:
All right, it's 10 a.m. on Tuesday. Then we'll have a subcommittee meeting with Monsieur Vincent, either you or Madam Brunelle, Mr. McTeague, Mr. Carrie, and Ms. Nash.
We are continuing our study pursuant to Standing Order 108(2), our overview of Canadian science and technology. We have five witnesses today, representing four organizations.
From Bioniche Life Sciences Inc., we have Ms. Susan Goebel, the E. coli project manager. From the Canadian Generic Pharmaceutical Association, we have Jim Keon, president. From Canada's Research-Based Pharmaceutical Companies (Rx and D), we will be hearing from Mr. Rob Livingston, vice-chair, federal affairs committee; and Mr. Normand Laberge, vice-president, federal government affairs and federal-provincial-territorial relations. Finally, from Trojan Technologies, we have Ms. Linda Gowman, chief technology officer.
Welcome to all of you. We will start with Ms. Goebel.
:
Mr. Chair, members of the committee, on behalf of Bioniche Life Sciences, I want to thank you for the opportunity to speak to you today.
Bioniche is an innovative biopharmaceutical company based in Belleville, Ontario. Our mandate is to act on innovation and improve the quality of life. We are publicly traded and invest heavily in research and development. Bioniche works hard to successfully commercialize our products for the benefit of our stakeholders and Canada. We currently employ over 200 people in highly skilled scientific jobs, with revenues in excess of $27 million.
I am here to speak to you about E. coli O157:H7, a deadly bacteria that continues to affect Canadians.
Bioniche's commitment to science and innovation has led to the development of a vaccine that is the first of its kind in the world. This vaccine was developed through strategic alliances across Canada and is truly a national success story.
The initial discovery occurred at the University of British Columbia. The Alberta Research Council assisted with the vaccine scale-up. Testing was conducted at the Vaccine and Infectious Diseases Organization at the University of Saskatchewan. Commercialization is being achieved by Bioniche in Ontario, and we are exploring supplementary manufacturing in Prince Edward Island.
Throughout all of this, the Government of Canada has been a strong supporter of the vaccine, providing funding through programs such as the Industrial Technologies Office, the agri-opportunities program, and the scientific research and experimental development program.
Canadians remember all too well the tragic outbreak in Walkerton, Ontario where thousands fell ill, seven people died, and many will never return to full health, all due to this pathogen. At the time, governments at all levels vowed to ensure that tragedies such as Walkerton never happen again.
Cattle are the primary reservoir of this bacteria. This deadly strain of E. coli does not make cattle sick, because these animals are not susceptible to the bacteria's toxin; people, however, are. Each year approximately 100,000 cases of human infection with E. coli O157:H7 occur in North America. This bacteria causes diarrhea in most people; however, in 15% of the cases people will develop a bloody diarrhea, and a further 10% of the cases will lead to kidney failure or death.
Although this innovative vaccine could easily be defined as a public health vaccine because it reduces a public health risk, it's given not to Canadians but instead to cattle. This way it helps to prevent the E. coli strain from entering the environment at the source.
An independent economic report estimates that vaccinating Canada's national cattle herd will result in a two-to-one return on investment, with annual savings of $63 million--$30 million in health care costs, and $33 million in benefits to the agricultural economy.
Canada is currently the only country in the world where regulators have granted cattlemen access to an E. coli O157:H7 vaccine. Given the numerous benefits resulting from vaccinating beef and dairy cows, one might assume that cattlemen will move quickly to use this vaccine. However, it's not that simple.
In late 2007 there was a recall of over 20 million pounds of hamburger in the U.S.A. that was linked back to Canadian beef. The negative publicity was yet another blow to Canada's beef industry, a commodity-based system struggling with increasing input costs and recovering from mad cow disease.
Cattlemen receive no direct benefit for spending money to vaccinate their animals. This bacteria does not make cattle sick. Canadian cattlemen are willing to administer the vaccine, but at this time they cannot incur the expense without receiving an offsetting increase in revenue. For this reason, cattlemen are reluctant to spend money to vaccinate their beef and dairy cows.
A Government of Canada program that encourages the adoption of E. coli O157:H7 vaccine over a period of three years would provide leadership for the agricultural sector, use innovation for the benefit of public health, and position Canada as a global leader in food safety. The end goal of this program would be to vaccinate the national cattle herd by 2010. After three years, the benefits of vaccinating cattle against E. coli O157:H7 are expected to be readily evident and justify continued use.
In summary, this Canadian vaccine is a world first and a shining example of innovation. Widespread adoption of this vaccine will position Canada as a global leader in food safety and provide much-needed assistance to the agricultural sector, particularly the beef industry. It will also preserve consumer confidence in Canadian food safety and benefit public health.
Thank you. I'd be pleased to answer any questions you have.
[Translation]
On behalf of the Canadian Generic Pharmaceutical Association and our member companies, I thank you for inviting us to appear during your study of Canadian science and technology. The CGPA is the national association representing the generic drug industry in Canada.
Generic medicines are inexpensive versions of the original brands, manufactured by a number of companies once the patents on the brand-name originals have expired.
[English]
There are no differences as far as the quality, purity, effectiveness, and safety of generic and brand name drugs. All drugs sold in Canada must be reviewed and approved by Health Canada, and Health Canada stands by the quality of both brand and generic drugs. That gives Canadians the confidence in both brand and generics. Both brand and generics must meet the same standards and regulations established by the Food and Drugs Act.
Generic drugs in Canada, for 2007, were dispensed to fill 49% of all prescriptions. I'm actually pleased to say that according to industry data, for the first quarter of 2008, for the first time ever, generic drugs are now the dominant sector in Canada. More than 50% of all prescriptions are now filled with generics in Canada. However, in the United States generics are used to fill 67% of all prescriptions, so we feel we have a long way to go to catch up to our big neighbours to the south.
Generic drugs filled 49% of all prescriptions last year, for only 20% of the cost. When I've been at committee in the past, I've been asked about our pricing. I'm pleased to say that our prices have come down close to 25% in both Ontario and Quebec as a result of intensive discussions with those provinces over the last couple of years. We're now in similar discussions with the western provinces in Canada. Generics will be an even better value and even more important to the health care system on a go forward basis.
Canadian generic pharmaceutical companies are proud of their contribution to affordable health care in Canada. We're equally pleased that we can play a role in getting made-in-Canada medicines to countries facing crises, where they are desperately needed. CGPA member companies donate about 100 million doses of medicines each year, at an approximate value of $20 million. We participated with the Prime Minister at the opening of Health Partners International, and we're strong supporters of that organization.
Also, as announced earlier this week, one of our member companies, Apotex, the largest pharmaceutical company in Canada in terms of research and development spending and employees, will be the first company in the world to obtain and use a licence to export generic drugs for humanitarian purposes under the landmark WTO decision and Canada's own access to medicines regime.
Canadian generic pharmaceutical companies are making significant investments in Canada, and we have aggressive plans to expand these investments over the next five years.
Today generic pharmaceutical companies spend 15% of Canadian revenues. It says here that it's about $450 million--it's actually greater than that now--on domestic research and development activities. Our member companies are actively seeking to expand their domestic sales and increase exports. And we have committed to doubling our industry's employment over the next five years to 21,000 highly skilled jobs. We have a very good news story to tell in terms of being an export-oriented industry, and the high-quality R and D and manufacturing jobs we have. We hope to tell that story more often, and in a better way, than we have in the past in the Ottawa circles.
