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37th PARLIAMENT, 2nd SESSION

Standing Committee on Health

EVIDENCE

CONTENTS

Tuesday, November 4, 2003

0905

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

Mr. John Stewart (Chairman, Rx & D - Canada's Research-Based Pharmaceutical Companies; Executive Vice-President and General Manager of Purdue Pharma)

0910

Mr. Nestor Nituch (Director of Clinical Research, Bristol Myers Squibb (BMS); Rx & D - Canada's Research-Based Pharmaceutical Companies)

0915

The Chair

Ms. Janet Lambert (President, BIOTECanada)

0920

Ms. Suzanne Cadden (Vice-President of Clinical and Regulatory Affairs, Lorus Therapeutics; BIOTECanada)

0925

0930

The Chair

Mr. Jim Keon (President, Canadian Generic Pharmaceutical Association)

Mr. Allan Oberman (Vice-Chair, Canadian Generic Pharmaceutical Association; President and Chief Executive Officer of Novopharm Ltd.)

0935

Mr. Jim Keon

0940

The Chair

Mr. Jim Keon

The Chair

0945

Mr. Rob Merrifield (Yellowhead, Canadian Alliance)

Mr. John Stewart

Mr. Rob Merrifield

Mr. John Stewart

Mr. Rob Merrifield

The Chair

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ)

The Chair

Mr. Rob Merrifield

The Chair

Mr. Rob Merrifield

The Chair

Mr. Rob Merrifield

1000

Mr. Murray Elston (President, Rx & D - Canada's Research-Based Pharmaceutical Companies)

Mr. Rob Merrifield

Mr. Jim Keon

Mr. Rob Merrifield

Mr. Jim Keon

Mr. Rob Merrifield

Mr. Jim Keon

Mr. Rob Merrifield

Mr. Jim Keon

Mr. Rob Merrifield

Mr. Jim Keon

1005

Mr. Rob Merrifield

Mr. Jim Keon

Mr. Rob Merrifield

The Chair

Mr. Rob Merrifield

Mr. Grant Hill (Macleod, Canadian Alliance)

Mr. Nestor Nituch

Mr. Allan Oberman

Mr. Murray Elston

Mr. Grant Hill

1010

Mr. Nestor Nituch

Ms. Suzanne Cadden

1015

The Chair

Mr. Réal Ménard

Mr. Murray Elston

Mr. Réal Ménard

Mr. Murray Elston

Mr. Réal Ménard

Mr. Murray Elston

Mr. Réal Ménard

1020

Mr. Murray Elston

Mr. Réal Ménard

Mr. Murray Elston

Mr. Réal Ménard

Mr. Murray Elston

Mr. Réal Ménard

Mr. Jim Keon

Mr. Réal Ménard

Mr. Jim Keon

Mr. Réal Ménard

Mr. Jim Keon

Mr. Réal Ménard

Mr. Murray Elston

Mr. Réal Ménard

Ms. Janet Lambert

1025

The Chair

Mr. Gilbert Barrette (Témiscamingue, Lib.)

Ms. Janet Lambert

The Chair

Mr. Murray Elston

Mr. Gilbert Barrette

Mr. Murray Elston

1030

The Chair

Mr. Svend Robinson (Burnaby—Douglas, NDP)

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

1035

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Murray Elston

Mr. Svend Robinson

Mr. Nestor Nituch

Mr. Svend Robinson

Mr. Nestor Nituch

Mr. Svend Robinson

Mr. Nestor Nituch

Mr. Svend Robinson

1040

Mr. Jim Keon

Mr. Svend Robinson

Mr. Jim Keon

The Chair

Ms. Carolyn Bennett (St. Paul's, Lib.)

Mr. Jim Keon

Ms. Carolyn Bennett

Mr. Jim Keon

Ms. Carolyn Bennett

Mr. Jim Keon

Ms. Carolyn Bennett

Mr. Murray Elston

Ms. Carolyn Bennett

Mr. Murray Elston

Ms. Carolyn Bennett

Mr. Murray Elston

1045

Mr. Jim Keon

The Chair

Hon. Hedy Fry (Vancouver Centre, Lib.)

