EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 9, 1997

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[English]

The Chairman (Mr. David Walker (Winnipeg North Centre, Lib.)): I'd like to welcome the witnesses here to the resumption of our hearings, pursuant to Standing Order 108(2), a review of section 14 of the Patent Act Amendment 1992, chapter 2, Statutes of Canada, 1993. We'll continue our deliberations by hearing witnesses.

Before the witnesses start, I would like to inform the opposition parties and the government members that we have a budget that has to be discussed and formally approved. Later in the day, or whenever we have a quorum, if this budget is okay with you, we'll have a motion. It's the budget we've discussed. We won't do it now, but I want to give you notice that either today or tomorrow we'll do that. If you have any questions on the budget, would you please see me or the clerk before then.

[Translation]

Mr. Réal Ménard (Hochelaga - Maisonneuve, B.Q.): Did you discuss this with the steering committee?

The Chairman: Yes. It is the same thing.

Mr. Réal Ménard: And Pierre Brien gave his consent?

The Chairman: Yes.

[English]

I said I would give notice of any motions because we're into a hearing format. I just want you to know...sometime in the next day or so, okay?

[Translation]

Mr. Réal Ménard: That's fine.

[English]

The Chairman: I'd like to welcome two distinguished guests who participated in the National Forum on Health: Dr. Noseworthy from the University of Alberta, and Dr. Evans from the University of British Columbia. Welcome to both of you. We're very happy to have you come and participate with us.

Perhaps one of you can begin the opening statement. I understand both of you would like to make opening statements. Then we'll turn to the members for questions. Please keep in mind, as I said, we have a set time because of the vote.

Dr. Tom W. Noseworthy (Chair of the Department of Public Health Sciences, University of Alberta): Honourable chair, honourable members, ladies and gentlemen, thank you and good afternoon.

We recognize that for many weeks you've been holding these hearings and you've had many and varied views. On behalf of the 24 members of the National Forum on Health, we are pleased to have the opportunity this afternoon to offer our contribution to your deliberations on this important undertaking.

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I'd like to preface my remarks with quite a personal statement. As a practising intensive care physician, on a regular basis I marvel at the tremendous advantages we have accrued from modern day pharmacotherapeutics and what the future holds. We're not here this afternoon to discuss commendation.

Honourable chair and members, the mandate of the National Forum on Health given to us by the Prime Minister was to involve and inform the public and then to advise the federal government on innovative ways to improve health and health care of Canadians. When we addressed the subject of pharmaceuticals we felt the major issues in that area were equity of access, appropriateness of both prescribing and usage, and cost control.

We approached pharmaceuticals as in effect one element of the larger health system, as opposed to limiting our considerations to pharmaceuticals as a commodity or to the pharmaceutical manufacturing industry as a for-profit global industry. We thought beyond that. Nonetheless, on this latter issue, I wish to pass the floor to Professor Evans to deal with those subjects.

Professor Robert G. Evans (Department of Economics, University of British Columbia): Thank you.

Mr. Chairman and honourable members, we've now moved from the physician to the economist.

There is a significant difference between the pharmaceutical industry and other components of the health care sector. I'm going to make some comments that are probably obvious, but I've always found it quite unusual and helpful for an economist to keep a firm grasp on the obvious. They will serve as a context for a number of the specific statements and recommendations made in the forum document.

Manufacturers of pharmaceuticals are for-profit corporations that have a fiduciary responsibility to their shareholders. This is their overriding and dominant responsibility. It is not a responsibility to the general public, to patients, or to doctors in the first instance; it is a responsibility to their shareholders. That does make them different from other participants in the health care sector and it conditions all of their behaviours.

In a very crude sense, one could say they're not in business to make people healthy. They're not in business even to make drugs. They're in business to make money. That's not an accusation; that's simply a statement of the way the for-profit sector is organized. One has to keep that always in mind in trying to understand the behaviour in this sector.

I'm also not trying to suggest that no one else in the health care sector is motivated by economic concerns, because that's patently false. There is a different pattern of responsibility in this sector, and that lies behind much of what we're going to say. There's a lot of rhetoric in some of the response to our report that would suggest almost in so many words that the primary mission of the pharmaceutical sector is to provide education and that it is in fact some form of educational foundation. This is not so.

The second subsidiary point to this is that for the largest pharmaceutical firms in our country, most of those shareholders to whom they are responsible are not Canadians. That, again, has to be kept in mind as background information.

There is also an important feature of the cost structure of pharmaceutical industries, actually much like the software industries. More so than almost any other kind of industry they are characterized by very high fixed costs and relatively low variable costs. In other words, you have to put a tremendous amount of money up-front before you have a product. Once you have a product you then have to recoup all of those tens, hundreds, and millions of dollars of investment by selling that product. So it creates a tremendous incentive, indeed a need for survival to ensure that you can get a price that exceeds the actual cost of production of the product and to ensure that you can maximize your sales. That is the iron law of survival under which pharmaceutical firms have to operate. There's no way around that. Again, it's not an accusation; it arises out of the cost structure of the industry.

That leads us to look at this sector as essentially engaged in a bargaining transaction with Canadians and with Canada's representatives, i.e., ultimately yourselves in the industry. You are looking for the regulatory environment that is as favourable as possible for the shareholders, and in return offering benefits to Canadians that will in some way offset the regulatory advantages you're being asked to provide.

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So the patent legislation you're considering is in fact a very significant economic benefit granted to that industry in the form of the ability to enhance its prices over and above what they otherwise would have been, to enhance the profits that accrue to its shareholders. The issues you then have to address are to what extent Canadians get benefits commensurate with the cost that we have imposed on ourselves through that protection of the industry's profits. That has been in the back of our comments and our thoughts on the development of and the possibilities for universal public insurance for pharmaceuticals.

I'm going to pass the baton back to my colleague, Dr. Noseworthy, to describe briefly what we have to say about that.

Dr. Noseworthy: Let me reiterate that we felt the three major issues regarding pharmaceuticals were equity of access, improved appropriateness in both prescribing and usage, and cost containment.

On the issue of equity of access, as I'm sure you've heard over the past many weeks, we are facing a changing phenomenon with an increasing use of drugs outside of hospitals, with greater roles for drugs in both prevention and treatment, with more care provided in the community on an ambulatory basis, and with drug benefits generally being fairly limited.

When a patient is discharged from a hospital, pharmaceutical costs now shift from the institution to the patient or the patient's insurer. Our goal should be to rationalize costs, not merely to shift them. There is no real logical reason why drug costs should be transferred from institutions to individuals as merely a by-product of improving hospital efficiency.

On the issue of appropriateness, there are countless studies that indicate drugs are both over-prescribed and inappropriately used, and I won't reiterate this evidence.

On the issue of cost containment, the management of costs is becoming a particular issue, as it is indeed in the entire health care system, but most particularly because drug expenditures continue to increase at a faster rate than any other component within the health care system. I find it perhaps more than coincidental that the fastest-growing cost sector in the health care system is the most privately financed component. I don't believe that's an accident.

At our stakeholders meeting in April, as we consulted with the public and decision-makers, a number of points were made from the participants. They felt that pharmaceutical policy needed an adjustment on a wide range of issues: over-utilization, physician prescribing practices, direct marketing to physicians, lack of effective information systems, the role of drugs in the health care system not well defined, perverse incentives for fee for servicing reimbursement, and so on.

On the issue of Bill C-91, whenever it was raised with the public or in stakeholder meetings, we would detect some interest and some views that the surging costs of prescription and non-prescription drugs were linked to Bill C-91 in a direct way.

There are many things that could be said about the position we've taken to deal with these issues. We have concluded that the best way to deal with equity of access, appropriateness of prescribing and usage, and cost control is to expand coverage for prescription drugs to a fully funded component of a publicly funded health care system. We know that will not be easy to do. For our critics who have commented on this, we are certainly not prescribing that course of action quickly. It must be sequenced and it needs to take time to move in a sequential fashion.

There is simply no reason why medically necessary prescription drugs should be any less medically necessary and covered by the public system than, for that case, hospitals or doctors. Having said that, we need to be exquisitely sensitive if we expand public coverage to pharmaceuticals to engage in very definite and working value-added mechanisms of cost control.

Many people have suggested that by our advancing the approach to broader public coverage of prescription pharmaceuticals we will add to the cost of Canada's health care system. We do not believe that has to be the case. We believe we have to find a mechanism to transfer current private health expenditures on pharmaceuticals to the public system. There's some $4 billion involved. The transfer of such funds would not indeed be easily done and it will not take place quickly, but it is the essential link to move the agenda forward.

I reiterate that we do not feel that it means spending more money on drugs overall. Also, it does not mean a federal prescription to increase provincial responsibility for funding a bigger share of health care costs.

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To begin this reform process towards larger public coverage for pharmaceuticals, we believe the first step is a comprehensive, population-based drug information system that needs to be implemented soon. These databases are highly sensitive information and they must be publicly run and capture all prescription information regardless of the payer. They can link physicians, pharmacists, patients, and so on. We feel that is a critical next and perhaps first step in moving the agenda towards national drug coverage.

My other point, before I pass the floor to Professor Evans, would be on the issue of research funding as it relates to Bill C-91. As part of our review and part of Bill C-91 we understand of course that the contribution to research and development as a proportion of total sales was part of the construct, and we wish to address what the consequences of that are.

In fact, we believe there is a steering effect that is now taking place, given that as it currently stands the pharmaceutical industry is funding something in the order of 30% of all health research in our country, which is more than is spent by the federal government, twice as much as is spent by universities, and three times as much as is spent by provinces. At one level of success, those expenditures on research appear to be very fine results of Bill C-91, but as a consequence of what we believe is a steering effect the health research agenda has now moved far more towards product-related research and pharmaceutical preparation development.

We do not believe that is the construct that should work as a consequence of that 10% recovery for research. In fact, we believe the pharmaceutical industry should convert those contributions in their entirety to a fund for health research broadly defined, at full arm's length from this industry, and to be administered by a national granting agency or agencies that allocate such funds for methodologically sound, peer reviewed research.

We do not believe the current circumstance, where pharmaceuticals fund something in the order of two-thirds to three-quarters of the research that relates to pharmaceuticals themselves and clinical trials, is the way to go. It does not give us the return on our investment of that 10% in research and development that the public so sorely deserves.

There are several other issues we could comment on, but I'll pass the floor back to Professor Evans.

Prof. Evans: I will try to be quick, because I hear your injunction to be quick.

I think the key issue I would emphasize is that all of our experience with medicare, hospitals, and doctors over more than a quarter century now indicates that public funding through a single payer leads to substantial efficiencies on administration and it leads to effective cost control if governments have the will to do so. Other countries' experiences reinforce that conclusion, both the ones that have been successful and the ones that have been egregious failures, like the United States.

But that is not automatic. The reason we on the one hand state with considerable confidence that we think a publicly funded universal system would be less expensive than the mixed funded alternative we have now is that historical experience. On the other hand, the single payer, which would be provincial governments in this case if we adopted the medicare model, must have access to a range of options. It must be possible for the payer to choose drugs from different sources.

That's where we overlap with Bill C-91, to the extent that increasing the patent protection available to suppliers of drugs makes it more difficult to find alternatives to a particular drug. It makes it harder for a prudent purchaser to exercise and to exploit the power that comes with being a collective purchaser, being a big buyer.

What we would see is the necessity of ensuring that whatever regulatory framework you structure, you provide provincial governments as the ultimate payers for a universal system and you provide them with the freedom of action, the options they need to be able to act as prudent purchasers. If we can do that, then we believe we can actually get better care for Canadians at lower cost by giving the purchasers options to choose the most appropriate drugs.

There are examples of some systems working that way on a limited basis, as in my own province, but it is a limited basis and the range of options available is shrinking as the effects of Bill C-91 play themselves out through time. That's why we're particularly concerned about that.

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We're also very concerned, as Dr. Noseworthy has pointed out... One of the main parts of the mandate of the forum was to explore the approaches to the factors that affect health that are outside the health care system, the things that matter beyond health care. Those are very important. There are a lot of them.

If we have now steered our research priorities into not only focusing primarily on health care, but also focusing on health care as defined in terms of producing commercial products, we're going exactly in the opposite direction to the direction that was given to the forum as a mandate, which we found to be important.

The Chairman: Thank you very much to both Dr. Evans and Dr. Noseworthy.

We'll begin our questions, as usual,

[Translation]

with Mr. Ménard. You have ten minutes.

Mr. Réal Ménard: You will have never been so generous, Mr. Chairman.

[English]

The Chairman: I have no choice. I may as well be generous.

[Translation]

Mr. Réal Ménard: Don't say that! I know it makes you happy. We are a mutual admiration society; no medication could change that.

Our committee would like to make two major recommendations. The first is to determine whether the National Forum can help us get a better idea of the current costs incurred to develop a new drug. The brand name drug industry appeared before us and said it needed a return on investments and that if you take everything into account, it costs approximately $500 million to develop a drug and market it. Given those costs, the industry says it needs effective protection for at least ten years - 20 years in total - , but that does not take into account the time spent on clinical trials and the entire regulatory process. If the industry does not have that type of protection, not only will it be unable to do more research, but it will also prevent it from discovering new types of drugs. I would first like to hear your reaction to those arguments.

[English]

Prof. Evans: By pointing out that Canada is not the only country in the world. Canada represents about 2% of the world drug market, and to suggest that the level of research of the international drug community or the rate at which new drugs are developed depends in any way on how Canada funds drugs I think is completely unrealistic and misleading.

The question of where research gets done may well be dependent on the kind of regulatory environment we create, but the rate at which research gets done on a world scale - and this is a world industry - is not dependent on what Canada does. It is true that on a worldwide basis it is necessary that any company - and I stressed this at the beginning - that is science-based and has a high initial cost be able to recoup that cost, but it does not follow that it has to recoup that cost in any one country or that it has to recoup the cost through the mechanism of an extended patent protection. There are a variety of ways in which one could recoup part of that cost.

To answer your question directly, no, the forum did not attempt to break out those costs and figure out what the up-front costs were, but I would think it would be very unwise indeed to begin by accepting the industry's own statement in deciding how much patent protection to give. The whole question of how you go about assigning costs to anything is a bit of a black art, as accountants are well aware.

I think that's essentially irrelevant to the issue of Canadian policy.

[Translation]

Mr. Réal Ménard: I think you are pushing it a little when you say that the cost breakdown has nothing to do with it, which leads me to my next question. Do you agree that there was a time when the pharmaceutical industry did very little independent research in Canada? Would you agree that you and I would be able to discuss that type of research? Believe me, I am well enough informed to know that the type of research that the Patented Medicine Prices Review Board accepts and assesses is very specific and similar to research activities that are eligible for a tax credit for experimental research and development.

That said, would you agree that more effort is being made by brand name drug manufacturers and would you agree that despite Bill C-91, that research would have been done anyway?

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You have to use common sense. The industry says that because there wasn't any protection on competitive intellectual property, it was unable to invest as much as it was supposed to.

When industry representatives appeared before parliamentarians in 1992, they committed to investing 10%, which is about $600 million. They met their obligation. I am not saying that is enough and I am not saying the brand name drug industry did not have to deal with some grievances, but I cannot accept as an answer that there is virtually no link between the regulatory or legislative framework and research. You will have to explain that to me.

[English]

Prof. Evans: Sure. If you are trying to encourage the industry to site its research in Canada, to do more of the research in Canada, and you offer financial incentives to do that, I would expect that you would indeed get more of the research sited in Canada.

It really comes down to a question of whether you are concerned about the rate of production of new drugs and their availability to Canadians, which is dependent on the worldwide process, or whether you are concerned about where the research activity happens to take place. Yes, indeed, if you provide enough financial incentives to an industry to do research in a particular place, they will do the research in that place.

Whether that represents progress or a benefit to Canadians is a whole other matter. Essentially, you are giving the industry a substantial benefit in the form of the ability to raise its prices above what they would otherwise have been, and in return you are asking for them to put back some of those extra profits - not all, but some - in the form of research activities within Canada. What we're saying is that quid pro quo - we'll give you more money if you put some of it back into Canada - has led to a distortion and a steering of the whole research process in Canada.

If you want to do that, our recommendation is that you would be far further ahead to require the industry to turn over that research funding to a consortium of the granting councils in Canada so that the extra research money can be devoted to the topics that are priorities for Canadians rather than left entirely within the hands of the industry, where whatever products it produces on behalf of their shareholders will still belong to those shareholders.

[Translation]

Mr. Réal Ménard: Fine.

[English]

Dr. Noseworthy: May I comment on this as well?

We're talking about the relevance of the research here, in my view, and it seems at a simplistic level that what took place with Bill C-91 in exchange for the length of patent protection was a guarantee to invest in research for the public good.

If the public good here is the health of the public, I think we need to once again remind ourselves that a route to the health and well-being of the public is only marginally related to the health care system, which almost entirely involves prescriptions, doctors, hospitals, and so on. There is a huge research agenda here that is not being addressed, and I'd like to know why it is that we agreed that this 10% research and development to be reinvested for the public good be almost entirely used for pharmaceutical-type research and the addition of new products. I do not believe this leads to the better health of the Canadian public, and I think there are better ways for us to spend that money, such as the way we have proposed.

If additional product research is then appropriate and relevant to be done in this country, let it proceed with the other 90% of the sales revenue that comes in, but not the 10% that's spent for the public good.

[Translation]

Mr. Réal Ménard: In fact, what you really want is a State-run health care system, where the government could play a vital role by reimbursing the cost of prescription drugs. I can understand that. Perhaps you already know that Quebec has a headstart on that.

Could you tell us how the provinces, with the exception of Quebec which already has a headstart - and I am being very honest, Mr. Chairman - reacted to your report? Can you tell us that three, four, five or six provinces strongly support your recommendations?

[English]

Dr. Noseworthy: Well, what we can say is that every province is concerned by the escalating cost of its drugs and every province that we have talked to is attempting to introduce some agenda to bring cost control more in line, as well as improve appropriate prescribing. So a lot of energy is being exerted in the provinces.

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Quebec, of course, is not the only province that has taken a more formalized provincial approach; many others have. But what is taking place is still largely piecemeal coverage, often for the disadvantaged or for the elderly.

A good deal of the coverage that exists now is coming from private insurance. So we have allowed a multiple-financed, private source of funding to happen in pharmaceuticals, which I think very clearly contributes to the growing cost.

It is clear that all the provinces have a receptiveness to expanding coverage for pharmaceuticals. But it would only be correct to point out to a province that is concerned that this could become a prescription to hand a new cost and a new share of paying for the health care system to them. We are most definitely not suggesting that.

[Translation]

Mr. Réal Ménard: One of the issues committee members will have to deal with is the role of the Patented Medicine Prices Review Board, which some like a great deal and others abhor. I am not asking you to put yourself into one of those two groups, but do you think the Review Board should have additional powers for it to review the activities of the generic drug industry?

You cannot say the generic drug industry is not making an effort to do research. We have some very concrete examples that that is not the case, but we must nonetheless recognize that it is not accountable to anyone, unlike the brand name drug industry that has to table a research report every year, which is then evaluated, made public and made available to consumer associations. Do you think the Board should be able to have a better idea of what the generic drug industry is doing?

[English]

Prof. Evans: I don't think I can answer that on behalf of the forum, because I don't think the forum has taken a position on that.

