EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 11, 1997

.1901

[English]

The Chairman (Mr. David Walker (Winnipeg North Centre, Lib.)): Pursuant to Standing Order 108(2), a review of section 14 of the Patent Act Amendment 1992, Chapter 2, Statutes of Canada, 1993, the committee continues its work with witnesses.

We have with us today Dr. Francesco Bellini, from BioChem Pharma, Hans J. Mäder, from Novartis Pharmaceuticals, Gerald McDole, from Astra Pharma, and Karl Parker, from Pfizer Canada.

Thank you very much for being here as witnesses. As you were told by the clerk, we're going to hear a brief opening statement from each of you, and in the next hour we'll pursue questions from the members of the committee.

I'm going to ask Mr. McDole, president and chief executive officer of Astra Pharma, to begin.

Welcome, Mr. McDole.

Mr. Gerald McDole (President and Chief Executive Officer, Astra Pharma Inc.): Thank you, Mr. Chairman and members of the committee.

I will be the quarterback of this group in order to facilitate the discussion.

With me are Hans Mäder, who is the present CEO of Novartis; Francesco Bellini, who is the present CEO of BioChem Pharma; Karl Parker, vice-president of government and public affairs with the Pfizer Corporation, who is here on behalf of the president, Alan Bootes, who unfortunately is out of the country and regrets that he can't be here.

I believe English and French copies of our text have been made available to you in advance. If not, they are available here as well.

We'll each give a short presentation and then welcome your questions.

I will start by stating that the perspective on the Bill C-91 review that I offer tonight is really one that comes from someone who has spent his entire career working in the pharmaceutical industry in Canada and knows it well, both before and after the introduction of patent amendment legislation. This perspective is also from someone who understands the industry worldwide and understands the needs of our foreign-owned pharmaceutical companies seeking to strengthen their investment and to increase their presence in a strong market such as Canada's.

I spent a number of years working in the field and in managerial functions in the days of compulsory licensing, and for the last number of years have been privileged to be in a leadership position when the Canadian government began processing and extending the patent protection to the pharmaceuticals. For the past dozen years I've been the president and chief executive officer of Astra Pharma.

I've also served as chairman of the PMAC and continue to be involved in the association in addressing some of the industry issues.

Mr. Chairman, I know you've already heard from a number of different groups with interests and stakes in this issue, including the PMAC, and I'm confident that in their presentation to the committee last Thursday they represented the position of the brand-name industry collectively very well. So rather than simply repeating our collective view that patent protection is working and is good for Canada, tonight I'd prefer to offer a different perspective and some context for our industry.

I won't read the Astra position paper, which was submitted earlier to the committee. Instead, I will focus on remarks outlining some concrete examples of one company, our own, Astra Pharma, and the benefits for Canada and Canadians that have been achieved because of the move to a balanced intellectual property protection policy. Then I will be pleased, of course, to answer any questions committee members might have.

.1905

Astra Pharma is a research-oriented brand-name company. It's a subsidiary of Astra AB of Stockholm, Sweden. We were established in Canada in 1954. The company is headquartered in a state-of-the-art high-tech manufacturing and research facility in Mississauga. Through sound strategic management, innovative new products, and enhanced intellectual property rights we've been able to move our company from 26th to 5th place in the Canadian marketplace.

Research and development for our company is really the reason we exist, our raison d'être. Approximately one in five of our employees worldwide are engaged in research and development. Astra concentrates its research efforts in five key areas: disease of the respiratory tract, disease of the cardiovascular system, gastrointestinal diseases, pain relief, and finally, disorders of the central nervous system.

I know the committee is particularly interested in basic research and that members have raised the question in previous discussions, so I'd like to explain how Astra conducts its basic research.

Historically we had four basic research units in different centres throughout Sweden, but increasingly we've been looking to Canada and other regions in order to establish research units. As a matter of fact, in May of this year - coming up soon - we will be officially opening our new drug discovery facility in Montreal, which will employ 150 research scientists. There are 71 there at present, by the way, but we will be expanding shortly to 150. This represents an investment of $300 million over a 10-year period, and the capacity of this facility will manage upwards of 450 scientists.

It was the first Astra research unit to be established outside Sweden, so it was a real milestone for our organization. Our parent company took some two years to select this location, and since I was part of that selection team I can tell the committee for a fact that the decision to locate in Canada was not made until after the patent legislation had been enhanced in 1993. In fact, it would not have been chosen as a site if the government had not processed and passed Bill C-91.

In addition to this new basic research centre, however, we have also invested another$150 million in research and development since the passage of Bill C-22, making Astra one of the top 50 R and D spenders in the country across all sectors and one of the top 10 within the pharmaceutical sector.

On top of this investment in R and D, we have invested $126 million to date in capital expenses for the expansion and enhancement of our headquarters and manufacturing site in Mississauga. As a result of that, we now have a state-of-the-art high-tech manufacturing facility that was opened in 1993 that produces injectable solutions for not only the Canadian market but for the Latin American, Mexican, and Asia-Pacific markets.

We have almost tripled the number of employees in Canada to 756, and this gain has come almost exclusively in the research and manufacturing area. We now have 190 in R and D and 220 in the manufacturing side. The plan is to grow this by another 20% over the next two years.

We are partnered with the Medical Research Council of Canada and the PMAC, through their health program, to fund research. Since 1994 we have invested $1.6 million into five different areas of research, and this will grow to $6 million in the next two years.

What we can add is that we have an established agreement with Allelix Biopharmaceuticals to develop and commercialize a compound called human parathyroid. As part of this agreement we have an option to build a $60 million manufacturing facility. The decision will be made sometime during this calendar year, before November we expect, and Canada is one of three sites around the world that is being considered for this investment.

The marketplace is another issue where we try to offer not only balanced patent protection, as we discussed...but it encourages companies to realize some other spin-off benefits. Simply put, it means that companies like ours have the incentive to look to invest in the future in other ways. To do that, we've stepped up our efforts to solve other areas of the health care system, such as escalating costs. We introduced a new not-for-profit education initiative called Sharing a Healthier Future under that trademark. Having evolved significantly since its first inception, Sharing a Healthier Future is now a multi-faceted national program that integrates a variety of health and wellness promotion programs in partnership with organizations such as Participaction.

.1910

We co-founded a network with two other pharmaceutical companies designed to reduce costs for the hospital sector in their ordering of prescription drugs. Through this Canadian pharmaceutical distribution network, both the brand-name and the generic companies work together to offer hospital pharmacies one method of purchasing, ordering, invoicing, shipping, and receiving of supplies without the separate and individual service fees.

In 1992, we initiated a product-wide price freeze that is still in effect at this date.

I know Monsieur Ménard is also keenly interested in compassionate-use policies, so I'd like to highlight for the members of the committee what Astra's policy has been on compassionate use.

Last year, Astra Canada made some $1.4 million worth of product available to patients in Canada, at our cost. One product in particular is used in the treatment of complications related to AIDS - and this is made free of charge to AIDS patients. Last year, in 1996, we distributed more than 15,000 treatment courses of this particular drug.

The foregoing is just a few of the achievements we have been able to accomplish since the intellectual property rights were created in Canada. We believe this significant contribution can only continue to contribute to the health care system in Canada and that the economy generally will benefit from these enhancements. We also feel quite strongly that the members of our association will continue to consider Canada as a vital part of their global business strategies.

I thank you for giving your time to listen to my portion of it. I will now surrender to Dr. Bellini.

[Translation]

The Chairman: Dr. Bellini.

Mr. Francesco Bellini (President and CEO, BioChem Pharma): Mr. Chairman, ladies and gentlemen, I want to thank you for inviting me here. Bill C-91 is very important to my company and to myself as well. I appreciate the opportunity to share my views on this matter with you.

I am the President and CEO of BioChem Pharma, a company that I founded together with some colleagues a decade ago. Today, BioChem is one of the ten largest biopharmaceutical companies in the world. With approximately $4 billion in invested capital, it is one of the largest corporations in Canada.

[English]

The most important message I would like to leave with you is this. Without Bill C-91, BioChem would not exist in the form it does today, at least not here in Canada.

BioChem has grown from five employees when we were founded 10 years ago to more than 1,000 today, with 400 in Canada. Only now, after 10 years of research and losses, are we entering an area of profitability.

Previously we had to raise significant capital, much of which came from outside Canada. In 1996 alone we raised more than $250 million. I do not believe we would have been successful in attracting the capital and the people we needed in order to grow if Canada had inferior patent laws. Would investors and scientists have committed themselves to our company if even the local government did not support the main foundation of our future growth and success? No, they would not. There are plenty of options elsewhere.

The future of a modern country is in value-added products. The biopharmaceutical sector is helping to position Canada as a credible member of this new economy, as a knowledge-based source of innovative products respected by the scientific and economic leaders of countries elsewhere in the world.

A recent Ernst & Young biotechnology report estimated that there are about 130 biopharmaceutical companies in Canada. Today, this sector is one of the shining lights of Canadian industry. BioChem alone plans to hire about 50 people - mostly scientists - in Canada this year.

I can best illustrate what the biopharmaceutical sector contributes with BioChem's own story. Our growth is due in large part to the enormous risks we have taken doing research to discover innovative products. The first full year of sales for our drug, 3TC, was 1996. After only one year, 3TC is the most prescribed drug for HIV and AIDS in North America.

.1915

The new HIV combination therapy, with 3TC as the cornerstone, has made a big difference to people living with HIV and AIDS. They can expect to live longer and feel better. In fact, a recent study by Dr. Julio Montaner at the St. Paul's Hospital in Vancouver has shown a significant decrease in the number of HIV-related deaths there since the introduction of the newer therapy, and 3TC in particular.

The drug 3TC is now sold in 40 countries and generates significant revenue for BioChem, and most of this revenue from around the world is reinvested here in the Canadian economy.

