INST Committee Meeting

37th PARLIAMENT, 3rd SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Tuesday, March 9, 2004

Á

1130

The Chair (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.))

Mrs. Carol Hitchman (President, Intellectual Property Institute of Canada)

Mr. Patrick Smith (Chair, Patent Legislation Committee, Intellectual Property Institute of Canada)

Á

1135

The Chair

Mr. Patrick Smith

Á

1140

The Chair

Mr. Patrick Smith

The Chair

Mrs. Chantal Blouin (Researcher, Trade and Development, North-South Institute)

Á

1145

The Chair

Mrs. Chantal Blouin

The Chair

Mr. Jean-Louis Roy (President, Rights and Democracy (International Centre for Human Rights and Democratic Development))

Á

1150

Á

1155

The Chair

Hon. Joe Fontana (London North Centre, Lib.)

The Chair

Mr. James Rajotte (Edmonton Southwest, CPC)

Mr. Patrick Smith

Mr. James Rajotte

Mr. Patrick Smith

Mr. James Rajotte

Mr. Patrick Smith

Mr. James Rajotte

Mr. Patrick Smith

Mr. James Rajotte

Mr. Patrick Smith

Mr. James Rajotte

Â

1200

Mr. Patrick Smith

Mr. James Rajotte

Mr. Patrick Smith

The Chair

Hon. Joe Fontana

Mr. Patrick Smith

Â

1205

Hon. Joe Fontana

Mr. Patrick Smith

The Chair

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ)

Mr. Patrick Smith

The Chair

Mr. Jean-Louis Roy

Â

1210

Mr. Paul Crête

Mrs. Chantal Blouin

Mr. Paul Crête

Mrs. Chantal Blouin

Mr. Paul Crête

The Chair

Mr. Paul Crête

The Chair

Mr. Paul Crête

The Chair

Mr. Patrick Smith

The Chair

Mr. Patrick Smith

Â

1215

The Chair

Hon. Lyle Vanclief (Prince Edward—Hastings, Lib.)

Mr. Patrick Smith

Hon. Lyle Vanclief

Mrs. Chantal Blouin

The Chair

Mr. Jean-Louis Roy

The Chair

Mr. Brian Masse (Windsor West, NDP)

Â

1220

The Chair

Mr. Patrick Smith

The Chair

Mr. Jean-Louis Roy

Â

1225

The Chair

Mrs. Chantal Blouin

The Chair

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.)

Â

1230

The Chair

Mrs. Chantal Blouin

The Chair

Mr. Jean-Louis Roy

The Chair

The Chair

Ms. Gauri Sreenivasan (Policy Coordinator, Canadian Council for International Cooperation)

Â

1245

The Chair

Dr. Don Kilby (Chairman, Canada-Africa Community Health Alliance)

Â

1250

The Chair

Â

1255

Mr. Srinivas Murthy (Co-ordinator, McGill International Health Initiative; General Executive, Students Against Global AIDS, McGill University)

·

1300

The Chair

The Reverend Jim Sinclair (General Secretary, United Church of Canada)

The Chair

Mr. John Dillon (Coordinator, Global Economic Justice Program, KAIROS, United Church of Canada)

The Chair

Mr. Anivaldo Padilha (Secretary of Planning and Cooperation of Koinonia, Brazil, United Church of Canada)

·

1305

The Chair

Mr. Anivaldo Padilha

The Chair

Mr. James Rajotte

Mr. Srinivas Murthy

·

1310

Mr. James Rajotte

Ms. Gauri Sreenivasan

Mr. James Rajotte

Mr. John Dillon

Mr. James Rajotte

Mr. John Dillon

The Chair

Ms. Gauri Sreenivasan

·

1315

The Chair

Ms. Paddy Torsney (Burlington, Lib.)

·

1320

The Chair

Mr. John Dillon

Ms. Paddy Torsney

Mr. John Dillon

Ms. Paddy Torsney

The Chair

Mr. Anivaldo Padilha

·

1325

The Chair

Mr. Paul Crête

Mr. Srinivas Murthy

Mr. Paul Crête

Mr. Srinivas Murthy

The Chair

Mr. Srinivas Murthy

Dr. Don Kilby

Mr. Paul Crête

Dr. Don Kilby

Mr. Paul Crête

Dr. Don Kilby

The Chair

Hon. David Collenette (Don Valley East, Lib.)

·

1330

The Chair

Hon. David Collenette

The Chair

Mr. Brian Masse

·

1335

Dr. Don Kilby

Ms. Gauri Sreenivasan

·

1340

The Chair

Ms. Gauri Sreenivasan

The Chair

Hon. Joe Fontana

Ms. Paddy Torsney

Hon. Joe Fontana

The Chair

Mr. James Rajotte

The Chair

Mr. Srinivas Murthy

The Chair

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CANADA

Standing Committee on Industry, Science and Technology

---

NUMBER 005

l

3rd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, March 9, 2004

[Recorded by Electronic Apparatus]

Á  (1130)  

[English]

    The Chair (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good morning, everyone. I'd like to call to order this March 9 meeting of the Standing Committee on Industry, Science and Technology. We are continuing our study of Bill C-9, an act to amend the Patent Act and the Food and Drugs Act, more commonly known as the “drugs for Africa act”, although there are a lot more countries than Africa that will benefit from this very important Canadian initiative.

    We have for our first hour this morning witnesses from the Intellectual Property Institute of Canada, the North-South Institute, and Rights and Democracy, the International Centre for Human Rights and Democratic Development.

    To our witnesses, I am pleased that you are able to join us this morning to help us with Bill C-9.

    For members around the table, we'll have a business meeting at the conclusion of our session this morning.

    We will go in the order of the agenda, starting with Carol Hitchman of the Intellectual Property Institute of Canada. Rather than waste any more time with formalities, we'll ask, Ms. Hitchman, if you would start.

    Thank you.

    Mrs. Carol Hitchman (President, Intellectual Property Institute of Canada): Good morning. Thank you for allowing us to come here today to make submissions to you.

    The Intellectual Property Institute of Canada is made up of patent and trademark agents and lawyers who practise in the intellectual property field. Our members include both those who work for the generic drug industry, like myself, and those who act for the name-brand industry, such as Mr. Smith beside me.

    We recognize the difficulty in drafting legislation that tries to balance the competing interests of the brand-name and the generic industries. Our submissions are for the most part limited to technical issues related to the draft legislation; we have not done an analysis of the underlying WTO decision. We have tried in our submissions to have the same balanced view that we see in the draft legislation.

    There are a number of issues in our written materials, and Mr. Smith is going to address some of them. He is the chair of our patent legislation committee.

    One comment I'd like to make before he begins is that we can see from the submissions we have made and the legislation itself that there are concerns about the generic industry and the name-brand industry and about whether on the one hand this legislation will address a real supply, given the right of first refusal, and on the other there will be a concern about diversion of product. We are pleased to see that there is a review provision provided in this legislation, because you may wish to go back and make changes after we see how it operates for a year or two.

    Mr. Smith.

    Mr. Patrick Smith (Chair, Patent Legislation Committee, Intellectual Property Institute of Canada): Thank you.

    Like the members of our institute, our committee was comprised of both persons who act for brand-name companies and generic companies and also members who don't act for any of these companies but act for other industries. We really did try to take a balanced approach to this to see whether the act as proposed, whether the scheme proposed, is going to be workable from a practical point of view, and secondly, whether it met the objectives it was intended to meet.

    In looking at that, and in reflecting the general council's decision in the comments of the chairperson about ensuring that these drugs get to the persons who need them rather than furthering the economic policy perspectives of the particular members, it's one of the policies that was looked at. The second thing was ensuring that the members took all reasonable steps to prevent the diversion of these products.

    We really tried to incorporate those objectives into our comments. In my submission, the report that we put forward as part of IPIC's submission does that.

    Today, I want to address three things. The first is whether the commissioner should be given some discretion. The second thing is, does the scheme work to lower prices to LDCs, which is one of the policy objectives, and is there something that can be done with respect to that? The third is, what happens if the policy objectives are not being met with a particular authorization?

    Now let's begin. Should the commissioner be given a discretion? This is really a policy decision that this committee and Parliament have to make as to whether the commissioner of patents is intended to be a rubber stamp, simply ensuring whether documents are put before it and the authorization should be granted, on the one hand, or, on the other hand, whether the commissioner of patents should be given some discretion to determine if an authorization is appropriate.

    Let me give an example. Let's take the situation where a particular country says they require a certain amount of drugs, which is enough to supply the entire world. It's obviously an absurd example, but I think it illustrates the point. How should the competing objectives of, one, ensuring that the drugs get to the people who need them in a timely fashion be achieved, and secondly, how can we do our best to ensure that the products are not diverted somewhere else?

    The proposal we put forward was to have a two-stage process. The first is an interim authorization. That's essentially something that's granted almost as a right. For example, are all the documents in place? It's something that's similar to what's in the legislation right now. That ensures that the drugs can be provided in a timely fashion.

    The second, though, is that parties who are interested, be it the patentee, the applicant for the authorization, or other interested parties, should be able to make submissions to the commissioner of patents as to whether the authorization is appropriate or whether limitations should be placed on the authorization. The commissioner of patents should have some discretion as to what controls are appropriate for that particular authorization or whether in fact the authorization should be granted at all. The fact that the interim authorization is in place will ensure that the products are getting to the places where they are needed as quickly as possible. That's the first concern.

    The second is, in my submission, this committee doesn't want to do something now that at some point in the future it finds out it ought not to have done in the first place. In other words, it shouldn't adopt legislation that would be non-compliant with TRIPS. The obligations of TRIPS are not relaxed for this member, except to the extent that they are relaxed.

    Canada must still comply with provisions of article 31. With respect to royalty rates, paragraphs 31(a) and 31(h)--this is paragraph 31(a) and paragraph 31(h) of TRIPS--require that authorizations be looked at with respect to the individual merits of a particular authorization. Paragraph 31(h) sets the compensation and it says the circumstances of each case should be looked at.

    The legislation that is proposed sets a fixed royalty rate of 2%. It's not looking at each case, each authorization, on a case-by-case basis. It's not looking at the countries on a case-by-case basis. Rather than set a fixed royalty rate, the committee thought the discretion of the commissioner should once again be exercised.

    It could be that 2% is too high. It might be that the patent they're talking about may be of marginal benefit to the drug as a whole. For instance, it could be a formulation patent that makes the product taste better. If that's the only patent to which the authorization relates, maybe 2% is too much. On the other hand, it could be a pioneer patent that totally changes the way medicine is delivered, and it could claim the product per se. Maybe 2% is too little. But in each circumstance the party should be given the fundamental administrative law right of the right to be heard. The commissioner, at the end of the day, can determine whether that royalty rate is appropriate, and that's fine.

Á  (1135)  

    Now—

    The Chair: We're going to try to keep each of the three witnesses to five or six minutes to start off, but you'll have a chance to make additional points during the question and answer session.

    So we'll get you to wind up, Mr. Smith, if you would.

    Mr. Patrick Smith: That's fine.

Á  (1140)  

    The Chair: Thank you.

    Mr. Patrick Smith: The two last points were, does the scheme work to lower price to LDCs? What we suggested was an alternative to the right of first refusal of patentees that is in the legislation now. The patentees should not only be allowed to match but also to better the price of the generic companies.