We have discussed the PMPRB issue. Our sense there was that there is a fundamental inconsistency in setting up increased patent protection, whose specific intent is to assist the advancement of prices, and then putting in place a board whose responsibility is to try to control those prices. That really is trying to be black and white and red all over.

So I guess that while on the one hand we didn't want to get into the business of trying to evaluate or criticize the board - and we haven't - on the other hand, there did seem to be kind of a fundamental inconsistency in policy from the outset, going back to 1987, in dealing with the board. On the other hand, if you are going to try to regulate prices, then I suppose you want to regulate them as broadly as possible.

But that's my response to you, rather than a response by the forum. I can't claim that was a conclusion reached by the forum.

The Chairman: Mr. Schmidt, please.

Mr. Werner Schmidt (Okanagan Centre, Ref.): Thank you, Mr. Chairman. I have a number of questions.

If I remember correctly, Mr. Evans, you said at the beginning something to the effect that the provisions that are found under Bill C-91, the current legislation, provide for prices that are higher than would otherwise be the case. Could you explain exactly what you mean by that?

Prof. Evans: I think what I said was that the purpose of a patent is to provide for prices higher than what would otherwise be the case. The reason I chose those words - higher than what would otherwise be the case - is to avoid getting into the technical complexities of the computation of price indexes for pharmaceuticals. As I'm sure this committee is aware, or will be aware, these are particularly treacherous.

The whole point of a patent at the first stage... There are obviously other things that one hopes to follow from that, such as increased investment in research, and so on. But the first purpose of a patent is to create a monopoly. It's to create monopoly powers in the hands of the patent holder, and to prevent other people from competing with that product.

Competition is what tends to drive down prices. So, yes, the way in which you reward a patent holder is by permitting that patent holder to charge prices higher than they would if they were faced with competition from other products, and enjoy those corresponding profits.

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Mr. Werner Schmidt: As you gentlemen are both professional people, both trade in the matter of knowledge, training and understanding, and you understand the current term ``intellectual property'' very well, could you tell me how a patent differs from intellectual property ownership?

Prof. Evans: Well, historically patents have been... There are very clear statements in some of the legislation on this that will have been brought before you. They state that the purpose of a patent is not to reward someone for past behaviour, but to encourage future behaviour. The idea is not that you have somehow acquired a piece of property, but rather that the state offers a monopoly in the hopes of inducing future behaviour. So there's an extremely important distinction -

Mr. Werner Schmidt: But with all due respect, isn't that precisely what happens when a person writes a book? It has a different name. It's called intellectual property, it's called copyright. It's not called a patent, but doesn't it have exactly the same effect as a patent does, as you've described it?

Prof. Evans: I'm coming around to your question. The whole notion of intellectual property is an interesting one, because it's very clear in the case of patents that property is created by the state. There is no natural law definition of property. There is a state-created right, which the state creates for public purposes. It creates that form of right in order to encourage certain activities.

But it doesn't follow that there is some kind of uniform form of intellectual property that is right for all states, all times, and all places, the kind of position we seem to be drifting into through the World Trade Organization.

Now, as far as writing a book is concerned, you have copyright in those words, but there's certainly nothing to prevent anybody else writing on that same topic, so long as they don't use exactly the same order of words that you do. They use the same words, they use the same letters, and they may use the same argument.

Mr. Werner Schmidt: Well I must admit that you, Mr. Evans, are extremely adept at using words, and I congratulate you for that. But you have absolutely failed to convince me that there's any real practical difference among those three things. So I will move on to another aspect -

Dr. Noseworthy: But what if there's not? May I ask you what the significance of that might be?

Mr. Werner Schmidt: Yes, the difference is quite simple. In either case, the marketplace doesn't determine the value of an intellectual property any more than it does a patent. That's the point I'm trying to make. In either case, both are there to generate profit either for the individual or for the corporation. And that's the whole issue. That is the point that was being made here. The patent is here to protect the return on investment by a company. And the intellectual property, I submit to you, is exactly the same thing for the individual.

Prof. Evans: Which patent?

Mr. Werner Schmidt: The practical impact is precisely the same.

I want to move on to another question.

Prof. Evans: Which patent? The patent that is in place today? The patent that was in place in the mid-1980s? The patent that was in place in the 1970s? It is up to the Government of Canada to decide what patent policy is most advantageous to its citizens -

Mr. Werner Schmidt: Precisely.

Prof. Evans: - not to the shareholders of the company we're dealing with.

Mr. Werner Schmidt: You've now changed grounds, and that's fair ball. That's a beautiful shift in logic. You're a good debater, too. Not only do you know how to use words well.

But I want to shift to another whole area. That has to do with cost control. I think you suggested that the way in which you could control costs was by having a universal, single-payer system. Now, how would that control costs?

Dr. Noseworthy: The same way it has for hospitals and doctors' costs. It is the same reason we've gone from 10.2% of gross domestic product in 1992-93 to something in the order of 9.4% now.

Depending on how you choose to do this, we have seen that you can indeed wrestle cost escalation to the ground, and you can make it turn down inside the public system. It isn't necessarily always politically popular to do that, and many offices get gored because people's incomes or their jobs are affected. But make no mistake about the fact that you have a successful construct in medicare that is able to control costs if you have the political will to do so.

Mr. Werner Schmidt: Doesn't the PMPRB do the same thing?

Prof. Evans: No. There are a couple of differences. First, obviously the PMPRB controls prices, not total costs. But the second and very important thing is -

Mr. Werner Schmidt: Well, aren't costs and prices related?

Prof. Evans: They're related, but they're not the same thing.

Mr. Werner Schmidt: Well, if they're related, one doesn't exist without the other.

Prof. Evans: In dealing with medicare, every province has discovered that simply regulating fee schedules is not sufficient to regulate physician costs. And that's why all provinces have now shifted from simply trying to negotiate fee schedules with doctors to controlling global budgets for physician payments, because they discovered that regulating prices was not enough.

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But there is a major difference: a single payer is actually fiscally at risk for those costs. The PMPRB is not at risk for the cost of pharmaceuticals.

The point that Dr. Noseworthy made is really important. A lot of oxen get gored because it is an accounting reality that every dollar of expenditure is a dollar of somebody's income, always. So whenever you try to control expenditures, you are attacking someone's income, and there's going to be a tremendous amount of resistance.

So what you find in multiple-payer systems is a tremendous pressure to convert cost control into cost shifting. That's exactly what you found in the multiple-payer pharmaceutical systems in Canada. Until now, it has always been easier to talk about shifting the cost onto the patient or back onto private employers or somewhere else rather than controlling that. You only go through the hard, brutal work of controlling costs when you don't have any option.

Mr. Werner Schmidt: It seems to me that in your comments you indicated very clearly two kinds of costs here. There are the costs to the patient or the payer, but then there are also the total costs to the public purse of this particular part of the economic sector that's devoted to health care.

It seems to me that as public pharmacare systems or any other medicare systems have been there, the total cost or demand on the public sector is still increased. So which kind of cost are you trying to control here?

Prof. Evans: Well, the total cost for medicare has in fact flattened out, not increased, in the last few years. It flattened out quite significantly in the 1970s.

So which one am I talking about? I'm talking about the global cost paid by Canadians, whether it's through the public sector, private insurance or private out-of-pocket payments. I'm saying that if there are multiple sources of payment, the temptation will always be for every party responsible for the payment to allow the total to continue to drift upward while trying to control its own share - that's exactly the trap the Americans are in now, for example - whereas if you have a single-payer system, the option is not available of shifting the cost onto somebody else. That's what the Canada Health Act has achieved for physicians and hospital services. The single payer then has to take the very tough and difficult decisions that are involved in cost control.

Mr. Werner Schmidt: I have one final question, which has to do with determining the initial price of a drug. Whether it's a single-payer system or a multiple-payer system, ultimately, somewhere, this thing has to start. Somewhere, this thing has to be discovered, invented, and developed to the point at which it can be marketed. How should that initial price be determined?

Prof. Evans: That's not something I can answer on the basis of anything the forum did, but I think the answer that's implicit in what we're saying is that if you have a universal pharmacare process or program in place, then the developer of the drug will have to think fairly hard in setting that initial price as to whether a price that's set too high will simply lead to the drug not being purchased by the purchasing agency for the province, which is what you'd expect a market to do in any case.

Mr. Werner Schmidt: That's even if it was a really good drug that really served the public well and would have tremendous advances and improve the health of a nation?

Prof. Evans: That's where you're going to get into some very interesting ground: do you want to leave the price of such a drug simply in the hands of the company that's developed it? They really do have a gun at your head at that point, don't they?

Mr. Werner Schmidt: You are skilful at moving things around, aren't you?

Prof. Evans: I'm sorry, am I being criticized for something here?

Mr. Werner Schmidt: I think he's just a little bit flippant there. I don't think he answered my question at all.

Prof. Evans: Oh, I'm sorry. I'd be willing to try again.

The Chairman: The economics classes are over, so I see.

Mr. Werner Schmidt: Okay.

The Chairman: Thank you, Mr. Schmidt. Mr. Bodnar.

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

Professor Evans, in your opening statement you indicated that private companies are motivated by one motive, the profit motive, because of shareholders, etc. Do you not believe that private companies can have more than one motive? For example, there could be a motive for profit combined with a motive of helping the public, because one depends on the other.

.1650

Prof. Evans: To the extent that one depends on the other, one is then the primary motive, and the other is an instrumental motive. The whole insight that is traced back to Adam Smith is the notion that the search for private profit might be dependent on doing things that benefit the public. So all the arguments for private markets have always traditionally hearkened back to some version of private companies having to do things that are beneficial for the public in order to make profits.

There are certainly circumstances under which that's true. But the point I was emphasizing was that these are not competing motives. The private company's motive, their legal responsibility, is the generation of profit for their shareholders. That may be achieved through the creation of certain benefits for the public, or it may not.

Mr. Morris Bodnar: Professor Evans, I certainly am going to ask this simply as an MP for a riding in Saskatchewan, not in my capacity as the parliamentary secretary to the minister. Not long ago I had the opportunity of speaking to the Minister of Health in Saskatchewan, my province. My suggestion was that if profits were that high in the generic industry and in the patent drug industry, then why doesn't a province such as Saskatchewan, with the government that it has, not partner with the university - in particular, the university in Saskatoon - and set up its own pharmaceutical industry? What do you think?

Prof. Evans: You were asking the question of him, but two of my colleagues did a report for the federal-provincial-territorial ministers back in 1990 on medical manpower. Professor Morris Barer and Professor Greg Stoddart were both at universities. I had the fortune of working on a commission with the managing partner from Coopers and Lybrand. He took a look at their report with the eye of a management consultant. He said that this was the best report that had ever been done on this subject. He said that if they had done it for his company, they would have been fired immediately.

We can't afford to do that kind of work. Don't turn university people loose to try to make a profit out of anything - that would be my reaction - and certainly not me.

Dr. Noseworthy: There's also a simple doctor response to this. Look at the construct and the shape of the industry in pharmaceuticals. There are none based provincially that are looking after or servicing a population of 900,000. These are international large companies with multiple offices throughout the world, huge returns on investments, and very powerful lobbying capabilities. I doubt that you could get market share and make a dent in this international industry in which Canada is only really quite a small player.

Mr. Morris Bodnar: As for the question of surging costs, you indicated when you were on the forum that there were links between the surging costs of drugs linked to Bill C-91 by some of the individuals who appeared before the forum. Was this ever investigated by you to see in fact if this were true or not?

Dr. Noseworthy: You mean whether Bill C-91 directly contributed to costs, or if it was true that this was what people felt?

Mr. Morris Bodnar: No. I realize that you've indicated that some people felt this was the case. But did you in fact look at this whole issue to determine whether in fact this was the case?

Dr. Noseworthy: That Bill C-91 led to higher drug costs?

Mr. Morris Bodnar: I believe the term you used was ``surging costs of drugs''.

Dr. Noseworthy: It is believed by the public we have spoken to in large numbers to be the case that this patent legislation, rightly or wrongly, has contributed to the cost of the drugs they're paying for.

Mr. Morris Bodnar: Okay, you've indicated -

Prof. Evans: Could I come in on that?

Mr. Morris Bodnar: Please.

Prof. Evans: I think that's not quite an answer to the question. I can give perhaps a part answer.

It is the case that the rate of increase in drug costs speeded up considerably during the 1980s compared with what it has been during the period of compulsory licensure. There is certainly a considerably body of evidence around to suggest that compulsory licensure did have a significant dampening effect on costs in Canada. Costs have accelerated since that began to be watered down. That's not conclusive evidence. It's sort of a correlation through time.

On the other hand, as I said, the whole logic of Bill C-91 - well, not Bill C-91, but starting with Bill C-22 - of enhanced patent protection is aimed toward increasing drug costs. That's why you do it.

.1655

Mr. Morris Bodnar: Dr. Noseworthy, you mentioned that a system of universal drug care or pharmacare program should not mean increased cost to provinces. I'm just wondering why you indicated that.

Dr. Noseworthy: I wanted to say that it should not increase total drug expenditures. Virtually all of the views we have taken in the forum on expenditures related to health care, and the components of those expenditures, we have always thought jointly of both public and private expenditures. If we take the 1994 figures of all the hospital drug expenditures as a total of $9.2 billion, I guess our position is that is a substantial proportion of total health care cost. It has increased greatly in the last 20 years. And there's substantial room for cost containment and improvement in that cost profile, notwithstanding the definite advantages that are coming from new drugs.

Mr. Morris Bodnar: I see. I asked that question because I got the impression that from the way you had structured it you were really saying if there is any additional cost or whatever the cost is, provinces should not bear it. Therefore the conclusion I draw is that the federal government should bear it.

Dr. Noseworthy: I see what you mean.

First things first. We feel that there's enough money in the Canadian health care system to pay for medically necessary pharmaceuticals with the current costs that we're experiencing. In fact, we could be spending less with better management.

Mr. Morris Bodnar: I see.

Dr. Noseworthy: Having said that, the mechanism to get that better management in place, we advocate one more time, is to put in management information systems as the first step towards management control, which would best be found inside a public system.

Mr. Morris Bodnar: You mentioned an interesting comment to Mr. Schmidt when he asked you questions. You said that if we had the political will to control costs certain things maybe should be done. I'm wondering what you think should be done if we do have the political will to control costs with Bill C-91.

Dr. Noseworthy: There are a number of things about Bill C-91, but if I could just make it in general about pharmaceuticals, find some way to take the $4 billion that is currently experienced in personal private expenditures or private insurance and find a way to shift that to the public side. That is the challenge in order to make this happen.

Mr. Morris Bodnar: Anything else? Can you be more specific?

Dr. Noseworthy: That's pretty specific. We are basically saying that we're not advocating new expenditures. We have suggested a transitional fund to help fuel innovation around the area of things such as pharmaceuticals, and we're suggesting that with an information system as the front-end for this endeavour that we move progressively and over time towards progressive inclusion of more Canadians into a national plan.

Prof. Evans: I think we can be a bit more specific, if I understand your question correctly, and stop me if I don't.

One of the areas we recommended expanded work on in the forum as a whole was the funding of primary care for general practitioner services, similar to general practitioner services. One of the things other countries seemed to have found is that if you pay for general practitioner services at least partly on a capitated budget basis - i.e., paying the practitioner so many dollars for each person on his or her list - and you include in that capitated amount an allowance for a drug budget, you find that prescribing behaviour by physicians changes significantly.

That's an example of the sort of thing you could test out in the Canadian environment. You can never import directly the German system or the British system. You obviously have to develop it for your own environment. But that's an example of the kind of thing you could do that would affect prescribing that in other countries has affected prescribing patterns in a way to reduce costs.

We also mentioned the experience with the reference-based pricing system in British Columbia which so far seems to be having quite positive effects in reducing costs and in focusing attention on the appropriateness of prescribing.

Mr. Morris Bodnar: I simply mentioned that because in having listened to the members of this committee, and I'll speak for simply our side of the committee, I think there is the political will. It's a matter of us being given the information so that we can properly look at it and try to analyse it and in our own layman MP manner try to deal with the problem. That's why I'm trying to get at these particular suggestions you may have.

I think I may be out of time. Thank you very much.

.1700

[Translation]

The Chairman: Mr. Ménard, if I may, I would like to ask some questions.

[English]

First of all, just because these are such formal hearings, I want to clarify your relationship with the health forum at this point in time. You noted that you were representing the health forum. Is that sort of a formal delegation that took place? I just want to clarify for the record.

Dr. Noseworthy: The forum was officially opened in October 1994 and our final report was delivered to the Prime Minister on February 4. We continued to interact and disseminate this information. But as a formal structured body, the National Forum on Health no longer exists.

The Chairman: So the opinions expressed in your brief reflect, as closely as you could, the opinions expressed in the forum and then you've distinguished in your answers where you are making your own responses and those of the forum.

Dr. Noseworthy: To the extent we could, but we also would like to underline the fact that the opinions of the forum were not the opinions of the 24 members who sat around that table. We did consult widely; there were 71 different discussion groups in 34 communities.

The Chairman: I just have to get this on the record.

The question I have for Dr. Evans is a question that's of interest to me. When we talk about several things that happened in the last four years since Bill C-91 comes in, I'm just curious, going back to the question of causality versus coincidence in the academic sense versus just trying to understand what you think caused what. As a preamble, we've had witnesses come and present different regimes under the Patent Act to us. I guess the lowest threshold would be people who refer back to the Eastman report in the mid-1980s, which suggested, I think, if I'm understanding it correctly, that it would total about ten or eleven years of patent protection, when you include the six years basics, plus the time for regulatory approval and testing.

That being the case, and you had the Eastman type of regime right now, from 1993 through to 1997, what would be fundamentally different?

Dr. Noseworthy: I certainly can't answer that on the basis of the debates in the forum, as this question has never been discussed in this forum. I'm not even sure this is true. I'd have to go and check the numbers on it or seek advice from somebody who is more on top of it. But I think it would come down to the availability of alternative drugs for public or private purchases. The essence of what we're looking for here is the establishment of a regulatory environment in which a public agency, or even a private agency that wants to behave like a prudent purchaser, has options available to it. My sense of it is that the shorter the period of patent protection, the more options will be available sooner to any purchasers.

The Chairman: I understand fully - the 19th year, if you will, okay? I understand fully the 19th year. What I don't understand is the first six years, because witnesses have attributed causality in this debate. If I'm allowed to be my old academic person, I don't understand the causality at times. I understand the expectations and the suspicions about what is going to happen in the future, unless it's submitted or addressed.

Dr. Noseworthy: Why should it be happening now?

The Chairman: But if you look back for the first four, what would you isolate as being fundamentally different under the lowest threshold regime that's been suggested by critics of the process?

Dr. Noseworthy: I see. Okay. That's a fair question, and I can't give you an answer to that. I think that would take substantially more time.

The Chairman: If you have any comments in the next week...

Dr. Noseworthy: I do have a comment, though. And my comment is, why is that the lowest threshold? Harry was trying to find something he thought would fly. He was already giving up a lot of ground when he brought that report down - at least that's my recollection.

The Chairman: I don't work out of my own speculation; I just work from the witness list in terms of questions that come to mind from the witnesses.