The Chair

Mr. Murray Elston

Ms. Carolyn Bennett

Mr. Murray Elston

1050

Mr. Jim Keon

The Chair

Mr. Murray Elston

The Chair

Mr. Murray Elston

The Chair

Mr. Svend Robinson

Mr. Rob Merrifield

The Chair

1055

Mr. Murray Elston

The Chair

CANADA

Standing Committee on Health

NUMBER 069

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, November 4, 2003

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Ms. Bonnie Brown (Oakville, Lib.)): Good morning, ladies and gentlemen. I'd like to call to order this meeting of the Standing Committee on Health as we pursue further our study on prescription drugs.

We have some very interesting witnesses this morning. Without further ado, we'll begin with the chairman of Canada's Research-Based Pharmaceutical Companies, Mr. John Stewart, who is also executive vice-president and general manager of Purdue Pharma.

Mr. Stewart, you have the floor.

Mr. John Stewart (Chairman, Rx & D - Canada's Research-Based Pharmaceutical Companies; Executive Vice-President and General Manager of Purdue Pharma): Thank you. I'm the chair of Canada's Research-Based Pharmaceutical Companies. With me today are our president, Murray Elston, and a regulatory affairs expert from Bristol-Myers Squibb, Mr. Nestor Nituch.

I thank you for this opportunity to appear before you. As we will discuss today, new medicines contribute to a high quality of life for patients and their families, a strong economy, and health care savings.

We know that the federal government has said it wants to establish Canada as one of the most forward-looking nations in the world. At the same time, Canada's most valued social program, our health care system, is at a crossroads, as governments at all levels continue to look for ways to make the system more effective, efficient, and innovative.

Rx & D, whose very existence rests on innovation in health care and whose products allow for enormous savings in other areas of the health care system, believe that now is the time to merge these two objectives. We believe it is time to look at our health care system as a social force and as an economic generator.

The rewards of capturing our health care strengths and taking far-reaching, pro-growth views of the health care sector can be enormous, both for patients and their families and for governments, and it can help our country pursue its goal of being a world leader in scientific and economic development. We believe that Rx&D and our member companies are in a position to make a unique and highly significant contribution to our health care and innovation objectives, which are extremely important to Canada's future.

Last year, Rx & D's 60-plus member companies invested over $1 billion in medical research here in Canada, investments that created job opportunities for some of our best and brightest scientific minds while supporting growth in university research, clinical trials, and the biotech industry.

All of these investments lead to more research and to discoveries that help Canadians live longer, healthier, and more productive lives.

The fruits of our work, these new medicines, are also proven cost-savers. They reduce the need for other, more expensive avenues of treatment such as hospitalization. They help make people more productive and enhance their quality of life. Seniors are living longer at home with their families and in their communities.

In total, only 6.3% of all money spent on health care in Canada, from both public and private sectors, goes directly toward patented prescription medicines. We certainly acknowledge that these expenditures have been growing, but largely because of the fact that more treatment options are more available, newer diagnostic technologies are available, Canada's population is aging, and there is an increased prevalence of disease.

Contrary to what some would suggest about overutilization being at the root of increased spending, a recent Canadian Medical Association journal commentary found that reducing the number of drugs taken by elderly patients is misdirected and should really be abandoned as any measure of quality. Studies show time and time again that medicines, when properly used, are not only effective in improving patients' quality of life, but they are also a wise health care investment. A Columbia University study shows that every dollar invested in new medicines relieves the health care system from expenses seven times greater in other medical areas.

Another study by the Analysis Group in Montreal shows a strong correlation between pharmaceutical spending and longer life expectancy and lower infant mortality. Although spending on medicines has increased, the prices of our products have been kept well below the consumer price index and in fact have decreased by an average of one half of one percent each year over the past 10 years.

