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37th PARLIAMENT, 2nd SESSION

Standing Committee on Health

EVIDENCE

CONTENTS

Tuesday, October 28, 2003

0805

The Chair (Ms. Bonnie Brown (Oakville, Lib.))

Mrs. Sylvie Boulanger (First Vice-President, Fédération des infirmières et infirmiers du Québec)

0810

0815

The Chair

Mr. Jean-Yves Julien (President, Ordre des pharmaciens du Québec)

0820

0825

The Chair

Mr. Paul Saba (President, Coalition of Physicians for Social Justice)

0830

0835

The Chair

Mr. Rob Merrifield (Yellowhead, Canadian Alliance)

Mr. Jean-Yves Julien

Mr. Rob Merrifield

Mr. Jean-Yves Julien

Mr. Paul Saba

Mr. Rob Merrifield

0840

Mrs. Sylvie Boulanger

The Chair

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ)

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

0845

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Jean-Yves Julien

Mr. Réal Ménard

Mr. Paul Saba

Mr. Réal Ménard

The Chair

Ms. Hélène Scherrer (Louis-Hébert, Lib.)

Mr. Réal Ménard

Ms. Hélène Scherrer

0850

Mr. Jean-Yves Julien

Ms. Hélène Scherrer

Mr. Jean-Yves Julien

Ms. Hélène Scherrer

Mr. Jean-Yves Julien

Ms. Hélène Scherrer

Mr. Jean-Yves Julien

Mr. Marc Parent (Administrator, Ordre des pharmaciens du Québec)

0855

Mr. Paul Saba

The Chair

Mr. Svend Robinson (Burnaby—Douglas, NDP)

Mr. Jean-Yves Julien

Mr. Svend Robinson

Mr. Jean-Yves Julien

Mr. Svend Robinson

0900

Mrs. Sylvie Boulanger

The Chair

Mr. Gilbert Barrette (Témiscamingue, Lib.)

Mr. Paul Saba

Mr. Gilbert Barrette

Mr. Paul Saba

The Chair

0905

The Vice-Chair (Mr. Réal Ménard)

Ms. France Latreille (Acting Coordinator, Union des consommateurs)

0910

Mr. Charles Tanguay

0915

The Vice-Chair (Mr. Réal Ménard)

Mr. Charles Tanguay

The Vice-Chair (Mr. Réal Ménard)

Mrs. Martha Paynter (Research Assistant , Atlantic Centre of Excellence for Women's Health)

The Vice-Chair (Mr. Réal Ménard)

Mrs. Martha Paynter

0920

The Vice-Chair (Mr. Réal Ménard)

Mr. Luc Gagnon (Executive Director, Committee of People Living with HIV of Quebec)

0925

The Vice-Chair (Mr. Réal Ménard)

Mr. Rob Merrifield

Mrs. Martha Paynter

Mr. Rob Merrifield

Mrs. Martha Paynter

0930

Mr. Rob Merrifield

Mr. José Sousa

Mrs. Martha Paynter

Mr. Rob Merrifield

Mrs. Martha Paynter

Mr. Rob Merrifield

Mrs. Martha Paynter

Mr. Rob Merrifield

Mr. José Sousa

The Chair

Mr. Rob Merrifield

Mrs. Martha Paynter

Mr. Rob Merrifield

The Chair

Mr. Réal Ménard

0935

Mr. Réal Ménard

Mr. Marc Lapierre (President, Committee of People Living with HIV of Quebec)

Mr. Réal Ménard

Mr. José Sousa

Mr. Réal Ménard

Mr. José Sousa

Mr. Réal Ménard

Mr. José Sousa

0940

Mr. Réal Ménard

Mr. José Sousa

Mr. Réal Ménard

The Chair

Ms. Hélène Scherrer

Mrs. Thérèse Richer (President, Union des consommateurs)

Mr. Charles Tanguay

Ms. Hélène Scherrer

Mr. Charles Tanguay

Ms. Hélène Scherrer

0945

Mr. Charles Tanguay

Mr. José Sousa

The Chair

Mr. Charles Tanguay

The Chair

Mr. Svend Robinson

Mr. Luc Gagnon

Mr. Svend Robinson

Mr. Luc Gagnon

Mr. Svend Robinson

M. Marc Lapierre

Mr. Svend Robinson

Mr. Marc Lapierre

Mr. Svend Robinson

Mr. Luc Gagnon

Mr. Svend Robinson

0950

Mr. José Sousa

Mr. Svend Robinson

Mr. José Sousa

Mr. Svend Robinson

Mr. Luc Gagnon

Mr. Svend Robinson

Mr. Luc Gagnon

Mr. Svend Robinson

Mr. Gilbert Barrette

Mr. Charles Tanguay

Mr. Gilbert Barrette

Mr. Charles Tanguay

Mr. Gilbert Barrette

Mr. Charles Tanguay

Mr. Gilbert Barrette

Mrs. Martha Paynter

Mr. Gilbert Barrette

Mrs. Martha Paynter

0955

Mr. Gilbert Barrette

Mrs. Martha Paynter

Mrs. Thérèse Richer

Mrs. Martha Paynter

The Chair

1010

The Chair

Mr. Joseph Kerba (Chairman, Kerbapharm Inc.)

1015

1020

Mr. Réal Ménard

Mr. Joseph Kerba

1025

The Chair

Mr. Richard Mayrand (Vice-President, Professional Activities, Le Groupe Jean Coutu (PJC) Inc.)

1030

The Chair

Mr. Michel Leblanc (Vice President Life Sciences, Montreal International)

1035

1045

The Chair

Mr. Marc Hasbani (Researcher, Socio-economic Research Chair, University of Quebec in Montreal)

The Chair

Mr. Marc Hasbani

Mr. Réal Ménard

Mr. Marc Hasbani

Mr. Joseph Kerba

The Chair

Mr. Joseph Kerba

The Chair

Mr. Marc Hasbani

1050

The Chair

Mr. Rob Merrifield

Mr. Marc Hasbani

1055

Mr. Rob Merrifield

Mr. Marc Hasbani

Mr. Rob Merrifield

Mr. Michel Leblanc

Mr. Rob Merrifield

Mr. Michel Leblanc

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Marc Hasbani

1100

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Rob Merrifield

Mr. Joseph Kerba

Mr. Rob Merrifield

Mr. Joseph Kerba

The Chair

Mr. Réal Ménard

1105

Mr. Michel Leblanc

Mr. Réal Ménard

1110

Mr. Richard Mayrand

Mr. Réal Ménard

Mr. Richard Mayrand

Mr. Réal Ménard

Mr. Richard Mayrand

Mr. Réal Ménard

The Chair

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

1115

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

Mr. Michel Leblanc

Mr. Svend Robinson

The Chair

CANADA

Standing Committee on Health

NUMBER 064

l

2nd SESSION

l

37th PARLIAMENT

EVIDENCE

Tuesday, October 28, 2003

[Recorded by Electronic Apparatus]

¾ (0805)

[English]

The Chair (Ms. Bonnie Brown (Oakville, Lib.)): Good morning, ladies and gentlemen. Welcome to the study on prescription drugs being conducted by the Standing Committee on Health. We have some very interesting witnesses this morning.

The first witness is stuck in traffic, so we'll move him down the program.

We'll go now to the federation, with Sylvie Boulanger and Lucie Mercier. The floor is yours.

[Translation]

Mrs. Sylvie Boulanger (First Vice-President, Fédération des infirmières et infirmiers du Québec): Good morning, ladies and gentlemen. Thank you for this invitation to appear before the Committee today to present our recommendations, particularly with respect to the advertising of prescription drugs. We have had other opportunities to present our views to the federal government with respect to health issues, notably before the Romanow Commission, but this meeting marks the first time we are appearing before the Standing Committee on Health.

Over 30 years after the establishment of the public health care system, prescription drugs, an increasingly essential component of that system, are still on the fringes of public plans. After seven years of experience with a mixed drug insurance plan, Quebec has made a subtle shift to a catastrophic illness plan, despite a broad social consensus in favour of a universal public plan.

Pharmaceuticals are first and foremost an industry, a highly successful industry that posts extraordinary rates of return. It benefits from protection for intellectual property and constitutes one of the lines of development of industrial policy. In that capacity, it enjoys significant tax benefits.

Few new drugs put on the market each year represent real innovations. That is probably one of the main reasons that prompts pharmaceutical companies to invest so much in marketing. In fact, marketing expenditures have now overtaken expenditures earmarked for research and development.

Brand name manufacturers have perfected various strategies over the years to maximize their investments. Apart from the longer term for patents and the abolition of the Bolar provision, they overuse the patent process, have their products patented for new uses, and put new products on the market that do not represent real innovations. These firms have managed to generate a better return for their industry than even the banks.

Even though the pharmaceutical industry represents a growth sector in research and development, it spends more money on marketing and administration than on R&D. The pharmaceutical industry might not really be the powerful industrial engine it claims to epitomize.

One thing is certain, however—Canadian and Quebec economic policies have favoured a very rapid increase in drug expenditures, around 15 per cent. The passage of Bill C-91 alone will end up costing over $6 billion over a twenty-year period. The five-year extension of the term for patents would cost between $3.7 billion and $6 billion for an equivalent period.

¾ (0810)

There can no longer be any doubt that rising drug costs must be contained. A review of cost growth factors would be useful for developing options to bring these galloping costs under some kind of control. In that regard, the role of the Patented Medicine Prices Review Board (PMPRB) should be reassessed.

The drug industry is seeking to adopt a new weapon in order to launch an assault on the markets—direct-to-consumer prescription drug advertising. The industry has already succeeded in obtaining the necessary authorizations in New Zealand and the United States, where advertising expenditures reached $2.5 billion U.S. a few years ago. Growth in that area is exponential. In Europe, however, elected representatives have rejected direct-to-consumer advertising.

In Canada, even though direct-to-consumer advertising is prohibited, the pharmaceutical companies have bypassed the ban on several occasions and launched advertising campaigns, particularly for Diane-35®. In the case of Viagra, even though nothing is really said about the product, the ads speak volumes about its benefits.

The rare supporters of direct-to-consumer advertising maintain that it should be authorized because American advertising is already invading the Canadian market. They maintain that it is a means of educating consumers and raising awareness about treatments. However, direct-to-consumer advertising is not justified either scientifically or clinically. It can only contribute to rising drug costs, a plague that urgently needs to be brought under control.

In the first place, we must not forget that drugs are sold by prescription precisely because they are toxic—they are in fact chemicals—and are therefore dangerous to people who don't need them. Extreme vigilance is absolutely essential. Advertising is not intended to inform, nor to convey complete and objective information. It is meant to sell products and maximize profits. Advertising decisions are directly linked to marketing decisions, without regard for population health. Indeed advertising expenditures are directly linked to opportunities to sell product and potential markets. In the United States, many offences have been noted,particularly for unapproved uses.

In addition to not being linked to improved health, less hospitalization or lower mortality rates, advertising campaigns have harmful public health effects. There is reason to doubt the benefits that the general public can derive from such activity, were it to be authorized.

We do have a number of recommendations, which can be found on page 27 of our brief. First of all, we recommend the creation of a public, universal drug insurance plan. As I said at the beginning of our presentation, we have been experimenting with a mixed plan for six years now, the costs of which continue to rise and to which taxpayers are being asked to contribute more. Our brief is quite telling in that regard. Yet there is a broad consensus in Quebec in favour a universal public plan, as a component of the public health and social services system. We also believe that the Government of Canada should provide financial support to the provinces to allow them to develop such a plan.

Our other recommendation concerns a review of our industrial policies. More than in any other area, the industrial policy of the two levels of government strongly conflicts with health policy and fosters unhealthy competition between the two. Drugs are not a commodity and should not be treated as such.

Finally, the entire population, and especially patients, are paying the price. The FIIQ believes that both levels of government must urgently review their industrial policy, restore competition in the industry, redress the balance in favour of the general public, and promote the care aspect of medication.

Our third recommendation is intended to bring drug costs back under control. The cost of prescription drugs is increasing at a rate of 15 per cent a year and seems to be completely out of control.

¾ (0815)

We believe that, while respecting the fact that this is a provincial area of jurisdiction, the federal government has a responsibility to take action. The role and mandate of the Patented Medicine Prices Review Board seems to be too limited and should be reviewed.

Over the past several years, pharmaceutical companies have developed various strategies to bypass the regulators, particularly by constantly putting new products on the market. The federal government must make some tough decisions in order to control this breakneck rise in prices. What is needed is a lowest price or reference price policy.

Finally, there is a need to maintain the prohibition of direct-to-consumer advertising, that being our final recommendation. As I was saying earlier, the purpose of advertising is not to inform, but rather, to sell products. Furthermore, it focuses on certain products with high sales volumes and targets certain segments of the population. In that regard, women are the primary target of advertising campaigns. And that is generally the case with all advertising campaigns.

The FIIQ considers that patient information, if it is required, must not be connected to commercial interests. There must not appear to be a conflict of interest. The information has to be neutral. The role of government organizations and health professionals must be to inform the public about available products. Furthermore, physicians must continue to have full latitude with respect to treatment. The marketing activities of pharmaceutical companies, which now cost more than do research and development, need to be more closely monitored.

That is a very succinct summary of our brief, which you may review at your leisure. Thank you.

[English]

The Chair: Thank you, Madam Boulanger.

We'll now go to the order of pharmacists, Mr. Julien and Mr. Parent.

[Translation]

Mr. Jean-Yves Julien (President, Ordre des pharmaciens du Québec): Thank you, Madam Chair and members of the Committee for inviting us to appear this morning.

My name is Jean-Yves Julien and I am President of the Ordre des pharmaciens du Québec. I am accompanied today by Marc Parent, our Executive Director, who will also be available to answer your questions.

To begin with, I have to say I am rather surprised to see that time is so tight for discussion of such an important subject. I think it is worthy of another session with you; otherwise we will feel as though there is something missing. My view is that economic and scientific impacts associated with this issue are extremely significant.

This morning, in the few minutes available to us, we will again be emphasizing two of the official positions the Ordre has taken in this area, which are connected to items E and F. First, we are asking for a change in the way samples are currently distributed. Samples are part of the costs considered by the federal Board, and they are an important element. Second, the Ordre des pharmaciens du Québec is opposed to all advertising of prescription drugs. That is consistent with the views that have just been expressed.

We are strongly urging the government to play its proper role, which is to make effective, safe medications available in the marketplace as quickly as possible and at the lowest possible cost. We have a review board whose mission it is to do just that. The mandate is a very broad one, and the government is already having certain problems; it has in fact offloaded some of its responsibilities. We don't want to see that role disappear.

As regards distribution, the role of professionals, physicians, pharmacists and all other prescribers falls more within the purview of the province and professional bodies. I think it's important to make that distinction.

With respect to rising prices, again we need to make an important distinction. We are talking about the cost of drugs. The federal government is responsible for the cost of these products. It has just been mentioned that costs are rising by 15 per cent every year. That means a 15 per cent increase in the cost of insurance programs, an increase that is not only tied to the cost of drugs. In Canada, it can be demonstrated that the cost of drugs barely goes up once they have been introduced in the marketplace, but we also know that they come onto the market at very high prices. Controls at that level are important, but we also need to distinguish between the cost of drugs and total program costs, which are related in part to increased consumption due to aging and other factors, as well as to professional fees.

