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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Tuesday, June 10, 2003

1530

The Chair (Mrs. Sue Barnes (London West, Lib.))

Mr. Patrick Borbey (Assistant Deputy Minister, Corporate Services Branch, Department of Health)

1535

1540

Dr. Janet King (Senior Director General, Policy and Strategic Planning Directorate, Health Products and Food Branch, Department of Health)

1545

The Chair

Mr. John Stewart (Executive Vice-President and General Manager, Purdue Pharma; Chair, Board of Directors, Canada's Research-Based Pharmaceutical Companies)

1550

1555

The Chair

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food)

1600

The Chair

Mr. Claude André Lachance (Director, Government Affairs, Dow Chemical; Canadian Chemical Producers' Association)

1605

1610

The Chair

Mr. Nevin McDougall (Business Director, Agricultural Products, BASF Canada Inc.)

1615

The Chair

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance)

1620

Mr. John Stewart

Mr. Rahim Jaffer

1625

Dr. Janet King

Mr. Rahim Jaffer

Dr. Janet King

Mr. Rahim Jaffer

Dr. Janet King

The Chair

Mr. Pierre Paquette (Joliette, BQ)

Mr. Patrick Borbey

1630

Mr. Pierre Paquette

Mr. Patrick Borbey

Mr. Pierre Paquette

Mr. Patrick Borbey

Mr. Pierre Paquette

Mr. John Stewart

The Chair

Mr. Bryon Wilfert (Oak Ridges, Lib.)

1635

Mr. Patrick Borbey

1640

The Chair

Dr. Janet King

Mr. Bryon Wilfert

Dr. Janet King

Mr. Bryon Wilfert

Mr. Patrick Borbey

Mr. Bryon Wilfert

1645

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.))

Mr. Patrick Borbey

The Vice-Chair (Mr. Nick Discepola)

Mr. Roy Cullen (Etobicoke North, Lib.)

Mr. Patrick Borbey

1650

Mr. Roy Cullen

Mr. Claude André Lachance

Mr. Roy Cullen

Mr. Claude André Lachance

Mr. Roy Cullen

Mr. Claude André Lachance

Mr. Roy Cullen

Mr. John Stewart

1655

The Chair

Mr. Tony Valeri (Stoney Creek, Lib.)

The Chair

Mr. Patrick Borbey

Mr. Tony Valeri

Mr. Patrick Borbey

Mr. Tony Valeri

Mr. Patrick Borbey

Mr. Tony Valeri

Dr. Janet King

Mr. Tony Valeri

1700

Mr. Claude André Lachance

Mr. Tony Valeri

Mr. Bruce Deacon

1705

The Chair

Mr. John Stewart

The Chair

Mr. Patrick Borbey

The Chair

Mr. Tony Valeri

Mr. Patrick Borbey

The Chair

Mr. Claude André Lachance

The Chair

Mr. Nick Discepola

1710

The Chair

Dr. Janet King

Mr. Nick Discepola

Dr. Janet King

Mr. Nick Discepola

Mr. John Stewart

Mr. Nick Discepola

Mr. John Stewart

Mr. Nick Discepola

Dr. Janet King

1715

Mr. Nick Discepola

Dr. Janet King

Mr. Nick Discepola

Dr. Janet King

Mr. Nick Discepola

Mr. John Stewart

Mr. Nick Discepola

Mr. John Stewart

The Chair

Mr. Patrick Borbey

Mr. Nick Discepola

1720

The Chair

Mr. Bruce Deacon

The Chair

Mr. Tony Tirabassi (Niagara Centre, Lib.)

Mr. Patrick Borbey

1725

Mr. Tony Tirabassi

Mr. John Stewart

Mr. Tony Tirabassi

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

1730

The Chair

Mr. Shawn Murphy

The Chair

Mr. Roy Cullen

The Chair

CANADA

Standing Committee on Finance

NUMBER 063

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, June 10, 2003

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Welcome, everyone. Today the orders of the day are Bill C-212, an act respecting user fees, and the proposed policy of the Treasury Board on external charging policy.

We have as witnesses, from the Department of Health, Patrick Borbey, assistant deputy minister,corporate services branch, and Dr. Janet King, senior director general, policy and strategic planning directorate, health products and food branch. Welcome.

From Canada's Research-Based Pharmaceutical Companies, we have John Stewart, chair of the board of directors and executive vice-president and general manager of Purdue Pharma. Welcome to you, sir.

From the Department of Agriculture and Agri-Food, we have Mr. Bruce Deacon, assistant deputy minister, corporate management branch. Welcome.

From the Canadian Chemical Producers' Association, we have Claude-André Lachance, director, government and public affairs, Dow Chemical. Bienvenue.

From BASF Canada Inc., we have Nevin McDougall, business director of agricultural products. We're happy that you're here with us.

We have five groups today, and I'm going to ask you if you could keep your initial presentation to 10 minutes or under. That will take us to 50 minutes. I would like to go to no later than 5:30. I understand that some of you, especially those of you from the various departments, do have technical expertise with you. When we get to the questions and answers, you could bring in the others if necessary and introduce them.

I would like to start in the order of the agenda: from the Department of Health, Mr. Borbey.

Go ahead, sir.

Mr. Patrick Borbey (Assistant Deputy Minister, Corporate Services Branch, Department of Health): Good afternoon, Madam Chair.

I'm the assistant deputy minister for corporate services at Health Canada, and with me today is Dr. Janet King. I'd like to acknowledge the presence of a couple of additional officials: Dr. Robert Peterson, director general of the therapeutic drugs directorate of the health products and food branch; and Ms. Janice Hopkins from the Pest Management Regulatory Agency.

I understand that the committee may have some particular questions, for example, for PMRA. There were some specific questions posed earlier. Janice and Robert would be happy to step in if required.

We're pleased to have the opportunity today to share our experience in the administration of the Treasury Board cost-recovery and charging policy as part of your deliberations on Mr. Cullen's bill.

[Translation]

I would like to provide you with some background about charging for services, rights and privileges under programs carried out with the authority of the Minister of Health across the health portfolio.

[English]

The principles governing cost recovery are those set out in the Treasury Board policy and those directing the Minister of Health to help the people of Canada maintain and improve their health. Our priority in the drugs area is ensuring that products are safe and efficacious. We do not compromise health and safety standards. We honour international trade agreements. We have open, transparent consultations. We minimize the impact on the minister's legal liability. We seek opportunities to avoid and reduce costs of services where costs are recovered. We support the availability of regulated products and services.

Charging for services, rights, and privileges has been a feature of many programs within the health portfolio for some time. Cost recovery is a means of supplementing program budgets, meeting challenges, and increasing the efficiency in the use of resources. Following the federal government's program review initiatives earlier in the 1990s, Health Canada received approval to proceed with a number of new proposals for cost recovery.

[Translation]

During the same period, Treasury Board developed and refined its policy on charging user fees in an effort to assist federal departments and agencies in developing and managing the recovery of fees for services or for the market value of rights or privileges such as the issuance of a notice of compliance which is necessary to market a drug product.

Health Canada has worked with our stakeholders to implement the 1989 and 1997 amendments of Treasury Board's cost recovery policies; we have also participated recently in discussions toward a revision of the existing policy and await its finalization.

¹ (1535)

[English]

All the cost-recovery initiatives within the health portfolio serve to support programs to varying degrees. No program at this time is fully cost recovered. Each program that has cost recovery is different, and the degree to which the costs are recovered is a function of many things, including stakeholders' participation during the various and ongoing consultations.

For these programs, the fees charged only partially recover the costs of delivering the activities. This ranges from 20% to 60% of the total cost for any given program.

[Translation]

Many cost recovery initiatives within the health portfolio are tied to regulatory requirements. For example, regulations require that in order to have the right to market a drug product in Canada, a drug identification number (DIN) must be obtained. Fees are charged for issuing, recording and maintaining this number.

Other cost recovery initiatives are not dependent on regulatory requirements. For example, user fees are charged for obtaining a drug export certificate which is not a mandatory requirement, but which for exporters facilitates the sale of a licenced Canadian drug product in other countries.

¹ (1540)

[English]

Our national dosimetry service is a non-mandatory program in Health Canada's radiation protection bureau. Since 1951, it has provided lifelong personal occupational monitoring for ionizing radiation to Canadians. This means that health providers such as radiologists, X-ray technicians, and dentists are monitored to ensure their workplaces are safe. This service also has a role in our emergency preparedness strategy, but also competes in the marketplace with an American company.

Cost-recovery programs currently exist across the health portfolio, including within HPFB, and these include: the therapeutics products directorate, the biologics and genetic therapies directorate, the medical devices directorate, and the food and veterinary drugs programs. Within the first nations and Inuit health program, costs for medical care are recovered from provincial and territorial governments. Within the pest management regulatory program, an example is their application fees and maintenance fees for pest control products. In the workplace and public safety program, examples are quarantine services, cruise ship inspections, and employee assistance programs. In the healthy environment and consumer safety programs, cost recovery is there for product safety, for example, and in the hazardous materials information review program as well.

[Translation]

Each cost recovery initiative has been developed to support a particular program and, accordingly, each initiative is unique in many ways.

For example, the authority for charging for services varies from program to program and includes: ministerial authority, contracts and regulations under the Financial Administration Act and the Pest Control Products Act. Each program is also supported to different degrees by appropriations-based funding from the tax revenues, as approved by Parliament annually.

[English]

I take my role as comptroller for Health Canada seriously. Reflecting on Mr. Cullen's bill and the hypothetical consequences for Health Canada should it become law, I would like to share the following considerations.

We have faced tremendous challenges in implementing cost recovery and we welcome guidance from you to assist in the application of the policy. For example, quantification of the concepts of apportioning public-private benefit has been a particular challenge. We welcome every opportunity for thorough scrutiny of our business by parliamentarians and Canadians generally.

At a recent appearance before this committee, officials from Treasury Board Secretariat mentioned to you their planned enhancements to the departmental performance report and the report on plans and priorities. I cannot forecast in detail what the specific impacts will be for Health Canada. I am, however, confident that we can adjust our planning and reporting processes to respect the policy and statutory directions provided to us by Parliament.

Finally, I would like to point out that there is a variety of recent reports on our program performance information on Health Canada's website.

[Translation]

I would now like to turn to my colleague, Dr. Janet King, who will tell you more about these specific activities in the Health Products and Food Branch and some of the new initiatives that are already underway to improve our performance in regulatory functions and cost recovery.

[English]

Dr. Janet King (Senior Director General, Policy and Strategic Planning Directorate, Health Products and Food Branch, Department of Health): Good afternoon.