BioChem sells 3TC in Canada. In other industrialized countries, and for the time being in Canada, we are guaranteed that once a drug has been developed and approved we can sell it for what is left of the 20-year patent life. This gives us an opportunity to recover our investment and make a fair return.

Should the patent protection be weakened in our home market so that a generic company can sell 3TC here while it is still patent protected elsewhere? No, I cannot see that as logical or fair. And giving Canadian companies special treatment is not the answer. All major companies sell their products worldwide, and in other industrialized countries patents are respected regardless of the company's nationality. It should be the same here.

The Canadian generic industry is an important part of the health care system because it helps to keep costs down after patent expiration. But we need to be careful about looking at the generic as a way to reduce overall health care costs. The research-based pharmaceutical industry discovers important new drugs to address unmet medical needs. It is our industry that is looking for a cure for cancer and for Alzheimer's disease, just to name two.

If every country in the world decided to copy drugs rather than create them, there would be no new drugs developed. Ironically, the generic industry would see its product source dry up because there would be nothing left to imitate.

[Translation]

The growth of BioChem has led to the creation of valuable jobs for Canadians. We have invested approximately $75 million in state-of-the-art facilities in the Montreal and Quebec City regions. Our R & D budget for this year alone totals $45 million. And that's not all.

Now that we are turning a profit, we have launched a number of other initiatives. We have committed $5 million for the establishment of a chair at McGill University, this in addition to a research program that we fund in 9 Canadian universities and institutes. Furthermore, we are planning to announce in the next few days a major investment of approximately $100 million in the field of genetics research in Canada.

[English]

We are planning to increase our investment in research and development here because Canada is our home. Our goal is to become the premier biopharmaceutical company in the world. Canada is an excellent base for us, with good universities, research hospitals, government research institutions, and favourable R and D tax credits.

What we need now is to know that we have your continued support for what we do. Canada is one of the few industrialized countries where the intellectual property issue keeps coming up. It causes instability in our industry and needs to be put to rest. We need a clear message that Canada supports what we do: basic research for the discovery of important new medicines and vaccines. I strongly believe the message should go beyond the status quo. We should enact the linkage regulations into law and establish patent term restoration.

.1920

If Bill C-91 is weakened, we will view that decision as a clear message that we are not considered an important part of Canada's future. We will then make the future decisions about our business accordingly.

Thank you very much.

The Chairman: Thank you, Dr. Bellini.

Mr. Philip Mayfield (Cariboo - Chilcotin, Ref.): May I have a translation of the last word on page 4?

The Chairman: What's the word?

Mr. Philip Mayfield: Génomique.

[Translation]

Mr. Bellini: It refers to gene discovery.

Mr. Réal Ménard (Hochelaga - Maisonneuve, BQ): It's related to genetics.

[English]

The Chairman: Who's the third speaker?

Mr. Parker.

Mr. Karl Parker (Vice-President, Government and Public Affairs, Pfizer Canada Inc.): Mr. Chairman, hon. members, my name is Karl Parker and I'm vice-president of government and public affairs at Pfizer Canada Inc.

Pfizer is a global, research-based pharmaceutical and health care company. Our Canadian head office is located in Kirkland, Quebec, and we have manufacturing and distribution facilities in Ontario and Alberta. I've been an employee of Pfizer Canada for 19 years.

This committee already has heard about beneficial effects Bill C-91 has had on the innovative pharmaceutical industry in Canada and on our emerging biotechnology industry. Pfizer Canada fully supports the position put forward by PMAC, our industry association.

I'm here this evening to give examples to this committee of the beneficial effect this legislation has had in allowing my company, Pfizer Canada, to significantly expand its operations over the past four years, creating employment and research opportunities, but most important of all, helping Canadians by bringing some of them earlier access to our innovative, important new medicines.

Bill C-91 has allowed Pfizer Canada to compete much more successfully within our own global corporation for a greater share of investments in both research and manufacturing facilities. This success is reflected in the growth of total research and development spending by Pfizer Canada.

In 1993, for example, the year Bill C-91 was proclaimed, our total R and D spending was$6.9 million in Canada. This year it will be seven times as much, $41.3 million. Our R and D spending in 1996 equalled 18% of our human prescription pharmaceutical sales, far in excess of the 10% commitment made when Bill C-91 was passed.

This research spending has been distributed to many centres across Canada. In fact the clinical research programs sponsored by Pfizer directly contribute to helping talented and skilled Canadian researchers stay in smaller centres, where they can both serve Canadian patients and fulfil their career aspirations by conducting world-class research.

Important international studies being conducted by Pfizer Canada include sites involving researchers and patients in communities as diverse as Saint John, New Brunswick; Sudbury, Ontario; Humboldt, Saskatchewan; Medicine Hat, Alberta; and Kelowna, B.C.

For the five-year period from 1994 through to 1998, research spending by Pfizer Canada will total $110 million. At least half of this amount is due to a decision that was taken specifically as a result of the patent protection improvements provided by Bill C-91. That decision was to establish a central research unit in Canada to begin earlier-stage research on drug candidates.

It is vital to remember that the value of this kind of investment is greater than just the economic and scientific benefits. It provides Canadians with earlier access to the newest of drug therapies for illnesses we have yet to adequately manage.

For example, hundreds of Canadians already have benefited from a new drug we are developing to treat the symptoms of Alzheimer's disease, a fatal illness for which there are as yet no approved drug treatments in Canada. Without the research we are doing, those Canadians would be without treatment and without hope. Without adequate and effective patent protection, no one could afford to do the research necessary to make such treatments possible.

.1925

The climate created by Bill C-91 has also allowed our manufacturing facilities in Canada not only to survive, but to grow dramatically. Even at a time when Pfizer has been consolidating manufacturing facilities and closing nine plants around the world, our pharmaceuticals plant in Arnprior, Ontario, has recently undergone a $14 million modernization and is now exporting to26 countries around the world. Similarly, our animal health plant in London, Ontario, also now produces for global markets and has had a $6 million renovation and expansion.

What about jobs? Has Bill C-91 made a difference to our company? The answer is an unqualified yes. Since the bill's passage, Pfizer Canada's pharmaceutical employment has grown by 48%, from 282 to 418 individuals. We are literally bursting at the seams at our head office, and we will be announcing a building expansion at our Quebec facility very soon.

You've heard may references to the twenty years of patent protection afforded by Bill C-91. As you are all aware, in the case of medications, 20 years of patent protection does not mean 20 years of market exclusivity. Drugs get patented soon after they are discovered, but it then takes many years of patent life before they can be tested adequately to get to market. I'd like to illustrate this point by telling you about ZOLOFT, an anti-depressant drug developed by Pfizer.

ZOLOFT was first synthesized by a Pfizer researcher, Willard Welch, in 1978. Its potential was eventually recognized, and a Canadian patent was granted in August 1982. It took almost six years of further testing before Pfizer was ready to submit the drug for Canadian regulatory approval, and it took another three and a half years until the approval was granted. Thus, a drug first made in 1978 did not reach the Canadian market until 1992, 14 years later. The original patent expires in 1999, giving Pfizer just seven and a half years of market exclusivity for this product - and this is our largest product. It's not 20 years, as some people claim. It's not up to 15 years, as in Japan, the United States, and some other countries. It's just seven and a half.

The challenges and costs of bringing a medicine to market after its discovery have been recognized by many of our trading partners and trade competitors. They have responded by providing up to five additional years of patent protection to compensate for the long period of testing and regulatory approval that medicines require. We fully support the PMAC recommendation that the Patent Act be amended to allow for similar patent term restoration provisions in Canada.

In closing, Bill C-91 has been good for Pfizer Canada. More importantly, it has been good for Canadians. Effective and enforceable intellectual property protection and legislation will provide the environment necessary to build an even stronger research- and knowledge-based pharmaceutical industry in Canada. The past five years, and the activities of both my company and the industry, clearly attest to the economic and health benefits that such policies bring to our country.

Thank you.

The Chairman: Mr. Mäder.

Mr. Hans J. Mäder (President and Chief Executive Officer, Novartis Pharmaceuticals Canada Inc.): Mr. Chairman, honourable members, I thank you for this opportunity to present our views to your committee today. I'm Hans Mäder, the president and CEO of Novartis Canada. I wish to bring you the perspective of a Swiss-based, international company recently created by the merger of Ciba-Geigy AG and Sandoz, both of which have had operations in Canada for more than 60 years.

With over a thousand employees, Novartis Pharma Canada is headquartered in Dorval, Quebec, plus it has manufacturing plants in Dorval and in Whitby, Ontario. Recognized as a world-class centre for pouch-filling technology, the Whitby plant in Ontario is the second largest Novartis Pharmaceutical facility in North America, and it exports to 11 countries.

Why would two successful and conservative Swiss companies abandon their long and proud tradition of independence and decide to merge? The answer is that the leaders of Novartis realize they must take bold initiatives to remain competitive in today's knowledge-based, technology-driven, and globalized economy. The Government of Canada - specifically Industry Canada - has also adopted international competitiveness in high-tech, research-based industries as a strategy to create jobs and a strong economy. International competitiveness is the overriding issue that must never be forgotten in the details of this debate. For the Novartis group worldwide, the primary benefit of the merger is that it creates a company with the critical mass and financial resources needed to support pharmaceutical research and development and its inherent risks.

.1930

As the second largest pharmaceutical company in the world, the Novartis group will base its competitiveness on an annual pharmaceutical research budget of over $2.5 billion. Moreover, because Switzerland is a relatively small country, Novartis exports a lot of its research and development investments to other countries, creating opportunities for Novartis affiliates around the world. Such opportunities, however, must be won in a fiercely competitive battle amongst affiliates.

As the head of Novartis Pharma here in Canada, I must continually sell this country to my superiors as a better place than others in which to invest and conduct pharmaceutical research and development. In this regard, Canada has certain competitive advantages: a growing pool of highly qualified biomedical researchers; a network of hospitals, universities, and research centres willing to cooperate with industry, and with the experience in doing so; as well as federal and provincial tax policies to support R and D. The quality of research dossiers completed in Canada is of such high quality that those dossiers are in demand for international registration purposes.