In regard to issues today, I'll touch on a few.
Canada's generic pharmaceutical industry supports patent rights and the right of any pharmaceutical company--brand or generic--to recoup their investments and turn a profit to help grow and sustain their business. What we do not support, however, is excessive intellectual property protection that guarantees longer periods of monopoly prices to brand-name companies without bringing additional benefits to Canada. Our current intellectual property regime in Canada for pharmaceuticals goes beyond our international trade obligations, through NAFTA and TRIPS.
[Translation]
In the last 21 years, successive Canadian governments have strengthened the commercial monopolies of manufacturers of brand-name medicines with no resulting increase in expenditures, as a percentage of sales, in research and development in Canada. Historical data from the Patented Medicine Prices Review Board in fact shows the opposite. In 1987, holders of pharmaceutical patents made a commitment to Canadians to increase their annual expenditures in research and development to 10% of sales. In 2006, they devoted only 8.1% of Canadian sales to research and development, and, in real terms, an amount of less than 2% of Canadian sales has been invested in basic research on new medications.
:
I will start. We are going to divide our time in two, but we will not exceed it.
Mr. Chair, we appreciate this opportunity to appear before the committee today on behalf of Rx&D. You have our written submission; we will use our time today to underline four recommendations.
Rx&D comprises more than 50 innovative companies employing 20,000 Canadians in highly skilled jobs. Our goal, and the goal of our member companies, is to develop new medicines and vaccines that can help Canadians live longer, healthier and more productive lives.
Rx&D firms are the largest single funder of health research and development in the business enterprise sector. They have funded more than $1 billion in research and development investments in 2006, a figure exceeded only by the telecommunications sector. We are a proud partner of Canadian Institutes of Health Research (CIHR) with whom we have invested more than $320 million in biotechnology research.
We are pleased that your committee is looking at science and technology policy in Canada. Our sector has been supportive of the government's science and technology framework launch, but we also feel that there is a great deal that remains to be done.
:
In particular, there are a number of public policy factors that affect Canada's ability to attract the investments critical to ongoing pharmaceutical innovation. We put forward recommendations in our submission to address these public policy factors today, and we will focus on four of them.
To put these recommendations into context, I refer you to your graphic on the timelines for the development of an innovative medicine from laboratory to pharmacy. We've also taken the liberty of expanding it on this billboard so we can refer to it when we're talking about some of those issues. On it is the 20-year patent life. As you can see, a good part of that gets used in drug development and then you go through the various regulatory steps to get on to the market and you end up with what we call your period of market, which ranges anywhere from five years up to nine years. So I'll talk to you about some of those regulatory steps.
A fundamental driver of business investment is intellectual property. In this industry it takes approximately 10 years to develop a new medicine and costs an average of about $1 billion. That's a global figure, that's not a Canadian figure. It's a global effort, so it's in total. Intellectual property protection is our primary asset, given the high cost and risk of developing a new medicine or vaccine and the relative low cost and risk of copying it. Our regime needs to remain competitive if we're going to continue to be able to compete internationally for R and D investment.
After approvals and reviews, there's often only a five- to seven-year window in which a medicine can recoup its costs. We are the only G8 country without some form of patent term restoration. This is an instrument in which the time to develop and get a medicine on the market is recouped on the back end; it's added to the end. As well, there are significant incentives to infringe our patents, therefore, we need to be able to effectively enforce them.
We therefore recommend that the government deliver on its throne speech commitment to improve the scope and duration of intellectual property protection in Canada and maintain a stable, reliable, and globally competitive footing.
The Patented Medicine Prices Review Board was established 20 years ago with a mandate to ensure a balance between pricing patented medicines fairly and encouraging innovation and investment. Price increases were not to exceed the consumer price index, and over the past 10 years they have not. CPI has gone up about 2% on average per year, and the price increases of patented medicines have declined about 0.2%. We feel it's evidence that the board is exceeding its mandate.
Our second recommendation is that the government implement an innovation review of the PMPRB to ensure that it does, in practice, adhere to its mandate.
Every aspect of a pharmaceutical's life cycle is subject to intensive company and governmental review and oversight, a process that can and does take years. We accept this; we are, after all, talking about people's health. But inefficiencies and duplication are a disincentive to access to both new medicines and innovation and don't necessarily always enhance patient outcomes. For instance, the common drug review was established in 2003 with the intention of reducing duplication and effort in streamlining the review process among the provinces. However, we found that it is now prolonging and complicating the process, without any direct benefit to patients.
Our third recommendation is that the drug review and reimbursement evaluation process in Canada be evaluated for its competitiveness and should include standards of measures to improve efficiency, eliminate duplication, and strengthen transparency and patient involvement.
Our final recommendation is that there should be a framework in which to implement these recommendations. Global R and D investment is declining. There's greater competition, and we have new markets like India and China. We feel that other countries are implementing comprehensive strategies to look at some of these issues and that Canada needs a similar strategy upon which to look at some of these changes. We therefore would look for the committee's support for a recommendation to the government for a sectoral strategy.
Thank you very much. We look forward to your questions.
I think you have our submission before you.
Mr. Chair, members, it's a privilege to be here today.
Trojan Technologies is based in London, Ontario, and has been treating water with ultraviolet light since 1977. Trojan Technologies remains a Canadian corporation, although in November 2004, with annual sales of roughly $100 million, the company was wholly sold to Danaher Corporation of Washington.
Our growth has continued at a double digit rate, and our global reach is expanding. The majority of our roughly 500 employees are located in London, Ontario. Our sales are heavily global, and we have installed technology on every continent. Our considerable focus on research and development has allowed us to continue to innovate to bring clean water to an increasingly water-stressed world. We believe that out-innovating our competition is a key strength of our company.
Trojan Technologies has always invested heavily in S and T, but S and T isn't just about doing beautiful research or building wonderful technologies; often it's about building the market itself, and doing that profitably. Research itself--and we do fundamental research sometimes--can't be justified in business if it cannot be tied to business expectations. How, then, can we enhance S and T initiatives in Canada to have greater impact on our global competitiveness?
Challenges in successful S and T initiatives can often exist for us on the deployment end. Once the research and development is done, new environmental technologies need to be tested and purchased by a few alpha sites before they are readily accepted by others and before a market can develop. There is a requirement here for government agencies at many levels to facilitate the testing and adoption of new technologies by having qualified staff capable of conducting testing and rendering decisions of suitability in a timely fashion. The world economy is becoming ever faster paced, and timeliness of technology validation cannot be measured in years, or parts of years, when the natural scientific timelines do not warrant such delays.
In addition, staff at government agencies must be sufficiently educated and informed to be able to request or receive information to make informed judgments. The more educated and skilled these adjudicators are, the less risk there is for all. Education and skills should be obtained with the recognition that we are a small economy in a global sense, that consolidation of regulatory requirements within Canada is efficient, and that we must avail ourselves of the knowledge and practice that exists globally.
From a client’s perspective, purchasing new environmental technology can be seen as being a bit risky. Government incentives for the purchase of new environmental technologies can be very helpful in changing the perceived risk for a purchaser.