My colleague, Mr. Borbey, has provided a brief overview of some considerations on cost recovery and the application of the existing policy within Health Canada. I will address some more specific considerations about cost recovery in the health products and food branch, and how we are addressing the government's commitment in the 2002 Speech from the Throne to speed up the regulatory process for drug approvals to ensure that Canadians have faster access to the safe drugs they need.

Under the Food and Drugs Act, Health Canada is mandated to review the safety, quality, and efficacy of new therapeutic products before they are sold to the public. It is also mandated to review new uses for already approved products and to monitor the safety and effectiveness of products that reach the Canadian market.

As Mr. Borbey noted, our cost-recovery initiatives have been developed to support specific programs. With respect to human drugs, mandatory fees have been set in regulation under the authority of the Financial Administration Act for the authority to sell drugs, drug submission evaluation, and establishment licensing. Similarly, cost recovery for review of veterinary drug submissions is set under the veterinary drug evaluation fee regulation.

[Translation]

A regulatory amendment is required if we are to change the fees associated with these activities—requiring consultation as per the government's regulatory policy.

I would like to reiterate Mr. Borbey's comments about the principles governing our approach to cost recovery, which are set out in the current Treasury Board policy and applied in a context of delivering on Health Canada's mission to help the people of Canada maintain and improve their health.

[English]

In the mid-1990s Health Canada established performance targets with respect to the review time to first decision for new submissions for both human and veterinary drugs. These targets are comparable to those set by the U.S. FDA and other leading regulatory authorities. However, we have not been meeting our drug review time performance targets over the past decade, and this is reflected in our current review backlogs. Our current performance lags behind that of the U.S. FDA and the EU but is on par with Australia and well ahead of Japan.

We have taken action to address our performance against the published targets for review times of new drug submissions and are committed to making substantial performance improvements over the next few years.

[Translation]

To ensure that we not only improve our regulatory performance, but sustain it as well, we have taken a comprehensive look at reviews of our past performance—both what we do well, such as our safety record, and where we need to improve. We have analyzed the key to success for the world's top performing regulatory authorities for therapeutics—like the Food and Drug Administration in the U.S. and the European Agency for the Evaluation of Medicinal Products in the E.U.

Through this analysis, we have identified success factors for regulatory performance and the specific best practices used by the top performers to achieve them. These include top-notch business processes, efficient use of external expertise, and measures to improve transparency. As well, stable and adequate funding was identified by all top performers as a key to success.

Funding provided in Budget 2003 will help us to improve regulatory performance, including timeliness of reviews, transparency and the predictability of review processes, while maintaining Health Canada high standards for safety. In keeping with the government's Speech from the Throne commitments to smart regulation, we are investing in key business practices associated with the drug review process to transform efficiency and effectiveness, adopting and adapting international best practices and standards where they make sense for Canada.

[English]

But regulating smarter is more than just increased efficiency. As such, we are also investing in enhanced international regulatory cooperation and increased transparency as well as additional post-market surveillance activities regarding safety and therapeutic effectiveness. We are working closely with our international partners through the international conference on harmonization on data standards, which will support e-submission and simultaneous submission in multiple jurisdictions.

With this approach we are focusing on three key outcomes: safety, which Canadians place their greatest emphasis on; a drug review process with internationally comparable review times and predictability for the benefit of all stakeholders; and increased transparency. This not only means increased transparency by my department but this means stakeholders as well.

We are seeking stakeholder input on our regulatory process and ways to improve its performance through consultations now underway by the Public Policy Forum. The PPF is facilitating a deliberative engagement process that is bringing all stakeholder groups together for an open dialogue on how best to ensure regulatory process for therapeutic products that is safe, sustainable, and timely.

¹ (1545)

[Translation]

Madam Chair, we are listening to stakeholders and are seeking to make substantive, sustainable improvements to our regulatory performance. We are committed to change, which will help Canadians to have timely access to safe and effective drugs.

[English]

On that note, Madam Chair, I feel I should conclude my remarks to respect your time constraints. I look forward to questions.

The Chair: Actually, it didn't respect the time constraints. I hope all of you will try to shorten down some of those things that are at the beginning, which the committee is familiar with, to try to stay within the time. It's important in this committee that we have time to question. That, I think, is very important, as the people around this table have decisions to make.

With that, I will go to Canada's Research-Based Pharmaceutical Companies, and Mr. Stewart, who is the chair of the board of directors.

Go ahead, sir. Ten minutes, please.

Mr. John Stewart (Executive Vice-President and General Manager, Purdue Pharma; Chair, Board of Directors, Canada's Research-Based Pharmaceutical Companies): Thank you, Madam Chair and members of the committee, for allowing Canada's Research-Based Pharmaceutical Companies, also known as Rx&D--which will help us save some time as go on in the presentation to refer to it as that--to present its views on the impact of cost recovery on the innovative pharmaceutical industry.

As has been noted, I am John Stewart. I'm general manager and executive vice-president of Purdue Pharma, a research-based pharmaceutical company in Toronto, and I'm also for this year chairman of Rx&D's board of directors.

Rx&D is of course the national association that represents the over 23,000 Canadians who work for more than 60 research-based pharmaceutical companies in Canada. Our members are both big and small, and they include bio-pharmaceutical members. They do, however, all share the same objective, and that is to discover and develop innovative new drug therapies that improve the quality of life of Canadian patients and benefit our health care system.

Let me say at the beginning that Rx&D respects the principles of cost recovery and supports Bill C-212, since we firmly believe that it will bring about much more effective enforcement of performance standards. In fact, Rx&D has supported reasonable fees in the association with review of drug submissions since the concept was originally brought forward by the federal government back in May of 1986.

We supported cost recovery because of associated promises of improved performance. Unfortunately, those promises have not been delivered. As a result of that, Canadian patients wait longer than necessary for access to needed new drugs, and the pharmaceutical industry has lost substantial investments in R and D, manufacturing capabilities, and other areas that it otherwise would have secured.

Let me just take a minute to give a review of the innovative industry's experience with cost recovery.

Back in 1994, as part of the federal government's program review, the therapeutic products program, now the therapeutic products directorate, or TPD, began a consultation process that resulted in the implementation of annual fees for the renewal of drug identification numbers, manufacturing establishment licences, and fees for the evaluation of drug submissions. These are not small amounts of money. The fees for the evaluation of a drug submission can easily amount to $250,000, and in 2002 the aggregate fees collected by Health Canada cost recovery would be in the neighbourhood of $40 million.

An integral part of the cost-recovery initiative, and also consistent with Treasury Board policy, was the introduction of performance standards for the review of drug submissions. The TPD committed to meeting performance standards that were competitive, as we've heard, with those of other leading regulatory agencies, such as the FDA in the United States and the U.K.'s Medicine Control Agency, or MCA. In addition to providing revenue to government, cost recovery was to result in improved performance within the TPD.

Although there was some skepticism among industry, the majority of our member companies supported the introduction for those pre-market fees for the evaluation of new drug submissions, since the TPD, and indeed all levels of Health Canada, repeatedly stated that implementation would result in improved timeliness in its review and approval performance.

The TPD established some very favourable performance targets, such as the completion of the review of a standard new drug submission in 355 days. There was even a statement from the then Minister of Health, Diane Marleau, that the fee schedule would be set in such a way that the fees would be reduced for submissions where the TPD failed to meet its performance target.

To industry, there truly seemed to be a commitment from government to deliver on its promise of improved performance. Today, the unfortunate reality is that the TPD's performance has failed to meet its targets. The linkage between performance and fees has never been established in the regulations, and over the same period the drug regulatory agencies in countries such as the U.S., the U.K., and Sweden have vastly improved their performance, leaving Canada and Canadians far behind.

¹ (1550)

I have a couple of slides or overheads I'd like to show now that demonstrate the performance we've seen from the TPD in the years from 1995 to 2002. These are the days to approval for new drug submissions received from member companies of Canada's research-based pharmaceutical companies.

You'll note there that over the last most recent year, the average days to approval was 672 days, and certainly throughout the past seven years it's always been above 550.

Although the TPD's targets are actually for completion of the first review--not necessarily approval, because not all new drug submissions are approved at the end of the first review, and some need to go through additional cycles--we believe that because some submissions are in fact approved more rapidly than 350 days, others can be approved at the end of the first cycle. Overall, it would not be unreasonable to expect an average review and approval timeframe in the area of one year to slightly more.

In fact if we look at the next slide, this shows some international comparative data. This is really median time over the three-year period 1999, 2000, and 2001. So we put three years together to take out year-to-year variations in this and show a more consistent pattern.

We see that Canada's average time to approval is 645 days. In the U.S., the FDA is 371 days, or some nine months less than in Canada, or about 60% of the time required in Canada--and, as you can see, just slightly above, in the United States, an average review and approval time of one year. The rest of the data I understand has been presented to you, so I won't go through. Suffice it to say that of these five countries, Canada has been the slowest.

Linking fees to performance has been implemented successfully in other jurisdictions. The U.S. Prescription Drug User Fee Act, or PDUFA, is one example. PDUFA set a series of performance goals that were agreed by industry, FDA, and Congress, and they actually strengthened each year from implementation. The FDA has met nearly every one of the performance targets they've set in the ten years since PDUFA originally came into force.

The major reason for this, FDA officials themselves will say, has been the fact that there was a five-year sunset clause where the entire issue came back to Congress to see if they were meeting their performance targets and other expectations, as well as the ongoing oversight that Congress brought to that. We think PDUFA has been successful, and in fact the same process is now being applied in the United States to medical device review and veterinary drug reviews, which were not cost-recovered previously.

According to Rx&D's annual notice of compliance survey, the average time taken to approve new drugs in 2002 was 672 days, and we've seen this. The frustrating thing about this to all of us is that we recognize that much of that time is taken up before the submission is actually opened for evaluation or due to poor coordination between the various components of the review process.

I have one more slide to demonstrate this. What this shows along the top, in the black line, is the TPD's current performance standard. There are basically 10 days from receipt to acknowledgement of receipt. There is a 45-day period where that submission is screened to make sure it's complete, that it's not missing any major components, and then a 300-day review period. That totals 355.

If we look at an actual product in the red line.... And I know many of you will say “He's showing us an old slide. We saw this before, back in 2000.” Indeed, that is true; but regrettably, the story it told in 2000 is exactly the same as the story that exists today. What we see in this is that the safety and efficacy review--that is, how well the drug works and whether it is safe, free of major side effects--took 73 days before the submission was open and that review began. That safety and efficacy review actually ended 170 days later. It took less than 180 days to do the review, and the drug was found to be safe and effective.

