Sometimes they direct them to a particular person and sometimes they're directed to the group. If a question is directed to another person, feel free to participate. Just let me know that you want to say something. Feel free to express your opinions not only when you agree but also when you disagree so that we will get a good feel for this field. It's very important.

[Translation]

Now I would like to introduce a former student from the Université de Montréal, Mr. Ménard.

Mr. Réal Ménard: I'll begin with two comments. I believe we'll have to consider having two turns, since we have been given such a wealth of material.

You know, I'm feeling very nostalgic, and I really miss the Université de Montréal, where I studied history and political science, although I did take my administration courses at UQUAM. I hope you won't be too angry with me. But the department of social sciences at the Université de Montréal is not bad either. Don't deduct these introductory comments from my time.

On several occasions we were told that the approval process is slow, and I would like to get back to that point. We also heard about the restoration clause in the United States. Compensation of up to five years is provided, up to five years of patent protection, when the approval has been delayed too long. You've introduced a new variable that I'm not familiar with, and I would like you to give us the details: I'm speaking of the selective introduction of extension certificates. I think you should assume that I'm a layman, an ignoramus who doesn't know anything. Could you please explain this system to us.

Mr. Simard: Perhaps Mr. Goyer would be better able to answer your question.

Mr. Réal Ménard: Fine.

Mr. Goyer: You mentioned a complementary patent certificate. Let's say that we discover a new drug in 1980 and it takes us ten years to market it, which brings us to 1990; we still have 10 years of patent protection, that is, from 1990 to the year 2000.

In 1984, legislation was adopted in the United States that provided additional protection, allowing for a longer period of exclusivity. Calculations were done using the time it took for the clinical study, let's say 5 years for the clinical trial, thus perhaps 2 years for government approval, which total 7 years, then that was divided by 2, resulting in 3.5 years. That was added to the 10 years of protection, resulting in 13.5 years of exclusivity. That period of exclusivity must never exceed 14 years, while the complementary patent certificate can never go beyond 5 years. There is a similar formula in Europe and in Japan; the maximum is still set at 5 years, while the total period of protection can never exceed 15 years.

Mr. Réal Ménard: In the final analysis, it's the restoration clause.

Mr. Goyer: It's the restoration clause, which they call the additional protection certificate.

Mr. Réal Ménard: I see. We hit upon a very important point. We questioned officials from the Health department because we were very concerned about the approval issue. This is an important point to master. We were sent a chart, and I really hope that you can look at it. We were told that the average time for approval in Canada is about 600 days, except for the fast track procedure.

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On the basis of the data that was provided to us, and if we compare that data to data from the United States and other countries, we can see that our process is competitive, comparable. We have heard from various sources that the Health Protection Branch obviously does not have the same human resources as its American counterpart does. But on the basis of the data provided to us, which is up to date, we've been assured that the Health Protection Branch is competitive.

Do you agree with this analysis? I hope that our clerk will send you this chart.

Mr. Goyer: In comparison with the United States, our delay is competitive, nearly two years, although it is about one year in Europe.

Mr. Simard: That's the answer I had as well. I was told that it was six months in the United Kingdom. When we were drafting the report It's Time to Act, the delay was three years. So the approval process has improved by one year. Progress has been made, and we think it could go even further.

Ms Suzanne Bisaillon (Professor, Faculté de pharmacie, Université de Montréal, and lawyer): Our current objective is to review the entire file initially and make sure that all the information is there within 45 days, and then study the file in depth, which can take up to 300 days, nearly one year. However, all kinds of delays can occur if the file has any shortcoming or flaws. In the final analysis, that's what extends the process. If the company is sent a notice of non-compliance, it has 90 days to respond. Then the clock starts ticking again, from zero to 190 days. It's true that the delay has been reduced to two years, but we think that in light of other countries' experience, it could be reduced to one or one and a half years.

Mr. Réal Ménard: So I gather you would be in favour of a joint approval process. Several witnesses asked us why we couldn't have a joint approval process, if monographs were tabled in the United States and the FDA had the necessary data and had begun the approval process.

Ms Bisaillon: The harmonization process between the main countries is well under way, and eventually will lead to that, which is to be hoped for.

Mr. Réal Ménard: Mr. Goyer, you yourself are an old timer; you have served on the Board. I hope that it was a fine experience in your life, but you don't have to share that with us if you don't want to.

Mr. Goyer: Unfortunately, it convinced me to take the dean's job.

Mr. Simard: It's even worse when you're dean.

Mr. Goyer: Unfortunately. Every morning, I shed a tear.

Mr. Réal Ménard: Well, in either case, I suppose sometimes you have to just take your medicine every day.

Here is a question for you. Several witnesses argued that the Board should have additional power to monitor the cost of generic products. You seem to be telling us that given the regulatory maze and the volume of data that you have to handle, you aren't convinced that the Board would want to take on that mandate at this time, if the status quo remained. Is that an accurate interpretation of your thoughts?

Mr. Goyer: Perhaps you would like to ask your lawyers to verify my statement, but I believe that in theory, the federal government is not entitled to get involved in price controls, because that is a provincial area of jurisdiction.

Mr. Réal Ménard: We are sure about that, sir.

Mr. Goyer: It managed to do so with Bill C-22, by means of patents, by asking whether overuse of the monopoly that a patent provides was leading to excessive prices. So the government was able to make the link.

I believe that in the case of non-proprietary drugs, we would have to have the approval of all the provinces - and that probably would be possible - that asked the Board if it wanted to monitor the price of these drugs. Often the price of the first non-proprietary drug that comes on the market is very high because of the investment that was made in it, whereas the price of the generic drugs that follow is lower.

Mr. Réal Ménard: One thing is for sure, and I will put on my Bloc Québécois hat to tell you about it.

