:
Good morning, ladies and gentlemen.
Thank you so much for being here today. I want to welcome you to the session this morning.
Because we have a very full agenda this morning, I'll quickly ask the committee to pass the budget, first off. The motion is that in relation to the study of the role of government and industry in determining drug supply in Canada, the proposed budget in the amount of $18,450 be adopted.
Can I have someone move that, please?
Ms. Block, thank you.
Does someone second it?
A voice: That's fine.
The Chair: Great.
Thank you very much.
So we have the budget passed. Also—
A voice: You have to call for the vote.
The Chair: All in favour of the motion?
(Motion agreed to)
The Chair: Thank you.
Sorry; I was rushing too fast. I knew you'd pass it.
I think now we can go directly into our....
We have a couple of other things to finish, but I see that we're missing some members, so I'll wait until the end for that. We'll just take five minutes at the end of committee.
We have a full agenda today. We'll start with the study of the role of government and industry in determining drug supply in Canada.
From the Canadian Generic Pharmaceutical Association, we have Mr. Keon, Dr. Desai, and Mr. Michel Robidoux, who's president of Sandoz Canada.
Welcome. We're very glad that you're here.
We also have, from Canada's Research-Based Pharmaceutical Companies, Mr. Russell Williams, president, and Mr. Mark Ferdinand, senior director.
Welcome. We're so glad you're here as well.
From the Canadian Association for Pharmacy Distribution Management, we have Mr. Johnston and Mr. Reynolds. Mr. Johnston is the president and chief executive officer, and Mr. Reynolds is the vice-president.
We're so glad you're here as well. Thank you.
Our fourth presentation is from HealthPRO Procurement Services. Ms. Kathleen Boyle is vice-president and Mr. Michael Blanchard is the clinical director.
Welcome. We're very glad you're here.
The presentations will be 10 minutes for each presenter.
I will start with the Canadian Generic Pharmaceutical Association.
Mr. Keon, I believe you will be presenting. Would you begin, sir.
:
Thank you, Madam Chair, and good morning, honourable members.
We want to thank you for providing Canada's generic pharmaceutical industry with the opportunity to contribute to your study of the domestic drug supply system.
As the chair said, I am Jim Keon, president of the Canadian Generic Pharmaceutical Association, or CGPA. Our member companies research, develop, manufacture, and market generic drugs in Canada and internationally.
I am joined today by Dr. Jeremy Desai, the president and chief operating officer of Apotex. Apotex is a privately held Canadian company based in Toronto. Dr. Desai provides the experience of Canada's largest pharmaceutical R and D investor, manufacturer, and employer. He personally has extensive experience in working with Canadian, U.S., and foreign regulatory agencies.
I'm also joined by Monsieur Michel Robidoux, president of Sandoz Canada, a company that develops, produces, markets, and distributes a wide range of generic products. They are headquartered in Canada, in Boucherville, Quebec. Sandoz is the second-largest producer of generic drugs in the world.
CGPA member companies take the responsibility of providing high-quality, lower-cost generic drugs to Canadian patients very seriously. Millions of Canadians rely on these products daily to maintain or improve their quality of life. Generic drugs are dispensed to fill 60% of all prescriptions in Canada, and they provide significant value to Canadians. Retail generic drug prices are internationally competitive. Today, three to four generic prescriptions in Canada can be filled for the price of one patented brand-name prescription.
The generic pharmaceutical industry is devoted to working with all stakeholders to minimize the current shortages and to mitigate factors that could contribute to future shortages. We are aware of the distress caused to patients, families, and clinicians by disruptions in the drug supply, particularly with respect to drugs identified as medically necessary.
Most of the pharmaceutical manufacturing capacity that exists in Canada is operated by generic drug companies. We have two of the largest Canadian manufacturers here with us today, Sandoz in Quebec and Apotex in Ontario. Canada is fortunate to be home to an internationally significant cluster of generic manufacturers, which contributes positively to the Canadian drug supply.
In addition to supplying the domestic market with high-quality pharmaceuticals, we export about half of our domestic production to more than 115 countries around the globe, with the United States forming the single largest market for our products.
[Translation]
The generic drug industry is a highly competitive, low-margin industry that operates in a highly regulated environment.
Before bringing a new generic drug to the Canadian market, a company must carefully weigh several business considerations. These include the cost of development, the cost of production and market prospects. It also needs to navigate Canada's complex and costly legal environment, which creates a great deal of business uncertainty for a generic manufacturer seeking to make a new generic product available to Canadians.
