EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 18, 1997

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[English]

The Chairman (Mr. David Walker (Winnipeg North Centre, Lib.)): Good evening, ladies and gentlemen. 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 resumes its work with a round table of groups from Saskatchewan.

On behalf of the industry committee, I would like to welcome you here tonight. Our format is to ask each of the representatives, starting with Ann Smart from the Saskatchewan Health Coalition, to speak for a brief time, perhaps five minutes, giving us your major ideas. After we finish that, we go to a round table and we'll have comments and inquiries from the committee members. I look forward to this discussion.

Again, welcome. I'll turn it over to Ann Smart.

Ms Ann Smart (Saskatchewan Health Coalition): Thank you.

As you probably know, the Saskatchewan Health Coalition is an affiliate of the Canadian Health Coalition. We're an organization that was formed to protect and enhance the medicare system, which began in Saskatchewan and is now enjoyed by all Canadians.

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The five principles on which medicare is based are universal coverage, accessibility, portability between provinces and territories, comprehensive coverage, and non-profit public administration. These are the principles on which we base our work, and they're the reason we've asked to address this committee today.

Most Canadians agree that health care is an essential service to people, not a commodity. Access to medications is increasingly a cornerstone of care for the sick. The value of drugs is reflected, for example, in the number of prescriptions now available to those who suffer from mental illness. I'm sure all of you realize that the availability of these drugs has been the rationale for closing mental health care institutions in favour of having people live in their own homes. This decision has had a major impact not only on the individuals but on their families and their communities. The reliance on medications such as this to stabilize health is a fact of modern medicine. It's within this context that we intend to discuss this review of Bill C-91.

Those who see drugs as just another commodity will want to argue the issue from the narrow perspective of patent legislation, but even that position must acknowledge that patent protection was initially designed to balance the rights of the inventor with the needs of the larger public. As a group of concerned Canadians we are representative of that larger public. It's on this historical basis alone that we are validated in taking a broad look at the issue of patenting medicine.

Massive changes in our health care system are under way across the country, as you all know. Two forces are motivating these moves. One is the desire to improve the system and the other is the push to save money. Access to safe, appropriately prescribed medications can be seen as an improvement. On the other hand, these costs must be monitored and accountable systems implemented.

This committee has to address the fact that the cost of prescription drugs is the only part of the health care system still out of control. Currently, the health care sector spends 12.7% of its budget on drugs. That's up 9% between 1984 and 1994. At the same time, spending on hospitals has declined and so has spending on physicians. From the point of view of the consumer, the increase in drug costs is serious; 15% of us across the country have no drug coverage and many more have only minimal insurance. The situation varies dramatically between provinces.

As long as people are in hospitals, the cost of their medication is covered by government now, but the new trend of early discharge from acute care means drug costs are increasingly picked up by individuals and their families, becoming another user fee and obviously another move towards a two-tiered health system. Patent protected brand-name drugs cost us an average of 50% to 60% more than their generic equivalents. The 12-year patent protection now in effect means billions of extra dollars will have to be spent on health care by the year 2000. The federal government alone holds the power to bring our drug costs under control. It can begin by rescinding this 20-year patent protection afforded to drug companies.

We agree with the National Forum on Health when it states that the Canadian public recognizes that Bill C-91's intended effect, as with any patent legislation, is to limit competition and raise prices and industry profits, thus contributing to the overall escalation of health care costs in Canada. We do not agree with the Minister of Industry that the federal government is bound by international trade agreements not to reduce patent protection. We say that position is a cop-out; it's an excuse to cave in to the powerful lobby mounted by the Pharmaceutical Manufacturers Association of Canada.

We draw your attention to NAFTA article 1709(2) and article 27(2) of the WTO code on trade-related intellectual property, both of which allow a country to exclude items from patentability if it is necessary to protect order of public. As we understand it, this is an international law term referring to the ability of government to take measures for the general public benefit. Health care is certainly a general public benefit.

This parliamentary review committee is certainly a part of our Canadian government. You have the power to assert Canada's right to control our patent legislation for our own common good. We urge you not to deny the reality that drugs are an essential component of our health care system and that as such they are much more than mere commodities for sale. Canadians everywhere need to know that when we are sick we have access to safe medications regardless of our ability to pay. We need to know that such access is available wherever we live, that it is not dependent on the vagaries of private insurance companies, and that the drugs have been adequately tested and are controlled through public administration.

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Therefore, we endorse the position taken by the Canadian Health Coalition, and that is that this committee must make recommendations to the federal government ensuring that generic drugs reach the market quickly by allowing for compulsory licences after four years of exclusive patent protection.

We're calling on you to recommend the establishment of a national universal drug insurance plan, to recommend the controlling of prices for all medicines, including generics, through referenced-based pricing, and to recommend that sufficient public resources be committed to fund basic public research, that the quality and effectiveness of private research be monitored, and that the drug approval process be made safe and publicly accountable by creating a new mandate for the Health Protection Branch that would require it to develop stricter standards and enforced regulations.

Thank you for this opportunity to make those points.

The Chairman: Thank you for being so much to the point, Ms Smart. We very much appreciate it.

We will now turn it over to our next presenter, Mr. Peterson. Welcome.

Mr. Warren Peterson (Board Member, Saskatoon Community Clinic): Thank you.

The Chairman: You're from the Saskatoon Community Clinic.

Mr. Peterson: That's right. I'm also the president of the Federation of Saskatchewan Community Clinics, of which there are five.

The Chairman: Thank you.

Mr. Peterson: The Saskatoon Community Clinic has been in operation since 1962 and was bred out of Saskatchewan's medical care bill by the physicians strike that followed. It has over 20,000 members and yearly makes over 36,000 visits.

The Saskatoon Community Clinic and the other Saskatchewan community clinics are member-governed primary health care cooperative organizations delivering multiple community-based services using salaried health care workers, including physicians, who work in a multi-disciplinary team model. These collectively serve in Saskatchewan about 80,000 people.

I mention this because any reform of our drug system must be integrated with the health care system as a whole, in particular the primary health care component. The large preponderance of literature, including that of the federal, territorial, and provincial advisory committees on health care reform and the National Forum on Health, supports substantial use of community-based primary health care centres, such as ours, as an important part of any health care reform.

We subscribe to the positions of the National Health Coalition regarding drug reform and to those of the National Forum on Health. In particular, we agree that compulsory licensing should be reintroduced, that patent protection for brand-name pharmaceutical companies should be reduced, and that a national pharmaceutical care plan should be implemented in stages by the federal government, in cooperation with the territories and provinces.

As part of that plan, we also subscribe to the establishment of a properly funded organization that is at arm's length from both government and private interests and whose job is to promote research and development in pharmaceuticals in the public interest and in the interest of a healthy population.

You will note that cooperative health care centres are interested in population health and in health promotion.

It is a tenet of the Canada Health Act that medically necessary services be available to all on the basis of need and not on the basis of ability to pay. Arguably pharmaceuticals are medically necessary and should be covered under a national plan. Pharmaceuticals are not a commodity, and expert legal opinion holds that on at least three counts such a plan can be instituted.

As the disparity in income levels increases, demonstrably the health of the population decreases. For a multitude of reasons, income disparity in Canada, and indeed everywhere, is increasing. Because the cost of private insurance plans is increasing, because most of them are linked to employment, and because initial pricing of new drugs is high, lower-income people, the chronically ill, the elderly, and the disabled are increasingly less able to afford the drugs they need to maintain health. As a consequence, patients are increasingly unable to comply or are able to only partially comply with drug prescriptions and the directions for their use. These people get sicker.

It is the responsibility of governments to balance private privilege with the collective good. Patent protection is one such instrument available to governments.

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We must decide what kind of society we want. If you believe a society properly and naturally consists of large differences between the privileged few and the many without privilege and hence that a less healthy population is a small price to pay for such a society, then you will maintain that at least 20-year patent protection for pharmaceuticals.

If, however, you believe that society properly deserves through collective effort and individual responsibility to care for its citizens and to promote the well-being of its members, then you will reduce patent protection, institute price controls for all drugs, including generics, establish proper drug and medical research geared to aiding policy decisions, and initiate together with the provinces and territories actions that will result in a national drug insurance plan.

I thank you.

The Chairman: Thank you very much, Mr. Peterson, for a very clear overview of the values that are involved in our discussion.

Ms Smart, who do we turn to now?

Ms Smart: Marjorie Willson of the Saskatchewan Seniors Mechanism.

Ms Marjorie Willson (President, Saskatchewan Seniors Mechanism): I'm Marjorie Willson, president of the Saskatchewan Seniors Mechanism. As I mentioned in the brief, this is an organization of some 12 seniors organizations province-wide or city-wide within Saskatchewan. We represent approximately 80,000 seniors in the province.

We want to emphasize the growth in the number of seniors. In Saskatchewan the population is now approximately 15% and will be 25% or more by the year 2031. Seniors are involved in using about 40% of all drugs. This means that seniors are paying the high costs of new drugs coming out to a far greater extent than any other group. That's one thing we want to emphasize - the fact that for seniors the costs are being paid by them for most of these drugs.

It's not just the new drugs that are expensive; all drugs are going up. This causes tremendous concern to seniors. It often means a choice between using the drugs that are prescribed or having some food. That's a pretty difficult choice to make, obviously, for anyone.

To lay down some particulars, the cost of some drugs has gone up over 80%, just the basic cost of their drugs in the last six years. This is tremendous. When someone is on a fixed income, when that income is being clawed back and when that income is being cut and a benefit of $120 a year offered, it's not going to make a great deal of difference.

We've had one drug that was used up in Saskatchewan - enalapril. It's a drug that was on the borderline and they had it estimated. It was in a challenge as to whether it was to be available or not. So it was held back for two years. In that time the province saved $2 million because it was at its original price, not the new price.

So patent protection is increasing the costs a great deal. Our point of view generally is that if Bill C-91 cannot be revoked, then the Government of Canada has a responsibility to the public to take care of the adverse effects of the rising drug costs.