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We know very well that there will have to be delegation of power from the provinces if we want to do that. But there are times when it might be a possibility in view of the fact that the Board doesn't have a bad reputation. Many stakeholders recognize that the Board has acquitted itself extremely well of the last three mandates it was given.

As we are talking about the Board and since the chairman is in one of those moods where he's generous with me, I'll hurry up and put the following question to you. There are very critical minds, who surely went through the University of Montreal, who say that the evaluation done by the Board should be relativized because the survey of the seven reference countries that allowed us to measure and compare the evolution of our prices is not representative. Comparisons would have to be established with 24 countries, in other words, all the OECD countries. Do you share that opinion?

I'm sorry for throwing that data at you; I know it will be a headache.

Mr. Goyer: When Mr. Eastman and I started, we only had three or four criteria. We wondered what we'd do.

The Department of Justice asked us to look at prices in all 125 countries, which was impossible. Some suggested we examine what was done in OECD member countries. We would then have established comparisons with countries like Portugal and Turkey; it would have been unbelievably difficult to get that information and, moreover, the cost of living isn't the same. So we chose the industrialized countries. In some countries, price levels were high while in others, like Italy and France, they were lower even though their rate of consumption is almost four times higher than what's found in Anglo-Saxon countries. We also looked at those prices which were more in the middle of the range, like in Sweden and England. Maybe we could have examined eight or nine countries, but we thought we'd get a good overview with that.

[English]

The Chairman: Could I just make sure I understood fully? You think the comparisons used by the board are acceptable and defensible. Is this what you're saying?

[Translation]

Mr. Goyer: Yes.

[English]

The Chairman: I just want to put this on the record directly.

Mr. Goyer: Yes, sure.

The Chairman: Réal.

[Translation]

Mr. Réal Ménard: This time, my question is for the coalition representatives who presented a brief that I found to be excellent. What would you like the committee to recommend concerning the improvement of the tax credit for experimental research and development? You seem to be saying that the tax credit could be improved.

As for recommendation no. 3 on page 5 of your brief, I get the impression that it could have been written by the generic drug industry. Am I wrong in interpreting this recommendation? Would you actually like the federal and provincial governments to finally be able to evaluate the cost/benefit and effectiveness of new drugs? This argument was often repeated by the generic drug industry representatives. Finally, it is said that very few of the new drugs being put on the market have any new curative value. Could you explain your recommendation no. 3 in more detail?

I think you were very bold in your recommendation no. 5. Am I to understand that you would agree that the Board could ask for a reopening or a review of the legislation if the objectives are not attained?

You say:

The PMPRB should be empowered to call a review of the legislation by the Canadian Parliament following two successive years of failure by the pharmaceutical industry to meet the set targets for either drug prices or R&D expenditures...

Could you explain this recommendation? Are we to understand that you find that with its present powers, the Board is slightly emasculated?

[English]

Dr. McLennan: Let me answer your second question first. In recommendation 5 we spell that out pretty clearly, I think. You heard ample testimony earlier from Dr. Goyer, our former representative. We think the PMPRB has been an effective mechanism, so we're recommending under recommendation 5 several additional responsibilities that should be given to them. One of them would be to monitor, as we say in recommendation 5 on page 6. We say they should continue to report to Parliament annually on drug prices and research and development expenditures.

We made a comment about what we thought the penalty might be if the industry doesn't live up to these preset targets. This penalty would be that the discrepancy would be turned back into the research community.

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So those are clearly defined in our recommendations. Your first question had to -

[Translation]

Mr. Réal Ménard: In reading the Board's report, one learns that some 60 corporations are holders of patents and I believe that 49 of those are members of PMAC. Are you telling us that those who did not have any research reports - perhaps the example isn't a good one because some don't have an active patent - and whose data are lower than the average of what's done by the PMAC should be sanctioned? Is that what I am to understand?

[English]

Dr. McLennan: Yes. We have set out, I think, rather modest targets in view of not only their past performance but what we think they could do in the next decade. Those numbers are under recommendation 4. I don't think they are unrealistic targets.

Yes, we are suggesting if these targets aren't met, there would be, to use your phrase, punitive measures. The flip side of this, of course, is that we would provide a level playing field. In other words, we maintain adequate patent protection. I suggest to you that we have to remember Canada is a small player on the world stage with respect to the global industry. If companies make a decision to invest in Canada, and we want them to invest here to create the jobs and so on that have been described by other people this evening, then we have to have a reasonably level playing field. Others have commented on this in detail. It is terribly important to restore and maintain this because we're not a major player on the world stage.

If we persuade a company to invest in Canada and we want them to do this, then for goodness sake, let's do two things. Let's provide the environment to give them protection for their patent. Secondly - it's a point that's been brought out but hasn't been emphasized tonight - we must also maintain a proper research environment in this country. Other people tonight have spoken to this. We must make sure we have a cadre of trained people in place in our university system to do the research and to respond to this investment.

Now if I can go back to your first question, which I believe had to do with...

A voice: Number one.

Dr. McLennan: Sorry. Yes, it was number one. Thank you.

The second paragraph under recommendation 1 on page 5 suggests consideration be given to enhancing the SR and ED tax credits for Canadian patents that are researched in Canada.

The Chairman: Thank you.

Do you have a comment on this point?

Mr. Bressler: Yes, on the point of SR and ED credits, I'd like to just put another spin on this. It's an issue we have been debating and discussing with Revenue Canada for several years now. It has to do with the fact that, even in making its investments, the industry excluded certain kinds of investments. It excluded, for example, investments in chairs at universities, support of graduate students and support of postdoctoral fellows.

They are able to do it partly through the MRC-PMAC program now, but they're not able to do it as defined by that section of the Income Tax Act. There are other industries now feeling this same pressure. I've spent some time this week in Ottawa with the wireless telecommunication industry. I won't bring that into this discussion, but I will just say they're also affected by the definition of SR and ED in that particular section of the Income Tax Act. It does have an impact on how they make their investments as far as the university sector is concerned.