It takes several years to bring a new generic product to market. Once Health Canada has reviewed and approved a new generic drug as being safe, efficacious and bioequivalent to a reference brand name drug, it can be sold anywhere in Canada. All pharmaceutical manufacturers are subject to ongoing reporting requirements and inspections aimed at ensuring the product meets current and evolving regulatory standards in Canada and other countries in which a Canadian-made product is sold.
To be reimbursed under the provincial drug programs and obtain significant sales volumes, the generic drug must be listed on provincial drug benefit plans. The manufacturer must submit a separate application to each province and await a response. It can take up to one full year to have the new generic listed in all provinces.
The generic manufacturer negotiates with pharmacy customers and other purchasers to sell its products. For the hospital market, group purchasing organizations conduct a tendering system where pricing is the main consideration. This has led to a number of sole-source contracts in the hospital market.
The generic manufacturer typically distributes the medicine to pharmacy customers through a wholesaler, although companies also have some in-house direct distribution to pharmacy.
[English]
Despite the best efforts of all parties in the pharmaceutical supply chain, shortages of prescription medicines can and do occur in Canada and other countries. There are various reasons why a brand or generic manufacturer cannot temporarily supply a drug. The specific reasons may vary and can be complex.
The most common causes for drug shortages are: issues around the active ingredient quality or the availability of the active ingredient; manufacturing issues; the evolving regulatory environment and, in the view of our members, an increasingly inflexible approach to enforcement by the U.S. Food and Drug agency; and marketplace issues.
When shortages of prescription medicines occur in Canada, generic pharmaceutical manufacturers aggressively pursue remedies, including finding alternative sources of products. Canada's generic pharmaceutical manufacturers recognize the importance of providing transparent information to help patients, health care professionals, and provinces and territories prepare and deal with current and anticipated shortages of prescription medicines.
CGPA has been a leader in the activities of the multi-stakeholder group on drug shortages, which includes representatives of several organizations that will appear before this committee, including Rx&D and CAPDM, which are here today, as well as the Canadian Pharmacists Association and the Canadian Medical Association, which you will hear from later this week. Health Canada has also participated in that multi-stakeholder group.
The work of the multi-stakeholder group led to an interim solution for the reporting of current and anticipated drug shortages on public websites operated by the University of Saskatchewan's Saskatchewan Drug Information Services and Sainte-Justine Hospital in Montreal. CGPA member companies have been reporting to these websites. The information has also been available on our own CGPA website. The availability of these websites has been promoted to health care professionals.
Recently, CGPA and Rx&D have been working very closely to accelerate the development of a national bilingual reporting website for Canadian drug supply stakeholders. Our associations have each committed up to $100,000 to accelerate the development of this website. Earlier this week, the website www.drugshortages.ca went live. The French website is available at www.penuriesdemedicaments.ca.
We consider this an important milestone. We are now focused on continuing our communications efforts with the goal of providing robust, timely, and transparent information to all drug supply stakeholders.
Cooperation and joint action between the generic and brand-name industry is not particularly common in Canada or any other jurisdiction. The fact that we have set aside our differences and come together to combat drug shortages in Canada we believe demonstrates how critically important both sides of our industries view this issue and how committed we are to finding workable solutions.
While the reporting of backlogs and shortages to all drug supply stakeholders is important, reducing the potential for backlogs and shortages is a high priority for the generic pharmaceutical industry. To mitigate the potential for disruptions in our domestic drug supply, our member companies have invested more than $100 million over the next three years in new systems, personnel, equipment, and facilities. They have heavily allocated additional resources, both human and financial, to quality control and quality assurance operations to ensure continued compliance with the evolving regulatory environment. They have improved forecasting capability and prioritized production to better adapt to shifting market demand. They are working with Health Canada on an ongoing basis to prioritize product reviews and approvals based on shortages or potential shortages. They are implementing industry best practices guidelines for the prevention, notification, and management of drug shortages. A copy of the CGPA “Best Practices Guidelines for the Notification and Management of Drug Shortages” has been provided to committee members.
CGPA and its members remain committed to working with Health Canada and all our partners in the prescription drug supply chain to develop solutions to help mitigate the impact of prescription drug shortages in Canada.
Dr. Desai, Mr. Robidoux, and I would be pleased to answer any questions you may have. Thank you.
:
Merci beaucoup. Thank you, Madam Chair.
Thank you, committee members, for the opportunity to appear before you today.
As you mentioned, seated with me is Mark Ferdinand, our senior director of health and economic policy. He has been a key worker in terms of the working group that Jim Keon just mentioned. If there are other questions, he will certainly add to them.