The limitation of the patent protection just serves to enrich the pharmaceuticals. The average rate of return - equity before taxes - is 29.6% for pharmaceuticals while other industries average 10.7% over the same time. It seems a fair difference.

We were also promised that when this bill went through there would be research to the universities. A great deal of this tends to be research that's just clinical trials that are done in hospitals rather than basic research. We wonder if that's the way it was meant to be.

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It's the same thing with the number of jobs, as we mentioned here. We're talking about seniors who are below the poverty line; many of them are. The cost in both dollars and anxiety for these people is extreme.

It's a matter of record that the Liberal Party opposed this legislation when they were in opposition. We wonder if this 1997 review is an opportunity to rectify the devastating consequences to seniors that this bill has brought about.

I'd like to reiterate the five points someone else mentioned here that are needed to improve things: establish a drug insurance plan for Canadians, ensure cheaper generic drugs are available quickly, monitor quality and effectiveness of research, make the drug approval process safe and publicly accountable, and control prices for all medication, including the generics.

Thank you.

The Chairman: Thank you very much, Mrs. Willson, and again for being right to the point.

Now, is it Glen or Dale?

Mr. Glen Makahonuk (President, Canadian Union of Public Employees (Saskatchewan Division)): It's Glen.

The Chairman: All right, Glen.

Mr. Makahonuk: I'm Glen Makahonuk, president of CUPE Saskatchewan, the Canadian Union of Public Employees. The Canadian Union of Public Employees across the country represent 450,000. In our Saskatchewan division, we represent 20,000 members working in hospitals, nursing homes, group homes, universities, schools, libraries, municipalities and other public sector entities. Approximately half of our members are health care workers.

We welcome this opportunity to outline our concerns about Bill C-91. During the past five years drug prices have skyrocketed, new research and development has not materialized and the pharmaceutical drug companies have eliminated thousands of jobs.

The Pharmaceutical Manufacturers Association of Canada had promised stable prices for new drugs when Bill C-91 was introduced. Instead, this monopoly patent legislation is inflating the cost of health care.

Dr. Joel Lexchin estimates the prices for prescriptions of new patented medications have risen at a rate of approximately 13.4% per annum since 1988 compared to 7.6% for prices for prescriptions of non-patented drugs.

Research by the Canadian Health Coalition estimates that by the year 2010 Bill C-91 will have cost consumers and taxpayers somewhere between $3.6 billion and $7.3 billion. The only area of health spending that is out of control is spending on drugs. Nationally, nearly 15% of the health care budget is allocated towards spending on drugs. This kind of spending on drugs is not sustainable in an era of declining transfer payments for health care.

The brand-name drug companies argued that they needed extended patent protection for research. However, the facts show that the pharmaceutical association's members spend relatively little on research and development, approximately 11% on sales compared to an international average of 18%.

Only 8% of the new products introduced by the pharmaceutical industry were for breakthrough medications while 49% were for product-line extensions and 43% involved moderate or no improvements over existing medicines. Instead of spending more in research and development, the pharmaceutical companies spend approximately $1 billion per year on product promotion.

The average rate of return on equity before taxes in the pharmaceutical industry between 1988 and 1995 was 29.6% compared to an average rate of return for all other manufacturing industries of 10.7%.

We understand the pharmaceutical companies promised that Bill C-91 would create jobs. Instead, these brand-name drug companies eliminated 2,055 jobs between 1990 and 1995. During the same period the Canadian-based generic drug companies created approximately 2,118 jobs.

Furthermore, between 1989 and 1994 pharmaceutical imports into Canada from the U.S. grew by approximately 200%. According to the U.S. International Trade Commission, Bill C-91 has contributed to a rapidly growing trade deficit in the pharmaceuticals.

We have a number of recommendations and they're similar to the ones the other groups have presented. We believe Bill C-91 is diverting increasingly scarce public funding away from front-line services for larger profits for multinational drug companies. The generic drug companies can produce drugs more cheaply than the multinationals and create more jobs at the same time. Surely this legislation must be changed.

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We urge the federal government to enact the Canadian Health Coalition's five-point plan, which is as follows; one, establish a national universal drug insurance plan; two, ensure generic drugs reach the market quickly by allowing for compulsory licences after four years of exclusive patent protection; three, commit sufficient public resources to monitor quality and effectiveness and tie royalties for compulsory licences paid to patent holders to the amounts spent on research; four, make the drug approval process safe and publicly accountable; and five, control prices for all medicines including the generic ones.

These reforms would lower drug prices and improve people's health. We would urge the federal government to take action to ensure the above amendments to Bill C-91 are carried out.

Thank you very much for this opportunity.

The Chairman: Thank you, Glen, for your presentation. I'm sorry about the interruption. Every once in a while we get translation problems, so we have to stop and make sure everybody can hear properly.

Our final presenter is Dale Holmberg from the Moose Jaw - Thunder Creek District Health Board. Welcome, Dale.

Mr. Dale Holmberg (Member, Moose Jaw - Thunder Creek District Health Board): Thank you. I represent a couple of other organizations as well: the Moose Jaw and District Food Bank, the SGEU Long-Term Disability Plan, the SGEU Health and Welfare Trust, and the Moose Jaw branch of the Saskatchewan Health Coalition.

The Liberal members of Parliament put forth some cogent arguments against Bill C-91 when it was being debated in Parliament in 1992. Their arguments were valid then and perhaps they're even more valid now in light of what has transpired since. They were quite correct in their assessment that it would have a huge impact on provincial pharmacare programs and individual Canadians.

Drug costs had been escalating as it was. The extended patent protection that resulted from Bill C-91 and the earlier Bill C-22 made matters worse. According to recent Health Canada figures, the amount of money Canadians had to allocate to pay for drugs skyrocketed from $1.1 billion in 1975 to $9.2 billion in 1994. Of the $9.2 billion, $3.3 billion came form the public purse. That figure was almost three times the $1.2 billion provincial governments had spent 10 years earlier.

Although the threefold increase in itself seems excessive, it would have been far worse had provincial governments not been reducing benefits and delisting drugs. The percentage of drugs purchased by governments had grown quite rapidly from 25% in 1970 to 54% in 1981. By 1994, however, that figure had dropped to 35% of all drugs purchased in Canada.

Like the other provinces, Saskatchewan had begun to transfer the cost of drugs directly to the pockets of its citizens and/or their extended health benefits plans. In 1992 the NDP government increased the annual drug plan deductible by 204% to $380 from $125. Since the inception of Bill C-91, it has been increased to $1,700.

When social services minister Lorne Calvert was health minister, he said Bill C-91 alone was costing Saskatchewan residents $6 million to $10 million a year. The increasing costs of drugs were reflected in rising costs for the Saskatchewan Prescription Drug Plan.

The average cost per person on the drug plan went from $116.88 in 1985-1986 to $227.84 in 1994-1995. During the same period the average cost per prescription went from $15.24 to $26.11. In response to the higher costs, the government simply raised the deductible. The net result of all this was that many people in effect lost their SPDP coverage. Although it helped to ease the burden on government coffers, the cuts simply served to transfer the costs elsewhere.

As a member of the Saskatchewan Government Employees Union Health and Welfare Trust, I can tell you from first-hand experience that it had a major impact on our membership. The SGEU Health and Welfare Trust is responsible for the dental and extended health benefits plans of a number of bargaining units.

As a result of the increased deductibles introduced by the Saskatchewan Prescription Drug Plan, in 1993 Blue Cross raised the premiums on our extended health benefits plan by 120%. This presented a hardship for our members, as many of them were paying their own premiums and we had bargaining units where members were earning minimum wage or just above minimum wage. Some bargaining units had to look at reduced coverage.

Worse was yet to come, however. A year later we were faced with another increase of nearly 115%. That was a blow many of our bargaining units could not afford. As a result, we changed carriers. That proved to be only a temporary solution, however. Last year our new carrier raised our premiums 88% to reflect its actual costs.

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Although there are other factors, it is largely drug costs that are driving the increases. Drug reimbursements accounted for 61% of the costs to the plan in 1995-96. For our membership it has meant much higher premiums, and in some cases where they couldn't afford the higher premiums it has meant reduced coverage.

For the poor and elderly, the escalating drug costs cause an ever greater hardship because most of them don't have the good fortune to be part of an extended health benefits plan. In fact, according to the Canadian Health Coalition, 3.6 million Canadians are not covered by any drug benefit plan.

In Saskatchewan the poor are only partially protected by the provincial drug plan. Elderly Saskatchewan residents, even if they qualify for the guaranteed income supplement, are still faced with a $200 deductible for medication every six months. Younger residents who are living below the poverty line are also faced with a deductible. A single parent with one child, for instance, who is earning a poverty-line income would be faced with a $260 deductible every six months. That is a lot of money for someone living at the poverty line.

In light of what has happened to drug prices as a result of Bill C-22 and Bill C-91 and the impact this has had on Canadians, I have to agree with Liberal MP Joseph Volpe, whom I understand is a member of the committee reviewing Bill C-91 and who said during the debate on the bill in December of 1992 that if it was passed it should be rescinded when they get into government.

Thank you.

The Chairman: Thank you very much, Mr. Holmberg, on that note.

[Translation]

Mr. Ménard, please go ahead with the first questions.

Mr. Réal Ménard (Hochelaga - Maisonneuve, BQ.): I can tell you right off, as a joke, that no one has yet discovered a drug that would force the Liberals to keep their promises. If ever one such drug were discovered, it would be very widely distributed with a few notable exceptions.

You have voiced some strong accusations against brand name drug manufacturers. I would address my first comments to the Canadian Union of Public Employees, given that you have supplied numbers. You seem to say that the R&D effort in Canada is at 11 per cent whereas it is at 18 per cent elsewhere.

The information available to the committee had led us to believe it was at roughly 14 per cent. Could you give us a little more information in this regard? My question is for the president of the Canadian Union of Public Employees, Mr. Glen Makahonuk. Once he has responded, I will follow up with another two or three questions.