    Secondly, so that generic companies are not out of pocket for the expenses of finding these contracts, they should be compensated by the patentee for the cost of finding the contracts.

    I won't discuss the third point I was going to talk about, but I'll just ask, what if a particular authorization is no longer meeting the objectives of the act? Right now, there are limited termination provisions. In circumstances where the authorization no longer meets the objectives of the act—which I believe our submission sets out—there should be a greater right for parties to be heard and to make submissions about the termination of these authorizations.

    Thank you.

    The Chair: Thank you very much. You will have a chance to clarify any of your comments afterwards.

    We'll proceed to the North-South Institute and Chantal Blouin.

[Translation]

    Mrs. Chantal Blouin (Researcher, Trade and Development, North-South Institute): Good morning. I would like to begin by thanking the committee for having invited us here today.

    Located in Ottawa, the North-South Institute is a research institute with a focus on international development. For more than 25 years, we have conducted research on Canada's relations with developing countries and on a wide range of foreign policy issues.

    My comments primarily concern the context of the bill. I would like us to take a step back, so that we can reach a fuller understanding that this bill is an integrate part of our foreign policy, specifically, Canada's commitment to international development.

    In 2000, Canada and all the other United Nations members committed to achieving the UN millennium development goals. At that time, the world's leaders agreed that every effort must be made in order to, reduce by half the proportion of people living on less than a dollar a day by 2015; halt and begin to reverse the spread of HIV/AIDS; and halt and begin to reverse the incidence of malaria and other major diseases.

    The North-South Institute's work in the areas of Canada's foreign policy and health shows that our millennium goal commitments complement our existing obligations. In fact, Canada is a signatory to several human rights treaties that recognize the right to health, such as the Universal Declaration of Human Rights and the International Covenant on economic, social and cultural rights.

    It should also be remembered that one of the three pillars of Canada's foreign policy is the promotion of human rights. Given our current commitments, the protection and promotion of the right to health worldwide must guide our actions. Therefore, a concrete strategy that promotes the right to health is made up of multiple components, but it is undeniable that access to medicines is a core element.

    I would like to point out that in 2002, the British government created a commission on intellectual property and development to study the ways in which patent protection in developing countries limits access to medicines and therefore hinders the progressive realization of the right to health in these countries. I would like to briefly quote from the commission's report:

As intellectual property rights are strengthened globally, the cost of medicines in developing countries is likely to increase, unless effective steps are taken to facilitate their availability at lower cost. [...] One means of obtaining medicines at lower prices, among others discussed in the report, is for countries to use a mechanism called “compulsory licensing.“

    The current bill ensures that countries that are unable to benefit from compulsory licensing, those with insufficient pharmaceutical manufacturing capabilities, can improve their access to medicines. There is no question that, in terms of international rights, our obligations to protect intellectual property rights are secondary to respecting fundamental rights such as the right to health. Our actions must reflect our international commitments.

    This bill, which allows generic medicines to be exported to developing countries, will help to improve access to medicines and the health of the people in these countries. Once we know the importance of a population's health for economic development, we will then understand that each piece of the puzzle, each step toward improving the health of people, is crucial to attaining the development goals.

Á  (1145)  

    I could go through several studies that confirm the impact that health has on development. I will mention only a few of them.

    In 2002, the WHO presented an extensive study on macroeconomics and health, which clearly found that countries with poor health conditions had much more difficulty achieving sustainable economic growth than countries with a healthier population. It also found that high levels of malaria are associated with a per-year decline in economic growth rates of 1 percent and over.

    The HIV/AIDS pandemic alone has enormous consequences, as you are well aware. The World Bank prepared a study on the long-term economic costs of AIDS.

[English]

    The Chair: Could we get you to add comments later?

    Thank you.

[Translation]

    Mrs. Chantal Blouin: Yes.

    In the case of South Africa, once again, there was a very serious impact on economic growth if no measures were taken.

    I will wrap up with the bill's provisions.

    We all want to ensure that the provisions of the bill maximize access to medicines for the people in developing countries. Several witnesses have already drawn attention to problems in certain clauses of the bill, in particular, the provision allowing the patent holder to take over contracts concluded between a Canadian company and in importing country.

    What we should expect to find in this bill is what is already in the TRIPs agreement of the WTO, the intellectual property provisions that the members agreed on. Therefore, any restrictions placed on medicines affected by this initiative, that is, the list in this bill, should be eliminated because it prevents this initiative from contributing to an improvement in access to medicines in developing countries.

    I will conclude in saying that the idea of restricting the agreement to a list of medicines was discussed and negotiated for months and months by WTO partners, and they agreed that all diseases and all medicine should be covered. Why, therefore, should we go backwards? Why start all these discussions on issues that were already resolved within the WTO again?

    Thank you.

[English]

    The Chair: Thank you very much for that.

    We'll go to Jean Louis Roy, of Rights and Democracy, International Centre for Human Rights and Democratic Development.

[Translation]

    Mr. Jean-Louis Roy (President, Rights and Democracy (International Centre for Human Rights and Democratic Development)):

    Thank you, Mr. Chairman.

    Thank you for inviting me. This is the first time I have had an opportunity to comment on this bill, which is an extremely important one. I will not repeat what Ms. Blouin has just said. However, I support her remarks about Canada's half century of commitment. Since the World Health Organization was created in 1946, Canada has made commitments at various stages of our international relations history to protect social and economic rights.

    It undertook commitments with the World Health Organization, the Universal Declaration of Human Rights, the International Convention on Economic, Social and Cultural Rights and the WTO General Council's decisions of August 30, 2003, concerning access to generic medicines for countries that did not have the industrial capacity to manufacture them.

    Mr. Chairman, I would like to make a couple of comments. If I could have five minutes, I will try to be as specific and concise as possible.

    To begin with, as was just pointed out, we are talking about fundamental rights. In my opinion, there has been a dramatic shift in how those who defend fundamental rights see things. On the issue before us today, we are very conscious of the responsibilities of all those involved. These are in fact shared responsibilities. We want to see that the WTO's objectives in this area are achieved.

    Moreover, as Mr. Smith said, we recognize that there are genuine problems and that we need to ensure that the delivery systems for these medicines are reliable. Perhaps—and I would ask the members of the committee to think about this—we need to coordinate the policies that will be developed to implement this legislation with projects to support certain developing countries so that they can create reliable systems of checks and balances to ensure that these medicines are not diverted but that they reach the people that really need them.

    Mr. Chairman, we are talking here about fundamental rights and about development and security. This is not legislation that will be in place for the next three months or the next three years. Two billion people will be born over the next 15 years in Africa, South Asia and Latin America. The needs that we are talking about will grow exponentially and their magnitude will be enormous. As the Secretary General of the United States has just indicated, Development and Security have become extremely closely linked.

    Mr. Chairman, I would like to come back to what I have just said, which is that the issue we are dealing with has two parts. There are the least developed countries,

Á  (1150)  

[English]

the least developed countries. They must have in place a basic system for the monitoring and checking of essential drugs,

[Translation]

    both to make them available and also—I believe this is important—to ensure quality. I spent 15 years in Africa and in every region of the continent I saw drugs that were of poor quality, that were long passed their expiry date or that were exported from Europe to African markets.

    So developing countries have a responsibility, but what the WTO is doing is to clarify the responsibility of developed countries that have the industrial capacity to do the research, produce the medicines, etc. The system that Canada will adopt and that will be based on the legislation that we are looking at today, will influence and act as a sort of model for legislation elsewhere in the world. So we need to ensure that this system meets these objectives.

    The first objective is to deliver the medicines that are available today to the countries that need them, so that children in Burkina Faso no longer die from meningitis at the age of 12, just to give an example.

    Second, I would like to say a word about the right of first refusal. I think that we could put in to the legislation today the possibility of having licences by mutual agreement, including perhaps reduced royalties, as Mr. Smith, I believe, has just described. These mutual agreement licences could be defined and the system would have to work that way. That is the only flexible approach and the only approach that will ensure that these drugs are available for the long term at reasonable prices. Where an agreement is not possible, the commissioner of patents should be able to intervene, as was already mentioned.

    In conclusion, Mr. Chair, the system that is adopted must make it possible to achieve the objectives. And these are urgent objectives. I believe that we cannot expect to start from the beginning again. These are urgent objectives that affect rights, development, security and our commitments regarding international trade negotiations. We made serious commitments and negotiations stalled. I was in Cancun; the talks stalled over a certain number of things, including agriculture, but also over the issues we are discussing today.

    Our position, therefore, is to adhere as closely as possible to the WTO decisions of August 30, 2003, without any additional constraints.

    Thank you.

Á  (1155)  

[English]

    The Chair: Thank you, Mr. Roy. Thank you all.

    We'll start the questions with Mr. Rajotte, please.

    Hon. Joe Fontana (London North Centre, Lib.): A point of order, Mr. Chair.

    I kept hearing throughout the translation the term WHO. I believe you meant WTO. Can we just clarify it for the record?

    The Chair: WTO--okay.

    I'm going to keep the questions to five minutes so we can include everybody in this hour.

    Mr. Rajotte, please.

    Mr. James Rajotte (Edmonton Southwest, CPC): Thank you very much, Mr. Chairman.

    Thank you for coming in and presenting to us this morning.

    I want to ask Ms. Hitchman and Mr. Smith about their submission and clarify the issue of royalty rates. You're recommending we amend section 21.08 to allow for variable rates, and the commissioner would determine the rate on a case-by-case basis.

    Mr. Patrick Smith: That's essentially the situation that existed previously under the compulsory licensing legislation in Canada. Submissions were made by both the applicant and the rights holder, and the commissioner set the appropriate royalty rate. Typically in the past it was set at 4% for the domestic market. In certain circumstances there was, I believe, one at 6% and one at 10%, but for the most part it was set at 4% for the domestic market.

    One concern that has to be met is to ensure that the delivery of product to where it's needed is not delayed by bickering about the royalty rate. That's why we suggested that if an interim rate was appropriate it could be fixed in the legislation, but the final rate should be determined on the discretion of the commissioner.

    Mr. James Rajotte: Other witnesses have recommended a variable rate, but then a maximum of 4%. Would you recommend something like that, or would you still recommend an interim rate say of 2% and then a final rate to be determined without regard to a maximum?

    Mr. Patrick Smith: I don't think I can answer that question, because if you set a maximum limit on a royalty rate you may not find yourself in compliance with article 31 of TRIPS. So it's something that should probably be left to the commissioner of patents.

    At the end of the day, if the historical reference has been 4% for the domestic market, there's probably going to be a cap in there based on that precedence.

    Mr. James Rajotte: The second issue I wanted to talk about deals with the right of first refusal. You talk about a finder's fee to generics on page 4 of your brief. This is so that if the generic company goes through and reaches an agreement with a country, you cannot allow a brand name to simply scoop that contract.

    Who would determine the amount of the finder's fee? Would that be the commissioner?

    Mr. Patrick Smith: I would suggest it would be the commissioner. I think what we're looking at there is that you don't want to punish somebody for finding a contract. You want to make sure they're compensated for their out-of-pocket expenses with respect to obtaining that contract.

    Mr. James Rajotte: And this would be paid by the brand name to the generic?

    Mr. Patrick Smith: That's right.

    Mr. James Rajotte: How much would it be in a general...is there any past experience to guide us in this?