Rx&D, as you know, is a national association that represents 50 companies that represent the innovative pharmaceutical industry.
[Translation]
Our members research, discover, develop and deliver life-saving and life-changing medicines and vaccines.
[English]
To start, let me state that patient access to the widest array of effective medicines and vaccines is of paramount importance to Rx&D and its members. Simply put, we are in the business of improving health outcomes. This is best achieved by maximizing the choice of therapies to which patients and physicians have immediate and consistent access.
I want to assure this committee that our members appreciate the anxiety and frustration that drug shortages cause Canadian patients, their families, and health care professionals.
[Translation]
Indeed, the drug shortages issue demands attention and collaboration from everyone—we as innovators, generics, governments, health care professionals, and all others who play a role in providing medicines to Canadians.
I believe that Canadians want and deserve answers to three very simple, specific and straightforward questions.
[English]
First, why do drug shortages sometimes occur? Second, what is our industry, along with others, doing to address this issue? Third, and most importantly, what can we do, using public policy tools and expertise of industry, to ensure that drug shortages do not occur in the future?
Turning to the first question of why and how shortages occur, let me provide some context. Each and every day, Rx&D members adhere to the highest standards of management and manufacturing practices. They are constantly refining their business continuity plans to supply, in a reliable fashion, Canadians with the medicines they need. These practices include: actively managing supply chains to ensure regional balance and access; securing backup suppliers for base components and raw materials and active ingredients; and monitoring stock throughout the wholesaler community. Nonetheless, it has long been recognized that shortages can occur, and no country is immune from this reality.
Reasons for the drug shortages, as Mr. Keon has just mentioned, can include a number of factors: unprecedented and unusual demand for product is one factor; unforeseen manufacturing, safety, and quality problems; procurement policies; interruptions in distribution networks or factors beyond anybody's control, such as accidents or natural disasters. These are all magnified due to the practice of single-source purchasing in the post-patent market.
Turning to question number two, Rx&D has worked with the pharmaceutical supply chain community, including wholesalers, distributors, physicians, pharmacists, chain drugstores, and Health Canada officials on this issue since last summer. In fact, last October Rx&D members created a public and bilingual web-based platform to inform Canadians of shortages. Our site includes key information, such as the name of the drug in shortage; strength and dosage form; its drug information number, DIN; name of the member company; the reason for the shortage; and expected duration and resupply date.
[Translation]
Three weeks ago, we expanded our site's capability and opened it so that any manufacturer in Canada—innovators, generics, Rx&D members or the Canadian Generic Pharmaceutical Association—could use our platform to report on shortages.
[English]
We strongly encourage them to do so, and many companies have accepted this offer. As suggested by the last speaker, this information can be found at www.drugshortages.ca
[Translation]
or www.penuriesdemedicaments.ca.
[English]
Two weeks ago, both Rx&D and the generic association came together to commit up to $100,000 each toward a comprehensive national and bilingual platform and plan that will do two important things: permit real-time reporting of drug shortages, and recommend potential solutions when medications are not available.
I am proud of our leadership on this joint initiative. However, while better reporting on shortages helps health care professionals deal with the immediate challenge, it does not address the root causes of drug shortages and will not mitigate by itself the risk of future drug shortages.
That brings me to the fundamental question posed at the outset of my remarks: what can we do, in terms of public policy, to better assure Canadians the medicines they need will be there for them, day in and day out? I will be unequivocal in the answer. The present Canadian policy environment does not favour better access to prescription medicines. If this environment does not change, based on what we have learned from the current situation, the potential for problems caused by future drug shortages will not diminish.
Federal, provincial, and territorial policy makers must clearly understand that procurement approaches, such as sole-source contracts or bulk purchasing of medicines in the generic, post-patented sphere, which limits competition and patient access to medicines, have real and lasting consequences, like the scarcity of supply to all Canadians.
Mike de Jong, the Minister of Health for British Columbia, recognized this fact last week when he said:
If you become overly reliant on a single source for any product, there are risks. I have to say, one of the things we are discussing, amongst provincial health ministers, in our zest to drive the cost down on behalf of taxpayers...have we inadvertently created a condition where competition has been compromised?
That is a powerful statement.
Moreover, the unintended consequences of short-term, cost-containment strategies that compromise health outcomes have been witnessed over the past few years in areas such as surgical supplies and vaccines, and now we see it in medicines too.