[English]

Mr. Makahonuk: In response to the question, our research was based on documentation provided by the Canada Health Coalition in a document called A Prescription for Plunder. Ending the monopoly for multinational drug companies is necessary to control drug costs and protect Canada's health care system. In gathering this information, we were using this to make our presentation to this particular standing committee. That's what we used in terms of the research we went into in order to get our facts. If they're in dispute, they're based on the information provided to us.

In terms of the percentages, I think we've pointed out that the research spent in Canada is still below what the international average is.

[Translation]

Mr. Réal Ménard: It seems to me that some of our witnesses, the names of whom I will not mention, believe that your numbers regarding research are wrong, but we will have the opportunity to revisit this.

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I would like to know what arguments you could give the committee. Canada is perhaps going the wrong route in seeking to grant protection to companies doing research. However, this is comparable to what is being done elsewhere in the world, because you must be aware that all of this is not simply a matter of happenstance and that the total 20-year period granted is the standard in several industrialized countries.

Given that this argument is not sufficient to convince you, what could you tell the committee to convince us that we should rather be moving towards a four-year period? Would it be a four- year period from the date when the molecule is patented or a four- year period from the time the product is marketed?

[English]

Mr. Makahonuk: That's a good question. I wouldn't be able to give the details on it, although it seems that in terms of the marketing of the product four years would be the time span.

[Translation]

Mr. Réal Ménard: Fine. If it were a question in the context of an examination, it could not be said that the answer is substantial, but I can understand that it is not always possible to flush out one's viewpoint. One witness - I believe that it was the representative of the Saskatchewan Seniors Mechanism - explained what took place in the case of Enalapril. That could have had a very negative impact on consumers.

Would you be so kind as to talk to us a little bit about it? You mentioned the two-year campaign against patent protection and you stated that the province could have saved millions of dollars. Could you tell committee members what exactly happened in the case of Enalapril?

[English]

Ms Willson: Yes, this is our report from Lorne Calvert, who was then Minister of Health.

In 1994-95, at the time of dispute or challenge for this particular drug and while that was in effect, this province saved some $2 million that they would not have otherwise if it had not been challenged and on the increased price would have cost them. It has now cost them several million dollars since 1995 to be able to use that particular drug.

[Translation]

Mr. Réal Ménard: Without going into all of the technical details, are you putting this argument to the committee in the belief that the whole patent protection issue is unfounded? Or else is the problem the whole issue of the allegation of the notice of compliance? What exactly is the message you want to leave with us regarding this specific example?

[English]

Mr. Holmberg: The point is that this is balancing public interest versus the interest of the patent holders. This is costing Saskatchewan residents on one minor drug, over a period of one, two, or three years, millions of dollars.

That patent protection is certainly important to those drug companies. It's important for an industrial society like ours to encourage research and development, but at what cost and for how long? How much money is reasonable to reimburse research and development? We're saying the balance is not being dealt with properly, that the balance should be more for the public interest and less for the interest of private patent holders.

[Translation]

Mr. Réal Ménard: Personally, once again, I am hoping that at the end of our study we will have been convinced that four years is a valid period, but we must have more specific information.

If you feel that the status quo, namely the protection accorded today, is unacceptable for the consumer, then I am ready to look into the issue with you, but we must nevertheless ask the reverse question.

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If we do not offer a competitive framework for research and development... Could you give the committee examples, facts, relating to the generic industry and its ability to provide drugs?

I would like to tell you a very personal story, so as not to have too academic a debate. My common-law spouse died last January. He had AIDS. I am very familiar with the AIDS problem, because I have been following the issue for the last ten years. Pharmaceutical companies have done research and we have moved from a situation where AIDS was a fatal disease to one where it is a chronic illness.

I agree that we must establish a balance. However, do you believe that the generic drug industry is capable of taking over as far as the major research orientations for degenerative diseases are concerned?

[English]

Ms Smart: I'd like to respond to that question. The issue is not the generic drug firms picking up the need for that research; the issue is we need to have money put into public research. The government should be funding universities for basic research connected with medical problems as serious as AIDS and the other conditions with which people have to struggle. We need public funding for basic research.

We are also saying the brand-name drugs don't put enough money into basic research. What money they do put in is not put in Canada anyway. The generic firms are able to put money into research to some extent, but until the patent protection is lifted and compulsory licensing brought in after four years of drugs being on patent, the competition for marketing drugs is limited. What you have is a monopoly of the brand-name companies over particular drugs. So it's not in a way good sense to have that extended patent anyway.

[Translation]

Mr. Réal Ménard: We live in a society where people's life expectancy is longer, and this is especially true for women. Do you not believe that the research issue is particularly acute?

You are right in hoping with all your heart that governments will invest more in research. However, as we speak, it is the drug companies that are financing the broad orientations of research work. We might hope that PMAC might make a statement and take on commitments, and the Official Opposition is going to push to have PMAC not be content with 11.8 per cent, which is the result obtained thus far, but rather aim for 15 per cent.

There is little chance that our society is one where public funds will be in the forefront of research financing . Personally, I am a little troubled when you say that you recognize that the generic drug industry is not doing research whereas in the same breath you say that you are hoping to see the competitive framework limited. Is there not a contradiction between the two?

I believe it is the Canadian Union of Public Employees that stated that a billion dollars were being invested in promotion by the pharmaceutical companies. According to your understanding of the issue, is this billion dollar amount tax-deductible for drug companies?

[English]

Mr. Makahonuk: My understanding is there are certain tax deductions that take place with research and development and product promotion.

[Translation]

Mr. Réal Ménard: That is not true. If you were provided with the rules outlining what drug companies are allowed to deduct with experimental research and development tax credits, you would see that expenses for conventions, marketing and promotion are excluded.

[English]

The Chairman: Thank you, Mr. Ménard.

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Just before I turn it over to Mr. Murray, I have a rare intervention of my own. We've been hearing today from different groups on the four-year rule. One of the witnesses here tonight has introduced some work done by the provincial Minister of Health indicating the increased cost of pharmaceutical, prescription drugs. Nobody here doubts that there's been some increase in cost. But the recommendation has come from you that there should be a four-year rule, which then permits competition. The legislation has only been in place for four years. What difference would your four-year rule make from what's been going on?

Mr. Holmberg: I think what was meant by the four years is that after four to six years compulsory licensing be allowed again so that the generics can get in. You could still have the longer patent life - not twenty years, but somewhere in between the 10 and 20 years. Reintroduce the compulsory licensing so that the generic drugs can get into the market earlier.

It did work. Looking at the statistics, what was happening in Canada previously is that compulsory licensing was working. It was providing good, cheap drugs to Canadians. We had one of the cheapest drug regimes in the industrial world before Bill C-91. After Bill C-91, and as a result of Bill C-22, the previous bill, we've now ended up with some of the highest prices in the industrial world.

Could I just go back to the business of research? The other thing about the drug companies saying that they need this money for research... In the United States, in 1991, they spent $10 billion on sales and marketing, whereas they spent $9 billion on research. Also, you have to remember that their profits are extremely high in relation to all industries - about two to three times as much as the other industries' are.

The Chairman: Yes, but I'm just trying to understand this. If the argument is that in a well-protected system they tend to spend more on research, is your argument to make it more protected for more research, or to make it less protected for less research?

Mr. Peterson: Can I field that?

It's pretty clear from a good deal of research, including that of the National Forum on Health, that the amount of research that was substantive in developing new drugs that were substantially changed from existing drugs, and had demonstrable benefits over existing drugs, was very low compared with the amount of money spent on research and developing minor variations in drugs.

It's not at all clear that corporate interests in research are geared to health interests. Rather, they have to be, of necessity, geared to profit.

The Chairman: Mr. Murray.

Mr. Ian Murray (Lanark - Carleton, Lib.): Thanks very much, Mr. Chairman. I'd like to thank the witnesses for their presentations.

In Saskatchewan you have a young biotech industry that's flourishing. We heard from a number of bio-pharmaceutical companies, a week or two ago, that made it very clear they would not be able to stay in business in Canada without the 20-year patent protection, the international standard that exists. They just wouldn't be able to attract the investment that's required, and it's long-term patient investment as well.

I'll throw this out to everybody. I don't have anyone in particular I want to ask this. I'd like to know what you feel your responsibility is to those companies that are doing very interesting research into pharmaceuticals.

Mr. Peterson: I'd like to give at least an initial answer to that. The Eastman commission way back in 1985 clearly demonstrated that a good case could be made for compulsory licensing and moderate patent protection. It demonstrated also that competitiveness did not suffer because of it. The National Forum on Health has come to much the same conclusion.

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Mr. Ian Murray: No one else wants to comment on that?

Mr. Holmberg: Actually I would also refer you to Issues in Patent Policy with Respect to the Pharmaceutical Industry - the Commission of Inquiry on the Pharmaceutical Industry, Ministry of Supply and Services Canada, 1986, by Yehuda Kotowitz.

The average patent period must be more heavily weighted towards the lower end of the scale, yielding an average optimal patent life that is probably shorter than five years even for product innovations. The introduction of compulsory licensing changes the picture. We show that compulsory licences with an appropriate royalty rate are always superior to a shortened patent life that yields the same revenues to the innovators.

Yes, we do owe something to those companies that are doing the research, but the evidence shows that their profits are very high, plus they're spending a heck of a lot more on sales and marketing than they are on research and development. That's true in the United States and Canada.

Mr. Ian Murray: No, I wasn't referring to the major brand-name manufacturers. I was talking about young start-up biotech companies, which in many cases have yet to show a profit.

I'll move on. I'd like to know if you're all in favour of generic drugs being brought under the control of the PMPRB. Is that something you would support?

A voice: Yes.

Mr. Peterson: Yes.

Mr. Ian Murray: Everybody.