[Translation]

However, in the on-going battle for international research and manufacturing mandates, intellectual property protection is Canada's Achilles' heel. Our foreign competitors never tire of repeating that Canada has only ten years of effective patent life for pharmaceuticals whereas the United States offers 14 years and the European Union together with Japan provide 15 years.

That is why we strongly support the PMAC position calling for your committee to address the issue of patent term restoration and the need for a predictable patent environment which recognizes innovative advancements.

Like the Novartis group worldwide, Novartis Pharmaceuticals Canada comes out of the merger stronger and better able to compete. Now that the consolidation is behind us, we are looking to the future and we have major plans for new R & D investments to create jobs and to bring Canadians better medications.

This year, in our quest for better medicines, we are conduction 78 clinical trials at 668 sites across Canada, involving 4,000 patients and 1,000 researchers and investigators, for a total budget of $35 million.

Notable studies include those for breast cancer, symptomatic relief of Alzheimer's disease as well as a novel gene therapy to treat deadly brain tumours.

Looking to our future revenues and our commitment to continue investing at least 10 per cent of sales in R & D, Novartis Pharmaceuticals Canada plans, if Canadian patent conditions are favourable, to spend some $200 million on research and development over the next five years. These moneys will be spent both on existing research programs in areas such as transplantation, and on new ones in areas such as xenotransplantation.

In basic research, Novartis Pharmaceuticals Canada intends to increase its effort to at least 25 per cent of total R & D, especially through the Novartis Canada discovery research office in Calgary, Alberta, a world-class centre to which we have just renewed our funding commitment for another five years.

.1935

[English]

In this debate, we have a tendency to talk about pharmaceutical research and development as if it is primarily a question of money and jobs. These aspects are certainly important, but the truly critical end product of biomedical research is to find cures for the diseases that afflict humanity, ladies and gentlemen. As an innovative drug company, this is our passion. It is what distinguishes us from other companies that reproduce existing therapies, such as the generics.

Think of your constituents suffering from incurable diseases, such as AIDS, Alzheimer's, or certain cancers, and ask yourselves how you can foster the development of the only industry that offers them hope. At the most basic level, this is not a question of figures or of balance sheets, but of real people living real lives, as the following brief example will show.

In the 1970s, Novartis research led to the discovery of cyclosporine - or Neoral, as it is called today - the drug that essentially made the whole field of organ transplantation possible. Today, thanks to an organ transplant, more than 10,000 Canadians are living full lives and are contributing to society. One of them - and I'll just take two minutes here - is Michel Perron, the CEO of Uniforêt. Several years ago, he was suffering from kidney failure and was facing long-term dialysis or worse. Following the transplant of a kidney donated by his son, Michel Perron went on to conquer the North Pole, believe it or not. He accepted the challenge of reviving the fortunes of a pulp mill in Port-Cartier, Quebec, and brought that community back to life as well. Without the research and development effort of an innovative pharmaceutical company, his story would not be told today. And Michel Perron is only one of many productive Canadians who are able to contribute to society because of research done by the innovative pharmaceutical industry.

Ladies and gentlemen, we all know that what you are examining in this committee is no trivial matter. It touches the lives and hopes of all Canadians. You must decide if Canadians will continue to have the most direct and rapid access to new medications and better health. You must decide if Canada is to be a full participant in the new global economy. If you think this is what Canada and Canadians deserve, your decisions are obvious, and you will remember and act on the following realities: the research-based Canadian pharmaceutical industry needs patent term restoration in order to operate on a level playing field with its international trading competitors; existing patent protection must be adequately enforced by including linkage regulations in the patent legislation, or by some other equally effective means; and Canadian pharmaceutical companies require a stable and predictable patent environment to convince our head offices to make substantial and long-term investments in this country.

I think it is time for the Canadian pharmaceutical industry to operate on a level playing field with the rest of the world. It is also time for our country to get serious about winning in the global race for competitiveness.

Thank you.

The Chairman: Are there any further comments?

Mr. McDole: Mr. Chairman, that concludes our presentation. We would be pleased to entertain whatever questions you may have. You can direct them to us as individuals or, if you are uncertain as to where to best direct a question, I will field it and redirect it either to myself or to one of the others at the table.

The Chairman: Thank you very much, sir.

Given that the choice of the witnesses was to read their presentations, as chairman I'm left with no choice but to limit questions severely here. We'll have one round each of ten minutes, beginning with Monsieur Ménard.

.1940

[Translation]

Mr. Ménard.

Mr. Réal Ménard: I have three questions for our witnesses. Getting back to the presentation of the Pfizer company representative, mention is made on page 5 of an anti-depressant which would certainly prove popular with us some days. We read that the drug was first synthesized by Mr. Welch, a researcher, in 1978. After several years of research, the drug's potential was recognized and Pfizer was granted a patent in 1982. Six more years of research were necessary before the company was ready to submit the drug for Canadian regulatory approval, a process which required another three years. Therefore, it took 14 years for a drug synthesized in 1978 to finally get on the Canadian market.

Did you use this example to demonstrate to us the twists and turns that one may encounter between the time a drug is discovered and the time it is finally marketed and to give us some idea of how very long the process is? Was this intended to make us aware of the difficulties inherent in the drug approval process? What reason did you have for using this example?

I would hope that everyone will answer my second question, if possible. If ever you were put in a position of having to choose between the existing linkage regulations and the possibility they afford of manufacturing a patented drug after the 17th year, or an alternative scenario where interlocutory injunctions would be allowed, what answer would you be tempted to give committee members?

Thirdly, and this is my final question, I appreciated the subtle as well as timely reference to AIDS. Am I to understand from this that I can expect you all to support my bill which is aimed at granting additional powers to the Patented Medicine Prices Review Board?

I believe I had a fairly positive influence on Ms Erola the last time and it's not over yet. Therefore, if I could count on your support, this would be most gratifying. If you require additional information about my bill, I am certain that the Chair will give you the opportunity to speak to this subject.

The Chairman: To whom are you directing your questions, Mr. Ménard?

Mr. Réal Ménard: There are three questions in all. Perhaps we could start with Astra Canada.

[English]

Mr. Parker: Since the first question was concerning ZOLOFT and my company is responsible for ZOLOFT, I'll take that one on. The objective of using that example was really to compare and to make sure everyone understands fully the difference in terms of market exclusivity between patented drugs marketed in Canada and those marketed in some of our most important trading partners.

No one questions that there needs to be a reasonable and very careful review process for any medicine. Everyone agrees with that. Our concern is that the patent clock is clearly ticking from the time the patent is granted. We don't earn any revenue whatsoever on that product until we're able to commercialize that product.

In the case of ZOLOFT - and I'm sure my colleagues here can cite many other examples - this particular product will have only seven and a half years of market exclusivity. I'm pointing that out because in our major trading partners there is a gap. It could be a gap of two or three years or it could be a gap of five or six years, depending on the country and depending on the circumstances.

Every year is precious for a product. Having seven and a half years versus having 13, 14, or 15 years represents a significant loss in revenue for our company, much of which would be poured back again into R and D.

Did I answer your question?

.1945

[Translation]

Mr. Réal Ménard: You say that the patent clock begins ticking from the moment the patent is granted and that you see this as somewhat of a disadvantage. When would you like the patent clock to start ticking? When the patent is first issued by the Canadian Intellectual Property Office or by the Commissioner of Patents?

[English]

Mr. Parker: No, it's not so much a question of when the patent is actually granted. The most important period is the period of time we have to market the product on the market in terms of a period of exclusivity. We feel seven and a half years is just not adequate in this day and age.

Mr. McDole: Perhaps I could add something. The period of patent protection of 20 years is not what we are debating, but there is a mechanism in some countries to compensate for the unusually long regulatory period. It's not applied across all products, but only certain products. In that instance the extension would be welcome.

Mr. Parker: It is important, as we've all said, to be competitive, and if you have seven and a half years or less on patented drugs, then clearly Canada is not competitive with its major trading partners.

Mr. McDole: The second question I believe, Hans, you said you'd be responding to.

Mr. Mäder: Yes, the linkage question, the question of what we would like to have, interlocutory injunction or linkage.

It is clear we need an enforcement mechanism that works, and historically linkage has worked. We know interlocutory injunction in the Canadian system does not work. So what's the answer? You cannot separate them; it would be a Solomon's decision. You need both, ideally.

The Chairman: Mr. Ménard.

[Translation]

Mr. Réal Ménard: I'm sure the witnesses haven't forgotten: my third question has to do with granting the Patented Medicine Prices Review Board additional powers to ensure that persons suffering from a degenerative disease receive fair and reasonable access to drugs.

In law, this concept is applied to other areas. Armed with its new powers, the Board could conduct an inquiry the results of which could be released in a report tabled by the minister to the House. I simply want to say that in the pharmaceutical industry, much like life in general, we see both the best and the worst.

Some pharmaceutical companies are extremely responsible when it comes to humanitarian access. We have some excellent corporate citizens, some of whom are seated around this table, but there are also corporate citizens who are obtuse, despicable and narrow-minded, and not very open to the idea of granting people humanitarian access to drugs.

I don't know if I should name names, Mr. Chairman.

The Chairman: No.

Mr. Réal Ménard: My objective is to ensure that this process is regulated somewhat, although not overly restricted. I worked with lawyers on the drafting of this bill for over a year. I realize full well that there is no legal obligation on your part to provide humanitarian access to drugs.

When I refer to humanitarian access, I'm talking about access to drugs not yet approved. Getting this bill passed is one of the great challenges of my life. If you agree to help me in my quest, I will be eternally grateful to you.

[English]

The Chairman: Could I get one quick response from somebody on this issue?