To protect against future shortages we recommend that a system of competitive diversity for post-patented medicines must exist to ensure there are enough companies in the market that can increase production immediately if needed. We need to guard against procurement models that run afoul of the old adage, “Don't put all your eggs in one basket.” It's a simple concept, but one that I think we have to look back on.
Our members sincerely appreciate the very serious fiscal challenges facing all levels of government across this country. We are working with governments on what we call value-demonstrating initiatives—those projects that take health care challenges and, through an evidence-based approach, identify ways to improve patient outcomes and cost-effectiveness.
Yes, government has a responsibility to manage taxpayer dollars, but we have now seen only too clearly what can happen when Canadians rely on one supplier for the medicines they need. It is not in the best interests of patients, does not account for the essential role pharmaceuticals play in our health care today, and runs contrary to the values and intent of our health care system.
Our preference is for increased choice domestically, but we have also repeated at both the provincial and national levels that more work must be done to expedite Canadian approvals for medications from jurisdictions such as Europe and the United States. We've also encouraged better fast-tracking of alternate sources of supply when shortages occur. I know that is being worked on as we speak.
[Translation]
On behalf of Rx&D, you have my commitment that we will continue to work in partnership with governments and our supply chain partners to report on drug shortages on an ongoing basis.
[English]
We believe that our joint efforts on a joint reporting site with all the interveners of the chain is an important first step; however, we need all policy-makers to work with us towards a long-term solution to ensure that we have a system that can respond quickly when drug shortages do occur.
Thank you very much, Madam Chair and committee members, for your attention. I look forward to your questions and a discussion following the other presentations.
:
Good morning. As mentioned, I'm David Johnston, president and CEO of the Canadian Association for Pharmacy Distribution Management, or CAPDM, as we are known.
On behalf of CAPDM, I thank the members of the House of Commons Standing Committee on Health for the opportunity to outline the role of the pharmaceutical wholesalers with respect to drug shortages. This is an issue that our industry is very concerned about and is working closely to address with other health care organizations in Canada, including those organizations presenting this morning.
First, I would like to offer you a brief overview of CAPDM so you see how we fit into the health care system generally and the drug shortages situation specifically.
Established in 1964, CAPDM is the voice of the Canadian pharmacy supply chain. Members consist of pharmaceutical wholesalers, self-distributing pharmacy chains, prescription and non-prescription drug manufacturers, both brand and generic, as well as goods and services providers to the pharmacy supply chain sector. We are a significant contributor to the efficiency of the Canadian health care system. Over 95% of pharmaceuticals across Canada are distributed to community and hospital pharmacies as well as long-term and specialized facilities by pharmaceutical wholesalers and self-distributing chains, with an order accuracy greater than 99%. Distribution of pharmaceutical products by pharmaceutical wholesalers is the system of choice for pharmacies and manufacturers.
By offering same day and next day delivery five days a week to all parts of Canada, through thousands of employees working in distribution centres in nearly every province, pharmaceutical wholesalers help to ensure timely patient access to vital pharmaceuticals and over-the-counter medicines. CAPDM pharmaceutical wholesalers, working with Health Canada regulators, are proud to be part of a pharmaceutical supply chain that has come to be admired at home and abroad as one of the best systems in the world.
The role of pharmaceutical wholesalers is to obtain available products from pharmaceutical manufacturers and distribute them under highly regulated pricing regimes in a safe, secure, timely, and economical manner to pharmacies. On the surface this may seem like a simple process. However, behind the scenes there are highly complex skills and technologies used by wholesalers to consolidate shipments from hundreds of manufacturers and deliver them to thousands of pharmacies.
This is crucial in sustaining the safety and viability of Canada's pharmaceutical distribution system, which in turn means the viability of the health care system itself. In today's world of growing demands and service, just-in-time storage and delivery are crucial to pharmacies, wholesalers, and manufacturers alike.
Before I describe our role when a product shortage occurs, I'd like to quickly define what the notion of shortage means to our industry. Shortage represents a reduced availability of one or several products from one or several manufacturers. Typically when a manufacturer experiences a supply issue, it will create an allocation for the impacted product or products to ensure fair distribution of available inventory to the market. This allocation may be at the geographic level or wholesaler distribution level, or even at the customer level, based on historical trends.
Pharmaceutical wholesalers do not cause drug shortages, nor do they have the information to predict a shortage. They do not determine the adjusted supply levels to each customer in the event of a shortage.