The Chairman: Any other comments on this one? I'm going to go on to the next member if I can.

Mr. Mayfield, please.

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

I very much appreciate being here tonight to listen to you who come out of the furnace of research, I guess. Now you professionals are in the hands of the laity here and we, in all our ignorance, will decide how you go about your business.

I'm wondering who owns the intellectual property. Out of the relationship that is growing among industry and the universities and the researchers, who ends up owning the intellectual property? Is there a general rule about this?

Mr. Bressler: It varies. Our university specifically owns the intellectual property outright if we decide to work it. So when researchers come to our office, which they have to by their arrangement of employment with the university, they disclose an invention and we have a certain period of time - 60 to 90 days - to tell them whether we will work it. If not, then we assign it to them and it's theirs.

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The majority of the time we will work it; therefore, the rights remain with us. However, as soon as we find a licensee for that particular technology we will provide them with an exclusive licence, which often lasts up to 20 years. So in net effect, the company that ends up with the licence - and sometimes they're a spin-off company of the professor's laboratory themselves - ends up with the exclusive use.

Some universities, by the way, have policies that are somewhere between that and the other extreme.

Are you similar to us?

Mr. Simard: Yes, it's about the same.

Mr. Bressler: Yes, the University of Montreal is similar to us. The University of Toronto varies. Laval...?

Dr. Bergeron: I think Laval had the same traditional approach, where they kept the property and just licensed it.

For one of our recent spin-off companies, Laval University has agreed to be a co-partner in the industry and to release the intellectual property to give more leeway to this young industry, to this young biotechnology company. They had to go to the council of the university to change the rules at the university.

So that is another approach, which I think is very positive and gives more leeway to the young industry that's growing up. That approach is quite new, as a matter of fact. So the university is co-partner; it's a shareholder within the company but a minority holder. To my knowledge, it's the first time it has been done in Canada.

Mr. Philip Mayfield: I very much appreciate the enthusiasm and the excitement and the energy that I presume you draw from the growing research you're involved with. I think that's really a wonderful thing for you and for our country. So often we have been bombarded with stories of our researchers, our young bright people, heading somewhere else because there's no opportunity here. So I think it's wonderful, and I want to say how pleased I am to hear that.

I wonder, though, in the growing relationships, we generally think of the generics as picking up where the brand names have left off after the protection has ended. But we've heard that the generics themselves are caught up in this growing wave of research and are involved in that themselves. Are there relationships between any of your institutions and, say, some of the generic companies?

Mr. Bressler: Absolutely. Lots.

Mr. Philip Mayfield: When you say ``lots'', would you care to talk about some of the numbers in that? Would you be able to do that?

Mr. Bressler: I can't give you the numbers -

Mr. Goyer: Chairs, centres of excellence...

Mr. Bressler: Yes, I was going to say, chairs, centres of excellence, support of graduate students, support of our doctors and pharmacy program at UBC. I don't have the numbers - I wasn't anticipating the question - but I know there's sufficient support.

Mr. Simard: In fact, in the province of Quebec, the Ministry of Industry has what they call des grappes industrielles, industrial clusters. One is biotechnology, where the pharmaceutical industry is important, and that includes the generic companies. So they are part of a complete strategy to increase Quebec's competitiveness in that area. They are very much involved, and they participate very actively as well in decision-making.

Ms Bisaillon: If I can add a comment -

The Chairman: Yes, please.

Ms Bisaillon: - one area where generic companies have done quite a lot of applied research is formulating drugs: tablet formulation, capsules, liquids, and so on. There's a lot of research involving that area, especially with faculties of pharmacy, and there has been quite a lot of development in the last 20 years. Some of them grew very large and became so good in the production of drugs, manufacturing of drugs, that as a matter of fact they are manufacturing drugs for patent companies, brand-name companies.

Mr. Philip Mayfield: One of the concerns that has been brought to the committee was put very forcefully last night in our teleconferencing. The Canadian Auto Workers union brought a lot of numbers to show that drug prices have substantially risen since 1992.

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I wonder what basis there might be for those numbers, because I hear you people saying something quite different, that in fact the rate has gone down, that in fact it's lower than the national indices. Can you understand why there is this difference of opinion on prices? They're talking about very large price increases.

Mr. Goyer: I don't know if they talked about large price increases or large cost increases.

What are the costs of drugs? The cost of drugs is the price of the drug.

Secondly, what do you prescribe? Do you prescribe a Mercedes, or do you prescribe a bus ticket? If you want to go to that corner, you can choose either one because the prescriber doesn't pay and the patient doesn't pay. That's what we call the prescribing profile. It constitutes 35% of the increase in the envelope of drugs. The professionals have done a hell of a lousy job there.

Thirdly, how many people do you have on social security or unemployment? In the late 1980s, in Toronto - I don't remember exactly how many people - the increase in the number of recipients of social benefits and unemployment insurance had an impact of something like $100 million a year because the health status of people, of society, is such that when we become poorer, it has an impact.

Fourthly, how many people do we pay for to live longer? We don't live healthier longer, but we live longer, so we live longer sick.

Males and females live healthy exactly the same duration of time. So fortunately we males take off sooner.

Also, we have degenerative diseases that we have to treat, and now new diseases: Alzheimers, AIDS.

In Quebec, for example, they've decided to cover drugs for kids under twelve years of age, so then you have new beneficiaries.

One of the biggest problems we had at the board with the provinces - and they were yelling at us all the time - was, why the hell don't you control the cost of drugs? We could not; we could only control the price.

The Chairman: Did anybody else want to add to that? Was the response to that fine?

Mr. Bressler: I might add that the utilization problem is the big issue, so the auto workers are probably not wrong. It's utilization and total cost versus price of drugs. That's what Professor Goyer was saying. That has to be dealt with another way.