[Translation]

Mr. Réal Ménard: Not too quick, I hope, Mr. Chairman.

[English]

The Chairman: One response, please.

Dr. Bellini: In the case of 3TC, in Canada we had about 3,500 people to whom the product was given for humanitarian reasons, and in the States there were 30,000. Better than this you cannot do today. In Canada we have about 7,000 patients. That means half of the patients were covered on a humanitarian basis. That's for 3TC.

[Translation]

Mr. Réal Ménard: You of all people are in no position to answer that question.

[English]

The Chairman: Mr. Mayfield.

Mr. Philip Mayfield: Thank you, gentlemen. I appreciate your presentations tonight.

In listening to you, it sounds as though there's been something happening right, because your companies are investing, building, hiring, and increasing your research, and I'm very pleased to hear about that. At the same time, I hear you also saying there needs to be some modification or changes.

.1950

Mr. Mäder, you mentioned that patent protection must be adequately enforced by including linkage regulations or by some other equally effective means. Could I press you a little bit to see if you have given some thought to what those other equally effective means might be in terms of looking at the Patent Act and what legislative changes might be involved? Have you given that any thought?

Mr. Mäder: We have given it a lot of thought. It's all in the brief of the PMAC, our association. I wouldn't go beyond what the association put forward last week. I realize it is not an easy situation. The fact that linkage is not part of the law itself makes the whole system vulnerable, because, as you know, governments change, as do people, and the system is very vulnerable to being played around with. This makes world investors nervous. I think our friend, Mr. Bellini, can tell you stories about it.

When you look at other countries, it's together in there...or you have a system like elsewhere in the world where the court system is much more effective and you can actually protect yourself somewhat with an interlocutory injunction. It's one thing for the Canadian government to be legislating it; it's another thing to enforce it after a problem.

Mr. Philip Mayfield: Earlier today I tried to ask a question that didn't go very far. I'm going to try it again tonight.

It seems to me that we're talking about the period of the product in the marketplace. That's the problem. One of the problems that occurs to me as I think about it is that we're talking about an average, and sometimes we use the extremes when we make our arguments. One extreme would be that a drug only takes two or three years to go through all the hoops to get on the marketplace, and the other extreme...one chap today talked about a drug that 35 or 38 years later still isn't there.

Is there not a way that we could amend the Patent Act to simply have the product protected from the time of the patent, with a specific period of time for the clock to tick once the licensing is completed and the marketing begins? What would be a fair period of time?

One of the weaknesses of that argument, just to begin with, is that there wouldn't be quite the urgency to get it out into the marketplace. But at the same time, it does seem to simplify the problem of coming to the average, of seeking extensions for a drug that takes a particularly long period of time to develop and test.

Gentlemen, does that have any semblance of reality or possibility in your minds?

Mr. McDole: Mr. Chairman, perhaps I can respond to that. What is at issue is that we have a globally competitive environment. Whether it's 12 years or 14 years, whatever the number of years...that is less in debate than is keeping a reasonably level playing field from market to market. All we're trying to point out is that in our case there is sometimes a gap of two years or three years, or even longer in some cases, between what we enjoy here versus what some other markets have.

I think it seems more prudent to do it on a case-by-case basis rather than to have a fixed period across the board for all products. I don't believe that would necessarily serve the public's interest.

Mr. Philip Mayfield: That's the kind of answer I'm looking for.

Mr. Parker: If I could add something, I mentioned earlier in my presentation that we compete within our own companies for research moneys, but we also compete with each other, so I can assure you that there would be no foot dragging on our part to get a new product to market. We want to be there and we want to be there first.

We do have regulatory authorities that we have to deal with as well. Just as long as you understand that...it would not take away our industry's sense of urgency in bringing a new innovative therapy into the market. We want to market it as soon as we possibly can, providing it's also safe and effective for Canadians.

.1955

Mr. Philip Mayfield: In talking about the comparisons, I think it has been mentioned that the United States and Japan have an average of, say, 14 years in the marketplace. You have companies that have head offices in Sweden and Switzerland.

The question I want to ask you, gentlemen, is how do you see Canada standing with regard to international competitors? We know about the United States and Japan, but what about the other countries of Europe that are dealing with this problem? How do we stand with the countries as a whole?

Mr. Mäder: If you look at the G-7, as said before, Canada is at the bottom when it comes to effective patent protection, and you have to understand the dynamics of this.

Canada is what you call a hard country for regulatory submissions, as hard as the U.S., with the FDA, which is the hardest. In Canada, the HPB requires the top amount of research to be done for a drug to be approved for the market - and high quality. That takes a long time.

At the same time, we have no PTR. So you put those two together and the spread increases and the cost increases. That is the big problem. With what we have in Canada, we can never compete against the U.S., which is a huge country with a big economy. But Canada has top-notch researchers. We have top-notch scientists and universities, which we developed at great expense, by the way. This is what we should sell. This is what Canada can sell: science. As I said, since we are a hard country, the data that is created in this country can be used for submissions everywhere in the world, including the U.S. That is our strength, but we have to have an environment that will allow us to sell this strength.

The Chairman: Mr. Mayfield, do you have a final point?

Mr. Philip Mayfield: I have one final question, sir.

As I mentioned earlier, it seems to me that we're doing something right. Are you able to live with the act as it is now?

Mr. Mäder: Yes, I'm able to live with it, but I would like more than what I have now.

Mr. Philip Mayfield: You seem to be progressing fairly well.

Mr. Mäder: We're doing pretty good, as I said, but we're not far away from world standards. Give me world standards and I will get world returns, what Canada deserves.

Mr. Philip Mayfield: Thank you very much.

Thank you, Mr. Chairman.

The Chairman: On the government side, Dr. Patry is going to begin, and I think he's going to split his time with another member.

Mr. Bernard Patry (Pierrefonds - Dollard, Lib.): Thank you, Mr. Chairman. I have one general question for any of the panellists and one specific question for Mr. Bellini.

Mr. Bellini mentioned in his exposé that the intellectual property issue caused irritability in the industry. One of the solutions to this instability is to have the regulation in law. Also, for all multinational companies, in the discussion for future and increased budgets for research and development, these decisions are taken in either Switzerland, Sweden, or the United States, from your mother country.

My question is whether these regulations are the most important irritant you are facing for more funds for research and development because they are not included in law. If yes, will your company, through PMAC, be ready to work to have these regulations put into law? Would anyone like to answer this question?

Dr. Bellini: It is very important that these regulations be in law. I was here at the committee hearings for Bill C-91. You never know with these things; they may change. When you have such types of things not in law, they may change any time. If they can change, such things are a very great instability in our business. It would be very important that this go into law.

Mr. Bernard Patry: Are there any other comments?

Mr. McDole: I could add perhaps that as a rule, regulations can be changed rather quickly and easily. As a result, that leaves a cloud of uncertainty or doubt as to how permanent is the mechanism to police, if you want, or the mechanism to make certain it works. If it were in the act, for example, as opposed to in regulations, it would eliminate that uncertainty, or whatever mechanism was in place to control it.

.2000

Mr. Bernard Patry: I'll change my question in this regard. Do you feel that if it is enacted into law we will have more research and development in your companies in Canada?

Mr. McDole: For myself I would have to say yes, because the trend is certainly moving in that direction now anyway, and the more secure the marketplace looks and the less risk there appears to be, the more investments will follow.

Dr. Bellini: One thing you can reasonably say is that you don't know what is going to happen tomorrow. That's reality.

Mr. Bernard Patry: I have a specific question for you, Dr. Bellini. What percentage of the national AIDS strategy funds contributed to the development of 3TC in Canada?

Dr. Bellini: I think for the development in Canada it was Canadian money that came from us -

Mr. Bernard Patry: No, the national AIDS strategy from the government. Did you receive any funds -

Dr. Bellini: There were some groups such as Dr. Wainberg's that participated in the discovery of 3TC. It is very important, I think, that these people continue to do what they did, and I support them. Right now we're increasing our funding to these people in order to counteract the lack of money. I'm talking about Dr. Wainberg.

Mr. Bernard Patry: I know Dr. Wainberg.

Thank you, Mr. Chair.

The Chairman: Thank you very much.

Mr. Discepola.

Mr. Nick Discepola (Vaudreuil, Lib.): Thank you, Chair.

I'd like to direct my questions to two areas. One is that Dr. Bellini mentioned in his brief that the industry is asking for a fair return on investment. I concur with that. However, the only way you're going to be able to measure that, I believe, is by allowing our Canadian industry to be competitive internationally. I haven't heard anybody object to the 20-year patent protection. I think that's the best protection you're going to get, and you're going to have to live within the 20-year rule in order to recoup your investment, as you said.

There are two areas, though. One, we talk about patent term restoration. I believe someone said we should look at it on a case-by-case basis. As a legislator I have a hard time saying you can review something on a case-by-case basis. I think you run into the problem of what products you would favour. Just because one product is more beneficial for humanity, for example, would you favour that one? Under what conditions and at whose discretion? Should the only application of patent term restoration be in the case when the regulatory process has been delayed? Then you get into the problem of measuring what is an internationally accepted reasonable delay versus what happened in Canada.

I'll ask the second question also.

There are claims from different people that the linkage regulations you're asking us to legislate have been abused in the sense that through evergreening and other means, or tacking on related patents or at times claims of non-related patents, the allegation and the notice of allegation, for example, with the actual whole notice of compliance process tied in, leads in essence to an effective extension to the patent. I don't believe any legislation such as linkage, if we're going to enshrine it, should in essence lead to any further extension above and beyond the patent protection we normally apply.

Mr. Mäder referred to equally effective means. I don't think PMAC provided this committee with an alternative to the linkage regulation. They just said we should enshrine it. So if you or your groups have ways of coming out with an equally effective process, another made-in-Canada process, I believe this committee would like to hear from you.