This sort of program in the U.S. was highly beneficial to Trojan 30 years ago when we started building the technology and market for our products. Such programs, if continued throughout the environmental sector, would likely serve to stimulate more innovation and, equally importantly, establish a climate within Canada for acceptance of innovation. The new technology, demonstrated to work in real life within Canada, becomes saleable internationally, helping to grow the Canadian economy.
The first installations are key, and these demonstration sites continue to be vital for our industry. Wouldn’t it be nice if the first full-scale demonstrations of Canadian technology were easier to conduct in Canada than elsewhere? This does not mean that regulations and requirements for technology should be slack. Canadian regulations should be robust, and regulators and their staff should be informed, aware, and empowered, and execute their roles quickly and thoroughly.
On the front end of S and T we work with Canadian and international universities, tending to go where the expertise exists. Trojan benefited significantly in its infancy by participating in IRAP, whose small grants helped to fund essential research when moneys were extremely tight. The best experiences were always those that were executed quickly.
As the company has grown and become more profitable, SR and ED tax credits are a very efficient and effective means to support research and development. It is our recommendation that this tax credit remain.
The challenges in working with universities surround negotiations around intellectual property rights and managing public disclosure of findings that give strategic business advantage. In addition, the timelines of industry and those of universities are sometimes not aligned. We see the same challenges internationally, but perhaps therein is the possibility to distinguish ourselves as a country. There is a change at universities in Canada toward welcoming industrial participation in research, and that is very good because it is our collective knowledge, our collective value-added, and our collective focus on targeted research that will accelerate the innovation process.
Perhaps agencies such as NSERC, CIHR, SSHRC, and others could facilitate industrial researchers' participating at Canadian universities by offering career awards in the form of salary contributions toward qualified industrial researchers who wish to spend sabbaticals at Canadian universities. Bringing industrial researchers closer to universities and their students will also show graduate students that a life in research can mean a life in business and entrepreneurship, impacting global problems and benefiting the Canadian economy.
We have shared a few experiences and thoughts with you, hoping to be helpful. We are privileged to have been given this opportunity to participate in this forum.
I thank you.
Thank you, witnesses, for being here at our meeting today. This is a very important area that we haven't covered in some time.
I'll go directly to you, Mr. Keon. Your presentation pointed out the changes to the NOC regulations. I have had discussion with other members here about this. In essence, if I am to take you correctly, it reopens the loopholes on the subject of evergreening, something that certainly I thought had been addressed some years ago. Not only that, but I thought the balance had been seen in giving the brand name industry data exclusivity. That was a way of saying we're going to take away what appears to be an opportunity for the brand names; at the same time, we're going to provide them with that exclusivity.
I note that the research component as a ratio of their investment is down. I also note that Apotex, according to what our own Library of Parliament has pointed out, is at 17.6% in terms of R and D as a percentage of revenue.
Going back a few years, I remember that seniors, provinces, and a number of organizations came together to decry this. Most notably, the Supreme Court of Canada referred to the practice of evergreening as draconian. I was very surprised to see, following these things as closely as I do, that in the actual edition...or the first Gazette of this proposal—without much consultation, I add—the government freely admits that there will be delays in the generic market entry and that there will be costs associated with these delays.
Can you give us an idea of what the cost is going to be, given that there was anticipation, certainly by the provinces, that this practice would not be reallowed through the back door?
Yes, I mentioned briefly in my comments that we were very disappointed in the changes. You're right, in 2006 the government had taken steps to seal off evergreening, to make it much more difficult to add on patents. And then after the government did that, the Supreme Court validated that and said yes, that was the law.
The government has said that anything prior to 2006 that was on a patent list at Health Canada--which gives a brand company an automatic right to stop a generic--can go back on the list. So we're very concerned; we think the regulations are difficult to interpret, but right now our patent experts are telling me that very large drugs that have not yet been genericized could get extra protection through these extra patents.
Take a drug like Lipitor, which has sales of $1.1 billion. Again, if I just do a very rough calculation here.... I mentioned earlier that we've negotiated new pricing regimes with Ontario and Quebec, so the generics are down to no more than 50% of the brand. As soon as we're able to come to market, on Lipitor alone we will bring savings of $500 million to $600 million a year--that's on one drug--for the health care system.
So these are very large numbers we're talking about here. The provinces, as we know, pick up most of the drug costs in Canada for seniors and people on social assistance.
:
Mr. Livingston, I want to ask you a question.
In previous times we dealt with products like Taxol. We dealt with Losec in the past, because it was an issue that did come up with respect to evergreening. These types of issues tend to be almost causes célèbres.
In the case of Taxol, members of your industry claimed a patent that was actually produced, created, and paid for by American taxpayers. It was later determined by the Supreme Court of Canada that in fact one of your member companies didn't have the right to it. The company that produced it in St. Catharines--the riding of a chairman who was previous to Mr. Rajotte--was allowed to in fact proceed with the product.
We also have the issue of Losec. Before, your members gave testimony to the fact that none of these products were produced in Canada. No research was done in Canada. Not even the packaging was done in Canada.
If you're asking for greater patent protection, and you're asking for more opportunity to extend to 20 years, why should Canada give you that extension when you're not prepared to make the investments in R and D to begin with?
:
I will answer that question.
The commitment of the member companies of Rx&D was indeed to raise the average ratio of research to sales to 10% before 1996. We actually fulfilled that commitment in 1993. We met the target, and it continued to increase to almost 12% or 13% in 1997-1998, after which it began to drop. But, averaged over the last 19 years, the ratio exceeds 10%. The exact figure is 10.17%.
The environment in which we work has changed a great deal in recent years. There have been regulatory challenges, such as market access because of the drug review, or the price freeze that was imposed, and they have changed the situation. At the same time, other countries have been able to attract more research dollars by changing their regulatory approaches as well as their patent protection programs. Our member countries are trying worldwide to attract those dollars, but they are having difficulty doing so because, as a result of the changes, the Canadian market is less appealing. Nevertheless, we maintained our average at 10.17%. We want to increase that average and to change the situation. The decline is explained by the changes in the regulatory framework in recent years.
As an example, I should mention that the changes Quebec made to its drug program very quickly brought in $650 million in investments. So you see the direct impact of regulatory changes. The recent change caused the drop. So there is a way to level the playing field, and that is what we are suggesting. We want to become partners and good ambassadors for Canada internationally and we want to attract those new dollars.
:
Just to clarify, I think what you're referring to is that in the PMPRB report they break down that total R and D spent. Of the $1.2 billion, they categorize it as “discovery”, “applied”, and “other”. I think the issue is the discovery component, that $232 million, which represents about 20%. Is that enough?
If you look globally at the allocation of the total cost, because there's not only the discovery, there are various steps--you have the discovery, and then you have the development, and then you have the approval of the drug.... I've been trying to find the latest statistics, but historically the drug discovery component usually runs at around 25% to 30% of those total costs. There are various steps involved in that, where you identify a disease, where you identify potential candidates, where you do some safety testing. Then if you have candidates that it appears are going to be safe and work for a condition, you then start the development process. That development process is where you try it in patients who have the disease, you try it then in healthy patients, and that's where the cost starts to grow significantly. So the fact that it's $232 million is probably maybe a little on the low side, but not that far off what it is globally.