New medicines are helping to drive cost savings and life-enhancing trends. As we look for new ways to deliver strong health care to Canadians, new medicines must be fully taken into account in the public policy equation. For example, AIDS therapies have major and proven benefits. Thanks to the introduction of drug combinations, known as HAART, a diagnosis of AIDS is no longer an automatic death sentence. Death rates were halved shortly after these combinations became available, and they have declined by more than 80% through to the end of 2001.

Another compelling example is new medicines to treat arthritis and rheumatism. In 1998, the total economic burden of these diseases in Canada was estimated at $4.4 billion, with the total cost of drugs accounting for only $263 million, or 5.9% of that total. The direct economic costs, such as hospitalization and medications, were far less than the indirect costs of lost wages and productivity due to the disability caused by arthritis and related diseases. The improvement in life that the medications bring should also be factored in.

I thank you for your attention. I will now turn over the presentation to Nestor Nituch.

¿ (0910)

Mr. Nestor Nituch (Director of Clinical Research, Bristol Myers Squibb (BMS); Rx & D - Canada's Research-Based Pharmaceutical Companies):

Thank you, John.

The current environment in which we operate unfortunately does not embrace pharmaceutical innovation nor does it promote bringing new medicines into the hands of patients.

Canada does not operate in a vacuum. If we don't make our health care system more innovative, other countries will do it in our place. We will be forced to import their innovations, their ideas, and their discoveries.

Japan, Australia, and several European countries are developing new, innovative health models to better attract research investments in the face of strong competition from the United States. Here in Canada, investments in research are deterred by regulatory restrictions and a patent regime that is uncompetitive compared to those of our international competitors.

In each of these key areas, which have a profound effect on our ability to develop new medicines and get them into the hands of those who need them, Canada falls short against our major international competitors.

[Translation]

I would like to spend a little time discussing a number of areas in greater detail. The first is Canada's regulatory environment. It takes Health Canada 672 days to approve a new medicine—about double the department's own target, and much longer than in other jurisdictions, such as the United States, at 459 days, Australia, at 436 days, the EU at 475 days, and Japan, at 511 days.

While the last federal budget announced $190 million over five years to address this situation, we have yet to see much, at the departmental level, in the way of concrete follow-up action.

Further, the time between the federal approval of a new medicine and its listing on the provincial and territorial plans must be reduced. Delays of between one and two years—and more—are not uncommon, if the new medicine gets listed at all.

[English]

Canada's pricing regime does not reward pharmaceutical innovation: those introducing a new drug today may be forced to price it at the level of a comparator product that was delivered decades ago. This unfortunately makes Canada a less attractive destination for research investments, thus limiting patients' access to new therapies.

Turning to another global comparator, Canada's patent regime is also less favourable than that of jurisdictions like the U.S., the European Union, and Japan. For example, Canada is the only country in the G-7 without patent term restoration. This makes Canada's effective patent term shorter than those of many other countries and reduces its attractiveness as a location of choice for the development and discovery of new medicines and therapies.

Canada's commitment to the protection of intellectual property also remains uncertain. This is troubling not just for our larger members, but also for our smaller biotech companies, which are more reliant than ever on a stable, globally competitive intellectual property model as they move into the risky commercialization environment.

As you know, it takes 10 to 12 years to develop a new drug. In a 20-year patent term, our member companies often have only eight to ten years' patent life for their medicine in which to recoup their costs before generic firms claim the medicine as their own. It costs an average of $1.3 billion to develop a single new medicine. The risk, as I've said, is substantial. One in ten thousand molecules actually makes it through the product development cycle and seven out of ten products brought to market fail to recoup the investment.

PMPRB data show that investments in R and D by our member companies, relative to sales, fell to 10% in 2002 from 10.6% in both 2001 and 2000. This means that pharmaceutical R and D investments that might have come to Canada went elsewhere, denying Canadian patients early access to new medicines and therapies.

It is therefore our view that to encourage innovative technology transfer and development through knowledge, Canada needs an environment that fosters pharmaceutical investment. At the risk of using a cliché, we really must start to think outside the box as to how our health care system can be more effective and serve as an economic driver. We must work within a national and provincial policy context that encourages innovation in health care, one that recognizes that new medicines contribute to a high quality of life, a strong economy, and health care savings.