Let me give you another example. The private component of the Quebec insurance program has been in place for more than 30 years, and the public component, for about seven or eight years; now the two operate under a private-public partnership. Under the public component of the program, current expenditures are about $2 billion. Of that $2 billion, some $500 million represents professional fees. So, when we talk about program costs, it is important to look at what part of that reflects the actual cost of drugs. That is an absolute must. If we want to establish clear drug pricing controls, we have to make that fundamental distinction.

¾ (0820)

As for control mechanisms. I believe that any controls put into place by the Patented Medicine Prices Review Board should also apply to generic drugs. At the present time, only the prices of new drugs are controlled. However, the pricing of all drugs should be controlled, and we see that as a very important consideration.

Also, to help managers and the general public really understand the situation, data should be made available that would clarify the different components of these costs. It is not enough to say that drugs cost this much; we need to know the cost of such things as the raw materials, labour, distribution, marketing, research, advertising, and so on. Only then will it be possible to have an enlighted debate on what action should be taken. We do not have that information at this time.

With respect to approval mechanisms, there needs to be greater rigour. We saw the mess that recently occurred with marijuana. If we want to approve it as a drug, then we have to exercise the same rigour in that process. I would never be allowed to market a new product without going through every step of the control and review process. There are two debates raging about this product: decriminalizing it is one thing, but approving it as a drug is quite another. Professionals should not be taken hostage in all of this; there has to be greater rigour in the debate. We can't just decide, because we're afraid of decriminalizing marijuana, that it should be considered a drug and rely on professionals for that purpose. So, much more rigour is needed.

The monitoring of side effects is also an important issue that is part of this debate. All partners should play a role in this, including the federal government. In that regard, one very important rule is electronic transfer between physicians and pharmacists of various kinds of data. There needs to be support for information transfer that can be helpful for research on the uses of medication.

As regards lobbying, our understanding is that this probably refers to industry promotion efforts. Marketing is a federal responsibility. We do discuss advertising a little further on in our brief, but one aspect of promotion that does affect us has to do with samples and advertising on drugs.

I will stop there. I have a few moments left, that can be used for any questions you may have.

¾ (0825)

[English]

The Chair: Thank you very much.

We'll now go to Mr. Saba, who is from the Coalition of Physicians for Social Justice.

[Translation]

Mr. Paul Saba (President, Coalition of Physicians for Social Justice): Thank you.

A universal drug insurance plan has to be part and parcel of a universal public health system. A public health system without a universal drug insurance plan is unreasonable and endangers the health of the Canadian public. Any private or public system that relies on user fees diminishes access to essential drugs and gives rise to thousands of hospitalizations, as well as transfers to residential care centres, and even fatalities. That fact has been confirmed by the Tamblyn report, here in Quebec. In the meantime, pharmaceutical companies are getting richer on the backs of the poorest members of society. So, we are against any kind of user fees, such as premiums and co-insurance.

There is no doubt that the use of pharmaceutical products to treat a patient's medical condition is an essential medical service, in the same way that surgery is. Consequently, drugs should be insured, just as surgeries are.

Universal coverage of approved drugs should be part and parcel of a health insurance program, along with all the other principles on which the Canada Health Act is currently based.

According to our calculations, little or no additional funding would be necessary. I have already submitted a presentation. According to our figures, here in Canada, we consume some $14.7 billion worth of pharmaceuticals. We consume approximately $11.3 billion of prescription drugs; current total spending amounts to $11.9 billion. Incidentals—that is out-of-pocket expenses—and private insurance expenditures amount to $6.6 billion. I will provide you with all these figures.

According to our calculations, there are potential savings of $7.1 billion. Those potential savings are as follows: premiums previously paid to private insurance companies, $3.9 billion; increased use of generic drugs, $1.7 billion; lower prices through bulk purchasing, about 10 per cent of $1.1 billion. We are therefore proposing that grants currently provided the pharmaceutical industry be eliminated; that represents $0.4 billion.

¾ (0830)

I would like to explain why we are proposing these measures. Our figures clearly show that the cost of a drug insurance program is roughly equivalent to current spending on drugs from all funding sources, and that this issue warrants close, unbiased attention.

As regards other savings to be made in the area of drug costs, first of all, we are recommending that physicians be better informed as to how to prescribe lower cost, but equally effective, medications. For example, we should be prescribing generic drugs, rather than patented ones. By training physicians better so they prescribe cheaper drugs, we would generate additional savings of at least 10 per cent—in other words, $1.13 billion out of a total bill of $11.3 billion.

Second, we should be training physicians to prescribe fewer drugs, which could result in a further saving of some 10 per cent, or $1.13 billion. I want to give you a well-known example: antibiotics, which are prescribed far too often for viral infections such as a cold. That does not only mean training physicians; there is also a need to raise awareness among the general public and change perceptions. People often believe that if a physician does not prescribe a drug, they won't get better.

These savings represent an extra $2.26 billion which, added to the $7.4 billion I already mentioned, amount to some $9.66 billion that can be used to fund a universal drug plan.

The influence pharmaceutical companies exert over physicians' practices is well known. Here I am referring mainly to pharmaceutical companies that produce patented medicines, because no one representing a generic drug firm has ever been in my office. Patented drug manufacturers spend more on promotion and administration than they do on research and development.

Research has shown that 46 per cent of physicians acknowledge that drug company representatives influence their choices. One third of residents acknowledge that they changed their way of prescribing medications based on information provided by pharmaceutical company personnel, and 90 per cent of physicians changed the drugs they were prescribing because of samples. So, it is clear that drug companies have a great deal of influence over physicians' choices and decisions in this area.

Although politicians also have to limit the influence of companies that produce patented drugs, as well as the amount of advertising targeting the medical profession, we, as physicians, should not be accepting gifts. As the expression goes, there is no free lunch.

New medications are not necessarily better. A lot of older drugs are still very effective. Approximately 20 per cent of new drugs often have unknown side effects, causing them to be suddenly taken off the market. New medications are also a lot more expensive.

In summary, we are proposing, first of all, that a universal drug insurance plan be put in place for all Canadians. This would have the effect of distributing the costs and thus bringing down the overall cost of drug plan insurance premiums. It is also worth noting that such a system would mean that individuals that currently contribute to such a plan with private insurance companies would end up paying less. Also, establishing a universal system for everyone could reduce the cost of drugs, in that the government would be in a position to negotiate the purchase of larger quantities of drugs with pharmaceutical companies.

Second, we are suggesting that only new medications of exceptional therapeutic value be added to the drug insurance plan.

Third, both levels of government need to invest in physician training so that they change their prescribing practices.

¾ (0835)

Fourth, a national consultation committee could be struck with a view to monitoring costs and drug efficacy, with representation in the following areas: one representative of patented drug companies—there is no denying that they play an important role—one representative of the generic drug firms, a physician with expertise in the costing and efficacy of drugs, a representative of seniors' community groups, one representative of patient community groups, a family physician, a medical specialist, a nurse, and one person representing the unions.

Over the long term, we are recommending that the 20-year term for patents be reviewed, and also possibly the mandatory licences issued previously, prior to 1993, when a generic company was able to produce medicines at a lower cost after seven years of patent protection.

Thank you.

[English]

The Chair: Thank you very much.

We don't have a lot of time for questions. I'm going to ask my colleagues to restrict themselves to four to five minutes and no more, so we can give everybody a chance.

We'll begin with Mr. Merrifield.

Mr. Rob Merrifield (Yellowhead, Canadian Alliance): Thank you for coming in. I appreciate your comments. Basically you're saying you want cheaper drugs, and you want them more available. You don't want direct-to-consumer advertising.

In light of what was said by all of you about prescription medications and direct-to-consumer advertising, do you see merit in giving the consumer both positive and negative information about a drug? If the consumer is also given the negative effects or the side effects of that product, would there be value in the consumer understanding that much more clearly?

From testimony--not here this morning but elsewhere--we've seen that many physicians haven't been told by the pharmaceutical companies about the negative side effects of some of the products they're prescribing, or don't understand them.

Have you weighed that at all in your consideration of whether there's any value in advertising?

Mr. Jean-Yves Julien: Yes, we have certainly been looking at this closely.

[Translation]

There are three distinctions that need to be made. First there is the primary effect of the drug, about which objective information has to be provided. We can't entrust that task solely to the person who is selling the product. Then there are the side effects, as you say, which is a second area where information needs to be provided. Those two elements are product-related.

The third piece of information that has to be passed on to the public is that people have to consider their particular circumstances. I may receive information saying that such and such a drug is useful and produces a specific side effect. But in my own case, what does that information really mean? That's where the problem arises. We have to find some way to get that message out. We have to allow them to act independently and give them an opportunity to determine whether specific drugs are right for them, and what their primary and secondary effects may be.

Let's not forget that in Canada, the most dangerous drugs are probably the ones that are used most and for which the best patient information is available. The example that comes to mind is insulin.

[English]

Mr. Rob Merrifield: So does advertising have a role in that, or could it have a role?

[Translation]

Mr. Jean-Yves Julien: Advertising plays a very limited role.

[English]

Mr. Paul Saba: Medicines are important and have an important role in health, but there are other important measures that the public needs to be informed of. That's where I think Health Canada can play an important role. For example, in diseases such as obesity and heart disease, it has the important role of teaching prevention--eating right, and exercising. Drugs are only part of the whole problem, for example, in treating cholesterol. It shouldn't be our first reflex to go to anti-cholesterol drugs, even though they have an important role.

The problem is that the pharmaceutical industry has a vested interest in promoting their products, as does all industry. They play an important role in our economy, but we don't want them to influence the public on such an important issue as health. The information they provide must be scrutinized, and before it is disseminated to the public, Health Canada needs to look at all the information and put it in the light of all other therapeutic interventions.

Mr. Rob Merrifield: I believe two of you have suggested that we should look at the Patented Medicine Prices Review Board and its role. You're saying some of the terminology that's used should be reviewed.

Basically, that's patented medicine. When we compare the price of patented medicine in the United States and Canada, Canadian prices are significantly less. That's what's causing us all of the problems with the Internet pharmacies. We don't have that problem with the generics because our prices for them are much higher than in the United States.

Have you considered why the prices are so high for the generics, when you're attacking the prices review board, which is just for patented medicine? Why are you attacking the prices of the generics, when they're so much higher here than in the United States?

¾ (0840)

[Translation]

Mrs. Sylvie Boulanger: To be perfectly honest, we haven't given much thought to the price of generic drugs, which do cost more here than in the United States.

However, we believe the role of the Patented Medicine Prices Review Board should be expanded. Sometimes new drugs are patented where only one molecule has changed. Sometimes the changes made to specific drugs, for which a new patent is being sought, are quite subtle and even homeopathic in nature. And yet this inevitably means delays before a patent can be issued, and so on, when in fact the change is a very minor one. So, we think the role of the Prices Review Board should be reviewed and that consideration should be given to broadening that role so that the Board can conduct more in-depth reviews.

[English]

The Chair: Thank you, Mr. Merrifield.

Mr. Ménard.

[Translation]

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ): I have three short questions.

Mr. Julien and Mr. Parent, let's try and get a clear understanding of how responsibilities are shared in this area. What we know is that the cost of buying drugs, both for governments and for individual citizens, is rising by 15 to 20 percent every year. That includes administrative and retail sale costs. So, costs are going up. That is the basic reality we have observed. So, let us consider together how responsibilities are shared in that respect.

Let's use a pedagogic example—and I hasten to add that my relationship with this particular product goes no further than that—Viagra. Supposing I buy Viagra in the pharmacy on Hochelaga Street in the riding of Hochelaga-Maisonneuve, where I pay $30 for 12 tablets. Explain to me how that money is divided up between you the pharmacist, or intermediary, and the manufacturer, and explain to me what share is paid by the person who purchases the product in a retail outlet.

Mr. Jean-Yves Julien: Well, there are basically three components: the cost of the product itself, which represents between 65 and 68 per cent of the retail price; the cost of its distribution through a wholesaler, which is between 5 and 7 per cent; and the pharmacist's fee, which is about 28 or 30 per cent. There is some variation.

Mr. Réal Ménard: How much of the cost is directly related to the product itself?

Mr. Jean-Yves Julien: About 65 per cent.

Mr. Réal Ménard: So, about 65 per cent of what I pay for my tablet.

Mr. Jean-Yves Julien: Yes, that's correct.

Mr. Réal Ménard: That comes from the manufacturer.

Mr. Jean-Yves Julien: Yes, that comes from the manufacturer. That's what the pharmacist pays the manufacturer.

Mr. Réal Ménard: So, we agree that the Patented Medicine Prices Review Board determines the factory gate price, but once the factory gate price has been established, the Board does not interfere with the chain of distribution involving a number of intermediaries.

Mr. Jean-Yves Julien: Yes, that's correct, it has no further involvement.

Mr. Réal Ménard: Good. Let's move on now to the second variable.

Mr. Jean-Yves Julien: The second variable is the share of the wholesaler, which is about 5 to 7 per cent, depending on use.

Mr. Réal Ménard: And who is the wholesaler?

Mr. Jean-Yves Julien: The wholesaler is the person who takes the product from the manufacturer, puts it in a warehouse and then transfers it to the hospital or to the pharmacist. These intermediaries are essential. The wholesaler's costs are about 5 to 7 or 8 per cent.

¾ (0845)

Mr. Réal Ménard: So,if I go to Jean Coutu Pharmacy, for example, and buy that tablet there, who is the wholesaler?

Mr. Jean-Yves Julien: The wholesaler may be Jean Coutu himself. In fact, Jean Coutu is not really a pharmacist in that sense, but really more of wholesaler. The wholesaler could be someone like McKesson, here in Canada, which is a very large wholesaler. It's probably the biggest one in Canada at this time.

Mr. Réal Ménard: And that represents 5 per cent of the cost.

Mr. Jean-Yves Julien: Yes, about 5 per cent.

Mr. Réal Ménard: And what is the third variable?

Mr. Jean-Yves Julien: The third is the pharmacist's fee, which represents about 30 per cent of the cost.

Mr. Réal Ménard: That's the whole chain of intermediaries...

Mr. Jean-Yves Julien: Those fees are going down. A few years ago, the pharmacist's fee was about 48 per cent of the cost, whereas now it's more like 28 or 30 per cent. The same applies to the cost of services inside hospitals.

So there are three important components.

Mr. Réal Ménard: It's important that we keep that in mind, and I hope our researchers have noted that information. That is the first step.

Mr. Jean-Yves Julien: I'd like to draw one further thing to your attention. The Patented Medicine Prices Review Board only does price comparisons. It doesn't carry out any detailed analysis of costs here in Canada. It simply tells us that prices in Canada are better than in other countries. That's why the cost of generic drugs is not reviewed.

Mr. Réal Ménard: I think everyone around the table agrees that the mandate of the Board should be broadened.

I would now like to ask another short question, and I hope to have time to put one last question to Dr. Saba.