Dr. Noseworthy: I'm working on my very faulty memory of a long conversation with Harry. I have no grounds for challenging your statement that it's the lowest common denominator that's been brought forward to these hearings. Yes, sure, no argument there. But whether that is the lowest common denominator in terms of protection that could have been available, there was always the previous regime. That now is ruled out. That's ancient history and it's long gone by.

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One of the things we did suggest in the forum report that we haven't mentioned here is that the change in the world regulatory environment was brought about by quite conscious and deliberate policies of particular people and industries. We think there might be an opportunity for coordinated international action to try to release some of those constraints, and certainly Canada should be exploring it.

If we find there are things we want to do and we can't do them because of international obligations, remember those international obligations were made by people too. They weren't ordained by God. That's why the notion of a natural law of intellectual property and patents is just nonsense. These are human constructions and they can be modified.

The Chairman: Thank you.

Perhaps we can have another round of five minutes, if you wish.

Mr. Ménard.

[Translation]

Mr. Réal Ménard: I don't think I am mistaken, at least I hope I am not, in saying that what you really want, what the National Forum really wants, is to convince the greatest number possible of Canadians and decision makers that the government should take full financial responsibility for prescription drugs. I fully support that goal, coming from a province that is tending towards that. Could you tell us how that ties in with your objectives?

You were extremely harsh in your criticism of the pharmaceutical industry, to a point where I actually thought you were a lawyer yourself, but I understand that is not the case. You said money could be saved by eliminating overconsumption, that doctors are somewhat complacent and that there is a conspiracy between the pharmaceutical industry and doctors to account for this overconsumption of medication, and that you would like to see more information and better control.

Could you explain to us the link between your most generous and judicious objective of a health system that fully covers prescription drugs, and your wish that there should be better control of information on drugs and the conspiracy that you see between the pharmaceutical industry and doctors.

[English]

Dr. Noseworthy: The first link in our recommendations to expand public coverage, of course, is that we think that's the fundamental mechanism to begin the process of enhanced cost containment. We draw that from other international evidence, but we would draw that specifically from the example of our own system. We know what is controllable in our system and I would reiterate that it's no accident that the most private finance component of our health care system is the fastest growing in cost, doubling in 20 years.

We do need to learn from our own example. The rest of the world is learning from us and we feel the public structure fundamentally gains cost control.

How do you get to that stage? None of us are so naive as to believe that can happen easily, without political consequence, or with acceptance of the pharmaceutical manufacturing industry and many others. It will only happen because there's a strong will and a belief that we have a successful framework and a construct in our system. By expanding that construct to include pharmaceuticals, we will have the same success with them as we've had with doctors and hospitals.

To get to that we need information. We simply have no information systems in provinces or in the country right now, with perhaps a single exception, that can give us viable, value-added information about who's prescribing what for whom, when, and how. Without that information, you can only manage what you can measure.

We have a largely unmanaged pharmaceutical system in this country at present. This is our prescription for beginning to wrestle that under control and it might take quite some time to get there. The key is finding a clever mechanism of making the shift of that approximately $4 billion from private expenditure to public.

[Translation]

Mr. Réal Ménard: Fine. One thing that concerns me a great deal is that at the beginning you deplore the fact that governments do not always invest what they should in research and development. We all know the current government slashed the funding of various subsidized organizations. But I was under the impression that it was private funds, the industry's funds that set the tone for biomedical research.

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Let me give you an example of an unhealthy trend. Throughout the country there is the Canadian HIV Trials Network. It gets about $3 million in funding, as part of the National AIDS Strategy. So it is a relatively small amount. Believe it or not, the federal government only funds the research infrastructure. As for the rest, all the clinical trials, of which there are currently about 50, are done by the pharmaceutical industry, and it decides which research protocol will prevail and which clinical trials will go ahead.

There is a positive side to this, of course, but also a negative side. A pharmaceutical company will, of course, look at marketing potential, which it ought to do and which does not mean that at an earlier stage the pharmaceutical company did not have to take any risks, which is something we must all recognize. But I am very concerned about the fact that there isn't really any public money to determine the direction in which research is headed. That is true for AIDS, but also for other areas. Do you share my concern?

[English]

Dr. Noseworthy: I'm not sure that I fully understand it, although let me see if I can recount what I believe to be your point. The expenditure on research right now... First of all, I wasn't criticizing the federal government for its quantity of expenditure or lack of it; I was only comparing the quantity of expenditure for research that comes from pharmaceutical firms with that of the federal government, provincial governments, and universities. It's far more. To put it bluntly, there is a substantial concern that I have - and others have and the national forum has - that the tail wags the dog this way.

There are lots of us, physician investigators, out there who have gone into the business of doing this research at $2,500 an enrolled patient. Lots of me-too drug research is taking place in Canada, and many individuals have gone into the business of actually doing clinical trials. That is not to say that clinical trials are not useful, they are terribly valuable. They are critically important for the development of new products.

What we're saying is the health research agenda is huge, much bigger than the agenda for pharmaceuticals, and yet 30% of the health research agenda is being paid for by pharmaceutical firms, which in itself is a success of Bill C-91. We're saying the research agenda is not the right research agenda. It's a pharmaceutical, clinical, drug-oriented research agenda because of who's paying for it. We don't believe this is the correct approach.

The Chairman: Mr. Schmidt, please.

Mr. Werner Schmidt: Thank you, Mr. Chairman.

I'd like to pursue exactly this area, so I will go a little further. How do you think the research that's done should be determined, and who should do it?

Dr. Noseworthy: It should be done in the same way that the other component of the research agenda in this country is determined, with support from governments and other areas, and that is through a proper peer review process where there's a methodologically sound protocol that is reviewed dispassionately and separately by a group of individuals who are looking at the larger health agenda for the country, not pharmaceutical research. Therefore, there is a filtering mechanism and there is a peer review process. There is the potential for higher quality research.

Much of the research we speak of here, please understand, comes with a protocol that is already written by the firm. They go and find physician investigators who are willing to do the trial and then conduct it. There's nothing wrong with that, but that is not the intellectual pursuit that is usual for medical sciences. That is doing contract research for pharmaceutical firms that want product investigations.

Mr. Werner Schmidt: Yes, I quite agree. I'm sure that's happening.

There is curiosity-driven research. If I understand you correctly, you're probably leaning in that direction with your comment. Is that correct?

Dr. Noseworthy: I'm leaning in a direction that the health research agenda has to get considerably beyond the health care delivery system in its broadest context. We have a sorry lack of money in this country for non-medical health determinants research. There is very little money being put aside for socio-economic influences on health and understanding them. The last NHRDP budget, for example, had $200,000 included in it for doing synthesis work and socio-economic non-medical health determinants work. To my mind, that is a substantially larger and more important agenda than pharmaceutical research, and we would do well to reposition our priorities.

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Mr. Werner Schmidt: I'd like to explore this basic research thing just a little further. At the moment I think that's done primarily at the university level.

Dr. Noseworthy: More or less.

Mr. Werner Schmidt: If we could put it into three stages here, there's that basic curiosity-driven new ideas sort of thing, and then off go thousands. There are probably one or two of them that could go to the developmental stage. Then maybe one or two of them actually get to where they can produce a product. Is there a distinction between who should be managing which part of that research or should all facets of that research be done by this peer review system?

Prof. Evans: Excuse me, may I intervene there? Do you mind?

Mr. Werner Schmidt: Sure, I don't mind.

Prof. Evans: You're not going to go after me for being too much of a debater again? No, you might. You can't commit yourself on that.

Mr. Werner Schmidt: I haven't heard what you're going to say yet.

Prof. Evans: That's right.

I think what you're describing might be thought of as a vertical process and whatDr. Noseworthy is trying to describe as a horizontal process. You're looking at the progress, as you said very clearly, from a curiosity that leads to an idea, down through a sequence that eventually comes out as a product. Dr. Noseworthy's point is that if you're interested in the health of Canadians, there's a great deal you need to know that doesn't have anything to do with products.

Mr. Werner Schmidt: I'm sure that's true.

Prof. Evans: A lot of the papers that are going to be published by the forum, and the background papers, are going to explore that in a good deal more detail. The shorthand is the socio-economic environment of the individual and the family, or something like that. It's a pat phrase, but there's a whole lot that lies behind that.

None of that gets to a product and therefore none of it is properly within the responsibility of private firms whose job it is to bring a product to market. You said I was being harsh on the industry. I thought I was just stating the obvious: that their job is to bring products to market. That's what they're there for. If you're concerned about what the impact, for example, of the Bank of Canada's interest rate policy has been on public health through its effect on unemployment rates, you're not going to fund that through the drug industry.

Mr. Werner Schmidt: You're absolutely right. But do you think that should be the funding of this peer-driven research thing in health?

Prof. Evans: Absolutely. In fact there is now a section within the Medical Research Council of Canada that is concerned with population health.

Mr. Werner Schmidt: So if I understand you correctly, you're saying this medical research fund ought to deal with everything from market analysis and the overall health of the nation to the impact of economic, sociological, psychological, pharmaceutical and geographic factors. All of that should become part of this.

Dr. Noseworthy: Broadly defined health research.

Mr. Werner Schmidt: Is that health?

Prof. Evans: I think that's a yes.

Mr. Werner Schmidt: That's yes, okay. How much money do we need for that?

Dr. Noseworthy: Whatever money you're spending now on pharmaceutical preparations and me-toos, you might want to move into that, because that's a lot more than exists there now and there's frightfully little access to those sorts of funds. If product research needs to take place, as indeed it would for an industry like this, then that needs to be found in the other 90%.

The Chairman: Thank you.

A final question for Mr. Bodnar.

Mr. Morris Bodnar: Thank you, Mr. Chair.

I'm just wondering with respect to Bill C-91, as we are dealing with Bill C-91, what you feel should remain or should be done with Bill C-91. In other words, specifically, should the 20-year patent protection trade remain? Should it be shortened? Should it be lengthened? What about licensing? What about stockpiling? What about all these matters? Do you have an opinion on these particular points?

Prof. Evans: I think the opinions that would be implicit in the position the forum has taken - and here I'm trying again to skate around what would be the forum's statements as written down, the forum's thinking and my own thinking - would say no, it shouldn't be lengthened. Yes, it should be shortened.

Licensing would be a superior alternative because it makes transparent and explicit the nature of the cross-subsidy. The fact that you are paying the owner of the patent and you're paying an amount that is known and that can be manipulated to raise or to lower the rewards appropriately seems to be a much more sensible way of rewarding innovation than doing it in a non-transparent manner and doing it through very broad coverage. Yes, that would be my answer on those questions.

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Mr. Morris Bodnar: Are there any other changes you would like to see done to Bill C-91?

Dr. Noseworthy: Not a change, but perhaps a cautionary note. As we did not raise it, this is a 30-second clip.

We are quite concerned about what we believe to be a growing phenomenon - and it's quite subliminal still - of director advertising to consumers. We think that's a dangerous practice.

On Thursday night past I asked my wife, separately from me, to look at The Edmonton Journal and review the paper. She's a physician. I asked her to look at all the things in there that she would describe as advertising, where there was a pharmaceutical firm involved and they were marketing something to the public. Four such ads were in that journal that night. Now they were not ads for very specific products and for very specific use trying to contrive a response from the consumer, but there is implied advertising of a variety of sorts that's beginning to get far more common. I think we're on a dangerous precipice here, and we should rigorously enforce the lack of advertising to the general public.

The Chairman: Thank you. I'd like to thank our two guests, Dr. Evans and Dr. Noseworthy, for bringing us the health forum. We've had a very interesting time here and some interesting ideas have been brought forward. We appreciate the time you've taken to meet with us and present your ideas.

The committee is now suspended until approximately 6 p.m. To the witnesses who are due next, I would suggest, depending on how long the vote takes, that you might be back in the room by ten to or five to, as we'll be starting as soon as we can after the votes. Thank you very much.

.1723

.1829

The Vice-Chairman (Mr. Walt Lastewka): Ladies and gentlemen, we'll begin with the order of the day pursuant to Standing Order 108(2), a review of section 14 of the Patent Act Amendment 1992, chapter 2, Statutes of Canada, 1993.

I would like to thank the witnesses and the resource people for being patient, as the members have to be in the House when the bells are called.

We've been trying to keep our opening remarks from each of the witnesses to around five minutes. Because of our schedule we will try to keep it as close to five minutes as possible and I'll have to warn you if you're going beyond that. Then we will open it up for questions and answers. Many times the members run for time to make sure we can get as many questions in as possible, so we hope we can have as much dialogue as possible.

We'll begin. From the COCQ-SIDA, we have Alain Godmaire, secretary of the board. Will you be making the presentation?

Mr. Alain Godmaire (Secretary of the Board, COCQ-SIDA): Oui, bonjour.

The Vice-Chairman (Mr. Walt Lastewka): Please begin.

[Translation]

Mr. Godmaire: Mr. Chairman, members of Parliament, good evening. I would first like to thank you for giving the Coalition the opportunity to express its views on the review of this legislation.

Our Coalition speaks on behalf of 36 Quebec organizations that are fighting AIDS, organizations that are found throughout the province. Our presentation this evening is not directly related to pharmaceutical companies and their positions, but is really an expression of the concerns of those living with HIV/AIDS and what can be done to improve their quality of life.

When the HIV virus first appeared, because of its rapid development and the lack of interest in this new illness, the infected people took charge very quickly and developed several resources to meet their needs. They set up information services, education services, but also did some major lobbying to pharmaceutical companies to get access to therapies that might help them improve or extend their life.

.1830

The ability to take charge of their own destiny resulted in pharmaceutical companies recognizing the advantages in getting close to those with HIV/AIDS, that getting closer to them might speed up the approval of new drugs.

We would like to present five points to you, the first of which is price control. In terms of the HIV virus, several new drugs have appeared on the market. Their cost is truly exorbitant. Since those costs are assumed by governments in most Canadian provinces, there seems to be an increasing problem in getting them registered as free drugs.

When the costs of those drugs are not covered by the provinces, HIV carriers must pay for them themselves, and 95% of them are unable to do so.

Right now, the Canadian government sees what the average price is in other North American and European countries to set the price here; those prices are very high. Often, the countries used as reference are places where pharmaceutical companies have their head office.

As for costs, we ask that the Canadian government broaden its comparison base to include the global market for the drug, rather than just look at European countries and those on the American continent.

Secondly, with regard to humanitarian access, a number of new medications have appeared on the market and many people who are at a point of no return with their current medication want to have rapid access to those new drugs. It is only through clinical trials or humanitarian access that they can do that.

Right now, clinical trials are feasible only in Canada's major cities such as Montreal, Toronto and Vancouver, and those with HIV/AIDS living in outlying areas can only get rapid access to new treatments through humanitarian access.

Since there is very little opportunity to get that humanitarian access and companies are reluctant to make those treatments available, for financial reasons or because they are insensitive to the problem - it is not up to us to judge - we recommend that the Patent Act include an obligation to provide humanitarian access in cases where molecules have reached the second phase of clinical trials and a provision to ensure that people living in regions where there are no clinical trials do not have to have exhausted every other option to be eligible.

Thirdly, we would like to talk about an independent research fund. It is increasingly difficult to find funding for basic research. Canada is considered one of the leaders in terms of well-known researchers especially for HIV. Several new discoveries have been made here in Canada, but unfortunately, there is often insufficient funding.

For pharmaceutical companies, finding a cure for HIV is the least profitable solution. If HIV were to become a chronic illness instead of a fatal illness, that would ensure incalculable revenues for several companies, probably for decades.

We do not want to accuse those companies of any wrongdoing, but you have to be realistic. The main goal for those companies is to make money. They are for-profit organizations and it seems reasonable that they would first develop money making products.

.1835

So, with regard to an independent research fund, our recommendations is the same as that of the National Forum on Health, namely that when Bill C-91 is reviewed, the commitment made by the pharmaceutical industry when the legislation is first adopted, which is to increase its research expenditures, should be changed to stipulate how much and there should be a mandatory contribution to a health research fund, in the broader sense of the word, that would be independent from the industry and administered by national granting agencies, whereby subsidy applications would have to go through the standard review process by a committee of peers.

Fourth, we would like to talk about moral or ethical aspects of research, or more specifically, the production of financial statements. We are asking companies to reinvest in research, but the costs involved in marketing the products are included in those sums when they present their budget. Right now, marketing costs are not clearly indicated. Every time we asked companies or their associations about the exact amount invested in research, we were unable to get any answer.

Why isn't it possible to have separate entries in the financial statements for travel bursaries, secretaries or nurses positions in establishments involved in clinical trials, and the cost of launching the products?

We recommend that the Canadian government require companies that do research to clearly identify in their financial statements which sums pertain to basic research and which relate to marketing, support and development to make sure pharmaceutical companies fulfill their commitments.

In closing, let us talk about regulation 55.2, concerning the notice of compliance. We have a lot of reservations about that because we think it will just provide an advantage and better protection for brand name companies and will not improve the safety or well being of HIV/AIDS sufferers.

Thank you very much.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Thank you.

Our next witness, from the Canadian AIDS Society, is Mr. Rodney Kort, program consultant. Welcome.

Mr. Rodney Kort (Program Consultant, Canadian AIDS Society): Mr. Chairman, honourable members, thank you for inviting me to appear.

I just want to introduce the Canadian AIDS Society briefly and its role with respect to HIV/AIDS. The Canadian AIDS Society is a national coalition of over 100 community-based AIDS organizations providing education, support and advocacy services for people living with HIV/AIDS and for communities vulnerable to HIV/AIDS.

The role of CAS is to speak as a national voice and act as a national forum for the community-based response to HIV and AIDS. The society also advocates on behalf of people affected by HIV and AIDS. It acts as a resource on HIV and AIDS issues for its member organizations and it coordinates community-based participation in the national AIDS strategy combating HIV and AIDS, which I should also say is due to end at the end of March of next year.

With respect to the cost of brand name pharmaceuticals and HIV/AIDS treatments, as the representative from COCQ-SIDA has said HIV/AIDS treatments are extremely expensive. They can easily range from $1,000 to $2,000 a month in terms of both direct HIV antiviral treatments and the related prophylaxes. HIV/AIDS treatments must be taken in very strict regimens for indefinite periods of time, which means you're looking at costs in the tens of thousands of dollars over a period of years. So it's very clear that people living with HIV/AIDS and their representative consumer groups have a vital stake in what happens with Bill C-91.

In the written brief that the Canadian AIDS Society presented to the committee it goes into a fair bit of detail and there are quite a number of recommendations contained in the brief. I don't want to go into detail in terms of the background documentation. I would encourage the committee members to refer to the brief in support of the recommendations, which I'm going to present to you now.

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The Canadian AIDS Society recommends that the federal government, the provincial governments and the pharmaceutical industry immediately form a working group to address the issue of pharmaceutical drug costs. They should develop an interim strategy to ensure universal drug coverage for people living with catastrophic illnesses in Canada.

CAS recommends that the federal government work with provincial and territorial governments to implement the recommendation of the National Forum on Health to establish a national drug coverage program.

CAS supports the recommendation of the National Forum on Health that a coordinated interprovincial drug information system be developed to facilitate interjurisdictional information sharing.

CAS recommends that a single, provincially administered national formulary be developed to eliminate interjurisdictional variations in drug coverage and accessibility. And I'll return to accessibility a little later on in the presentation.