B.C. is one province where the 21 pharmaceutical companies now have come together in partnership with the government to put a pilot project in place in a community called White Rock, which has a tremendous number of seniors in that community, to run a program called Excellence in Health. It's a self-run education program that's being evaluated in the hope that the utilization will go down because of increased information. I think that's the route we need to take, in partnership with the industry, to bring costs down.

The Chairman: Thank you very much.

Mr. Goyer.

Mr. Goyer: May I add that when Kessler, the FDA commissioner, presented his budget a few months ago in front of the Senate, he said that the impact of lack of proper utilization by patients when they receive their new prescriptions cost the health system in the U.S. $22 billion. Hepler, in Florida, evaluated that the cost of misuse of drugs is $74 billion, while the sale of drugs is $70 billion. So we're not doing a good job, but the money is there.

Ms Bisaillon: I would add one figure, a statistic. In the elderly, when you make a survey of how many prescribed drugs they are consuming, the average is between twelve and fifteen per person per day.

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Mr. Philip Mayfield: Is that the national average?

Ms Bisaillon: That is the situation in Quebec, but I doubt that it would be very different elsewhere.

Mr. Philip Mayfield: Mr. Chairman, I'm not quite sure how to get into the next subject because I really lack the depth of knowledge to discuss it. But I'm interested in approaching it in the best way I can. Mr. Goyer raised the issue of the legislation and how that needs to be reviewed. I trust that it is in the purview of this committee to look at that kind of thing. I don't know if it is, Mr. Chairman.

The Chairman: It depends on their answer.

Some hon. members: Oh, oh!

Mr. Philip Mayfield: But I will be most interested in the information you will be forwarding to the committee.

I'm wondering if you have any general comments about the fairness or unfairness of the legislation as it is now and how it might be improved as this committee looks at it and perhaps makes recommendations. Do you have any comments about that beyond what you have already said?

Mr. Goyer: Is the legislation fair? That depends on to whom you ask the question.

Mr. Philip Mayfield: That's right. But when Solomon sat at the gate, he looked for that perfection.

Mr. Goyer: Before the legislation the price of drugs was double the inflation rate. Now it's zero.

Obviously, the PMPRB is helped by the provinces, because the provinces have decided that in their formularies they will extend the directives of the PMPRB for patented drugs to non-patented drugs. Then at one point the provinces can say, no more increases in the price of your drugs, so they are even more powerful than the board in relation to price increases.

Now, as to the new drugs, of the countries compared, we were second highest. Now we're in the middle, and even a bit below. It could possibly be done at the Portuguese price, but at that price they won't market the drugs here. Even our neighbours, the Americans, are upset to see the difference in price between the U.S. and Canada. They wonder how come a Canadian company can market drugs at prices much lower than in the U.S. But what's a fair price? It's very difficult to determine. So I think the comparisons are okay.

I think we impose on the companies a regulatory burden that is excessive. Even for those who don't have an excessive price, there's an excessive regulatory burden. For all twelve territories and provinces it involves filing every six months for four classes of customers. It's unbelievable. So this is unfair. This is something I would change.

I would certainly change the possibility to dedicate patents. In one case that has been made public, the Genentech case, they dedicated their patent one week after having paid their annual dues, so they didn't even know themselves that they were going to dedicate their patent. So how can a generic know? It takes five years to prepare. So patent dedication was used to get off the PMPRB. That's unfair, and it's unfair for those who abide by the regulations. So I think this will have to be changed.

Mr. Philip Mayfield: Thank you very much.

The Chairman: Thank you, Mr. Mayfield.

We'll now go to Mr. Bodnar, who is the parliamentary secretary to the Minister of Industry.

Mr. Morris Bodnar (Saskatoon - Dundurn, Lib.): Thank you, Mr. Chairman.

With all the brain power here, can any one of you solve my cough?

Mr. Bressler: Fisherman's Friend lozenges work.

Some hon. members: Oh, oh!

Mr. Bodnar: No, I tried them. They taste great, but...

Dr. Bergeron: I'm an infectious disease specialist, so I could see you after the meeting.

.2030

Mr. Morris Bodnar: This is sounding interesting already.

With respect to matters of interest that have come up in the last few months, one in particular was the National Forum on Health and its report. In that report they made the following recommendation:

...during the up-coming mandatory review of Bill C-91 in 1997, the commitments to increased funding for research made by the pharmaceutical industry at the time of its initial passage be converted into specific required contributions to a fund for health research broadly defined, at full arm's length from the industry, to be administered by the national research granting agencies and allocated through the normal peer-reviewed granting process.

Who wants to start on this one as to whether you believe this to be a recommendation that should be supported or not?

Dr. McLennan: Mr. Chairman, I will try that one.

This is not a new notion. You're quite correct that the National Forum has repeated it recently, but a number of years ago this notion was put on the table. I think it was prior to the discussions that led to the formation of the MRC-PMAC program.

The notion's been there for some time and it's in the form of a levy, if you like, on total R and D sales of products in Canada, with the idea... There have been various names given to it - a millennium fund, a medical discovery fund, and so on - but the notion is not new. I think it has considerable merit.

As we say in our recommendation... We make a comment about the MRC-PMAC program that is now in the fourth of its five-year phase. Whether it will be renewed or not in its present form, I think the answer would be obvious. I think the sentiment to have some kind of program like that is strong. I think there's support for it on both the industrial side and certainly in the research community.

This program, by the way, was one of the first in the world. Yes, it had some teething problems, but I'm confident, and I think most people are, that they will reach the terms of the agreement quite easily.

To answer your question specifically, yes, I think the setting up of a fund like this has merit. Whether you call it a levy, or a tax on sales of products, I think it has merit.

Bernie, do you want to add something to that?

Mr. Bressler: Yes. I've been with this issue since 1987, when we first heard about the patent legislation. I was then the president of the Canadian Federation of Biological Societies, and there are two past presidents here with me.