The Chairman: That is a good question. Perhaps, Mr. McDole, you can divvy it up and one person can answer each of the two questions presented to you.

Mr. McDole: I can certainly respond to the first one, since I was the one who made reference to the case-by-case basis. It was perhaps a poor choice of words, but what I was suggesting is that rather than provide a fixed period of time across the board to all products, in these instances you look at the length of time it has taken to bring individual products to market.

.2005

Many countries around the world have a mechanism whereby they reach some formula where there is a maximum number of years that you add on and a total maximum number of years that you would have market exclusivity. That formula then is applied based on the regulatory time for that particular product. In many instances it would not apply to a product; in other cases it would.

The Chairman: Who would like to take the initiative and criticize your association?

Some hon. members: Oh, oh!

Mr. McDole: What we're saying is that linkage works today. It's not that it can't be improved, because it probably can, and we would be prepared to negotiate or discuss any way to improve it.

Other nations use interlocutory injunction laws; that is the mechanism they choose to use. It does not work in Canada and we do not have confidence that it can be changed to make it work here, so I don't have a solution for you. But the current mechanism is the one that works.

Dr. Bellini: Can I give you an example on 3TC? It's our first product to be sold in Canada. If it were not for linkage, tomorrow somebody could start to sell the same product. What do you do? Is it fair?

The Chairman: Thank you very much.

I'd like to thank the witnesses. It's been very valuable to have such senior executives come before the committee and share your experience. As you can tell, the members are all interested in your testimony, and I'm sure there would have been more questions, but such is the nature of this review. We appreciate your help. Members are free to contact you and vice-versa if you want to clarify any point.

Thank you again. We appreciate each and every one of you being here.

I'll call the next witnesses up, from Genpharm and Technilab. We'll start with them after we've had a two-minute break to stretch.

.2007

.2012

The Chairman: Ladies and gentlemen, the committee is going to resume its work now.

We have with us today witnesses from Genpharm and from Technilab. Perhaps one of the witnesses can identify himself as the quarterback and then tell us how he'd like to proceed.

Please introduce yourselves and then we'll proceed.

Mr. Neil Tabatznik (Chairman, Genpharm): Mr. Chairman, my name is Neil Tabatznik and I'm chairman of Genpharm. I don't intend to be the quarterback; we're a company of equals.

With me is Jean-Guy Goulet, who's the VP of Technilab, and Ian Hilley, who's the VP and project manager from my own company, Genpharm. Jean-Guy Goulet is going to start the proceedings.

[Translation]

Mr. Jean-Guy Goulet (Senior Vice-President, Business Development, Technilab Pharma Inc.): Mr. Chairman, I would like to thank you and the members of the Standing Committee on Industry for this opportunity today to speak to you about the implications of the review of Bill C-91 and to share the views of my company, Technilab Pharma Inc.

Our industry, represented by the Canadian Drug Manufacturers Association, made a presentation last week and in conjunction with this, I would like to share with you my company's views on this subject.

Technilab is a Quebec company undergoing rapid expansion. Its workforce of over 200 is currently involved in manufacturing generic pharmaceutical products at its 150,000 square foot plant located on autoroute 15 in the municipality of Mirabel.

We allocate 15 per cent of our sales figures to research and development and as a result, we offer quality jobs to scientists in various fields of endeavour. Moreover, we plan to hire 25 new scientists in the coming year. In addition, we export our products to approximately 15 countries. Our biggest market is the United States.

Above all I am here today to lend my support to the Canadian Drug Manufacturers Association. We ask the committee to reject the call by drug manufacturers to extend patent protection by a period of five years. In so doing, we want it clearly understood that we recognize the legitimacy of reasonable patent production.

Furthermore, we ask that our ability to export products not be curtailed in any way. This is an important point and it will be the main focus of my presentation.

Our sales in this sector are growing strongly, but the current regulatory regime of Bill C-91 hampers us considerably and prevents us from exporting products under patent here in Canada, even if these products are no longer under patent or never were in the first place in the countries they are destined for. It should be remembered that developing countries have an urgent need for less expensive pharmaceutical products, which explains the rapidly expanding export markets for generic drug manufacturers.

.2015

Moreover, a recently released US study shows that between the year 2000 and 2005, many patents will expire in the United States. The study estimates that this represents a potential market of about $41 billion. Given that patent protection for many of these drugs will expire earlier in the United States than it will here in Canada, we will have no choice but to relocate to the United States because we cannot export products under patent from Canada to other countries where the patents on similar products have expired or never existed in the first place. Thus, this legislation will contribute directly to an exodus of jobs to the south.

Finally, we want to emphasize that section 55(2) respecting the notice of compliance must be repealed so that multinationals can no longer use this provision as a pretext for delaying the marketing of new generic drugs.

We are not asking for any special privileges. We are only asking for the right to engage in normal development activities so that our contribution to the economy, by way of jobs and exports, is no longer impeded by Bill C-91, legislation which in many respects is unfair and outdated.

It is time for the government to acknowledge our contribution to the economy. Consumers, manufacturers and governments will all come out ahead in the process.

Thank you for your attention. I am available to answer your questions.

The Chairman: Thank you very much.

[English]

Mr. Tabatznik.

Mr. Tabatznik: Thank you, Mr. Chairman.

I'm chairman of Genpharm, as I mentioned. Genpharm is a company that was incorporated into Canada in 1984. We develop, manufacture, and sell generic pharmaceuticals.

We have two facilities, one in Etobicoke and one in Cambridge. The Etobicoke facility is our main facility, consisting of three buildings. We're a small company, but we've invested over$30 million in that factory, and we employ over 300 people.

Our Canadian sales grew at a rate of 148% last year, which made us the fastest-growing pharmaceutical company in Canada. We export to a number of markets, the most important of which are Europe and the U.S.

We bought our third building last year, invested over $6 million in refurbishing and creating an additional manufacturing facility, and expanded our workforce by 40%. This year we're commissioning another two manufacturing facilities.

Let me say that much of that growth has been fuelled by our R and D investment over the past three years, which is in excess of $40 million. Last year alone we spent $16 million on R and D, and I'm amazed to hear from Mr. Mäder of Novartis that that's only marginally less than Novartis' R and D spend. We're tiny. We don't even feature as a blip on the top 500.

We expect to spend marginally more on R and D this year. I'd venture to suggest that as a percentage of sales, we're in the top 2% of R and D spend, and that's in relation to not only any pharmaceutical company, but companies in general.

Our Cambridge facility is a small one; we employ 40 people. It manufactures cephalosporins, and you require a dedicated, separate facility for the manufacture of cephalosporins. I'll talk a little bit more about that facility in a minute.

Genpharm is part of a much larger multinational generic company, Merck Generics Group. We have sister companies in Australia, New Zealand, the U.K., Ireland, and the U.S., all with their own R and D centres, all with their own manufacturing, and all with their own marketing. We have other sister companies in Germany, France, Holland, and Scandinavia that are just marketing companies.

Another unique feature of our company is we're owned by E. Merck of Darmstadt, and let me make it clear that's not to be confused with the Merck of Canada. They're the oldest pharmaceutical company in the world - family-owned, except for 20% that went public about a year ago. They're a brand company selling patented, proprietary pharmaceutical companies, with sales worldwide in excess of $9 billion.

.2020

The perspective we bring to the committee is slightly atypical. We're a multinational generic company with a brand proprietary parent who, were they in Canada, would be a member of PMAC.

I must say that Bill C-91 hasn't hurt us dramatically thus far. Its effects are beginning to be felt as we move further along in our development. That is because Bill C-91 really only impacts on the newer products. Most of our products that we've brought to market in excess of 24 are, by and large, the older products. So Bill C-91 hasn't thus far been of much relevance to us. I've got to say that, if anything, Bill C-91 thus far has been good for us because it has slammed the brakes on our two competitors and enabled us to play catch-up. But that doesn't make it right, Mr. Chairman, and it doesn't make it fair.

I want to focus on two aspects of Bill C-91, the absence of an export provision, which I'll describe merely as a pity, and something far worse, the regulations that I'll describe as patently and blatantly unfair.

The absence of an export provision you have heard about and I'm sure everybody knows about. I'll just give you an illustration of how that has affected our company. The patents, as you've heard, especially in cephalosporins, expire later in Canada than in other significant markets. The effect of that is that instead of expanding the facility in Cambridge, that facility is in jeopardy.

It made no sense to develop the product here, since we wouldn't be able to manufacture it for export. Instead, we transferred the development and manufacture to one of our parent companies abroad, which is a pity. It's a pity for Genpharm, because the profits that would have been generated from that manufacture are not ours. It's a pity for Revenue Canada, because the taxes that would have been generated on those products are paid elsewhere. It's a pity for the building and service industry, because the $6.75 million that was earmarked for that expansion has been spent abroad. It's a pity for the 50 or so people who would have been needed to operate that facility, but for the 40 good people of Cambridge who currently work in that facility and whose jobs are in jeopardy, it's a shame. That's Cambridge.

The effect of that provision on our Etobicoke facility, our major facility, has been less apparent. We've continued to expand. We plan to commission two new facilities next year.

If we have to transfer product, it doesn't matter to us, but it's a pity that in Canada, instead of manufacturing product and exporting product, we have to export product and export jobs. For our parent company and for the group as a whole, it matters not.

Let me focus on something far more important, far more fundamental and, if I can say, far more shameful. I am referring to the regulations. They're an aspect of Bill C-91 that is inequitable and is wrong.

I have to give my competitor 30 months' notice of my intention to market a competitive product, and that's unfair. I have to give him 30 months' notice of my intention to market a product, even if it's an entirely different dosage form, and that's unfair. It gives him time to switch the product, switch the dosage form, take steps in the marketplace to prohibit my access, and that's unfair. It gives him another additional free, no consequence, 30 months of monopoly, and that's unfair. But what makes it grossly unfair is that he gets that 30 months of protection whether I infringe his product or not. If it turns out that he wasn't entitled to that 30 months, because it turns out that I didn't infringe, then I argue that this shows where the gross unfairness is.