The Canadian AIDS Society recommends that patent protection not be extended beyond the current twenty-year period.

CAS recommends that section 55.2, the so-called linkage regulations of the Patent Act, be removed through an administrative Order in Council.

Also, there's no reason that CAS believes interlocutory protection should be awarded to the pharmaceutical industry.

CAS recommends altering the mechanism whereby the Patented Medicine Prices Review Board, the PMPRB, assesses initial list prices or factory gate prices of new treatments to include scrutiny of the process or the formula whereby the manufacturer determines the initial list price. This process is opaque right now and that is very problematic.

CAS recommends that the Patent Act regulations be changed to require a pharmaceutical manufacturer to submit a statement of intent with respect to compassionate access prior to the introduction of phase two and phase three clinical trials. As the representative from COCQ-SIDA said, this is really critical for people who have reached the end of the approved treatments that they're undergoing and who need to access experimental treatments.

CAS recommends streamlining the emergency drug release program to ensure facilitated access to necessary medications and to require manufacturers to explain why a particular medication is refused.

CAS supports the private member's bill tabled by Réal Ménard on December 13, 1996, requiring pharmaceutical companies to report annually to the PMPRB on their efforts to make therapies available through compassionate access programs.

CAS recommends that in consultation with industry and the scientific community the PMPRB develops a strict definition of what precisely constitutes basic science, clinical or applied research and other qualifying research. They should use these in defining and assessing the research efforts of brand name pharmaceuticals.

CAS recommends that the federal government establish an independent fund, supported by the brand name and generic pharmaceutical industry, for basic science research in Canada that is not specifically product and profit driven.

CAS recommends that the mandate of the Patented Medicine Prices Review Board be expanded to include analysis of the research efforts of generic drug manufacturers so we can look at them on a level playing field with patented drug manufacturers.

In closing I want to reinforce the necessity for people living with HIV and AIDS of a national drug coverage program for all Canadians. As the National Forum on Health has pointed out, the single pair system would reduce administrative costs and ensure that the accessibility principle of the Canada Health Act is met. It currently is not met.

I just want to add a final note on equity of access. I received a call about a month and a half ago from an individual who was desperate with respect to the treatment he was undergoing. He had applied to the Trillium Drug Fund in Ontario, and as we all know, there is a large backlog in Trillium. His file had not been processed. He didn't want to leave work and go on welfare, which is something I think this government can appreciate. He had borrowed all the money he could from family and friends to support the medications he was under, including two nucleoside analogues and one of the new protease inhibitors.

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He was trying to find out if there was any way I could help him with respect to facilitating his application to the Trillium drug program, because without that he was going to have to stop his treatment. The result of ceasing treatment, as any clinician will tell you, is a very rapid response in terms of viral replication and eventual disease progression.

This is not an isolated occurrence. It's happening across the country. It depends on what the particular programs are in each of the provinces. They're all different. Many of them have different regulations determining who has access to it, what's paid and what's not.

This individual was fortunate. Literally two days before his drug supply ran out he finally received a cheque from the Trillium program and was able to access the program. But there are many others who are not as fortunate.

I think it's incumbent on policy-makers to work with the provinces, with the private sector and with consumer groups to ensure that we really do have a strong and truly universal Canadian health care system.

The Vice-Chairman (Mr. Walt Lastewka): Thank you.

From the Canadian Treatment Advocates Council, Louise Binder.

Ms Louise Binder (Co-Chair, Canadian Treatment Advocates Council): Good evening. I'd like to thank you for inviting me to speak.

I'm a woman living with AIDS, and I speak to you as the co-chair of the Canadian Treatment Advocates Council, a fairly new national community-based organization of AIDS advocates dedicated to working for best practices in standards of care and access to treatments for people living with HIV and AIDS.

As you may hear in my voice, I've been struggling with a bout of bronchitis for about the last two weeks, so bear with me if my voice isn't quite as audible as it usually is.

We think one of the greatest strengths of our organization is the involvement of people with AIDS on the council, including the board of directors. We have representatives on our council from across the country, from each of the provinces as well as from the three largest people with AIDS organizations in Canada. We have a representative from AIDS Action Now!, a very strong AIDS activist group, the Canadian Aboriginal AIDS Network, and there's a women's representative as well.

The vast majority of people sitting on our council are people with AIDS. In fact, I'm here to speak on behalf of people with AIDS, particularly about the implications of Bill C-91 on the health of people with AIDS in this country.

There are two things that in the treatment area people with AIDS in Canada desperately need. One is meaningful - and I emphasize meaningful - research and development up to approval and subsequently, which is often forgotten. Many drug companies seem to drop the ball once they've received approval and don't follow through to continue with research as to how this drug is really working once it's out in the real world.

The other thing we need in addition to meaningful research and development is accessibility to drugs. Of particular importance to us is the ability to pay for these drugs. It is tremendously difficult for people in this country to afford the high costs of prescription and non-prescription drugs required for AIDS.

I'm going to tell you my own experience briefly, just to give you an example. I am on a three-drug cocktail, which I assure you is not anywhere as pleasant as martinis, in addition to a number of prophylactic drugs to keep me from getting a number of diseases, including pneumonia. I also take a number of vitamins and mineral supplements.

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I spend at least $2,000 per month on prescription and non-prescription drugs. I am one of the fortunate, very fortunate, few who have some coverage through a private drug plan. If I did not, I can tell you that I would never be able to afford the drugs I need to stay relatively healthy and to have some kind of quality of life. Basically, I'm what's called ``asymptomatic'', which means I don't yet have a serious illness as a result of my disease.

If you want to do the mathematics, you can see it's a tremendously expensive problem. Very few people with this disease have private drug plans - very few.

As was mentioned by my colleague, Mr. Kort, even where there are provincial drug programs they are hopelessly backlogged in many cases. People are required to have significant amounts of funds of their own to up-front the cost of drugs, which they cannot afford to do. Many of them, therefore, leave their jobs and end up in the welfare system, not because they want to but because it's the only way they're going to be able to afford to stay alive and to have some quality of life.

So we're really concerned about good research and development. We would very much like to be cured. We don't wish to be on the welfare rolls and we don't wish to have to cost you a lot of money in drug coverage. We also want to be able to afford the drugs that will keep us alive.

Now, specifically what I would like to talk about are some of the contributions that the existing wording of Bill C-91 brings to the problem of high drug costs. Some of these will have been covered by my colleagues already, but I hope you'll bear with me. I think they are worth repeating.

The first thing I do want to say is that I'm not sitting here, and my organization is not sitting here, suggesting that brand name drug companies should not be entitled to reasonable return for their investments in research and development and generally in the economy of this country. We think they certainly are entitled to that, but they are not the only stakeholders in this situation. One of the stakeholders - and I think, frankly, the most important stakeholder, obviously - is the person who needs to purchase these drugs.

One of the difficulties we have with Bill C-91 relates to the Patented Medicine Prices Review Board. It was purportedly established to regulate the price of patented drug products.

The particular difficulty we have with this board is that it does not look independently at the methodology drug companies are using to state a price for their drug in Canada. Instead, what they do is look at the drug price lists of other Organization for Economic Cooperation and Development countries, including the United States. I can assure you, there are almost no drugs patented in Canada before they're patented in the United States, at least in the area of AIDS; I wouldn't presume to speak in any other area. So what really happens is that we end up with pricing that's not determined independently for Canada and what people in Canada can afford. Instead, we end up with a formula based on what other developed countries are charging.

We think that's wrong. We think there should be some real teeth put into the Patented Medicine Prices Review Board so that it does look independently at these methodologies that the drug companies have come up with to state their prices.

In addition, this board is supposed to monitor drug prices to ensure that they remain within the rate of inflation, as monitored by our consumer price index. One of the problems with this is that the cost of new drugs approved in that year are not included in determining whether in fact the company has met their obligations in this area. AIDS drugs are very new on the market, and often very expensive AIDS drugs are not put into the formula for that year to determine whether this has been met.

Another problem we have with Bill C-91 is what we and I think others call ``evergreening'' of drugs. What evergreening does is to permit the 20-year patent protection to be significantly extended in some cases. It does that by allowing the company to apply for different patents though different stages of development of the drug.

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It also allows for patenting of a different dosage of the drug. That becomes a totally new patent. As well, if the drug is administered in a different way - it moves from a pill, for instance, to a soft-gel capsule - a new patent can be obtained.

This evergreening has allowed many of the brand name companies to retain their patents for much longer than the 20 years. That, in our view, adds significantly to the cost of these drugs.

Of course, one of the arguments we hear from the brand name companies is that they spend a great deal of money on research and development to bring their products to market and therefore are entitled to lengthy patent protection and high pricing in order to make up for that. We say, fine,20 years must be reasonable, because the high profits of these companies don't seem to be waning.

We're concerned about this. We don't really understand what is being spent in terms of research and development. They argue about the high cost of research and development, but we've been unable to get -

The Vice-Chairman (Mr. Walt Lastewka): We're going to have to ask you to summarize. You're four minutes over.

Ms Binder: Oh, I'm sorry.

In any case, we're very concerned about what research and development really means.

We agree also with the Canadian AIDS Society that section 55.2 should be deleted from the regulations. There's really no reason why the drug companies should get injunctive relief by law when no other companies can do this. They should be able to go to court, as others do.

So there are many problems with this legislation. CTAC has developed a number of recommendations. I really would commend them to you. We think there should be another four-year review. There's no reason why we shouldn't continue to review what's happening with these costs. They should continue to be related to job creation, meaningful research and development and cost containment. They should also be related to compassionate access for drugs. Nobody should be in a situation in this country where they cannot get drugs because the drugs are -

The Vice-Chairman (Mr. Walt Lastewka): I'm going to have to stop you. You've taken double your time.

Ms Binder: I'm sorry.

The Vice-Chairman (Mr. Walt Lastewka): You have to remember that in the end I have to live with these members.

Ms Binder: Well, you can tell I'm passionate about my subject.

The Vice-Chairman (Mr. Walt Lastewka): Maybe you can make some of your points as the questioning begins.

Ms Binder: Thank you.

The Vice-Chairman (Mr. Walt Lastewka): From the Canadian HIV Trials Network,Mr. William Cameron, regional director for Ontario. Welcome.

Mr. William Cameron (Regional Director, Canadian HIV Trials Network): Thank you, Mr. Chairman, and good evening.

I'm a physician at the Ottawa General Hospital and a clinical researcher, and regional director for the Ontario region of the Canadian HIV Trials Network. I'm here to offer a statement for the CTN in support of the protection of intellectual property in renewal of Bill C-91.

Stakeholders were asked by a federal review committee to comment on its effects. The Canadian HIV Trials Network are stakeholders in the issue of whether Bill C-91 continues, because it is closely tied to companies' willingness to invest in clinical trials in Canada. In our experience, in the field of HIV and AIDS the companies that have been willing to invest in clinical research efforts have been exclusively companies developing innovative drugs.

The CTN, or the Canadian HIV Trials Network, is a federally funded organization. We facilitate clinical research on HIV/AIDS in 26 clinical sites across the country. Over the last six years we've been involved in over 50 clinical trials that have enrolled 5,500 Canadians living with HIV and AIDS.

We have also facilitated several open-label and compassionate-access programs involving drug access to over 3,000 patients. Our infrastructure has offered access to clinical trials by Canadians outside of major centres who might otherwise have been excluded from this process. However, our mandate and limited funding do not permit us to sponsor clinical trials directly. The CTN is like the United States government-funded AIDS Clinical Trial Group, with one important difference - the money with which to do trials.

Unlike our counterparts in the United States, Canadian researchers are completely dependent on sponsorship by drug companies to conduct our clinical research. As a result, we naturally support legislation that encourages pharmaceutical companies to invest in clinical trials. This is especially true in the area of AIDS research for three reasons.

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First, AIDS has no significant other sources for funding of research. Because of the continued stigma attached to this disease, fund-raising is difficult, and charitable contributions are a fraction of those allocated to or collected for other diseases.

Second, finding treatments and hopefully a cure for devastating diseases like AIDS requires an intensive research and development effort, which has to date only been provided by innovative pharmaceutical companies, none other. Over the past six and a half years, the Canadian HIV Trials Network has never received a protocol submission with support of any kind from a generic drug company. All of the trials we have facilitated or conducted have had the financial support of an innovative pharmaceutical company.

Third, conditions caused by deadly and adaptable viruses like HIV require a sustained commitment of costly research and development efforts. AIDS is still new and is still a fatal disease. HIV adapts quickly and in a short time develops resistance to most of our currently effective agents. It is because of the continued willingness of innovative companies to engage in an expensive and lengthy drug development process that we now have many drugs to combat HIV.

The new combination therapies that are giving hope to people living with HIV are the direct result of the drug development efforts of only the innovative pharmaceutical companies.

Whatever we may think of these companies and their business strategies and tactics, we recognize that the lives of people living with HIV in Canada have been improved by these companies' investment in and development of the most recent generation of new drugs.

Having said this, we recognize that the burden of paying for expensive pharmaceuticals falls to individual Canadians and to provincial and private drug plans and that resources within the health sector are stretched. There is a whole spectrum of clinical research that can help address this situation, but it does not fall naturally under current funding envelopes.

We refer to so-called clinical management trials and studies that are aimed at improving clinical management of patients. Take, for example, in the area of AIDS, studies that followed on the heels of the original AZT drug studies. These original studies showed that AZT was effective in doses at 1500 milligrams per day. That was bench-marked at $1,000 U.S. per month when it was introduced and enforced on the country at that level. But critically important management studies later showed that equivalent effectiveness could be achieved with only one-third that dose, at far less cost and with far less toxicity, resulting in a greater quality of life for people living with HIV under this treatment.

These later studies were funded by governments and were obviously of little interest to the pharmaceuticals, which had acquired their licences and their patents and such. There are other examples that are equally as dramatic and these are the result of clinical management trials.

For convenience, we'll use the term ``clinical optimization research'' to refer to such trials that seek to optimize the clinical management of patients with specific disorders, given available therapies. These trials fall outside the natural interests of pharmaceutical sponsors. Such research might seek to determine if lower doses of drugs are as effective as licensed doses and whether specific pathways of care can lead to better patient outcomes.

At the present time there are few resources in Canada for funding of such critically important research, which has interests from many perspectives.

The MRC and PMAC health program is a very unlikely source of support for this because one must have an industry sponsor to begin the application process to that resource.

MRC itself, while a possible source, does not have the funds within its clinical research envelope to undertake more than a very few of these studies. These are expensive studies that we're talking about and government support of MRC health research is falling in Canada. While the new health research fund has been announced, again, the annual amount available is limited. We believe that in exchange for this patent protection, industry should contribute to this underfunded and critically important area of research for patients, Canadian taxpayers and our governments.

The CTN wishes to make the following recommendations in support of Canadian research efforts under Bill C-91.

We recommend that if the provisions for patent protection specified in Bill C-91 are to be renewed, a significant proportion of the ``10% of Canadian sales'' commitment be set aside to conduct clinical optimization research or clinical management trials that are unlikely to be done by industry, not being in their natural interests. These unencumbered funds would be administered through a peer review process and would be used to fund management studies that have no alternative sources of sponsorship.

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Second, we recommend that if there are unspent funds because of failure to meet that 10% target, any of the target amount not met be allocated to this unencumbered fund.

Third, we recommend that an increasing percentage - ideally 50% - of PMAC R and D funding be spent on extramural research. Currently the vast majority of basic research is performed in industry labs.

Fourth, we recommend that the R and D fund establish regional targets for research investment.

Thank you.

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much.

We'll now begin our questioning. Monsieur Ménard.

[Translation]

Mr. Réal Ménard: Mr. Chairman, I hope that you, like the government side, noted the unequivocal support for my bill. I must admit I'm pleased to see that. I am especially pleased because I really feel the government will support the amendments that will be tabled by the Official Opposition.

I would like to remind my friends from AIDS Action Now! that the first person who came to see me after I was elected in October 1993, as were a number of my colleagues, was Brian Farlinger. He came to see me in December. You might say he did not waste much time. He is the one who really explained the importance of having very clear provisions in the Act.

People living with an AIDS sufferer and who know what it is all about know that it is a vicious circle and how medication can make the difference between an acceptable quality of life and a dreadful quality of life.

As a committee, we must recognize the role pharmaceutical companies can play. I've told my colleagues on a number of occasions that with pharmaceutical companies, some are good and some are bad. Some people are very, very committed. There are pharmaceutical companies that are extremely generous and excellent corporate citizens, but there are others who are quite the reverse and are very tight.

Perhaps Louise or the representatives from the Canadian AIDS Society can really explain what it means to have access to approved drugs and also what it means to have the opportunity to participate in a controlled clinical trial so that it's clear for all my colleagues. If I am not the one to say it, they will listen.

[English]

Mr. Kort: I don't know about that.

The Vice-Chairman (Mr. Walt Lastewka): That's not really true, you know. Mr. Ménard is a valuable member of this committee and we have many discussions together.

[Translation]

Mr. Réal Ménard: It is a joke, Mr. Chairman.

[English]

Mr. Kort: The issue of compassionate access is absolutely critical for people living with HIV and AIDS.

The research and development process for these medications uses up a substantial amount of time before the medication is even ready to be submitted for approval, and the approval process can then take a substantial amount of time as well.

For people who are living with the disease and who have already gone through the medications that are currently available, it really can literally be a matter of life or death to be able to access an experimental treatment through a compassionate access program or through the emergency drug release program at Health Canada prior to approval of the drug. It can have all sorts of impacts in terms of quality of life, health and the hope of people living with HIV and AIDS. That's one of the reasons that compassionate access has figured so strongly in all the presentations you've heard.

[Translation]

Mr. Réal Ménard: Ms Binder may want to add something.

[English]

Ms Binder: I think we have to make a distinction between compassionate access and involvement in clinical trials. They are not the same thing.

Clinical trials - which I think one of my colleagues mentioned earlier - generally happen in only the very large centres, because you do need a critical mass for these clinical trials. And people are purportedly going into these trials because they have a desire to help science and research move forward.

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Compassionate access is a different issue. Compassionate access is the issue of someone using up all available drugs at their disposal and being aware of other drugs being developed by companies, drugs that are not yet ready for approval in this country. And compassionate access is the issue of that person not surviving if he does not at least get the opportunity to try these drugs that are in the pipeline. That's really what compassionate access is about. We strongly believe in compassionate access, and at no cost, if possible, to the person who is critically ill. For us that's really quite different from making a decision to help research.

[Translation]

Mr. Réal Ménard: Is it really that important? I think we will have made real progress the day pharmaceutical companies are proud to give unapproved drugs to people who need them. I don't just mean AIDS sufferers but also people with other types of dreadful diseases. The day pharmaceutical companies are proud to provide that type of broad access to a drug will be a huge step forward for us as a society, but I have no illusions.

Personally, I am convinced that politics is a power struggle. In politics, if you don't talk about a problem, it doesn't exist. I think there should be some legislative obligation.

I suggest that every year the Board conduct a review, at least of companies holding patents - if the committee broadens the Review Board's mandate we can adjust accordingly - and of associations such as yours and others throughout Canada. Those companies should make a public statement on what they are doing.

Once the Health Minister has to table a report by the Patented Medication Prices Review Board in the House and Senate, the minister's entourage might start to do something. There are also consumers and other people who have an interest in keeping abreast of developments on medication price control.