    Mr. Patrick Smith: This is really the first place in the world that this type of legislation is being considered. There is no experience with respect to that. But in terms of finding a contract, if it's something that's been done, say, from a generic office in Toronto over the phone or over the Internet with a person from another country, then I can't imagine the expenses would be that great.

    With respect to the right of first refusal, though, here's a comment. Right now there are limited generic companies in Canada. If you have no incentive to compete on price, in terms of lowering your price, somebody who is interested in the monetary perspective of obtaining contracts would not lower their price. If I run a gas station and you're across the street from me, if you lower your price of gas by a cent, I'm going to follow suit. That's what people do in an oligopoly--they follow suit; they follow the market leader in terms of price.

    So what we thought would be best would be to provide an incentive for somebody who obtains a contract to put forward their best price so that somebody can't come along and scoop up that contract, as you've just said. This would provide an incentive for somebody to actually come in there and give it their best shot--or risk losing that lucrative contract.

    Mr. James Rajotte: The third issue I wanted to raise with you is the right to object to the generic's notice of intent to supply. Could you explain that in more detail for the committee? It is a little confusing here.

  (1200)  

    Mr. Patrick Smith: Let me give some historical perspective with respect to the former compulsory licensing regime that existed. If somebody applied for a compulsory licence under Canada's previous legislation, what they would have to do is meet certain criteria. There might be a dispute as to whether that criteria had been met, so both parties were presented with an opportunity of making submissions to the decision-maker. The decision-maker would set limits on the rights that would be granted under a compulsory licence or decide whether a compulsory licence should be granted at all.

    Now in this case, you don't want something to tie up the timely delivery of these products to where they're needed. That's one thing our committee looked at. What we thought was, you provide the interim relief, just as the legislation provides right now, based upon the meeting of objective criteria: Is there a document? Is this declaration made? Have the prescribed fees been paid? And if that's made, issue the interim authorization.

    At that point in time, once that is done, the parties can come forward in a very timely and short manner, present their arguments as to why the authorization was appropriate and whether it should keep going because it's in furtherance of the objectives of the act, or alternatively, why it shouldn't have been issued at all.

    Mr. James Rajotte: But just for argument's sake, if there's an interim authorization granted to the generic and the generic begins exporting that product and then they lose the final determination, are we then not accomplishing what we're setting out to do?

    Mr. Patrick Smith: The answer is it would be against the objectives of the act as a whole, but it's a more limited evil than not providing any drugs to these people who need them in a timely fashion. So it's a trade-off, a balancing act. The committee recognized that, but that's the place they placed the fulcrum.

    The Chair: Thank you very much.

    Mr. Fontana, please.

    Hon. Joe Fontana: Thank you, Mr. Chair.

    Thank you to all the witnesses for your participation and your briefs. I think they've been well thought out.

    In fact, we just heard a speech from Kofi Annan, which I think is the inspiration for this bill, in terms of our policy objectives on making sure we can help the needy of the world get the medicines at the lowest possible price.

    I would agree with those who have said it's about our foreign affairs policy, and it's rights and development. But I'm not sure this is going to be the bill where we can in fact express all of the things Canada wants to do, from a foreign affairs standpoint, from a development side, or even on rights stuff. It is a piece of what Canada is committed to.

    I have some questions, Patrick, if I could. You said this thing has to be workable. I think your organization is between a rock and a hard place, as we are.

    On this idea of interim solutions and interim agreements and the commissioner being given all of this discretion to decide what the price is, and so on, I think you're creating chaos and not workability. It's going to be a real problem. Using your definition of workability, I'm not sure how that's going to be workable if in fact we don't set some guidelines.

    One of the things you might address for me is.... You talked a little bit about the process for all the nations that will in fact initiate legislation like this, or for those countries that need the drugs that we want them to have, either the NGO community or countries themselves. How about now talking about an open and transparent level playing field process that will in fact drive the lowest price of drugs down?

    Could you talk a little bit about the process that I think we should ensure everybody follows, so that we can have the best workable piece of legislation but at the same time make sure the drugs get to the people who need them, at the lowest possible price, with no diversion, and we have an open and transparent system and a model piece of legislation that other countries in the world can follow?

    I have another question for some of the others, but could you answer, Patrick?

    Mr. Patrick Smith: What I'd like to do is start off with your discretionary comment. Decision-maker tribunals have been set up by Parliament right across the board. Discretion is given to people. This is not something new.

    In my submission, what you don't want to have happen--and it reminds me of that old Esso commercial about the mechanics, where they say “pay me now or pay me later”--is you don't want to have somebody challenge this and find out that you're not compliant with TRIPS at some point in the future because you didn't provide discretion to the commissioner of patents or someone else.

    Article 31, in certain circumstances, requires consideration to be given on applications on a case-by-case basis. Keeping that in mind, what's wrong with giving the commissioner a little bit of discretion? Other tribunals of Parliament have that discretion.

  (1205)  

    Hon. Joe Fontana: You'll have to have an appeal mechanism based on what the commissioner may or may not have said.

    I'm worried, because unfortunately sometimes creating these great systems will cause delay in getting the drugs to the people who need them. There will be counter challenges, court challenges, to what the commissioner said, and so on. At the end of the day, I don't mind having a commissioner issue the compulsory licence once a voluntary licence has been put in place, and perhaps be given some guidelines as to what that royalty fee might even be.

    At the end of the day, I've heard the brand drugs and even the generics say they're giving drugs away and it's costing nothing. I'll be darned if I'm going to add a 1%, 2%, or 4% royalty on something for the least developed countries that can't afford anything. It should be 0%, maybe, when it comes to least developed nations.

    If you give the discretion to the commissioner, how on earth is that commissioner going to be able to determine who, from that list of countries, which medicines and so on, and what the price or the royalty should be? You're leaving it up to one person, as opposed to maybe regulations and/or legislation that give guidance to the world or the community.

    Mr. Patrick Smith: We're not suggesting that guidance shouldn't be given to that decision-maker.

    I can't imagine that somebody would, keeping in mind the objectives of the act, set an unusually high royalty rate. It doesn't make sense, in my submission.

    With respect, 1923 was when legislation was first enacted with respect to compulsory licensing. It wasn't taken away completely until 1993. We've had 70 years of experience with respect to setting royalty rates. The commissioner has done it in the past. Typically, for the domestic market, it has been set at 4%.

    In any event, with respect to the royalty rate, the absolute rate probably isn't as important as that amount. To the extent that this committee can work to lower the price of drugs to LDCs in the first place, that's going to lower the royalty rate as well, if you're basing it on a percentage.

    In my submission, providing that discretion to the commissioner shouldn't be that big of a deal. I support you that the criteria should be kept in mind.

    The Chair: Thank you very much.

    Monsieur Crête, please.

[Translation]

    Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Thank you, Mr. Chair.

    In looking at this bill, we are always faced with the issue of whether it goes further than was intended in the international decision or whether it merely reflects that decision and implemented in Canada. I would like to hear what the participants have to say on that, starting perhaps with the representatives from the institute.

    In your opinion, what part of this bill goes beyond the objective of the international agreement? Are there parts of the bill that go further than what was intended by the international agreement, and, if so, why?

[English]

    Mr. Patrick Smith: In my submission, I think the heart of Canada in this committee is in the right place in terms of ensuring that these drugs are getting to where they're needed. What we're talking about here, for the most part, is tinkering, in terms of ensuring they get there quickly, ensuring they get there as cheaply as possible, and ensuring that you have some type of process that's going to work in the end, and try to remove the hurdles that are in place now with respect to other areas where regulations or tribunals are put in place and there are endless appeals. To that extent, certainty should be included in the bill.

    But what we're talking about is trying to get these drugs to these places as cheaply as possible and ensuring that they're getting to people who need them. For the most part, I think this committee has it right.

    The Chair: Monsieur Roy.

[Translation]

    Mr. Jean-Louis Roy: Mr. Crête, I think that whatever adds time, and a lot of time, to the most straightforward mechanisms possible... We have to find, in this case, very simple mechanisms. The August 30, 2003 WTO decision sets a policy that radically changes the international system for access to drugs. It is not just any old amendment: from now on, existing drugs will be made available to people who do not have access to them because of underdevelopment.

    In order to approach the decision of August 30, we have to find the simplest mechanisms to reach that goal. This is not just another business undertaking, it is a humanitarian undertaking, dealing with development and human rights, and I would also add a security undertaking. As I said earlier, I think that the three concepts have become inseparable today. So the parameters are completely different.

    Up to now, we lived in a world where drugs were available only to people who could afford them. We were also living in a world, let us recall—the Secretary General of the United Nations constantly reminds us—where pharmaceutical research was done almost exclusively in relation to profitable markets. The WTO decision is to change the parameters for an indefinite period of time, to make existing drugs available to people who did not use to have access to them as effectively and quickly as possible.

    I would like to repeat what I said earlier. We are not against any form of accountability. That would be an absurd position for us to take. Under the system that will be set up, people will have to be able to ask questions. There must be no corruption, no falsified contracts and no third class drugs. So we need a certain number of audits. The main thing is to find a system—and I think that the WTO decision was clear about this—that leads developing countries to equip themselves with reliable audit mechanisms. Perhaps they will need help, as I said earlier. For producing countries, this is also a profound change.

  (1210)  

    Mr. Paul Crête: Ms. Blouin, would you like to comment?

    Mrs. Chantal Blouin: To answer your question, yes, indeed, additional road blocks have been put in the way of the current bill, road blocks which are not to be found in the August 2003 WTO decision. The right of refusal and the list restricting the agreement to certain drugs are two examples of such added road blocks.

    I believe that the Norwegian Parliament is currently considering a bill similar to ours and that it is sticking to what is in the WTO decision. So there is no list restricting the agreement to certain drugs nor the right of refusal.

    Mr. Paul Crête: Would you have a copy of that bill?

    Mrs. Chantal Blouin: I could get you one.

    Mr. Paul Crête: I would appreciate that.

    The Chair: Thank you, Paul.

    Mr. Paul Crête: I have another short question.

[English]

    The Chair: You have two seconds.

[Translation]

    Mr. Paul Crête: As for the people from the Intellectual Property Institute, I am personally really worried that the potential to object to the generics notice of intent to supply as in the case of interim relief, could cause legal paralysis. Is this fear warranted? It seems that this issue could make a lot of work for lawyers without actually increasing the speed of the system.

[English]

    The Chair: Thank you, Paul.

    Is there any answer?

    Mr. Patrick Smith: That's one of the suggestions we actually took into consideration—the interim relief we suggested.

    The principal policy is trying to get those drugs there quickly. To that extent, the initial role of the commissioner should be one of providing that interim authorization, so that the drugs can get there quickly, and then to set his or her mind to whether or not the authorization should be issued.

    Let me give you a couple of examples.

    The Chair: Very quickly, if you would, Patrick.

    Mr. Patrick Smith: Yes.

    Let me give you two examples. Let's say somebody applies for an authorization but doesn't have the ability to supply that particular drug. Is that something the commissioner should be made aware of, that perhaps they have enough for a 10-day supply but they can't meet the commitments of the country? If the country requires and asks for that particular drug, and if they make changes in their own position—and assuming the drug is coming and the party is not in a position to supply—isn't that something the commissioner should consider, whether or not the authorization should take place?