We phoned Judy Erola, whom we didn't know - Howie Dixon and I - and asked if we could meet. She agreed. With no notice, we called her in the morning - we were here in Ottawa - and met with her to discuss the issue of setting up a fund, because that's in fact what we thought the 10% would translate into. It's that old an issue. Obviously, the fund didn't get set up until the MRC-PMAC program started to look in that direction.

I've had mixed emotions about the fund. I think at the beginning we started on this venture in 1988. It was a venture - it was an adventure really - in working in synergy with the industry to put money into the best that we could offer up to them right across the country. That was the way we went into it.

I think what's happened over the course of the 10 or 11 years - and I was there with Dr. Simard during Time to Act; I was on that commission. We thought things were moving along fairly well, but at that time, maybe not as a result of our report, we saw that regional distribution had become an issue. Again, though, it was a matter of making sure in all regions of the country that we put things up in front of them that were our best. The hope would be that they would make decisions on that basis.

It's been variable. It's been focused in two provinces, primarily Ontario and Quebec. It's been a major effort to get it outside those regions. Part of it is due to the political realities of the regions themselves. That's why I started laughing when you started your remarks. I thought you were going to start at me from B.C. on reference-based pricing, which I only want to mention. But I thought that's where you were going, Mr. Bodnar. You may go there next. I hope not.

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It brings a case in point to the specific regional problem we have in British Columbia.

I also feel taxing the industry, which is what this fund would do if it were blanket and we removed everything else, could make the situation worse. That's what I'm concerned about. So there's an unequivocal answer.

I think we have a hybrid now in which we have MRC-PMAC, which serves to focus it, albeit it's not a fund they put money into. They go and seek the partnerships. I don't have an answer, but I think that takes a lot of serious thought. I don't think we can go all the way one way.

Mr. Morris Bodnar: Is there any evidence that PMAC's involvement with the MRC results in any bias in the type of research that's being done?

Mr. Bressler: No, because the process is even more - if it can be any more - susceptible to lack of bias, because every project goes through peer review through the MRC peer review system. Prior to that program, and even in addition to that program... If someone wants to invest in the University of British Columbia - company X - we give them our best... They choose an area - neuroscience - and we give them our best in neuroscience. The company brings its scientists together with our scientists. Often those scientists come from their U.S. or European head offices, and the synergy is made that way. But the peer review in that process is done at the company level, so the MRC-PMAC adds that other dimension of doing an arm's length peer review.

Mr. Morris Bodnar: Professor Goyer mentioned the problems - I believe it was you who mentioned the problems - on the shortage of funds in fundamental research. Do you have any suggestions on how that can be rectified?

Mr. Goyer: There's the problem of the definition of fundamental research. We discussed that before, and we should use the OECD definition of research. We don't, but I think we should.

Obviously in the faculties of pharmacy we have to take into account that we are also upgrading our activities, and in some cases we do not have all the expertise that they have in other faculties - medicine without naming it. So we are in a building up process, and I hope that within the next few years we will be better at it.

We have to get money because of the expertise we have. Also, we have to make sure we know what the other people are doing as their business. If we're not proactive in making links to know what their interests are, it's obviously difficult to be there.

There's one comment I wanted to make on the repartition of research within the country. In Canada about 55% of the R and D money - at least three years ago, but it may have changed - was in clinical research, and out of that 55%, about 50% was spent what we call in house for the infrastructure of the company to conduct that research.

So obviously if the industry is in Quebec and Ontario, the infrastructure is there. It will be very difficult to move 25% - 50% of 55%. So almost 25% of it is where the company has its building.

Secondly, with respect to the other 25% or 30%, clinical research goes where people are, so you will obviously find more clinical research in more populated provinces. I think this is compensated for in some ways, because there are some super centres of clinical research in other provinces, but they may not attract as much R and D dollars because of the limited number of studies that can be made.

Clinical research in Canada represents 55%. In the U.S. and Europe it's about 20%. In these countries, you have much more R and D in drug design, drug chemistry, drug formulation, toxicology, and pharmacology. This is where the real transfer of technology is.

I think that at the beginning, when the industry is investing more in Canada, you may be in a temporary - and I hope it's temporary - situation in which you have more money in clinical research. But as time goes by, companies will invest more as Bio-Méga did, as Astra is doing, as Merck is doing, and maybe as others will do.

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The Chairman: We will now hear Monsieur Simard on the same point, and then we will here from somebody over there.

[Translation]

Mr. Simard: I think the question is quite relevant and we should ask innovative companies to invest more in fundamental research. Once again, it's research that facilitates the transfer of technology and creates quality jobs. We've had a 26% drop, four or five years ago, when Bill C-91 was passed, but it was because of Bill C-22 and the present drop is 22%. That's certainly something we should improve. I dare hope recommendations on that will figure in your committee's report.

It's too easy for a corporation that is involved only in clinical research to move that kind of research across a border. It's extremely easy while moving quality research installations is a lot more difficult. Companies should be asked to invest perhaps a little less in clinical research in Canada, if we give them a favourable regulatory environment, and invest in research laboratories where fundamental research can be done and where our students, whatever province they may be from, could find jobs. I think that's an absolutely normal and honest recommendation to be making to the drug companies.

[English]

The Chairman: Thank you. We will now hear from Dr. McLennan on the same point.

Dr. McLennan: I just want to add a small point. The basic research problem is a terribly serious one in Canada, and if I could show you this chart to put a different spin on it... My colleague here showed you that investing in research and training people leads to inventions, jobs, and so on. There's another way to look at this. The essential ingredient in all of this is basic research. That's the starting point. The basic research then leads to the innovation, the inventions, the spin-off companies, and so on, but you must have the basic research.