¹ (1555)

There's a separate thing, a chemistry and manufacturing review. It did not start until day 355 and then finished 132 days later. So the total review time of 473 days really could have been collapsed dramatically into some 170 days, plus 45 days upfront, had there just been better coordination and less time spent before the submission was open for review. And this is not inconsistent.

I have another slide, which I will not show for time purposes, but it shows that this basic process is repeated time and time again, a long time before the submissions are open for review and time spent because of poor coordination between those stages.

Let me just close by saying that under the present circumstances industry views user fees as more of a tax, as opposed to payments for provision of meaningful services. It didn't have to be this way, since in the U.S. and many other countries the implementation of user fees was associated with dramatically improved performance.

We respectfully request that this committee endorse Bill C-212. It will help make a difference in getting medicines to Canadian patients who need them with the least possible delay and will help the innovative pharmaceutical industry companies invest substantially more in Canada.

Thank you for your attention, and I look forward to your questions at the end of the presentations.

The Chair: Thank you.

Now we'll go to Mr. Deacon, from the Department of Agriculture and Agri-Food. Ten minutes, please.

Mr. Bruce Deacon (Assistant Deputy Minister, Corporate Management Branch, Department of Agriculture and Agri-Food): Thank you, Madam Chairman.

I am pleased to have the opportunity to appear before this committee during your consideration of Bill C-212.

I would like to make some brief remarks around the issue of cost recovery from the point of view of our experience in Agriculture and Agri-food Canada.

By way of context, the department's annual revenues from cost recovery total in the neighbourhood of $47 million. This is a modest amount in relation to the overall activities of the department, which has an annual budget of between $2 billion and $2.7 billion.

The $47 million is concentrated in six specific areas: the Canadian Pari-Mutuel Agency; the Community Pasture Program; the Net Income Stabilization Account, or NISA program; the Farm Improvement and Marketing Cooperatives Loans Act, or the FIMCLA program, as it's known; leasing of real property; and royalties on intellectual property.

I would now like to briefly look at our experience in these six areas in light of some of the main questions, which I have read about, that have been raised surrounding the consideration of Bill C-212.

First, external charging in Agriculture and Agri-food Canada is clearly linked to what an identifiable external party receives, over and above what is received by the general taxpayer. In other words, costs are recovered for specific services provided to specific recipients.

Second, costing is in proportion to the services received, and can only be changed after extensive review. This is a fairly important point, and I'd like to go into it in a little bit more detail. In the context of the Canadian Pari-Mutuel Agency, it is funded 100% through cost recovery based on 0.8% of every wager placed by bettors at racetracks across Canada. The fee is regulated, and can only be changed by order in council.

The Community Pastures Program, on the other hand, is an interesting example of where the nature of the program and the application of user fees have in fact evolved over time. About 70% of its costs are recovered from producers who pay fees to graze their cattle or use other services provided by the pastures.

The Community Pastures Program was originally a public service aiming to improve the environment by taking marginal land out of cultivation and putting it into green cover. This evolved to include cost-recovery services when pastures began to be made available for specific recipients, in this case, cattle producers. Fees are set by the minister after extensive consultation directly with the producers involved.

The NISA program, a farm income stabilization program, recovers about 80% of its administration cost from participating producers. The fee structure is fully accountable. It is determined by the federal minister after consulting with his provincial producer advisory committee. To change the fee requires a high degree of consensus. As a minimum, it requires approval of Canada plus two-thirds of participating provinces representing at least 50% of total production margins.

The Farm Improvement and Marketing Cooperatives Loans Act is a statutory loan guarantee program, which also recovers 100% of its costs over time. Lending institutions pay a fee of 0.85% of every dollar to cover administration of the program and to insure against loan defaults. The fee is set again by order in council.

Fees for rural property leases are determined by market rates as indicated by independent appraisers. This process is formula-driven and is prescribed by Treasury Board policy.

A third issue that is being raised is the need for independent dispute resolution. Speaking for the department, this has not been a major problem for us to date, partly, I would suspect, because there are already processes in place that provide for intensive industry consultation and input, and partly because, in general, the amounts we are talking about are relatively modest and relatively low compared to other sources.

Last, on the issue of public reporting and parliamentary oversight, we agree that there is a need for a set process for reviewing the application of user fees and for appropriate and timely information to enable standing committees to effectively conduct those reviews.

º (1600)

The real question is whether standing committees are provided with the adequate and timely information they need to undertake these reviews. The proposed Treasury Board policy on external charging would significantly increase the availability of data to enable committees to conduct a review of cost recovery across government.

In conclusion, Madam Chair, the department supports the effective use of user fees and supports the intent of Bill C-212 to achieve greater transparency and accountability, both in terms of Parliament and in terms of Canadians.

Thank you very much. I'll be glad to take questions later.

The Chair: Thank you very much.

Now we'll go to the Canadian Chemical Producers' Association. Monsieur Lachance.

Mr. Claude André Lachance (Director, Government Affairs, Dow Chemical; Canadian Chemical Producers' Association): Thank you, Madam Chairman.

Members of the committee, you heard from Mr. Stewart about a case where cost recovery applies but the quid pro quo in terms of performance is not being delivered. Our case is a bit different. We submit that we are faced--and I'm going to talk about it in a few minutes--with a cost-recovery scheme that shall not apply. In both cases we're faced with system breakdown. In both cases we agree with the intent of the policy. This is not about the policy; this is about the implementation of the policy.

You have received our brief. I will not go into a detailed description of the new substance notification and its arcane details. We can discuss those details during the question period that will follow. However, just for the sake of illustrating what the problem is, let me tell you the essence of the issue.

To understand this issue and why it is so critical to our industry and the policy debate on private benefits, a very brief description of the NSN is required. NSN stands for “new substance notification” scheme under the Canadian Environmental Protection Act of 1999.

Very briefly, chemicals used in Canada need to go through a registration and review process by Environment Canada and Health Canada. This is defined under the NSN process. The company that wants to use the chemical must pay for the process review of it. The amount varies, but can be as much as $300,000, and sometimes more. Unlike drugs or medical instruments, however, in other areas of government, the company paying the fee gains no private benefit. Once registered, any company can use the chemical.

This is quite fundamental, because it goes to the old definition of private benefits versus public benefits. Even Environment Canada agrees there are no private benefits; hence, it has invented the concept of a group benefit. One of the limits of the group benefit is that Canadians, as a result of the NSN process, have assurances that those products are going to address environmental health concerns. One can define society as a group. And interestingly, Treasury Board didn't challenge the creative interpretation of the policy by Environment Canada.

The interesting thing about this whole debate is that I'm not here to basically argue whether we are right or wrong in our interpretation of whether the policy applies to NSN. The issue is that I have nowhere to go to argue whether we are right or wrong.

Under the current policy, once ministerial discretion has been exercised by fiat, because this is basically where the accountability lies under the current policy, that's it. Treasury Board has basically abdicated any kind of role in enforcing the policy. This committee, or Parliament for that matter, would be frustrated, at least under the current policy--and, I submit, even under the new or proposed revamped policy--in exercising any kind of review role of the cost-recovery scheme.

There is no independent review that takes place. So at the end of the day, from the scope and the main point of view, if we are right and if we had a place to basically adjudicate whether we are right that the policy doesn't apply to us, we are basically faced with a cost-recovery scheme that amounts to taxation without representation. If that's the case, there's no question that Parliament should be concerned and involved through the supply process, or even the estimates, to review whether or not that authority to impose such a tax on industry exists.

Ultimately, this is what Mr. Cullen's bill tries to address. It is basically about accountability and governance. The current scheme basically lacks on both counts. Sure, ministerial accountability exists, and you've heard and have read from the testimonies that Treasury Board basically believes there is a proper review process that takes place within the departments, and there is some review that takes places within the departments, but this is literally a judge and party situation. As I said, at the end of the day, it is a departmental decision.

º (1605)

Now, interestingly, the decision will basically be driven by the departmental mandate. What is the departmental mandate of Environment Canada? It's to protect the environment. We've heard from the previous speakers that the departmental mandate of Health Canada is to protect the health of Canadians. We cannot expect those departments, for instance, to basically integrate competitiveness issues.

Another aspect of this cost-recovery scheme, and where you've got system breakdown, is how do you reconcile policy intents of the Government of Canada? How do you ensure that innovation takes place, as Mr. Stewart indicated, and that we have products that arrive at the marketplace at the right time?

So the government's aspect is especially critical in ensuring that there's transparency, there is a proper review process that takes place, that the private versus public debate can take place, that all stakeholders can basically lay claim on this discussion, and ultimately that there is a reporting scheme that allows for the transparency that is required for Canadians to judge results.

We've got none of that, as things currently stand. Sure, the proposed changes to the policy that Treasury Board officials have described in their testimony to the committee will go some way to address some of those issues.

What we are lacking is a so-called hammer. I've read some of the discussions in previous sessions of this committee, and there's no question that we are lacking some sort of an accountability hammer that would ensure that policies are clearly enforced and applied by the aligned departments. What the Treasury Board proposed in terms of changes would bring some additional transparency, but would not bring the kinds of efficiencies we're looking for. Ultimately, as I indicated, this is about Parliament exercising its authority and ultimately representing the interests of all Canadians in such policy implementation issues.

Currently, we are frustrated in our ability to have those debates. The new substance notification scheme that is currently imposed on us in terms of cost recovery has documented impacts in terms of the bringing about of products that would improve the competitiveness of Canadian industry and ultimately improve on the types of substances that are brought to market, including potentially greener chemicals.

All of those perverse effects are the result of a situation where we have a policy that is integrated within our confines of the departmental mandate and its interpretation of a private benefit that we don't contend exists.

We believe that this whole issue needs to be given some parliamentary scrutiny. We believe that Bill C-212 provides this hammer that is required to ensure that the policy is interpreted correctly.

I want to make it very clear for the record, Madam Chair, that from the Canadian Chemical Producers' Association we agree with the underlying principle of a cost-recovery policy, one that is predicated on private benefit, is applied fairly, and is efficient from the point of view of improving performance. This is clearly not the case concerning the new substance notification application of the policy.

I welcome comments and questions from members of the committee as to how this whole discussion took place over the past three, four years with the department involved.

Thank you, Madam Chair.

º (1610)

The Chair: We now have, from BASF Canada Inc., Nevin McDougall, who is the business director of agricultural products.

Mr. Nevin McDougall (Business Director, Agricultural Products, BASF Canada Inc.): Thank you very much, Madam Chair.

I'd also like to thank the committee for allowing me to share a few thoughts from BASF's perspective on this important issue.

BASF Canada is a wholly owned subsidiary of BASF Corporation, the North American affiliate of BASF AG, Ludwigshafen, Gemany.