We've heard a lot of quotes from previous debates in Parliament going back to 1992-93. One of the things Parliament was told during those debates was that Bill C-91 would mean the death of the generic drug industry. I'd like to know how you account for the fact that generics have prospered since Bill C-91 was passed.

A witness: We're not in favour of the generic drug companies, we're in favour of a public interest policy that bears in mind the high cost of patent protection. Sure, the generic drug companies have done well.

A voice: Prices are well up.

A witness: That's okay. We're not in favour of one particular industrial sector over another. We're in favour of a policy based on the public interest that bears in mind the high cost of patent drug protection.

Mr. Ian Murray: I'd just like to be clear as well on the burden for seniors that Ms Willson mentioned. Could you just let me know what the drug plan is in Saskatchewan for senior citizens? We heard about the deductibles, I believe $200 every six months. Does that apply to senior citizens as well?

Mr. Holmberg: What was that?

Ms Willson: They want to know about the deductible.

Mr. Holmberg: If they're entitled to the guaranteed income supplement it's $200 every six months.

Mr. Ian Murray: That's for all seniors?

Mr. Holmberg: No. That -

Mr. Ian Murray: I'm sorry. If they qualify for the GIS.

Mr. Holmberg: Right.

Mr. Ian Murray: If they don't?

Mr. Holmberg: It's dependent on income, so it would vary depending on what their income is. I think it's 0.17 times whatever their income is.

Ms Smart: But it's not only the very low income seniors, it's a large bulk of seniors who perhaps do not even qualify for GIS. The cost of drugs is constantly increasing.

Our organization went out and did what we called vision sessions all over the province. We were told by many people that at the end of the month it came down to a choice between keeping up their medication and buying proper food. Of course, if they don't keep up their medication and take it as they are supposed to, they may as well not be taking it at all. So the cost for seniors is something we have been told over and over again.

Mr. Holmberg: I just add that I have heard of cases of people having to go back on welfare because of drug costs.

.2005

Ms Willson: The system we have in Saskatchewan with the drug plan is certainly a great deal better than what some of the other provinces have. There are special conditions and special cases that are considered and given priority.

Mr. Peterson: I just want to validate in any way I can what she is saying about seniors' problems and about fixed income people. Our anecdotal experience at the clinic, the pharmacist assures me, is people having to make exactly that same choice of whether they can afford drugs that month.

Mr. Ian Murray: I have just one quick, final question on reference based pricing. I believeMs Smart mentioned that in a cost saving context. Is reference based pricing something the Saskatchewan Health Coalition supports? As I understand it, at times physicians would prescribe a certain drug and say no substitutes. Perhaps I'm misunderstanding this.

Ms Smart: Reference based pricing is something that's been brought into British Columbia or tried in British Columbia, and it seems to be working reasonably well. People are able to see the different prices of drugs and prescribe the one that's less costly.

Mr. Ian Murray: Mr. Chairman, if I have any time left, I'd be happy to share it with my colleagues.

The Chairman: I'm just going to ask another question, if you don't mind, because you've touched upon several points that are really important to us.

I just wanted to tell you as an overview that I think every committee member here is fully aware of the difficulties low-income people have in accessing prescription drugs. I don't think anybody here kids themselves about the seriousness of the problem.

There is a question of controlling the price of generic drugs, and you all seemed to nod when one participant said we'd very much like to see that under the price review board. That is in fact a transfer of authority from the provincial government to the federal government. Has this been discussed with the provincial government? Do you anticipate their adopting that position when they come before us?

Mr. Peterson: I don't think we have any information on that.

The Chairman: That might be useful. We'd like to make sure everybody's working together for the same purpose. If you have an opportunity to discuss it, your provincial minister will come here and I'm sure he's interested in the views of the coalition. You might just want to make sure that -

Mr. Peterson: The premier has already invited us and we have to work with government. When I say us, I'm talking about the health coalition. The Federation of Community Clinics has been working with the provincial government for the last year or two.

The Chairman: That's very good, very helpful.

Finally, I just want to go back to the four-year rule so I understand where everybody is. When Eastman discussed it in the mid-1980s, what he said was you have to take into account that it takes six to seven years to get through the field testing and the regulatory process. After seven years, you should have four years of market exclusivity. That makes the total eleven. So when you use the word four, are you talking as Eastman did, which is eleven, or are you talking about four in a different way that I don't quite understand?

Ms Smart: I think we're talking about four as Eastman said it, because that's what we would base it on. It would be four years from the time it goes to market, and then compulsory licensing would be allowed.

The Chairman: Thank you.

Are there any concluding remarks from any of the participants? Is there anything we missed from your point of view?

Mr. Holmberg: Could I just mention a drug here? We have an individual on our district health board who is using a drug called Mestinon. In June of 1996, it went up 125%. Would you look into that, please?

The Chairman: Yes. In return, I wonder if you could help us out with one thing, and this is public testimony. The price review board came before us and indicated a very low rise on an annualized basis of the cost of drugs beneath their purview, and yet the anecdotal testimony has been contrary to that. I wonder if you would have time in the next few weeks to get from the clerk a copy of that testimony and just let us know what you think of how it's been proceeding.

If there's any way we can improve the work of the Patented Medicine Prices Review Board, we'd like to know from you, because there's no use frustrating each other with our getting information from an agency saying things are hunky-dory and you having all the anecdotal evidence which is totally contrary to that. We very much would like to know how to strengthen that organization. I think I speak on behalf of all members of the committee on that point.

.2010

Mr. Peterson: One of the things they could do is to start controlling initial costs, the introductory costs, of name-brand pharmaceuticals, because they are tremendously inflated relative to the investment costs.

The Chairman: Thank you so much for your time and thank you for coming together tonight. We appreciate your making the effort. As parliamentarians I can tell you that we think your views are important. We've heard some of these positions before, but it's not the original presentation that interests us but what you had to say in the round table, and you've added some colour and some commentary to bring it alive for us. We appreciate it, and the hour and a half you spent with us was greatly welcome by all members of the committee. Thank you.

We're going to continue our hearings across the country and I hope our findings and our conclusions are consistent with what you'd like to see in the Canadian health care system and intellectual property. Thank you very much and I'll say good night on behalf of the committee.

What's the latest word from B.C.? What do you think is happening there?

A voice: I have not spoken to them. I can dial them up right now.

The Chairman: Why don't you dial them now and see if anybody's in the room at all? We're half an hour ahead, but what we've been doing is phoning ahead, and as people have come in early we've tried to start as early as possible.

[Translation]

Mr. Réal Ménard: We could perhaps have a ten-minute break.

The Chairman: Absolutely. We will probably break until 8:30 p.m.

[English]

We'll try for 8:30 probably. That's my guess. We won't get started before then, even if we try to hurry it on. We're suspended until 8:30.

.2012

.2020

The Chairman: Could I get everyone's attention, please? Before we go on to the actual hearing, I just want to explain our process. Then we can give you a minute to think about it.

What we'd like to do in the round table is to have people make an opening statement that highlights their written brief. The researcher is sitting right beside me. The members of the committee take the brief seriously. There should be no doubt in your minds that the briefs will be read and considered.

What we want to know from you is what's really driving your interest in this issue and what methods you want to leave, both with the government side and the opposition parties, so we really understand what's going on. Some of you are working with the National Health Coalition, which is quite fine and quite acceptable. We've had their briefs presented. We'd appreciate if you would indicate that this is what you're in agreement with and get on to the points that really concern you.

The members have lots of questions. We're interested in the different perspectives from across the country. I can promise you that everybody will engage you in conversation after, and you'll have a chance to make your points. Make the first part of it. Give us the message, in TV land if you will, then give us lots of chance for questions after.

As soon as I use the gavel, the meeting is in order and on record. Also, please identify yourselves. Have you decided among yourselves who will start? If not, I might simply look at the list and say... How about you, Jef? Is that okay?

Mr. Jef Keighley (National Representative, Canadian Auto Workers Union): That's fine, David.

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

I'd like to welcome our witnesses to the round tables we're holding today. This time our witnesses are from British Columbia. All members of the committee join me in welcoming you. We look forward to your presentations.

We would like each of the individuals to in turn identify themselves and to state in five minutes or so what they think the pressing issues are that the committee should resolve. After we've heard from everybody, we'll head into a round table.

So I'm going to ask Jef Keighley from the CAW British Columbia office to begin our deliberations today. Welcome.

Mr. Keighley: Thank you, David. I'd like to thank you first for the opportunity to address the committee, especially giving the hour in Ottawa. We sent you a copy of our brief yesterday. I'm going to skip over some of the initial points so we can get to it.

My name is Jef Keighley. I'm the national representative with the CAW. I'm also a vice-president of the British Columbia Federation of Labour. With me is Spencer Mohart. Spencer is the administrator of our health and welfare plan, not only for our own union, but for other unions in British Columbia. Spencer has extensive experience in that area.

.2025

Our thrust is going to be basically looking at the issue of bargaining, and the issue of health and welfare plans, particularly with respect to extended health plans.

We define ourselves as a social union. What we mean by that is we recognize that our political and social responsibilities go well beyond the workplace into the our communities. When Bill C-91 was first introduced, we were strenuously in opposition to it because we knew then that it would drive up the cost of pharmaceuticals for all Canadians, not just the organized workers.

We want to let you know that we fully support the ``Medicare: Need Not Greed'' campaign of the Canadian Health Coalition, their five-point plan for pharmaceuticals, and the work of that coalition.

Although our experience goes well past, our comments are primarily directed toward the last ten years, since the advent of Bill C-22 and Bill C-91, and we wish to give you some of those critical examples. The information I'm going to give you is driven from our own experience negotiating and delivering health and welfare plans for a wide variety of companies throughout the British Columbia marketplace.

In 1987 we could look to our extended health coverage, which is the drug reimbursement part of the health and welfare plan, and our average cost was running $7.80 per employee covered in 1987. In the past ten years, we have witnessed those costs go up 275%. Costs are now running an average of $21.44 per month.