    On the other hand, what happens if a particular country has a website, but all the drugs being provided to the country from other countries or companies are going on the website for sale elsewhere and diversion is inevitable? Is that something the commissioner should be made aware of in determining whether to grant the overall licence?

    In my submission, there should be at least some discretion so that the commissioner can determine those matters initially.

  (1215)  

    The Chair: Thank you, Mr. Smith.

    Mr. Vanclief, and Mr. Masse.

    Hon. Lyle Vanclief (Prince Edward—Hastings, Lib.): Thank you very much, Mr. Chairman.

    Welcome to the witnesses.

    I'm going to make my comments and ask for a response in one series of comments.

    Mr. Smith, I find it interesting, and I'm not saying it can't be done, but in the presentation you forwarded to the committee prior to coming here, you didn't have any discussion about discretion for the commissioner—unless I'm missing it. If it's there, it is not as clear as you have made it in your presentation here. I hate to use the word, but is this an afterthought, as I know you and your committee have given more thought to this? It is introducing that level of discussion, which I think we can see here and which I think we should have. I'll just leave it at that.

    To madame Blouin and monsieur Roy, you've made it very clear...and I don't think any of us are quarrelling at all with the goals of what we're trying to achieve here.

    In your last comments, Madam Blouin, you may have got to this a little bit, but I didn't find anything in your comments giving a clear view on whether or not you think the bill as it is now will do that. Does this bill need changes in order to do that?

    It's good that all of us are talking about what we want to do. The question for us around the table is to collectively determine how we can get it done.

    Can I read into the fact that you didn't have very specific comments about the bill that the bill as it is now can do the job?

    Mr. Patrick Smith: Just in terms of dealing with that, if you'll turn to the bottom of page 3 of our submission, we have a section entitled, “The Right to Object to the Generic’s Notice of Intent to Supply”. The proposed interim solution is found in there.

    The discussion about the price and the 2% fixed rate is on page 4.

    Hon. Lyle Vanclief: Okay. Your comments made it clearer than this. I read that, but I didn't read it in the same way.

    Thank you.

    Mrs. Chantal Blouin: On the specifics of the bill, it is clear that the right of refusal is a major problem. From reading the transcripts of previous hearings, it seems that all pharmaceutical companies agree that there is a problem here and therefore it should be removed.

    To make it a really good bill, the list of drugs in the annex should be removed as well, because to achieve the goal we want to get the maximum impact. That's how we would get it.

    The Chair: Do you have anything to add?

[Translation]

    Mr. Jean-Louis Roy: Yes, I would like to say, in response to Mr. Vanclief's comment, that the patent holders' right of refusal which was just discussed, has to be studied in depth. Given the content of the bill, we have significant objections in that regard.

    At the end of the document we presented, we set out ideas about alternatives to certain provisions of the bill. It would therefore be inappropriate to think, based on what we have said, that we approve of the bill as it stands. As a matter of fact, it needs some amendments.

[English]

    The Chair: Merci.

    Thank you, Mr. Vanclief.

    Brian Masse, please.

    Mr. Brian Masse (Windsor West, NDP): Thank you, Mr. Chair.

    I think I'll ask all my questions in succession, to be answered by each witness.

    The first one is for Mr. Smith. The first right of refusal that's in the bill right now is actually the third opportunity drug providers or pharmaceutical companies have to provide the product right now. They have the actual product, and they could mark it down or provide it at a certain cost right away. Second, there is a condition for a voluntary grant of authorization, whereby a pharmaceutical company can enter into an agreement with generic producers if it wants to; that's the second opportunity provided for them.

    My concern about adding this third opportunity is in the delay and the processing issues. I guess it really ties into a concern about a suggestion you made with regard to a finder's fee. Maybe you can elaborate more on that. Are you talking about compensating them for expenses? Are they going to then be able to apply for a profit? Second, if it doesn't lead to generics getting into the market, have we been successful at all if they're not encouraged to flourish in this environment so people will be able to receive drugs across the board?

    Mr. Roy, if I could, I'll ask a question of you with regard to the suggestion that a royalty rate be set, for example, at 2% and then that there be a commissioner who could then reintroduce a price later on. I'm concerned about the destabilizing effect of that if, for example, an NGO or a third world country then had to come back and pay, say, another 8% or whatever it might be. Do you think it might lead to them not purchasing, first, enough drugs, or second, incurring debt that could further burden them? I guess the stability is what we're looking for here; we're hoping not only to improve the lives of individuals but also to stabilize those countries so they can have good public policy and we can prevent some of this in the future. I'm concerned about that effect under that scenario.

    Madam Blouin, with your Norwegian notations, could you elaborate on what they're doing compared to this bill in relation to those countries that are left out of the current bill here? There are many countries with people in very desolate conditions who will not be able to receive help if we do not fix this bill or make amendments.

    Thank you, Mr. Chair.

  (1220)  

    The Chair: Do you want to go first?

    Mr. Patrick Smith: Yes, if I may.

    Let's look first of all at the general council chairperson's August 30 statement accompanying the release of the WTO decisions:

First, Members recognize that the system that will be established by the Decision should be used in good faith to protect public health and, without prejudice to paragraph 6 of the Decision, not be an instrument to pursue industrial or commercial policy objectives.

    So first of all, our committee looked at this for our submission, and it wasn't about an opportunity to get a brand-name company into a certain country. It wasn't about an opportunity to get generics into the market. The policy or the objective sought by the committee was to try to come up with a mechanism that would provide safe and inexpensive medication where it was needed no matter who supplied it.

    Now, as I look at this, it's a point well taken that the brand-name companies—I understand some of them are supplying certain countries—have an opportunity, obviously, to do what they want with their patents, including license them.

    With respect to a timely approach, it may be that the generic drug company won't be the best entity to provide the drug to a particular country. They still have to obtain approval from Health Canada to sell their drug, and that's going to take some time. So maybe the brand-name company is going to provide it on a quicker basis. That may be something that's important.

    At the end of the day, though, it's my submission that what the committee doesn't want to have happen is a situation where there's no competition for price, namely where there's a limited number of market suppliers that put forward proposals as to the contracts and prices they are going to charge and where there isn't effective competition in terms of incentives being offered for other people to beat that price. That's the worst thing that can happen, because you're not going to get the inexpensive drugs.

    A situation where somebody is provided with some encouragement to put their best price forward when they negotiate these contracts with these countries, it's my submission, is what you want to have. We think the proposal we put forward, with the alternative to the right of first refusal, more effectively achieves that objective.

    The Chair: Ms. Blouin or Monsieur Roy, do you wish to reply to the question?

[Translation]

    Mr. Jean-Louis Roy: Yes. First of all, I would like Mr. Masse to know how happy I am to hear him talking about the development of public health policy in developing countries. You are absolutely right, Mr. Masse. Naturally, we must make drugs available to the people who need them, but beyond that, in the long-term, the new policy must among other things be able to help people in developing countries to establish their own public health policy system.

    I will take 30 seconds and, using Mr. Masse's question, to point out that the human right to health is not a concept for which people generally feel sympathy, to which people rally on humanitarian principles. It is a tool that, as Mr. Masse implied, makes it possible for people to live and makes it possible for countries to establish a system. And this is why—coming back to Mr. Vanclief's question earlier—we believe, as we said at the end of our brief this morning, that the best formula is a system that provides for an agreement between a generic drug company which has been awarded a contract and the patent holder. What we are looking for is an agreement that can be reached quickly, so that medicines become available quickly. If the agreement cannot be reached, the commissioner would intervene and establish reasonable conditions for a contract between the generic manufacturer and the patent holder.

  (1225)  

[English]

    The Chair: We'll go to Ms. Blouin for a final word.

    Mrs. Chantal Blouin: First, regarding the Norwegian bill, I've just learned about this yesterday. All I know about it now is that they will not include the right of refusal in the list of drugs.

    As regards which countries are allowed to use this, I do not know, but I will make sure the committee gets the details on that.

    Just to complete, this point about presenting the right of refusal as a way to allow the patent holder to compete is a bit odd, because they are allowed to compete in that market at any point, meaning that even now nothing prevents any pharmaceutical producer from negotiating these costs with developing countries like South Africa--South Africa is going to offer treatment--that are going to seek drugs and need to look at buying drugs. Nothing stops them now from offering very low prices and therefore getting those contracts. So the market is open.

    This procedure allows more competition, and this is indeed how we'll get lower prices.

    Thank you.

    The Chair: Thank you.

    Ms. Jennings, please.

[Translation]

    Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Mr. Chairman.

    Thank you all for your presentations. I have two or three questions. The first question is on Norway. How large is the pharmaceutical industry in Norway? Is there a well-developed pharmaceutical industry in Norway?

    Secondly, it is quite true that the right of refusal issue is raising a great many questions, among generics and among proprietary pharmaceutical companies that engage in research and development. I wonder whether... The generic drug manufacturers raise an interesting point: if they are the parties which have negotiated everything and invested resources, and if the proprietary drug companies are given the opportunity to command right at the end of the process, that is not exactly an even playing field. But I also understand the proprietary drug manufacturers, who hold the licences. I wonder whether it would be better for the generic manufacturers if they had a mechanism to notify proprietary manufacturers earlier in the process. For example, a generic manufacturer might respond to a request by a certain country and perhaps intend to begin negotiations, but would be required to inform the commissioner, for example. Proprietary manufacturers with licences would then have the opportunity to say whether they were interested. This process could lead to agreements or something of that nature.

    My third question is to Mr. Roy. You raised a point no one else has yet when you said that, once the bill is passed with or without amendment, if we ever wanted to tackle the issue of the right to health as being a fundamental right, Canada might have to consider projects to help apply the legislation in developing countries and least developed countries. I would like some further details on your views, since no one has yet raised this issue. I believe NGOs could have a role to play here. These are my three questions.

  (1230)  

[English]

    The Chair: Thank you, Marlene.

[Translation]

    Mrs. Chantal Blouin: To begin with, I am not really familiar with the pharmaceutical industry in Norway, but I will be happy to come back with some information on that so that we can look at how Canada and Norway could work together to address this need.

    As for the early notification mechanism, we could see what section 31 of the TRIPS agreements says and include it in the bill. There is a process that requires those wanting to use the patent to undertake commercial negotiations with the patent holder before going ahead. So those negotiations can lead to a voluntary licence. It is only when the negotiations do not lead to an agreement that compulsory licensing is considered. The TRIPS agreements contain a mechanism that could be put into this bill through an amendment.

[English]

    The Chair: Monsieur Roy.

[Translation]

    Mr. Jean-Louis Roy: Ms. Jennings, thank you for your question. I want to come back to what I said earlier to the effect that the change which is called for by the WTO and which this bill may implement is so important, so... I told you earlier that I worked for 15 years in many different countries, particularly in Africa. It is obvious that if enough medicines were made available tomorrow morning in some of these countries to treat various diseases and health problems, at least three problems would arise.

    First, some of the countries would have to review their laws dealing with customs, import capacity, etc.

    Second, there is the monitoring of quantities, controls and issues of distribution, including fair distribution, which is one of the main objectives. There is no point in sending drugs to the 15 per cent or 20 per cent of the population that already has them.

    How can we be sure that these medicines will get to where the genuine needs exist and are not being met? I am sure that some countries will need help for a period of time—three years or five years—to set up systems and ensure that they work. It would be unfortunate if a country like ours were to pass legislation to give effect to a WTO decision but ignored how it would actually be implemented within the communities in developing countries.