In times of shortage, the role of the pharmaceutical wholesaler is to support the allocation process by fulfilling and delivering orders according to the defined allocation instructions and stock replenishment received from the manufacturer. With their available inventory, pharmaceutical wholesalers will then implement order limits to ensure that as many customers as possible have access to the product experiencing a shortage and that no one region or organization will have a disproportionate amount of product.
CAPDM recognizes that drug shortages are a major issue, and we have developed a committee that is actively participating in a cross-industry initiative with Health Canada, known as the drug shortage working group, along with other health stakeholders, on proactively reporting on shortages. There's still much to be done by all stakeholders, and we look forward to continuing the progress made to date in creating a system to help Canadians better manage their medication needs within shortage situations.
In summary, during times of drug shortages, pharmaceutical wholesalers will continue their essential role of distributing all available products through the safe, secure, and efficient system they have developed.
Pharmaceutical wholesalers do not influence the cause of drug shortages but do manage the flow of available products in the market during shortages, and they are working with manufacturers, health care providers, and government to help find a solution to this situation. We look forward to continuing this important collaborative initiative.
Thank you for your time and attention. We'd be delighted to answer any questions.
:
Thank you for inviting HealthPRO Procurement Services to present at today's meeting. My name is Kathy Boyle, vice-president of pharmacy services at HealthPRO. I would like to introduce my colleague, Michael Blanchard, clinical director at HealthPRO.
HealthPRO is Canada's national group purchasing organization for health care, representing the purchasing interests of hospitals, provincial health authorities, and shared services organizations from coast to coast. We recognize the critical impact that drug shortages can have on delivering quality patient care. We are doing everything possible to help our members find alternative solutions to drugs that are in short supply, and we are actively collaborating with industry stakeholders to find solutions. To that end, we are pleased to be invited to participate in today's important event.
Although the problem is not new, the number of drug shortages has significantly increased in the last few years. This is a complex problem, with no easy solutions. It is important to first understand the following key factors that contribute to the global problem. It is also important to consider that every situation is different, and that each product on back order and each shortage is driven by unique contributing factors.
The global supply chain is complex. A trend by manufacturers to outsource active pharmaceutical ingredients and raw materials has created intricate and increasingly less stable global supply chains. Manufacturers are susceptible to shortages or delays at any of their global facilities.
The move to consolidate production overseas warrants consideration. The health care sector's ability to respond to Canadian shortages is further hampered by suppliers' attempts to consolidate production overseas, generally in one plant, which increases vulnerability to production interruptions.
There is increased demand without increased production. As the need for medications grows, manufacturers are struggling to keep up with demand. Contributing factors can include rigid regulatory control over manufacturers' active pharmaceutical ingredients, raw material shortages, and delays caused by line production increases of drugs in greatest demand.
We now have stricter drug regulations and improved quality. In response to several tainted drug and food incidents over the past several years and the increasing challenge of counterfeit drug production, the U.S. Food and Drug Administration has increased the frequency and intensity of audits with a focus on complete traceability of all compounds. In several cases, strict FDA audits have impeded production of high-demand drugs at manufacturing facilities, contributing to temporary shortages.
Public policy directives on health care costs have affected drug supplies. The drive to control health care costs in Canada has led to a leaner supply chain and tighter hospital, distributor, and manufacturer inventory across the country. Shrinking margins for manufacturers and distributors affects inventory and product availability. Shrinking margins can also negatively reshape the market, leading manufacturers to focus on the most profitable products.
Canada's market share is limited. Canada represents 3% of the global drug market. Of that 3%, Canadian hospitals represent just 10%, a small business market opportunity for global manufacturers.
There is no stakeholder in the Canadian supply chain that has not contributed to, or been complicit in, the problem of drug shortages, including global parent companies, local manufacturers and distributors, Health Canada, provincial authorities, group purchasing associations, and hospitals. Nevertheless, there is room for each of these key stakeholders to consider how they might contribute to a solution.
We have the following suggestions related to each of the stakeholders.
Health Canada may consider guarding against standards of other countries overriding the high-quality standards in Canada, ensuring there are multiple suppliers of medically necessary drugs in Canada, mandating early warnings of anticipated supply disruptions, mandating early warnings of manufacturers' plans to exit the market, regulating the exit of the market for medically necessary drugs, easing the process for access of secondary suppliers of single-source critical drugs not already in Canada, and overseeing the establishment and sustained funding of a national drug shortage reporting system.
Global drug manufacturers must shoulder greater moral accountability for health care in Canada. A licence to make profits on Canadian health care should go hand in hand with a commitment to patient care in the form of a stable supply. We must ensure that any required remediation plans do not negatively affect to a significant degree the production of supply available in Canada.