Almost all of that is directly attributable to the rising cost of patent medicine. Patent medicines alone under our plan have risen 16% every year for the past 10 years. After you've deducted 34% for inflation, you're really looking at - just on increased costs over and above inflation - 8¢ an hour for every hour of labour paid for every one of our covered members. That's an average $140 per employee covered, per year.

The critical part of understanding health and welfare premiums is that the premiums paid are a direct function of the claims. Insurance companies for very large risk groups, of say 1,000 plus, are charging in the range of 15% to cover profit and overhead. As the group size goes down, they charge upwards of 30% premiums for fees, profit, and overhead for groups of 100 and less, and when you get down to about 50, that climbs to 35%.

The important thing to understand here is that the rising pharmaceutical costs cost all employers, all employer-employee groups, and all Canadians more money. But smaller employers - and we're all supposedly looking after the interests of small and medium-sized businesses as economic drivers in this country - necessarily get hit far harder, even though everybody gets hit.

It's fair to say that Bill C-91, and Bill C-22 before it, have directly and adversely affected all employers, but small and medium-sized employers far more dramatically.

That reality has also had a substantive effect on provincial drug plans. In British Columbia, for instance, when the Pharmacare program was originally introduced, there was a $50 per family per year deductible, and the reimbursement level was at 80%. Today, as a direct result of those rising drug costs, because we're now engorging the coffers of the multinationals, our deductible has gone from $50 to $600, and the reimbursement level has gone from 80% down to 70%. All British Columbians, all employer groups, and all employer-employee groups are paying the freight for that change.

I went to the library last week to do some research on the relative impacts and looked at the Financial Post 1000 and at the Fortune 500. We've appended to our brief the last four pages from the Fortune 500 medians from last year.

One of the things the April 29, 1996, Fortune 500 clearly shows - and really you look to the American experience because that's who dominates the patent drug industry here in Canada - is that out of 36 identifiable sectors in the United States with respect to the one-year return and the ten-year return for investors, pharmaceuticals were number four.

When it gets down to return on revenues, return on assets, and the all-important return on equity - because that's what profit truly is - the pharmaceuticals are number one out of 36 industrial sectors throughout the United States. In 1995 they had a return on equity of over 30%. The only place you can do better than that is in the illegal drug business.

.2030

If the pharmaceuticals were in fact seeing breakthroughs one following the other, we might have at least some greater sympathy for that position. The reality is, it's exorbitant. Really what they're doing, in our industrial terms, is reformatting and reformulating prospectively, to mine the patent-protection mother lode. They are really mining Bill C-91 and Bill C-22.

Spencer, who's with me, talked about this with us back in 1992. He raised with us then, backed by information received from the Patent Medicine Prices Review Board, that in 1991 a total of 94 allegedly new drug products were introduced by the pharmaceutical industry in Canada. Only five were genuinely new; 34 were me-too drugs, basically providing little or no therapeutic coverage but nevertheless given the additional patent protection and the prices jacked up. The remaining 55 were simply line extensions such as reformatting from a pill to a capsule, changing the colour, or slight differences in the milligram dosage.

To conclude in this area, Bill C-91 has really hit both Canadian workers and Canadian employers. We can't let the opportunity pass to point out the palpable irony that the so-called free marketeers in the pharmaceutical industry want to have restricted competition when it comes to the generics. It seems that perhaps Adam Smith's ``invisible hand'' is in fact attached to the arm of a pickpocket, and the pockets being picked are yours, mine, and everybody's in this room.

In your recommendations we'd strongly urge you to adopt the five-point plan put forward by the Canadian Health Coalition. We think that's good for Canadian citizens. We think that's good for Canadian business.

I'll wrap up there and let somebody else take over, and we'll join in later.

The Chairman: Jef, I'd like to thank you for your presentation. I think committee members will pursue this. We're really interested on the impact on union negotiations and the cost that's being implied in your original presentation. We haven't had nearly enough testimony on this, so I'm sure people will come back to it, if you don't mind.

Mr. Keighley: Just before you pass, I think it's important to keep in mind that the amount of money paid out through this process is far more than what the employer community is crying about for UI premiums, and yet we hear nothing from the employer community on this very important issue.

The Chairman: This also is very true, so thank you for putting that on the record.

I now turn to Joyce Jones, the chair of the Greater Vancouver Seniors Coalition, to speak. Welcome.

Ms Joyce Jones (Chair, Greater Vancouver Seniors Coalition): Thank you. We are very pleased to be a part of the discussion here tonight. I bring with me Ben Swanky and Ellen Woodsworth, who are also members of the Greater Vancouver Seniors Coalition.

We're a coalition representing a variety of senior organizations, which has branches all over the province. We came into being in 1994 when it became apparent that social programs, on which so many seniors depend, were being eroded by federal budget cuts. We feel seniors would be more effective if we could speak with one voice. We have not yet achieved that, but we're making progress.

We organize conferences of seniors organizations on issues as they arise and as we believe they should be addressed. We publish leaflets, issue press releases, and send out speakers, and we're interviewed quite often on TV and radio.

I'm sure you don't need this, but we want to bring you up to date on the majority of seniors and their wealth status. Most of them do not fall into the category of wealth status, but come from the low-income bracket. In 1996, 46% of seniors had incomes below $20,000 and relied heavily on OAS and GIS, and 33% had incomes between $20,000 and $40,000, which can hardly be called wealthy. Only 5% had incomes over $75,000. In that, 62% of senior women do not have private pension plans and rely heavily on government transfer payments.

We're convinced that the major reason for escalating drug prices is Bill C-91, which gives the big foreign multinational drug manufacturing corporations a 20-year monopoly on the sale of brand-name drugs in Canada. The purpose of Bill C-91 was not and is not to improve the health of Canadians. It is to keep out competition, to prevent the growth of the Canadian-owned generic drug industry, which can produce drugs of the same quality at half the price, and to enhance its own profits at the expense of Canadians. This was recognized by the government-appointed National Forum on Health, as it stated in its final report, which you have seen.

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Finally, Mr. Chrétien and two cabinet ministers involved in this review of Bill C-91 state that the removal of the 20-year monopoly clause is not negotiable, because Canada is a signatory to NAFTA and the WTO, which have clauses granting monopoly patent rights. Leaving aside the shameful fact that any Canadian government should sign an agreement that takes away Canada's right to decide what is best for its health care system, there are ways of getting around these clauses.

Why can't the Canadian government make efforts to amend these two trade agreements so that we retain the right to run our medical care system the way we deem best, which in this case would mean restoring compulsory licensing? Compulsory licensing was introduced in Canada in 1923 and considerably broadened in 1960. It allowed companies in Canada to manufacture and sell patented drugs that had already been on the market for several years. Generic manufacturers paid royalties to the drug's inventor to offset the cost of research and development. Bill C-91 passed in 1993 and eliminated compulsory licensing retroactively to December 20, 1991.

Apparently there are three exception clauses that would enable Canada to get around the 20-year provisions of Bill C-91 and restore compulsory licensing. These come according to Jean-Gabriel Castel, professor of international business at the Osgoode Hall Law School. The first is to treat compulsory licensing as a limited exception to the NAFTA and TRIPS codes, in particular article 30 of the TRIPS text and its parallel article, 1709.6 of NAFTA.

This is Professor Castel's quote:

...limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

That's his first option. He then goes on to develop a second option, giving many ways in which one could look at changing these laws.

A second option for institutional compulsory licensing, while accepting that such laws must conform to the TRIPS and NAFTA articles already mentioned, would be to ensure that they take advantage of the clause allowing ``the use of the subject matter of a patent other than those allowed under the limited exceptions clause''. Thus, if a licence for a public agency were operating on a not-for-profit basis or a generic firm were producing pharmaceuticals on contract for a public drug program, such other use of the subject matter could be allowed.

In other words, the licensing of pharmaceuticals for distribution under a public drug program rather than for commercial use would be one of the best ways of making generic drugs available without violating the terms of NAFTA and WTO.

The third option that Professor Castel gives is for Canada to seek amendments to the TRIPS code and for NAFTA to clarify the scope for compulsory licensing. I think it's important to remember that in no way are these trade agreements fixed in stone. NAFTA article 2202 allows any member to propose any amendment at any time.

The National Forum on Health noted in its final report that the multinational drug industry can bring pressure to bear through foreign governments to modify Canadian policies and its interests. Therefore, the National Forum on Health advises that concerted actions with other countries initiated by the federal Minister of Health could be a more effective counterpoint to these pressures. Many of these countries are struggling with exactly the same problems of managing drug utilization and costs. All that's in the federal forum's report.

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Measures such as compulsory licensing are a legitimate means through which public policy objectives may be achieved. Compulsory licensing does not deny private sector rights but it does add a social dimension by requiring patent holders to share their inventions in return for royalty fees to cover the cost of research and development.

The Greater Vancouver Seniors Coalition strongly endorses the Canadian Health Coalition's five-point plan.

Thank you.

The Chairman: Thank you very much, Ms Jones. I appreciate that.

I'm going to call upon Sandra Sorensen from the Health Sciences Association of British Columbia. Welcome, Sandra.

Ms Faith Uchita (Acting Communications Director, Health Sciences Association of British Columbia): It's not Sandra. My name is Faith Uchita.

The Chairman: I'm sorry, Faith. They didn't tell me they changed it. Go ahead.

Ms Uchita: I'm here representing my union, the Health Sciences Association of British Columbia. Our union represents more than 10,000 health care professionals who work in the health care field in British Columbia.

I'm a practising pharmacist at the Vancouver General Hospital and have seen firsthand the effects of Bill C-91 on costs and quality of health in British Columbia.

Drug costs are out of control. Our situation is made worse by bad legislation in the form of Bill C-91. We share the concerns raised by others on this panel and identify with the Saskatchewan Health Coalition in their presentation to you.

In the limited time available to us to state our concerns today, I want to focus particularly on the issues of the international trade agreement in our health care system.

The Chairman: Faith, we're having trouble with translation here. Is there a microphone that can be moved closer to you?