BASF is one the world's largest chemical companies, offering a range of high-performance products, including chemicals, plastics, performance products, agricultural products, fine chemicals, as well as crude oil and natural gas. In 2002 BASF had revenues of 32 billion euro, globally, with an employee base of 89,000.

In Canada, BASF operates production, warehousing, research, and office facilities across the country, employing more than 650 Canadians. BASF is actively involved in the automotive, construction, and agricultural industries within the Canadian marketplace.

As a result of BASF Canada's diverse activities, there are several areas of business that are regulated by federal agencies and subject to cost recovery. Therefore, Bill C-212, the private member's bill introduced by Roy Cullen, is of great interest to BASF.

BASF Canada strongly supports this bill, because we believe it addresses the principles that are necessary to encourage investment and to foster a spirit of innovation with companies participating in Canadian industry.

Bill C-212 outlines several key principles that support investment and innovation from our perspective. Of particular interest are elements such as communication and how user fees are determined, assessment on stakeholder impact, improved transparency of the process, and ensuring accountability by requiring performance standards.

The aim of BASF globally is to increase our corporate value through growth and innovation. To achieve this goal, participating in markets that provide a fair, predictable, and cost-effective regulatory framework is critical.

In the case of BASF Canada, we compete internally with our global colleagues for resources to invest in our Canadian organization. Implementation of a cost-recovery system that is competitive and encourages innovation enables BASF Canada, and myself in particular in several cases, to secure resources for further investment into this particular market.

As an example, Environment Canada's new substances fees regulations, as outlined in CEPA '99, is one such user-fee scheme that we believe would have benefited greatly from this bill.

The concern is that this regulation will impose a competitive penalty on the innovator, as was mentioned by Claude André. A company that is first to introduce a new substance in the Canadian marketplace must pay to generate the data required and the user fee under the NSN and the new substances fees regulations respectively. The issue is that a competitor that follows with the same substance would not have to incur any cost. There is no proprietary advantage for companies that are innovators, from our standpoint.

As an active participant in the innovative agricultural, chemical, and biotechnology industry, BASF is governed by a number of acts, including the Pest Control Products Act and its associated cost-recovery mechanism. In addition to private benefit, products of this industry provide Canadians with a public benefit, allowing our farmers to produce food efficiently and safely while reducing the impacts of pests of both agricultural and public health importance.

When examining cost recovery in this industry, it is worth while to compare not only our major trading partners but also the relative size of the markets for these products. Cost of registration is one of a number of factors, including review times, that are considered when making a decision whether to move forward in Canada with a new product. Bill C-212, with a focus on such areas as performance standards and accountability, would enhance regulatory efficiency for BASF.

While our company understands and supports the need to pay for the federal services that we use, we strongly believe these fees must be in line with those paid in other countries, consistent with the level and value the service provides, and fair to all participants. We also believe fees should be transparent to the public, and that the departments and agencies implementing them be accountable to the people and organizations paying for the service.

In conclusion, I would like to reinforce BASF Canada's support for Bill C-212 and the value it brings not only to organizations such as BASF but also to the Canadian economy. I hope this information is useful to you to demonstrate support of this bill.

I look forward to any questions you might have.

Thank you.

º (1615)

The Chair: Thank you very much.

We'll go to the first round. Up to ten minutes, Mr. Jaffer--and that includes answers.

Mr. Rahim Jaffer (Edmonton—Strathcona, Canadian Alliance): Thank you, Madam Chair.

I'd like to thank all of the presenters here today. I appreciate the time you've taken, especially to enlighten us on some of the challenges, and in the case of the industry representatives, some of the challenges you face on a day-to-day basis, especially dealing with the regulation side of the work you do.

I was particularly interested in the identified drug approval times, Mr. Stewart, you talked about, especially in light of our largest competition, the United States, the EU, and other markets. Unfortunately, we lag behind in approval times in many of those jurisdictions. I'm glad to hear that there's an interest to improve that. I think that's very important.

What I want to know from you is what are the costs in comparison to the U.S. in the process for regulations? As you're going through the process, are the costs currently comparable with the U.S. when you compare the cost-recovery costs Canadian companies are faced with? And if there is a difference, is it due to the longer delays, or is it just the costs that are charged here in Canada in comparison to the U.S.?

What I'd like to know, in other words, is does the cost that's levied on Canadian companies rise with the delays you're faced with in approval times and so on, or is it just the overall cost that the cost recovery has charged? There's no set regulatory amount, from what I understand; it's kind of set arbitrarily by these departments. Maybe you can enlighten me on that particular area.

º (1620)

Mr. John Stewart: Thank you, Mr. Jaffer.

There may be several components to the question. The actual fee for the drugs submission in Canada is set by regulation, although it varies depending upon the types of data elements that are in that submission. If one has manufacturing data as well as clinical data, there are two fee components that are added together. It does build together; it does build up from a base.

The way we went about determining those fees in Canada was to look at a relatively straightforward activity-based costing model. We looked at the approximate time that was taken and the human resources that were required to do an efficient review and approval. We then added some overhead levels to that. It was a bottoms-up cost that industry and Health Canada, supported by Treasury Board, went through back in 1994. That's how those costs were generated.

The cost to industry in the delay really comes about because there are six months, 12 months, and in some cases 18 months where industry would rightly see the drug being on the market earning revenue as well as providing benefits to patients, but not capable of being marketed because it had not been approved by Health Canada. Much of the time that it had not been approved, it had simply been awaiting opening or a beginning of the review process.

With respect to the specific comparisons of the actual fee levels, they are higher in the United States than in Canada. I don't have the actual figures with me now, but if you factored in the exchange rate they would probably be around the level of twice as much.

The FDA has a dramatically larger number of individuals than Health Canada working on the files. In fact, it takes a bit of a different, more repetitious approach to the review and approval process. It repeats all the statistical analysis, whereas Canada tends to follow more the European model of looking at the summary data along that line.

The fees are closer in line with the EMEA that way, but they've come from a different base. The approach to the development of the fees has been different from country to country. Another big difference is that the fees in the United States were supplementary to the FDA's budget, so all the money that it was able to achieve through cost recovery was used to hire additional reviewers.

Here in Canada, the fees generated substantial revenue, and I mentioned a figure of $40 million. I believe the government appropriations were reduced fairly dramatically in the years the fees were introduced. There was not as large a net gain to Health Canada or the TPD so that they could apply those fees to hire more resources and expedite the processes.

Hopefully I've answered your question.

Mr. Rahim Jaffer: That does.

Perhaps in the remaining time I could direct my questions to our Health Canada officials, Mr. Borbey and Dr. King.

First of all, I know in your brief you've identified a number of areas Health Canada is trying to improve on, especially in relation to this particular problem that's been raised. Will this bill help you to do the job, or what other things do we need to do to improve the situation? Mr. Stewart talked about the idea of resources in your department to be able to carry out these approval times. Should we be looking at, alongside this particular bill, the money being collected for cost recovery going directly into your department to be able to staff correctly and to be able to resource correctly?

If we're taking one step forward to improve the situation and we're not following through at the other end, clearly we're going to be in the same place we are in if the government doesn't allocate the proper resources. I'm wondering if you could address that particular issue and see if we're on the right track with this bill and what more needs to be done in order to make this work.

º (1625)

Dr. Janet King: Just for clarification, the cost-recovered resources that are recovered for drug approvals do go straight into the program. When the cost-recovery program was implemented in the mid-1990s for these particular products in Health Canada, as Mr. Stewart rightfully indicated, the resources were adjusted at that time so that there was not incremental benefit to bringing in the revenues. It was funding-neutral, if you will. Resources were extracted from the A base equivalent to the resourcing that we would then acquire incrementally through the 1990s in cost recovery. We were, at that time, left in a budget-neutral situation and also working to effectively implement the new commitments and the new performance standards in cost recovery.

I think that clarifies the first part of your question.

Mr. Rahim Jaffer: Yes, it does.

Dr. Janet King: With respect to some of the changes we're implementing right now, perhaps I could speak for a moment to some of the challenges we've been working with in terms of implementing the cost-recovery framework, cost recovery for therapeutic products through the 1990s.

As Mr. Stewart indicated, the fee structure was identified, the activity base was identified in terms of establishing the fees, and that was accepted by all sides again as the fees started being implemented in the mid-1990s. We've been learning and working with that implementation in the context of a very restricted budget, given what I've previously described.

Some of the challenges we've been working with along the way and finding some solutions for along the way have been a combination of a number of factors, including workload issues, tremendous workloads coming in, staff turnover, competing priorities, and increasing complexity of submissions along the way. The scientific base is getting more complicated, the submissions are getting more complicated, more data-intense. The workload in fact is increasing with many of these submissions.

We've also recognized that some of our project management processes are not as efficient as they could be. I think the example over here, while singular perhaps in that particular case, describes a situation we have been working with. We are now moving through a very ambitious project management renewal process to condense or move away from the sequential process and move to combined processes so the whole project is well managed and inefficiencies we have been working with will be minimized and it will be as effective a project management as possible.

Mr. Rahim Jaffer: In your opinion, is this bill moving in the right direction to give the framework that you'll need to address some of those deficiencies currently?

Dr. Janet King: We support the principles of accountability, of transparency, and so on. We support the principles.

[Translation]

The Chair: Mr. Paquette, you have ten minutes.

Mr. Pierre Paquette (Joliette, BQ): Thank you, Madam Chair.

To follow up on the question which was just asked, I would like to know the following. Since you said you were in agreement with the principle of accountability, which is contained in Bill C-212, are there any other elements in the bill which may impede you and your work? I support this bill, but if there is room for improvement, we need to know where we can improve it, beyond its basic principle, that is, which parts of the bill are problematic with regard to their application.

Mr. Patrick Borbey: I can briefly address that.

We reviewed the bill and I know that M. Cullen proposed a couple of amendments. I think that the proposed amendments address some concerns which were previously raised.

I think that we already abide by most of the principles included in the bill, but we do so through the cabinet approval process as it applies to our regulatory amendments. So, I think that we already abide by the principles of transparency, consultation and impact analysis.

However, some aspects must be studied more closely. For instance, the dispute resolution mechanism and the third independent party, as they apply to the resolution of disputes. I think that in this case, it is a concept which should nevertheless be studied very closely in order to assess what kind of impact it may have on the accountability of our minister when he refers an issue to a tribunal or independent jury. We already have mechanisms at our disposal. However, they are not independent because the decision and accountability lie with the minister. We agree with the principles of the bill, but certain aspects may be difficult to implement.