[English]

    The Chair: Thank you very much, Monsieur Roy.

    We're going to suspend this first hour. I thank our witnesses and invite them to leave the table as quickly as they can so the next group can come to the table.

    We invite to the table for the next hour the Canadian Council for International Cooperation; the Canada–Africa Community Health Alliance; McGill University; and the United Church of Canada.

    Thank you for your cooperation. We are suspended for a couple of minutes.

  (1234)  

---

  (1240)  

    The Chair: Let's move back into session.

    Excuse us if we continue having our working lunch while we work with you, our witnesses. Thank you for being here. We will continue with the order that has been printed, starting with the Canadian Council for International Cooperation.

    I will have to be strict on the five minutes for opening remarks from each of you so that we'll have time to get everybody at the table in, but you can cover something you may have missed later in a response.

    We'll invite, then, Gauri Sreenivasan to start. Thank you.

    Ms. Gauri Sreenivasan (Policy Coordinator, Canadian Council for International Cooperation): Thank you very much for the invitation, Mr. Chair, to appear before the committee. I'm glad you're eating lunch. The last thing we need is starving MPs who are not able to digest, as it were, the comments coming forward.

    CCIC is the national umbrella organization for Canadian development agencies, representing organizations from Halifax to Vancouver, with the support of thousands of Canadians who are working abroad to end poverty. CCIC and our members, such as the United Church, Médecins Sans Frontières, Oxfam, and CARE were among the very first to congratulate the government and the Prime Minister on this initiative: first because—and I think you've heard some of this before—it can address the urgent needs of millions of human beings for affordable medicine and as such is directly consistent with our commitment to upholding the right to health; second because Canada is the first country on the planet, even if Norway appears to be close on our heels, to enact this legislation and because we moved so quickly following years of intransigence—time is often described as money, but in this case time is also lives: it is estimated that in the almost one-year delay following the missed DOHA deadline for this agreement, one and a half million people around the world died of AIDS alone; and third because this initiative puts concrete action behind the Prime Minister's bold promise for effective and values-led international leadership.

    Being first and promising effective leadership confers on Canada special responsibility to get the legislation right. Canada will set the bar, which countries will either strive to live up to or will gratefully huddle under.

[Translation]

    As you have already heard, the bill in its current form presents some major problems. The Minister of Industry said last week that with this bill, Canada was trying to strike a fair balance between compliance with patents and protection of the interests of the research sector, on one hand, and our commitments to health and poverty throughout the world, on the other. This is a very important balance, but this bill has not yet achieved it.

[English]

    I want to speak to only two key concerns today, since time is tight. Other colleagues, notably Médecins Sans Frontières and the HIV/AIDS Legal Network, have submitted more detailed recommendations on a variety of concerns, which we endorse as a member of the coalition known as GTAG, the Global Treatment Access Group. A letter on this was sent to all MPs yesterday.

    Just to speak to two of the five concerns, the first is what you have come to know as the right-of-refusal issue. Bill C-9 grants patent holders rights that are not just beyond those required by the WTO, but rights that undermine the very intent of the multilateral accords that WTO members struck on August 30, after arduous negotiation.

    It's important to clarify that the development goal at the heart of this—the prize jewel in the WTO development agenda—is to ensure that the poorest countries have access over the long term to the cheapest possible prices for drugs. It is not enough to have access on an ad hoc basis, based on the goodwill of either generic companies or brand-name drug companies.

    The measures in the proposed bill enabling patent holders the right to take over contracts negotiated by a generic company, even after the patent holder has turned down the request to provide a voluntary licence, are not acceptable—not because they favour one company over another, but because they kill the basis for commercial interest in competition from the generic drug industry. It is only this competition that can guarantee sustained lower prices of drugs over the long term, and there is ample empirical evidence to substantiate this claim.

    The counter proposals that have been submitted by Canada's research-based pharmaceutical companies do not address the problem. They just move the ability to scoop the contract up earlier, to the outset of the bid phase rather than after the contract is negotiated.

    The second issue I want to talk to you about is that Canada must not narrow the scope of medicines covered by this bill. The honourable Minister of Industry testified before this committee that the wording in the WTO declarations is vague in this regard and that this requires Canada to make its own judgment and to strike a balance.

    Respectfully, the CCIC has been monitoring trade policy and WTO negotiations for years. All WTO watchers know and will tell you that there is nothing overlooked, or not considered, or unclear about the words in trade negotiations. The words are everything. There was a year-long battle over the words in the relevant paragraphs of the August 30 declaration, and in the first paragraph of the Doha declaration on the TRIPS agreement and public health, which are the two sets of words that are relevant. I want to read them to you from the August 30 declaration, just to be clear about whether or not they are vague: “'pharmaceutical product' means any patented product...needed to address the public health problems as recognized in paragraph 1 of the Declaration.”

    So it is any product relevant to public health problems as listed in this declaration.

    Paragraph 1 reads: “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.”

    Developing countries fought long and hard, and in the end everybody agreed that the declaration would cover public health problems in general while pointing to an exemplary subset of such diseases that would not represent the totality of its scope.

    There is absolutely no room for fudging here on what was agreed to. It was left general. The words are not accidentally strewn on the page; they were purposeful, and they were hard fought. And Canada, of all countries, knows how important it is to uphold multilateral consensus when at long last it appears.

    To be subject to the whims of a powerful country who chooses to reinterpret the meaning of international courts, whether on softwood or salmon or medicines, makes Canadians' blood boil—and well it should. I think it would be shameful if we try to squeeze out the poorest countries on the planet from access to medicines in the imaginary shadows of a text so hard fought on the multilateral table.

    So in sum, we urge this committee to strike out the extra right of refusal elements in Bill C-9--you know those paragraphs so well, paragraphs 21.04(6)(a) and (7)(a)--and two, we urge you to scrap schedule 1 and to leave the wording general, as the WTO agreed, using “public health problems” and “any product”. In this way, we can pass a bill that Canadians can be proud of.

  (1245)  

    Thank you.

    The Chair: Thank you for your intervention.

    Dr. Kilby is next, on behalf of the Canada-Africa Community Health Alliance.

    Dr. Don Kilby (Chairman, Canada-Africa Community Health Alliance): I'd like to thank the standing committee, on behalf of the Canada-Africa Community Health Alliance, for this opportunity to provide our comments on Bill C-9.

    I was initially approached because of my involvement with our projects in Africa, as well as my 20 years' experience as an HIV primary care physician. I'm presently treating more than 500 patients with HIV through the University of Ottawa health services. I've co-chaired the federal Ministerial Council on HIV/AIDS, and I presently co-chair the Ontario Advisory Committee on HIV/AIDS. I sit on the board of directors of the Ontario HIV Treatment Network, and have been on advisory boards of many pharmaceutical companies on HIV therapeutics.

    The Canada-Africa Community Health Alliance is a very small NGO. It participates in rural health projects in Benin and Gabon and has recently started a partnership with an existing AIDS service organization in a district hospital in Tanzania.

    After 20 years of care and treatment of HIV, at a time when mortality rates due to AIDS have plummeted with access to antiretrovirals, HIV care providers in Canada like myself are seeking opportunities to share knowledge and expertise with colleagues in Africa and other areas and to help develop and expand HIV prevention, care, and treatment programs, as well as train Canadian students and professionals in settings of greatest need. We therefore welcome Canada's initiative in this area.

    Bill C-9 demonstrates Canada's commitment under UNGASS to harmonize our domestic and international responses to HIV/AIDS. It also signals to the world Canada's willingness and ability to lead the efforts needed to ensure access to less expensive pharmaceutical products by countries lacking sufficient pharmaceutical manufacturing capacity.

    However, Bill C-9 as drafted does present problems. The right of refusal is one. As presently crafted, the bill presents challenges that, if not addressed, will create precedent for other countries that are watching to see how truly committed we are to a process that will ensure Canadian companies will not only be willing but capable of competing for contracts in developing countries. We must ensure a level playing field exists that provides equal opportunity to patent holders and generic companies to compete to provide the lowest possible price. Rights of refusal will effectively mean additional risks to generic companies and will be a disincentive to participate.

    The optics for patent holders is bad. It basically says that multinational companies need not participate in the effort to secure affordable life-saving medication, and that they reserve the right to undermine, at will, the efforts of others by picking and choosing the most favourable markets to enter once others have committed themselves to a negotiated arrangement. I would think that our Rx and D companies would not want to be put in a position that not only unfairly pitted them against their generic competitors, but also forced developing countries, or NGOs and Canadian government agencies, into a relationship they had not themselves thought to secure.

    Canadian international NGOs that are operating in resource-limited settings and have been granted import privileges by these developing countries to drugs patented in Canada should also be allowed to negotiate competitive pricing arrangements with drug manufacturers under the provisions of Bill C-9. This would allow organizations like Médecins Sans Frontières to negotiate purchase agreements directly for their own operations and possibly even act as brokers for smaller NGOs that operate in developing countries.

    Resource-limited settings do not today represent a sales market that is able to contribute to revenues needed for research and development and corporate shareholder profits. This may represent, however, a significant opportunity for various generic companies in Canada, provided they are able to manufacture and distribute drugs at a cheaper price than generic manufacturers from other countries, such as India and Brazil, while still covering their costs and turning profits for their shareholders.

    In that regard, Bill C-9's greatest strength is that it serves as a catalyst for similar legislation in other countries capable of producing patented medication under compulsory licensing, and thus expands the competitive market needed to reduce the cost of these drugs.

    In my first discussions with Ministry of Health officials, I questioned whether this bill would allow a company requesting a compulsory licence to produce fixed dosing compounds, whereby two or more drugs from one or more companies could be co-formulated to help reduce pill burden. This would allow for ease of delivery for patients and improved compliance, thereby reducing the risk of resistance. It is still not clear whether this would be allowed. This is desirable, and if it were allowed, countries importing these co-formulations should expect that these FDCs have been tested for bioavailability and efficacy equal to their individual components, and that co-formulations developed in Canada, like single-agent drugs produced in Canada, meet Canadian standards for quality assurance.

    I personally favour initially offering World Health Organization-listed medications for access to ensure that most needed products are requested first, provided periodically updated lists are accepted without review.

    Resource-limited settings have many other challenges to meet. A graduated approach to accessing most needed medications is reasonable. It may even be desirable to ensure that patients with the most serious public health diseases get first access to our markets.

  (1250)  

    Language could be used that protects the sovereign rights of states seeking relief under this legislation by allowing access to medication not identified in the World Health Organization's list if these states are able to demonstrate they already access those essential medications identified by the World Health Organization.

    I'm a pragmatist who believes we should follow the leadership of the World Health Organization in determining first where we should set our targets to ensure we concentrate our initial efforts on those conditions, those public health diseases, that most need our attention, and when successful, further use compulsory licensing in Canada to access other medications.

    Thank you.

    The Chair: Mr. Murthy, please proceed on behalf of McGill University.

  (1255)  

    Mr. Srinivas Murthy (Co-ordinator, McGill International Health Initiative; General Executive, Students Against Global AIDS, McGill University): Hello.

    First of all, I'd like to thank the committee for giving me the opportunity to present myself here today. My name is Srinivas Murthy and I'm a second-year medical student at McGill University. I'm speaking here today in my role as coordinator of the McGill International Health Initiative as well as founding director of Students Against Global AIDS.