Samples are clearly a very important issue. Manufacturers put samples into circulation which are not sold. What should we be doing about that sort of thing? My question is addressed either to the nurses or to the Ordre des pharmaciens, depending on what they may have to say about this.

Mr. Jean-Yves Julien: I will begin, and someone else may want to add something.

I think there are two important points to be made here. First of all, in terms of the educational aspect of this, it is important that the person being given the samples receive proper information. Those samples should also be accounted for and be treated with the same rigour as other drugs that are distributed. There has to be enough information provided about them. They have to be considered in studies on drug use. So, that is the educational aspect of it.

In terms of costs, it's important to understand that if a company is distributing samples, that activity is part and parcel of its costs. So we need to understand that those samples are actually being paid for; they are not being given away for nothing. We do in fact pay for them at some point in the process. So, when people say that samples are useful and can help people, that may be true, but we need to remember that someone else is paying for them.

Third, it should also be pointed out that it's very rare to find samples of older medications, which are less costly. If this were really being done in the interests of people who could benefit from them, they would be distributing samples of less costly drugs.

Mr. Réal Ménard: My last question is addressed to Dr. Saba. I am the person who suggested you be called as a witness. So, I hope the Chair will allow me to put one question to you.

Let's be perfectly frank here. Pharmaceutical companies are engaging in influence peddling with health care professionals. Earlier, you said there was no free lunch. So, what recommendations should we be making to limit influence peddling with health care professionals by pharmaceutical companies?

Mr. Paul Saba: Well, I would prefer that company representatives no longer visit us at our offices, because I see the harmful effects of that relationship. Our cabinets are filled with samples. Let's use the example of an ear infection. When I work in the emergency, I often see patients who have been treated with new medications—heavy-duty drugs, in other words, when all they really needed were older drugs like amoxicillin. But because they've already used a very strong drug, once that treatment fails, I don't have much choice: I have to administer an even stronger drug. Sometimes there aren't any, and that can even endanger the health of our children. I prefer that any training given physicians be objective and be provided through universities or research centres, rather than pharmaceutical companies.

Mr. Réal Ménard: Thank you.

[English]

The Chair: Thank you, Monsieur Ménard.

Madame Scherrer.

[Translation]

Ms. Hélène Scherrer (Louis-Hébert, Lib.): Thank you very much.

Welcome to the Committee. Because this is quite exceptional, I will take the trouble to mention it: very rarely does a House of Commons committee meet in Quebec City. Generally committees go to Montreal. It's not as though there is a competition between Quebec City and Montreal, but I have to say I am particularly pleased that we are meeting in Quebec City today. Also, much of this discussion is being carried on in French.

Mr. Réal Ménard: [Editor's Note: Inaudible]

Ms. Hélène Scherrer: In the most beautiful riding in Canada.

¾ (0850)

Mr. Jean-Yves Julien: One of the most beautiful.

Ms. Hélène Scherrer: I would like to pursue the discussion along the same lines as my colleague, Réal Ménard. We talked about the difference between the cost of the products and what you call the program costs. There are the chemicals used to manufacture a drug. We also talked about the cost of marketing and advertising. Is that cost reflected in the product itself, in the money paid to the wholesaler, or in the pharmacist's fee? It is as high as what is being paid for research. Where can we find that in the breakdown you've given us today?

Mr. Jean-Yves Julien: Everything that's related to the pharmaceutical industry itself is rolled into the cost of the product. That's the first thing. If a drug company advertises on television, its advertising expenses will be reflected in the cost of the product. The cost of services also includes the cost of advertising by pharmaceutical companies. That is another problem. That is something that falls within the purview of the provinces and professional bodies, but that is another part of it. When you see advertising by pharmacist groups, well that cost is rolled into the fee they charge for their services.

Ms. Hélène Scherrer: Could you give us an example, Mr. Julien?

Mr. Jean-Yves Julien: You often see ads on television for pharmacist groups such as Uniprix, Familiprix, etc. Those are actual organizations. It's not the pharmacy itself doing the advertising, but there is a connection. That generates certain expenses. It's connected to a whole series of things that are included in the fee component, but as for the advertising carried out by pharmaceutical companies themselves, those costs are rolled into the price of the drug.

Ms. Hélène Scherrer: I see.

When you see all the marketing and advertising done for all the different products, you immediately understand why costs are going up by 15 per cent. I assume that the 60 or 65 per cent that relates to the product itself has not really changed, because the price hasn't gone up much in a long time. These are chemicals that are added together to manufacture a drug. But you're saying that the advertising and marketing costs are part of that portion of 60 to 65 per cent. In recent years, marketing costs have probably been rising steadily, because we have never been so bombarded with advertising and marketing on the Internet, in magazines and just about everywhere, as we are now. We're trying to see what can be done to contain the prices of these drugs. You say the wholesaler plays a critical role. So, I suppose we can't do anything about that portion of the cost. Even professional fees have gone down, and each of you seem to be saying that it's important for the pharmacist to be part of this process to guide the customers. So, I guess our line of attack will have to be the cost of the product itself.

Mr. Jean-Yves Julien: Yes, and that's where we're talking about an increase of 15 per cent. It's important to realize that when these drugs are marketed, they're sold at the highest possible price, unlike what is done in other industries. The price of the product remains the same or even tends to drop.

Let's take the example of Viagra, which was mentioned earlier. That drug costs no more than it did a few years ago, even though there is more advertising done nowadays. It came onto the market at the maximum price point. What is costing the insurance programs more is the fact that there are more people using these drugs. When we talk about a 15 per cent increase, we're not talking about an increase in the cost of acquiring the product; we're talking about more people actually using that drug. Medications to treat Alzheimer are a good example. When they first came on the market, the cost of treating a patient was about $3,000. Five years later, it still costs $3,000 to treat a patient, but rather than there being 100,000 patients, there may be as many as 200,000 in Canada. That is the reason for the increase. So, it's a combination of the two.

Mr. Marc Parent (Administrator, Ordre des pharmaciens du Québec): In fact, there are two forces at work here. The cost of drugs when they enter the market has been rising over the years, even though the price does not go up once it has been marketed. It should also be noted that the introductory price of certain drugs for relatively rare diseases exceeded the average income of Canadians. At the present time, there are treatments available on the market that cost $20,000, $40,000, $60,000 or even $80,000 per year, per individual patient. That has a major impact, and it represents a significant and fundamental change in the ground rules that should be noted and examined more closely. So, the introductory cost is the first point.

The second has to do with demand. Demand is evolving as the population ages, but also based on needs that come to the fore as a result of advertising. Advertising is somewhat biased. There is no doubt that an ad is intended to promote use of the drug, rather than inform the public. Some health conditions are simple, and our role is to look after complex situations and avoid the kinds of problems and accidents that can occur when a situation is complex. I don't think an ad in a magazine or a 30-second commercial is the answer, given the complex interaction between the needs of the individual, the benefits of one medication in relation to others, and the side effects the drug itself can cause, compared to other, perhaps even non-medicated, alternatives.

¾ (0855)

[English]

Mr. Paul Saba: The pharmaceutical industry has exaggerated the price of bringing a drug to market. They often say a new drug costs about a billion dollars. A famous Tufts study showed it was about $802 million U.S., but in fact that's exaggerated by about three- to four-fold. We've looked at other studies. The actual cost of bringing a drug to market--in after-tax dollars--is $240 million. So we think that many of their justifications for raising prices are exaggerated.

The Chair: Mr. Robinson.

[Translation]

Mr. Svend Robinson (Burnaby—Douglas, NDP): I'm from British Columbia, where a lowest price and reference price policy was adopted quite some time ago. That was recommended by the Romanow Commission. But so far, the government has done nothing to act on this important recommendation.

Does the Ordre des pharmaciens du Québec also support this recommendation?

Mr. Jean-Yves Julien: With respect to a reference price policy, the Ordre des pharmaciens du Québec has no official position on what has been done in British Columbia. It has not officially stated whether it is in favour of such a policy or not.

I personally think that there are interesting avenues to be explored in that area, but it seems to me that in order for decision-makers such as yourself to make a clear determination that is in the best interest of Canadians, two things are needed. We need an industry in Canada, and we have to recognize that. There are thousands of researchers and other jobs associated with it. We also need a strong generic industry, because that provides opportunities for exports. So, there is an economic component here. In order to make a proper determination, I think you need the information that I mentioned to you briefly earlier on.

What is the cost of a product when it is introduced into the market place? We are not interested in knowing whether it costs less here than in Spain or the United States. We want to know what it actually costs. If that cost is reasonable, we can then make the appropriate decisions, which may mean choosing the least expensive product, but we will be making that decision with full knowledge of the facts and without necessarily endangering the industry.

In Canada, we have quite a few provinces. I understand how a province like British Columbia may have made that decision, but in Ontario, which has a strong industry, the economic issues are different. It's important to understand that.

Mr. Svend Robinson: Yes, but if we are able to choose a generic drug that has almost the same effect on a given medical condition as the patented drug, we will be saving a lot of money, and the impact will be the same. I have some other questions.

Mr. Jean-Yves Julien: Yes, and that is exactly what pharmacists are recommending.

Mr. Svend Robinson: There has been a great deal of discussion about pharmaceutical companies. I realize that it represents an important industry. But people are also saying that it's important to carry out an in-depth review of the Patent Act. Dr. Saba and the Federation referred to the fact that a thorough review of the patent system is required—for example, with respect to the 20-year term, evergreening, and so on. However, when we try to submit proposals for this kind of study at the Industry, Science and Technology Committee, Liberal and Bloc Québecois members always block them. So, there is a slight problem where these matters are concerned. I have always found it rather strange and somewhat hypocritical that pharmacists, physicians and other groups who receive gifts from pharmaceutical companies are under attack. While I agree, the fact is that pharmaceutical firms also give very generous gifts to political parties, namely the Liberal Party and the Bloc Québecois. Mr. Chrétien intends to do away with that, but if we're talking about gifts, it's important to know that there is a lot of that going on.

I would like to put one last question to the Federation. Have you tried to persuade the provincial government to implement a lowest price or reference price policy? If so, why the resistance? Can you comment on that?

¿ (0900)

Mrs. Sylvie Boulanger: When we appeared before the Parliamentary Committee, initially when the legislation was passed, but then later when it was reviewed in 2002, those are the very points that we made. There is just as much resistance there as what you may be seeing in Ottawa. The industry is very powerful; there is a lot of money involved. Shareholders of those companies also want to make a lot of money, and it would seem that those interests are deemed to be more important than the health status of the general population.

As Dr. Saba was saying, we would like drugs to be considered a basic component of the public health care system and believe that, as a result, drug prices could be more easily contained.

[English]

The Chair: Thank you, Mr. Robinson.

Mr. Barrette.

[Translation]

Mr. Gilbert Barrette (Témiscamingue, Lib.): Thank you, Madam Chair.

I want to make one comment before asking my question. What I really don't understand is that more money is being spent on promotion than on research. I didn't realize that was the case and I'm having a hard time understanding why so much money is being invested in promotion. They seem to attach a lot more importance to consumption than they do to the benefits of the drugs themselves.

We could certainly take a long hard look at the whole process surrounding the product, its manufacture and even marketing, but there is one important thing that triggers consumption. I don't want to blame physicians, but prescriptions are one of the main reasons why people take drugs. Some have been saying that they should be better trained in order to prescribe fewer drugs or be better at prescribing. But I really don't understand why that is not happening now.

Mr. Paul Saba: I think the problem has to do with the fact that most of the time, our continuing education seminars and workshops are funded by pharmaceutical companies. I attended a conference at McGill University this summer where no pharmaceutical companies were represented. But that's very rare. My view is that the majority of conferences aimed at physicians should not be influenced by pharmaceutical companies. Even our research facilities and university centres are influenced by these companies. As a result, physicians can't be objective about treatments they prescribe for patients.

Mr. Gilbert Barrette: Well, I'm sure you will agree that this is quite a dilemma. The physician is the one telling us what we should take, but at the same time, we are seeing a rise in consumption, and therefore higher costs.

Mr. Paul Saba: Our governments could play a critical role in that area by investing in physician training—for example, by giving grants for continuing education. The federal government and provincial governments could work in partnership to provide appropriate training to physicians with respect to drugs. Nowadays the provincial government is very focussed on health care spending; but it also has an important role to play in educating physicians with respect to prescribing. I would like there to be grants available for research programs on drug cost and efficacy, and also to teach physicians to be better at prescribing medications.

[English]

The Chair: Thank you very much, Mr. Barrette.

On behalf of the committee, it's my pleasure to thank all of the witnesses for the serious presentations you made. We're very grateful for them and for your efforts and time, particularly coming so early this morning. So thank you very much.

We'll now prepare for the second round and ask the witnesses listed from 9:05 to 10:05 to come to the table.

¿ (0905)

[Translation]

The Vice-Chair (Mr. Réal Ménard): Ms. Scherrer, with your permission, we would like to resume our hearings. As you know, we are very short of time. I will be chairing the meeting, Ms. Scherrer, and I intend to keep an eye on you. Because we're meeting in your riding, though, I plan to show some leniency.

We will now hear from witnesses representing the Union des consommateurs and the Quebec Committee of People Living with HIV, represented by Mr. Lapierre and Mr. Gagnon. We will also hear from the representative of the Atlantic Centre of Excellence for Women's Health. Please be seated.

If you agree, each of you will be invited to make a five-minute presentation, after which we will open it up for questions from members. We will have to move quickly because we have a plane to catch around lunch time that will take us back to Ottawa for a vote at 5:30 p.m.

I would ask Ms. Latreille from the Union des consommateurs to please proceed.

Ms. France Latreille (Acting Coordinator, Union des consommateurs): Good morning.

I would like to briefly introduce my colleagues, Thérèse Richer, President of the Union des consommateurs, and Charles Tanguay, Director of Communications. I am Acting Coordinator.

We would like to begin by thanking you for inviting us to make our concerns known to the Committee. Now I'd like to tell you something about our organization.

The Union des consommateurs is a non-profit organization which represents eight different Associations coopératives d'économie familiale (ACEF), the Regroupement des consommateurs d'assurance, as well as individual members. Our mission is to represent and defend consumers, and particularly lower income households.

Since it began, the ACEF movement has been actively involved in health issues. At this time, we are particularly interested in the work aimed at legislative renewal in the area of health protection. We want to say, right from the outset, that we do not have a well-prepared presentation today, contrary to our normal practice. We only recently received your invitation, and didn't have enough time to adequately prepare our material.

However, we did want to take this opportunity to comment, if only to make you aware of our interest in drug-related issues. I should mention that we are starting to conduct research on advertising and drugs. That research is being funded by the Office of Consumer Affairs at Industry Canada, and we hope it will help us support the position we have taken with respect to information on drugs, and advertising campaigns that directly target consumers. We will be pleased to pass on the results of our research to you in about eight months.

Also, we hope to participate fully in the consultations held by Health Canada as part of the legislative renewal effort related to health protection. In that regard, we want to alert the Committee to the fact that civil society groups such as ours that defend the public interest have too few resources to adequately participate in consultation processes like those Health Canada is holding and will hold in future. There is a significant imbalance there. Our argumentation is compared to that of extremely powerful groups that are far better equipped than we to defend specific interests. These groups often have commercial interests that involve astronomical sums of money.