In Canada who supports basic research? There are only two players in town. One is the Medical Research Council of Canada for health research, and the other is the Natural Sciences and Engineering Research Council for the non-health research areas. The fundamental mandate and responsibility of those two councils is to fund basic research.

As someone said earlier tonight, our success rate at the moment in Canada is around 20% or 30% for applications to come before these councils. That is absolutely unacceptable. Look at the waste in this country.

As taxpayers, you, I, and everybody in this room who pays taxes supports and subsidizes the training of university students, the research training, and so on. They then come along, they complete their degrees, they finally get jobs, and they file their first grant applications. It's a shooting match. It's a lottery. You may get a grant. As a society we've invested in these people, and look at the waste when they can't get a job because we don't support basic research to the point where they can have the funding to do the work.

So I just close that, Mr. Chairman, by referring you to our fourth recommendation, in which we set out specific targets for the support of basic research. Thank you.

The Chairman: What normally happens late in the evening is that people get back to their famous questions and answers. I'm going to ask you to be disciplined. I'm going to recognize Monsieur Bergeron. I'm going to recognize you on the point. I'll suggest to the committee members that if they want another five minutes each, that's fine, and we'll try to conclude by 9 p.m.. Is that okay with everybody?

Monsieur Bergeron.

[Translation]

Dr. Bergeron: I emphasize that I insist, as I was saying before, on this graph where it is shown that the funds granted the Canadian Medical Research Council decreased by 10% over the last seven years as compared to what all the other industrialized countries are doing. We know that within five years, Japan will be doubling its investments in fundamental research. People are always a little confused about that and wonder what fundamental research actually is.

The Chairman: Haven't you discussed this point?

Dr. Bergeron: No. It's extremely important that we recognize that fundamental research is upstream.

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I think we fully have to understand that this is the fountain of youth that will allow us to develop centres of excellence and, of course, create biotechnology companies. At least 75% of all biotechnology companies that have developed over the last few years and especially during the last two years stem from fundamental research and, more specifically, from research subsidized by the Medical Research Council. That is extremely important and I think there is a direct link between Bill C-91 and that research. In the absence of fundamental research, your Bill C-91 will serve no purpose because there will be no discoveries. Let's not forget that.

[English]

The Chairman: Thank you.

[Translation]

Mr. Ménard.

Mr. Réal Ménard: I went to my office to get the document on approval so you could leave with the data in hand.

I'd like to come back to the brief tabled by the Coalition and have you answer my question concerning recommendation no. 3. I'd like you to explain it for us just to make sure that we have a clear understanding for what's to come.

My second question is also important. Before undertaking the review, I spent a morning at the Patented Medicine Prices Review Board where I was hosted by Ms Dupont-Kirby. I don't know if this means anything for Mr. Goyer, but I asked to be given training and I asked for an explanation of the expression ``research and development'' and what definitions are used. I seem to remember it's the Coalition who was saying that we were using Revenue Canada's definition to establish the right to a tax credit in experimental research and development.

We were also told that research and development activities were evaluated as financial expenditures and that expenses that qualify under tax credit investment criteria are eligible. Expenditures are divided as follows: current expenditure and capital cost expenditure. Current expenditures include salaries, purchase of materials, supplies, services, amounts to be paid to universities, hospitals and others, and capital costs, of course, include equipment and depreciation on buildings.

We are told these definitions match those of the main OECD countries. How do you find that the definition applied by the Patented Medicine Prices Review Board is prejudicial?

Perhaps you are aware I have tabled a private member's bill that the Liberals are looking upon very favourably, I think. I even think the parliamentary secretary is slightly excited at the thought of voting in favour of this bill which provides granting more powers to the Patented Medicine Prices Review Board as it touches on the whole question of humanitarian access to drugs, all the drugs that are not approved and that Canadians can only obtain in three ways, two of which are the emergency drug distribution program and clinical trials. We must be mindful that in the pharmaceutical community, the worst still walks alongside the best.

Some drug companies are extremely committed and excellent corporate citizens. On the other hand, other pharmaceutical companies are extremely detestable. Would you agree if our committee were to word a recommendation in such a way that the Patented Medicine Prices Review Board would have powers of investigation when someone suffering from a degenerative disease thinks that just and reasonable access to a non-approved drug has not been granted?

The Chairman: To answer your third question...

Mr. Réal Ménard: Be careful, now!

The Chairman: ... we could have a private meeting with you.

Mr. Réal Ménard: It would be a pleasure, Mr. Chairman. Do you want a motion to that effect immediately?

The Chairman: Mr. Ménard always has such a long list of questions.

[English]

You can pick and choose among the three.

Mr. Réal Ménard: No, you can't choose. I want to -

The Chairman: Oh, no.

[Translation]

Mr. Réal Ménard: Let's quiet down. Let's start with the first one.

[English]

The Chairman: Is there any response?

[Translation]

To whom are you putting your question?

Mr. Réal Ménard: I think the Coalition is dying to answer my first question about recommendation no. 3.

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The Chairman: You're still on...

[English]

Go ahead, Dr. McLennan.

Dr. McLennan: I'm not sure whether my number 3 is the same as your number 3. But anyway, at one point you asked about recommendation 3 in our report. This was referring to the cost-benefit and effectiveness of new drugs. I would like to use the analogy discussed earlier by Professor Goyer.

Did you call it the Mercedes and the bus ticket?

Mr. Goyer: I said the bus and the bus ticket.

Dr. McLennan: Yes, you said the bus ticket. Thank you. I thought you said Volkswagen earlier. But anyway, this is an important point. We need to, as a nation, have a system of evaluating the cost-benefit and effectiveness of new drugs through an independent, arm's length agency.

Then you also asked about the definition of basic research. This is a very important question. I realize PMPRB has a specific definition and I believe they tried to standardize this among the countries where they were comparing prices.