Canada should not be satisfied with an environment that places us at minimum international levels. We really should aim to be the best in the world.

Thank you.

¿ (0915)

The Chair: Thank you very much, both of you.

We'll move on to the representatives from BIOTECanada: Janet Lambert, president, and Suzanne Cadden, the vice-president of clinical and regulatory affairs for Lorus Therapeutics.

Ms. Lambert.

Ms. Janet Lambert (President, BIOTECanada): Thank you very much, Madam Chairperson.

Thank you for the opportunity to appear in front of you. Merci beaucoup pour cette opportunité.

I'm president of BIOTECanada, the national biotechnology industry association. We represent more than 85% of Canadian health care, agriculture, food, research, academic, and other organizations that work toward improving the lives of Canadians through biotechnology. I have with me Suzanne Cadden, vice-president of clinical and regulatory affairs for Lorus Therapeutics, a member of BIOTECanada.

The potential of biotechnology and its discoveries can be likened to another point in human history, the Industrial Revolution. The level of discovery found throughout the late 19th century led to a societal revolution that reshaped every community and household in the western world.

We find ourselves today at a similar point in time. Our capacity for invention and discovery has never been greater. The challenge for you as parliamentarians is to shape a regulatory framework that protects the Canadian capacity for exploring great ideas and bringing those great ideas to the global community we all live in while maintaining one of our proudest national institutions, our world-renowned system of health care.

The link between meeting the medical needs of Canadians in as short a time as the next five years and then for the generations of those who come after us lies directly in our ability to adapt to the vast knowledge being heralded almost daily in our media. The status quo of our current regimes will not work for much longer. Why? Quite simply because it's not designed to serve the sheer capacity and volume for new treatments that biotechnology will bring us.

Today in Canada there are more than 18,000 biotech products and processes currently approved or under development. Most of them were started before we even began mapping the human genome. Canada stands as one of the leaders in the community of biotech innovation, helped to a large degree by the more than $11 billion the federal government has invested in the knowledge infrastructure in Canadian universities and research institutions during the past five years.

You have to ask yourself when evaluating the current regimes related to prescription drugs what the world of drug discovery will really look like in the next few years. How much are things going to change from where we are now?

Canada can no longer regard its economy and health care as two separate policy areas. Despite the recent levels of economic progress and brilliant scientific discovery, the biotech industry in Canada is at a highly nascent stage. We are fighting daily to grow towards sustainability in a very competitive global marketplace, where good ideas and the people who create them can all too easily move halfway around the world in that pursuit.

Survival for Canadian biotech depends on strong investment in order to file patent registrations, bring products through clinical development, and obtain regulatory approvals. Attracting that investment depends on the company's potential to access markets where they can achieve a return on the resources that have been put into research and development of new products. Companies must have the tangible potential to earn revenues or else investment will not be available.

Decisions that private and public sectors make today will clearly impact on our ability in this country to remain leaders. We are at a crossroads. Canada can either embrace its ability for knowledge and reap the rewards of a made-in-Canada biotechnology community or we can maintain the status quo and see our ability to meet predicted medical needs erode as other nations adapt and make room for new-found knowledge.

Are we going to risk our capacity for biotech innovation by burdening it with undue delays and the associated cost implications of those delays? On average, standard submissions to Health Canada's therapeutic products directorate take over a year longer to get through the review process than their own performance targets set out. Canada's drug approval system should be more effective for these innovative, research-intensive companies. Are we going to do with biotech what we have done with so many of our other great resources? Sell Canadian biotech discovery off to our competitors, who will turn that discovery into products that we then buy back?

The unique circumstance of biotech should be considered in assessing overall health pricing. Whatever pricing regime changes you make, it's imperative that they reflect the scope of how medicine and treatments are going to work. Gone will be the days of mass production and meeting the needs of tens of thousands of patients at a time, replaced instead by a multitude of highly specialized, targeted treatments meeting the needs of small groups of patients. Gone will be those blockbuster drugs the PMPRB is currently structured to address. Instead, you will have hundreds, if not thousands, of treatments designed to treat smaller and smaller groups of patients, and eventually each of us will have a treatment based on our own unique individuality.