There's no compensation to my company for the loss of revenue that I would have received over the previous 30 months and there's no compensation to the consumer, to the provinces that have to fund it, to the citizens who have to fund it, and to the health plans that have to fund it. It is unfair because there's no turning the clock back.

.2025

What makes it far worse is the fact that these regulations are entirely and completely unnecessary. For every other intellectual property right, except for pharmaceutical property rights, the Canadian patent law and general common law have proven to be an effective buffer against abuse. For every other intellectual property right, apart from pharmaceutical property rights, universal concepts of fairness and equity suffice. And for every other intellectual property right, except for pharmaceutical property rights, the judiciary is regarded as and has proven to be perfectly capable and perfectly competent to adequately and sufficiently protect the rights of the property owner. But the brand pharmaceutical companies say they need special protection, that the judges can't be trusted to make the right decisions to apply the principles of fairness to their special interests.

The PMAC paper on interlocutory injunctive relief boils down to a very simple argument, and it's quite a scary one: judges in Canada don't make the decisions we like and therefore we have to bypass them. We have to tie their hands. What their paper shows is that judge after judge after judge - most of it admittedly during the compulsory licence period, but even afterwards - has refused to grant interlocutory injunctions. What follows from this, they say, is the need for special protection under the regulations. They couldn't sell their viewpoints to the judges that damages aren't enough to compensate them in the event that another party does infringe; they have to sell it to you.

If one person calls you a monkey, you can ignore it. If two people call you a monkey, you can ignore it. But if three, four, and five people start calling you a monkey, you have to start eating peanuts. So if judge after judge after judge has found their interests can be adequately protected, that the infringement can be adequately compensated, it could mean that their answers are fallacious.

The test under the law is simple: that the plaintiff will suffer harm - in other words, the patentee will suffer harm - that can't be compensated by a monetary award at trial; that there is a serious issue to be considered and not something merely frivolous; and that the balance of convenience lies in favour of the particular party. They must also undertake to indemnify - and this is critical - the defendant in the event that damages are ultimately...if it's decided that the injunction was wrongly granted. That's the test, that's the law, and I'd argue that that's fair.

The test that is contained in a leading case in Canada is the same test that the courts apply in the U.K. I can provide special knowledge of that from a previous life with a barrister in the U.K. It's the same law that is applied in Australia. It's the same law that is applied in New Zealand.

Mr. Mäder made the point that we need a level playing field. Yes, we need a level playing field. Apply the interlocutory injunction laws that are applicable throughout the English-speaking world; apply them here. Mr. McDole has accepted that these work in other countries. If interlocutory relief works in other countries, apply those tests here. So I'd argue that while it would be nice to insert an export provision, it would be right and it would be fair to repeal the regulations and to repeal them now.

We can answer any questions you may have.

The Chairman: Thank you very much, Mr. Tabatznik and Mr. Goulet, for your presentations, because they are to the point and animated and it gives us a chance to get into a good discussion.

[Translation]

Would you care to begin, Mr. Brien?

Mr. Pierre Brien (Témiscamingue, BQ): I have some questions about the export process, but I would like to clear up one thing first. Mr. Tabatznik, you said something which I don't quite understand. Perhaps you could explain it to me.

You stated that the notice of intention extends the term of the patent by 30 months. I understand from this that it takes on average 22 months before the courts hand down a ruling. At the same time as the notice of intention is given, a request for approval is made. You cannot market your product until it has been approved. On average, the approval process takes 26 months.

.2030

Therefore, in my opinion, you couldn't market your product in any case, since it would not have been approved by the Health Protection Branch. How can you say then that this gives patents an extra 30 months to run, since you cannot market the product in any case?

[English]

Mr. Tabatznik: The regulation is extended beyond 30 months, and I'll tell you why. The courts don't decide the issue of infringement within those 30 months; they merely consider whether or not a notice should be granted. There are a number of cases, most of which do not affect us but effect our competitors - Lovastatin is a prime example - where a decision as to infringement 43 months later has not even been considered. It used to take 22 months in Canada to obtain an approval. It used to take four years to obtain a generic approval. All power to HPB. They've reduced it to...on average, my guess is about 16 months, but there are cases where a submission could take seven months. On average, ours are taking in the region of 12 months.

It would take 22 months, as you say, for a regular court of law to make a decision as to infringement, but it would take them a week to decide whether or not it's right and whether or not it's fair for an injunction to be granted, whether or not the patent holder's rights can be adequately compensated if it turns out that in the event I do infringe my undertaking I will compensate him for his losses; I will pay him damages. Under the current regulations there is no similar undertaking given by him to me if it turns out that the 30-month injunction he got was in fact frivolous.

[Translation]

Mr. Pierre Brien: I won't get into a debate with you on the figures, but based on the numbers we have from the Industry and Health departments, when it comes to getting generic drugs approved, it takes on average 26 months to obtain the notice of compliance and 22 months for the court to hand down a ruling.

Therefore, no compensation should be awarded because there was no opportunity to market the product. That is the logical way of looking at this. If you are looking to be compensated when a case drags on for 43 or 45 months, that's quite another matter, but this is more the exception. Overall, no compensation should be awarded because the product could not have been marketed in any case.

[English]

Mr. Tabatznik: Without getting into an argument, I can only submit, and will undertake to submit, the length of time it has taken our company, which is all I can speak for, for approvals. On average, it's about 12 months these days, and that is all credit to the HPB for speeding up.

[Translation]

Mr. Pierre Brien: I have a question for Mr. Goulet. You talked about gaining access to an export market. Could you tell me at which point in time you would like to be able to copy a product? Would you like to be able to produce the drug as soon as possible in order to make it available on these markets when patent protection ends or would you like to copy it immediately and then sell it on these markets?

Mr. Goulet: To answer your question, I will take the position of a generic drug company that does not operate plants in different countries and that is involved in manufacturing drugs here in Canada, more specifically in Quebec, for the export market. Canada's share of the world market is less than 2 per cent and we are interested in capturing a portion of the 98 per cent share that remains.

.2035

We do not want to be restricted by the patent standards in Canada when we develop, manufacture and export a product to a country where the patent has already expired or where the product was never under patent in the first place. It is important that our actions not be curtailed. As things now stand, if the product is under patent here in Canada, we cannot develop and manufacture it. We must form partnerships with other countries to develop these products and export them to these markets.

Mr. Pierre Brien: Do other countries allow this type of production? Do the United States and European countries allow generic versions of these products to be sold, for example, on the African market?

Mr. Goulet: I do not have the figures for all of these other countries. I can only say that our Canadian companies' share of the world market is less than 2 per cent and that it is critical for us to be able to tap into these other markets.

I mentioned the United States earlier. As things now stand, over the next few years, patents will be expiring more quickly in the United States, which means that a company like ours will not be able to export its products to the United States. As we all know, in the months after the patents expire, there is a marked erosion in prices in the United States, which means that a Canadian firm will not able to export its products to a market which is almost seven times the size of the Canadian market.

In the next few years, we will find ourselves in the position of having to decide whether to forge partnerships with the United States or to open plants elsewhere. One thing is clear, however: once these patents expire, as things now stands, we will not be able to export our products from Canada.

Mr. Pierre Brien: My next question is for both of you. Regarding the linkage regulations, the entire generic drug industry is wondering why special regulations have been introduced for the pharmaceutical industry instead of relying on the normal injunction process. Conversely, what also sets the pharmaceutical industry apart is that companies can manufacture products before the patent expires. In other sectors, this cannot be done until the 20-year patent term has expired. As you well know, pharmaceutical products can be copied earlier. Therefore, you also benefit from an exception.

Following this argument through to its logical conclusion, if you want to do away with the linkage regulations, then you will also be eliminating the opportunity to manufacture the drug at an early stage. What system do you prefer? An end to linkage regulations and early production, or a system where you can only begin to copy a drug after the 20-year term has expired and where interlocutory injunctions are the norm?

[English]

The Chairman: Mr. Tabatznik.

Mr. Tabatznik: Forgive me, I was waiting for the translation.

I think the provision you are referring to is the Bolar provision.

The reason for the difference between the pharmaceutical industry and every other industry may be the length of time it takes for a generic to be developed and to go through the regulatory process. The point I made earlier, the one about the patent protection and the interlocutory system being sufficient for every other industry, still applies. Whatever industry I'm in, I cannot exploit my product. I can't manufacture it for exploitation of the commercial market prior to the patent expiration, whether I'm in the generic industry or that of a peer commodity, such as a camera or a TV or a bicycle.

[Translation]

Mr. Pierre Brien: I would like a copy of Mr. Goulet's report.

The Chairman: Do you have this with you, Mr. Goulet?

Mr. Goulet: No, I have nothing further to add.

[English]

The Chairman: Mr. Mayfield.

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

Gentlemen, I appreciate your presentation. As I listen to you, I'm inclined to agree that the 30-month injunction would be a hardship for people in your industry, but I don't have quite the same understanding that you have presented about the pharmaceutical companies' difficulties. My understanding is that they may take you to a judge and prove that you have infringed upon their patent, but it is still their problem to take you back to court and to claim the damages or collect the fees that may be necessary in that, and that is quite a long process. So it seems to me that there is enough unfairness to go around in this. I'd be very interested in hearing, quite specifically, your recommendations on how to deal with this in a fair manner, both from your point of view and from the patent drug companies' point of view.

.2040

Mr. Tabatznik: I would argue that the fairest manner in which to deal with it is to apply the general law of Canada. The hardship for a generic company is simply that. In the event that there was no infringement of the patent, we don't get compensated.