    The McGill International Health Initiative, or MIHI, is a Montreal-based group dedicated to advocating for global health justice. Students Against Global AIDS is a national network of students committed to curbing the pandemic.

    I have submitted a brief detailing these groups as well as further information that we believe is pertinent in your deliberations regarding the distribution of low-cost medications to resource-poor settings.

    Last year our group drafted a letter to the Prime Minister, every MP, and relevant ministries with the aim of making you, our elected government officials, aware that students from all walks of life and all disciplines of study demanded a paradigm shift in Canada's approach to the HIV/AIDS pandemic. The letter, endorsed by students and student unions from across the country, demanded that Canada implement a multi-departmental, access-based approach to international health, entitled SLAHM, for student-led access to HIV/AIDS medications. It led to numerous meetings with officials and government departments integral to the drafting of what was Bill C-56.

    The reason I've travelled here from Montreal to present myself today is not because I'm an expert on trade policies or patent laws; it's because I've been granted a mandate, a mandate from over 250,000 Canadian students, a mandate from the Canadian Federation of Medical Students and the Federation of QuebecMedical Students Societies, meaning the overwhelming majority of future physicians in Canada, a mandate from the Canadian civil society. That mandate is to ensure that Canada do more than just pay lip service to the problem and the travesty that is much of the world's inaccessibility to life-saving medications.

    Bill C-9 has given tremendous hope to the humanitarian community and to the millions of Canadians who care about the health of people in developing countries. However, the bill will not meet these hopes unless it is amended. The bill was drafted in response to the August 30 WTO agreement, a global consensus saying that access to medicines must be an international priority. Developing countries now have the right to limit the strict patent rights that play a role in blocking access to these medications.

    By setting a global precedent well below that of the WTO agreement with Bill C-9, Canada will effectively create a new low standard that other developed nations can use as their diving board for further and further compromises of humanitarian principles in a shameful race to the bottom, and the losers will invariably be the destitute, the sick, and the poor of the world. What progress will we have made to global health care justice if we begin our pledge to Africa by chipping away at a consensus that developing nations have fought so hard, for so many years, to achieve, an agreement that clearly states that all countries have the right to use compulsory licensing to obtain more affordable medications?

    This is not just a student issue; it's a Canadian issue. Canadian citizens see their global role as one of furthering principles and ideologies, not of profit and commercialization at the expense of the health care of the poor.

    Last weekend hundreds of citizens turned out in Toronto and Vancouver all saying that changes have to be made. The same thing will be happening in Montreal this Friday. Thousands of other Canadians, from labour unions, to the Quebec Medical Association, to human rights advocates, to general citizens, to the Quebec federation of family doctors, have all expressed the same shared concerns and have called on the government to fix the bill.

    We have just heard Kofi Annan speak to Canada's roles and responsibilities in the world. Now is our opportunity to finally live up to them by making changes to Bill C-9 as it currently is drafted.

    First, any provisions that would allow brand-name pharmaceutical companies to block the competition that is needed to bring the prices of these medicines down must be removed from the bill.

    Second, the provision that excludes developing countries because they are not WTO members must be removed. You've already heard evidence to this effect from previous witnesses.

    Third, the bill should allow NGOs providing health care in the developing world the opportunity to purchase generic versions of patented medications from Canadian manufacturers. NGOs are often the only health care providers in populations endangered by discrimination or war.

    I know that as a medical student and future health care provider to both Canadian citizens and citizens of the globe, affordable medications for all public health problems are imperative. By including provisions in the bill that will limit export to a pre-set list of specific medications, we effectively create a double standard of care in the developing world that is unconscionable to any medical practitioner.

    Global public health problems, including such crises as the HIV/AIDS pandemic, can be averted, but only with the help of effective developed country initiatives.

    I implore you, members of this committee, to make these vitally needed changes, making Canada the nation that we, as citizens, are so proud of.

    Thank you, and I look forward to answering any questions you may have.

·  (1300)  

    The Chair: Thank you, Mr. Murthy.

    Mr. Jim Sinclair, general secretary, United Church of Canada.

    The Reverend Jim Sinclair (General Secretary, United Church of Canada): Mr. Chairman and members of the committee, thank you for the privilege of being here. I feel very proud, as a member of Canada's largest Protestant denomination, to present to you today the fact that we have a situation in our denomination that, in effect, has gotten out of control.

    We have a Beads of Hope campaign. We are sharing these little buttons that have been made for us by Global Partners in Africa as a way of raising awareness around AIDS in our constituency. Over the next few weeks you will find up to 40,000 petitions presented to the House from our constituency. In addition to that, what I mean by “out of control” is that we thought we would be raising a certain amount of money in two years and we're now 50% over that already.

    I'm here today, though, to present to you how our partners also are working on this with us. John Dillon will be representing KAIROS, which is a Canadian church coalition, and the expertise it brings to the question of HIV/AIDS, and then also a partner from Brazil.... You were interested in Norway. You'll be interested in Brazil and how they're addressing this issue now.

    So we thank you for the time.

    The Chair: Mr. Dillon.

    Mr. John Dillon (Coordinator, Global Economic Justice Program, KAIROS, United Church of Canada): Thank you, Jim, and thank you, Mr. Chairman.

    The Canadian government is to be commended for being the first developed country to introduce this legislation; however, the bill as drafted is seriously flawed and it must be amended if it's to benefit the millions of low-income people suffering from HIV/AIDS and other treatable diseases.

    First of all, the provision on right of first refusal must be removed. A careful study of the TRIPS clause, article 31, the Doha declaration, and the August 30, 2003, WTO general council decision shows there's no requirement that patent holders be given an opportunity to take over contracts negotiated between importers and generic producers. The right-of-refusal clause and the alternative, as proposed by the research-based pharmaceutical companies, are both TRIPS-plus measures, that is to say, they're contrary to the spirit of the Doha declaration. Giving patent owners a right of first refusal would nullify any incentive generic manufacturers have to negotiate contracts and it would set a very negative precedent.

    Secondly, there is no need for the schedule of medicines. Perhaps we can reflect for a moment. Why did it take so long between the Doha declaration in November 2001 and the general council decision in August 2003? The reason it took so long is that many countries tried to make what should be a simple process complicated. For example, the United States tried to introduce measures that would restrict which diseases could be treated under this provision, but the developing countries said, “No, we want to be able to choose our own public health needs”.

    To introduce a schedule of eligible medicines, it's a similar kind of obstacle. Of most concern to us is the fact that some fixed dose, antiretroviral medicines that are recommended by the World Health Organization for treatment of HIV/AIDS do not appear on the list, and these are some of the least expensive alternatives.

    Thirdly, the bill should be amended so that non-governmental organizations such as Médecins Sans Frontières have an opportunity to supply medicines, because we cannot count on every government and every low-income country to be able to provide that service.

    And fourth, there's no reason why certain countries that are not members of the World Trade Organization should be denied the potential benefits of this legislation.

    In conclusion, we urge committee members to remember that 14 million people die each year of treatable diseases. Of these, 6 million die from AIDS, tuberculosis, and malaria, and another 8 million from other treatable diseases. We urge that this legislation be amended and passed to set a positive example for the rest of the world.

    The Chair: And you'll have Mr. Padilha use the rest of your time.

    You have about a minute and a half or so. We appreciate your being here.

    Mr. Anivaldo Padilha (Secretary of Planning and Cooperation of Koinonia, Brazil, United Church of Canada): Thank you, Mr. Chairman.

    I really appreciate the opportunity to be here and to speak before this committee.

    I only hope that by sharing our Brazilian experience with this committee, it will inspire you to enact the changes that are being proposed and suggested by the churches and the NGOs in Canada.

    The experience I bring to you is about the importance of generics and the key role generics have played in our fight against HIV/AIDS in Brazil. In 1990 we started a program in Brazil, a national program to fight AIDS. It had several components, but I will only mention two of them.

    In addition to education, prevention, and so on, we worked with our government and with our parliament to enact a law, new legislation, that would allow the government to provide free and universal treatment and medicine to those living with or affected by HIV/AIDS. The legislation also allowed the Brazilian government to strengthen its capacity to produce generic drugs and thus to allow the generic drug companies to operate in the market.

    Since then, the figures in Brazil have shown a lot of improvement. At that time, 12 or 13 years ago, the projection was that we would have about two million people infected with HIV/AIDS by the year 2002. Instead of that, we have 600,000.

    Right now, about 180,000 people receive free drugs and free treatment provided by the government. We have been able to reduce the death rate to 50% until 2002, and that rate is still declining. Last year, the decline was 12.5%. Those people are back to work, they are having productive lives, and so on.

    One concern the drug companies had in the beginning was that by producing our own generics, the drug companies in Brazil, controlled primarily by trust national corporations, would lose a lot of their profits. The opposite has occurred in Brazil. The drug companies realized that at the beginning they could only sell to a couple of thousand people, those who could afford it. The majority of Brazilian people cannot afford those drugs, so the government buys them. They establish contacts with the drug companies. The cost right now to the Brazilian government is about 30% of the market price of the brand market drugs and about 12% to 15% of the cost of the generics.

    The prominent drug companies, those national companies, are now gaining in scale instead of just from the volume of their--

·  (1305)  

    The Chair: With great respect, we're going to give you lots of chances to speak some more. Maybe you could wrap it up.

    Mr. Anivaldo Padilha: Yes, I'm almost finished. I'll just go back to what I said first.

    I hope you take a close look at the Brazilian experience, which the United Nations has chosen as a model for the national programs to fight AIDS. If you take a closer look at that particular situation in Brazil, you may find other details to help you in the enactment of this bill.

    Thank you very much.

    The Chair: A special thanks to you for being here.

    Mr. Rajotte, and then Ms. Torsney.

    Mr. James Rajotte: Thank you very much, Mr. Chairman.

    Thank you very much for coming in today.

    I want to address the issue of the list of medicines. I believe at least three of you touched on this issue.

    Mr. Murthy, perhaps I can begin with you. You say this list excludes numerous drugs that have been proven to be required by countries facing public health problems.

    For schedule 1, on my count, there's about 46 on the list of medicines. Can you identify the medicines that you or your organization feel should be added and which public health emergency they address, whether it be TB, malaria, or HIV/AIDS?

    Mr. Srinivas Murthy: To answer that, first of all, there's a drug called nevirapine. I'm sure it has previously been brought up before this committee. It's to prevent mother-to-child HIV/AIDS transmission. It's the best drug for this purpose. It is not included in schedule 1.

    There are numerous other examples. I can't think of them off the top of my head right now.

    I believe the HIV/AIDS Legal Network outlines a number of drugs in their submission that need to be added that address specific public health problems, not just HIV/AIDS, but cancer, diabetes, hypertension, things the developing world suffers from as well.

    We don't want to fight this battle again in five years, when another epidemic comes into South Africa. We don't want to have to go through all the legal wrangling every single time something new happens. We need to have no list at all.

·  (1310)  

    Mr. James Rajotte: Okay.

    Ms. Sreenivasan, do you have a list of medicines you'd like us to add, or specific medicines that deal with these three named diseases?

    Ms. Gauri Sreenivasan: The direct answer to your question is no, because I don't think a list is the right solution.