We completely agree with what the bill says about transparency and accountability to Parliament. As I said a little earlier, we support the principles calling from more transparency in the reports, which already exist. We do not have a problem with that. For instance, on our website, we already regularly report on the performance of our main programs, be it with regard to the approval of pharmaceutical products or pest control products, as we call them.

º (1630)

Mr. Pierre Paquette: With respect to the dispute resolution mechanism, you mentioned an argument which I think we should examine more closely. I find it hard to be both judge and jury. I've had to deal with the organizations; I've already talked about my experience and won't repeat what I said. However, sometimes you felt you were hitting a wall. It often had to do with a single individual who was being difficult for reasons which were hard to understand; perhaps this person didn't like getting a phone call. Sometimes, you had the impression that you were completely powerless. But that's not the worst of it. If you try to intervene, the situation might become even more difficult. So, if there is any way to make the process more neutral, that may help the situation. I would like you to tell us again why you are against the dispute settlement mechanism.

Mr. Patrick Borbey: I did not say that I was necessarily against this mechanism, I said that it should be studied more closely.

Mr. Pierre Paquette: Or that it should be studied.

Mr. Patrick Borbey: You have to study the potential impacts, since, after all, it would affect the dynamics of ministerial responsibility. These elements would have to be studied, and I know that you have held deliberations on the subject and that you have spoken to related issues. Do not forget that there is another interested party, namely Treasury Board. When we want to make changes to our cost recovery programs, we have to convince Treasury Board and its ministers of the validity of our proposals. It is a matter of resources. In fact, this issue has already been raised. Treasury Board also has a say with regard to resources.

Mr. Pierre Paquette: Mr. Stewart, in her opening statement, Ms. King talked about a forum which is facilitating a deliberative engagement process. Have you already participated in this forum? What we are basically hearing is that people are not really against Bill C-212 because things are already moving in that direction. Do you agree with that statement and do you think that the forum, which was created by management, is an effective enough mechanism to bring together industry and government?

[English]

Mr. John Stewart: Let me respond in two ways. There was the very major forum , we went through for determining the appropriateness of the actual fees themselves, what the amount of the fee would be for review of a new drug submission. That was a very lengthy process, probably 10 to 20 full days of meetings spread over a year, supplemented by Treasury Board staff, Health Canada staff and industry. We were very productive in that and came to the conclusion that the fee levels were reasonable.

I actually did not see the suggestion that the process would be repeated when discussions were entertained about changing the fee levels.

More important, with respect to performance, there have been ongoing meetings between the pharmaceutical industry, Rx&D and the other industry associations, and Health Canada TPD with respect to performance.

Our frustration is that while many, many items have been identified that potentially could be of value and improve the performance and improve the timeliness, they simply have not come to pass, despite what would appear to be good efforts or genuine intention in having these changes make a substantial difference.

The Chair: Mr. Wilfert, ten minutes.

Mr. Bryon Wilfert (Oak Ridges, Lib.): It's been three years this month that the finance committee released its challenge for change on cost recovery, and we're still talking about it. At that time the committee identified the problem of oversight by the Treasury Board. The adherence to the policy, as you've talked about, has varied from department and even program.

In response to that, the Treasury Board in December last year came up with a draft external charging policy. They suggested that the Treasury Board Secretariat be responsible for monitoring government-wide implementation and again looking at implementation of policy.

This is the third meeting on this bill. We all agree there should be service standards, there should be service performance, and there should be some form--although what mechanism I'm not sure yet--of a dispute mechanism.

You've all said that you agree with the notion of fee for service. You're not getting the service. Even the former Minister of Health's letter in 1985 said that the lack of a formal link to review specified performance targets in the regulations that were submitted in no way lessened the commitment of a drugs program to adopt and deliver against internationally competitive performance targets.

Obviously, the median approval time for new drugs that were shown suggests that we're falling increasingly behind. A question to the representatives of Health Canada is why are we falling behind? What is it we are doing, or not doing, that makes our approval time 645 days compared to others, such as the United States at 371, or even Sweden at 431?

You have indicated in Health Canada that you agree with the principles, yet we still don't seem to have some form of hammer, even from Treasury Board. This is why I'm sympathetic to Mr. Cullen's bill and would agree that we need some form of hammer. Whether it's this bill or whether it's the Treasury Board, somebody needs to be able to say that we are engaged in false advertising. If we're suggesting that you're going to pay x number of dollars and you're not going to deliver, what's the penalty? Why is it so difficult for the Treasury Board, Health Canada, the Department of Agriculture, or any of them to adhere to what they say? You talk a great line, but what's wrong with the delivery?

º (1635)

Mr. Patrick Borbey: In terms of the issue of performance, we've already acknowledged that, yes, we have not met our performance commitments. We are lagging behind in those commitments. We have looked at a deliberative strategy to close that gap. We've talked about the consultative process we've engaged in recently. The government has also committed some resources to help bridge the gap, especially dealing with the backlog. The presentation showed a little bit earlier that if it weren't for the backlog, once we got to work on a review, we're very close to the standards that have been set by other jurisdictions.

The other thing to say generally is that comparing Canada's processes and review times with those of other countries is not always the same as comparing apples and apples. There are differences in terms of how we count days. For example, in the U.S. the clock stops ticking when a submission is sent back to the manufacturer for further information. In Canada we don't take the same approach. So there are some differences.

We also have looked at the performance in other programs. For example, we looked at some of the reports that were done with respect to PMRA. We have found, in fact, that once we look at the actual performance, we're very, very close to the standards we agreed to with industry. It does vary from program to program.

There are significant complexities. For example, when we find out about adverse drug reactions, sometimes after a product is approved in the U.S., there is subsequent information that becomes available that we have to take into account. That does mean a little bit of additional time. It's a very complex answer.

The issue is also in terms of how the industry files. The industry files later in Canada. The public may think that a product is in the market in the U.S., so why is it not yet in the market in Canada? In fact, the submission was filed much later.

There are a number of elements. Again, I'm just touching on the general elements to explain some of the differences. If we want to get more into the details, I'm going to have to ask Dr. Peterson to come and help.

º (1640)

The Chair: Dr. King.

Dr. Janet King: I want to add a couple of things.

I want to note that we are not meeting our performance commitments on all our processes. On some, yes. For example, on our clinical trial application review, our priority review policy, and our notice of compliance with conditions, we do meet those timelines, so on some very priority issues we are prioritizing our resources and our attention and working to meet those timelines.

Mr. Bryon Wilfert: Can you elaborate? You mentioned that you have a backlog and that once this backlog is out of the way we would be, and according to the former minister we want to be, up against internationally competitive performance targets. That was in 1995. When you were getting these backlogs, what signals were sent to say that you had a backlog? What kinds of resources were you looking for, and how were they not addressed, obviously? Why weren't they addressed? You were still collecting the fees for service that you weren't delivering.

Dr. Janet King: Through a variety of processes, resources were accessed for specific activities within the approval process, so some resources were received. Through that time also, though, I note that we faced a number of other challenges along the way, those that I mentioned previously, in terms of the increasing complexity and the increasing numbers of the reviews, the submissions, we're receiving.

Mr. Bryon Wilfert: In your assessment of this particular bill, do you believe that a “one size fits all” policy is in fact attainable and that it can be implemented? In terms of the Treasury Board being given the mandate to in fact make sure this is done, what would be the difficulty with that? What kind of hammer is it that we are really trying to assess? We're trying to assess a hammer, whereas if you say it's 100 days, and it's 200 days.... And I go back to the finance department and our decision, which is now being implemented by the Treasury Board, to say that if you don't reallocate $1 billion across the board, we have an internal tax.

In other words, you deliver or else. I'm trying to figure out what the “or else” is here. And I'm glad to note that in some areas you say you're hitting your performance standards. I'm not necessarily questioning just the health department, because I continue to hear from constituents about many areas where there doesn't seem to be rhyme or reason. Could you elaborate on that?

Mr. Patrick Borbey: I have just a couple of comments on resource issues.

Again, when we originally established cost recovery, it was a resource-neutral process. For the appropriations associated with the sum, which is about $31 million or $32 million in terms of the revenue target for TPD, those resources were taken out of our appropriation, so I guess the expectations created with the industry and with stakeholders perhaps were unreasonable for us to meet, given the fact we didn't have any additional resources to invest in improving processes, speeding up, and hiring more staff.

Now, remember that revenues have been basically frozen. Fees have been basically frozen since the introduction of the fees in 1996. I compare the situation with what we've looked at in the U.S. FDA, for example. We had a very interesting presentation by them a few months ago. They have had a number of increases to their revenues, to their fees, and all of those increases have been put back into the program. So for the U.S. FDA, along with it being much larger and much more capable of handling review than we are in terms of the size of that administration, new resources have been found in the organization in addition, and in fact in areas where we have not even started charging. For example, the most recent amendment did provide for an increase in fees to fund post-market surveillance activities, which is something we've had to undertake using parliamentary or reallocated funds within the department. So there is certainly a challenge.

Mr. Bryon Wilfert: On the oversight role, do you think a parliamentary committee, which is where I have great difficulties at the moment...? In terms of an oversight, is it that the Treasury Board is provided with the proper tools and the message is delivered coherently across the board with appropriate updates to whomever--we have to figure out who that is--or is it through a stand-alone committee that would review? Which is it? I have some difficulties, particularly after I heard Mr. Gray the other day raising some issues that I thought were quite salient.

You all say you agree with the principle. Every time somebody tells me they agree with the principle of a bill I get nervous, because that means you obviously have concerns. You agree with the intent, but where's the hammer? Do you think the Treasury Board, if empowered properly...? What Treasury Board has proposed doesn't go to the extent that it should, to my way of thinking, if we're really serious. I mean, if we're not really serious, let's say we're not serious and continue to bilk people for money for which we're not delivering a service. If we are, and if you need resources, then do so, but I'd like to know what it is we are looking for.

º (1645)

The Vice-Chair (Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)): Mr. Borbey, please.

Mr. Patrick Borbey: The concern about the so-called hammer is if it's designed in such an arbitrary way that it leads people in our organizations to expedite decisions in a way that's not in the interest of the health and safety of Canadians. That is certainly something we're quite concerned about, and it might cause some of our employees to behave in a completely different way from the way they would behave if they were really worried first about the bottom line, which is the health and safety of Canadians.

The Vice-Chair (Mr. Nick Discepola): Thank you.

Mr. Cullen, please, ten minutes.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chair.

Thanks to all the presenters.

I find this interesting. While I would agree that the independent dispute resolution process within my bill needs some fleshing out, I am reminded of how many times government has come to this committee or any committee with bills, and it's, “Well, in terms of all the details, members, these details are worked out through regulation, and it's not really meant to be in the bill”.