Your point about it taking a long time for the issue of infringement to be heard is right. But at the initial hearing before the court, when the court decides whether or not to ``injunct'' me for infringement, or whether or not I give an undertaking as to damages, the court takes into consideration my inability, my ability or otherwise, to pay. If I'm a $5 generic company and I'm infringing on a $45 million product, the balance of convenience will not lie with me, because the undertaking as to damages is not real.

So when the court decides on the interlocutory at the injunction proceedings, it's at that stage that there is consideration given as to where the balance of convenience lies. In the event that it turns out that I did infringe, can the patent holders' interests be protected by the payments of damages? As I say, although it's not impossible to get an injunction, in more cases than not the judges have said that the patent holders' interests can be protected by my payment of damages to the brand if it turns out that I did infringe.

So I would say that the fair answer to the dilemma is to rely on the judges. Let's rely on them, as they do in every other English-speaking country that I know of. Let's trust the judges to make the right decisions and to make the fair decisions.

Mr. Philip Mayfield: As I heard you comparing judicial systems, I did hear you mention Great Britain, Australia, and New Zealand, but I didn't hear you mention the United States. I understand that their rules for evidence in this regard are somewhat different from ours. What difference would that make?

Mr. Tabatznik: I have no idea. The only reason I know of the U.K., Australia, and New Zealand is that the latter two have followed basically general common-law principles as established by the U.K.

Mr. Philip Mayfield: There are other things I'd like to ask about besides the patent, but I think the Patent Act itself is what we're interested in. I'm therefore prepared to withdraw and leave it to the other members to ask questions.

Thank you, Mr. Chairman.

The Chairman: I'll start with Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Mr. Chairman.

First of all, thank you very much for coming to report to us tonight. It's a pleasure to hear your presentations.

I wanted to get some information concerning Genpharm, in your case. If you have a brand company back home - wherever that is - and you are a generic company in Canada, does your firm do any innovating of drugs, or is it strictly copying drugs?

Mr. Tabatznik: Genpharm itself is purely a generic company.

Mr. Walt Lastewka: It's purely a generic company.

Mr. Tabatznik: Yes. All we do is develop, manufacture, and sell products once the patents have expired.

Mr. Walt Lastewka: If I was hearing from the brand portion of your company, would the report be the same?

Mr. Tabatznik: Would my submission be the same?

Mr. Walt Lastewka: Yes.

Mr. Tabatznik: Yes, because it's not from one side or another. I argue simply on the basis of what is fair - and I hope I've argued simply on that basis. My parent company does develop and sell proprietary patented products, and we respect those patents. They apply for those patents, and we then respect them.

Mr. Walt Lastewka: In your -

Mr. Tabatznik: Forgive me, but might I make one other point?

.2045

To my knowledge, were they to have products and were they in the beginning stages of seeking approval for their products in Canada, and they do have one they've licensed to another brand company... Even during the compulsory licence days there's not a single brand product that wasn't put on the Canadian market by virtue of the patent system, including one of my parent company's products, which was actually introduced into the market because market conditions were favourable, not necessarily because they had 20 years' protection or five years' protection or, at the time, compulsory licensing.

Mr. Walt Lastewka: In your Genpharm family do you have a brand-name company and a generic company in the same country?

Mr. Tabatznik: Canada is one of those, but the brand products of my parent companies are not sold by Genpharm. They're sold by Marion Merrell Dow and, I think, Bristol-Myers Squibb.

Mr. Walt Lastewka: How do you generally or typically price your generic drugs? That's always been a mystery. We've tried to get information about it. How is it done?

Mr. Goulet: Could you repeat the question? I didn't hear it.

Mr. Walt Lastewka: How do the generics typically price their drugs? We've heard the brand-name companies complain that within the timeframe, when the 20 years are up and the generics go to market, there's immediately a drop of 50% to 90% in their sales. I want to find out how you price your drugs, on what cost basis. We're not too familiar with the pricing of generic drugs.

Mr. Goulet: The system we have now is provincial formularies. For example, Ontario has a rule of 25%-10%, which means the first generic on the market is priced at minus 25% and the second generic is priced at an extra 10% decrease, so therefore it's minus 35% from brand. To a certain extent provincial formularies regulate the entry prices of a generic product and a second generic product. After that, just like any other industry, the sheer factor of increasing competition on the marketplace has a pressure on price. Therefore, prices go only one way in the generic industry: they go down.

In several provincial formularies, we're not allowed to increase any prices. In Quebec, for example, since 1993 there has been no price increase for drugs in the formularies.

Obviously, having more generic product available on the market will put pressure on prices, therefore decreasing prices. We have to find solutions and mechanisms that will increase the amount of generic product out there and therefore have it just like any other commodity or any other industry.

Mr. Walt Lastewka: You led me right to my concern. If the brand-name products were brought to market at the wrong price and the first generic is priced at 25%...it's a cascading effect.

Mr. Goulet: With respect to the brand names pricing their product properly, I do not want to respond. To respond for our industry, let me just say that the price introduction is based on provincial formularies, regardless of the price of the brand product.

The Chairman: Mr. Lastewka, the choice is yours. If you want to split your time, you should do it now. If not, go ahead and ask.

We can get Mr. Volpe's questions later. Go ahead.

Mr. Walt Lastewka: Thank you, Mr. Chairman.

I want to get that clarified. So when the province says 25% under, let's say, do you ever go a little bit lower than that or do you price it at the 25% under?

Mr. Goulet: It is possible. Pricing the product is the option of the first generic company with the product out there. In the last couple of years, mainly what we're seeing in the market is that the first generic products could be products that are called ultrageneric products.

.2050

To respond to your question, I would say that all generic products are launched, as an average, at a 25% price of introduction. I would say that would be a reflection of our industry, and with increased competition in the market, you have a rapid decrease in prices. So our average is within 40% to 50% of brand, if you look at the high-usage products.

Mr. Walt Lastewka: I have one more question on the export exception. I want to get an understanding.

Whereas Canada doesn't have the export exception, tell me about other places around the world.

Mr. Tabatznik: Again, to my knowledge, most of the countries to which I referred don't have an export exemption. I think that's correct.

The point I make is that when the system went from one of compulsory licences to our current patent, under the old system we were permitted, by virtue of a compulsory licence, to export. The fact that there is not that exception does Canada only harm...two different perspectives. We have facilities abroad that we can put our products in, because there isn't one. I say merely that it's a pity there isn't one, for Canada and Canadians.

Mr. Goulet: I would like to add, on behalf of my corporation and the small and medium-sized enterprises that are solely and 100% owned by Canadian interests, that we need to export. If we look at our

[Translation]

our trade deficit went from minus $800 million in 1987 to minus $1.4 billion in 1994. Canada has become a country

[English]

that is important in drugs right now. That's what we do in Canada. We bring products in; we do not export. We need as a country to be able to export products. It's very important.

We need to have access to the U.S. market. It's a huge market. I want to repeat, in the period from 2000 to 2005, more than $41 billion of drugs are coming off patent, and as a Canadian company we obviously would like to be part of that market. We will be part of this market; Bill C-91 will determine whether it be through factories in Canada or the U.S.

Mr. Walt Lastewka: Thank you.

The Chairman: Thank you.

We'll have Monsieur Brien, Monsieur Patry, and then Joe Volpe, and I'll consider the list to be closed at that point.

[Translation]

Mr. Pierre Brien: I would like to come back to the subject of export exemptions. You are calling for changes, namely that you be allowed to sell generic drugs in countries where the patent has expired. Would these changes be consistent with our international agreements?

Mr. Goulet: I refer to the report that was tabled by our Association and in which legal opinions indicate that Canada, by removing the restrictions on exports, would be complying with these international agreements. That is the position of our Association.

Mr. Pierre Brien: When he appeared before the committee, the Health Minister talked about extending the mandate of the Patented Medicine Prices Review Board to non-patented drugs. How do you feel about a mechanism to monitor non-patented drugs?

Mr. Goulet: Overall, as an Association or at least as a company, I see no problem with the Patented Medicine Prices Review Board monitoring the price of generic drugs. The only thing I can tell you, as I mentioned earlier, is that the price of generic drugs is headed in only one direction, and that is down.

As for introductory prices, these are determined by the provinces by way of drug rebate mechanisms. Right now in Canada, the vast majority of introductory generic drug versions that are marketed are developed by innovative companies through their generic drug subsidiaries. In the United States, this way of doing things is very popular. Therefore, and I think I can speak for my company, we are comfortable with this system.

.2055

Mr. Pierre Brien: Lastly, I want to come back to a point that you have consistently stressed, namely the unique nature of the pharmaceutical industry. You argue that linkage regulations should perhaps be abolished because they exist nowhere else. You said that you would still like companies to be able to produce drugs before the patent term expires even if there were no linkage regulations, because it takes time to develop your product and market it and because you must obtain a notice of compliance. Novartis expressed a similar view. The process of developing a drug takes much longer than the development of another product. Therefore, this argument is equally valid in your case and that is why specific safeguards are in place.

Another thing about the pharmaceutical industry is that it takes quite some time for a drug to be approved. Developing a drug is a rather unique process. That is why special regulations have been developed for the pharmaceutical industry. Are you saying that this industry should not be treated any differently than other industries? If that were the case, there would be no linkage regulations, and no possibility of early production. If the pharmaceutical industry is special, then we need to find a formula that takes this fact into account.

[English]

Mr. Tabatznik: I would say that why there should not be a special case, exceptions made in the pharmaceutical field, is because the Canadian courts are quite capable of meting out fairness, of balancing the interests between the competing parties. If the judiciary is capable and competent to deal out justice and to balance the interests of the competing parties in every other intellectual property case, I see no reason why the pharmaceuticals should be treated differently. All we're asking for is justice from the courts, not a special injunctive procedure that effectively operates as a patent extension.

[Translation]

Mr. Pierre Brien: Then there would be no possibility of early production. Mr. Goulet is trying to explain this to him. Have you understood my question?

[English]

Mr. Tabatznik: Yes, I did. We don't agree with that.