Certainly at our facility in Montreal the majority of our $120 million is in what you'd call the basic research, but you still have to have the development component as well before you can get a drug on the market.
:
Thank you very much, Mr. Chair.
I want to thank the witnesses for being here for this very important study on science and technology. It hasn't been done in a long time, and I think it's important now that government starts to look at this to see how we can start stimulating more science and technology development here in Canada.
I'd like some clarification on a statement. In Mr. Keon's brief here, he made a statement, basically, that increased intellectual property protection had not led to increased domestic R and D spending for the pharmaceutical industry. He talks, as Mr. Vincent said, about this 10%. It says that big pharma is breaking its R and D commitment to Canadians, less than 2% of sales revenue is spent on basis research into new drugs, Canada's pharmaceutical R and D spending is well behind other countries, and that most new drugs are not truly innovative.
As we're looking at this right now, from listening to Rx&D, it seems there's one side of the argument, and from listening to the generics association, there's the other side of the argument. I was wondering if you could clarify both of your viewpoints on this very important statement, because government does play an important role in the work that both of you do. We're trying to do the best we can, but there seems to be a conflict in your opinion on that statement.
Is it true increased IP protection does not lead to increased domestic R and D and spending? Is that true, Mr. Keon? Could you start?
The data that we present in our brief come from the government agency, the Patented Medicine Prices Review Board. Those are not our data; they're data that it reports every year. I think we had provided to the clerk this morning a chart that basically shows that subsequent to Bill C-22 and Bill C-91, going back 20 years and then 15 years, the commitment of 10% in R and D--the research companies' commitment--has fallen below that for several years now.
So I guess our message to the committee would be to be very careful about buying that argument. It doesn't seem to have applied in Canada. We have seen, over the years, consecutive increases in patent protection through regulations, data protection, etc., yet the R and D numbers are not there.
One of the other messages I want to get to the committee today is that when we're looking at science and technology, Canada has a very strong generic drug industry. We should be proud of that. We have 10,000 or 11,000 jobs, many of them in manufacturing, many of those in the manufacturing sectors and areas that are being hard hit now with the Canadian dollar and losing jobs, which is one of the reasons we're concerned about the changes. But we're spending money on research and development. We're developing our products in Canada. Fifteen percent of our sales is going back into research and development for new products. They're being exported.
So when we develop intellectual property policy, we need to have a balance in Canada, and that balance has to be in terms of protection versus competition. We're arguing that the competition from generics is very valuable to Canada as well.
First of all, this has been an ongoing debate, and I think we need to put it into perspective. In Canada we need all the sectors. I think the generics play a very vital role, as do we, and there's another sector that's not here, called biotech. In the continuum as it currently stands, the biotech sector often does the development. We partner with them. We develop; we market. Then when they come off patent, the generics lower the price so that we get a cost savings to the market.
So I don't know that we're directly in competition. I think we're all part of the continuum. The challenge and the reason we always have this debate is the question around intellectual property. When is the right time? When should the patent period end? In Canada, we've had this debate now for some time, and Jim and I will continue to have this debate and continue to stay employed doing it. There will always be lots of dispute.
I guess it's our position that there have been some direct benefits. Prior to the changes back in the late 1980s, there were some famous cases where the Roche manufacturing facility in Vaudreuil and the Ayerst lab in St. Laurent left, and we declined to a very low level. A number of studies were done, and it was identified that one of the reasons was that we didn't have a minimum international standard of IP. With the various international agreements, Canada came into compliance, and we think there's quite good evidence that there has been a benefit. We went from 4.3% in the late 1980s. Our undertaking was to hit 8% by 1991 and 10% by 1996. I think we in fact exceeded that. We hit 10% by 1993. I think we were up around 12%. In addition, we have this whole new sector, the biotech sector, which is quite successful, whose R and D figures are not necessarily captured in these because of the definitions.
We do acknowledge that the figure has now gone below 10%, but as my colleague explained, we think overall the figure has been quite good. We think it could be better, and that's why we're here trying to recommend how to do that.
:
It seems to me the data is highlighting that the deal made 20 years ago about extending patents and the requirement for greater investment is not really being lived up to. That is something I appreciate their highlighting for us.
I am concerned about the notion of evergreening, because that is on top of the 20 years of patent protection, and it is something, as my colleague mentioned, that the Supreme Court identified as draconian. These proposed regulation changes with no consultation with the generic industry would reinforce that, and who is going to take the hit? It will be Canadians, through both individual payments and their private drug plans, and through our provincial governments.
This is my question to you, Mr. Keon. The generics seem like a good news story. They are doing double the research. They're providing drugs at half the price of the name brand pharmaceuticals, which, as I understand it, are the fastest-growing cost to our medicare system across the country.
Can you explain to us what consultation and discussion you've had with the or the or their officials, and what their rationale is for making this change?
As I said earlier with regard to the changes that are now published in the Canada Gazette--and the comments have to be in by Monday--there was no consultation. We were completely surprised. I have some difficulty in understanding the rationale.
Pharmaceuticals have extra patent protection that doesn't exist for any other type of patent. That's through the patent regulations, where if a competitor is seeking to get an approval, a brand company can get an automatic block against that approval. What the Supreme Court said was that if you're going to enjoy that benefit, the patents you put on the list have to be relevant to your submission that Health Canada approved. And the government agreed with that in October 2006.
What is happening now, surprisingly, is that the government is saying they did not support the Supreme Court decision, even though they made that change, and now they're going to go back and let these patents be re-listed, even if they're not relevant to the submission, even if they should not be on the list in terms of the generic product that's coming. The effect is going to be much more litigation, much more delay for generics coming on the market. That's surprising to us. I think again in the discussions I've been able to have this week with some of the provincial ministries of health, they're very surprised and very concerned too. I do not have a good rationale for why the government would want to do that.
For a generic drug, the research would be to develop your own formulation for the drug. You would either develop or import, define chemicals, develop the formulation. You then do your clinical trials to determine that the product has the same medicinal effect as the brand name company. Those are the types of research you do.
Our companies are also moving into a very important new area. We talk about biologics, and our companies are very excited. There's a process going on now in Canada with Health Canada, and consultations are under way on subsequent entry biologics, where the products are much more complicated. Our companies are anxious to do that.
I should say, just so people understand, that the generic industry has evolved quite a bit in the last five years or so. We now have companies like Sandoz, which is part of Novartis; we have Teva; we have ratiopharm; and we have our own Canadian company, Apotex. These are very large, sophisticated companies selling around the world, fully capable of developing the technology for these biologic products. We're quite proud of that as well.
:
I will answer in English.
If a patent represents a substantial improvement, and if it is a new product, then that patent will protect the product and the generic will not be able to come to market until that new patent has expired. What we find with evergreening is that there are many patents on minor variations. For instance, it could be a different polymer or a different salt in the product, which does not change the product, does not in any way enhance the product. But these patents would have different expiry dates. The difficulty is that with the patented medicines regulations, the generic cannot come to market until it proves in court that it's not going to infringe on any of these patents.
The Supreme Court said that the patented medicines regulations were being abused, that irrelevant patents were going on the list and were delaying generic drug companies. The government said the same thing in October 2006. Terrific! Let's get rid of them. Health Canada was taking them off. The courts were taking them off. Terrific! Generics were able to come on the market when basic patents were expiring.