    I think it is key to note that there are several missing ones from the list that Canada has come up with, but the more important point is that any time you try to come up with a list, you're going to miss stuff.

    The agreement that was reached at the multilateral table was that there would be no list, and they fought.... That's why it took so long. People wanted a list and they wanted it short. They gave up lots of other stuff and they didn't get lots of other agreement at the WTO. But they did get this one thing that we would say: any pharmaceutical product for public health problems, including some of these examples. The door was left open. So I think a list is the wrong approach.

    Mr. James Rajotte: Mr. Dillon, are there any medicines you would like us to add?

    Mr. John Dillon: I would agree with the previous speakers that a list is the wrong way to go. But if you're looking for specific examples of what's not on the list, I'd refer you to page 19 of the HIV/AIDS Legal Network brief, where they list a number of antiretrovirals, in addition to nevirapine, that are not on the list.

    But I think it's more important to appreciate this from the point of view of the developing countries concerned, because what they want is to be in charge of their own public health needs. They don't want a double standard whereby a country that does have capacity to produce pharmaceuticals can choose which pharmaceuticals to make available to its people. They want the same right to make those choices, for a country that does not have pharmaceutical capacity.

    Mr. James Rajotte: With respect, I think looking at this list of 46 medicines and then looking at clause 21.03, the government has drafted this legislation so that if you read in terms of schedule I, it can be amended “by adding the name of any patented product that may be used to address public health problems...if the Governor in Council considers it appropriate to do so”. Maybe I'm misreading this, but this seems to me to be a fairly simple way to add medicines.

    I just want to understand what the big problem is when people say there are all these medicines not on there, yet they can't actually point to many medicines.

    Secondly, could you explain to me how this is such a difficult process to go through? To me--and we have privy councillors on this committee who can perhaps enlighten us as well--this seems reasonable as a process. So could you explain to me how this is an arduous process we're going to have to go through that will prevent medicines being added on?

    Anyone can answer that.

    Mr. John Dillon: It doesn't take a lot of imagination to think of scenarios where there could be a lot of lobbying about a particular medicine. Perhaps the patent holder doesn't want it added to the list, and this could make very complicated a process that should be quick and efficient.

    Think, just within the last couple of years, of the public health emergencies that emerged so quickly--like SARS, severe acute respiratory syndrome. Had there been a medicine available to treat SARS, it would have been very important to make it available immediately. What if the patent owner of that medicine was lobbying hard and keeping it off the list? People could die in the meantime.

    The Chair: Anybody else?

    Ms. Gauri Sreenivasan: I guess it's just not clear to me how coming up with a list and all the medicines and then coming up with a process for adding medicines could be perceived as quicker than not having a list. If you don't have a list, you deal with demands as they come up. Some of them Canada may not be able to fulfill. They may not come to Canada because we just may not have the capacity, and then we don't answer. So if there's no list, there are no boundaries around it.

    It may seem arcane, but the purpose of the declaration at the WTO was to bring the least developed countries up to the same rights as everybody else. It's actually quite important, both in health terms and in the sense of the trade system, equalizing trade rates within the trade system so other countries have access to enter into compulsory licensing provisions on the grounds that they determine. But they have to fulfill them within their national boundaries. So it just catches the countries--I think this has probably been explained before--that can't make access to those provisions within the boundaries of their own countries.

    It means we just need to open the doors in other countries so that they can access those same compulsory licensing provisions, and there's no need to add, just for that subset of countries, a list of medicines that doesn't obtain for any other country.

·  (1315)  

    The Chair: Thank you for that.

    Paddy Torsney, please.

    Ms. Paddy Torsney (Burlington, Lib.): Thank you.

    Perhaps we have to discuss this afterwards, but I think this bill is about getting much needed drugs to Africa particularly and to other hot spots in the world. It's not about equalizing anybody's trading system, especially for countries that aren't in the WTO. I'm not sure if that was something I misheard. It's not about rights. It's about getting drugs to people who need drugs. We have an agreement now, which has been carefully negotiated at the WTO and within the Canadian context, and we have a huge opportunity.

    Some of you have spoken about specific drugs related to AIDS. The minister has already identified that those are going to be added to the list.

    Lots of you have talked about how difficult it is to change this list or have said that we shouldn't have lists of either countries or illnesses. I'm not sure people are aware--I think Mr. Rajotte tried to identify this--that governor in council additions can take minutes. You need four cabinet ministers to sign their names. That's how long it can take to add a drug or a country to the list.

    Yes, it's theoretically possible, Mr. Dillon, that someone could go off on some wild tangent for days and days and days when there's a health emergency breaking out. I think we saw with the anthrax threat that we were able pretty quickly to break patents. I'm not sure that's really feasible when there is an identifiable need. So let's be clear that a governor in council change takes minutes.

    We have an agreement. We have an opportunity to get drugs and to show that it can work. It can work on these countries. It can work on these drugs. We can get something happening. I'd say let's go and let's increase the competition.

    I asked to have my name put on the list because I wanted to ask Ms. Blouin about her statement that the brand-name companies aren't doing anything right now and we shouldn't have this right of first refusal because they already have the opportunity. I'd say to both Ms. Blouin and you, because I think you also raised some of these issues, that there are drugs for TB and malaria, which are not under patent right now, that Canadian companies are not providing to Africa.

    So, really, what is some of this stuff about? I think all of you came with prepared presentations. I'd like to hear your comments on the idea to amend the right of first refusal that was put forward by Hitchman and Smith. I think you were all here for that presentation. It had to be on a cheaper cost basis. There had to be some kind of payment for the contract that was previously negotiated. My first impression is that that system would create a huge competitive environment for the products. I would like to hear your comments on that. I know your presentations didn't include it because you didn't come here thinking about it.

    To our friend from Brazil, you talked about the infrastructure that's in place and the situation occurring in Brazil. A couple of people mentioned that they didn't want it to be necessary to have a country agreement, that it should be done just with NGOs. I have some concerns about that because I think you do need some kind of infrastructure in place to be able to make these agreements, or else we could have huge problems with diversion and inappropriate use, not by the NGOs but by various actors in those kinds of environments. I'd like to hear why you think the infrastructure is so necessary and how we're going to deal with this if we start changing the agreement on having to have countries sign on their support for the protections.

    That's it.

·  (1320)  

    The Chair: Thank you, Paddy.

    Who wants to start? Mr. Dillon.

    Mr. John Dillon: Ms. Torsney, after listening to the presentation by Hitchman and Smith, it seems to me that they were basically presenting a variation on what the Rx and D presented as their alternative. They've added the notion that the generic company could be compensated for its costs. But what they haven't questioned is the fact that a generic company would still be notified either early in the process or during the 30-day period that a negotiation was going on, being given an opportunity either to grant a voluntary licence or the patentee can negotiate to supply the contract.

    After a few cases where the patent owner has stepped in and taken over a contract and supplied it--in fact, they may even do it initially on very attractive terms to the buyer--I think it would become very discouraging for generic firms to even try to negotiate because they'd say, “All we're going to get back is our expenses”. It wouldn't be true competition the way it's supposed to be set up.

    Ms. Paddy Torsney: They'd just negotiate a cheaper price. I think it would be a race to the bottom in terms of price.

    Mr. John Dillon: Not if the generic firms give up in the competition. Just think about the financial resources available to the pharmaceutical companies. They can take losses, if they want, on some initial contracts if they want to discourage this.

    Ms. Paddy Torsney: Canadian generic companies are some of the most successful companies in our country. They're doing pretty well, too, so I'm not sure they wouldn't be interested in fighting some of those lawsuits.

    The Chair: Mr. Padilha.

    Mr. Anivaldo Padilha: I want to respond to two concerns that you've raised.

    First, in terms of the closed listing of drugs, in Brazil we do not have that. It's an open list. So what happens is that by not having a list of specific medicines, Brazil can use its buying power to negotiate on the market. By having a list, what you are actually doing is establishing a cartel that would prevent countries, especially in the developing world, from using their buying power to go to the market and buy whatever drugs they need.

    The other point here is that you would be imposing on other countries certain criteria, and I would say even medical criteria, in terms of how to treat the illnesses we have to treat. That's an important point.

    In relation to the infrastructure, I just want to mention that it's very well acknowledged by the World Health Organization that the AIDS program in Brazil would not have been so successful without the participation of civil society organizations, or NGOs. It is true that in Brazil we do have our public infrastructure, which is needed for treatment, distribution, and so on. There are countries I know of, especially in Africa, and especially the Portuguese-speaking countries, which I know best because Brazil provides them with services on AIDS, where there is no organization of public society, or very little. The state infrastructure is very weak, and it has to rely especially on organizations of civil society, or NGOs.

    So if you prevent NGOs from buying those drugs, you would be preventing some of those countries from establishing good and effective programs. Sometimes even government structures are not that reliable for those kinds of services.

·  (1325)  

    The Chair: Thank you, Mr. Padilha.

    We'll go to Mr. Crête, and then to Mr. Collenette.

[Translation]

    Mr. Paul Crête: Thank you, Mr. Chairman. I would like to make a comment and ask a question.

    I think we need a legal opinion to find out whether the commitments made in the bill go beyond those made internationally. I think it is up to the department to give us an opinion about the right of first refusal, as well as the schedule with the list of medicines and the restriction to WTO countries.

    I do not think that the committee members are trying to justify mentioning medicines that could be added to the list. However, we have to know whether we are talking about one, two, three, five or ten medicines that might be added, or whether some that are being developed could become available in the short term. We will have to be given this information, because without it, the arguments against the list are weakened. That takes nothing away from the substance of the matter, but this need does exist.

    My question has to do with the NGOs, and the countries in which they work. I asked the question the other day, but I was not satisfied with the answer I got.

    Could you tell us under what circumstances the NGO, not the country, has the right to purchase and use the medicines? We should not adopt a paternalistic attitude whereby NGOs are making decisions for these countries—about the places where they want the medicines and for whom. In short, how can we ensure that the NGOs become good tools in this process?

    Doctors without Borders is definitely the best example, but others may be more dubious. In addition, there could be conflicts with some countries. How can we ensure that we are doing things properly? We have heard about Brazil. Perhaps we should be asking for more details on this. I would like some examples involving less well-organized countries.

[English]

    Mr. Srinivas Murthy: First of all, to address this issue, I don't think we should have a list of five drugs added or ten drugs added because you can see the problems with that. You're always going to be adding new drugs and new drugs. With no list at all this is not a problem. This is what was agreed to over years and years of debate at the WTO.

[Translation]

    Mr. Paul Crête: The point is not to say that we should be adding five or ten medicines, but rather to have some examples. If you cannot give us any such examples, that means that there are none. I am not saying they do not exist, I am just wondering whether some doctors or other individuals could give us this information, not necessarily this morning, but within a week or two.

[English]

    Mr. Srinivas Murthy: In answer to that, amprenavir, abacavir, lamivudine, nevirapine, tenofovir--are you going to add all those drugs? It's already done?

    The Chair: Order.

    Finish up, Mr. Murthy, and then we'll have Dr. Kilby.

    Mr. Srinivas Murthy: Oh, I'm sorry.

[Translation]

    Dr. Don Kilby:

    I would like to comment on why organizations such as Doctors without Borders should be able to gain access to medicines.

    Mr. Paul Crête: And about the way of proceeding.