The current regime of the PMPRB and its operations will have to be completely replaced. The need to start that change is upon us today. It's not something that's looming down the road to be considered in five, ten, or twenty years from now.

¿ (0920)

If biotechnology has to continue to deal with a drawn-out drug approval process, outdated price control standards, and uncompetitive intellectual property standards, the only companies left standing will be the pharmaceutical companies, the large ones that already exist today. Our ideas and the people who thought of them will have moved away.

I'll turn it over now to Suzanne. Merci beaucoup pour votre attention.

Ms. Suzanne Cadden (Vice-President of Clinical and Regulatory Affairs, Lorus Therapeutics; BIOTECanada): I would like to thank the committee for this opportunity to present today on issues under the committee's area of study that are critical to the survival of Canadian biotechnology companies. My comments will focus on, first, the Canadian approval process, both for clinical trials and for marketed drugs, and second, drug pricing. My perspective on those two areas is that of the Canadian headquartered biopharmaceutical company. Having worked both for Canadian biotech and also the international pharmaceutical affiliates in Canada, I believe the issues under study by this committee can have a larger and more significant impact on Canadian-owned biotech companies.

As a background to my comments, the majority of Canadian biotechs are early start-ups focused on moving early pre-clinical compounds to first testing in man. Lorus is one of the few Canadian exceptions to this general description. Our drugs were discovered at the Universities of Manitoba and Guelph, but we are not an early-stage biotech company. We have moved our Canadian-discovered cancer compounds, which are three in number, into either phase three or phase two of development. We have clinical trial programs that span eight separate cancer types. We run over 110 clinical sites in Canada, the United States, eastern and central Europe, Spain, Brazil, and Mexico. In two years our staff has grown from under 20 to over 60 scientific professionals, with substantial outsourcing to over 10 emerging Canadian contract research organizations.

Our focus has now turned to moving these drugs to the international regulatory process and market, but we see major challenges ahead of us.

To develop these drugs, our company burns well over $2 million a month on average, despite aggressive cost control measures. Like most Canadian biotechs, we have no internal source of revenue. We are publicly traded and must seek limited sources of external revenue to support each stage of each program. These external sources of funding do not come unless there is clear evidence of definitive results. We are held to exacting standards, not wishful thinking.

We all consider the option of partnering our drugs with large international pharma companies that have the vast and excellent expertise to rapidly move these drugs forward and commercialize them. But this comes at a large trade-off in terms of revenues and our existence in Canada. We struggle to maintain a two-year cash balance to keep our programs going so that we can see a product through to registration and commercialization.

Time is obviously the killer here, and the race to develop drugs is even more intense in the biotech sector when the option of not being on time or a drug failure is not just a year of depressed revenues but actually an empty parking lot and a for lease sign on our building.

Against this perspective, what are the issues with regulatory approval times in Canada? For Lorus, we anticipate filing our first regulatory application in the U.S., Canada, and the EU for a pancreatic cancer drug in early 2006. If we assume current statistics for approval in these regions for drugs in areas of high medical need, the U.S. and EU approvals will be attained in four to six months and a Canadian approval hopefully six to eight months later, but again, statistics show that does not occur.

This is leading us to an anomalous policy and health care environment in Canada where Canadian-discovered and -developed drugs are unlikely to be approved first in Canada. Instead, can we envision leadership globally on the commercialization of Canadian discoveries and the availability of these drugs to Canadians first? How could a Canadian review actually be used to facilitate rather than follow the U.S. and EU reviews?

Typically, six months elapses between availability of clinical results and the actual filing of a regulatory dossier. Could we submit our information earlier in a rolling fashion so that our reviews could be done in parallel rather than after dossier compilation? The Canadian review could be used as a strong influencer of the U.S. and EU approval. Again, it is very common for foreign regulatory agencies to ask us what the approval status is in our own country.