I would agree with you that it needs to be thought out, clearly, and my own view is that the independent mechanism wouldn't be binding; it would be a recommending body. Yes, there are many things to be thought through, but I'm not sure that the place would be in the bill.

Just as a matter of interest, there have been a lot of questions about the volume of fees, so we went back to the special committee of council that gazettes all the new user fees. I'm told through the Privy Council Office and the Treasury Board Secretariat that 70% of the fees go through this special committee of council and they're gazetted. In the last year and a half we counted eighteen, so if you extrapolate that to a full population, that's maybe seventeen in a year.

It's interesting, too, that in the U.S. Congress, as was noted by Mr. Stewart, somehow U.S. congressmen and women seem to find the time to get engaged in this, and, just coincidentally, that system seems to be working. So where I'm coming from is that we wouldn't be here with this bill if the government had put in a policy and implemented the policy. I'm equally as frustrated as you are with this whole process.

I would like to come back to the question of the issue you raised, Mr. Borbey. It also was raised by the Treasury Board Secretariat. That is, there is a certain discomfort with the idea of defining public and private benefit. I understand that. It's not an easy task. For example, if you approve a drug there's a public benefit, because Canadians will be safer as a result, and the same with a new chemical. With the exception of the chemicals and the new substance notification policy Mr. Lachance spoke about, where you could debate and there's perhaps no private benefit, what the Treasury Board Secretariat and you are implying, I think, is that because it's difficult, we have to back away from it. Perhaps you're not saying that, but it seems to me that the whole essence of a user fee is that it confers a private benefit. If it doesn't, then surely it's a matter to be covered under general taxation.

What exactly are you saying, sir? Are you saying that because it's so difficult to define public and private benefit we just give up on it?

Mr. Patrick Borbey: Not necessarily. The concept is one that's been around for a long time. I remember in a previous life when I was at Parks Canada where we had some very clear applications. If somebody is renting a site for a tent, that is certainly a private benefit; nobody else can pitch their tent there. There were other areas where it was more nebulous and you had to find a proxy.

Again, I think that through the consultative process and through working with the industry--and I guess we acknowledge also that the costing has to be revised and we have to make sure that our costing approach is as relevant as it can be--you can arrive at some form of a good approximation of private-public benefit.

In our case, for example, as I said, between 20% and 60% of costs are recovered. This does acknowledge the fact that not all of those benefits are private, that there is a role for government appropriations.

º (1650)

Mr. Roy Cullen: So yes, it is difficult and it is debatable, and it's on that very point that Mr. Lachance said, with respect to new substance notification, that even though the new Treasury Board policy provides a little more structure to the dispute resolution process, it's still all internal.

I think what I heard you say, Mr. Lachance, was that your frustration is that you've had nowhere to go, and the value of involving parliamentarians is that we at this committee would have had the debate on new substance notification as to whether or not it confers a private benefit. Isn't that what you're saying?

Mr. Claude André Lachance: Yes, there are two points, Mr. Cullen. The first point is that even Environment Canada agrees there is no private benefit in our case. So as a result of that, they invented a concept called “group benefit”, which is not in the Treasury Board policy. The interesting thing is that the Treasury Board didn't challenge that, which goes back to the accountability and a lack of discipline, if I can put it that way, in implementation.

I'm not saying we're right. We think we're right, but there should be a place where it should be adjudicated, because this is pretty important in terms of the impact of the implementation of policy on other policy objectives of the government, including innovation and economic development and whatever.

The real point here is that it's more than dispute resolution. There needs to be an appeal process, a place where you can go and basically have it aired again, in another forum. The department is not the place where you can have this, despite the fact that you may have all the transparency and all the consultation.

By the way, we've had a lot of consultation on the NSN with Environment Canada; I'm not blaming the consultation part. But ultimately they made a decision we disagree with. The question is, should it be final? Basically we say that ministerial discretion is the final authority. Or in a case like this, where, depending on what the outcome is, it might end up being taxation in disguise, should it go back to the place where this should be debated? We say Parliament would be a good place for that.

Now, if the committee in its own wisdom judges that it should be an independent panel, fine, but there should be a place where you can debate it again and it's resolved.

Mr. Roy Cullen: It's conceivable that the debate could be held at a committee of the House of Commons.

Mr. Claude André Lachance: Absolutely.

Mr. Roy Cullen: I know that many parliamentarians are saying they don't want to get involved in that kind of level of detail, but those are sort of debatable--

Mr. Claude André Lachance: By the way, I just want to make one additional point in terms of this ministerial discretion, which is a bit of a fig leaf, if I can put it in those terms. There's already a process through the regulatory instruments committee, where Parliament basically adjudicates whether a department has or does not have the authority to do certain things. What your bill proposes, Mr. Cullen, although it's different in scope, is not a precedent from the point of view of bringing some discipline to ministerial discretion.

Mr. Roy Cullen: You're right.

Mr. Stewart, let's assume for a moment that this is a congressional committee. You've heard the Health Canada officials say that to some extent when we look at performance times we're comparing apples with oranges. How would you respond to that?

Mr. John Stewart: I guess I would respond by saying that the study you saw me present there was done by an independent third party who went out of his way to ensure that we were comparing apples with apples. Those are from the time the submissions are filed in the various countries until they are approved in the various countries. They are not affected in any way by a differential in timing of those submissions. They began along that line.

Mr. Borbey did say that industry tends to file later in Canada. I think the differences there are relatively small. I think I've heard the patient group say it perhaps the most effectively, when they were very, very interested in seeing some drugs that were available in the United States and other countries being made available here for their use. They made the point that, while complexity and issues were raised, they said that these were the exact same submissions that were filed and the FDA reviewed them in 365 days and approved them, that the MCA reviewed them in 450 days and approved them, so why is it taking you 650 days to review them and approve them, and made the point they were fundamentally sound along that line.

I guess I would also pick up on a comment that perhaps has been said a lot here, that the focus of oversight that congress bought through PDUFA, where it basically said “Five years into this we're going to look at your performance, and if your performance has not improved, we're not going to re-authorize these fees”. So it wasn't a 25% reduction, it was 100% reduction.

I would also say that industry is not interested in saving money fundamentally on the fees. We want to pay the full fee. We just want to have the performance standard met.

I also want to emphasize that we are not looking for anything other than a full and complete and totally safe drug launched on the Canadian market. It has been demonstrated time and again that that process, on average, takes approximately 180 days to do that, right? The reason why it tends to take longer is that the submissions wait before being opened or are between the various stages of the review process. This is why, for our priority submissions, they can meet the targets. They open them right away, get to it, finish it and make a decision. So what we are looking for is all submissions to be treated with the same level of respect.

Now, on the backlog issue. I've been in this business too long, way too long, many would say. There was a committee report. The Stein committee in 1986 reported that, fundamentally, the problem here was the big backlog of submissions and that it took about a year before a new submission was opened because of the backlog. Well, we're hearing the same thing today, getting close to 20 years later.

We believe that once again it is really the function of oversight that this bill, more than anything else that we have seen, would bring and would make a difference and would operationalize the performance into the day-to-day activities of Health Canada's review of the process.

º (1655)

The Chair: Thank you. You're over time, Mr. Cullen.

Mr. Valeri, please.

Mr. Tony Valeri (Stoney Creek, Lib.): I'd be interested in hearing a rebuttal. Is that absolutely correct?

The Chair: Mr. Borbey or Ms. King.

Mr. Patrick Borbey: Whether the oversight role would make a difference?

Mr. Tony Valeri: No. Mr. Stewart made the comment that the issue of backlog is one that's been in existence for 20 years, and that in order to get performance where it should be there needs to be a lot more oversight taking place by Parliament. Would you agree with that statement?

Mr. Patrick Borbey: I don't know how oversight leads to the reduction of a backlog. The reduction of the backlog we are addressing through additional resources that have been provided by the government in the recent budget; by the measures that Janet has described, in terms of improving the performance and approach from a project management perspective; and by looking at harmonization and using international data. It's true that we can make better use of international data from other jurisdictions.

Those are some of the key elements we're putting together in a strategy that will deal with the backlog and will bring us to the performance level that's expected by industry and by all Canadians. We are not proposing to go forward with any increase in fees until such time as we have that strategy well in place and starting to produce results.

Mr. Tony Valeri: So with the strategy and with the additional resources you feel comfortable that you'll be able to meet the backlog demand that exists?

Mr. Patrick Borbey: That is what the minister has asked us to do, and we will strive to achieve that.

Mr. Tony Valeri: No, that's what she's asked you to do, but are you preparing a strategy, with the resources you have, that suggests you will meet the performance backlog demand?

Dr. Janet King: If I may, I think there are two pieces to this that we need to be clear about. There's dealing with the backlog, something we're living and working with, so whittling that down and bringing it back down to zero so that we're effectively working with submissions as they come in. The second part is to design a sustainable evaluation process. So there's the backlog issue that may require special attention, and we're working on that to bring that down.

At the same time, we are re-engineering our processes and reinvesting so that we are going through the backlog and coming out of it, not just to deal with the backlog, but to build a truly sustainable process that does meet our performance commitments.

Mr. Tony Valeri: Okay. I see our discussion today and certainly the discussion that we've been having in this committee as breaking down and focusing on four different aspects: the setting of the fee itself, and the bill and Treasury Board have certainly made some recommendations as to how to go about setting that fee; the consultation process; the involvement of stakeholders and that sort of commitment; the idea that through Treasury Board it had suggested that any new fee would be required to be included in the departmental plans and priorities so it would be going in front of committees and committees could scrutinize that.

The oversight coming through the performance reviews, the departmental performance reviews--there would be a section in those reports that would indicate how you are performing and what percentage of targets you're actually hitting.

Although Treasury Board does not feel very comfortable with the dispute resolution mechanism, I think we need to have some type of dispute resolution mechanism in place and then the hammer that we often talk about. Certainly we've talked about a number of different hammers, and one that seems to be resonating somewhat with some people is the performance-based fee. Australia has used it. Others have used it. The U.S. has used it.

Do we need to proceed with those four initiatives within legislation, or can we do it in policy? I'm really interested in your take on that.

Mr. Lachance.

» (1700)

Mr. Claude André Lachance: Let me take your question from the point of view of the dispute resolution machinery.

Clearly, we've had dispute resolution machineries within the department under the current policy. As far as we are concerned, for the case that we've brought to the attention of the committee, it does not work. If it does not work, then that begs the question: what is it that may work? It cannot be another ministerial discretion approach where the department basically educates according to its own mandate. Ultimately, this is where you're going to bump into conflicting policy objectives. So it has to be brought outside the department.