Now, again without consultation, the government is saying that brand name companies will be able to re-establish those patents on the patent list. And that's clearly going to delay the entry of generics, as the government has said itself. That is the difficulty we have with the evergreening patents.
:
I'm very disturbed that the Conservative government would have taken the position of actually not even informing the industry affected after so many years of hard-fought battles to correct this problem. Even the President of the United States, when reviewing this back in 2002, referred to it as absurd and beyond reality that the patenting of even...I think he referred to it as the pill bottle in which a drug was found was used strategically to keep generics off-line.
If it were the other way around, if a regulation were being proposed that would affect the brand names, would we not expect the kind of response we're seeing here today? I am flabbergasted that we would allow this to happen.
Mr. Carrie, you take back to your minister the need for further consultation and for really looking at this hard and long, because I think, frankly, that it's going to damage a lot of the provincial formularies that are anticipating these changes. And of course, it is a question of equity.
I want to ask something that is specific to this committee, and that is about the level of R and D. We can talk about the percentages, but I want to know what truly is research and development.
I'm wondering, Mr. Livingston, Mr. Laberge, and Mr. Keon, what you consider R and D. Do you consider advertising to be R and D? The Income Tax Act actually says that it is. Do you consider marketing to be R and D? The Income Tax Act says in fact that it is. Mr. Livingston and Mr. Laberge, are we giving a false impression of what in fact is a declining amount of R and D being done by your industry?
I am speaking to you today in my capacity as the chair of the Science, Technology and Innovation Council. I am here with my fellow council member, Dr. Heather Munroe-Blum. On behalf of Heather and myself, I would like to thank committee members for the opportunity to speak to you about how the council is contributing to science and technology policy in Canada.
[English]
It's a great pleasure for us to be here.
[Translation]
It is very timely that your committee is studying science and technology issues, given the introduction last year of the government's Science and Technology Strategy, which positions science and technology as part of the government's economic agenda, directly supporting long-term productivity and competitiveness.
I will not go into details on the strategy itself, as I understand that Mr. Richard Dicerni, the Deputy Minister of Industry Canada, and Mr. Iain Stewart, the Director General of the Portfolio and Coordination Branch, already presented this topic to you a few weeks ago.
[English]
The S and T strategy highlighted the need to revitalize external science and technology bodies through the creation of a single integrated committee with a strong voice. The STIC, or Science, Technology and Innovation Council, is therefore an important element of the strategy.
Scientific and technological innovation not only provide solutions to environmental issues, health, and other important challenges; it also contributes to the enhancement of economic competitiveness and productivity. This multi-year S and T strategy is very important for the country. The Minister of Industry is fully engaged in advancing the strategy and council members are making a meaningful contribution by providing nimble—and I underline that word—responsive expert advice on issues in this respect.
In terms of the composition of council, Chair, you may recall that in March I sent a letter providing information on council membership. I also noted some of the work we have been tasked to do. But let me add a few comments.
First of all, personal. It's a great honour to serve as chair of this council, to serve my country and to contribute to the country in this regard. Canadians are so fortunate to have such a phenomenal group of people on this council. I've chaired 13 committees in Canada. I had to resign from all of them when I took on the council--conflict of interest--to chair or serve. I serve on a number globally. This is the best committee I have ever run. The people from industry, academia, and government are not only engaged; they are committed to this enterprise.
For example, recently we had to deal with a short-term issue and set up a meeting with four days' notice, and all 18 members but one for part of the meeting were there. That's just one minor point, but I think it's very important.
Who is on it? There are seven from the corporate sector, presidents and CEOs of small and medium-sized enterprises, as well as trend-setting research-based organizations. There are four outstanding university and college presidents, including my colleague to the left, who is a treasure to this country, in my opinion. It was important to have real researchers on the committee. I'm still a real researcher; I run a group of 15 graduate students and post-doctoral fellows. But it's important to have people from across the country, and there are three outstanding individuals, all Canada research chairs, who serve on the committee. There are three deputy ministers on the committee who serve as well. They add an important voice in terms of providing advice to the process from policy creation standpoint.
In terms of the role and work of council, we report to the Minister of Industry, and he is responsible for S and T across government. Our principal mandate is to provide timely advice, as I've already noted, on S and T issues identified by the government that are critical to Canada's economic development and social well-being. Additionally, we will provide regular state of the nation reports to benchmark Canada's performance in S and T against international standards. Heather Munroe-Blum will provide more detail in a moment.
In putting this council together, we looked at other successful models globally and tried to incorporate best practices. The council operates on the following principles. Our work supports the S and T needs and priorities of government. We address issues that are crosscutting in nature, that are relevant to STI, and that can be dealt with in a timely manner.
When an issue is brought to us for attention, we create a working group of usually four to six individuals, a subcommittee of council, to consider the matter, report to council, have a debate, and come to closure. Then the recommendations on the advice function are presented to the government.
I'll describe some of the issues that have been considered and that are being considered. The S and T strategy described four general priorities: environmental S and T, natural resources and energy, health and related life sciences, and information and communication technology.
We were asked to recommend themes or sub-priorities within each of these four areas that we should focus on as a nation to achieve accelerated growth or accelerated development in those areas. I served on John Howard's group setting national research priorities for Australia, as the foreigner, and that was an incredibly valuable exercise to learn from. It has transformed Australia in the last six years.
Another issue is to deal with Canada's international S and T portfolio, to look at opportunities for Canada on a global basis, and to provide advice on a coordinated strategy for S and T that's relevant to all sectors--industry, academia, and government. We had a working group this morning at nine o'clock that I left at 12 o'clock.
We're also looking at procurement policies at the present time. It's a separate working group that meets at three o'clock this afternoon. We have a meeting of STIC tonight and tomorrow. Today's a busy day.
Also, I should mention that council had a large role on two initiatives announced in the budget that I think are remarkable. One is the Vanier Scholarships, valued at $50,000 each--500 scholarships--and the other is the Canada global excellence research chairs program, with $10 million for seven years per chair.
Those are some examples. I'll ask Heather to comment on the state of the nation.
Thank you, Howard.
Like Howard, I am very pleased to be with you today. I feel that the work of the members of this committee is very important for the present and the future of Canada.
[English]
It's an honour to come and present before you and talk to you about this new national initiative and also to see democracy working so well.
As Howard said,
[Translation]
I am going to speak briefly about one of the council's initiatives.
[English]
This is our Science, Technology and Innovation Council state of the nation report. Indeed, if you think about one of the big questions facing Canada right now, and if you believe, as certainly our gifted chair and the members of the council do, that science, technology, and innovation are at the heart of the future success of the country, it's important for us to know how Canada is actually doing in this domain. I'm sure as members of a committee you often wonder exactly that, as you have to deliberate on the important questions about our science, technology, and innovation programs and policies.
So the state of the nation report is one of the major initiatives being undertaken by the council in the first year of its mandate. The idea here is to create what will be a cyclical report, a public report that will serve to help us to benchmark Canada's science, technology, and innovation performance both against its own progress at year over year, but maybe most importantly, against the progress of the nations with which we both compete and collaborate worldwide. I think it has been well demonstrated that we have no benefit from science, technology, and innovation at the local level if this is not science, technology, and innovation that is recognized worldwide as having a quality and an impact that ranks with the very best in the world.