    Dr. Don Kilby: Yes, and about the way in which they could proceed. I think that countries often negotiate directly with organizations such as Doctors without Borders for the provision of services. They therefore use the existing medical expertise, of Doctors without Borders, for example, to put in place whatever program for the country.

    Organizations such as Doctors without Borders must first get permission from the country, in any case. Even a small NGO such as ours that goes to an African country with medicines produced elsewhere must have the country's permission to get those medicines into the country. I think that organizations such as Doctors without Borders must first have permission. Then it can negotiate much more effectively, because it can do so for several countries at once. Subsequently, it may become a sort of warehouse, if you will, for the medicine contracts negotiated for these countries.

    Mr. Paul Crête: So this would happen on the condition that the NGO had received a mandate from the country.

    Dr. Don Kilby: I think this is always necessary, in order to respect the country's sovereignty and needs.

[English]

    The Chair: Any other comments? Thank you, Paul.

    Mr. Collenette, please.

    Hon. David Collenette (Don Valley East, Lib.): Thank you, Mr. Chairman.

    On the issue of the list, at this particular point in time I'm sure our witnesses are aware, as everyone is, that we have some controversial issues facing government—charges of lack of accountability on the part of ministers and on the part of public servants. What the list issue comes down to, as far as I'm concerned, is accountability.

    As someone who has been on the other side of the table, I believe we have to be very, very careful to ensure that government remains accountable and that any drugs prescribed are prescribed in the proper way, authorized by the WHO or by Health Canada. As Ms. Torsney said, these drugs can be quickly added. I've been involved in orders in council where a decision was taken in an emergency and within the hour the paperwork was done. So I don't think we should worry about that.

    I do have concerns with the notion that somehow NGOs have direct access to drugs without necessarily them having been prescribed, in this case by Canada. NGOs are not accountable to the people of Canada. They do great jobs. They are volunteer organizations and the like. But the government, which sanctions what drugs can be used, is accountable to the public and therefore must follow prescribed procedures.

    I would certainly reject the notion that the list should be opened up. Other drugs can be added. Mr. Fontana has indicated that, but the fact is there is a procedure. It happens not just on the question of drugs; it happens on other regulatory matters. Whether it's in transportation or in other parts of government, there are procedures for allowing certain parts, in this case drugs, to be authorized.

    Where I'm very sympathetic, Mr. Chair, with our guests—and I told them yesterday—is on the issue of the first right of refusal. I can't understand how this bill got to this stage the way it's written with respect to the right of first refusal. Our friend from Brazil talked about the cartel in the context of the list. The fact is we have a cartel when it comes to the research-based drug companies in the world. I think no one can see this more clearly than what is happening right now between Canada and the United States, where thousands of Americans are ordering drugs from Canada through the Internet and whereby generic drugs are significantly cheaper. Generic brands, once they have been freed from their patent restrictions, are significantly cheaper than the brand models.

    It doesn't mean to say that I'm against research or intellectual property being rewarded, but at a certain point in time there has to be competition. The fact of the matter is the international drug companies do not compete. It is an international cartel.

    Thankfully, because of what Mr. Trudeau did in 1969, in bringing in compulsory licensing—unfortunately reversed by the Conservative government, by Mr. Mulroney, in Bill C-22, in 1988 or 1987, somewhere around there—the fact is that we have developed a generic industry that has provided low-cost alternatives to Canadians, and those drugs can be available in this instance.

    Now, that's not saying that the research-based companies cannot get a good return. What is a decent rate of return? I would ask colleagues to look at the rate of return of research-based drug companies and see that it's a pretty good business to be in. It requires more international regulation.

    So I would hope, Mr. Chair, that the government reflects upon this and changes this. I see this as really coming right out of the Department of International Trade. I was involved in a lot of discussions on other issues, where, as a reflexive action, the Department of International Trade just says “Look, the WTO obligations are not going to be met by a specific measure”. I do not believe it in this particular case, and I would hope this could be changed.

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    The Chair: I take that as a representation to the committee.

    Hon. David Collenette: No, I'm agreeing with them and disagreeing with them. I've heard both sides of their arguments.

    The Chair: Thank you.

    We're going to conclude, actually, unless there's a revolt, very quickly with Mr. Masse and then very briefly to Mr. Fontana.

    Mr. Brian Masse: Thank you, Mr. Chair.

    I actually share a concern about the list. It comes from practical experience and it also comes from policy.

    The experience comes from my own constituency, which had an announcement of over $300 million for border infrastructure funds. We haven't seen a single dollar in nearly two years. It comes from a policy perspective because what it does is take us back to having to go to political masters to get a drug on a list, as opposed to taking it out of that realm altogether and basing it on human health and need and processing it that way rather than coming back to political masters. So I express that concern.

    There are two questions I want to get at. The first is to Mr. Kilby. One of the portrayals of providing the drugs to third world countries has been that basically they'll be dumped out there; that there may not be any type of connections. What types of things are physicians and doctors and other groups doing to build the bridges to get these medicines applied properly to those populations? If you have some examples, they would be helpful.

    Second, ironically—and I think it's a bitter irony in some sense, because the Prime Minister today noted the work of Kofi Annan in East Timor, and we know what happened there—under this current bill as written, my understanding is East Timor is left off the list, and that's tragic. Maybe I can get a comment about that situation.

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    Dr. Don Kilby: In terms of what's happening already to meet the necessary infrastructure needs and get over the bottlenecks that truly do exist—especially on the African continent, the area I know most—there are a lot of initiatives taking place with an organization for HIV/AIDS called the International Association of Physicians in AIDS Care that does broad-based education of nurses and physicians across the continent and offers a lot of workshops and a lot of educational capacity.

    But for sure there's a great challenge no matter where you go in becoming able to ramp up programs. In a country like Botswana, which is certainly one of the countries most capable financially of being able to provide antiretroviral drugs to its population, the ramping up to get the medications to the populations that need it the most is a gargantuan task, a very difficult task to accomplish. It requires the help of governments from different countries. Certainly Canada will be called on to participate. Once you have that flood of medications available, how are you going to ramp up the services and infrastructures to be able to deliver them?

    The other piece is, we can't ignore the fact that those out there now doing the work are the NGOs and also the multinational pharmaceutical companies. As much as you can criticize on the one hand, you have to also praise them on the other, in that they have the financial capacity to deliver very effective programs, giving us a lot of knowledge and research that tells us how we can best address the problems that are going to be faced once we open the floodgates.

    Ms. Gauri Sreenivasan: On some of the points that have been raised by different questions, I would agree with you that the case of East Timor is a very painful example of a country in high need that's been left off the list. Our position is that all developing countries should have access to this bill. That goes beyond what's required by the WTO; it's extra largesse on Canada's part. It's not in contravention. It's just a question of whether we want to be quite helpful or super helpful--and I vote for super helpful.

    On the question of the proposal that was tabled just about an hour earlier, I would like to review some of the details of it. I guess the main point I want to say is that ultimately it will be important for the generic industry itself to try to respond to some of these proposals and to be clear that our concern is to assure that whatever features are in the bill, they do not kill the incentive for competition over the long term, the health in the long term of the generic industry. We're not particularly keen that the generics always get the contracts. What we're keen on is that there does have to be that competition, because that's what has shown that the prices have to drop. So I think ultimately the industry is going to have to respond as to what extent that does or doesn't kill their incentives.

    But the point Mr. Dillon made is relevant. We have to make sure the measure doesn't just allow the pharmaceutical companies to sort of beat them down for the first few contracts, that it doesn't injure their interests in staying in the industry in the very long term. Ms. Torsney has confidence that they will continue to stay in there in the long term. If that were true and if they'd tell you that, I would be much relieved to hear it.

    But it's a little bit awkward for us. I'm not interested in figuring out what's good for them as an industry, the generic industry. I just want to make sure from a public policy perspective that the long-term viability of competition is assured.

    I think there have been a couple of questions raised on NGO accountability. When you have NGOs that are operational in problem countries, as I think they were framed, what is the potential conflict between them and the government at hand, and are they accountable at all, should they be allowed to deliver medicines?

    My first point is that I think I'm going to get some of the members in our organization who are operational to come back in writing to you to address some of those specific concerns. Our understanding and our position is that our member organizations--and I'm sure you didn't mean to impugn--actually have incredibly high reputations for being very transparent. I think their operation--what drugs they use, where they're operating, how they deliver them--is very transparent. And transparency is the core of accountability to their donors and to the public. I think it's a question in each context of how they work with the government, whether the government feels they override them or not.

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    The Chair: We'll get you to wrap up. Thank you.

    Ms. Gauri Sreenivasan: Okay.

    On the last point you raised, which was whether this is about equal trading rights or drug delivery, it's absolutely about getting access right now for the poorest countries that don't have access to those kinds of drugs. Right now, there are open doors for all the countries except the poorest.

    The Chair: Thank you very much. We just want to make sure we wrap up in time.

    One minute to Mr. Fontana, then a minute to Mr. Rajotte, and then we're going to adjourn.

    Hon. Joe Fontana: It's within that spirit that there are a number of stakeholder groups around here, and everybody has to see themselves as a winner. The principle is let's make sure we get the drugs to the people at the least cost. I don't personally care whether it's generic or brand, and I don't personally care whether it's the NGO or the government delivering it. This is not about protecting anybody's turf. It's about everybody working together to make sure those lives are saved.

    Now with regard to the democratic deficit, I'm going to tell the former minister that you're darned right, we're going to fix the first right of refusal; it's not on. And I thank all of those witnesses, especially James and others.... In fact it's something we need to change, and we understand.

    With regard to the drug list, I must talk to you a little bit about it. Paul—

    Ms. Paddy Torsney: On a point of order, that would be the committee that would choose, not the parliamentary secretary.

    Hon. Joe Fontana: It's just that the government is being very attentive to what the committee has been saying.

    Canada can waive only the patents it holds, or at least that the drug brand companies hold. There's a list that's included in everyone's packages, and there are 49 or so drugs under Canadian patent. We can't waive drugs that are not given patent protection from Canada. There are a number of drugs, as you know, that are available around the world but are not available in Canada, much to the dismay of people. That's why you have to have a list, because if certain drugs become available, you would want to make sure they're the right drugs and that Health Canada has approved them before we move them over. So from that standpoint, I would hope that lists are in place.

    The Chair: That's a good comment.

    James.

    Mr. James Rajotte: I think you do see a consensus forming to the effect that the section on the right of first refusal certainly needs to be amended.

    But I want to ask something specifically on the proposal presented by the Canadian HIV/AIDS Legal Network. If the patent holder agreed to grant a voluntary licence, it would simply be granted and then there would be remuneration decided by the commissioner of patents. But if the patent holder did not agree, then it would basically be up to the commissioner of patents to determine whether that licence would be granted or not. Now, do you see that as fixing the problem in this bill with the right of first refusal?

    The Chair: A short comment, Mr. Murthy.

    Mr. Srinivas Murthy: Given that this was what the WTO agreed to two years ago and in 2003, yes, we would see that as a benefit.

    The Chair: Thank you.

    Thank you to all of our witnesses in this second session and to those in the first session earlier this morning. The questions and responses were very greatly appreciated.

    We're going to remind members that we have a meeting tomorrow afternoon with Stephen Lewis for the first session and with a number of NGOs and organizations for the second session, so please be here on time.

    With that, we're adjourned.