Imagine how interesting it would be for activists if the Board tabled a report every year in May or June and if the former could react to it. It could be amazing as well for pharmaceutical companies. I have no doubt that some of them really want to help sick people, but I think that without any legislative obligation, they will not have that pressure. Companies work best under pressure, that is to be expected. When you don't have to do things a certain number of times, you don't do them. If that obligation were a legal obligation, I am sure it would make a huge difference.

That said, I think you were very clear on the need to give the Board more power with regard to access to medication. I refer back to COCQ-SIDA, because it is a very important organization for Quebec. In fact, you represent over 30 organizations. I think you said 36 in your introduction.

Could you tell us about the co-operation you get from pharmaceutical companies and could you also tell us why you think this committee should recommend a broader comparison base for countries used as a reference point? Right now, Canada can compare with seven countries. You are not the first to bring that up, but it would be interesting to hear your views.

Mr. Jean-Pierre Bélisle (representative for people living with HIV-AIDA, COCQ-SIDA): COCQ-SIDA asked me to be here for the questions. With regard to our relations with pharmaceutical companies, right now, Quebec community organizations are wondering what type of relationship there should be between the AIDS community and the pharmaceutical industry. We are becoming increasingly convinced that there are nearly incestuous links between the researchers, doctors, some community representatives and the brand name drug manufacturers.

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Last week, we published our information journal on available treatments, and the big question mark was the relationship between the pharmaceutical industry and us.

Why has AIDS suddenly become an industry? Several Quebeckers attended the international conference in Vancouver and came back with a bitter taste in their mouth. They were wondering whether it was a scientific conference or a trade fair. We think that is a clear illustration of what happens when funding in a particular area of research comes virtually only from a profit-making sector. Those living with AIDS - such as myself - know full well that when a pharmaceutical company looks at them, what they are interested in is money the sufferers will pay for their medications.

Those companies just look at the bottom line. From a purely ethical viewpoint, we can wonder whether the goal of maximizing profits is compatible with the objectives of biomedical research. That question was raised earlier in a somewhat different way by the representatives of the National Forum on Health.

As for the second part of your question, which dealt with broadening the cost base, right now, the Patented Medicines Prices Review Board, for category 2 medications, which are those that interest us, namely those that are really something new, usually bases... What we do know is that they will never exceed the medium price of the medication in the United States and in six European countries. We wonder whether that comparison base is the right one, because some of the countries used are countries where the price of a cup of coffee has nothing to do with the price of a cup of coffee here. So we would like the reference base to be broader.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much.

Mr. Schmidt.

Mr. Werner Schmidt: I want to thank you for being here this evening.

On a procedural issue, Mr. Chairman, we're going to be here until midnight at the rate we're going.

The Vice-Chairman (Mr. Walt Lastewka): We said we were on the night shift, so we need to proceed and we're going to try to get through as quickly as we can.

Mr. Werner Schmidt: I wonder if it might be appropriate for us to accelerate this. Perhaps the first round of ten minutes could be five minutes and then two minutes.

The Vice-Chairman (Mr. Walt Lastewka): I shortened Mr. Ménard's time just a little bit.

Mr. Werner Schmidt: So you're going to do this without telling us, are you? This is a secret little decision you made.

That's okay, Mr. Chairman, because I do think some of our witnesses have been put under a lot of pressure simply by having to sit around.

I do have a couple of questions here, though.

In one of CTAC recommendations here you suggest that 50% of the research go to extramural. We've had other witnesses tell us that approximately 30% of the money that is given to research by the PMAC people goes towards research, and the rest of it, 70%, is clinical trials. So there's a variance here of roughly 20%. How do you propose that 20% be made up?

Mr. Cameron: I'm not sure I understand.

Mr. Werner Schmidt: I suppose the mathematics would suggest that you want 20% more of research money devoted to research, given that the same amount of money is required to do the clinical tests as is currently the case.

Mr. Cameron: I think where the actual spending is made within the company, under the company's control or by contract, or by transfer of funds to a process that is outside of the company's control, is the issue there.

Intramural research, of course, applies to all of the marketing research alluded to here, as well as the drug development process, the costs of conducting clinical trials in Canada, which is part of the drug development cost, whether it's done under this bill or...it's done anyway.

I'm not sure I understand what you mean by -

Mr. Werner Schmidt: At the current time, 10% of sales is supposed to go to research, and you're suggesting 50% of that go to extramural.

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Mr. Cameron: No, I believe we're talking about different things. This is PMAC R and D funding on extramural research as opposed to a 10% fund, which is a different pile of money.

Mr. Werner Schmidt: But just a minute now. The PMAC R and D... You're referring to the provision in Bill C-91, right? Or are you?

Mr. Cameron: Our recommendation on the PMAC R and D funding to be spent on extramural says, and I quote:

an increasing percentage, ideally 50%, of the PMAC R and D funding be spent on extramural research - currently, the vast majority of basic research is performed in industry labs.

Mr. Werner Schmidt: I understand that...which means that the PMAC R and D required by Bill C-91 is 10% of sales. That's the agreement.

Mr. Cameron: Yes.

Mr. Werner Schmidt: Are you suggesting that 50% of that be spent on extramural? Is that what that sentence means?

Mr. Cameron: I believe so - ideally, 50% of that.

Mr. Werner Schmidt: Well, either you do or you don't want that, because what this means is a major shift in the way the money is allocated by the PMAC R and D.

Mr. Cameron: Yes, I believe an increase in research money spent by pharmaceuticals that remains within their control is going to be applied towards the business plans of those companies.

Mr. Werner Schmidt: Okay.

Mr. Cameron: An increasing amount of money spent in research that's allocated or dictated under Bill C-91 should be transferred to the interests of the payers of health care and the consumers of health care, as opposed to the providers and the business plans of people who develop those drugs.

Mr. Werner Schmidt: Okay, thank you.

I would like to ask how you differentiate between scientific research and applied research.

Mr. Cameron: I believe the distinctions I've been using here refer to basic research, which is largely laboratory-based molecular biology. Applied research is clinical, in the clinical field, pertaining to the health of human beings in this setting. Marketing research, another large proportion of what we're talking about at the table here now, is how a company will choose, through scientific methods, to position better their products for incremental sales or increased margins.

Mr. Werner Schmidt: There was another point - and I don't remember who had this one - that had to do with the observation that the drugs that are being used to treat AIDS came from pharmaceutical companies that were in the innovation of new products and not elsewhere. That group, then, is doing this particular kind of developmental work, and it must be based on some pretty basic research, first of all. So it's the pharmaceuticals or innovative companies that are doing this. I think these are also the people under PMAC. Is that not correct?

Mr. Cameron: Some are, some aren't.

Mr. Werner Schmidt: Could you give us some names of those that aren't?

Mr. Cameron: I understand Abbott Laboratories currently is not a member of PMAC.

Mr. Werner Schmidt: Okay, thank you.

The Vice-Chairman (Mr. Walt Lastewka): Mr. Bodnar.

Mr. Morris Bodnar: Thank you, Mr. Chair.

I have a few questions, and they seem to link up. So I think I'll throw them out to you, and you can comment on them.

From having heard Ms Binder, I take it that this new generation of AIDS drugs has had an impact on the health of people living with AIDS - and perhaps you may want to comment on that as well - but there are those who have argued that these AIDS drugs are not just adding quality of life but are also saving a lot of money for hospitals because of less hospitalization, and so on. I would like some comments from you on that.

As well, I would like you to comment on specific AIDS drugs. Do you think patent protection has contributed to bringing these particular drugs to market? I have in mind, in particular, 3TC.

.1925

Mr. Kort: If I could just comment on the first question, then I'll leave the second to someone else.

First of all, you should know that the Canadian Policy Research Network here in Ottawa is at this point producing a paper looking at the economic burden of HIV/AIDS and looking at issues precisely like the one you raise about the advantages of therapies, keeping people out of acute-care settings where the costs are very much higher. So I think it's easy to make that statement, that keeping people on therapy is keeping people out of acute-care settings that are obviously a lot more expensive. CPRN is looking at that on a broader scale, and I believe their paper should be coming out at the beginning of May.

Ms Binder: If I may, I think your first question was are proteinase inhibitors really helping people live better and longer. We don't know yet. These drugs haven't been out for very long. We are certainly seeing some people having serious difficulties taking these drugs. Some people can't take them at all; the side effects are just too extreme for them. They haven't been out long enough for us to really make considered analysis of whether in the long term they're saving lives, or are they merely keeping the onslaught of the serious illnesses a little more at bay but it all catches up in the end? We don't know yet.

I can tell you personally that I have friends who have been very, very ill and who have taken proteinase inhibitors and who certainly seem to have made what we can only think of as miraculous recoveries. Will that last? I can assure you that we all hope so, but I don't think we know.

You asked if it keeps people out of acute-care hospitals. Yes, in general it has. However, the statistics in the United States show that one group that is dying faster is women. Although the deaths in the United States generally were down, the deaths were up 3% for women. So we still have a lot of work in terms of targeting some groups that have generally not been targeted for prevention and education services. But I think in general we would probably say that it is doing that.

I can't recall the other question.

Mr. Morris Bodnar: The last question was whether you think patent protection has contributed to bringing drugs such as 3TC to the market.

Ms Binder: I can't speak specifically to 3TC, but I'm sure patent protection has been a factor in encouraging companies to do research and development, absolutely.

Mr. Morris Bodnar: Thank you.

I'm sharing my time with Mr. Volpe.

The Chairman: Mr. Volpe.

Mr. Joseph Volpe (Eglinton - Lawrence, Lib.): Thank you, Mr. Chairman.

Thank you very much for appearing. I've met some of you before. I'm always impressed with the thoroughness with which all of you present your interventions.

I've read all of the recommendations. I can't say I'm surprised that you come up with some of the recommendations that you do come up with, but I'm going to offer a couple of observations.

One observation is that the recommendations that appear to make the most sense, for me at least, require an awful lot of interjurisdictional cooperation. I'm glad that you've raised that for committee members to consider, and I thank you for it.

The other observation falls in line with what my colleague was looking for a moment ago. Perhaps I could address this question first to Mr. Cameron, because he seemed to raise it more fervently than the others. That is, the question of research.

While I think everyone is agreed that research is important for bringing new drugs onto the market, we aren't really talking about no products coming on the market if there isn't any research done in Canada. The products that come on the market are market-driven, as they are virtually everywhere, and a producer of a product will look at the Canadian market if it suits him or her to bring a product on the market.

But more specifically, since you decried the lack of research, help me understand just how significant the Canadian strategy for fighting AIDS has been over the course of the last four or five years. The five years ends next year.

.1930

The Canadian government put about $200 million into a fund to combat HIV/AIDS. Of that, $17.5 million went to pure research on an annual basis. Another $2 million was from the MRC. Those last two figures have been approved again for extension, I believe. Yet you say there is no funding, Mr. Cameron, other than that from the patent medicines. Is that amount of money to be discarded? Is it not significant? Isn't it applied to producing a drug like 3TC?

Mr. Cameron: I do not believe that any of the national AIDS strategy funding went into the development of 3TC. I believe that was entirely funded from industry. There were collaborations from academic input there that was supported entirely by industry.

I can't right now give you a critique of the national AIDS strategy, but I can tell you that the proportion of this that was allocated to the CTN - the Canadian HIV Trials Network - has been used to support the infrastructure on which to conduct clinical trials, not to support the operations of conducting clinical trials. Therefore, to do one, it is necessary for the CTN to find a sponsor and a provider of not only support, but the drugs with which to do applied health research.

When the sponsor of the process is a pharmaceutical company, that becomes a controlling form of support. Therefore, the studies that have been done have been carried out to meet the interests of the pharmaceutical sponsor.

Mr. Joseph Volpe: Just in closing, if that money from the Canadian government or other governments wasn't there, you'd have to search for a lot more in order to provide for the infrastructure that will make that process doable.

Mr. Cameron: I think the research and development that brings drugs to market is driven largely outside of Canada. What we are discussing here from the point of view of the clinical trials network is whether Canada is going to be a player or not in that research process, which is a substantial potential investment.

The Vice-Chairman (Mr. Walt Lastewka): Mr. Ménard, you can have a very short question and a very short answer.

[Translation]

Mr. Réal Ménard: I will follow the same line of questioning as Mr. Volpe. As members of this committee, it is our duty to make sure the problem is not that the government has not earmarked money for research, but to make sure that enough money has been allocated.

The big problem we are dealing with is that the Clinical Trials Network gets annual funding of $3.3 million for its infrastructure and cannot do any independent research.

It is ridiculous to live in a country or a territory where the research focus is dictated by the pharmaceutical industry. Could Mr. Cameron tell us how things would be different if the Clinical Trials Network had independent budgets that could be used not only for infrastructure, but also to do research?

[English]

Mr. Cameron: I think if we had an operating fund, whether it came from an allocation under Bill C-91 from industry or whether it came from government in some other manner, then the clinical trials network would embark on clinical management trials.

This is not new drug development; this is the process of how to use the drugs we have today in a better, safer, and more cost-effective manner for the betterment of the health of people, as opposed to the regulatory drug process, or the drug marketing and drug positioning process.

The clinical trials network, if it had an operating fund from a source such as the one I've described, would embark on those studies that run perhaps counter to the marketing interests, tactics and strategies of businesses that produce new drugs, but it would hopefully work in favour of the health interests of Canada.

These are the clinical -

Mr. Joseph Volpe: You're looking at me. I was just wondering as you were saying that whether you're going to get me more funding from those companies that have been giving you funding, after a statement like that. But I applaud your courage.

.1935

Mr. Cameron: That's not courage. I'm just telling, as requested, what the reality is. We will conduct trials that will attempt to optimize health care with those funds. This is cost benefit, health benefit. And the people, my colleagues who work in industry, are quite happy to hear that. These are good citizens too. They happen to work in industry, but they'd be happy to help everybody.

The Vice-Chairman (Mr. Walt Lastewka): There's nothing wrong with people who used to work in industry.

Some hon. members: Oh!

The Vice-Chairman (Mr. Walt Lastewka): I want to thank you for your summation and I want to thank the witnesses. You can see the problems I run into when we go a little bit longer in presentations: everybody gangs up on me. But our objective in this committee all along has been to hear as many witnesses as possible. We're well over 100. I've lost count already.

At this time, I'd like to thank you very much for being with us and for your time, effort, and patience.

I'll now conclude this portion and take a two-minute break, ladies and gentlemen around the table, and then we'll reconvene for the next session.

Thank you very much.

.1937

.1941

The Vice-Chairman (Mr. Walt Lastewka): We will reconvene our session.

I want to thank the witnesses for coming forward. I apologize for the lateness of the hour, but it is caused by the voting in the House, over which we have no control.

I'm going to begin by calling, from the Consumers' Association of Canada, Marnie McCall, director of policy research and acting executive director. We have allotted you ten minutes. I think you heard from our previous discussions that we need to keep the presentations to ten minutes. The questioning will take seven minutes each, and we'll try to get a couple of rounds in.

Please begin.

Ms Jean Jones (Chairperson, National Health Council, Consumers' Association of Canada): May I introduce the people from the Consumers' Association?

The Vice-Chairman (Mr. Walt Lastewka): Sure. Go ahead.

Ms Jones: The Consumers' Association of Canada is pleased to be here this evening, in spite of the hour, to present to the industry committee. I am Jean Jones, volunteer chair of the CAC's national health council. I'm accompanied by Marnie McCall, director of policy research and acting executive director of CAC; Christine Miskell, staff research associate; and André Ouellette, trade policy analyst.

Mr. Chairman and members of the committee, I know you've taken a lot of time to hear from a wide variety of witnesses regarding the review of Bill C-91. Thank you on behalf of Canadian consumers. It is important that everyone is heard when such an important component of the health care system is debated. I think you will agree that the preservation of our health care system is a high priority for all Canadians. We hope that the following presentation by Marnie McCall is helpful to your deliberations, and we look forward to thoughtful discussion after the presentation.

Ms Marnie McCall (Director of Policy Research and Acting Executive Director, Consumers' Association of Canada): Thank you, Mr. Chairman and members of the committee, for allowing us to appear. I know your decision on whom to hear, when it seemed that everyone in Canada wanted to come and speak to you, was not an easy one to make, and I know you have been working very hard to hear from as many groups as possible.

You have received or are just receiving now a copy of our brief, which is some 40 pages long, and a shorter version that has the executive summary. What I will speak about tonight is based on the executive summary, although I will expand in some areas. Having had the opportunity to hear the last two rounds of witnesses, where I had intended to say things they have already said to you in detail, I will skip over. For the benefit of the translators, when I do that I will try to let you know where I've gone.

Before I begin I would like to tell you a little bit about the Consumers' Association of Canada. You should have received a one-page piece called ``Quick Facts about the Consumers' Association''. I would like to tell you that this is our fiftieth anniversary year. We are very proud of that accomplishment. We have been here certainly more than fifty times and we will probably be here more than fifty times in the future.

The Consumers' Association of Canada is a national organization. I think at the moment we have branches in 11 of the 12 provinces and territories and are hoping to get a branch going again in the other. We are a volunteer-based organization and are very fortunate to have people such as Jean Jones, who has chaired our health committee since 1988. We depend very much on the work of volunteers such as Jean, and we're very pleased that she was able to be here with us.

.1945

With respect to drug patent legislation, we have been involved in this issue over the last four decades. Throughout, we have consistently argued for an open, market-based system that is fair to producers, consumers, and researchers. Despite our claims that the 1987 and 1992 Patent Act amendments would yield negative and inadequate responses to consumer policy concerns, these amendments were passed.

Patent drug issues are a major issue for consumers. You have heard already this evening about the impact of the cost of drugs on Canadians. Over the period 1960 to 1992, health care spending for OECD countries as a whole more than doubled as a share of gross domestic product in those countries, from just under 4% to just over 8%. Although drug purchases rarely account for more than 15% of total health care spending, the pharmaceutical industry has become an obvious target for reform. In response to government cost containment policies, pharmaceutical companies have been very innovative in reshaping their organizational structures worldwide. The consumers around the world are affected by the high profits and few entrants enigma.

I will go through the key points in our brief and quickly summarize them. The first one concerns a comprehensive pharmaceutical policy for Canada.

The Consumers' Association of Canada believes that a national comprehensive pharmaceutical strategy leading to optimal drug therapy and contributing to the overall health of Canadians is necessary to slow the growth of prescription drug expenditures. It is imperative, in CAC's opinion, that such a pharmaceutical strategy include a national pharmacare program. CAC also believes that the basis of optimal drug therapy, which you just heard about from one of the last people to speak on the previous round, should be clinical correctness and cost-effectiveness, not jobs, investment, and research and development.

Our submission focuses on five key policy areas: health care, consumer protection, industrial benefits, intellectual property, and international obligation. I will pick out the highlights from each of those areas.

In health care, pharmaceuticals represent a very significant element of health care in Canada. CAC values the industry, which researches and manufactures these lifesaving and life quality enhancing products. The high price of drugs, particularly of new drugs, is a growing problem for Canadian citizens. Traditional therapies and hospital care are being replaced by expensive drug therapies delivered in the community. These expenses are creating barriers and burdens for Canadian families. Again, you heard more about this on the last panel.