Essentially, basic research talks about those research activities that are knowledge-generating. If you think of the development of a drug product, for example, the initial idea starts at basic research, at the research bench level. The other end of this spectrum - I'll try to be brief, Mr. Chairman - is when you put the label on the vial and sell it to the pharmacist or to the province.

So there is a long continuum there. But the basic research focuses on the beginning of this: the design, the innovation, the knowledge generation. What are the expenses? There are costs of research, supplies, materials, technicians, and so on. This is what is meant by basic research, the knowledge-generating research.

I think the third question had to do with PMPRB, and perhaps I'll pass to Dr. Goyer to answer this one.

Mr. Goyer: Well, I don't know exactly what the question was.

[Translation]

I believe the last question was about emergency drugs or humanitarian access to drugs. I think I understood part of it.

When patients consent to clinical studies, they're taking a risk that will profit other patients. I believe that when the study is over, they should be allowed to continue to have access to those drugs. As to whether the industry should provide other patients with drugs before they're approved, before the product has proven itself and has shown itself to be effective, I do have doubts on that subject.

Mr. Réal Ménard: But you know that all those patients...

Mr. Goyer: I don't think that's up to the PMPRB; I think it's rather up to the Drugs Directorate.

Mr. Réal Ménard: Indeed.

The Chairman: I'm sorry.

[English]

You have gone on too long.

[Translation]

Mr. Réal Ménard: Me?

The Chairman: We we're surprised.

Mr. Réal Ménard: You're hurting me for nothing.

[English]

The Chairman: Mr. Mayfield, do you have a final question or two?

Mr. Philip Mayfield: I have two questions. One is really just asking you this. We have talked about a formula for extending the patent period for drugs that have a long development time. It's such a simple thought in my mind, I'm sure it's been thought of before. What is wrong with having the period of marketability determined from the point it is approved for a specific period of time that is fair for all concerned?

Apparently some drugs take a minimal amount of time. Others take an enormous amount of time in comparison. If this is the case, one drug may have a marketable period, for example, of 15 years and another may have five years. Why is there not a period of protection from the time the drug is marketable, instead of having a complicated formula? There has to be a reason. Maybe you can explain it to me.

Mr. Aberman: I can give you one reason. There would be incentive for delay. A company would file a bunch of patents and not develop them.

A voice: It might leave them on the shelf.

Mr. Aberman: I am not saying they would do this, but there'd be an incentive to do it. You could imagine if a company had a competitive drug and there was a chance of tying up the development of the drug, then it could just sit on it. This is one reason. There may be a dozen others.

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Mr. Philip Mayfield: Is there a way of working beyond that, or would it be simpler just to do it in the difficult way we've been talking about?

Ms Bisaillon: Start the patent from the day the drug is certified.

Mr. Goyer: I think that's the best answer.

Mr. Philip Mayfield: Fair enough, then.

I have one more question, and it relates to other witnesses who have come here and said that before 1992, the drug companies were here and the little bit of research they were doing was still going on then. Those witnesses have said that things haven't changed much since then, and that if we were to reduce the period of patent protection, little would happen.

From listening to you people tonight, I suspect you may not agree with that, but I would like to have on the record your response to the points that the drug companies wouldn't leave, that the research would continue on, and that much would remain the same if the patent period was reduced from 20 to 17 years, as it was before - and some have said there should be a marketable period of no more than four years.

Mr. Bressler: The response is that it would put us back to the late 1950s or early 1960s, when we changed all our legislation and moved the companies right out of the country. In 1988, we brought them back with Bill C-22. In 1991, we fixed Bill C-22 a little bit, but it was only a refinement giving an average extended patent life of three years, and less for some. So that's moving us backwards.

As Professor Simard said, we can't move backwards anyway, because the GATT has this regularized internationally. Regardless of that, it's moving in the wrong direction. Reference was made in Mark's, Michel's, and my talks about the growing home-grown biotechnology industry. That's one good example for not wanting to move backwards, because it provides for something that's value-added to our country. Everything stays here: the development jobs stay here, etc. Its advantageous to our citizens to have the drugs first in our country.

So I'll go on record on that one. I think we'd be moving backwards, and I know you probably don't want to do that. I hope this committee certainly doesn't want to do that; even if it thought it could, it would be a very wrong move. Would the companies move out? Would things change? I suspect they would, and you have to remember that we have to buy the drugs anyway.

I remember a previous presentation. I'm going back now to the presentation on Bill C-92 that René and I did together. I've just recalled the speech that we wrote over the weekend before we presented it. In that speech, we said that our citizens will demand those medications anyway. So now we've at least created a value added to the medications, and we've curtailed the cost of the price of the drugs. We've done that, so why go backwards?

The Chairman: Mr. Bisby wanted to address that.

Prof. Bisby: I have two quick points. In preparation for this, I spoke to the people in the neuroscience network who were involved in generating this Neuroscience Partners venture capital fund. They made it very plain to me that adequate patent protection was absolutely key to raising that investment capital. That's the first thing.

The second thing is that three years out of twenty doesn't sound like much, but because of the length of the approval process, it might actually be three years out of ten. That's a very significant decrease.

The Chairman: A final comment.

Ms Bisaillon: Within a pharmaceutical company, you have the production part and you have the research part. You might not see a pharmaceutical company leaving the country as a whole, but it will certainly move its research to other countries. That was what happened then. Now it's going to be even worse because of the globalization of the economy and the merger of companies. Now each company has two or three plants for the production of drugs. So on a medium-term basis, they're going to move out not only the research, but even the production facility. That's going to be really bad for the economy.

Mr. Philip Mayfield: Thank you very much.

The Chairman: Our final set of questions is from Mr. Volpe.

Mr. Joseph Volpe (Eglinton - Lawrence, Lib.): Thank you very much, Mr. Chairman. I wasn't here for the first part of the stimulating conversation that was presented, but I couldn't help it. I just have a few comments.