Ms Uchita: Okay. It would be helpful if we could see all the people listening to us.

The Chairman: All right. After we get set up on this, the camera will start going around more frequently to everybody and you can get a little sense of where we are and who's paying attention. We all are now.

Okay, Faith, I'm sorry about the interruption. The translator has to hear your voice clearly to translate for committee members. Please go ahead.

Ms Uchita: In the limited time available to us to state our concerns today, I want to focus particularly on the issue of international trade agreements and our health care system. We recall the position of the Liberal Party during the NAFTA debate and your opposition to the drug patent law. Now you're claiming that your hands are tied by the international trade agreement, which is NAFTA, and the World Trade Organization. We do not agree.

We support the legal opinion of trade lawyer Barry Appleton, which shows how your government couldn't vote in the public interest. Other sections in the trade agreement allowed Canada to put restrictions, if necessary, for the general public benefit, thereby allowing Canadians quicker access to cheaper generic drugs.

When Industry Minister John Manley said it is not possible to return to our pre-1991 compulsory licence regime, and Health Minister David Dingwall said there are no options, they are misleading the public on an issue of critical concern to all Canadians.

We have read and support the paper prepared by John Dillon and presented to you, entitled On Feeding Sharks: Patent Protection, Compulsory Licensing, and International Trade Law, regarding pharmaceutical drugs and Canada's international trade obligations under the NAFTA and the WTO. Mr. Dillon points out there are a number of changes Parliament could make during this review of the Drug Patent Act that would be consistent with Canada's international trade obligations.

We urge you to seek legal opinion on possible strategies before concluding that you must follow the trade agreement. Canadians, Americans, and Mexicans were promised a six-month solution during the public debate about NAFTA. We were told we could get out of this agreement with six months notice. Surely this assurance is as relevant today as it was then, particularly on this issue.

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Although much of the damage and restructuring achieved by NAFTA are long-term, we have the opportunity now with this review to invoke our right to regain control over a key section of our service and our economy.

We support the call of the National Forum on Health for a government-provided universal drug plan. We feel that such a plan represents the public interest definition of trade agreement. We urge the Government of Canada to act on this provision to change this bill in order to ensure that at least one version of each pharmaceutical preparation sold in Canada is exempt from patent protection. This would guarantee Canadians access to high-quality, low-cost pharmaceutical drugs. It would also contribute to maintaining and improving our national health care system, which is the political party of all Canadians.

Thank you very much.

The Chairman: Thank you very much for your fine presentation, Faith.

From the Hospital Employees' Union, I have two people. Is there one of you who's going to speak on behalf of the group? I have Fred Miezia. Are you going to make the presentation, then, sir?

Mr. Fred Miezia (President, Hospital Employees' Union): Yes, I am.

The Chairman: Okay, please go ahead.

Mr. Miezia: Thank you very much, Mr. Chairperson.

I am the president of the Hospital Employees' Union and we're a service division of the Canadian Union of Public Employees in British Columbia. I'm also an officer of the B.C. Federation of Labour and a regional vice-president on the CUPE national board.

I come to this hearing to speak on behalf of the 42,000 front-line health care workers who make up our membership. For over 50 years we've served the public in hospitals, long-term care facilities and community health agencies. We're strong advocates for preserving and improving public health care and we support the Canadian Health Coalition in their five goals.

We'd like to use our time with the committee to support universal publicly administered drug insurance in Canada. I'll also refer to the different response of the government here in British Columbia. We have been one of the provinces that has been hardest hit by cuts in the social transfer payments for medicare. This is only exacerbated by the provisions of Bill C-91. Our government has instituted reference-based pricing and a different approach to health care cuts than other provinces. So it's very important that you truly hear from coast to coast to coast in this country. At the same time, I'd like to tell you how Bill C-91 is a barrier to the goal of health care and it taxes provincial pharmaceutical plans.

Just to preface my remarks, I'd like to tell you how angry we are with the way the government has chosen to deal with this important legislation. Our union is frustrated by the lack of real consultation that is taking place on Bill C-91 outside Ottawa. Today's electronic jaunt across the country is a poor substitute for the extended cross-country hearings this legislation and Canadians deserve.

Voices: Hear, hear!

Mr. Miezia: We're also disturbed that this legislative review is limited to the Standing Committee on Industry. It reinforces our perception and the perception of many British Columbians that this government regards the provision of necessary medications to Canadians as a trade and industry issue, primarily concerned with profits rather than an issue fundamental to Canadian health care. You can do better. You must do better.

This legislation should be reviewed widely, and certainly by the Standing Committee on Health and nationally by the ministers of health. The government must also make sure the wide range of groups in Canadian society who are affected by Bill C-91 are both aware of the review and invited to participate.

Our union believes access to necessary medicines is as much part of Canadians right to health care as is access to health professionals, medical procedures and health care facilities.

Universal drug insurance is not a radical notion. It's a key part of the social and economic infrastructure of the top 24 industrialized nations, with the exception of course of the United States and Canada. The federal government's own National Forum on Health has concluded that the existing federal-provincial system of health insurance should move to include the cost of prescription drugs. It's advice this government should follow.

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The sad reality for 3.6 million Canadians is that necessary prescription medicines are not part of their basic health care coverage. This represents a huge gap in basic health care coverage as lower income is widely accepted as a determinate of poor health. The lack of access to necessary medications compounds poor health and leads to hospitalization or institutionalization, which are more costly to the health care system in the long run.

The biggest barrier to universal drug insurance is the 20-year patent protection for new drugs contained in Bill C-91. Using the recent Queen's University study of Bill C-91's impact as a base, it has been estimated the legislation will cost British Columbia consumers and taxpayers $30 million to $50 million in each of the next 13 years. It will cost Canadians up to $7.3 billion by the year 2010.

Bill C-91 also poses a considerable barrier to efforts by the provinces to provide a more comprehensive pharmaceutical coverage for their residents. The prices of new patented restriction drugs have been rising at over 13% annually, almost twice the annual increase for non-patented drugs. It is little wonder the cost of B.C.'s Pharmacare program doubled over the last five years. The province's Pharmacare program illustrates the savings to health care that would result if generic drugs were permitted into the market earlier than Bill C-91 allows.

To control costs, the B.C. government brought in reference-based pricing in 1995. Under this program, Pharmacare pays for the least expensive effective drug to treat certain medical conditions. This program attempts to control the costs that result from the proliferation of me-too drugs on the market. Every year about half the newly patented drugs brought to market are expensive variations of profitable medicine.

Reference-based pricing will result in savings of $44 million this year. This is significant for a program carrying an annual cost of about $500 million. It's been estimated the application of reference-based pricing across the country could save the health care system $500,000 million a year. If generic drugs were permitted earlier entry into the market, the savings to the health system would be significantly larger.

It's no surprise that brand-name drug companies try to block reference-based pricing in the courts. Ruling in the B.C. government's favour in May 1996, the Supreme Court judge noted that reference-based pricing had not adversely affected patient care. This is a conclusion that was also supported by the B.C. College of Physicians and Surgeons.

I'm calling on this government to consider carefully the recommendations of the Canadian Health Coalition and the National Forum on Health and play a leadership role in the implementation of universal drug coverage for Canadians. It's consistent with the five principles underlying Canadian health care. We should never forget them and we can't repeat them enough. They are public administration, comprehensiveness, universality, portability, and accessibility from coast to coast in this country.

It's also consistent with the goals of progressive health care reform. With the deinstitutionalization of health care into the community, it makes sense that medications covered in hospitals should be covered in the community. If not, it just stands as an impediment to a closer-to-home model of health care.

In 1993 the Liberal Party stood with Canadians against the massive profits of Mulroney's Bill C-91 in the dying days of a discredited government. In 1997, with hundreds of millions of dollars continuing to be cut from medicare and a complete flip-flop on Bill C-91, the Liberals seem comfortable with Mulroney's previous policies.

On behalf of our membership, I urge the committee to challenge those cabinet members who've forgotten the Liberal promise of protecting Canada's health care system. It's time to control drug costs and protect health care by ending the monopoly under Bill C-91.

Thank you.

The Chairman: Our final witness is from the British Columbia Nurses' Union. I believe it's Mary Malerby. Is that right?

Ms Mary Malerby (Vice-President, British Columbia Nurses' Union): That's right.

The Chairman: Welcome to the committee.

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Ms Malerby: The B.C. Nurses' Union represents 23,000 registered nurses in British Columbia. These registered nurses have been dealing on a daily basis with the side effects of Bill C-91. As we've all witnessed, with the health care dollars shrinking, hospital beds closing, and patients being discharged earlier and sicker, the nurses' workloads are increasing dramatically.

The prices of drugs have made this part of the problem. Under Bill C-91, prescription drugs are now increasing at an annual rate of 12% a year. Unfortunately for the public, these drug prices are hitting B.C. taxpayers at the same time as the government - your government, by the way - is continuing to slash health care dollars and transfer payments to B.C.

Not only does the B.C. public have to pay higher prices over the counter for their drugs, but every hospital and care facility in this province also has to pay the higher price for the drugs.

At the time when we're closing beds and shifting people out onto the streets much faster than we ever did before, we're having to keep some people in those beds and in hospitals because they cannot afford to pay for the medication if they were discharged. So in order to save people's lives, we actually have to keep them in the hospital for no other reason than to receive a drug they can't afford to buy in the marketplace.

Couple that with the transfer payments, and Bill C-91 is having a disastrous effect on the whole of B.C. Hundreds of millions of desperately needed health care dollars are being siphoned away from patient care, and put into the pockets of the drug companies. We simply cannot afford to continue paying exorbitant prices for the products of multinational drug companies, particularly when generic drug manufacturers can offer a much more cost-effective alternative.

We must remind you of several points we need to make. Drug prices are rising at 12% a year. Patent protection drugs cost an average of 50% to 60% more than generic equivalents. Canadian taxpayers can now save $750 million each year by purchasing generic drugs.