Both targeted provincial plans and employer benefit plans have seen their drug expenditures rise significantly, and many have reduced their coverage. Furthermore, many of the growing number of unemployed individuals and temporary and contract workers, who are becoming more common in today's economy, simply cannot afford premiums for individual private drug plans. So consumers clearly have an interest in innovative health research because we need new therapies to address new problems and to better address existing problems. This does not, however, mean that imitative and costly me-too or copycat medicines that provide little, if any, additional therapeutic value are in consumers' interests. Insofar as valuable resources are misallocated, in our view, toward the development of me-too medicines, research into truly innovative drugs suffers and the health and well-being of all Canadians are sacrificed.

CAC reiterates its recommendation that the federal government establish a national pharmacare program. We recommend that the federal government make direct cash investments in the development of innovative pharmaceutical products and that in return the federal government receive a royalty from their sales. The federal government could also consider - and this is a recommendation we also made when Bill C-91 was being debated originally - requiring royalties to be paid in exchange for other forms of investment in pharmaceutical R and D, including incentives such as R and D tax credits. These royalties could be applied through a federal pharmaceutical fund dedicated to ensuring that all Canadians have access to medically necessary pharmacare services, at a reasonable cost to the national health care system.

.1950

The area of consumer protection is basically related to prices and control of prices. Bill C-91 expanded the powers of the PMPRB, and CAC would agree it has been successful in its limited mandate. We think the mandate has been limited, and no matter how diligent the board may be in attempting to regulate prices of patented drugs, the companies will continue to follow commercial strategies involving the introduction of new drugs at high prices, in order to replace existing less lucrative products, as price increases are easily controlled.

During the previous panel you heard various issues about the PMPRB. I will just summarize and move to page 5. CAC has worked with the boards, both formally and informally, since its inception, and two messages have been consistent throughout this time period. Consumers should be represented on the board. We generally feel that all stakeholders should have a voice in boards that make decisions concerning them, and the PMPRB does not include a consumer voice at this time.

The second message is that the practice of using the United States and international price comparisons for category two drugs makes this mechanism defective. Therefore the U.S. should be eliminated. You heard this already before.

The difficulty of separating the marketing cost from the R and D expenditures was already mentioned tonight. We suggest that the consumer interests would be served if further study was undertaken to expand on the limits that exist in tracking R and D and manufacturing costs of pharmaceuticals, to enable the kind of split and specification of the expenses that was talked about on the last panel.

The Vice-Chairman (Mr. Walt Lastewka): I just want to warn you that your ten minutes are up. You will need to summarize in the next minute.

Ms McCall: All right.

International obligations is one of the key points we want to bring to your attention. You have heard very much about compulsory licensing and ways of controlling costs.

We believe it is entirely within Canada's international obligations in NAFTA and the World Trade Organization TRIPS agreement to bring compulsory licensing into the Patent Act generally. We do not believe it is necessary to argue that an exception needs to be made for pharmaceutical patents. We believe the provisions of NAFTA and GATT TRIPS permit a broad-based system of compulsory licensing that would be open to anyone wishing to exploit a patent.

There seems to be an opinion that if you can reintroduce compulsory licensing at all, you must rely on one of the exceptions. It is our view, and the advice of our legal advisers, that it is not necessary. The Patent Act generally could permit compulsory licensing. The legislation requires that there be no discrimination on the basis of technology, and a general provision allowing compulsory licensing schemes would not fall foul of that requirement.

It would be necessary to ensure that the system does not unreasonably infringe on the patentees' rights. What would be unreasonable would have to be decided on a case-by-case basis. But we would suggest that in any system for compulsory licensing, the compensation to be paid by way of royalty to the patentee would have to be determined on a case-by-case basis.

.1955

The Vice-Chairman (Mr. Walt Lastewka): I'm going to have to stop you. We've gone two minutes over.

Ms McCall: I apologize. We'll pick up in questions.

The Vice-Chairman (Mr. Walt Lastewka): I'm sure during the question and answer period you'll be able to make your final couple of points. As you mentioned, we're trying, as much as possible, to let everyone be heard, and you represent a very large consumer base. That's why we want to have time for questioning.

Now we'll go to the National Federation of the Consumers Association of Quebec, Nancy Trépanier, consumer's adviser, ACEF. Are you going to be the lead speaker on this?

[Translation]

Ms Nancy Trépanier (Consumer's Adviser of ACEF Rive-Sud and spokesperson for the FNACQ's Health Committee): Yes, that's right.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Okay, I'll ask you to begin.

[Translation]

Ms Trépanier: Thank you, Mr. Chairman.

I would first like to mention that the mandate of the Fédération nationale des associations des consommateurs du Québec, or the FNACQ, is to make sure that the rights and interests of consumers are voiced, especially those of low and middle income earners.

We wanted to be involved in the review of Bill C-91 because we felt the discussion on pharmaceutical patents was extremely important and mostly because it has a major impact on low and middle income consumers. That is why the FNACQ appreciates the opportunity to be heard by the Standing Committee on Industry.

At a time when the public health system and social services are being called into question, at least to some extent, throughout Canada, because of increased costs and governments' financial difficulties, and at a time when Canadian and Quebec consumers are facing a precarious economic situation, we do not think it is appropriate for the federal government to maintain the Patent Act as modified by the Conservatives.

Our health system is one of the fundamental values shared by the people of Canada and Quebec. In fact, health is perceived not only as a value but as an essential service and obligation to be assumed collectively by society.

Over the years, drugs have become an extension of health care. They allow not only for reduced surgical and hospitalization costs but mean fewer consultations and shorter periods of time spent in convalescence.

In our view, pharmaceutical drugs are not consumer goods like any other, they are not taken because of an individual choice but because they are part of health care and thus essential. That is why the FNACQ recommends that the federal government preserve the accessibility and universality of health care, that it recognize drugs are part of health care and not a consumer good and that it increase the transfers to the provinces by taking the cost of drugs into account.

The second point we would like to deal with concerns the period of patent protection. The FNACQ recognizes the importance of intellectual property and research and development. However, we consider that the present Patent Act goes far beyond a mere matter of recognition and comes dangerously close to granting considerable privileges that are not justified.

Pharmaceutical multinationals are the only ones that stand to win in this situation. They have developed a series of monopolistic practices aimed at preventing sound competition such as the unjustifiably large number of patents, the voluntary extension of the exclusivity period changing the characteristics of the market before the arrival of generic products, the frequent use of interlocutory injunctions or the use of export restrictions.

As a result of such practices, they are able to get away with extending the twenty year protection, delaying competition with generics and penalizing consumers who will never be able to make up for the money lost.

That is why the FNACQ recommends that the federal government limit the patent protection period to twelve years following the marketing of the patented medicine, that it provide for a four-year period of commercial exclusivity and allow for a return to compulsory licences starting the fifth year of the patent and that it ensure that the amounts of royalties paid to the patent holder are established in relation to the actual costs of research and development.

.2000

Thirdly, the federation is very concerned by pharmaceutical companies practices relating to advertising and marketing. It appears that the amounts allocated to research and development are absorbed by advertising and marketing because the two budgets are not kept separate.

The industry is apparently swallowing up sums equivalent to twice the amount of the money allocated to R & D. The purpose of advertising and promotion is not to serve consumer interests but to increase profits. By allocating large amounts to advertising and marketing, industries influence the type of prescription chosen by health professionals as well as the consumption of their products.

This kind of logic generates completely unacceptable marketing practices where health professionals become the accomplices of pharmaceutical manufacturers. Think, for example, of the computers offered as gifts, payments made to physicians to attend luxurious conventions or the number of visits paid to students in the area of health care, etc.

The purpose of such practices is to create a kind of dependency which is ethically questionable. Consumers cannot afford higher drug prices simply to fund such practices. That is why the FNACQ recommends that the federal government require pharmaceutical industries to keep separate budgets for advertising-marketing and research and development; that it ensure the strict enforcement of the existing legislation, regulation and code of ethics, including the codes of the Pharmaceutical Advertising Advisory Board, the ACIN and professional corporations, and that the existence of such be made better known to consumers and professionals.

Fourth, the FNACQ is of the view that the results of Bill C-91 relating to research and development are not acceptable. Eight percent of the money spent on research and development is used for basic research and only two new so-called breakthrough drugs were discovered in 1995. Furthermore, the R & D investment rate is significantly lower than the international rate of 18%.

At the present time the grants made by the pharmaceutical industry are not disinterested. Their implicit aim is to create a lucrative complicity between manufacturers and prescribers and to orient research and development towards profitable drugs rather than encouraging a better management of healthcare. That is why the FNACQ recommends that the federal government set up a national health research and development fund as proposed by the National Health Board.

This fund would receive compulsory contributions from the pharmaceutical industry. It would ensure an independent management of research and development through the distribution of grants to projects based on merit and at the same time an appropriate balance between applied, clinical and basic research.

Lastly, the FNACQ considers that the Patented Medicines Prices Review Board, although useful, has been unable to exercise effective control over the price of medicine. The Castonguay Report noted last year that 55% of the patented drugs launched in Canada after 1987 cost more than the international average.

Furthermore, according to the OECD, Canada has the highest rates of all the OECD countries with respect to pharmaceutical products. That is why we recommend that the federal government strengthen the role of the Patented Medicines Prices Review Board so that it can establish the price of drugs and at the same time regularly monitor the evaluation of these prices; that it clarify the role to be played by the Board in relation to the price of medicine by granting it the power to limit the profit of pharmaceutical industries; and that it enlarge the role of the council so that it is able to intervene with respect to the price of generics and over-the-counter drugs, retail and wholesale prices as well as pharmacy dispensing fees.

.2005

In conclusion, consumers cannot afford to support and to extend the monopolistic privileges of pharmaceutical companies and end up paying higher prices for drugs.

The increased cost of drugs is exercising a downward pressure on our health system and causing problems for consumers, taxpayers, private insurance plans as well as for the government. The cost of drugs is now the third largest element in our health budget after hospitals and physicians. It also happens to be the only area where costs are not under control at the present time.

Maintaining the privileges of the pharmaceutical industry means a decreased accessibility to drugs and, by the same token, to health care. The price of drugs should not compromise the five principles of universality, accessibility, transferability, public administration and comprehensiveness set out in the Canada Health Act.

The government should assess the impact of Bill C-91 in relation to these five principles. It is now up to the Liberal government to support the interests of consumers and adhere to the position it advocated in 1992.

Thank you.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much.

We will now begin with questioning.

[Translation]

Mr. Pierre Brien (Témiscamingue, B.Q.): I'd like to welcome you all. My first question will be to Ms Trépanier. You made a number of statements and it seems to me that you want the best of both worlds.

You are concerned with basic research. You say that we should have as much research as possible and that we should maintain, and I agree with you, drug prices at the lowest possible level. But you also say that our companies should reach international research levels and make more R & D efforts. I think we agree on this point but how can this be done when another of your recommendations says that these same companies should be given less protection than they now have? If we want them to do the same level of research and development as elsewhere, then they are going to have to have a similar amount of protection. We can't expect the same R & D research efforts on the one hand, and on the other hand give them less protection than they would have elsewhere. How do you reconcile these two things?

Ms Trépanier: Are you talking about the commercial exclusivity protection or the overall patent protection?

Mr. Pierre Brien: The two go together since it is patent protection that does provide effective protection at the commercial level.

Ms Trépanier: I don't think the two are diametrically opposed. I would like to say that our federation does indeed wish to have the best of both worlds.

Our aim is not to defend the interests of any particular industry but to defend low income consumers. For some years now drug prices have been increasing regularly. And because of cutbacks to the health system, people have the feeling that things are beyond their control.

Medicines constitute the only area where there is no price control. That is of great concern to us. As far as patents are concerned, to answer your question, the present research and development take advantage of all sorts of policies that are expensive for consumers.

As far as advertising and marketing is concerned, we must keep in mind, as was noted by the National Health Forum, that the amounts invested in advertising and marketing are included in the prices charged consumers. When we are able to separate these amounts and ensure a greater transparency of the R & D budgets, then consumers will certainly be willing to assume their share of R & D, knowing that the money is actually used for this purpose.

When we take into account that out of the 180 new drugs that come out every year, only two or three are breakthrough drugs and that they have improved therapeutic properties, it is unacceptable to be spending millions and even billions of dollars in research and development when most of the new drugs on the market are only variations of existing products. Consumers are not willing to accept this state of affairs.

.2010

Mr. Pierre Brien: You raised several points. On your last point, is it not up to the patent commissioner, before granting a patent, to determine whether the application is for a product that is a true innovation? When a patent is granted, it is because the product offers a significant improvement.

I agree with you that it is not necessarily a breakthrough. But if there are two of these in the course of a year... Take for example the case of 3TC. When this kind of discovery is made it has a world impact, it is not something marginal. It's an important discovery. We can't expect to have50 of these every year.

Ms Trépanier: I'm glad you've raised the point of 3TC, particularly since you are a Bloc Québécois member. Let me point out to you that 3TC was discovered in Montreal, the patent was sold in England and the manufacturing takes place in Toronto. It's far from being profitable for Quebec and I do not understand why a patent like this could have been sold.

There are all sorts of ramifications related to patents. I don't think that the National Federation was invited to deal with these here today. But I think it's important for me to note that consumers consider it an aberration that a on drug like Cefaclor, used to treat otitis among children, 75 patents have been taken out. This means that the drug has a protection period that is far in excess of 20 years.

Mr. Pierre Brien: [Inaudible]

Ms Trépanier: First of all, pharmaceutical companies go about this in different ways. They obtain all sorts of pharmaceutical patents as in the case of Cefaclor, for example. They use different patents according to the process, the composition of elements, the binding agents etc.

Mr. Pierre Brien: When a first patent on process A, for example, expires, it can be copied in its entirety. If a second patent protects the same product, then the generic company can simply produce the drug using process A and them market it. So...

Ms Trépanier: Excuse me. At the present time, the generic product cannot be marketed, the patent must first have expired.

Mr. Pierre Brien: On process A, yes. But not process B. A patent cannot be extended for 35 years for the same product. Once the first patent expires, on the 20th year, generic manufacturers can market the same product manufactured according to the same process.

Ms Trépanier: Yes, I agree.

Mr. Pierre Brien: So even when there is a not a significant improvement in the product covered by other patents, generic manufacturers can without any difficulty market the same product manufactured in a different way.

If the first manufacturer has changed the dose and it is to be administered every four hours or eight hours instead of once a day, that is something else. If the product is the same, it can be made available at a lower cost after 20 years since generic manufacturers can start producing it.

This evergreening of patents I hear so much about seems to have taken on mythical overtones.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Thank you, Mr. Brien. We're going to our next questioner.

[Translation]

Mr. Pierre Brien: I'd like to have your answer to my question before.

[English]

The Vice-Chairman (Mr. Walt Lastewka): If you would like to make a short answer to his question, please do so.

[Translation]

Ms Trépanier: It is a fact that one cannot keep adding on 20-year periods. Nonetheless, an extension does take place.

There are two important points I'd like to make. The first is that 20 years must be seen as the equivalent of a human generation, a generation of consumers. This generation has to wait for20 years before competition can start bringing down prices.

The second I wanted to mention... It's slipped my mind, I should have written it down. It'll probably come back to me later.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Mr. Schmidt.

Mr. Werner Schmidt: Thank you, Mr. Chairman.

I want to commend both groups for the depth and organization of their presentation here tonight. I think they have been very good.

.2015

I would like to focus my questions on a couple of areas. First, as a general comment, both of you are interested in the controlling of health costs in total, and you have recognized that the drug therapy part is a major component of this. The component of health care of an individual person has increased dramatically. Drug therapy used to be a very small component. Now it's much larger. The decrease in the other areas hasn't been concomitant with this increase over here. It has in some cases.

I think you referred, Ms Trépanier, to the replacement of certain surgical procedures with drug treatment. That is a shift in costs and maybe an advantage to the patient and to the health care system generally. But as we move into an increasingly large contribution and treatment of various diseases by drugs, does this make a difference to you as consumers, that we should move more into drug treatment rather than into the other treatment?

Ms McCall: There are two issues here. At the moment most drug treatment given outside a hospital is not covered by medicare as we understand the medicare system. In other venues we have urged repeatedly that the principles of the Canada Health Act be extended to cover the continuum of care. All the care required to restore and maintain health should be covered in the medicare system, in our view, including drugs.

It is important and beneficial that people should not have to be in the hospital to receive treatment. That's a good shift. But we must also recognize that this shifts the cost of the care onto the individual. Many individuals we heard earlier -

Mr. Werner Schmidt: That really wasn't my question. My question really is this. Regardless of how this goes, ought the component of health care service, generally now, regardless of who pays for it, move into the drug area, or ought that part be decreased? What has happened in the last while is a major increase in the therapeutic application of drugs.

Ms McCall: There are two parts to that. In general, yes, this is by and large positive, that we can treat by medication rather than by surgery or whatever. That's beneficial.

One of the difficulties was alluded to earlier. We may be not using drugs properly, appropriately. We may be overusing them. We may be using dosages that are too high.

Mr. Werner Schmidt: It's a less costly procedure. The point is there's a case of -

Ms McCall: Sure, but it increases the overall cost to the system if we don't do it right.

Mr. Werner Schmidt: Sure. Absolutely right.

Ms McCall: We all have an interest in doing it right. That is the bottom line.

Mr. Werner Schmidt: You're absolutely right. But I know of a lot - and so do you - of abuses of other parts of the health care system also.

Ms McCall: Sure.

Mr. Werner Schmidt: I would like to go into another area here, the PMPRB. I was really interested in hearing you say something like this - I think this is correct - that you wanted the PMPRB to limit the profit of pharmaceuticals, including the generic companies, and you would include the control of dispensing fees and wholesale prices. All of that should be done by the PMPRB. Did I understand that correctly?

[Translation]

Ms Trépanier: Under the present system of establishing the price of drugs, 33% of the price of the medicine is paid to the pharmacist. That's a large amount of the price of the drug.

We're saying that we should have better control of costs and one of the ways to ensure this is through the Patented Medicine Prices Review Board. If our recommendations are applied, the Board would no longer be the Patented Medicines Prices Review Board but the Medicines Prices Review Board.

Pharmacists' dispensing fees should also be subject to control. In our view, 33% is a significant part of the price of the drugs on the market.

[English]

Mr. Werner Schmidt: Whether it's called the PMPRB or something else, you want some agency that's going to control the profitability of a pharmaceutical company, the dispensing fees, the wholesale price of drugs, and the initial establishment of the price of a new drug coming into the market.

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At the moment, of course, the PMPRB is limited only to the first of the established initial prices. It doesn't do anything else. So you want to expand the mandate of the PMPRB dramatically.

[Translation]

Ms Trépanier: Exactly. We do not think it is possible in the present situation to act only on some elements without an overall plan. So decisions relating to the price of drugs must be taken as part of an overall policy. If we wish to have better control over prices, then this must be done at all possible levels. That is what we are suggesting.

[English]

Mr. Werner Schmidt: Okay. If that's the case, how should the initial price be determined? When a new drug comes onto the market, how should that price be set?

[Translation]

Ms Trépanier: At the present time the price is set taking into account the sale price of drugs of the same category, prices abroad and variations in the consumer price index. The Board may make use of production and marketing costs, for example, when it deems such information necessary but this is not done systematically.