We are suggesting that you make the Department of Health aware of the unequal forces operating in the current consultation process when, for example, a group as modest as ours finds itself facing off against the drug industry and magazine publishing lobby as regards the advertising of prescription drugs. We would particularly have appreciated a move to provide funds to consumer groups for the purposes of their participation in this consultation.

I would now like to turn it over to my colleague, Charles Tanguay.

¿ (0910)

Mr. Charles Tanguay (Director of Communications, Union des consommateurs): Good morning, and thank you for inviting us to appear.

Let us very quickly look at the issue of drugs and access to drugs. We see access to medications as a major public health issue. With progress in the area of research, new technologies and molecules, using drugs is a preferred method of treatment. Surgery can be avoided, and stays in hospitals are not only less frequent but shorter when medications are used properly. Pharmacotherapy is considered an essential component of the whole range of medical treatments and, given rising costs, can provide an opportunity to reduce overall health care spending by avoiding certain costs. That is why it's important that drugs be just as accessible as other forms of medical treatment, and on an equitable and reasonable basis for everyone who needs them, whatever their income or social status—which is not necessarily the case all across Canada at the present time.

We are aware that drug costs are constantly going up. That cost increase is mainly related to the use of new medications that are not necessarily more effective than some that have been around for much longer. There are many examples of new, costly pharmaceutical products that are quickly adopted by physicians, even though they may not necessarily be a big improvement over older drugs. An example would be a cheap antibiotic that has been around for 20 years, is extremely effective and certainly more cost-efficient than new molecules that may cost 20 times more and are not necessarily more effective.

Family physicians are more likely than medical specialists to include representatives of pharmaceutical companies among their main sources of information about drugs. In the brief we drafted in 2000, we referred to the fact that physicians who prescribe a lot of drugs are also the ones who make the most frequent use and have the most positive assessment of commercial sources of information.

According to researchers, new medications are almost always the ones most widely publicized. And yet, precisely because they are new, they are the products with respect to which the potential health risks are not as well known or as well documented. In addition, new medications are not necessarily more effective or safer, although they are generally more expensive.

Consequently, we think it is important that the government set parameters around the kind of marketing that pharmaceutical companies can engage in to sell their products, and that impartial initiatives aimed at providing information and monitoring the side effects of medications benefit from government support.

It is also important to maintain the prohibition on the advertising of prescription drugs. The Romanow Commission report states that the federal government should continue to prohibit advertising for prescription drugs that directly targets Canadian consumers. We fully agree with that position.

A drug is not just any consumer good. It mustn't...

¿ (0915)

The Vice-Chair (Mr. Réal Ménard): You have already exceeded your time by one minute. Could you move directly to your recommendations?

Mr. Charles Tanguay: We agree with a number of the recommendations made by other groups, including Action pour la santé des femmes and their expert, Barbara Mintzes, who argues that advertising does not provide objective information and is dangerous to people's health. There are several other recommendations, but they all revolve around that fundamental theme.

We also wanted to make you aware of the class action suit launched against Pfizer about a drug called Celebrex. As part of that class action suit, we will be attempting to demonstrate that even so-called scientific information is sometimes manipulated by pharmaceutical companies, and that even scientific information can be slanted in favour of new medications that are not necessarily more effective.

The Vice-Chair (Mr. Réal Ménard): My colleagues will have a chance to delve further into this with you during the question period.

With your permission, we will now hear from Ms. Paynter, from the Atlantic Centre of Excellence for Women's Health. Will your presentation be in English or in French?

Mrs. Martha Paynter (Research Assistant , Atlantic Centre of Excellence for Women's Health): I would like to make my presentation in English, is that all right?

The Vice-Chair (Mr. Réal Ménard): Yes, that isn't a problem, because we have translation services.

[English]

Mrs. Martha Paynter: Hello, my name is Martha Paynter. I'm a research assistant at the Atlantic Centre of Excellence for Women's Health, which is a research centre for social policy change. It's affiliated with the IWK hospital in Halifax, and Dalhousie University. I'm also a candidate for the master's in the development economics program at Dalhousie University. My thesis research is a microeconomic and bioethical analysis of direct-to-consumer advertising of pharmaceuticals in Canada and the U.S.

I thank you for the invitation to speak today. I would like to recommend to this committee that health protection legislation be improved to completely ban direct-to-consumer advertising from Canadian media and public space, and that penalties for infractions by industry be augmented and seriously enforced. I will describe the reasons for this recommendation.

Members of the women's health movement oppose direct-to-consumer advertising because, like most advertisement, the purpose of direct-to-consumer advertising is to increase demand and consumption. This affects women's health, in particular, in a number of ways.

The expense of advertising is reflected in rising drug prices. Drugs represent the fastest growing component of health care spending. Since medicare does not cover drugs, this increase is primarily paid for on a private basis. Women are more likely to both use health care services and products, and experience poverty in Canada. Therefore it is women who disproportionately carry the burden of any private health care spending.

When we repeatedly see or hear advertising messages about using drugs to treat conditions, we lose sight of the cost-effective idea that an ounce of prevention is worth a pound of cure. Pills are not prevention. Examples of preventative health include safe and affordable housing, a clean environment, access to nutritious food, and exercise. Regular walks are, for example, more effective at preventing osteoporosis than any pill.

We're using more drugs than ever. Hormonal drugs like the birth control pill are showing up in our water and disrupting the endocrine systems of the fish we eat. Canadians are regularly hospitalized because of drug side effects, and the results of unsafe combinations of drugs. Some drugs, including many antibiotics, are so over-used that they are no longer effective.

DTCA has caused the medicalization of many normal human conditions and transitions. It is both demeaning and often toxic to make normal conditions diseases. History repeated itself last year with the finding that hormone therapy for menopause is more likely to be harmful than helpful. I say that history repeated itself because the thalidomide and DES disasters should have been the last time women in Canada had their bodies used, without informed consent, to test the long-term effects of new drugs. This lesson should not be repeatedly learned at the expense of women and their children.

DTCA is linked to rushed drug approvals. New drugs are a good sell. Empirically, it is new drugs that are most aggressively advertised, although we are least aware of their long-term and side effects. In lieu of spending on advertising, it would be more responsible and healthy to increase spending on drug trials.

Disturbingly playful advertising for erectile dysfunction, social anxiety disorder, and even baldness distracts our attention and diverts funds away from pressing global health concerns. It is unreasonable to vilify shyness and market Zoloft to treat it when millions go without medication for malaria and diarrhea.

It is a myth that pharmaceutical companies will innovate only if they receive enormous profits. Research and development expenditure constitutes less than 10% of most pharmaceutical companies' budgets. Spending on promotional activities is considerably higher. Furthermore, R and D budgets are often used to develop me-too drugs. These are medically identical copies of existing brand-name drugs that qualify for patents. They do not solve new problems; they extend the lives of profitable products.

DTCA creates and maintains brand loyalty, so when drug patents expire, and equally effective but less expensive generic alternatives become available, it is still brand-name drugs that are prescribed and purchased most frequently.

The most aggressive drug marketing is directed at those North Americans who are most privileged. Viagra and Lipitor are drugs most appropriate for middle-class white men. It is time to provide incentives to pharmaceutical companies to produce affordable treatments for diseases that affect vulnerable groups. It is time for education about health and pharmaceutical products to come from the public sector. Ads are not education.

To conclude, DTCA negatively affects our collective well-being. Ban it. Health is not a consumer product to be marketed and sold. Direct-to-consumer advertising is an attack on the Canadian conception of health as a right and a public good.

Thank you.

¿ (0920)

The Vice-Chair (Mr. Réal Ménard): Thank you very much for your presentation.

I would like to congratulate you, because your time was less than what you have the right to use.

Thank you very much.

[Translation]

We will now hear from witnesses representing the Quebec Committee of People Living with HIV. I believe Mr. Gagnon will be speaking first.

Mr. Luc Gagnon (Executive Director, Committee of People Living with HIV of Quebec): Good morning everyone, and thank you for giving us this opportunity to appear.

I am accompanied today by Marc Lapierre, President of the Quebec Committee of People Living with HIV, and José Sousa, a member of the Board of Directors of CPLHIV.

CPLHIV, for those of you who may not be familiar with it, is the primary organization in Quebec that represents people living with HIV. This is an organization that defends the rights of HIV-infected people with the objective of improving their quality of life through empowerment. The organization has only 2,000 members, and represents all people living with HIV in Quebec.

We will try and limit ourselves to five minutes. We have five points to raise in the way of recommendations. All the detailed information is presented in the brief you already have.

First of all, we recommend that Health Canada ensure appropriate coordination between the Canadian approval process for anti-retroviral (ARV) medications and the process used in the United States by the FDA, the Food and Drug Administration. The FDA is known to use a more stringent, thorough and exhaustive process.

Thus when an ARV drug is approved for commercialization in the United States, it would immediately become available for use in Canada, because every new approved molecule offers an opportunity for increased therapeutic choices. It's a matter of differentiating new medications that are not really beneficial in terms of improving health and anti-retroviral drugs that are a last resort for people living with HIV, whose resistance or reaction to side effects is such that there are no longer any treatment choices available. A distinction must be made between drugs that don't result in any improvement and medications that can prolong the lives of people living with HIV.

Given the nature of viral resistance to HIV medications, and that the cost of changing an ineffective drug for a functional one is negligible, people living with HIV need quick access to new and different treatment options. Such procedures would save time and lives for our community and would mean that Canada would no longer have to spend large amounts of money for results that are already known. In recent years, it has been demonstrated that all the studies carried out in Canada subsequent to other studies having been done in the United States yielded nothing new, in terms of what we already knew about the drugs. So, this is a step that contributes nothing, is costly and delays access to new treatment options. That is unacceptable.

Second, Canada should invest these savings in an effective post-approval monitoring system for the undesirable side effects of prescription drugs. A solid and well-developed Canadian system of prescriber and user notification regarding undesirable side effects would be a service to all those interested in HIV treatment, be they health professionals or people living with HIV, and would make Canada a leader in the field. That is something that is currently underdeveloped. So, Canada could truly show leadership in that area.

Third, continuing drug education for prescribers and dispensers, as we heard earlier, should be funded by pharmaceutical companies, but carried out jointly with groups representing people living with HIV and health professionals, in order to ensure objectivity and proper consideration for the concerns of persons most directly affected. This continuing education program should reflect educational needs relating to the post-approval monitoring of undesirable side effects phase, that we have just referred to.

As regards direct-to-consumer advertising, we fully agree with the views expressed by the witnesses who appeared before us. We are strongly opposed to the use of this kind of advertising. Rather, we recommend objective and realistic training on ARV treatments, and on continuing developments in this area, for HIV-positive persons. These educational activities should be financed by the pharmaceutical industry and include members of groups that represent people living with HIV.

In our brief, you will find examples of American advertising that illustrate the dangers referred to earlier with respect to this kind of advertising, where you see people living with HIV who have muscles and appear to be in good health, when that does not in fact jibe with the reality for people taking anti-retroviral medications. It is thus misleading to people living with HIV, and also has an impact on prevention. Indeed, people who see these ads tend to think that now that ARV drugs are available, there is no problem. So, this also has consequences for prevention in terms of ARV drugs and HIV in general.

¿ (0925)

Our final recommendation is not directly linked to the issue of prescription drugs in Canada, but is nevertheless something of tremendous concern to us. We are very worried about the apparent inconsistency in the Canadian government's current policy regarding access to anti-retroviral treatment in countries where the disease is endemic.

Officially, Canada, through CIDA, does not support actions aimed at treating HIV, and prefers to focus on prevention. We believe that position should be reviewed so that work could be carried out in both areas—prevention and treatment—and thus save millions of people living with HIV in such countries.

In that respect, the issue of exporting Canadian generic drugs to these countries—something we have heard a lot about it in recent weeks—should prompt the government to review and renew its position on this matter, in order to ensure greater consistency and effectiveness in the fight against HIV in countries where the disease is endemic.

That completes our presentation.

The Vice-Chair (Mr. Réal Ménard): Thank you very much.

We are now going to begin the question period. Mr. Merrifield will be our first questioner.

[English]

Mr. Rob Merrifield: Thank you, Mr. Chairman.

Thank you very much for coming in and sharing. All of you had very interesting presentations from different perspectives, but I'm really interested in the difference between the opinion from this side of the table to the other side when it comes to new drugs entering the market. You're saying that these new drugs do not have all of the benefits and they're much more costly, so hold them off. They're not the end-all.

How do you answer the HIV people who are saying these new drugs are new, improved, and better? How do you square that and determine whether they're going to be used or not? Can I just quickly get a response here?

Mrs. Martha Paynter: I was trying to say that there are certain conditions--and AIDS is definitely one of them--that qualify for much more research. It's a question of priorities.

Mr. Rob Merrifield: I think you're exactly right that it is a question of priorities.

The same thing can be said for individuals who are allergic to a certain drug. It doesn't work in their bodies, because all of us are unique. I've had many people in my office say we should have these newer drugs because the old ones just don't work for them. They say they can get the same product in other countries, and there are problems with the new drugs coming in. I think we're always trying to square that.

Mrs. Martha Paynter: I was trying to emphasize that more of a pharmaceutical company's budget needs to be devoted to R and D. Right now it's minuscule. Advertising takes up much of the industry's budget, so when we're paying for these medications, that's what we're paying for.

¿ (0930)

Mr. Rob Merrifield: Yes, Martha, I agree with most of what you said in your presentation about some of the abuses we're seeing with pharmaceuticals. A pill is not the answer to all of our woes, yet sometimes it seems we're living in a society that looks to that.

In fact, we had testimony last week that there have been 10,000 deaths within our hospitals alone from the misuse of pharmaceuticals--and tens of thousands outside of our hospitals in Canada. We know it's a very serious problem, and you're right. This committee is really trying to take a look at how we're going to deal with that.

You've all talked about direct-to-consumer advertising. When was the last time you pulled the trigger on the law? I say that because the only way the law can be applied in Canada is if there is a complaint about misadvertising. Have any of you seen misadvertising that goes against the law? If so, have you reported that?

Mr. José Sousa: I know CATAG, the Canadian Treatment Action Council, has at least one or two complaints in about what it considers to be direct-to-consumer advertising that is not supposed to be allowed. I don't know the exact drugs that were on display at the time.

Mrs. Martha Paynter: As I was saying, the law has to be tightened, because right now you can show a product as long as you don't say what it does. It's nonsensical to provide half of the picture, the way the loophole currently works in the law.

Mr. Rob Merrifield: The worst part of it is we have a law in the books that isn't being enforced because nobody is challenging that an ad is actually compromising what the law is saying. It's unfortunate, but that's the reality of the law. You're probably right that the law may need to changed somewhat in doing that.

It's interesting that you're advocating for no direct-to-consumer advertising, and yet my question to you as consumer advocates--

Mrs. Martha Paynter: I'm not a consumer advocate.

Mr. Rob Merrifield: I know you're not. I'm talking to the consumer advocates over here. But you still wrote a thesis on this, so you should be aware of direct-to-consumer advertising and all we need to do. We have a responsibility to be able to stop that.