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When Mr. Bressler prepares his speeches, I think he must be preparing for a public life. We do our speeches over the weekend as well. They're usually very well researched, and they have reference points for everybody who wants to study the parliamentary process. I hope it's a little different on the research side.

Mr. Goyer: He's going to run for the Bloc in B.C.

Voices: Oh, oh!

Mr. Bressler: Well, I'm from Quebec.

Mr. Joseph Volpe: We like to think all of those people are top-heavy with marble.

Anyway, I appreciated the discussion on basic research as opposed to, say, applied research. I just wondered, Monsieur Bergeron, if you have done a calculation of how many jobs per million dollars of investment are created in basic research as opposed to applied research? If so, can you share those numbers with us?

Dr. Bergeron: Yes. Let's give you the MRC numbers. As you know, the 1995-96 MRC budget was $241 million, and it financed 7,500 researchers. Now these researchers -

Mr. Joseph Volpe: Not full-time jobs.

Dr. Bergeron: Yes, jobs. And these are researchers with high-paid jobs, professors who are doing research at universities. Secondly, these people usually generate jobs for about three employees, and these employees are estimated at about 29,500 people. There are also the diplomats, the students, the MScs, PhDs, and post-doctoral students. The numbers have been estimated at approximately 11,000 students.

You have to estimate that $1 invested in basic research will bring approximately $2.50 to $4 worth of other moneyed research. For example, in my laboratory, I'm the head of the infectious disease research centre at Laval University. I have 132 people in my research group. Of those 132 people, 19 are independent researchers. These people have basic research funding from MRC and other agencies like FRSQ or NRC. This money also generates other kinds of research, such as industry research.

As we move in, make discoveries, and go into animal models, we find that we will work on a lot of the antibiotic resistance that you've heard about. In our basic research on antibiotic resistance, microbes become resistant to drugs that have been used. We study the basic mechanisms of this resistance. That research is funded by MRC, and it's really basic research. Once we find the enzyme secreted or produced by the bacteria that break your antibiotics into pieces and the drug is useless after that, we need to go into an intermediary phase of what we call technology transfer.

Mr. Joseph Volpe: Just a second. I feel almost like I'm in a lecture hall. I am enjoying the lecture, but this is the problem: the chairman is a pretty heavy-handed guy. He's got me timed for another minute or two. So can you go back to my own simple question?

Dr. Bergeron: Each job that's created creates three other jobs.

Mr. Joseph Volpe: All right. That's okay, because the way you're speaking, I can just hear my wife on my left over here saying, ``That's okay, you can'' -

Mr. Morris Bodnar: I'm not you're wife.

Voices: Oh, oh!

Mr. Joseph Volpe: Am I happy to hear that!

Dr. Bergeron: One job makes three others.

Mr. Joseph Volpe: Anyway, when my wife asks me to ask the people of Canada for an increase in salary, she goes through this whole elaborate explanation about how much money every dollar I've put on the table for her generates at the local corner store. By the time she's finished, I'm sure my measly parliamentary salary finances half of the neighbourhood and that everybody depends on me. I'm glad there is somebody else who thinks like that.

Since you're so enthusiastic about all of this basic research, were you happy to find that the Canadian government put about $800 million in the last budget for that type of work?

Dr. Bergeron: Yes, and do you know why? As a matter of fact -

Mr. Joseph Volpe: Just a second. Just let me finish.

Dr. Bergeron: I'm very happy, yes.

.2105

Mr. Joseph Volpe: I had a sense that you may not have been aware of that.

Dr. Bergeron: Oh, yes, I'm quite aware of it.

Mr. Joseph Volpe: Well, I heard you get all excited.

I was reading some notes from professors and research departments in Ontario. They were writing back and saying, Mr. Volpe, thank you for listening to us, because $800 million is like having struck gold in Indonesia.

Dr. Bergeron: Can I answer your question?

The Chairman: This is the final exchange.

Dr. Bergeron: Let me explain it in two sentences. That $800 million is going for infrastructure.

Mr. Joseph Volpe: Without which you can't do your research.

Dr. Bergeron: What I'm telling you is that you should add money to this in order that we can put people in that infrastructure.

Mr. Joseph Volpe: Well, $800 million is not a bad start.

Dr. Bergeron: No, and if you have plans to take part of this $800 million and to give, say, $30 million to the MRC, I have no problem with that. I think it makes a lot of sense. Infrastructure is a great idea, because our infrastructure at the universities is really backed up, it's behind, and we need new equipment and new space. But we have to continue to put people into that infrastructure, because just infrastructure at $800 million won't serve anything. You need both.

Mr. Joseph Volpe: You need to do one step at a time.

Dr. Bergeron: You need both.

The Chairman: Okay, guys, that's it.

Mr. Volpe, you should know to never ask the question unless you know the answer.

Mr. Joseph Volpe: I knew the answer, but I didn't think he was going to get all excited about it. If I'd said my wife to my right, then maybe, but...

The Chairman: I can tell you that the members very much enjoyed this session. We've been through a difficult time inasmuch as the testimony is very hard to sift through. We appreciated your professional honesty and your ability to help us through an important question as to whether or not there have been research gains.

I for one think very seriously about how to handle the question of basic research and its evolution in terms of making sure we do contribute to basic research. I'm not going to get into my own work here, but there's an idea that floated in the early 1990s about whether or not there should be a separate fund or not. If you have some thoughts that you'd like to return to us on that question, drop us a note or talk to the researchers.

You really covered a lot of important points here today, and you handle yourselves very well given that the round tables are compressed. As you know, we had a long list of witnesses, and we appreciated the way in which people came together on short notice and spent an evening with us. Your advice to us weighs heavily, because I don't think there's a member of the committee who doesn't want to see the research proceed and to be well funded.

You'll be hearing from the committee in the near future as it gets towards its deliberations. Thank you and good night.

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