What we have trouble understanding is why the Review Board does not take profits into account in its examination. If profits decrease then the price of drugs will also decrease and will be more closely related to the actual value of the drug.

So something must be done about this. At the present time enormous profits are being made. At whose expense? At the expense of consumers and the State.

If we want to have better price control...

[English]

Mr. Werner Schmidt: You didn't answer my real question. It's the first price I want. I know all the other stuff. We know what it is. How do you think it should go?

The Vice-Chairman (Mr. Walt Lastewka): The question was, how do you think it should be? How should the Patent Medicine Prices Review Board be setting prices? You might want to just think about it, and we'll come back to you.

Mr. Murray.

Mr. Ian Murray (Lanark - Carleton, Lib.): Thank you, Mr. Chairman.

Ms McCall, you mentioned that you've appeared numerous times before parliamentary committees, including the deliberations on the previous bills that affected patented medicines. A lot of people had predicted dire consequences when Bill C-91 was passed. Some of those critics are no longer quite as concerned as they were a few years ago.

I'd like to know if you have any thoughts on whether or not your predictions came true. I notice in your brief you argue consistently for an open market-based system that is ``fair to producers, consumers and researchers''.

Am I to conclude that you feel it's been fair to the producers and the researchers but not to the consumers? Is that a fair assessment?

Ms McCall: I think that's a fair assessment. As noted, we were opposed to the repeal of compulsory licensing. We believe compulsory licensing does enable a balance to be struck.

We recognized the argument the patent companies were making, that a flat royalty rate of 4% often did not provide adequate compensation. We propose here, and we proposed then, that there should be a more flexible system for setting the rate of compensation to the patent holder. We think that would provide a more balanced way of addressing the need for a stimulating innovation, which you want, obviously, from an industrial development and economic growth point of view. You want to have those activities going on in your country, but you also don't want to do that at the cost of ruining your health care system.

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One of the competitive advantages Canada has over the United States is our medicare system. Our costs per worker are much less than they are in the United States. So maintaining a viable health care system, including the use of pharmaceuticals in that system, is very important for Canadian society, particularly for economic growth.

There's a need to balance those things. We believe compulsory licensing is a reasonable mechanism by which you can do that provided it meets certain conditions. It was lopsided in one direction before. We think with its total repeal it's become lopsided in the other direction.

Mr. Ian Murray: We've heard from a number of bio-pharmaceutical companies that insist that without the changes that came in with Bill C-91 they wouldn't be in business. They couldn't attract the investment they require. There's been an exponential growth in the number of those companies from about 12 to over 200 since Bill C-91 was passed.

What are your thoughts on the value of that? You talk about the importance of this kind of economic growth in Canada, but -

Ms McCall: That statement may very well be true given that the alternative was compulsory licensing with a fixed 4% royalty rate, which did not, in many cases, come even close to recouping the R and D costs. So given those two options, the statement is correct.

We think there was a third option - to make the system take into account the real R and D costs and set the rate accordingly. In some cases that may have meant that the royalty rate would have been so high that a generic competitor would not have been willing to take up a licence, for example, or two years later, perhaps, the royalty rate would be a bit less because there had been a longer opportunity to recoup the investment, and now the rate fits within the abilities of the generic company.

So, yes, Bill C-91 probably did encourage investment. As you have heard probably ad nauseam, the investment that was promised has not necessarily been coughed up by the patent companies, although maybe they're getting close now. Maybe by the actual end of this year, which I believe is when the money was to come, they will be caught up, but they were running behind schedule. The fact that the basic research is 8% compared with 18% internationally is obviously of concern.

Mr. Ian Murray: I guess one of the problems we have with these competing figures is whether or not companies have met their obligations.

Ms McCall: The other thing, again, is that the marketing is added in. You have a global cost for research and you don't necessarily know how much is for the real research and development and testing of the drug and how much is for selling.

Mr. Ian Murray: That's the point Madame Trépanier made as well. Anybody performing industrial R and D in Canada can apply for investment tax credits. They have to be audited by Revenue Canada under very strict guidelines for what constitutes scientific research and development. I just can't understand how one can claim that marketing and advertising costs are mixed in with R and D costs. You won't get that past Revenue Canada auditors, I can assure you.

Ms McCall: That may be the case, but it's not clear that this information is given to the PMPRB. If it is given to the PMPRB, it's certainly not obvious to people looking from the outside. Maybe that's something that's really simple to clear up. That, I'm not sure about.

Mr. Ian Murray: Do I have a few minutes left, Mr. Chairman?

The Vice-Chairman (Mr. Walt Lastewka): Actually, you've just run out of your time. I'll allow you one short question.

Mr. Ian Murray: I'll try to make it brief.

If the real concern is health, and we want to have lots of research done on new medicines, then listening to what you're proposing I get the sense that we'd have a bureaucratic structure set up in Canada to direct royalty money from companies, who are forced to pay this into a research fund.

Does it not make more sense to have research going on all around the world by a lot of different companies with the costs, the risks as well as the rewards spread out? Because a country like Canada can't hope to tackle all of those research problems.

Ms McCall: No, and the more research the better. We very much believe in that. We don't believe the only research that should be done in the medical field, though, is pharmaceutical research.

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We would certainly agree with the people on the previous panel that we need to do more research generally on things that affect health. We don't do nearly enough research on the social and economic determinants of health. We don't look at what is the most effective use of the medicines, as was explained.

Maybe it's that medicine has changed so much in the last 15 or 20 years. We can do so much more with the research discoveries in microbiology, on the functioning of the human system, on the new chemicals that have been discovered. The whole face of medicine has completely changed. We need to sit down again and think about what should be the research priorities, and where we should be focusing.

Essentially, at this point the facts have gotten away from whatever plan we may have had. We need to sit down again and say, okay, if we were starting now, where would we focus research? What do we know about what affects health the most? Where can we get the best return for our research dollar?

We would like to see that broader examination as well. We've argued that with Mr. Dingwall, at the health committee, at the national forum and at various other venues.

The Vice-Chairman (Mr. Walt Lastewka): Thank you.

I will now go for the short questions. Mr. Brien.

[Translation]

Mr. Pierre Brien: Ms Trépanier, if I attempt to sum up your brief, I would say that in your view the ideal system is one where pharmaceuticals are completely removed from the private sector and handed over to the State, is this not so?

Ms Trépanier: We never adopted such an extreme position. What we advocate is sound competition. We never said that research and development should be nationalized.

In our opinion, and I come back to your previous question, the four years of commercial exclusivity during which royalties are paid to patent holders allow researchers to recover their investments in research and development. So we cannot consider this to be a hindrance to R & D, quite the contrary.

As to whether 4%, as was suggested in the Eastman report, is sufficient... We do not have the necessary economic expertise to express an opinion on this. We haven't given the subject a thorough analysis. It will be up to you to make this determination. We think that research and development should be encouraged and that basic research should be increased. At the present time far too little such research is being done.

This leads us to the position that tax credits for research should be given only to basic research as an incentive for this kind of research and to encourage Canada to make breakthroughs in this kind of medicine.

Mr. Pierre Brien: I see. I'll come back to you later.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Mr. Schmidt. A short question, please.

Mr. Werner Schmidt: Thank you. By the way, you were very patient with me before. I didn't realize I'd gone on as long as I had.

I have a simple question, which I'll raise in a different way. In terms of the initial, new drug that comes onto the market, should the Patent Medicine Prices Review Board have the power to audit the components of the cost of the company that puts it on the market in producing that drug?

[Translation]

Ms Trépanier: I gather we are returning to the previous question.

The Patented Medicines Prices Review Board must have increased powers and I believe that at the present time it does have the data available to set prices. It does all the research necessary relating to international comparisons.

However because of the way in which it operates, it regulates prices rather than establishing them as such. It has quasi-judicial powers but hardly ever uses them.

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The ACIM annual report mentioned that the Board relies on voluntary compliance in order to carry out its mandate.

We agree, if everything is going well. But when all prices are too high, how is it that the Board does not make use of the teeth it has? This is what we are questioning. That is why we are saying that the Board perhaps does not have sufficient power to take action. Instead of establishing prices by regulation, perhaps it should simply set them.

[English]

The Vice-Chairman (Mr. Walt Lastewka): Mr. Schmidt, I think you got your answer a couple of times now.

Mr. Werner Schmidt: Thank you, Mr. Chairman.

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much.

Is there a short question over here? Ms Brown.

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

I want to get at this mixing up of the budgets of publicity and marketing with those of research and development. That was in Madame Trépanier's brief.

My colleague, Mr. Murray, has already asked how that can be when Revenue Canada has a way of analysing that according to the Income Tax Act: you can't claim R and D credit unless you qualify according to their criteria.

So I have to assume that you have some sense of something going on under the heading of R and D that is really marketing. I wonder if you could describe that to us, because you want this clearly separated in the budgets. I think what you want is to get the marketing and advertising out of the R and D budget line. Is that correct? How do you think they're mixing those two things up?

[Translation]

Ms Trépanier: As you will see in the brief we presented, we consider it unacceptable for a company like Bristol-Meyers to offer a computer as a bonus to physicians who make 10 prescriptions for the drug Capoten, an antianginal and hypertension drug used for cardiac problems.

[English]

Ms Bonnie Brown: The names of the drugs aren't important. Are you saying that it's the recruitment of people by individual doctors and groups of doctors in clinical trials that is costed out as research and development but it's really a method into the market that could be called marketing and advertising? Is that what you're saying? Maybe Ms Jones would like to answer that.

Ms Jones: I think the point she's making is that it could be listed within clinical trials. It's a cost of doing the clinical trials. It's really not an actual required cost, but an entry into the market.

It's also a recruiting device to have physicians willing to participate. We know from various studies that when physicians participate, they're very likely then to prescribe that.

Ms McCall: The other thing is that the cost of the computer is being included in their research infrastructure cost, or it could be so.

Ms Bonnie Brown: It isn't just computers, Mr. Chairman, it's direct payments for the physician's time in doing those things.

I just wanted to thank Ms Jones and Marnie McCall for the quality of their presentation. You particularly established that there's no direct causal link between patent protection and foreign investment.

The Vice-Chairman (Mr. Walt Lastewka): Thank you, Ms Brown.

I would also like to thank both groups. Please take back to your boards, on behalf of the committee, the excellent presentations that you have put together. The executive summary and the detailed information is very helpful for us. I want to thank you again for your presentation and the question and answer period. You do represent a very large constituency, and we wanted to make sure that you were heard and heard properly.

I wonder whether there's anything else you might want to submit, especially on that last item, in which I think there was some confusion in the questioning and what you wanted to get across. Please submit one or two pages to the clerk to summarize it if you wish. Thank you very much.

We'll take a two-minute break to bring on the next set of witnesses. Thank you. We'll reconvene in two minutes.

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The Vice-Chairman (Mr. Walt Lastewka): Ladies and gentlemen, we will begin with our next session, again pursuant to Standing Order 108(2), a review of section 14 of the Patent Act Amendment 1992, chapter 2, Statutes of Canada, 1993.

First of all, let me thank the witnesses for their patience and understanding.

As you have seen, in the last number of sessions we have tried to keep the presentations to the five-minute mark so that we could have more group dialogue.

I'm just waiting for Mr. Brien to join us.

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We will begin the presentations with Dennis Morrice, president and CEO of the Arthritis Society. Welcome.

Mr. Dennis Morrice (President and Chief Executive Officer, Arthritis Society): Thank you, Mr. Chairman.

In light of the hour and the eyes that are starting to look weary, I will not read our brief. I gave copies of the brief to all of the committee members. How about if I just highlight some of the things, if you're comfortable with that?

There are four million people in Canada who have arthritis. Two million of those people take medications every day to relieve pain and inflammation. There are 600,000 people who have a long-term disability. It's the single largest cause of long-term disability in Canada today. Fifty percent of those make less than $20,000 a year.

And as you well know, the 9.8 million baby boomers begin to turn 50 this year, and that's when arthritis starts to show, at the age of 50. That's the age at which they all start taking medication. In fact we're looking at arthritis as the sleeping giant of health care costs.

There is no cure for arthritis now. There is no prevention. You can't say let's stop smoking, let's start jogging and let's change our diet and so on. That does not prevent arthritis. There are no drugs right now that modify the course of osteoarthritis, for example, which is one of the most common forms of arthritis. There are over 100 forms of arthritis.

Furthermore, there are very serious side effects from arthritis medications. Canadians with arthritis desperately need safer and more effective drugs. We believe that brand name companies seem to be the only ones in a position to do this. We believe that the biotech companies are probably the companies that are going to come out with the new medications. Therefore, we believe that the biotech companies should also be protected under patent protection.

We believe that the Patented Medicine Prices Review Board should also cover the generic companies and generic drugs.

We believe that the brand-name companies should invest in the country's basic research endeavours. We've heard that many times today.

We also believe that these companies should be investing in patient education. If we truly believe that drugs are just part of the health care system and health care costs, there should be a lot more investment in patient education.

I can just give you two very brief examples of areas in which PMAC companies have invested, certainly with us. One was with our web site. Doing that means that people from coast to coast are getting information, information we could never begin to provide. Our web site has over 3,500 pages. We wouldn't have that without one company's investment in this kind of education. That really means that people in P.E.I. have access to exactly the same information as people do in Ontario or B.C. or the larger provinces.

Mr. Chairman, in conclusion, we believe that people with arthritis need innovative research. Brand-name companies are the only ones willing to take the risks. Companies deserve intellectual property protection.

The regulations should ensure that basic science research is done, probably in cooperation with the Medical Research Council of Canada. The regulations should also recognize the investment in patient education programs. And the Patented Medicine Prices Review Board should have teeth and should also cover generic drugs and generic companies.

I'll end this here, Mr. Chairman, and hopefully address some of the technical things during the question and answer period.

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much, and I thank you for your understanding.

Next we will hear from an individual, Linda Kemp, who is a registered nurse. Is that correct?

Ms Linda Kemp (Individual Presentation): Yes.

The Vice-Chairman (Mr. Walt Lastewka): Please begin.

Ms Kemp: Honourable chairman and distinguished members of the committee, I would like to present the following concerns for your consideration in this review. My purpose is to provide an illustration of a significant gap in our health care system that is a direct result of escalating drug prices. It's a situation that demonstrates the need to control drug pricing in order to ensure accessibility.

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After a lifetime of excellent health, I recently had to undergo extensive surgery. In addition, we have three young children with asthma and allergies. Application for private insurance coverage resulted in a denial of a preferred hospital benefit and prescription drug benefits for myself and exclusion of drug benefits for all allergy and asthma medication for our children. I was denied because of my recent surgical history, and our children because of pre-existing conditions.

Medications that required coverage included anti-coagulants following a pulmonary embolism, antibiotics, ulcer medication, analgesics, all asthma medication for me and three children, and Epipens for one child to treat anaphylaxis. The cost of all these medications is approximately $900 per month.

It's important to note that one of the essential medications is ulcer treatment, which replaces surgery and hospitalization that would be covered under medicare.

The second condition that would require frequent hospitalization and emergency care is asthma. The use of preventative medications like Ventolin, and in particular Ventolin administration by compressor in acute situations, has decreased hospitalization requirements, yet in this situation are not covered.

Issues that need to be addressed with regard to the significance of this bill are: universality and accessibility to medicare; restructuring of the health care system; new approaches in medical management; escalating drug prices that are placing an increased burden on consumers, private health insurance and government programs to bear the cost, in addition to endangering our ability to preserve all other health care services; the selective screening and exclusion of individuals from private insurance coverage as a result of these increasing costs; and the growing gaps in our system as a result of these factors.

In the past two weeks it has become increasingly clear that there are inadequacies in the present structure and policy with regard to pharmaceutical pricing. It has been noted that as drug prices continue to increase, not only does it become difficult or impossible to obtain private health insurance coverage, but all plans, whether they be group, individual, federal government employee or provincial drug programs, are now in the process of cutting back this coverage. They're raising premiums, increasing deductibles and co-payments, delaying the addition of new drugs to the list and de-listing drugs.

All individual health insurance plans are medically underwritten, but group policy plans are not, as participation is usually a mandatory requirement of employment. As it is not mandatory to have private health insurance, it is possible to have for-profit enterprise. The Insurance Act, as a result, does not regulate health insurance to the same extent as it does auto insurance.

We cannot just blame the cost of drugs on inappropriate prescribing, prices of non-patented drugs, mark-ups, dispensing fees and an aging population. These are factors, but they are not the main issue.

It is possible to control drug prices. Age and illness cannot be regulated. There is a real danger in developing a managed-care attitude towards physicians and prescribing practices. They must be able to consider all the variables in the provision of medical treatment.

I have recommendations. I am encouraged by the support extended by our federal health minister for the recommendation for a universal drug plan made by the National Forum on Health, in addition to the finance minister's announcement of funding for a pilot project for pharmacare. I am also encouraged by the statement from Mr. David Walker, committee chair, regarding available regulatory options. This is not legislation that can be looked at in isolation as it has a most direct effect on the quality of care that we all receive.

With regard to the re-evaluation of the role of private health insurance in our publicly funded system and the ability to meet the five principles of medicare within this context: any role that private insurance plays must be closely regulated to ensure that Canadians are guaranteed the health care that is, in principle, our right.

I urge you to consider and act upon the many excellent recommendations that have been presented in the last few weeks: the five-point plan of the Canadian Health Coalition; the recommendations of the National Forum on Health; a review of the policy and roles of the Patented Medicine Prices Review Board in regulating drug pricing; amendments to the policy that denies generic manufacturers the right to export; rescinding the rules with regard to the notice of compliance; and cautions issued by the B.C. Medical Association with regard to reference-based pricing and possible compromises to patient care.

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Health care is changing. Ensuring comprehensive coverage, universality, and accessibility to this medically necessary care, including prescription drugs, is essential.

I hope the circumstances I have presented have conveyed the urgency of a problem that must be addressed. In closing, I would like to thank you and express my appreciation for the opportunity to present these concerns.

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much.

From Faith Partners we have Mr. Murray Angus and Mr. Ron Chaplin, spokespersons. Welcome.

Mr. Murray Angus (Faith Partners): Thank you very much. We too appreciate the hour, so we will be as efficient as we can. Thank you for giving us the chance.

We are here on behalf of a network of people in the National Capital Region associated with a variety of faith communities which share a common interest in the health and well-being of our community, locally and as a country. We meet regularly to examine what is going on.

Our interest in Bill C-91 is rooted in our concern for the health of our health care system. For a number of reasons we feel strongly that the publicly financed universal health care system in Canada is, dare I use the phrase, a sacred trust, and one to be fought vigorously for. We feel a strength in our commitment to defend the public health system because people such as ourselves in organized faith communities are increasingly relied on to deal with the casualties that are associated with cutbacks not only in the health care system but in other areas of our society. We see the pain these trends cause in our communities, and that, among other things, motivates us to want to speak out publicly.

The way Bill C-91 fits into that is that it's tied to our determination to defend the public universal health care system because we are aware of the impact of the cost of drugs on the overall health and well-being of our medicare system. We are concerned about that, and that's why we wanted to take a few minutes to say we see this as a threat, frankly, to something we think is a sacred trust in our community. We want to state that we are opposed to the continuation of Bill C-91 in its present form, and for these reasons.