Mrs. Martha Paynter: Actually, Health Canada has a responsibility to look for these things. We're the public, so look out for us.

Mr. Rob Merrifield: You're right, and maybe that's where the law needs to be changed. But in reality, Health Canada is not enforcing it unless somebody complains about it. That's my question to you. When is the last time you picked up the phone and said “Health Canada, have you realized this ad is compromising the law?”

Mr. José Sousa: What common citizens even know they have that right? What number do they call?

The Chair: To be fair, most of us found out at a committee meeting a few weeks ago that the public was supposed to complain about these things, and that Health Canada only responded to complaints. So don't feel bad if you didn't know; we didn't know either, nor did Mr. Merrifield.

Mr. Rob Merrifield: Therein lies the situation. When you come here and attack it I'm for you, in the sense that I think the law is right and direct-to-consumer advertising has some serious dangers. But we should be changing the law, and you should be advocating to fix this, not just broad-stroke it and say that direct-to-consumer advertising is all bad.

On the other side of it, we know that the pharmaceutical industry is very effective at marketing pharmaceutical products directly to the physicians. Many physicians have told us they weren't aware of the side effects; they weren't aware of the negative side of it. If they're not aware of it, neither are consumers.

There's a serious problem there. Maybe there is a role for us to go directly to the consumer with the information on the negative effects of some of these products. There are some advancements there. I don't know if you have any thoughts on that or not.

Mrs. Martha Paynter: I definitely think it's Health Canada's responsibility to educate the public about health. We shouldn't be relying on Pfizer to tell us what we can become sick with.

Mr. Rob Merrifield: We are right now to the doctors....

The Chair: Thank you, Mr. Merrifield.

Mr. Ménard.

[Translation]

Mr. Réal Ménard: Thank you

I would like to put some questions to my friends from the Quebec Committee of People Living with HIV and extend a special welcome to Mr. Lapierre, who is a resident of Hochelaga—Maisonneuve.

An Hon. Member: And who voted for you?

¿ (0935)

Mr. Réal Ménard: Let's hope so. He lives near me.

Mr. Marc Lapierre (President, Committee of People Living with HIV of Quebec): Only for about a month now.

Mr. Réal Ménard: And we can't predict the future.

Mr. Lapierre and Mr. Gagnon, in 1995, a sub-committee of the Standing Committee on Health looked at the issue of drug approval. There was a lot of pressure at the time from people who felt that drugs were not being approved quickly enough. As you know, the Canadian system is a bit of a mixed bag: $40 million spent on approving drugs actually comes from the pharmaceutical industry.

We looked at the idea of joint approval—as I understand your proposal, that is sort of what you're suggesting—but ended up ruling out that option. Our reasoning was that Canada, where the federal government under the Constitution is responsible for issuing notices of compliance, should have its own system—a Canadian system.

However, if approval were to be carried out jointly, pharmaceutical companies would no longer be required to file clinical monographs and we would have to rely on data from the United States. That may be an option worth considering, but do you not think relying entirely on the American system would be risky?

Mr. José Sousa: No, because the Americans could send those monographs to Canada. It's not a matter of confirming that the drug is safe. In our case, we have never rejected a drug that has been subject to a review that lasted two years longer than the FDA review. On the contrary, when I was a member of the Expert Advisory Committee on HIV Therapies and we ran into problems such as new ads or the black boxes that come with new medications, what happened was that having seen what had taken place in the United States, they would simply do the same a month or two later. It simply is not possible to obtain enough funding to do as thorough a review of a medication as is done in the United States. We review exactly the same number of drugs, but their budget is so much larger: there is no possible comparison between their budget and ours. We simply aren't able to do proper work.

The problem is that during those two extra years, a lot of people die while they're waiting for the drugs. Therapies that were already available in the United States in 1995 only started to be used here in 1996. For formularies, it was even earlier. During that time, a number of my friends died, as well as a great many other people. A delay of six months or two years can kill people. The FDA is one of the best agencies; there is also the European Union. In my opinion, the FDA is quicker and closer to us. When there are side effects, we can contact the FDA for information.

Why should we not do that? It would end up costing us less money and we could then invest in a post-approval monitoring system that would allow us to monitor the long-term side effects of drugs.

Mr. Réal Ménard: I understand your idea about exchanging data. I remember having done that with your organization and Dr. Gervais Fréchette. In fact, he is now in New York dealing with Saquinavir, which was taking some time to become available here.

You have presented an argument that we will certainly have to consider.

Another argument that was made had to do with the fact that Canada wants to be able to recall drugs. In fact, that is possible now. Even when notices of compliance have been issued, Health Canada can recall medications. It did exactly that last year, if I'm not mistaken. So, you have an argument that we will certainly want to consider.

I would like to ask a second question, if you don't mind.

The point has been made that new medications are more expensive and are not necessarily more effective. That is not necessarily the case with AIDS. There are generations of drugs that can be really effective for some people, but also happen to be expensive.

Could you tell us approximately how much it costs an individual who has to take medications? What is the average cost of treatment in 2003 for a person with AIDS?

Mr. José Sousa: People take at least three medications, and some take as many as nine. The cost varies quite a bit. There is a new drug out, which we are waiting to see approved, which costs about $20,000 a year.

Mr. Réal Ménard: What drug is that?

Mr. José Sousa: It called Fuzeon, T-20 or Pentafuside. It is administered by injection. There will be restrictions, and we agree with that. This is a drug to be used in what is known as salvage therapy, when people don't have any options left because the virus is resistant to all other medications. In that respect, the HIV community is different from other communities. We change drugs in order to prolong life. Every drug is useful for certain people, because of mutations or things like tolerance. That's very important.

At the present time, some companies don't even want to try and get drugs approved in Canada because they had too many problems trying to get the first one approved.

¿ (0940)

Mr. Réal Ménard: Could you tell us again who will be marketing that $20,000 medication you referred to?

Mr. José Sousa: Yes, it will be Trimeris and Roche. Trimeris is a small company, and Roche will be looking after sales.

Mr. Réal Ménard: Thank you.

[English]

The Chair: Thank you, Mr. Ménard.

Madam Scherrer.

[Translation]

Ms. Hélène Scherrer: Thank you very much.

I would like to come back to the Union des consommateurs.

In my opinion, when it comes to drugs, the person writing the prescription is the one who ultimately controls the most significant lever. I suppose that the vast majority of physicians are honest and sincere, that they want their patients to get better, and that they all have a sword of Damocles hanging over them that will fall if they are remiss in their duty.

I'm trying to understand here. We have been saying that the cost of drugs is related to the fact that physicians use new medications more often than older ones that are recognized to be effective.

Why would a doctor decide to use a new drug when he knows little or nothing about the side effects or its long-term potential, as opposed to another drug he has already used, that he knows to be effective, that works well, whose side effects he is familiar with, having been in practice for a number of years, and that he knows to be safe?

What is the reason for this overuse of new drugs? Is it really because of the pharmaceutical lobby?

Mrs. Thérèse Richer (President, Union des consommateurs): I think you should put that question to physicians.

Mr. Charles Tanguay: Let's take the case of Celebrex, which came on the market in 2000. In the space of a year, it rose to become one of the top anti-inflammatory medications for the treatment of arthritis, on the strength of truncated studies or half-truths. The long-term side effects were not yet known. On the contrary, the claim was that Celebrex had far fewer side effects than most of its competitors. Yet it costs 10 to 20 times more than other anti-inflammatory drugs.

There is no doubt that a physician should normally behave as you say, but that is not the way it works in real life. Physicians are in a hurry, are reluctant to make patients wait, and are swayed by pressure from patient groups, such as the Arthritis Society in this case. Clearly, physicians also follow trends, advertising and can be influenced in terms of their choice of medications.

In this case, scientific studies led them to believe that Celebrex did in fact cause fewer side effects than other competing drugs. However, they obviously are not influenced only by scientific studies, because otherwise, they would spend all their time with their heads in a book.

Ms. Hélène Scherrer: So, physicians rely on what they're told by the people representing the drug companies who come and introduce a product, saying that the directions for use are different because rather than having to take it three times a day, it only has to be taken once a day, and therefore it has fewer side effects. I guess physicians have to rely on something. They certainly aren't going to tell them that they're not too sure about the potential of the drug or what its possible side effects could be; rather, they're going to tell them that it's a wonderful, attractive new drug.

Physicians have five, six, seven or even ten years of training, and someone comes along one day who is part of the system and tells them that this new product is better than the previous one. We have a tendency to blame doctors, saying that they are the ones that prescribe the drugs and that ultimately, it is their fault. But they prescribe drugs on the basis of what they know, and what is offered to them.

Is it your sense that there is a problem in terms of drug approvals, because not enough research is being conducted, or do you think that it's more a case of a drug company representative knocking at the door of a physician and promising him a meal and a cruise, so that all of a sudden that product becomes a lot more attractive?

Mr. Charles Tanguay: Well, I guess that all of that is going on to a certain extent. I imagine that physicians do rely on several sources of information, except that if pharmaceutical companies are investing more money in marketing than they are in research, we can probably assume that's because it works—it yields the desired results.

Ms. Hélène Scherrer: I have one last quick question. If the Union des consommateurs really feels that lobbying efforts of pharmaceutical companies aimed at physicians, which involve offering them gifts, and so on, are that successful, do you think it would make a big difference in terms of drug sales or physician choices if that sort of thing did not go on?

¿ (0945)

Mr. Charles Tanguay: Yes, choices about medications would probably be much more rational.

Mr. José Sousa: Can I make a comment?

Old medications, that were available before Celebrex, were prescribed by physicians for five or six years, and there were side effects—especially long-term effects—that we were unaware of. Before a new drug like Celebrex can be approved, there has to be a 48-week trial. These trials are done on people who are generally healthy, or as healthy as possible, because someone who could reject the medication will not be selected. After a year, we can see the side effects in that population sample. It looks good on paper, and we're given the results. But in people who are suffering from other kinds of problems, such as liver or kidney problems, the difference in side effects is quite clear. However, it's always more attractive to a physician when he sees that there are fewer side effects than a previous drug had on his other patients.

[English]

The Chair: Monsieur Tanguay.

[Translation]

Mr. Charles Tanguay: There is indeed a need for a far more stringent system for monitoring side effects than the one currently in place. Of course, physicians don't want to admit that they gave someone the wrong medication. Instead, they will try and find other explanations for the side effects.

Often physicians don't take the time to listen to their patients when they describe their side effects. With Celebrex, we received all kinds of feedback from people who told us that they had explained to their doctor that they were experiencing gastric pain, and so on. Their doctor's response was that that was impossible, because that drug didn't have any side effects. Sometimes they can convince themselves that they're right.

[English]

The Chair: Thank you, Madam Scherrer.

Mr. Robinson.

[Translation]

Mr. Svend Robinson: Thank you, Madam Chair, and thank you to our witnesses for appearing.

As I said to the other group that just appeared before the Committee, there is a great deal of talk about the gifts being given to physicians by the pharmaceutical industry, but very little discussion of the generous gifts that these same pharmaceutical companies provide to political parties—indeed, a number of the political parties represented right here at this table. They are very, very generous gifts. In any case, Mr. Chrétien is eliminating all of that, and that's a good thing.

I want to begin by thanking the Union des consommateurs. I would like to get some additional information about your lawsuit against Pfizer Canada. It's with respect to Celebrex, is it not? If you could send that information to our Clerk, he could pass it on to Committee members. That would be extremely helpful.

[English]

Ms. Paynter, thank you for your eloquent evidence this morning on the issue of direct-to-consumer advertising. I think you're absolutely right there has been clear and gross negligence by Health Canada in the enforcement of the existing law. There are far too many loopholes in the existing law, but at the very least the existing law should be toughened.

I drew to the attention of Health Canada officials a blatant violation of that law several months ago. As of today, there hasn't been a damn thing done. So the law is not being enforced. I certainly haven't heard about anything that's being done so far.

[Translation]

I would now like to address a question to representatives of the Quebec Committee of People Living with HIV.

I read your recommendations with great interest and I would like to begin by asking one question. Are you subsidized by the pharmaceutical industry? Do you receive any funds from the industry?

Mr. Luc Gagnon: Yes.

Mr. Svend Robinson: How much do you receive on a yearly basis?

Mr. Luc Gagnon: I couldn't tell you exactly what that represents as a percentage of our budget. Among other things, that money is used to fund our treatment information activities, which are part of our information service for people living with HIV.

Mr. Svend Robinson: But what is the approximate percentage?

M. Marc Lapierre: It is currently about 30 per cent. The grants we were receiving from Health Canada have been cut back and we had to ask the pharmaceutical companies for more money in order to survive.

Mr. Svend Robinson: When I take part in AIDS marches, for example, I have to say I am really bothered by the fact that there are always so many posters for Pfizer, Glaxo and other pharmaceutical companies, and I am disappointed to see that a group representing people with HIV and AIDS has to depend on pharmaceutical companies for funding.

Mr. Marc Lapierre: It is disappointing, but our organization has to survive, and continue to be there to meet the needs of people living with HIV. When there is no public funding available, what are we supposed to do?

Mr. Svend Robinson: Yes, I understand; it's pretty sad.

I'm just looking at some of your recommendations. Your third recommendation is:

[...] that the continuing education of prescribers and dispensers be financed by the pharmaceutical manufacturers [...]

The fourth recommendation, regarding advertising, reads as follows:

These educational activities should be financed by the pharmaceutical industry [...]

Mr. Luc Gagnon: If you read the entire sentence, you'll see that it says: “financed by the pharmaceutical industry”, but also that it should be “carried out by an independent organization” so that we can in fact continue to carry out our activities.

Mr. Svend Robinson: I think these activities should be funded without the support of the pharmaceutical industry. I am a little surprised to read in your recommendation that such important activities as education and training should be financed by an industry whose only goal is to maximize its profits.

¿ (0950)

Mr. José Sousa: We're not talking about only one pharmaceutical company. We receive money from several companies and we provide information to people with HIV/AIDS. There isn't just one company out there; there are many and it's not a pharmaceutical company that is going to be deciding who is going to say what.

Mr. Svend Robinson: What is the goal of a pharmaceutical company?

Mr. José Sousa: To sell drugs. But we're not asking them to tell us what happens when we use one of their drugs. We hire an investigator who may or may not work with several pharmaceutical companies.

Mr. Svend Robinson: I believe your work is very important, but quite frankly, training, education and support for a group such as yours should in my opinion be public.

Mr. Luc Gagnon: That would be fantastic, but unfortunately, that is not the reality. I should also add that our activities are not controlled by pharmaceutical companies. We act as a watchdog in terms of people living with HIV and ensuring that their needs are met. We play that watchdog role and there is no interference. If we organize a conference on lipodystrophy, hepatitis C or anything else, pharmaceutical companies are not going to come along and dictate to us what we should say or what we should be debating.

Mr. Svend Robinson: Perhaps, but the fact remains that they spend their money with a very specific goal in mind.

Mr. Luc Gagnon: Absolutely. It gives them visibility.

Mr. Svend Robinson: Thank you for your work.

The Chair : Thank you.

Mr. Barrette, you have the floor.

Mr. Gilbert Barrette: Thank you.