Manufacturers and distributors must be more transparent with respect to potential supply disruptions and take responsibility for ensuring there is fair share distribution in place to prevent product hoarding, and have appropriate technology in place to handle an allotment approach effectively.
Provincial authorities should establish and monitor a fair share mandate and ensure that hospitals do not stockpile supplies of drugs and continue sharing information regarding clinical alternatives with their fellow provinces.
Group purchasing organizations must take a national perspective that ensures that everyone is not relying on a single supplier, create multi-award contracts that improve the security of supply for medically necessary products, and try to create a more attractive business environment to encourage multiple suppliers in Canada to stay in Canada and to encourage new suppliers to enter Canada.
HealthPRO noted the increasing instances of shortages and supply disruptions and a year ago proactively began working on a revised contracting strategy to better protect HealthPRO's pharmacy members. Our revitalized strategy was developed with direct input from suppliers and HealthPRO members, and it addresses many of the concerns being discussed here today.
The new contracting strategy strives to strike the right balance between competition, purchasing power, and a more reliable supply chain, while ensuring full compliance with regulatory requirements and contracting guidelines. It aims to fortify relationships with suppliers to better manage emerging shortages.
As part of the new strategy, HealthPRO has set more specific guidelines, and HealthPRO suppliers will now be contractually accountable for providing notification about critical inventory levels for hospital-specific items, notifications and action plans for anticipated drug shortages, correction plans for drug shortages lasting more than 60 days for hospital-specific items, and notification regarding an intention to discontinue drugs.
In addition, HealthPRO fully supports the establishment of a national drug reporting system. We have been providing just that service to our members for the last 10 years. Now more than ever it is imperative that we work together to improve transparency and communications surrounding drug shortages. We, as Canada's health care GPO, must adjust our procurement strategies to encourage additional and stable sources of supply. Security of supply is as important as safety, efficacy, and value to the health care of Canadians. We at HealthPRO are committed to making this happen.
Thank you.
:
Thank you very much, Chairperson.
Thank you to the witnesses for coming here today.
This is obviously a very urgent and important issue we're discussing today. It's an issue that has concerned many Canadians across the country. As you know, we had an emergency debate in Parliament on March 14, which is not a regular thing. It's not easy to get an emergency debate. That was followed by a motion that was passed unanimously by the House, which I'm sure you're aware of, on March 14. It called for a number of things, which I'll go into.
It's interesting to hear your presentations today. I think all of you have said, from varying perspectives, that this is a very complex situation. In fact, you've all gone to great lengths to describe what you believe are some of the factors involved in the drug shortages. What I take from that is that yes, there are complexities, but it's something that actually requires an intervention.
I don't know how anybody could argue that the status quo is acceptable and that these shortages will be kind of up and down and ongoing, on and off. To me, the immediate response is that there has to be a much stronger intervention in the public interest. I just want to put that out there. The motion we passed on March 14 clearly outlines that we need a national strategy that anticipates, identifies, and manages this drug shortage question—this is what was passed through the House of Commons—and ensures that there's required reporting.
In trying to sort through all these causes of the shortages, I noticed that it was only Mr. Keon, from the Generic Pharmaceutical Association, who, when you listed the most common causes, used the phrase “marketplace issues”. I'd like to know what those are.
I don't know if you're aware that the Canadian Medical Association surveyed their members—basically the doctors who are facing these shortages. One doctor put it very bluntly:
I find it interesting that the ones I have trouble accessing are always the lowest cost alternative and always need a more expensive substitution. It fuels my paranoid suspicions about Big Pharma only wanting to produce drugs with a higher profit margin.
I'm very curious to know what these marketplace issues are in terms of mergers and in terms of pricing. Apparently, many of the shortages apply to the generics, which may be taken off the market. Suddenly they're not available. It does cause enormous suspicion. I think this whole issue of marketplace issues is very important for us to pursue.
Second, I know that in New Zealand, smaller buyers come together. They have a contractual arrangement whereby the suppliers themselves must develop other sources. It's part of the contract, and there are heavy penalties if they don't follow that.
I'd like to ask HealthPRO, specifically, if that's something they've considered here in Canada. There's a way to actually ensure in the contract that there are alternatives, which the suppliers themselves follow through on.
I'll ask those two questions.
:
Thank you very much, Madam Chair.
I want to welcome all of our guests here today. This is certainly a very timely study, and I really appreciated all of your presentations.