Before I elaborate, let me make it clear that we are not opposed, and in fact we support the principle, that those corporations, PMAC members, etc., which invest a great amount of energy and resources in research and development, certainly deserve a fair return on those investments. We're not here to question the validity of that principle. We support that principle.

Nor are we here to question the government's right to make public policy decisions which deliberately divert resources from one area of society to another. That is government's right. That is government's responsibility. Of course it has to be accountable to the people for its decisions; that too will happen shortly. But we respect that right of public government.

In this case there's no question Bill C-91 does deliberately divert resources towards what are largely multinational pharmaceutical companies. That is a policy decision which was made by the former government. It was opposed by the current government when they were in opposition. The jury is out whether, now in power, the government will follow through with its original opposition. We encourage the current government to do so.

But there's no question Bill C-91 does divert resources. There's no moral problem with that diversion if it can be demonstrated that a broader public good is being met for the entire community, for the entire country.

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We have spent some time examining the information on both sides. We have examined the materials published. In the Report on Business magazine, for example, PMAC has certainly spent an awful lot of money trying to convey its position to the Canadian public. We have paid attention to that. We have also examined the briefs that have been submitted here over the last number of weeks. And our conclusion, as people from the community, is that public relations does not constitute definitive evidence and should not be construed as such by members of the committee. We hope the amount of money being spent will not be a decisive factor in determining what the real situation is.

We are persuaded that the groups opposing the continuation of Bill C-91 in its present form have the broader community interests at heart, judging from what we have read, and we are here to lend our support to them. We do not think there is sufficient return to justify, as public policy, the diversion of resources to these companies. We are asking the committee to recommend that patent protection be reduced under a new regime. That is essentially the reason for our coming here.

I will not take up any more time at this point, but just pass it over to Ron Chaplin, who has a few comments to offer from his experience. Thank you.

Mr. Ron Chaplin (Faith Partners): Thank you, Murray. Thank you, Mr. Chairman. I will keep my remarks very brief.

I would like to speak to one point only that Faith Partners made in its submission to this committee, a statement made on page one of our submission: that we begin our consideration of this legislation from the point of view that access to adequate and affordable health care constitutes a basic human right. I would add that equal access to adequate and affordable health care constitutes a basic human right.

We do not have such a system in Canada at this time. We have a universal medicare scheme that covers hospital care and clinical care, but we do not have a medicare scheme that covers the cost of prescription drugs. What we have instead is a hodge-podge of public and private plans across this country to help people meet their prescription drug expenses, and too many people are falling between the cracks.

I am living with AIDS. I am on a basic drug therapy program for my HIV infection that constitutes a kind of baseline therapy in medical practice today. My prescription drug costs now run at $1,250 per month. Last year my out-of-pocket expenses for prescription drugs amounted to over $8,000. I was able to pay that. I am fortunate that I was able to pay that. Most of my friends and colleagues in the AIDS community do not have that luxury.

I will speak not only of HIV and AIDS, but about other people dealing with catastrophic drug expenses. I'm thinking of friends from the mental health community, people living with various types of cancer, people living with some auto-immune disorders, such as Parkinson's disease and multiple sclerosis. These are all people who depend on leading-edge technologies, on the latest available medications, which are prohibitively expensive. We find that we have a two-tiered system of access to these leading-edge drugs.

I am not here to speak about whether twenty years of patent protection for drugs is adequate, if it's too long or too short. I will leave that for people with more expertise in economic policy and industrial policy. I speak here only for the needs of patients who require equal access to the best-quality medical care possible.

Thank you.

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much. I'll begin with Mr. Brien.

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[Translation]

Mr. Pierre Brien: Thank you. I think that your presentation and message are quite clear and that no one can remain indifferent to the kind of situation you present.

I'd like to put a question to Mr. Angus about something that comes up frequently and that leads us to ask some questions ourselves. You suggest we recommend that the government replace the patent protection period which is now 20 years by a four-year exclusivity period. Several briefs made the same recommendation.

I'd be interested in knowing on what you base this recommendation for four years. Why not six? Why not three? What is the reason for the period of four years? Is it based on any study or analysis? Where does it come from? The same figure is mentioned in various presentations and no one was able to explain to me on what it is based.

[English]

Mr. Angus: As Ron mentioned, and I concur, we're not here as technical experts. We don't have that pretence. We're not professionals in the pharmaceutical industry. We have taken that figure from the coalitions that have been working around this, and we've just supported it for consistency sake. They have done the homework and have come to that conclusion. We've been satisfied with the quality of the information they seem to have developed and are comfortable with the broader social values they are trying to support, so we have stuck with the numbers they have suggested and have tried to support their recommendations. That's where our choices came from.

[Translation]

Mr. Pierre Brien: While you make a distinction in your presentation, it's in the next recommendation. You talk about the quality of breakthrough drugs. You say that there could be different patents for products that are the result of major breakthroughs. So if I understand you correctly, you would like to see different categories of patents.

[English]

Mr. Angus: We've expressed that in only a principled way at this stage. Again, we haven't had the time or the resources to flush that out. We offer it as a principle for consideration by the committee.

We were struck by the material we were exposed to that pointed out the distinction between - and I've heard references to it here tonight by previous presenters - the different categories of drugs that are developed. Some are breakthrough drugs and much more significant and perhaps much more deserving of patent protection than other categories of drugs.

Again, we don't know the insides and can't recount all the delineations there, but we see a principle involved that's possible to elaborate on for those with the technical ability. We think the principle has validity and should be considered.

[Translation]

Mr. Pierre Brien: In your recommendations, you say that you would like us to be more strict with respect to money that is being spent on research and development, and on education programs. I would like you to explain that recommendation in particular.

In as far as Canada ensures protection that is in keeping with international patent standards, can we expect more significant commitments from industry as compared to their current commitments, i.e. applying 10% of their sales revenue to research and development? Do you expect additional, more demanding commitments?

[English]

Mr. Morrice: I think any company that has patent protection in this area would want to give back to the country and invest in the research. That's what some of the companies are doing, and we know some companies are not doing it to the degree they should be doing it.

This is the kind of thing for which Dr. Friesen at the Medical Research Council of Canada has been fighting for so long. Someone has to sit down and say what is fair and what is reasonable and decide how we should look at the research infrastructure across this country. Industry has to partner with that. No one can do it alone any more. Our organization puts millions of dollars into research, but we can't do it alone. MRC can't do it alone and industry can't do it alone. Somehow someone has to bring that kind of partnership together to make sure we do build a viable research entity so we do attract the dollars and we do have the top researchers in the country. That's how I would look at it.

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To get at the details of an exact percentage would be like saying if we're spending $72 billion here on health care, maybe we should be looking at 1% of that going into research, or whatever it might be. But surely to goodness we don't need to see the Medical Research Council of Canada being decreased by...really it's not 10%, it's up to 13% now, while other countries are increasing their research.

It's a convoluted answer, but that's the complexity I see.

The Vice-Chairman (Mr. Walt Lastewka): Mr. Schmidt.

Mr. Werner Schmidt: Thank you, Mr. Chairman.

Ms Kemp, you make the statement that one of the essential modifications is in ulcer treatment replacing surgery and hospitalization. Both of these would be covered by medicare, yet apparently there is a drug that will replace that medical procedure. Is that correct?

Ms Kemp: There is a drug that is a treatment for ulcers. It prevents you having to have surgery.

Mr. Werner Schmidt: All right. It means, then, the procedures are interchangeable. You could elect to do surgery or you could elect to take the drug. Is that correct?

Ms Kemp: No. The choice of the medical profession now is to treat medically, and surgically only in exceptional circumstances: if there's bleeding to control or if it has gone beyond the point where it can be treated with medication. It's not a choice for the patient to make.

Mr. Werner Schmidt: I see. So there would be no instances where ulcer would receive surgical treatment, other than in the case where it had ruptured.

Ms Kemp: Or hemorrhaged, yes.

Mr. Werner Schmidt: Or hemorrhaged. It's the same thing.

Ms Kemp: It's much safer to treat with medication first. There are all the risks involved in surgery. That's why they have elected to go this route.

Mr. Werner Schmidt: Yes. What I was leading up to, of course, was I thought we had an example here of a choice between two procedures, one being less expensive than the other one. At least that would be the assumption drawn from your sentence here. If that were the case, would it be your recommendation that in instances where there are two alternate procedures or more, the medicare system, or the publicly funded system, should support only that procedure, which is in fact the least costly?

Ms Kemp: No, I would say it would be the procedure or treatment that's in the best interests of the patient. For one patient it may be surgery, for another patient it may be medication. They may have other complicating factors. They may be undergoing other treatments at the same time.

Mr. Werner Schmidt: Okay.

The other question I have is for the faith community. How would you distinguish between your first recommendation and your second? It's really a follow-up on the question Mr. Brien asked about the breakthrough drugs and the non-breakthrough drugs. There's a series of questions here. First of all, how would you distinguish between those? Secondly, who would make that distinction? Finally, who would enforce compliance?

Mr. Angus: I go back to my original response. The second point in particular just introduces a principle that would allow for some variation. We ourselves haven't been -

Mr. Werner Schmidt: Who would do that?

Mr. Angus: Well, a regulatory agency, presumably. The PMPRB if... I know there are a lot of recommendations... The National Health Forum has made a lot of recommendations on it. Again, we're not in a position to speak in an informed way on those points, how and where. I think we'll just hold off trying to make it up on the spot and -

Mr. Werner Schmidt: I'm not asking you to do that. What you are saying...

Mr. Angus: If I could just cite a specific example, these are the kinds of decisions that are now made by the courts. For example, AZT, which was our first-generation AIDS/HIV drug, is not a new medication. It's a medication that has been on the market for years and years as a not very successful cancer treatment. They were challenged in the courts by some of the generic manufacturers essentially over whether redesigning the drug for another disease constituted a new drug, deserving of the full twenty-year patent or something less than the full twenty years. It was the courts that made those decisions.

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Mr. Werner Schmidt: Is that satisfactory? Should the courts be that body?

Mr. Chaplin: This is a question for the government to consider. It's the courts that are that body right now.

Mr. Werner Schmidt: I'm asking you, what do you think? Do you want the government to decide? If you do, that's fine.

Mr. Chaplin: What we are doing in this submission is raising the issue about reformulated drugs, as opposed to new discoveries, and should there be a different category for those.

Mr. Werner Schmidt: I appreciate that. Who should enforce this? I suppose you'd say the courts as well, would you?

Mr. Chaplin: Well, that's who enforces, the courts.

Mr. Werner Schmidt: Thank you.

The Vice-Chairman (Mr. Walt Lastewka): Ms Brown.

Ms Bonnie Brown: Thank you, Mr. Chairman.

I thank Mr. Angus for coming and stimulating the debate on a broader level; that is, reminding us of our responsibilities for the public good as we consider the details of our industrial policy. In his presentation I have this sense of broaden your thinking, don't be stuck in the status quo, but rather, what are some new and innovative ways of thinking about this issue so that people benefit.

I contrast that with Mr. Morrice's presentation, in which a lot of the time I thought he was making suggestions for new things, and I was quite amazed at the end with his basic recommendation to essentially maintain the status quo.

I find that conflictual with some of your statements on page 3, Mr. Morrice. You said:

Research partnerships with the non-profit sector, in my experience, provides superior accountability of private sector research dollars.

I think I know how that works now, and you're totally satisfied with that. Have you heard the exposition of ideas earlier tonight about some kind of maybe a pot of money or a system whereby royalties are paid to the government for the R and D tax credits that are used by the pharmaceutical companies in the beginning, to create a pot of money whereby a research agenda, based upon the health needs of Canadians, would be the driving force behind the use of that pot of money? Would you agree with that?

Mr. Morrice: I think that's fair ball. I think the bottom line at the end of the day is that we want to see good research happening and we want to see citizens being taken care of.

It's funny, when we keep talking about costs, I just took a generic medication I received and looked at the cost of that. I phoned Alberta, Quebec, and Nova Scotia, and the prices varied over 100% for the same product. Now, that's a generic; it's by prescription. I thought, wait a minute, what's happening here?

I guess I look at the whole area of research the same way. We're saying for people with arthritis, the drugs we have are not good enough. Right now we look at who has the dollars to do it, who's taking the risk to invest the money. Right now it happens to be the brand-name companies. So from that selfish point of view of people with arthritis, I say it is the eggs in that basket that we're going to put our hope on. That's our only hope right now.

Ms Bonnie Brown: You were putting your faith in the market, that the drug companies will decide to put more money into arthritis research. Would you not be safer to have some of that decision-making power in the hands of your government, who you can lobby at any time, to suggest that if they have a pot of money set aside some of that money should go to arthritis research?

Mr. Morrice: Fair ball. It makes sense.

Ms Bonnie Brown: Can I suggest, then, that the conclusion of your presentation, which is that Bill C-91 not be changed, might not be quite your true position? On the last page of your presentation you say Bill C-91 shouldn't be changed. But considering some of the new ideas you've heard here tonight, around having more publicly determined agenda for drug research, as a possibility at least, if that were a possibility then I think you're saying you don't necessarily think Bill C-91 shouldn't be changed.

Mr. Morrice: When you put it that way, yes, I agree with you.

Ms Bonnie Brown: Thanks very much, Mr. Chairman.

The Vice-Chairman (Mr. Walt Lastewka): Mr. Murray.

Mr. Ian Murray: Thanks, Mr. Chairman. I have just a brief comment and a brief question.

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I appreciated the presentations from the Faith Partners, Ms Kemp. Perhaps what you've done is essentially given us more to think about as parliamentarians, as we look at the health system in general, rather than just considering the narrow focus of Bill C-91.

I really have one short question for Mr. Morrice. It is about new drugs on the market for arthritis. I'm not aware of what drug therapies there are for arthritis. And obviously, as you say, there's no cure. I imagine there are some drugs, probably analgesics, that people take. Have there been any new breakthrough drugs for arthritis, and have they been coming on the market at such a high price that people who aren't in adequate drug plans have found it impossible to afford them? Has that been a barrier to their use?

Mr. Morrice: There are new drugs about to come on the market. We've got Cox2. There are a number of companies looking at that. That's what people with arthritis desperately need.

A lot of the medications that people with arthritis take now have been drugs for cancer therapy. When you look at methotrexate and other kinds of drugs that are really for cancer, there are lots of side effects with them. In fact if you really look at some of the numbers, more people die from the side effects of arthritis medications than all illicit drug use in North America. When you look at those kinds of numbers, they're staggering. So that's where we have this vested interest in finding new medication. It is the primary therapy for people with arthritis. We're asking, who can do that?

There are new medications coming. Right now there are 22 NSAIDs on the market. One could say there are a lot of ``me toos'' on there. But because of combination therapy that rheumatologists are now using, it's very tricky to get the person with arthritis to have the right kinds of medication. There's the use of the NSAIDs and DMARDs. It does get complicated. It would really be nice to have a breakthrough in medication that says, ``Here you are. You have lupus, you have scleroderma, enclosing spondylitis. This is the medication for you. You won't suffer. You won't be in pain any longer. In fact, you'll stay at work.''

Mr. Ian Murray: Thanks very much.

The Vice-Chairman (Mr. Walt Lastewka): Thank you very much.

Being the chairman, every once in a while I get the chance to ask a question.

We've heard over and over again information about the requirement to invest in patient education programs, in evaluation programs, information about drugs more and more. Mr. Morrice, you mentioned that in your report. And I would ask Ms Kemp or Mr. Angus to also add. Could you enlarge on that a little bit, on the reason why, and what's been happening, why you've put that in your report?

Mr. Morrice: I can certainly say in terms of non-compliance, with people who have serious arthritis taking their NSAIDs and DMARDs, we have close to 50% non-compliance. The costs of that are astronomical. On top of that, you have inappropriate prescribing. Many people who have arthritis end up with a family doctor and never get referred to a specialist. Therefore, it's inappropriate prescribing when in fact arthritis should be looked at almost as an emergency, because you want to stop the disease right there, at least slow it down. You cannot stop arthritis. So the medication has to be given right away. That's where the education comes in. It is critical that there be education for people, not advertising that we all hear about. We're talking about true education so the consumer can take some kind of responsibility.

There isn't a ministry of health or a government in this country right now that isn't saying that citizens have to take more responsibility for their own health. But how can you take more responsibility for your own health if you don't have the information, or if you're keeping the same gatekeepers in place? That's what I looked at in terms of web sites and so on and having a very solid one where people can go and say ``That's the kind of medication I want to talk to my doctor about. Maybe that's what I should be taking.''

The Vice-Chairman (Mr. Walt Lastewka): Ms Kemp.

Ms Kemp: Yes, patient education is really important, but all the education in the world isn't going to do any good if the people don't have access to the drugs they need.

What I see happening in the system is that there are so many hoops you have to jump through now, if you don't have access to drugs, and I think you have to deal with that first. Yes, the education is part of it, but I think people will get discouraged if they cannot even get access to the drugs they need.

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Mr. Chaplin: Perhaps I could comment very briefly.

The Vice-Chairman (Mr. Walt Lastewka): Sure.

Mr. Chaplin: Again, dealing with HIV disease, with the new HIV drugs, compliance is issue number one. Once you start these new combination therapies, you are wedded to them for life. If you don't stick to a strict daily dosage schedule, you will develop resistance to the medication. That is not only a danger for the individual's health, it is a danger to the public health that new strains of drug-resistant HIV can start circulating in society.

If I could make a point, too, on Mr. Murray's question, the problem is that we have unequal access to drug care. I know of too many individuals who either delay starting new drug therapies because they can't afford to pay for their medications, or they interrupt their drug therapy - take a holiday - because they are having problems shifting from one sort of medical plan to another medical plan. This, again, is very, very dangerous in the case of HIV disease.

The Vice-Chairman (Mr. Walt Lastewka): I want to thank you all for your presentations tonight and for your patience in waiting for our committee to get through all our hearings.

Mr. Chaplin: Is it 7:30 yet?

The Vice-Chairman (Mr. Walt Lastewka): Somewhere in the world it's 7:30.

As Mr. Murray and Ms Brown mentioned, each of the witnesses add a little bit more to our volume of information, and hopefully as a result of your patience and your presentations we can come up with a good report that makes recommendations to the government. I want to thank you very much.

Mr. Werner Schmidt: With regard to the next meeting, will we be meeting at 10 o'clock tomorrow morning?

The Vice-Chairman (Mr. Walt Lastewka): That is correct.

Mr. Werner Schmidt: Is this the document we will be dealing with?

The Vice-Chairman (Mr. Walt Lastewka): Thursday, April 10, 1997, in Room 253-D, and the documents are -

Mr. Werner Schmidt: Who will be presenting these documents? Are these departmental officials who are coming in to talk about this?

The Clerk of the Committee: We have three lawyers coming tomorrow.

Mr. Werner Schmidt: I see.

The Clerk: We have Emma Grell, Edward Hore, and David Vaver.

Mr. Werner Schmidt: Are these independent of government, or are they government lawyers?

The Clerk: I believe they're all independent.

Mr. Werner Schmidt: Okay.

The Vice-Chairman (Mr. Walt Lastewka): Have a good sleep. Get ready for the lawyers.

Thank you very much. This meeting stands adjourned until 10 a.m. tomorrow.

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