Mr. Tanguay, you stated and even repeated that biased, truncated information had been provided to the public. Are you serious when you say that?

Mr. Charles Tanguay: As I said, that is exactly what we will be attempting to prove in front of a court.

Mr. Gilbert Barrette: So, that is coming up in the next little while. It's a class action suit.

Mr. Charles Tanguay: Yes, we will be able to provide some information to the Committee. Obviously, we did not take the decision lightly to launch a class action suit such as this, which will probably cost several million dollars. It was on the strength of international studies, condemnation by the FDA, and several other pieces of information that we came to believe that Pfizer had deliberately misled the population and the medical profession by underplaying certain aspects of its research and emphasizing others.

Mr. Gilbert Barrette: I presume that in order to make that demonstration, you are going to be working with people who have expertise in this area.

Mr. Charles Tanguay: Yes, but we are still in the early stages of this class action suit. At the appropriate time, we will draw on that expertise. For the time being, just what we've read in the way of medical news, FDA research and Health Canada publications has led us to believe that our claims are founded. In time it will be up to a court of law to make that determination.

Mr. Gilbert Barrette: Ms. Paynter, you talked about prohibiting advertising. We can always say that, but realistically, we know there will always be some advertising.

[English]

Mrs. Martha Paynter: I think it's realistic.

[Translation]

Mr. Gilbert Barrette: In any case, I prefer to be more realistic about this. In a context where advertising were still allowed, how should that advertising reach the population?

[English]

Mrs. Martha Paynter: We're already receiving it through American media, and there's no way we can ban that. So that exposure, in and of itself, is bad enough.

I have no thoughts on how to ideally put together a legislative framework so it's allowed in any way, shape, or form. It's not a good thing and we're getting enough already.

Point final, non?

¿ (0955)

[Translation]

Mr. Gilbert Barrette: As they say, our lot in life is to be subject to advertising. What can we do to ensure that it is as painless as possible?

[English]

Mrs. Martha Paynter: Definitely ban it. I think the only way to have education to make the public understand drugs and their side effects is to make it Health Canada's responsibility. Have your own ads that talk about what's really going on, in the same way we have ParticipACTION ads on television. Make it accessible.

If you want the pharmaceutical companies to pay for this kind of thing, just tax it out of them. That's one suggestion.

[Translation]

Mrs. Thérèse Richer: I believe there are only two countries in the world where direct-to-consumer advertising is allowed. I really think we need to maintain it, but that doesn't rule out the need to educate and inform consumers. The two go hand in hand. I don't think we can just decide that starting tomorrow, American television and the Internet are banned.

[English]

Mrs. Martha Paynter: But at the same time, in New Zealand and the U.S. it is allowed, but in a lot of places there's no legislation at all, which isn't to say that it isn't allowed. I think that's an important clarification.

The Chair: On behalf of the committee, I thank you very much for your efforts in coming here this morning to present your thoughts on this subject. You are proving once again that the tentacles of big pharmaceutical companies are everywhere, and it is long past due for the Government of Canada to move into this field a little more aggressively. So thank you for your input.

We'll take a 10-minute break now. Thank you again for coming, and for your enthusiasm and thorough research.

À (1010)

The Chair: I call you back to order. We have more witnesses. Our first one is Mr. Joseph Kerba, the chairman of Kerbapharm Inc., and I would guess the founder, since the firm is named after him.

Mr. Kerba, go ahead.

Mr. Joseph Kerba (Chairman, Kerbapharm Inc.): Thank you very much.

Madam Chair, ladies and gentlemen, thank you very much for allowing me to come to be a witness before you.

À (1015)

[Translation]

I would like to make my presentation in French, but I will be very pleased to answer any of your questions in both official languages.

I'm going to be very matter-of-fact with you. I intend to present the six main reasons for the astronomical rise in the price of prescription drugs and at the same time—because that is always helpful when you're talking about causes—suggest some practical solutions to allow us to avoid this painful situation.

Here is the first cause. If you had an opportunity to read the October 15th issue of L'actualité, you already know that Dr. Philippe Couillard, Quebec Minister of Health and Social Services, said that only 6 per cent of the 100 or so new molecules coming onto the market are actually useful. The Patented Medicine Prices Review Board and the Auditor General of Canada both arrived at exactly the same conclusion.

Roy Romanow found a solution to that problem. He said we had to, and I quote:

Communicate evidence-based information and guidance to both health professionals and patients, using various media including the Internet, rather than leave this to pharmaceutical companies.

That's a very simple solution. Rather than entrusting pharmaceutical companies with the task of providing information—they are the only sources of information for physicians—the government should be doing this.

The post-scriptum at the bottom of that page is very important. The World Health Organization has stated that there are only 326 drugs in the world that are essential. Yet Health Canada authorized the marketing of 22,000 drug products, including 5,200 prescription drugs for human use, but excluding biologic drug products, etc.

So, 326 drugs are considered essential by the WHO, and yet 22,000 drugs are authorized for use in Canada. I'm sure you can understand what a headache it must be for physicians to try and sort through the thousands of medications currently available in the marketplace.

The second reason for the phenomenal increase in the price of prescription drugs can be found on the next page.

Sylvie Perreault, Ph.D., pharmacist, associate professor, and researcher in pharmaco-economics and other fields, made the following statement with respect to the studies demanded by Health Canada:

Clinical studies are randomized and controlled by placebos.

In other words, new products are being compared to placebos. I hope they'll be better than the placebos. That is what is required for a new medication to be approved.

And she goes on to say:

It is therefore very difficult to establish the performance of a new drug, as compared to established therapies.

And Sylvie Perreautl herself suggests a solution:

[...] demanding clinical studies that would allow comparisons [...]

That is the only way to determine whether the new drug is better than existing products. So, Health Canada should be requiring clinical studies that are allow direct comparisons and study specifications and parameters that are invariable. When they vary every time, it becomes impossible to compare apples to apples.

The third reason for the phenomenal increase in the price of drugs can be found in some material produced by the RAMQ. It states:

There has been a 42.4 per cent increase in the number of prescriptions in Quebec over five years [...] increased consumption is responsible for 70 per cent of the increase in the cost of the Drug Insurance Plan.

That is very important, because every time reference is made to the increased number of medications, that increase tends to be attributed to the aging population. However, we don't age by 10 per cent every year. The increase we are seeing now goes well beyond what could be attributed to an aging population.

Roy Romanow offered a solution. This is what he said:

Incentives will be introduced to ensure access to essential prescription drugs and the selection of cost-effective products.

That's important. The medical profession has to be made to share some of the responsibility. If we don't do that, and we just let the government keep paying, the profession will do nothing.

Personally, I am suggesting, as we'll see a little bit further on, that the cost of drugs and physician services be linked in a way, so that physicians will take an interest in the cost of drugs. I am making that point because there was quite a bit of discussion about Celebrex today. I provided some documentation to the Clerk in that regard which he will be distributing to you.

I would just like to point out that Health Canada issued an official news release to all health care professionals and provincial government health system administrators across the country. It states, and I quote:

In extensive clinical trials [...] no differences were noted between treatment groups, only as regards the risk of ulcerative complications (hemorrhaging, perforation or gastro-intestinal obstruction).

Those are the facts. The Clerk will be circulating the document issued by Health Canada. So, Health Canada has issued this information to all individual physicians. But what is actually happening? Since May 23, 2002, significant amounts of Celebrex are still being prescribed, and we continue to see Celebrex on provincial formularies in every province of Canada.

So, yes we have to inform physicians, but we also have to find a way to make them share the responsibility.

I would like to move on now to Ms. Marcia Angell, Editor of the New England Journal of Medicine. She says, and I quote:

Unfortunately, many physicians in fact rely on representatives and publications of the pharmaceutical industry [...] [That] makes about as much sense as relying on beer companies to teach us about alcoholism.

That is what she said, and she is absolutely right.

Sylvie Perreault, who is an expert with the Quebec Drug Board is concerned about the grants that pharmaceutical companies provide for the development of therapeutic guidelines. Earlier we were talking about those kinds of grants.

If you like, we could move on to the next page, which presents another extremely significant cause that we talked about earlier. Here I refer to samples.

People think they're free, but they aren't. We pay for those samples. I just would like to quote from a study Dr. Saba referred to by Lisa D. Chew, M.D., published in the Journal of General Internal Medicine—a journal with a very good reputation—in July of 2000. She says that “90 per cent of physicians acknowledge—and to get a physician to acknowledge something is quite a feat—having dispensed drug samples—that were lying around here and there, on their desks or in their cabinets—even though that was not their preferred drug choice.” They would have prescribed something else, but because the sample was there, they gave it to the patient free of charge.

What is the answer, then? In fact, every time I present a problem, I provide a solution. The answer is to prohibit pharmaceutical drug samples and replace them with exploratory prescriptions. If we tell physicians that they can no longer dispense samples, and that they have to write a prescription, we will not end up in a situation where 90 per cent of physicians acknowledge having dispensed drug samples, rather than their preferred drug choice.

À (1020)

Roy Romanow also wrote:

Disease management protocols will be in place and would guide decisions about the prescriptions a patient receives.

That's clear. There are 5,200 medications. Physicians simply can't remember all that information. There needs to be a well structured plan identifying such and such a medical protocol for this or that disease. That's important.

Let's move on to number 5, which deals with pharmaco-economics. Just how much pharmaco-economics are we actually doing? The fact is, very little. Why? Because clinical studies are randomized. We can conduct them in total different conditions, which simply confuses the whole picture and doesn't allow us to compare apples with apples. Furthermore, we're comparing new products to placebos. Just think about it: a sugar pill!

So, pharmaco-economics is sorely lacking, as are cost-benefit analyses, both before and after the inclusion of new medications in provincial formularies. That is very important. This kind of analysis should not only be done before a new drug is launched.

Michel Clair wrote:

Serious cost-benefit analyses should be carried out before including new products in the insured drug formulary [...] Drug utilization and therapeutic outcome assessment programs [...] Ongoing review of the basket of insured drug products.

Celebrex is supposed to be some kind of super aspirin, but Health Canada has officially declared that it caused the same problems as other medications. Yet it was not removed from the formulary. The formulary is an entry point, but apparently not an exit point. Formularies also have to be exit points.

Roy Romanow put it quite clearly:

Processes should be in place for reviewing drugs on an ongoing basis, monitoring their use [...] One significant cost driver rarely discussed is the unquantifiable cost to the system of inappropriate drug use [...] We know how much we spend, but we do not know how much we are wasting [...]

That is really the crux of the problem.

Mr. Réal Ménard: You have to leave some for the other.

Mr. Joseph Kerba: The final problem I want to discuss has to do with the constant renewal of patents. We have talked about evergreening, along with the famous Patented Medicines Notice of Compliance Regulations.

Since August 18, we are now the only country in the world with this combination of measures in place.

Roy Romanow made the point very clearly. The Supreme Court of Canada, which is not in the habit of using this kind of language, called this regime draconian. As I say, the Supreme Court does not generally use those kinds of terms.

In conclusion, I would just like to join with the other witnesses in urging you not to allow direct-to-consumer advertising. For heavens' sake, don't do it.

We have already talked quite a bit about the myth of generic drugs being more expensive in Canada than in the rest of the world. I have provided a document in both official languages to the Clerk. That document clearly proves that that is untrue. I would ask you to refer to the source of the study in question—the Patented Medicine Prices Review Board. They can confirm that there have been gross errors of interpretation. The detailed reasoning is clearly explained in this document.

Thank you for your patience.

À (1025)

[English]

The Chair: Thank you Mr. Kerba.

Next, representing Le Groupe Jean Coutu, is Mr. Mayrand, vice-president, professional activities. You have the floor, sir.

[Translation]

Mr. Richard Mayrand (Vice-President, Professional Activities, Le Groupe Jean Coutu (PJC) Inc.): Thank you, Madam Chair. Ladies and gentlemen, members of the Committee, good morning.

On behalf of the Jean Coutu Group, I would like to thank you for inviting us to present our views on prescription drugs in Canada. My name is Richard Mayrand. I am a pharmacist and Vice-President of Professional Activities for the Jean Coutu Group.

The Jean Coutu Group and its franchisees operate 330 pharmacies in Canada. Every year, we fill close to 45 million prescriptions. In total, we employ 1,000 pharmacists and 2,000 lab technicians in our pharmacies

This morning, given the time we have available to us, we have chosen to address four subjects which, unfortunately, are rarely discussed. In the document we have submitted, however, you will find our comments on the issues mentioned in your invitation.

First of all, I want to say that Canadians get worried when they hear about increasing drug costs, and many of them automatically assume that the cost increase is a problem. In that respect, we want to point out that it is not a problem in the way that it is normally seen to be. Drugs constitute a very effective advanced technology; they probably are the most cost-efficient technology in terms of improving the health of Canadians. For example, medications that treat stomach ulcers have made it possible to considerably decrease the number of surgeries. Rather than relying on surgery, ulcers are generally treated now by means of what is called medicated triple therapy which lasts for only a week and is effective in most cases. It has been noted that these medications, which are relatively costly, have had a very beneficial impact on population health, as well as on the overall effectiveness of the system.

We also think it's important to note that controlling increases in prescription drug costs is possible only in the context of a comprehensive drug policy, which includes drug program objectives, a framework for promoting optimal use of drugs, and control mechanisms. Such a policy should have two objectives: first, to encourage the development of new treatments. However, that development cannot occur unless we are able to provide a satisfactory return on investment for shareholders of pharmaceutical companies. The policy has to reflect the ability to pay of employers, governments, insurers and taxpayers, particularly since taxpayers are ultimately the ones who must foot the bill.

At this point, we could make a suggestion, but we believe that part of the solution lies in reconciling these two objectives which, at first glance, are contradictory. We need to find a way to adjust drug insurance payments at the time of purchase, in a manner that is consistent with the medical consensus. We can come back to this later.

À (1030)

Third, we believe that optimal use of medications necessarily requires optimal use of the knowledge and skills of pharmacists. To illustrate this point, we believe it is worth mentioning two recent developments in Quebec involving new uses of pharmacists' skills.

First of all, for the last two years, pharmacists in Quebec have been permitted to prescribe drugs for emergency contraceptive treatment. Beginning on December 17, Quebec pharmacists will be compensated for prescribing. We will receive a fee for patient consultation when we meet with patients requiring emergency oral contraceptive treatment. That fee is over and above the fee that pharmacists usually receive for dispensing the product.

As second example relates to Bill 90, which was passed by the Government of Quebec a year and a half ago. That legislation, which has been in place for a year now, even though its concrete applications are still not known to us, reorganizes the entire jurisdictional structure across the various professional bodies in Quebec, with a view to ensuring that every health care professional is used in the area where he can make the best possible contribution. For example, pharmacists, in keeping with their power to prescribe, will be able to initiate, modify and stop drug therapies. In such cases, patients will feel less of a need to consult their physician, except at times when that is really important strategically. But in the meantime, pharmacists will be able to make a tremendous contribution to proper therapy management.