Now, where could that be? Well, there are various options. If Treasury Board had not abdicated--I'm using a strong word--any kind of role in ensuring proper implementation of policy, then we would have had more discipline in the approach. I don't see this in Treasury Board's proposed draft revamped policy, but if it were going to actually enforce the policy, that might be another venue where that dispute could be resolved. Parliament is certainly a possibility as it is envisioned in Mr. Cullen's bill.

The third possibility would be, of course, the possibility to trigger a third-party review, advisory or binding. The details remain to be discussed, but there's no way, in my mind, under the current policy or under the proposed changes to the policy, that there would be a genuine dispute resolution system until and unless it is brought outside the department.

Mr. Tony Valeri: I agree with what you've said. What I'm interested in is whether the witnesses believe that what is outlined in Bill C-212 in terms of the oversight and the scrutiny can be accomplished in policy or whether you feel we need a piece of legislation in order to do what you're suggesting we should do.

Mr. Bruce Deacon: I guess the comment I would make is that I understand the proposals that are being developed by the Treasury Board Secretariat. It is basically saying that it would put in place rigour with regard to performance measurement and reporting, and that that reporting would go into a systematized, regular type of process through the reports on plans and priorities and also in terms of the departmental performance reports.

The question, then, is if that data is available and it does go on a regular basis to the appropriate standing committees, does that then enable those standing committees to effectively undertake the review they would be doing? Can they then make a determination and in fact impact on whether or not results are being achieved? To the degree that this rigour is put in place and that data is available, my view would be that goes a very long way in enabling committees to actually perform that function.

I guess the question then comes down, if you're talking in terms of sanctions or a resulting hammer, to a policy point of view. In terms of your question, the Treasury Board does often impose specific conditions with regard to performance: freezing of money, withholding of additional budgets, etc. In a similar vein, I guess the question would be whether the standing committees, through the existing process, would have or would choose to use tools available to them again with regard to making recommendations in terms of approval of estimates. If that's the timing at which it's done, my understanding--and I'm not an expert in this field--is that standing committees would have the ability. If, upon a review, they determined that something was not the way they wanted it, they could in fact recommend to Parliament redress, etc.

That's a different approach. But I guess I'm commenting on your question of could one do that through the policy route. My understanding is that is the direction that Treasury Board is recommending. It would basically be within the context of the existing structure.

» (1705)

The Chair: Mr. Stewart and then Mr. Borbey.

Mr. John Stewart: I would certainly speak, Mr. Valeri, in favour of having this in legislation based on the fact that within policy, performance standards have been there for a long time. Prior to there being performance standards, there actually was in the regulations a specific period for completion of the review.

Similarly, in listening to the discussions around the setting of fees here and Mr. Lachance's comment that even where it seemed to be outside of Treasury Board policy there was no individual, unique benefit, a fairly substantial fee was set. It was largely run by a group of individuals who, while well-intentioned, were fundamentally looking at increasing some revenues along that line. I think when we look where it has been effective, it's been put in legislation, or at least the oversight of the elected officials who serve all the constituents in that regard.

The Chair: Mr. Borbey.

Mr. Patrick Borbey: Basically, we're prepared to work under either scenario--work with the policy and, where the policy is still under review, to make sure the policy does meet the needs of stakeholders and the concerns of parliamentarians, or if there's a process by which there would be more oversight role played, let's say, by the Standing Committee on Health. We're prepared to work with either system.

I would welcome, though, some clarification in that process, if we end up going down that road, on how we work with a special committee of council in terms of its regulatory process and harmonize that with the role of the committee to make sure that's very clear and we don't end up with some duplication of effort and some confusion of roles and responsibilities. That's basically what I'd be looking for in terms of trying to see how the policy and legislative oversight kind of work together.

The Chair: Mr. Valeri.

Mr. Tony Valeri: Well, having said that, one would be the role you're playing with respect to cabinet and the other would be the oversight provided by Parliament. I mean, Parliament would certainly have a right to bring you forward at any committee and go through whatever process it deemed to be effective in providing the oversight. I'm not sure you're going to need much more clarity than that, except to know that Parliament could have that ability, whether it's in legislation or policy. My question is--and you've given me the answer, but I just want to be clear--are you saying that you don't care whether it's policy or legislation, that you'd be prepared to work with whatever process we end up with?

Mr. Patrick Borbey: Sure.

The Chair: Mr. Lachance had one short comment, because we're over time.

Mr. Claude André Lachance: At the end of the day, it all depends on how the committee wants to operate. If it operates in an oversight role, I believe the rules allow a committee to operate in that context either through the estimates or what not, and certainly some of the Treasury Board's proposed changes will facilitate that where it will improve transparency and information and all of that.

I think the contention is that it is not enough. It is not enough to operate in an oversight role. It doesn't address the dispute resolution issue. We have raised the issue of the hammer, and, in my mind, the oversight role provides a pretty soft hammer. Ultimately, what we want is a policy that works. I think we all agree on that. There's been no challenge to the policy of the cost-recovery concept, but we all want one that works. Clearly, the policy approach up to this point has not worked.

The Chair: Okay. I want to move to our last two questioners to get the time in.

Mr. Discepola, followed by Mr. Tirabassi. Then we'll be at the end of our time.

Mr. Nick Discepola: Thank you, Chair.

For Mr. Borbey--actually it was Dr. King's presentation--you mentioned that you've been reviewing the performance targets for over a decade already. You've been trying to work on improving them. You're working to really improve them over the next few years. I think there's a certain amount of skepticism as to whether you're going to reach those targets, from the current 645 days to what I believe was agreed upon in the review process, 355 days. Why should the industry believe you?

» (1710)

The Chair: Dr. King.

Dr. Janet King: I think we've demonstrated, as I think my colleagues here have said, a good intention to meet our performance targets. We have to identify the right tools to be able to do that. We have right now a very aggressive strategy, design and implementation in part right now built on what we now have identified as success factors from similar organizations around the world.

So we're looking at it very comprehensively, more comprehensively than we have previously. We've identified around the world what success factors would look like, and we're moving toward using those success factors in the design of our program. We've received some investment to allow us over the next couple of years to design those success factors and design the program that will bring us to be able to deliver on the performance.

Mr. Nick Discepola: Few meaning two, three, not five, seven, ten, right? Am I correct?

Dr. Janet King: A few would be not five, ten, seven. I mean five, ten.

Mr. Nick Discepola: Okay. For Mr. Stewart, if the drug approval times were within the generally accepted 355 days, do you see the need for this bill still?

Mr. John Stewart: If the drug approval times were in the.... Yes, I would.

Mr. Nick Discepola: Let me just ask another question. You said in your opening remarks that you see that this bill will improve enforcement of performance standards. Can you elaborate, please, on how this bill will do it?

Mr. John Stewart: Absolutely.

I think that more than anything else, this bill will make it clear to the individuals who are charged on a day-to-day or month-to-month basis with managing the activities of the therapeutic product directorate, it will make it first and foremost in their minds that one of their key deliverables must be the timely review of new drug submissions. That's going to benefit Canadian patients as well as benefit the industry and Canada indirectly through greater investment.

I picked up on one of the things Dr. King said. It's very true, there are conflicting priorities within the Department of Health and within the TPD. There are things that come along that those very capable scientists, well-intentioned scientists, are asked to do, which are not the review and approval of drug submissions.

I believe that if Parliament were to say directly to them, particularly through this bill and through ongoing oversight, that their primary function or one of their very key functions was to meet this deliverable in terms of review and approval of drug submissions, we would not see the diminution of activity toward those drug submissions that has unfortunately happened from time to time, even when everybody recognizes as an ongoing basis that this is important to do.

We've actually seen performance be better at times in the past than it is now. That's why I would say to you, that's my short answer. My original answer was yes. The rationale is even though we've gotten close before, we've deteriorated again. So if it were 355, I would say to Mr. Cullen and to everyone else, Parliament should move through, and we strongly endorse Bill C-212.

Mr. Nick Discepola: I'll come back to that.

Can part of the backlog for the regulatory approval process be sped up on a permanent basis through additional resources? And what are those resources that you need?

Dr. Janet King: Yes, additional resources would help us tremendously. I think we've described that since the beginning of the cost-recovery regime we have not increased our fees. We started with allocation being removed from our budget. So we do feel ourselves greatly hampered by the funding, the budget envelope we work within.

Yes, it could assist in working with the quick processes to deal with the backlog that is there now--for example, accessing external capacity on a short-term basis to deal with those pieces that are in backlog. It would assist us in designing and working with our international colleagues in the new processes and project management that would allow us to keep it then sustainable.

» (1715)

Mr. Nick Discepola: It's mainly monetary.

Dr. Janet King: It's money, and we have work to do internally.

Mr. Nick Discepola: Do you have any shortages in attracting skilled labour?

Dr. Janet King: Labour is a factor also, yes.

Mr. Nick Discepola: Mr. Stewart, in an earlier question—I think it was Mr. Jaffer's question—you said that in the United States the fees for comparable services were roughly twice what we charged. By the same token, the FDA has roughly twice the number of individuals. If we're talking about performance standards and fee-for-service, you've heard the department say all it needs is more money. If I were the minister, that would be simple. I'd just charge twice as much in fees and be comparable to the United States. If we get the performance down to the required levels, is the industry willing to accept that?

Mr. John Stewart: Were it so simple.

Again, I've been around a long time. Following the Stein review in 1996, substantial additional resources were given to Health Canada in order to bring about elimination of the backlog and a permanent ability for it to be able to meet its performance targets. I might make a point that a submission of backlog is no different from any other submission. It's just that they have been coming in and they haven't moved through.

We did have additional money, and yet there were things missing from the system that prevented those gains from occurring to the extent or from being sustained, even though there were additional funds given. Again I come back, regrettably, to history that says we've tried more money and we've tried shaking the system several different ways. What we have never tried is really putting in serious, high-level parliamentary oversight. I have not heard anything that sounds even close to chances of that being--

Mr. Nick Discepola: Let's look at that oversight then, if you don't believe funding is the only concern. My fear is that if you do bring in parliamentary oversight, if the department is not meeting its performance standards, what's the only recourse Parliament really has? It is to reduce the servicing. If you reduce the servicing, you aggravate the problem, don't you?

Mr. John Stewart: It hasn't happened. That is the issue. If we look at the submissions where they are directly tied, Australia has a 25% penalty if the target is missed. I think the targets were missed twice, and they said that they'd better focus on this, because it did bring that oversight.