I want to echo Mr. Williams' opening remarks, where he stated that their members certainly appreciate the anxiety and frustration that drug shortages cause Canadian patients, their families, and health care professionals. I think that could be said of all of us around the table here today.
We also recognize that drug shortages are a global problem, with multiple roles and responsibilities on the part of industry, provinces and territories, and Health Canada. That is why on March 11, 2011, the Minister of Health wrote to several industry associations asking that they establish a plan to share information on drug shortages with health professionals. After that, it's my understanding that the associations joined together to form a working group that plans to update Health Canada on its progress.
The minister also wrote, in April 2011, stating that this plan must include an agreed-to standard for notification of drug shortages to health professionals that is timely, accurate, and comprehensive. If the proposed plan falls short, the minister wrote that her department will be prepared to proceed with legislation that will force companies to disclose this information.
Today I will focus on asking questions of the representatives here from Sandoz.
Early last fall the Minister of Health received a commitment from several professional and industry associations for a voluntary plan to provide timely, accurate, and comprehensive information about drug shortages. I understand that you are a member of the Canadian Generic Pharmaceutical Association, which contributed to the development of this plan. However, you did not make available clear and timely information regarding the supply disruptions, which is contrary to the spirit and principles of the pledge made to the minister. Why didn't your company wait to ensure your customers were able to secure alternatives before making your business decision after the FDA's findings?
:
Chair, committee members, this is an opportunity for us to reaffirm our commitment to patients and to reaffirm our commitment to quality products.
With regard to your question, I might want to go back in time a little bit to November. This is when we received the warning letter.
A warning letter is very important. It is very serious. At Sandoz, we are a health care company operating in a highly regulated environment. It is our responsibility to comply with all regulations. Definitely, it is very important for us to meet the expectations of the regulators.
At that time, there were no shortages. At that time, Sandoz had undertaken a process called “quality transformation” within Sandoz to constantly improve the quality system and to constantly improve internally our manufacturing plant and our quality operation.
The warning letter really put us in a situation where we had to accelerate the remediation activities. It is important we comply with the regulations, so it is important that we improve our quality standards, our quality system. Because of that, we had to consider managing a reduced production. We are still in the December period. When we realized our production was going to be reduced, we decided to clearly make some key decisions.
Number one, in January, our company informed the marketplace and our customers that we would be stopping production of ointments, suppositories, and ophthalmics. In light of the situation, these were less medically necessary products.
In late January, we recognized that we would need to focus all remaining production on medically necessary products. At Sandoz, we have a long list of products. We have over 225 presentations. There are 140 different molecules with a different presentation, for a total of 235. As an example, morphine is one of our products, but we provide morphine in 15 different presentations.
Going back, in late January we worked with HealthPRO, key hospitals, and key pharmacists to identify what would be the most important medically necessary products to produce. At that time, there were no shortages. At that time, we made a decision to suspend from our production, because of our reduced capacity, 74 products. It's not because you suspend 74 products that you're in back order immediately. As a matter of fact, for the majority of those 74 products, we had one month, two months, five months, up to 12 months of supply. So at that time, there were no shortages.
When we went to the market on February 15 to announce there were going to be shortages, we had previously worked with the members of CAPDM to create an allocation system in order to ensure that we would spread the distribution of our products equally to the marketplace. As of February 15, we clearly posted on our website all of the back orders and prospective back orders. After the additional request of Minister Aglukkaq, we voluntarily posted on the two sanctioned Health Canada websites all of our current and perspective back orders.
Thank you.
I would like to thank all of the witnesses who have come here today to provide us with information, advice, solutions and explanations regarding the reasons for the shortages, in particular. This is a topical issue. As many stakeholders have stated, this problem is becoming more and more serious as the years go by. I feel it is therefore somewhat unfortunate that people are trying to point a finger at some stakeholders in particular. I believe that this problem involves the entire system, and as several people have already said, all stakeholders, the various government levels and industry need to cooperate so that we can put the interests and needs of patients foremost. This is extremely important.
We have been told that the reporting requirements were problematic, but we also heard that certain suppliers had a monopoly and that there was a need to diversify sources of supply. Have you got any models or examples from other countries? Sweden comes to mind, where the government has a public supplier that provides 2% of the system's essential drugs.
Could the federal government offer incentives to encourage new secondary manufacturers, so that we do not have to rely on one provider of essential drugs? Should Health Canada and the Minister of Health be giving greater consideration to this alternative?