Drugs account for 15% of the Canadian health care expenditures in 1993. That amount will skyrocket now that Bill C-91 forces us to buy more brand-name drugs. Only 8% of all the new drugs patented from 1991 to 1995 were breakthrough drugs, medications that offer a substantial improvement over the existing therapy.

Forty-nine percent of all the drugs that have been brought in since 1991 are the same drugs we always had. They're just a new strength, a new colour, or a reduced strength or medication. But it's the same drug we've always had, with just a little change to it. That is not drug research. That's stealing from the Canadian people.

So far Bill C-91 has truly been a prescription for disaster in Canadian medicare. Some 23,000 nurses in B.C. tell you that it's time to stop. It's time that you, as our government, opposed these changes. We wish to remind you, as other people at this table have reminded you, that the Liberal Party in 1993 spoke out vigorously in support of not allowing this patent to happen. I hope those people who were there in 1993 remember that the millions and millions of dollars they said this drug patent would cost the health care system has happened, and it's a reality. Don't continue on with the same error that you allowed to happen under the Mulroney government.

All 23,000 nurses of B.C. want you to repeal Bill C-91, and we want you also to support the national strategy for medication.

Thank you.

The Chairman: Thank you very much for your presentation.

We'll now move to the round table.

[Translation]

We will begin with Mr. Ménard.

Mr. Réal Ménard: Mr. Chairman, you will have noted that, overall, the witnesses are not very pleased with your government and they believe that, whether it was intravenously, orally or anally, you, as a government, have changed your mind.

You have made harsh statements regarding Bill C-91. You are calling for its repeal. It is therefore perhaps more essential for us to discuss that with you.

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First of all, the spokesperson for the Canadian Auto Workers Union stated that in 1987 the average claim per employee amounted to $7.07 and that in 1996-97, the average claim had gone up to $21.44.

Am I to understand that this increase that you have described is 100 per cent attributable, in your view, to Bill C-91?

[English]

The Chairman: Go ahead.

Mr. Keighley: First off, congratulations on your weekend; it was reported across the country.

The $7.80 refers to the monthly premium paid to provide the coverage. The $24.44 is what the monthly premium has now become.

Now, in any given month, you can have a member having no claim whatsoever. Alternatively, you can have a member having several hundred dollars' worth of claims. Spencer Mohart, who administers the plan, could probably give you some additional details on that.

An hon. member: D'accord.

Mr. Spencer Mohart (Adminstrator, Health and Welfare Plan, Canadian Auto Workers Union): That $7.80 figure was a monthly cost for us to provide prescription drugs to the people covered under the negotiated benefit plans. What has happened is that in that last ten years it was raised to $21.44 per employee per month. Now, part of that is attributable to the adjustment, if you will, by the provincial government pharmacare plan.

As Jef mentioned earlier, our Pharmacare deductible initially was $50 per family per calendar year, with a 80% reimbursement of any moneys over that. That deductible has been raised year after year until it's now $600 per family per calendar year, and the reimbursement level has been dropped from 80% to 70%.

So not all of that 275% increase was attributable directly to the cost of prescription drugs, but rather to the cost of prescription drugs and the reaction of the provincial governments to those increased costs. And the only way they could try to control them was to increase the deductible.

Reference-based pricing has so far not impacted too much on our plans, although I do notice in my last year's stats that the figures have held stable. That's the first time in ten years that the costs haven't gone up and up. So the reference-based pricing that B.C. has introduced has at least stopped the radical increase year to year.

Mr. Keighley: It also has to be remembered that we're really talking about two hits: Bill C-22 back in 1987, and Bill C-91 in 1993. So this was a double whack that brought us to the current situation.

The Chairman: Monsieur Ménard.

[Translation]

Mr. Réal Ménard: One of the representatives of your coalition stated that the monthly increase in the cost of drugs was of 16 per cent, whereas someone else stated that it was at 12 per cent.

You are aware that the Patented Medicine Prices Review Board (PMPRB) is a quasi-judicial tribunal that must each year draft a report that is tabled in the House in June by the Health Minister. This report has two main purposes. It must evaluate the rise in the cost of drugs, with cross-references to various other industrialized countries, and one can also use the report to examine the R&D effort of 69 pharmaceutical companies that hold patents.

We had the pleasure of having a meeting here with the president of the Patented Medicine Prices Review Board. You are aware that there have only been two presidents of the PMPRB since its creation: first, Mr. Eastman, a Canadian of Swiss origin, and then Mr. Elgie, who took over recently.

When you look at the reports - I believe there have been ten thus far - , you see that in Canada there has been control over the price of patented drugs and that the price increase of these drugs is well below the consumer price index.

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You are telling us that none of this is credible, that it is not true, and you are asking us to examine other statistics, namely yours. How do you explain the spread between the coalition's data and that of the Patented Medicine Prices Review Board?

[English]

Mr. Keighley: Well, in our case we're talking about the actual pay-out made. We're not talking about some generic statistics. We're saying this is what we paid out under our plan.

We may have different costs in our plan, but the fact of the matter is that our statistics are based on the actual pay-outs to real human beings for real illnesses. We don't try to justify those with other overall statistics.

There's another point that might be made -

[Translation]

Mr. Réal Ménard: I believe that we are not talking about the same thing. A member of your coalition stated that the annual price increase for drugs was at 12 per cent and another representative said that it was at 16 per cent.

You have already said several times that there was a difference between the rise in the cost of patented drugs and the rise in the cost of non-patented drugs, and that the price of the latter was increasing less rapidly than that of patented drugs. Is this important to you? Do you believe that the Patented Medicine Prices Review Board, which is a quasi-judicial tribunal, is credible when it tells us that it could put in place corrective measures and that in Canada the increase in the cost of patented drugs is below the rate of inflation? Do you agree or not with that? I am not talking to you about the premiums that you must pay as an employer or as a union. I am talking to you about the appraisal of the situation given by the Board.

[English]

The Chairman: Jef, could I just tell you where we're coming from on this? What we're trying to do... And I'll just follow Mr. Ménard's question, because it's very germane. We're trying to understand some of the different bodies of information we have.

The information from the union movement, which is really important, is that the cost rises have been dramatic. The official testimony from the government agency is that from their stats, the annual increase has been less than 2%.

So is the increase in your costs attributable to the implementation of Bill C-91, or are there changes in patterns of usage? Do you see that there's a whole constellation of causes, or do you attribute it directly to what the manufacturer is charging as the sole source? That's what we're trying to figure out, and what weights to give to these different issues.

[Translation]

I believe it is the same question.

[English]

Mr. Keighley: So many of those drugs have been reformulated. If you take a set formulation back before Bill C-91, for the most part a lot of those formulations have dropped out of usage, because they've been repackaged and reformatted. So they're now comparing a drug format that's no longer commonly prescribed, because doctors get the primary information on drugs from the same pharmaceuticals that reformulate and jack up the prices.

So it's not at all surprising that if you compare a drug that is basically falling into greater and greater disuse because of the reformatting and the PR to the doctors, that price may be static or relatively benign with respect to inflation, but the overall costs of what's actually being prescribed by real doctors for real patients is going up dramatically.

We're paying what the doctors are actually prescribing, not what some government board establishes as a static comparison over a timeframe.

[Translation]

Mr. Réal Ménard: This is an extremely important nuance. You are telling us that the increase in the cost of drugs is attributable to the drugs prescribed by doctors, because you have reason to believe that medical practitioners are prescribing the more costly drugs. Is that what I am hearing?

[English]

Mr. Keighley: No, we have reason to believe that they are are prescribing average prescriptions across the piece. We have enough numbers in our plans that we're not hitting artificial peaks or valleys. It's genuinely reflective of what's happening within the medical profession. They're getting their information produced by the drug companies and they're responding in kind, and that's what's driving the costs. What they're prescribing is what's been reformulated and reformatted to gain 20 years of extra protection and jack up the price.

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[Translation]

Mr. Réal Ménard: I believe it will be extremely difficult for the committee to form an opinion if we do not understand.

Personally, what I am telling you is that the Review Board, that is made up of five members including an accountant, a physician and a pharmacoeconomist, is mandated to evaluate the increase in the cost of patented drugs. It carries out its work on the basis of a certain number of guidelines, namely a gamut of comparisons between various industrialized countries.

Are you saying that the increase in the cost of patented drugs is really out of line? Do you really have the impression that the increase is different from that outlined by the Board? The Board tells us that the increase in the cost of patented drugs is of less than 2 per cent, but the members of the Canadian Health Coalition, in Saskatchewan, Manitoba and British Columbia, are telling us that the cost of drugs is rising by some 16, 12, or 17 per cent per year. What are statements such as those based upon?

[English]

Mr. Keighley: At the risk of being repetitive, it is based on what we're actually paying out based on what doctors are actually prescribing. The price review board is substantially disconnected from terra firma when it comes to describing a real-life situation Canadians are living in.

[Translation]

The Chairman: One final question, Mr. Ménard.

Mr. Réal Ménard: With all of the diplomacy you and I are capable of, my understanding is that you are telling the members of the Standing Committee on Industry that the Patented Medicine Prices Review Board is mistaken, that its evaluation is wrong and that our decisions should not be based on such evaluations.

Do not be afraid of speaking your mind.

[English]

Mr. Keighley: That's correct. You should not base your conclusions on that.

The Chairman: Thank you very much for that. We have to get to the bottom of that one.

Ms Malerby: I would also like to make a statement. I don't know how the drug patent people make their assessments, but I'm sure they probably would slant all their data in order to make themselves look good and to get another 20 years of protection.

I would just bring it down more basic to my reality. In my reality, which is in an acute care hospital, in B.C. we have reduced the number of beds in our hospitals by over 1,900. So we have 1,900 fewer beds than we had four years ago, and at the same time our drug costs have gone up 12% a year in our B.C. facilities. I don't know who's putting the prices on this, but I'm telling you that as the cost of everything else is going down, the drug cost to run facilities in B.C. is up 12% a year and climbing.