Conditional approval and priority review policies again grant earlier access to drugs in areas of high medical need. However, Canadian policies need to at least better match the best practices in other jurisdictions to ensure that new medicines reach patients as soon as possible, and importantly, for a biotech firm, the ability to commercialize drugs through conditional approval routes can also mean commercial revenues up to three years earlier.

Lastly, these types of policies best serve patients themselves. As a developer of a drug for pancreatic cancer, a disease where the incidence equals the death rate, we are inundated by requests from all over the world, from patients' physicians, but mostly family members, asking when our drugs will be available. In this regard, it is important to note that at Lorus, we do supply drugs free of charge on a compassionate basis to as many patients as we can, but I'm sure as you can imagine, for a small biotech company this practice draws heavily on our financial and human resources.

¿ (0925)

I would also like to note the lack of facilitative government policies in Canada that are present in other jurisdictions and that have been tremendously successful for Lorus. I'm talking of orphan drug policies as one example.

I would also like to note briefly some clinical trial regulation issues. We know that in the past two years the clinical review times have moved from 60 days to 30 days. This has been tremendously facilitative for small biotechs, where every month of delay means a burn rate issue. For Lorus, we are now placing additional phase two earlier drug development studies in Canada at the Ottawa Civic, the Princess Margaret Hospital, the London and Hamilton Regional Cancer Centre, and the Sunnybrook Health Science Centre. This move is primarily to that change in regulatory review time.

Last is drug pricing in Canada. What is fair value for a drug? The investment in biotech is huge. The cost to manufacture biotech and genomic drugs is more expensive per gram than small conventional drugs. Many of these drugs are injectables in some form, which require greater manufacturing expertise and hence are by nature more expensive than conventional non-injectable drug types.

For drug pricing decisions we need to recognize the risk and effort made by Canadian biotechnology companies in developing newer technologies, particularly in areas of high unmet medical need. We also need to recognize the benefits, not only to the patients who have chronic illnesses, but to the taxpayers and to the Canadian economy. Many contract research organizations that are emerging, not established organizations, are benefiting from Lorus programs. These companies are getting global drug development expertise by participating in our programs.

We also invest significantly in training people in drug development, so we don't need to access this expertise from the U.S. or the United Kingdom. I would also like to note that authorities in other jurisdictions often base their pricing decisions on the price of the medicine in the originating country. Without supportive pricing for drugs in Canada, the investment proposition looks bleaker, and it's not only the biotech company itself that loses, but many partners in our allied business sectors as well.

Finally, we need to recognize that lengthy regulatory approval times and inadequate and unsupportive pricing policies strangle the innovative biotech sector sometimes much more than established pharmaceutical firms in this country.

As a graduate of a Canadian university, I was trained in the complexities of drug development by the international pharmaceutical sector in Canada. It was at a time when there were no alternatives in this country. There were no Canadian firms. I now bring that expertise to a growing Canadian company. We trust that soon, with your cooperation, we will have a regulatory and pricing framework in this country that will allow us to commercialize successfully the efforts of our Canadian scientists and graduates originally from the Universities of Manitoba and Guelph who were the innovators of our cancer pipeline.

Thank you very much.

¿ (0930)

The Chair: Thank you, Ms. Lambert and Ms. Cadden.

We'll move on to the Canadian Generic Pharmaceutical Association, with the chair, Mr. Jean-Guy Goulet. I'm sorry, Mr. Jim Keon, the president, is going to present and Mr. Allan Oberman, the vice-chair, president and chief executive officer.

Go ahead, gentlemen.

Mr. Jim Keon (President, Canadian Generic Pharmaceutical Association): Actually, Mr. Oberman will begin our presentation.

Mr. Allan Oberman (Vice-Chair, Canadian Generic Pharmaceutical Association; President and Chief Executive Officer of Novopharm Ltd.): Thank you, and good morning to all members of the committee.