So the council has set to work, with me and Peter MacKinnon working with a group of the council, in the first instance, to develop a framework, which we will discuss at our meetings today and tomorrow, that will lay out key dimensions of performance that we feel will be very important for all sectors—government, universities and research institutes, and the private sector—both to understand how well we're doing against the competition worldwide, how well we're doing against our own progress over time, and to formulate recommendations related to areas of strength and weakness to build up our capacity and our impact, as I said at the beginning, for local benefit via worldwide recognition of our excellence and impact.
I'll stop there. Thank you, Chair.
:
That's a very good question.
I think Canada has done very well on the so-called knowledge advantage, the support for research in public institutions and universities. But we have challenges, as you noted, and one of our major challenges is research and development in industry. We need to do better.
I didn't have time to tell about all the working groups we have, but a very important one is one led by David O'Brien on industry R and D, to review and consider where we are now, benchmark us against the best in the world—and we'll come to that in a minute—and provide advice on any new initiatives, instruments, etc., that different stakeholders, not just government, can undertake for the future.
Some of the major success stories on a global basis include Finland, Korea, and Sweden. In all three, there are very large investments within industry for R and D and commercialization.
Last week I had the honour—it really was an honour—to speak to the European Union committee. I was the keynote speaker in Istanbul on research and technology for development. That is the terminology the Europeans use, which we would call science and technology, or research and innovation. I was invited there, I have to tell you, because of the reputation Canada has in S and T policy and accomplishments. Yes, we have challenges, but we also have accomplishments.
The warm-up speaker before me was the former Prime Minister of Finland, Esko Aho. He spoke for 15 minutes on transforming Finland from a natural-resource-based economy to one that is knowledge-based, a mixed economy. It's not just Nokia, which we all know, just as we do RIM in Canada, but it's also converting forests to value-added products, something in an area Canada has not taken advantage of, other than to produce paper and some other things. He mentioned some of the tools or instruments the Finnish government has used to make this happen and to accelerate its development. I fed that information in to David O'Brien's working group.
There are other best practices elsewhere, but those countries I mentioned really have much to be proud of in terms of what they've done in that regard.
So there is commercialization from an industry perspective: big companies spinning off small companies, small companies being created, and then of course the creation of companies from academia. We've made progress in this regard, but this is an area in which we need to make significant improvements in the coming years.
:
Yes, if I could augment what Howard said, I think we've been in an experimental mode in Canada for the last 10 to 15 years. When I think about the middle of the 1990s, when dramatic cuts were taken in the federal granting councils, in the provincial university systems, I think we've come an enormous way forward with the great, well-thought-out, creative investments in attracting and retaining great talent--the Canada research chairs, the Canada Foundation for Innovation--the transition of the Medical Research Council into the Canadian Institutes of Health Research, and beginning to deal with the full research costs of research done through universities.
I'll just say our challenges are twofold. One is that we are still undereducating our populace. At the end of the day, whether you look at commercialization as one of the outcomes or you look at the health and societal benefits that come from having a strong research, science, and technology innovation culture, you can see that Canada is doing well at the community college level, but underperforming in preparing people at the masters and doctoral levels, particularly in science-related degrees. That's an area I think we can take on and prevail in.
The second is that when we look at inter-country comparisons--and this will be very important for our state of the nation report--we tend to look consistently at those that have been successful, which are, as Howard said, these small nation states. You could add Israel and Singapore to the list he gave. Both our challenge and our strength is that we have a huge geography with a relatively small population. It would fit into California readily. Tokyo has more people than the whole nation of Canada. This large geography has created strength in our capacity to network, strength in our ability to understand that it's only through harnessing the synergies of private sector and government investment and what our universities, research institutes, and educational institutions do that we will really have outstanding areas of impact. We need to think more strategically about that. In that regard, Australia is a great example. It doesn't have the U.S. south of its border, but it has some other comparisons with Canada.
:
If I may, I will answer in English.
[English]
In the two areas you mentioned—natural resources and energy, and the environment—vis-à-vis also commercialization, there are a number of issues and challenges in Canada that need to be addressed and that can make significant progress through research in the next five to ten years.
Water is one area. Water is very important to us environmentally, the water and energy nexus. For instance, in Alberta with the oil sands, technology has improved significantly in the last 15 to 20 years such that, at the current cost of a barrel of oil, it is profitable to upgrade the tar sands. But there are challenges. There are technology challenges, and there are environmental challenges. So it really spans both areas, energy and the environment.
The consumption of water in the process used to upgrade oil sands is not sustainable. We're using far too much water, so we need to develop some new technology that either reduces the consumption of water or a totally different technology that doesn't use water at all. A lot of important research needs to be done in that area, and from an environmental perspective, the byproducts in the upgrading of oil are mountains of solids, sulphur-containing solids and others, that are damaging to the environment. That issue has to be addressed. So that's just one.That's the water issue, and as well, there is the oil sands issue.
There are areas in Canada that, for the future, could yield new benefit. One is research in the Arctic, the north, both from an environmental point of view and from an energy perspective. That too is important. There is sensor technology for environmental applications, not only discovery of new places to farm—more advanced GPS technology—or security-based work to protect our environment, but other applications as well.
Heather, do you want to add anything?
:
Yes, I could, because this is hardly an original idea. It exists in Australia, Finland, India, Japan, etc.
In late September I was in Canberra to run the executive committee of what's called the InterAcademy Panel, an academy of science for the world. I co-chair that with Chen Zhu, the minister of health for China. The Australians found out that we were meeting and asked me to appear before their Science, Engineering and Innovation Council, which has been going for 11 years. So it's not new or recycled.
The room was full. The membership there consists of approximately 12 individuals, and 10 deputy ministers were in the room. Why were they there? There were too many, because it is an external body, and the preponderance.... In fact, the chair at the time, Jim Peacock, said that if they had to do it over again, they would choose three to four deputy ministers.
The deputy ministers are absolutely key, because they provide the framework within a government context of how to take advice from us and to bring it forward. That has nothing to do with independence or dependence; it has to do with making top-notch advice and recommendations.
Again, welcome to the witnesses. Thank you for your presentations and the work you do on behalf of Canadians. It's certainly good to hear that Canada has a great reputation for science and technology.
Dr. Alper, I was very interested in your comments about the importance of innovation adding value to Canada's raw materials, to our commodities, and to really maximize the benefit we get from the many natural resources our country is so fortunate to have.
Something we've heard from other panels, or on which we've had discussion, is getting the balance right between the investment Canada makes in research for commercial purposes—which obviously is very important going forward—and basic research, which can be decades long and perhaps has no obvious end-purpose at the time it's being undertaken. So a question I've been asking witnesses is their view on whether we have that balance right between basic research and commercial research, that is, short or targeted research. If not, what would you advise this committee to place greater emphasis on going forward?
:
That question is actually central to any country's strategy. As you say, some research leads to commercialization; it could lead by six months, sometimes three years, sometimes ten years, sometimes a generation, and sometimes never.
I have two examples. If you go to a hospital and want the chief diagnostic for certain possible diseases, it's magnetic resonance imaging. It's derived from what's called nuclear magnetic resonance, developed in the 1950s. But the transformation from that basic research—which serves the research community very well as a general diagnostic—to its application for health took from about 12 to 15 years. It was not foreseen. Of course you are aware of the laser, which has fantastic applications now, be it in treatment of eye disease and in many different sectors, but it was discovered from very basic research.