We are convinced that these mechanisms, which came about as a result of legislative reforms—and it's important to realize that—will yield considerable savings, and considerably improve the quality of health care. Of course, in order to make greater use of pharmacists' skills, we will certainly have to resolve the problem of a shortage of pharmacists. At this time we have 700 fewer pharmacists than we require, and the proportion is the same for Canada as a whole. This is a hidden problem, because pharmacists work longer hours. Because we are running our own businesses, we don't complain; we just spit in our hands and keep on going, although the problem will eventually catch up to us.

The last point we want to draw your attention to is that we believe the success of any potential comprehensive drug policy depends first and foremost on how well it fits with the general policies of the Canadian health care system. I know the Canadian government has been working on this in recent years. However, for the average Canadian, the effects of that effort are still not clear. I would even say that the vision we are trying to realize has not yet reached our level, that of the professionals. We believe that if we were able to adopt a simple model where everyone played a role, we could secure greater cooperation, that would yield very attractive results for the system as a whole. This kind of reform would allow every sector of the health system to operate at a level of effectiveness which has long been desired, but never achieved.

In conclusion, our view is that the most expensive medication is not the one that costs the most, but the one that is misused. The professional most qualified to play a role in ensuring the healthy use of medications is an underused professional: the pharmacist.

Ladies and gentlemen, thank you for your attention.

[English]

The Chair: Thank you, Mr. Mayrand.

From Montreal International we have Michel Leblanc, vice-president, life sciences.

[Translation]

Mr. Michel Leblanc (Vice President Life Sciences, Montreal International): Good morning. I would like to begin by thanking the Committee for agreeing to hear the position of Montreal International and the Metropolitan Montreal Life Sciences Cluster with respect to access to prescription drugs in Canada.

First, I would like to say a few words about Montreal International, for those of you who may not be familiar with this organization. Montreal International is a private, non-profit organization that was created in 1996, and whose mission is to contribute to the economic development of metropolitan Montreal, by attracting foreign investment, international organizations, and by working towards the organic growth of all businesses and institutions in the Montreal metropolitan region. In keeping with that strategic mandate, we aim to ensure that the community and businesses remain internationally competitive, especially in the life sciences field, given the topic of today's discussion. With that in mind, in 2001 we began to develop an action plan for the Metropolitan Montreal Life Sciences Cluster, which sets out our vision as well as 25 recommendations for action.

Our objective is to position metropolitan Montreal as a dynamic world leader in the life sciences, specifically by creating at least 16,000 new jobs by 2010. That means 2,000 jobs per year—twice as many jobs as were created naturally 15 years ago in the Montreal life sciences sector. So, we're talking about a faster pace of job creation and investment.

On a personal level, I hold a degree in economics. I began my career in the federal Department of Finance more than 15 years ago, and went on to become Director of Research at the Institute for Research on Public Policy, a position I held for six years. I then worked for SECOR as a consultant, and for the last year, I have been trying to accelerate development of the life sciences cluster in Montreal. My job has two key dimensions: the first is to work with businesses, key players in the field, and research centre directors, as well as university administrators. There are two deputy ministers on a committee on which I sit: the DM for Canada Economic Development and the DM responsible for Quebec Regional Economic Development. That committee of 25—and the list of members appears in the presentation that has been circulated to you—is what I sometimes call the cluster committee.

The second document that you have been given provides an overview of our strategy one year later—in other words, a general explanation of the current situation in Montreal. It is very humbly entitled: “A Profile of Success”. We are working relentlessly to create jobs. Over the last year, we have created 2,145 jobs, which is in keeping with the goal that we set.

I would like to conclude this rather long introduction by saying that it is with the support of the life sciences committee and at its specific request that I appear before you today and that we have made these documents available to you. They reflect the position of a number of key stakeholders in the Montreal region on the important work that you have undertaken and its significance for the future of our life sciences cluster.

À (1035)

The rationale behind our position in this respect relies on three arguments. First, the health of Canadians depends on many factors, including access to prescription drugs, which is important. At the same time, there is no doubt that the fundamental factor remains economic prosperity. Only a prosperous society can avail itself of the latest treatments and new medications, while adopting measures to extend access to as many people as possible, including the neediest and the chronically ill.

Second, if Canada is to continue to be a wealthy society, it must adopt policies that foster economic productivity gains over competing governments. In that respect, the federal government and the provinces—rightly so—have embarked on extensive efforts to improve Canada's performance in the area of innovation. That central theme is the reason for my being here.

Huge investments have been made by the Canadian government, among others, in basic and academic research, particularly in the life sciences field. As a result of these endeavours, science and entrepreneurship are booming in Canada. The Montreal metropolitan region is a good example of that. This study of Canada's policy respecting access to prescription drugs must consider what impact that policy will have on the future of research in the life sciences, and on our ability to capitalize on all the efforts that have been made. A poorly formulated policy could have catastrophic effects.

The document you have been provided contains examples of what is currently happening in Europe, and they clearly illustrate what we believe to be a very poorly formulated drug policy. Major research centres are moving and research mandates are being lost. Although there is no outcry in the media, the fact remains that we are witnessing an exodus of jobs, brain power and skills to the North American content—essentially to the United States. Conversely, an appropriate policy could boost scientific and entrepreneurial activity even further, resulting in a considerable increase in Canadian research.

The document you have clearly identifies, I believe, the connection between prosperity and innovation, and also between innovation and drug policy. We mentioned earlier the need for greater consistency between our drug policy and the rest of our health care policy here in Canada. Yet this rationale leads us to think that where we really need consistency is between Canada's drug policy and its innovation policy.

The health and quality of life of Canadians would be better served by a policy respecting access to prescription drugs that incorporates all of the economic value of new or innovative drugs. We cited the example of the treatment of ulcers. That is the kind of approach that is needed. So, rather than considering only the price of the drug, we should also be taking into account the savings that it makes possible. If costs are avoided across the entire system, that must be taken into account. A simplistic interpretation of the cost of a medication would deprive us of important advances. That includes the benefits of the new drugs for human health, the costs that can be avoided elsewhere in the health system, and the economic spinoffs of biopharmaceutical research conducted in Canada.

If we were only consumers of imported drugs, innovative medications would cost us a lot more. However, we in fact create, produce and sell such medications here in Canada. The economic impacts of that are very significant, which means that the whole area of prescription drugs and innovative drugs is extremely beneficial to Canada from an economic standpoint.

In that respect, we encourage the Health Committee to consider the following potential solutions. The system governing intellectual property should be clarified, stabilized, and aligned with those of our main competitors, the United States and the European Union. Also, it is completely illusory to think that large pharmaceutical firms will conduct basic and applied scientific research in Canada if the message they receive is that we don't respect the intellectual property component of what they develop here, supposedly in order to realize short-term savings.

The drug approval process should be harmonized with those of these two competitors, and every form of cooperation should be explored in order to bring the approval timeframe into line with their standards. In that regard, it is important to note that our population is only one tenth the population of the United States, and that our wealth ratio is even lower.

By seeking to review and approve the same medications as they do, within the same timeframe, we will simply be duplicating that work, even though it will clearly take more time.

It is illusory to believe that we can carry out the same work with only 10 per cent of the budget. We are not saying that we have to accept everything the Americans approve. We are simply saying we need to cooperate with them.

Third, the prices of innovative medications should be competitive, and should include a fair contribution from Canadian consumers towards the cost of developing these new medications. Once set, the prices of the medications listed in the formularies should be adjusted in keeping with annual inflation rates. It would be ridiculous for drug prices not to reflect the annual inflation rate, when that cost is reflected throughout the rest of society.

Finally, the government should use every means at its disposal to put an end to the grey market of Canadian medications sold to Americans, which you have heard about in the media. Americans won't be taken in for long. They will impose price hikes, if need be—which are rare on our markets—with a view to countering this grey market that threatens the U.S. pricing system.

In exchange for this policy respecting access to medication, the Canadian government should insist on certain commitments from large pharmaceutical firms. First, it should insist on a group commitment from research-based pharmaceutical companies to each increase their R&D investments in Canada so that they represent 20 per cent of revenue earned in Canada. At the present time, that ratio is about 10 per cent, although it is 19 per cent in Quebec. The global average is 20 per cent. There is no reason why the Government of Canada, if it cooperates with the industry, should not feel it cannot require an additional effort from the industry in that regard. Our national goal should be to receive our fair share of the $30 billion U.S. spent annually on R&D.

Furthermore, the government should insist on a group and individual commitment by pharmaceutical companies to finance and collaborate on an independent study concerning the use of medications in Canada. I believe this goes back to what Joseph Kerba was saying earlier about the importance of analyzing the use of medications from the pharmaco-economic perspective.

Finally, it should secure a commitment by pharmaceutical companies to more closely examine the possibilities of collaboration and partnership with local biotech companies. Biotech companies are one of the flagships of our scientific community and are on the leading edge in terms of scientific discovery. I believe that a future large Canadian pharmaceutical company, if it ever sees the light of day, will be formed through one of these biotech companies.

That completes my presentation. Thank you very much for this opportunity to speak.

À (1045)

[English]

The Chair: Thank you, Mr. Leblanc.

Next, from the University of Quebec in Montreal, we have Mr. Marc Hasbani, researcher, socio-economic research chair.

Mr. Hasbani.

[Translation]

Mr. Marc Hasbani (Researcher, Socio-economic Research Chair, University of Quebec in Montreal): Good morning and thank you for your invitation to appear. Have copies of my brief been distributed? Would it be possible to distribute them? There are quite a few figures there. It's only a very brief summary, but it's difficult to follow otherwise. I will be quoting a lot of figures, and it would be a good idea for you to have them in front of you on paper.

I brought ten or so copies with me. It's important to have them, because otherwise you won't be able to follow.

[English]

The Chair: We have one here.

Mr. Marc Hasbani: There are about eight or ten.

[Translation]

Mr. Réal Ménard: I think you can begin your presentation. We will fill in the blanks once we have the document. Is that all right?

Mr. Marc Hasbani: Yes, if you like.

I would like to begin by presenting the results of a study published about a year and a half ago regarding the patented medicine industry. Nine of the 15 largest companies in the world that make prescription drugs were selected for the purpose of an analysis. The study was carried out over a period of 10 years. At the end of that period, there were only seven companies left, because there are a lot of mergers occurring in that industry. It's an area where firms are joining forces to create economic monsters.

The first point that was considered as part of the study, and it's a very important point, was the return on investment (ROI). On page 4, you can see that over that 10-year period, the ROI was 40 per cent. Perhaps I should explain the term “return on investment”. It simply means that an investment made brings you so much money at the end of the year. Perhaps I could give a simple example, like investing money in the bank. If you put $1,000 in the bank and it pays you 10 per cent, after calculating what you paid in tax, you're left with 5 per cent. So your return on investment is 5 per cent.

Over that 10-year period, prescription drug companies had a return on investment of 40 per cent, year after year. In other words, every two years, they doubled their after-tax invested capital.

Mr. Joseph Kerba: After tax.

[English]

The Chair: It's 45%, but if that is your figure--

Mr. Joseph Kerba: Over the last five years--

The Chair: Yes. Fortune magazine has that.

Mr. Marc Hasbani: -- it's been 45%.

[Translation]

So, year after year, they had an ROI of 40 per cent. If a company was worth $5 billion, then two years later, it was worth $10 billion. Generally the company realized these profits by selling drugs, which are an essential product. But still, that is rather excessive. Again according to Fortune magazine, which calculated an average for all industries, the average return on investment across all industrial sectors is 15 per cent. And yet pharmaceutical companies had an ROI of 45 per cent. That is huge. Banks have a return of 16 per cent; the chemical industry, 15 per cent; the automobile industry, 15 per cent. So, if the normal ROI was about 15 per cent, pharmaceutical companies had a return on investment that was three times the average.

Also, these nine pharmaceutical companies that manufacture prescription drugs realized profits of $15 billion in 1995. In 2000, five years later, they had profits of $31 billion. So, in the space of barely five years, they doubled their profit, which is already huge. I often talk about billions, but I don't even know what a billion dollars is: the fact is, it's a thousand million dollars. So, their profits doubled. That's incredible. This is the most profitable industry in the world. There is nothing more profitable than that. And yet it's pretty incredible when you think that these are essential products.

In our study, we began with one assumption. If the rate of return of the patented drug industry were similar to that of other industries, there should be a drop in the price of drugs of approximately 17 per cent, which would be huge. Seventeen per cent of $31 billion worth of profit, or sales of $100 billion, is huge.

Now what exactly do these companies do with their huge profits?

Let's take the example of Merck. In each of the last few years, all of Merck's profits have been paid out in dividends and share redemptions. Nothing is being reinvested in the company. All the profits are going to the shareholders. So, nothing is being reinvested in research and development or capital equipment. They have so much money, and they're generating so much profit, that they don't need to do that. It's a real cash cow: you sell your products a high price, make a lot of money and then pay it out.

Finally, I want to draw your attention to a comparison between research and development and marketing and administration expenses. Most people think that drugs are expensive because developing them requires a lot of research and development. And it's true that these companies do R&D, but compared to the money invested in marketing and administration, it represents a ridiculously small amount of money. Year after year, three times more money is spent on marketing and administration than on R&D. In terms of the cost of every pill we buy, three times more money is going to marketing and administration than to research and development. And a large part of that goes to profits. I have a table here. I calculated totals for the year 2000 for each of the different companies.

À (1050)

Total sales amounted to $150 billion. In terms of expenses, you can see here that the cost of sold merchandise is $48 billion, marketing and administration costs are $43 billion, and that R&D expenses are at $17 billion, leaving $31 billion in profit. That means that overall profits, marketing and administrative expenses, taken together, represent four times the amount spent on R&D.

I would just like to conclude by drawing your attention to the liquidity of these companies. Each of these firms—which is pretty incredible—has enough money to have practically zero long-term debt. Just with the money they have in the bank, they can generate higher interest revenues than interest expenses. It's absolutely crazy. It's better than a bank. It's quite unbelievable.

Let me just give you the numbers for Merck Frosst. In the year 2000, that company's liquidity—money in its bank account—was $5 billion. We're talking about five thousand million dollars cash. That was in its current account—its expense account. It doesn't need to issue bonds or engage in any other transaction. It has plenty of money in its account.

In conclusion, the pharmaceutical industry manufactures drugs, which is a good thing, because that helps people, and so on. However, does it have the right to sell those drugs at any price and to pocket such unreasonable profits?

[English]

The Chair: Mr. Hasbani, you just explained for me why Mr. Kerba has been smiling since he came to this room three hours ago. You've given us the perfect explanation.

We'll move now to questions and answers, and we'll start with Mr. Merrifield.

Mr. Rob Merrifield: Thank you. It's very interesting when you start talking about some of these profit margins. I'm wondering if you've done the same analysis with the generic-brand companies.

Mr. Marc Hasbani: We haven't' done it, but they make a lot of profit too. I don't have the numbers, but they're not as large as that.

À (1055)

Mr. Rob Merrifield: But you don't know how much.

It was really interesting, because I sat on the industry committee that looked at patent law this spring. Both brand-name and generic companies say they are broke, so it's really hard to swallow some of the numbers.

I'm wondering if you've done a comparison of the profitability of the brand-name pharmaceutical companies in Canada next to those of the United States and Europe. How do we stack up on profitability?

Mr. Marc Hasbani: I haven't done that.