By now you know my name is Allan Oberman and I'm vice-chair of the Canadian Generic Pharmaceutical Association. I'm also president and CEO of Novopharm Ltd.

Jim Keon is with us today, and he's president of CGPA, our industry association.

On behalf of CGPA and all our member companies, I'd like to thank you for this opportunity to present here today.

The CGPA represents over 20 manufacturers and distributors of finished generic pharmaceutical products and active pharmaceutical chemicals, as well as suppliers of other goods and services to the generic pharmaceutical industry.

The industry has existed in Canada for more than 50 years and today employs about 10,000 Canadians in well-paid, highly skilled jobs.

The generic industry invests over $250 million annually on research and development, and member companies have targeted more than $1.25 billion for R and D investment over the next four years.

Canadian generic pharmaceutical products are renowned for their excellent quality. Before a generic drug can come onto the market, it must be deemed bioequivalent to the brand version by Health Canada. Canada has earned an international reputation for the safety and efficacy of its generic drugs.

The CGPA is aware that the committee is looking at a wide range of issues pertaining to prescription drugs in Canada. Our remarks today will focus on the CGPA's five-point proposal to combat the skyrocketing costs of prescription drugs.

According to IMS Health, the independent information provider to the pharmaceutical industry, spending on prescription drugs in Canada rose from $6.8 billion in 1997 to approximately $14 billion in 2003. This trend is expected to grow as the population ages, as expensive new medicines replace existing ones, and as drug treatments form a larger part of patient care.

While spending increases, Canada's generic industry continues to make a significant contribution to affordable health care in Canada. Generic drugs fill more than 40% of all prescriptions but account for less than 14% of Canada's $14 billion annual prescription drug expenditure.

Last year alone, the use of generic pharmaceuticals saved Canada's health care system more than $1.5 billion in drug costs. Again, IMS Health Canada reports that from 1992 to 2002 the average price of a brand-name prescription increased by 76% to more than $55, while the average price of a generic drug increased by just 32% to less than $22.

In its May 2002 report, the Canadian Institute for Health Information stated that new brand-name drugs introduced between 1998 and 2000 cost on average over $114 per prescription in 2000, more than double the average for all brand-name drugs.

Earlier witnesses have claimed that generic drug prices in Canada are high when compared to the United States. This is simply not the case. Canadian generic drugs cost less than U.S. generic drugs. A price comparison of the 28 top selling drugs in Canada and the U.S., using IMS Health Canada data, reveals that Canadian generic prices are on average 28% less than U.S. generics. Full details of this comparison can be found on pages 4 and 5 of our brief.

Some witnesses have used the PMPRB's multi-source study to compare prices of generic and brand drugs. The multi-source study uses additional countries in its comparison that the PMPRB normally does not use in comparisons of patented prices. This is one reason why any comparison of generic and brand prices based on this data yields incorrect and misleading results.

Let's use an example from the study itself. When the PMPRB did use the same countries, brand-name multiple-source drugs were found to be between 39% and 54% higher in Canada than the median prices in the other nine countries studied.

¿ (0935)

I will refer members to appendix A of our brief, which outlines our concerns and our analysis of the PMPRB study in detail. This analysis of the PMPRB study, when combined with the IMS health study, provides strong evidence that generic prices in Canada are actually a better value than brand-name prices when both are compared within the same group of countries.

Today, Canadians and their elected representatives face fundamental questions about the affordability and sustainability of publicly funded health care. Even as these questions become more urgent, Canada's generic drug makers are fighting for survival in a legal and regulatory environment that limits their ability to provide cost-saving medicines to Canadians and restricts the industry's growth, investment, and job creation in Canada.

As prescription drug expenditures continue to consume an ever-increasing share of health care dollars, the demand for high-quality, low-cost prescription drugs will increase. The question is, will Canada's generic drug makers be allowed to meet that demand, deliver billions of dollars of savings, and make their full contribution to Canada's health care system and its economy?

I will now turn the microphone over to Jim Keon, who will outline our five-point program.

Mr. Jim Keon: Thank you very much, Allan.