Having said that, it is my personal view—and I'd like Heather to give her perspective on this, as I think she'll agree with me—is that to have a proper balance between excellent research and.... What I mean is that the signature has to be excellent; that drives whatever we do. We need excellence in basic research and excellence in applied or targeted research. A country needs to make choices for areas of accelerated development. That's why Australia did it, Japan has done it, the U.K. is doing it now, etc. And we have done it. We define four areas in the strategy where we make recommendations on sub-priorities, with the themes within those areas, just as Australia and others have done. As vice-president of research at the University of Ottawa, I led the process for setting strategic areas of development, with four areas and three to four themes.
Doing that exercise is important for several reasons. I discovered this during the Australia exercise. It builds cohesion and direction. Even the people who are not in one of those strategic areas know where the country is going; they know the direction. So a certain proportion of allocated resources needs to go into what I'll call areas for accelerated development, that is, the priority areas. However, basic research is absolutely key to support that, for exactly the reason you cited.
So a significant amount of money--the majority, in my personal view--should go for basic research, and a substantial minority for these targeted areas or areas of strategic development.
:
I think it's a bit of a circular question, but we're not in bad shape with respect to the balance. I think we are lucky to be in a country that has a general respect for the fact—it wasn't true 15 years ago, but it is today—that if you don't have that pipeline of basic or fundamental discovery-oriented research, you will not get any benefits, whether in the commercial domain or policy domain. So you simply need that balance.
I would agree totally with Howard, and I like the way he put it, in favour of having the majority of the public investment in fundamental discovery-oriented research and scholarship, and then a significant minority investment in targeted research in the areas Canada shows promise in.
Maybe I wanted a question to be asked before about the four areas chosen on the basis of our empirical progress in those four fundamental areas and their importance to the country. So it's both about taking areas where we've demonstrated excellence and impact and are recognized for that on the world stage, increasing the critical mass of outstanding targeted research based on that pipeline of basic research, and thereby have Canada advance even further.
If I could add one last comment, I would say that just as important as the pipeline in fundamental research, as against targeted research, is to have the range of disciplinary fields covered, because if you don't have the social sciences and humanities translated to the human factor side, you can have all the robust technology in the world, but you won't know enough about how to get the uptake to have an impact on society.
:
Thanks. Those are excellent points.
Let me address the second part first. Maybe Heather could address the first part, or whatever she wishes.
On the federal-provincial interface or landscape, there are a few councils like this one at the provincial level, and there are some provinces that invest significantly in R and D.
I was in Edmonton at the end of March to speak about science but was asked to speak also about this council. There was an excellent turnout from the public service, at the deputy minister and assistant deputy minister level and others. The basic discussion was, how do we improve our relationship and team-play better together? That's an issue that certainly merits serious discussion.
Alberta and B.C. have councils. Ontario has a council, as do several others. Several have very interesting policies internationally on S and T to look at as possible role models. Several have weaknesses as well that need to be strengthened. Working in a collegial manner between federal and provincial jurisdictions on the R and D issue is very important for the future.
:
Let me add one thing to your point, and then I'll certainly address it. That is that one other role the deputy ministers have is to link to other deputy ministers across government and sensitize them to the issues STIC is addressing as well as possible future issues, just as the minister is responsible at his level across government.
I did not mention that, for example, the international S and T request for advice came from Minister Emerson at International Trade, putting forth a request to STIC through Minister Prentice, since Minister Prentice is responsible for it.
In terms of working across issues relevant to cabinet, as STIC develops its programs and as more and more issues are brought to the fore, I anticipate that a number of ministers will ask the Minister of Industry for us to consider them.
For example, at the meeting I attended in Australia I didn't just give a presentation; I sat through their whole meeting, and eight new issues were brought from five departments. Again, just like here, it is centred in one department, with one minister being the clearing house or focal point, as well as himself or herself bringing issues. But they come from all across the Australian government.
In due course, our expectation, and I have discussed this with several colleagues, is that this will result here as well.
:
Let me say that we've been like a roller coaster in Canada. In the mid-1950s, Canada was extraordinarily strategic at the federal level in creating the granting councils, investing in them, and having a sense of the federation and how to optimize what we did.
Then we simply have not stayed the course. We see, both at the provincial level and the federal level, that every time you pull back you really suffer, because you lose ground, so you have to piggyback over what you lost and try to catch up with the competition.
We came back in the late nineties. I think we're certainly seeing the impact of the investments of the last 10 years on retaining and attracting talent. Let me just that say my own university alone attracted 800 new professors—predominantly, I'd say, because of the reputation of my university, but we could not have done it without the new federal programs—60% of them from outside of Canada.
So we're seeing those kinds of trends, but I think if you want to look at the broader commercial and industrial impacts, it will take longer to see them. I think we also have to optimize the provincial-federal policy to see the greatest impact.
Thank you for being here.
I sit on the committee today as an acting member. Unfortunately, this is not the committee that I normally sit on, but I am very pleased to be here. Before I was elected, I worked as an engineer, so I have always had a soft spot for investments in science and technology. I am familiar with the subject. I use the term "investment" in science and technology, because I really do see it as an investment rather than as an cost.
When the government invests in a significant way, whether in pure research or in research and development, it creates jobs for researchers and attracts companies, allowing them, as a result, to increase their productivity and hire more employees. The bottom line is that the government collects more taxes and reduces its costs, on things like employment insurance, for example. When investments are made in this area, the return is greater in the long term.
Do you more or less agree with that philosophy?
:
I think it's more complicated than that. For instance, in terms of granting councils and academic support, we talked about quality and supporting the best, and that means the best proposals irrespective of location. Some of that will benefit the immediate location and help build a cluster of innovation—for instance, the bio-farm industry in Montreal.
But at the same time, there may be outstanding proposals from individuals out in Vancouver that could still benefit that area. For example, look at the development of QLT from research of a biochemist and chemist at UBC that led to the creation of that firm.
It's only when you build clusters, when you have a high critical mass in a certain area of research, be it bio-farm, ICT, energy--the four priority areas we talked about. Then the investments, clustered in a particular location, do reap a harvest of results--as Michael Porter would say.
Nevertheless, you can diversify your investment cross-country and impact regions such as Prince Edward Island in certain areas.
Thank you for coming. This is fascinating stuff, and we're so glad that you have taken the initiative. It's been said before that you were asked and you've responded to the challenges.
I'm concerned about one thing. In a past study--and I've used this example before--we looked at the challenges of industry, and we examined the forestry industry, for instance. When the question was asked where the equipment was coming from, the answer was that it's coming from Sweden. How did we ever lose that opportunity when our dollar was...?
So as exciting and provocative.... The high-tech seems to have much more appeal. Are you putting enough emphasis on the others?
I'll give you one more example, from my riding of Chatham-Kent—Essex. In the Leamington area we have the largest collection of greenhouses in North America. These people, a long time ago, before government initiated the move, recognized that there were 200 million people within one day's drive, and they created this incredible greenhouse industry.
The leaders in the greenhouse industry are the Netherlands and Israel. Have you looked at industries like that? Sometimes we go for the high-tech, but we're missing some other areas. These are our drivers.