The Chairman: Mr. Mayfield.

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

I'd like to just pick up on another facet of that. As we listen to the agency talk about the price of drugs, we've listened also to other scenarios of increased funding for research, increased facilities, increased number of personnel, etc. We have had some of the biotech people tell us that it is absolutely essential for their continuing research and production to have the extended patent period and that without that they would not be viable. We've also had the majors say they have increased their funding as a result of this and that if that degree of protection doesn't continue, they would be inclined to take their business to another part of the world that would be more conducive to their profits.

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This raises alarm for some people, particularly those in the research area. I have a couple of letters here, one from an epidemiologist from the Vancouver General Hospital and the other from the division of neurology at the University of Ottawa. They both make the point as strongly as they can that the increased funding from brand-name pharmaceuticals is absolutely essential for the financing of research. One person mentions dealing with a matter such as VRE, the outbreak of the vancomycin-resistant strains. We had a couple of instances of that in British Columbia.

If we're not prepared to put the money into research that is needed, when our population needs to have these drugs they won't be available. I'm wondering how you would deal with this issue of the research money that's necessary and that these people are strenuously arguing must come from continuing the patent protection period.

Mr. Mohart: I don't think any of us has a major problem recognizing that there should be some patent protection for new drugs. They have to recover their research and development. I think what gets everybody really upset is when you see instances, which were quoted to you and are in some of these reports, where over 60% of the so-called new drugs were nothing but a change from a pill to a capsule or from a capsule to a tablet and the bloody price went up and the patent extension was granted. That is criminal.

I don't think we have a real problem recognizing some private protection for the research and development of a new drug, but when they're playing those kinds of games, bending the rules and trying to find their way around the legislation, then it's up to you people to do something about the legislation so that kind of crap doesn't continue to happen.

Mr. Keighley: I've never seen anybody who stood to gain ever advocate the change from the policy that provided the gain in the first place. It's the old adage that those who are prepared to rob Peter to pay Paul can always count on the support of Paul. Obviously they want to keep the money rolling in.

It's a tenet of business in Canada that if you don't cry ``Chicken Little, the sky is falling'', you're not going to get attention, but to suggest that this translates into a massive exodus from a country that provides a very good market... We provide a good market. Notwithstanding our population, it's better than average for most of the world. There's a good dollar return. Even at far lower prices, it's simply not to be believed that some of these people are going to run away and leave those profits behind.

The Chairman: Ms Bonnie Brown.

Ms Bonnie Brown (Oakville - Milton, Lib): Thank you, Mr. Chairman.

I just want to make sure I understand what this delegation is saying and all seem to agree upon. Going back to Mr. Ménard's earlier questions, are you saying that for the Patented Medicine Prices Review Board to evaluate the increases in the price of, for example, a 10-year-old drug that is being prescribed less and less often each year is kind of a useless exercise? You're making the distinction between those prices, which may be rising at less than the rate of inflation, and the real costs that employers, through their drug plans and their insurance companies, are paying out to your people. You're saying that's more like 12% a year.

You're saying these real costs are based upon what physicians are truly prescribing. They're often the new, expensive drugs that are still at entry level pricing, protected by patents, but a lot of them are really just new versions or new formats of old drugs. You think that game playing is what is driving up your costs. Is that correct?

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Mr. Keighley: Yes, it is in very substantial part. It's not that the test of the 10-year-old drug or older drugs isn't itself worth doing, but if that's the only exercise it performs, it's trying to play with an ever decreasing size of the pie.

They're keeping track of probably under 10% of the pricing, whereas the doctors are prescribing increasingly in the 90% range, and that's what's going up. It's not that the exercise they're doing is wrong. It's wholly inadequate for the real world that they're trying to evaluate.

Ms Bonnie Brown: I thank you.

We did have testimony earlier from an actuary from the Green Shield health insurance plan, and he was very clear in making that distinction between prices and costs. As government I agree with you that we have to be concerned about costs.

I have a question now for Mary Malerby. Mary, most physicians seem to feel that more use of pharmaceutical therapy or pharmacology is actually reducing health care costs, because it's keeping people out of hospitals. You're suggesting that there are many longer hospital stays, because certain patients are kept in the hospital in order that they can receive expensive drugs that they could not afford if their physician let them out of the hospital. Does your association have anything other than anecdotal evidence on that? Are you keeping any statistics on that particular phenomenon of longer hospital stays?

Ms Malerby: At this point I can't tell you whether we actually have stats, but we do have situations that many nurses will relate to you in which they have people sitting in the lobbies of the hospital and reading the newspaper or socializing, but they can't go home because they may have Crohn's disease and the cost of the medication for Crohn's disease is too expensive to take it outside of the hospital. The only way they can afford to have it is by having it in the hospital. Often these involve IV therapy. The only reason they're there is that the medication is by intravenous.

We have programs in which they should be able to have intravenous products given in their home or in the community by community nurses. Because the cost of the drugs that they would have to go to a drugstore and buy themselves if they were not in the hospital is so high, they could not afford it. We have some medications, for Crohn's disease in particular, that are up to $400 for one dose. There's no way any Canadian, unless you're related to Conrad Black, can go out and have four doses of medication at $300 or $400 a dose. It's an impossibility.

Ms Bonnie Brown: I understand the concept. What you're saying is that you don't have anybody collecting statistics. Could your association begin to collect statistics, maybe in ten major hospitals in B.C., and give us fairly soon - even if it was only three weeks of evidence - the number of times that kind of thing is happening?

Ms Malerby: I think it would be possible that we could produce something like that.

Ms Bonnie Brown: I think that would be helpful to us.

I think Jef made the point - and I find it very interesting - that employers are currently crying about UI premiums and seeking reductions in that particular cost, but they seem to be silent on their share of the costs of their drug benefit plans. Do you have any idea why that might be so? I find it an odd phenomenon too.

Mr. Keighley: Most employers don't actually understand what they're writing cheques for. That's part of the big problem. They write a cheque, and they have a consultant at the end of the month who tells them they owe $25,000 to the health and welfare plan. They pay it out, but they don't actually understand.

I've actually had to sit down at the bargaining table and explain to them what they're paying for, what the per hour cost is, and what their cost would be if their employees had fewer or more than 40 hours. There isn't a very polished understanding, but there isn't a human cry from the business community.

By and large the business community simply echoes whatever the BCNI or a provincial group such as The Fraser Institute or the provincial business council is talking about. If the business councils aren't talking about it, small and medium-sized business isn't talking about it either, because they're getting their information entirely second-hand. It's just parroting the information. Frankly, with no disrespect, it's largely a function of the ignorance - not stupidity, but ignorance - of the business community on what they're actually paying for.

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Ms Bonnie Brown: Thank you.

Witnesses previous to you have talked about the fact that they believe the pure research being done is geared to the potential profitability of the drug and not geared to the public health needs of the nation. Some of them have suggested that they would like to see public funding of pure research - research that would be driven by public health concerns.

Have you people thought about that concept? And if you have, what would you suggest might be the source for the funding of that public investment?

The Chairman: Does anybody have a response to this?

Ms Jones: There's some indication that in one out of two visits by seniors to their doctors they come out with prescriptions. It's an easy way to look after health care, but it's not the best way to look after health care. Therefore, that would certainly not be the way you wanted your health care to carry on, not with prescriptions coming out of your doctor every time you visit.

The Chairman: All right. Thank you very much.

Were there any final comments from the panel? Has everybody had their chance to say what they want to say?

Sir, you have your hand up there. Go ahead.

Mr. Ben Swanky (Greater Vancouver Seniors Coalition): We feel that research should be controlled and directed in the manner your last member described. That is, it should be based on what's good for health care and not what's good for the profits of multinational companies, because they're out to sell drugs and we're out for health care. They're two opposing things.

I think there should be some control over the kind of research that's done. It should be looked at to make sure it's the kind we need for a better health care system.

The Chairman: Thank you very much. I want to thank each of the participants.

Jef - if I could, through you and Spencer - perhaps you could contact the national office of the CAW. I think they've been to us once they were on the schedule, but I'd like our researchers to sit down and go through it in more detail.

Often politicians in a session like this miss how you set it up and how you think about it, and how you separate out costs and behaviour and all these questions. We'd very much like to get a better handle on this, because a lesson I've learned from other work is that if you don't stop and listen to what the unions are saying you miss about how it affects bargaining and all the other considerations you have in your benefit package.

So we're more than willing to sit down and make sure we fully understand what you're dealing with and the information base you've developed over the years to help us in our deliberations. If I can ask that of you and have somebody contact myself or the clerk, we'll make sure the meeting takes place. Okay?

Mr. Keighley: I would make one point to illustrate how important that is. In the big three auto assembly industry - mostly in Ontario and some in Quebec - the Canadian producers have a $600 per car advantage producing in Canada compared to the United States on health care costs alone. That's $600 per vehicle because of our more efficient system.

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The Chairman: I can tell you also that I fully understood your position on another issue I dealt with. I think I met some of you last June. It had a great influence on the way I finally decided to structure some of the pension issues in this country. I would appreciate your private input on this.

For those of you who are concerned about the committee, I want to say for the record that although this is an industry committee and we have this role because the Patent Act falls within the industry department, in fact the committee was reconstituted to make sure that the health interests were taken into account.

We have the parliamentary secretary to the Minister of Health, we have a medical doctor on one side, we also have Mr. Ménard, who has a private member's bill and has a real concern for health care. I want you to feel comfortable that both perspectives are very much on the top of our mind. In the committee, all parties reorganized themselves to make sure they had health-oriented critics here and it wasn't just an industry issue.

Anybody who's asked to come to the committee has been heard or will be heard in the following months. We've made sure that any Canadian who wanted to have his views known has had an opportunity.

Thank you very much for your time tonight. You can tell we've listened very carefully. The national coalition that some of you have put together has had a great hearing in the last few weeks. I'm sure their views will be taken into account too. Thank you, and good night.

The meeting is adjourned.

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