Moreover, we have seen that the voluntary reporting system currently in effect does not work very well. I have spoken to several local stakeholders, in Quebec. They told me that they did not really consult this site. In your opinion, is this because the system is not sufficiently effective, is it because people do not know about it, or is it because the information provided is neither relevant nor timely?
In mid-March, we unanimously adopted a motion calling upon the federal government to take initiatives in consultation with the provinces. What more can we do? Clearly, we need to take action at the federal level. But in terms of concrete action, what can we do to help people and patients feel secure about their medication?
My question is for Mr. Williams. You talked about the price of medication. As you said, and as we know, the price of medication goes down as a result of the price of generics. Large corporations have merged and only the most profitable remain.
Moreover, I would like to raise an interesting point regarding the price of medication for consumers. Since the early years of 2000, the average expenditure on medications per person was $329. Nine years later, this figure had more than doubled and the average was $736.
Despite the fact that drugs may be generating less profit, the demand is, nevertheless, growing throughout the country and particularly in Quebec. Quebeckers and Canadians are therefore spending more of their income on medication. I had cited the figure of $736 for 2009. This is an increase of 5.4% compared to 2008. Once again, we can see that the pharmaceutical sector is doing very well financially.
I am going to discuss some more specific numbers from 2009. On average, an individual taking Lipitor to reduce blood cholesterol levels will pay $800 per year. That amount represents a sizable amount of his income. In the case of Remicade, used to treat rheumatoid arthritis, the cost is $32,000; Effexor, used to treat depression, costs $450; and Nexium, used to prevent ulcers, costs $800 per year. So these patients have to pay large amounts of money.
There is another issue that worries me and also concerns consumers. We know that the hospitals pay a fixed price. However, when people go through their private insurance companies to pay for their medication, there is a large discrepancy in the price. The magazine Protégez-Vous, which you are no doubt familiar with, did an investigation in 2010 on the various prices charged by pharmacies for the same drug.
:
Thank you very much, Madam Chair, and through you to the witnesses, thank you for appearing today.
I'm not usually a member of the committee, but like every Canadian, especially when you get up to my age and you see your doctor, you have to occasionally take certain medications. This is very important, not just to me as a legislator, but to every Canadian.
My question would be to our Rx&D folks, particularly Mr. Williams. You told us you were making progress on your one-stop website for notifications. You also realize, of course, as we all do, that timely information about anticipated drug shortages is very important so that our health care system can respond, and can, if necessary, find alternatives to change their contracts so that drug therapy isn't interrupted for patients who need it.
I have a couple of questions. First, how quickly will you have it up and running? I think you somewhat indicated that. We need to know how quickly you anticipate having it up and running.
Second, would your organization be willing to give six months' notification of any drug shortages? Health practitioners are very busy. I know my doctor has at least 3,000 patients that he sees, some monthly, some every other year, but there are a lot of them.
In particular, I'm very much interested in this one-stop shopping. We can sit around this table and each of the parties here can have a whole lot of “gibbaldy gabbaldy” about what the policies should be, but the basic fundamentals of our society are that we're driven by profits, we're driven by price, and those other things.
I'm looking at page 4 and the third and fourth paragraphs, where you talk about an unequivocal answer, and that you do not favour—or that the current Canadian policy environment does not favour—better access to prescription drugs, and you talk about the sole sourcing. I guess people sometimes just don't trust big companies—big pharma—when they see these huge profits. You might want to talk about the research and development that goes into it.
Primarily, if you would answer the first couple of questions...and then let's talk turkey about sole sourcing.
:
Thank you for the question.
The website isn't ours anymore. We share it, coming together with the associations and others of the working group. We're very proud of our leadership role, but it is a joint effort. You can go through all the websites to get to the one. I think that was an important place. There were four up before, so people were confused about where they could find the best information.
We've all worked together. It's not a perfect model yet, but it's coming together so you can get the information. Let me tell you, I get notices and they're coming in all the time. So we're tracking that.
In terms of the first step, we're in good shape. Timely information is important. I do want to put a little caution to this, though, because I've also heard anecdotally that we have to be careful, when we're talking about so-called anticipated shortages, to watch out for human nature, behaviour of hoarding, protecting supply, and all of a sudden magnifying the problem we're talking about. That's a difficult thing. On one hand—I think HealthPRO mentioned it—you're trying to balance competitiveness, information, and supply, so it's that right balance that we're trying to get at. On the first part, I think we're in good shape.
Ultimately, my point was that we can have the best reporting in the world, but we need a new system, because drug shortages will occur for the multiplicity of reasons that we all listen for. If we don't have multiple suppliers—