:
This is a very competitive area right now. In Wisconsin there recently was a test of carbon capture and storage.
In the budget, of course, I think $250 million was set aside for a demonstration plant and research, and that's great. In fact, at the meeting I was at in March, the academies of the G-8 plus 5 had to prepare two statements, one on a low-carbon society. There is a paragraph in there on carbon capture and storage. So this is a very important area. Again, this is not really a STIC issue, but it is a scientific matter of particular note. Those who will succeed commercially in demonstrating the commercial viability of CCS--carbon capture and storage--will have a great advantage on a global basis, because they can market their technology elsewhere, not only in Canada.
In Canada this would provide a tremendous added value, as you so well articulated, not only in Nova Scotia but in Ontario, Saskatchewan, and Alberta, for different reasons. So it's a great area to focus on now. You know, in certain other countries, clean coal is a big issue that's being pursued. It goes in tandem with carbon capture and storage, because the process to clean coal may produce undesirable amounts of greenhouse gas. But if you can capture that and store it, it gives you--the company or the group--a competitive advantage. So there's a lot to do in this area. But the specifics of the science I am honestly not an expert on.
I'm going to take the prerogative as chair to finish up here.
I have a number of questions, and I know I'm going to run out of time, so perhaps what I'll do is put the questions on the table and I'll let you address perhaps one of them, and if you can get back to me on the other issues, it would be very helpful to have your opinion.
On the issue of intellectual property, one of the things the committee will have to wrestle with is should we recommend or are there better models of intellectual property? Especially if you have granting councils, if you have the university, if you have industry, if you have the researchers themselves involved in the development, what sorts of models should we be looking at in terms of intellectual property?
Second is the interplay between academic institutions and industry. Both of you have experience with that.
The third issue, about foresight, was raised on Tuesday. We need a group that looks ahead. Indirectly, I don't know if I'd say there was a criticism, but there was something your council would not be able to do. You're gauging what's happening now or gauging the past through your state-of-the-nation report. So if you take an issue like fusion, is that something, looking ahead, your council would be looking at or addressing? You could take that example or another example.
Another issue is how the council interplays or is different from the academies.
Another question was raised at the AUCC meeting. Ms. Munroe-Blum, you were there when I was challenged about why the government chose the four it did and excluded design, and I have to admit I didn't have a great answer at the time. The person who challenged me sent me some more information and makes some valid arguments, I would say. I don't know if it's strong enough to add it as a fifth, but it is worthy of discussion.
The final one is the big question. Perhaps you can address this one first and then you can address the others later. The whole issue of commercialization has obviously been a topic around the table. You've pointed out that in terms of basic research we're doing well, but as innovators or companies succeed, success almost presents more challenges. You heard from two groups today. Bioniche is a very good company. A second company is Trojan Technologies, in terms of environmental technologies.
As you go along, you almost face some real challenges. One challenge companies face is the building of a prototype, building a facility and getting the money to do that, and with Trojan it was the adoption of new technology, the same with Bioniche as well. Once you have created this new technology, whether your consumers are cattlemen or municipalities, how do you get them to adopt these new technologies?
There's a whole bunch of big questions there. I apologize for dumping all that on you, but you are two of the smartest people in Canada, so I am going to flatter you and then challenge you.
:
I'll let her deal with the last ones; Heather will deal with one or two. The rest we'll have to deal with off line.
We talked a lot about industrial R and D, but also this applies to commercialization that emanates from university research. Concerning the person who told you about money for a prototype, which I would call a pilot plant—for a chemist, it's the same thing—there are small programs, Idea to Innovation and Proof of Principle, in two of the three granting councils. But that's from research accruing from university; from industry, it's a different issue.
That brings up again how you enhance support for R and D in industry. The big problem is that discovery requires creativity. The role of a university professor is to nurture creativity—that's it—as a supervisor of graduate students.
If you make some major or landmark discovery, it goes then to the next stage of scale-up, which is what you're talking about. Then beyond that, depending what area we're in, you have financing for it, including venture capital—the challenge of securing venture capital is a major issue in Canada right now—and then ultimately go to the marketplace.
The problem here is not on the R side of R and D; it's on the D side. This is where considerable focused attention needs to be addressed for the future. That's very important.
The other thing goes back to the former Prime Minister of Finland and what he had to say.
In Finland they enhance R and D through two mechanisms. They said SR and ED or equivalent tax credits are useful, but they're far less efficient and effective than direct grants to companies on a partnership basis—50:50, 60:40.... He said his government could demonstrate to you how effective this has been. This might be worth looking at. The second is that successful procurement policy is an essential part of the innovation process.
Those are two components that he raised.
I should tell you that in my evaluation of Slovenia and Turkey—Turkey is not in the EU, but it is treated as such—and I evaluated Emilia-Romagna for the EU, the number one innovation region in Europe....
Emilia-Romagna has a spinner program that is absolutely fantastic, which many countries and regions in Europe are now copying, whereby a student in the last year of his or her studies gets supported by the government, goes into an SME, is supported 100% for the first three years, and supported at a declining percentage for the next three years. You can show the growth of 964 companies in Emilia-Romagna in the last five years.
Turkey has a direct program of direct support—as a partnership, again, 50:50, or 60:40—and Turkey has a fascinating new technology entrepreneurship program, which just started April 1, to stimulate entrepreneurship.
Those are interesting things. But Chair, what you're really talking about is the D part of R and D and then going to the marketplace.
:
Substantive motions do require 48 hours' notice for the committee.
Also, the chair of a committee, much as the Speaker in the House, can request that the motion be provided in writing—I would venture to say, in front of the chair—to be able to evaluate whether the motion is of a substantive nature to the subject matter presently under way or whether it's outside the scope of what the committee is dealing with.
Motions, if they deal directly with what the committee is presently discussing, can be admissible outside the 48 hours' notice if they relate directly to what the committee is studying. That said, as I mentioned, the chair would require that in writing to be able to evaluate it.
The committee can hold extra meetings, in addition to the meetings they have scheduled. That would be at the discretion of the committee, to advise the clerk when and where. Conference call meetings are typically very difficult to organize.
The committee could also, by unanimous consent, waive the 48-hour notice requirement or could agree to a compromise whereby the notice requirement would be, let's say, 24 hours as opposed to 48 hours. But that again would require unanimous consent.
:
That's fine, but I will comment, as it is my prerogative to do.
The person who moved the motion in fact is no longer here, because as chair I've allowed us to go ten minutes over time. I stand by my ruling that it's not related to the study of science and technology. I would encourage members: if they want to bring motions forward, that's fine. But on this study I would encourage us to stick to a study of science and technology policy in general. That's what scientists and researchers and institutions across this country want us to do. It's certainly what I've heard as the chair of this committee.
I think that's a valid public policy question. It will be brought forward in a motion, but with respect to the rules, and I'm advised by the clerk, it is a substantive motion and needs either 48 hours or unanimous consent. It did not get unanimous consent; therefore, it will not be considered today. If Ms. Nash submits it, it will be considered, I suspect, on Tuesday.
I'll also remind members that we have a subcommittee meeting at 10 a.m. on Tuesday, so Monsieur Vincent or Madame Brunelle—someone from the Bloc—will present .
Thank you.
The meeting is adjourned.