In the United States they said it a little bit differently. They said that they were going to review it in five years, and if this extra money wasn't bringing about the needed performance target, it may all disappear. They met almost every one of their targets. They were ramped-up targets. For year one they were going to do 50%, for year two 60%, for year three 70%, and they tracked right along.

The Chair: Mr. Borbey wanted to make a comment.

Mr. Patrick Borbey: I just wanted to make sure that we didn't leave the impression that we think it is only an issue of resources. It's not just an issue of resources. The U.S. FDA, yes, generates twice as much revenue. It also has ten times more staff than we do, yet we have to review a very comparable number of submissions. We can never compete exactly toe-to-toe with the U.S. FDA. We have to work smarter and we have to work in different ways. That's what Dr. King was talking about in terms of changing some of their processes, looking at more harmonization internationally, and using data from other countries and jurisdictions. That's all part of the strategy.

The resources help, but it's not going to be enough to deal with the whole issue, and it's not going to be sustainable in the long term.

Mr. Nick Discepola: I'd like to solicit the opinion of our panellists on the requirement of Mr. Cullen's bill to have this fee-setting structure overseen by parliamentary committees at first. I have a tremendous hang-up with that, because it's tantamount to the board of directors asking their shareholders before any price structure occurs in their product offerings.

It seems to me, from a parliamentarian's point of view, the only negative aspect of it is that while I would certainly like to see the transparency and accountability aspect of it, at the end of the day, if I were the member of Parliament where there's a major airport, I'm wondering whether I wouldn't have had a tremendous lobbying effort by the airport authorities before introducing the airport service tax, for example--or if I had major national parks, to use your example, whether I wouldn't be lobbied by a constituency to make sure that we didn't increase park fees, etc.

I don't want that added burden, as a parliamentarian. I think the bureaucracy and the public servants, etc., are best placed to see that, and it seems to me that is a level of micromanaging that I don't think we were elected to do. Besides that, I believe you introduce a huge possibility of political posturing at crucial times, like we had with the introduction of the airport security tax.

I'd just like your feedback on that. I think Mr. Deacon will answer.

» (1720)

The Chair: Mr. Deacon, go ahead.

Mr. Bruce Deacon: My sense is that this is not dissimilar to the way the Auditor General often approaches things. In terms of auditing practices, you can actually audit individual transactions, which can be onerous, very detailed and at a micro level. You can also audit process. And if you can correlate between the process and the transactions and you audit on a regular basis the overall process, then you can have a reasonable assurance that the individual transactions will in fact be in order.

I have some sympathy for the points you are making; oversight becomes really important. My sense is that if it's kept at a higher level in terms of the process, that may in fact ensure not only greater efficiency in the oversight function, but also the actual transactions would be okay. Now, there may be some fees where that oversight could be direct, but in many of them they are at a very detailed level. They require endless or very extensive consultation, discussion, and it is worked through in many ways and a consensus is arrived at.

The experience in agriculture is that the actual fee-setting process tends to be very extensive in terms of consultation, and it takes into account many factors. It's done over long periods of time and it often involves federal-provincial agreements, which add to the complexity as well.

I think it would be quite difficult in some cases for parliamentary committees to get into that level of detail, but the oversight on the process to ensure that those discussions, consultations, etc., are carried out in a rigorous way may in fact get you to where you want to be with a less onerous process. That's still consistent or could be consistent with the bill as proposed, but it's a question of level and it's a question of detail.

The Chair: Thank you very much.

We'll go to the final round with Mr. Tirabassi.

Mr. Tony Tirabassi (Niagara Centre, Lib.): Thank you, Madam Chair.

I'd like to welcome all the witnesses here today.

My first question is for Mr. Borbey. On page six of your submission you talk about the recent appearance before the committee of the TBS officials. They of course reported on their DPI and RPP under their new proposed draft policy. Now, I've heard several times today and from other departments as well that much of the transparency and the consultation from the stakeholders is already in place. Yet we have a draft policy here that I believe is a further enhancement to that.

You did make a statement that you cannot forecast in detail what specific impacts this will have for Health Canada, this new policy. But you did mention in one of the answers to one of the questions that you had a chance to look at the particular draft policy in detail.

I'm wondering if we enhance the accountability, the transparency, the consultation with the stakeholders, if that increased interplay will not drive the process to be quicker, which is really what it comes down to when I'm hearing enhanced performance: it's to shorten the amount of time that it takes to get the product through the process and to market.

Now, you can't drive the process if you don't have the resources. You also did mention that additional resources were allotted in the recent budget. So could that, along with the enhancements in the draft policy--and I want your opinion on that--not drive the process to be more efficient and quicker in and of itself?

Mr. Patrick Borbey: First of all, my comment with respect to having some difficulty being able to predict the impact was with respect to the bill. I've alluded to some of the questions I had, and where we would have to work on some of the impacts.

In terms of the policy, you're right, we have been working with the Treasury Board Secretariat, or at least providing feedback and advice as to how we feel about the enhancements to the policy. Generally, I'm very supportive of those changes in the policy.

There are some significant changes there that we will have to also make sure we understand, and we're working through some of those details. Only recently did some clarifications come out with respect to reporting, for example, because there was a general clause about reporting, which was to be defined later.

The “defined later” now appears to be using the RPP and the DPR, and we support using that mechanism. In fact we're involved in some consultations on specifically those aspects, and I think that--going back to the comment made by Bruce--will allow the committees or Parliament to be able to better understand what's going on in departments, what are the plans and what is the performance against those plans, and that will help, through the normal committee work, raise some questions about performance and issues like that.

I'm having a bit of a struggle, though, to be able to make that direct link between changes in policy and improved performance in a very complex and specific area called the therapeutics products directorate. As I've said to you before, I think that changes in performance are going to be the result of a pre-systemic and comprehensive attack on all of the aspects of the backlog of our processes, and that's going to take some time, but we're committed to make progress toward it.

» (1725)

Mr. Tony Tirabassi: My last question is for Mr. Stewart. At one of our previous meetings we had as a witness the former Deputy Prime Minister and House leader, the Honourable Mr. Gray. He spoke eloquently of some of the challenges that could be faced in the House because this has more of a direct parliamentary kind of involvement. I refer specifically to page 3 of the bill. Clause 4 states: “Every proposal tabled under subsection (2) is deemed referred to the committee”. And then it proceeds to talk about reviewing, reporting, and a resolution through the House of Commons and what happens if there's no report and so on. I do not wish to repeat all the concerns expressed by Mr. Gray, and I concur with many of them. He has much more experience and was able to go into a lot more detail.

Has your organization had an opportunity to take a look at the impact this could have as it relates to improving performance? The way I understand improving performance, and you have been consistent with many of the other stakeholder witnesses, means shortening the time to get through the process so that you can get whatever it is that you represent--that is, pharmaceuticals to market quicker.

Has Rx&D had an opportunity to study the impact of that particular section of the bill and what it could do potentially?

Mr. John Stewart: I personally, in Rx&D, have not studied Mr. Gray's comments thoroughly, although I did read them in the blues the other day. My interpretation is that he was referring to the potential complexity that could come to the parliamentary committee with respect to the workload level that could be brought to it under the provisions of this bill. Although I've never been a parliamentarian and participated in the committee process, other than to testify to a few of them, I would have to support Mr. Lachance's perspective. I think it would be a decision of the committee on how it chose to approach this.

It seemed to me that the number of user fee issues that Mr. Cullen raised was not an unmanageable number. If the approach the committee were to follow would be to ensure that a particular process is followed through like an adequate activity-based costing, then indeed the workload the committee faced could indeed be manageable. It is something we will do, at any rate. We will study those comments more thoroughly and see if there's something we can add to this.

I think the answer to that, from my perspective and what I read from Mr. Gray--and we did speak with him in years gone by when he was chair of SCC--would be how the committee chose to manage this process.

Mr. Tony Tirabassi: Okay.

The Chair: On behalf of committee members, I want to thank you.

I also want to let committee members know that, as of right now, the only amendments I have received are the ones that were originally tabled by Mr. Cullen. We will be doing clause-by-clause. Please try to get any other amendments in by tomorrow night so that we can have some time to look at them.

Mr. Murphy.

Mr. Shawn Murphy (Hillsborough, Lib.): Madam Chair, I was wondering if I could ask you to inquire with the clerk whether or not we could get information as to the number of these fees, because I really haven't got any information. I've heard that we'd be looking at 12 to 15 a year. Somebody else says that there are 3,500 fees out there. I would think that every three years these fees would be increased, decreased, or reviewed. I would like some information from Treasury Board or government as to the number of fees that are out there.

» (1730)

The Chair: It's usually not the clerk's job--the researcher, perhaps.

Mr. Shawn Murphy: I could ask Treasury Board. I don't know whose job it is, but I think it's important. I've never heard--

The Chair: They would have to get that from Treasury Board. You have the parliamentary secretary from Treasury Board.

Before I go to that, I have to get a few things in before the bell and then I'll go to Mr. Cullen again.

Tomorrow we're having a very--and this has nothing to do with this bill, but just housekeeping detail--short steering committee meeting to look at the questions we're going to put out there for this year's pre-budget consultation. Because I know everybody is very busy with time and other committees, I haven't called a full committee meeting. My intention is for the clerk to send out the draft questions to your offices tonight so you can look at them. Our steering committee members will meet tomorrow for half an hour to go over them.

Before we go into clause-by-clause, I would ask for consensus, and that way it avoids bringing this committee together at another time for just that purpose.

With that said, Mr. Cullen, did you have a question?

Mr. Roy Cullen: Madam Chair, if we ask the research staff or the parliamentary secretary to obtain that information, I think it's important that we ask the right question. We know roughly how many programs have user fees. What we did--and I don't know if you were here earlier, Shawn--is go through the Canada Gazette for the last year and a half. We found 18 user fees that were gazetted. That represents 70%, I am told by the PCO and the Treasury Board Secretariat. If you extrapolate that, that's 17 for the year.

I think we need to ask the right question. How many new user fees, or user fee increases, come through every year? I think that is the issue.

The Chair: Just to be fair on that, Treasury Board did have some testimony about what the levels might be. I know I was very surprised when I heard those numbers. We all know the dollar value is about $4 billion annually, at present, but it could change over time.

Perhaps, Mr. Tirabassi, if you have anything from Treasury Board that you wish to have circulated, you can get it to the clerk. If our researchers find out anything different, they can also get it to the clerk to circulate. We are not having any more hearings.

We are going to go to clause-by-clause at 11 o'clock on Thursday. I'll take a few seconds at the beginning of that meeting to get consensus so we can make sure our budget invitations go out, just in case we're not here next week.

Thank you very much. Thank you for all of your testimony, and for sharing your answers with us.

The meeting is adjourned.