Mr. Rob Merrifield: So we don't really know. It's pivotal because we have to know where the threshold is for them. The threat is always that they're going to pull money out of the country and move research to the States, or someplace else. They obviously won't do that if the profit margins are that high, but we have to know those numbers to have an idea.

The suggestion was to move R and D from 10% to 20%. I can't remember who said that. Was it the last group that was here? Is that what you're advocating for life sciences?

Mr. Michel Leblanc: Yes, that's what we're advocating.

I don't want to start a debate between economists here, but if that's the case why aren't the stocks higher? Why aren't more people investing in that pot of gold that is unseen, unknown, and not exploited as much as it could be? It's no big secret that we just discovered that the rest of the world doesn't know that the pharmaceutical industry is making money. There is an aging population. There's a growing demand for these sorts of medicines, therefore the profits expected are going to be there. There's no surprise there.

At the same time, it's a risky business. They don't have many new drugs in the pipeline. Merck stock this week was going down, and they're laying off people because they don't have new drugs in the pipeline. We can have all this discourse about the big bad guys over there, but they're having their own problems too, and they're not that unique.

Mr. Rob Merrifield: So are you refuting the numbers?

Mr. Michel Leblanc: I'm refuting this kind of “let's chase the bad guy” attitude. Let's chase them, just hammer them, and show the rest of the world that in Canada we're tough. Therefore, let's lose the R and D that's done here. That's what I'm against.

Mr. Rob Merrifield: Mr. Kerba, do you have a comment here?

Mr. Joseph Kerba: Nobody is chasing those companies out of Canada certainly, but it's all a matter of relativity. If they've been making 45% over the last five years, as has been explained by Mr. Hasbani, and they go back to 40%, which is exactly what they've been making over the last 10 years, then it will be a catastrophe for them. If they go down 1% below the 45%...because over the last ten years it was 40%, and over the last five years it was 45%. It has to go over and over; ask any salesman. You don't compare yourself to what you did last year. Doing as much as you did last year is not good enough. So moving from 45% to below expectations is hell.

So we're saying here that we're not going after those companies; we're going after ourselves. We have to decide which medicines we would like to have, and if 93% are me-too medicines--just like our minister of health here in Quebec has indicated, and the PMPRB--let's not prescribe those me-too medicines; prescribe only the products that have an improved cost-benefit ratio. That's what I'm saying.

Thank you.

[Translation]

Mr. Marc Hasbani: I don't want to get into a debate with this gentleman, but when I hear people saying that the pharmaceutical industry is threatened, well... I'm sorry! We are talking about profits of 40 per cent, year after year. Profits are going up by 20 per cent every year. That is a rate of return, year over year, of 40 per cent.

Every year, the company doubles its worth. The share value of these companies has increased tenfold. There is nothing risky about that. If that's risky, then I wonder what mining could be described as.

Á (1100)

[English]

Mr. Rob Merrifield: Then let's get into the other problem that brand names are talking about, which is the Internet pharmacy problem that has grown from about $400 million two years ago, to $1.2 billion last year, and will probably be more this year.

It's raising a lot of concerns with the Americans. When you look at our patent law compared to the United States--which is our closest neighbour--theirs is much more attractive to research and development than ours. You really wonder what the profit margins are down there, if that's the case, and whether they're going to be able to compete to stop the Internet trade or not.

The other issue is the generics. The U.S. doesn't have a law saying we can't have our drugs down there, but we have a law saying their generics can't come up here. If we were to open that up, would that be fair ball?

Mr. Joseph Kerba: First of all, on the cost of generics in Canada versus the United States, you have available to you at the table over there the proof of the pudding that the study made by PMPRB was incorrect. It's a myth. In fact, generics in Canada are 28% less expensive than in the United States.

Mr. Rob Merrifield: Are you saying our prices review board doesn't understand the difference?

Mr. Joseph Kerba: No. I'm saying they haven't compared apples with apples. You've got the whole document over there in English and French.

Mr. Rob Merrifield: I've seen the document.

Mr. Joseph Kerba: You will see in the document that there were a lot of mistakes, omissions.

Mr. Rob Merrifield: So what is the difference in price?

Mr. Joseph Kerba: They are 28% less expensive in Canada than in the United States.

Mr. Rob Merrifield: Generics.

Mr. Joseph Kerba: Absolutely.

I'm not saying I'm in favour of Internet pharmacies; I am not. I think a physician has to see the patient. Just sending medicine, as you send any other goods, is completely unacceptable. That's definitely the case.

Your third point, Mr. Merrifield, was that the patent laws in the United States were more attractive than the patent laws in Canada. I'm sorry to have to indicate that one of things I've mentioned in this document is the fact that in the United States, as of August 18 of this year, President Bush--a very Republican president--has said there's enough abuse, and he's stopping the evergreening associated with the regulation that on the basis of a simple allegation there is a 24-month automatic injunction. Since August 18, we've been the only country in the world to have this.

Mr. Rob Merrifield: If we stopped that and added the time of licensing, as they have in the United States, would that be fair ball?

Mr. Joseph Kerba: I think the brand-name companies are trying to gain something here, and then gain something there. Once they gain it here, they ask why they don't have it there, and so on.

Mr. Rob Merrifield: But if you're comparing the two, if we can stop evergreening and add the licensing time, would that be all right? And Stephen Harper, when he becomes prime minister next spring, since we're in a crystal ball here--

Mr. Joseph Kerba: Adding the licensing time is one of the most unacceptable things we could think of. We're doing that because of the bureaucracy we have in our institutions in approving products.

Instead of saying it should be 20 years plus three more years because the bureaucracy took three more years to get us there, let's improve our method of approving drugs. Let's get together with the other countries in the world so we don't reinvent the wheel every time--do it in Europe, do it again in the United States, and then do it again in Canada. That's a very costly process. Get together, and don't be slaves of the United States and Europe. Cooperate as equals with all the other countries. Then you won't have to add two or three more years because it took a little more time to get there.

Thank you.

The Chair: Mr. Ménard.

[Translation]

Mr. Réal Ménard: I think we have to be wary of two rather simplistic reactions: first, reviewing the Patents Act with the aim of no longer recognizing any kind of intellectual property; and second, not recognizing the costs associated with research.

The figure that has been quoted—and I don't know whether some of you could confirm its accuracy—for research is $850 million. That covers the entire period from the time the molecule is isolated to the time the tablet is actually available, either over the counter or by prescription. I don't know whether that's right, but I think we have to recognize that there are costs associated with research and that a certain environment fosters that. That is a reality we have to deal with and which has to be reflected in our report.

Of course, the figures Mr. Hasbani has brought forward, as well as those widely circulated by Mr. Léo-Paul Lauzon, certainly give us pause. So, the status quo is not really an acceptable solution either.

Mr. Leblanc, I'm a Montrealer and I like Montreal; I grew up there and I've spent my whole life there. I believe in research, and I think that what is taking place in Quebec now is part and parcel of our distinctiveness as a society. But when it comes to drugs, don't we need a safety valve? Personally, I would not agree with the idea of it being considered normal for the cost of drugs to increase at the same pace as inflation.

In any case, that would be considered illegal by the Patented Medicine Review Board. Should we not be encouraging research and assuming that drugs are a necessity? Our work as legislators is to ensure that drugs are available at the lowest possible cost.

How can we reconcile our desire to have an innovative, dynamic research sector with the idea of making these products accessible to consumers? During the mandate of the previous government, one of the best to ever have graced government benches—I, too, can be partisan—Mr. Montmarquette who, like you, is an economist, realized that one year after the introduction of the Drug Insurance Plan, it was already in the hole.

In your opinion, how can those two fundamental goals be reconciled?

Á (1105)

Mr. Michel Leblanc: In my opinion, it's important to realize that research is expensive, and in order for it to take place, there has to be some long-term return. I think we're fooling ourselves if we think we can take matters into our own hands and regulate prices and access to drugs, without taking into consideration what is going on in the United States.

First of all, Canada and Quebec have to understand that they are not distinctive enough to be able to afford to have that different a policy when it comes to drugs. We are living on the North American continent, where there is economic integration and where talent moves around. My job involves dealing with people who attract talent, such as researchers, managers, and so on.

I would like to come back to the issue of drug pricing. As I see it, what we should be doing is trying to determine how we can encourage the global pharmaceutical industry to make its research effort more efficient, productive and effective.

Mr. Réal Ménard: That brings me to my second question, which is connected to the first.

When we talk to different system stakeholders separately, the pharmacists tell us that they're not the ones getting rich on drug sales, the physicians say the same, and the pharmaceutical companies practically pass themselves off as philanthropists. So, one might be tempted to think that no one is getting rich. However, consumers are paying prices that go up by 15 or 20 per cent every year.

I'm going to put this question to each one of you, asking you to rely on the kind of synthesis Mr. Kerba is known for and which makes him so endearing.

In your opinion, what action can we ask various stakeholders in this process—pharmaceutical companies, governments and pharmacists—to take with a view to controlling the cost of drugs? How can we go about this, knowing right from the outset that the status quo is not an acceptable option?

I would like to begin with Mr. Mayrand, who was born in the riding of Hochelaga—Maisonneuve.

Á (1110)

Mr. Richard Mayrand: Thank you, Mr. Ménard.

I am a pharmacist, although I am no expert on the pharmaceutical industry. I come at this from the perspective of someone at the other end of the chain. I have a Master's Degree in Business Administration and I am a Certified Administrator, and I have to say that as interesting as the principle behind Mr. Hasbani's study may be, I think we have to be wary of some of his comments, which are probably personal views.

I think it's important to realize that the pharmaceutical industry is a high-tech industry and a risky one. There is no getting away from that. A good example would be what happened to a Quebec pharmaceutical company by the name of Les Laboratoires Æterna, one of whose studies just flopped. Investors in that company lost a good part of their investment. What must be considered is not the return of those companies that are successful, rather the industry's overall return, because for every success, there are many failures. I don't have the necessary expertise to tell you what the return should be now, but I did want to emphasize that you really need to consider the status of the industry as a whole.

Second, the real goal of the pharmaceutical industry is to push back the frontiers of our human condition, frontiers imposed by nature. We try, year after year...

Mr. Réal Ménard: That's the André Malraux in you coming to the fore.

Mr. Richard Mayrand: Yes, but it's true. Someone could give you the figure, but it seems that almost 80 per cent of the drugs a person uses in the course of a lifetime are actually consumed in the last two years or the last six months of life. Some of you may already have heard this statistic and be able to provide clarification in that regard. So, prolonging life is something that is very expensive. Of course, one day, if we're lucky and the right discoveries are made, we will make great leaps forward. That's the sort of thing that happens. A little like evolution, things tend to advance by leaps and bounds. Once we have understood that, the question is: should we try and control the cost of drugs, or instead, let the industry conduct its research, determine the selling price of its drugs, and then ask ourselves what our ability to pay is?

Mr. Réal Ménard: As governments.

Mr. Richard Mayrand: Yes, as governments and as taxpayers. At that point, we can decide that although such and such a manufacturer wants to market a specific drug at a specific price, as far as we are concerned, that drug is not worth that price. So, we say: fine, we will simply work with what we've got. I think that if we try to exercise too much control over pharmaceutical companies, we will end up destroying their desire for innovation and we will regret that sooner or later, because the pace of innovation will slow.

Mr. Réal Ménard: Now you're going from Malraux to Adam Smith.

I would have liked to hear from Mr. Leblanc.

[English]

The Chair: No. You're well over your time.

Seeing no hand on this side, I'll go to Mr. Robinson.

[Translation]

Mr. Svend Robinson: I want to thank all our witnesses, and especially Mr. Hasbani, because the results of his research and that conducted by Mr. Lauzon are truly striking. I hope your findings will be reflected in the Committee's recommendations.

Mr. Leblanc, are there women working in the life sciences industry in Quebec? If there are women working in that industry, I have to say I find it incredible, unacceptable and shocking that you would appear here as a representative of a committee of 28 that does not include a single woman. Why is that?

Mr. Michel Leblanc: I don't know any women CEOs, nor do I know any women who are directors or vice-principals responsible for research in a university. The two deputy ministers who are on the committee were appointed by institutions, one of which is the federal government. The research centre directors are also all men. Your question suggests to me that if there is blame to be laid, that blame rests more with society than it does with me.

Mr. Svend Robinson: It has nothing to do with society. Can Montreal International not find a single woman—not necessarily a CEO or a deputy minister—who works in this field?

Mr. Michel Leblanc: This is 2003. My personal perception is that any woman appointed simply by virtue of being a woman would feel uncomfortable. What I am seeking is people who are competent and able to act. That is exactly what I focus on. If there is a woman out there who meets that criterion...

Sir, I take that comment as an insult. I have been named personally and attacked...

Mr. Svend Robinson: That means that...

Á (1115)

Mr. Michel Leblanc: No one has a right to insult me with respect to my choices.

Mr. Svend Robinson: I would like a clarification. Did you say that no woman in Montreal is capable of sitting on such a committee?

Mr. Michel Leblanc: There probably are some. But I don't know them.

Mr. Svend Robinson: Are you going to try and find some competent women?

Mr. Michel Leblanc: I will carry out my duties according to my priorities. When I get to that one, I will do so.

Mr. Svend Robinson: Thank you. That tells us a great deal about your priorities.

I only have one other question, and it is addressed to Mr. Hasbani. Have you any specific recommendations to make regarding the possibility of funding research on the pharmaceutical industry, not through patents, but publicly?

A number of studies published in respected journals such as the Lancet and others have concluded that if there were public support for research in the pharmaceutical sector, we would save a lot more money, and public priorities, such as public health care, would be a lot more important than the profits of large corporations— profits that are quite frankly obscene. These companies, that should be forced to make drugs available to the poor of Africa—that is the industry, a male-only industry, that Mr. Leblanc represents—have done absolutely nothing thus far. It's absolutely disgraceful!

I put the question to you, Mr. Leblanc. Why has this industry that you represent done absolutely nothing thus far to make drugs available to the poorest in Africa?

Mr. Michel Leblanc: I can't answer for them.

Mr. Svend Robinson: You have no answer, then?

Mr. Michel Leblanc: In my opinion, they sell drugs at a price they believe to be in keeping with the value of those drugs. If a global redistribution is needed, it may be up to governments to finance a redistribution fund that could purchase medications at market price and then make them available, so that the entire population would be involved in this redistribution effort. If my taxes are to be used for that, so be it, but I don't believe we should be forcing the pharmaceutical industry or anyone else in society to give away a product or sell it at a highly discounted price.

Mr. Svend Robinson: Profits are the only thing that matter.

Mr. Michel Leblanc: Pardon?

Mr. Svend Robinson: Profits—they are all that matters.

Mr. Michel Leblanc: No. Companies conduct research, produce a consumer good that is a human necessity, and sell that consumer good. They negotiate with the rest of society as to the price they can demand for that product.

Mr. Svend Robinson: Thank you.

[English]

The Chair: Thank you, Mr. Robinson.

On behalf of the committee I want to thank you very much for making the effort to come here, and for the work you do in your daily lives that equips you to come with all this interesting information for us. I know you will follow the committee as we go about our deliberations.

Thank you for coming to our Quebec meeting.

The meeting is adjourned.