If a by-law is introduced here, it forces research and development out of Canada, simply across the border. Again, all one is doing by eliminating a by-law provision, quite simply, is exporting jobs, exporting R and D out of Canada. The two are not related.

[Translation]

Mr. Bernard Patry: Thank you very much, Mr. Goulet, for your presentation. It was brief, but concise and comprehensive. You stated that 15 per cent of your sales figures go to research and development. What type of research is Technilab involved in? Are you working with hospitals and universities?

Mr. Goulet: As far as research and development are concerned, we are involved in R & D activities aimed at helping us market our products. We conduct bioavailability and clinical studies. Sometimes we work with universities and at other times with specialized laboratories.

Mr. Bernard Patry: Brand name companies have told us that the cost of producing a drug... How much does it cost your company to develop a generic drug?

Mr. Goulet: Are you talking in percentage terms?

Mr. Bernard Patry: In dollars. Does it cost you $500,000, $800,000 or $1 million?

Mr. Goulet: It all depends on the nature of the products. Some drugs can be developed very cheaply, whereas others, that is other generic versions, can cost several million to develop. I can't give you any specific figures, because the range of products is quite broad. The cost is certainly in the neighbourhood of $750,000 to $1 million.

.2100

[English]

Mr. Bernard Patry: My next question is to Mr. Tabatznik. Thank you also for your presentation. It was quite different but very interesting.

First, I have a very short question. Do you agree with the 20-year period for intellectual property?

Mr. Tabatznik: I have no problem with protecting a patent. The question is how long is fair.

Mr. Bernard Patry: But what about the 20-year patent?

Mr. Tabatznik: Personally, I have no problem with the 20-year period.

Mr. Bernard Patry: According to some statistics, which I've even read in some of the papers, it seems that before Bill C-91 the amount of exports of generics was about 10% of their production, but since 1993, effectively since Bill C-91, the percentage of this exportation of generics last year or in 1995 reached roughly 40%. I conclude from this that with this tremendous increase in sales of the generics, Bill C-91 as it is right now was good in a way for the generics.

Mr. Tabatznik: As I said in my presentation, the effects of Bill C-91 are just beginning to be seen. The products that were on the market when Bill C-91 was introduced were what I call the older generic products. It's the new generation of generic products that is being held up and affected by Bill C-91. And I confess to having a self-interest, since Bill C-91 was good for Genpharm, even though it was unfair because it did not affect the older generation of products, which were those that we were working on. As we move into the new generation of generic products, that's where the effects begin to be seen - omeprazole, Lovastatin, simvastatin, pravastatin, sertraline; the new products.

Mr. Bernard Patry: This is my last question, Mr. Chair.

You mentioned, and insisted really, in your remarks that the 30 months was unfair. You insisted on this because, you said, if there is no infringement this is penalizing your industry. But if you're looking at the number of court cases, it seems there are more cases won by the brand names than by the generics. Do you agree that to diminish the court cases there will be a triple damage scenario or something like this?

Mr. Tabatznik: Triple damages, even single damages, even fair damages, I think, would help, provided they apply on both sides. If you turn out to infringe, pay the patent holder damages. If it turns out that you don't, let them pay you damages.

But regarding your point about more cases having been decided in favour of the brand, we have very few cases in the process, because, as I explained, we've only just started to introduce the new generation of products, and we will have more and more of those in the future. But my understanding of those cases, and it's only an understanding, is that most of the cases that have been decided have not actually been decided on the issues. They're procedural issues, and it seems that the statistic is right that more of the procedural issues have been decided in favour of the property holder than the generic. But on the merits, on the substance of the cases, I believe they are only four or five cases that have actually been decided.

Mr. Bernard Patry: Thank you, Mr. Chair.

The Chairman: Mr. Volpe, for the final questions, please.

Mr. Joseph Volpe (Eglinton - Lawrence, Lib.): Thank you, gentlemen, for your presentation. I had a series of questions for those who preceded you and a shortage of time, so I'm glad to have an opportunity to raise some with you. I found your presentation fairly compelling. Actually, I thought you were going to argue a different side. So I confess to that.

But since you've argued the side that you've argued, I wonder if you'd just bear with me a few moments and help me understand a little bit about the way some of the system is supposed to work. This afternoon and earlier on in the evening we were treated to a presentation by those who underscored the word ``innovation''. I thought I heard from you that the word ``innovation'' may not necessarily be applicable to all the brands in the market. I thought I heard you say, and I want to be corrected if I'm wrong, that there's a lot of licensing and that in fact one brand may license from another to market.

.2105

As one of the legislators, if I'm interested in legislating on behalf of those who are innovators, am I confusing an issue of licensing and innovation?

Mr. Tabatznik: My use of the word ``licensing'' was in relation to my parent company's two products on the market, both of which are highly successful and highly valuable and innovative products. Both of those were licensed by brand companies. My parent did the research and development outside of Canada and licensed the product for marketing to PMAC companies.

Mr. Joseph Volpe: But PMAC companies are not adverse to licensing a product with another PMAC company for the purpose of entering the market, whatever their reasons might be.

Mr. Tabatznik: It matters very little where the research is being done. As I said in a previous remark, both of those products were introduced during the compulsory licence period - in other words, where there was no patent protection - and they were introduced because the Canadian market is a valuable market. My parent's decision to introduce those products would have been the same whether there was zero patent protection or 50-year patent protection.

Mr. Joseph Volpe: Let's pursue just for a moment the development component of your product. We had at least one presentation today - and you must have been listening in the crowd because you talked about the number of times you get called the monkey - where the words ``theft'', ``piracy'', and ``copycat'' came up about seven or eight times. But you're telling me that's not necessarily the case.

Explain it to me. When you present something to the health protection branch for licensing, what type of research have you done? Explain to me the difference between a bio-equivalent product and an identical product and which of those two is a copycat product.

Mr. Tabatznik: The first point about the research that would have been done - all of which, I add, in Genpharm's case we do in Canada - is that it's analytical, it's methods, it's proving that you can test the product adequately. So there's all the analytical work, which is laboratory work either by ourselves in our laboratory, in which we employ 40 people, or in contract laboratories in Canada.

There is a large degree of analytical research that needs to be done, and then the studies are either biostudies, studies in human beings to prove that the product works therapeutically in the same way as the brand blood studies, or, alternatively, clinical studies, depending on the product, involving patients.

Mr. Joseph Volpe: Is something that's bio-equivalent the same as something that's identical?

Mr. Tabatznik: Equivalent means that the drug behaves in the same way as the brand within the body.

Mr. Joseph Volpe: Keeping in mind that you have a self-interest, which one of those two is a copycat?

Mr. Tabatznik: I'm going to say that they both are copycats in the sense that you have to prove that your product behaves the same way. That's the nature of a generic product. It produces the same result.

Mr. Joseph Volpe: When a company is an innovative company, assuming there's research being done - and I gather everybody is interested in protecting intellectual property. If I come to your university and find that you're doing some research on a particular topic and I race down to a competitive university and see if I can get appropriate scientists to pursue that particular line, and if the second person actually makes it to a patent office first, is the original researcher a copycat coming onside with a bio-equivalent product?

Mr. Tabatznik: The second person is the copycat, the second individual who has taken the research that has already been produced.

Mr. Joseph Volpe: I have one last question. This is Walt Lastewka speaking through the mouth of Joe Volpe. We had to question the prices.

.2110

Mr. Goulet, with respect to the question of pricing and costs, the initial question was about the pricing of generics. We've been told that generic products are really essentially out of control.

First of all, are they? If so, should they be brought under the control of the Patented Medicine Prices Review Board?

Mr. Goulet: I can speak for my company and my prices. I could say they are out of control: they're going down. So yes, I could say that I tend to agree with that. Again, let me repeat that -

Mr. Joseph Volpe: You know what? I'm thinking that maybe the prices are higher, because the competition came forward and said that generics are actually making more money when they sell abroad, that they even make a lot of money here, and that maybe they should be controlled.

Mr. Goulet: If I may, again I will speak for my corporation. As a Canadian corporation, we sell in Canada, mostly in this market, and to say that the prices...I repeat that the pricing situation is dealt with on the provincial level for the drug reimbursement programs. Again, when you have more generics and more competition out there, just like any other market, you have pressure on prices, and prices decrease. I think the solution is to find ways to have more generic products on the market. Therefore, just like any market, this would apply. That's my response for my corporation.

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

Mr. Volpe, the longer you sit on a committee the closer you get to what we call here the ``malade Ménard''.

A voice: Maladie Ménard!

The Chairman: Maladie Ménard.

Soon you'll have your own private member's bill here.

Members, I have a change for tomorrow's agenda. Could you stay for just one second?

I just want to thank our witnesses, Mr. Tabatznik and Jean-Guy Goulet. Thank you very much, gentlemen. Merci beaucoup. You have dealt very directly with the contentious issues before the committee and you've spoken with a clarity that causes the members to think through their positions. What we're looking for right now is clarity and discussion and debate. We have a long list of witnesses - we have about another 140 to hear from - so that causes us to really have to think through what we're trying to do. You have helped us a great deal. I think I speak on behalf of everyone here when I say that we appreciated your testimony.

Before I adjourn the meeting,

[Translation]

there will be a change in tomorrow's schedule. The round table is scheduled for 3:30 p.m. tomorrow at which time we will hear from two witnesses who decided not to come and testify this evening.

[English]

We'll hear from our last witness at 5:30 p.m., but we couldn't reach everybody. We'll have a round-table discussion from 3:30 p.m. to 5:30 p.m. and ask the witnesses who were going to come at 7 p.m. to come at 5:30 p.m. We'll deal with them then. I suggest that you set aside time from 3:30 p.m. to 7 p.m. in your schedules, just to be safe, and then we'll be free at 7 p.m.

The committee is adjourned until 3:30 p.m. tomorrow. Thank you.

Return to Committee Home Page