Our five-point program is built on the assumption that Canada benefits from having a strong generic drug industry. We believe it's in Canada's interest to do that. Our proposals are intended to help the industry grow and develop. Most of our proposals are related to federal initiatives, but we also have some suggestions for the provinces, which we hope the committee will pass on.

[Translation]

The first two initiatives fall directly under federal jurisdiction, while the remaining three require action by provincial governments, as I mentioned. I will start with the CGPA's federal proposals.

Our first proposal is that the federal government must eliminate the automatic injunction under the Patented Medicines (Notice of Compliance) Regulations of the Patent Act.

These regulations represent one of the most significant barriers to generic drug makers' ability to provide Canadians with low-cost prescriptions. The regulations allow a brand-name drug company to stop Health Canada's approval of a generic drug simply by alleging patent infringement.

The automatic 24-month injunction under the regulations is a special tool given only to the brand name industry. It is not available to patentees in any other industry in Canada. The automatic injunction has led to a practice commonly known as “evergreening”, which I am sure is something legislators and regulators did not foresee or intend. It is a tactic increasingly used by brand-name pharmaceutical companies for blockbuster drugs in order to extend their market monopolies.

A common strategy involves listing and litigating additional patents after the main patent on the active ingredient has expired. This is done to trigger additional automatic injunctions, and prolong the patent holders' market monopoly.

The regulations are modeled after the Hatch-Waxman Act, passed by the U.S. Congress in 1984. It is only in Canada and the United States where brand companies have enjoyed the ability to trigger multiple automatic injunctions in order to stifle competition and prolong market monopolies. But unlike Canada, the U.S. has taken action to stop this anti-competitive behaviour and help control prescription drug costs.

On August 18, 2003, new U.S. drug patent rules came into force that closed loopholes allowing brand-name drug manufacturers to trigger multiple automatic injunctions and unfairly delay the market entry of competing generic drugs.

Canada is now the only country in the world that allows brand-name drug companies repeated automatic injunctions against generic competition. The CGPA estimates that delays caused by the regulations have cost Canadians more than $1 billion since their implementation in 1993.

We believe that for Canada's pharmaceutical patent regime to best serve the interests of Canadians, the brand-name and generic companies should be encouraged to do what they are intended to do. Instead of being given special patent rules that invite sophisticated legal manoeuvering to prolong monopolies, brand name companies should be encouraged to develop new medicines that make a real difference to the health of Canadians.

After 20-year patents expire, generic companies should be allowed to produce less expensive equivalents in order to control health care costs, help keep drug plans viable, and ensure more people can afford to benefit from these discoveries.

This is what the U.S. changes are intended to do, and generic companies in Canada are now less competitive compared to our American counterparts.

¿ (0940)

Our second proposal is that the federal government direct more funding to Health Canada to reduce the time needed to properly review generic pharmaceutical products. Due to a lack of resources at the drug review directorate at Health Canada, generic drug approval submissions often wait months before they reach the hands of a reviewer.

The average approval time for generic drugs is still almost double Health Canada's own performance target of 225 days. These delays hold up the introduction of generic drugs and result in millions of dollars in lost savings every year for provincial governments, private insurers and those Canadians who pay out-of-pocket for their prescriptions.

The last federal budget included a commitment of $190 million over five years to speed up Health Canada's drug approvals. However, it remains unclear how, if any, of this money will be directed to generic approvals and how the money will be spent. The lack of specifics in the budget is in contrast to the budget initiative implemented in the United States, which added funds directly to the U.S. Food and Drug Administration's generics program, allowing the agency to hire about 40 more people to evaluate applications. We believe resources to help Health Canada meet its performance targets should be allocated as soon as possible.

[English]

Our final three proposals focus on provincial change.

The Chair: You're well over time. I think we'll leave the provincial part for the members to read at their leisure.

Mr. Jim Keon: Okay. They're noted in the brief.

The Chair: Thank you very much.

We'll move on to the question and answer period, and we'll begin with Mr. Rob Merrifield.

¿ (0945)

Mr. Rob Merrifield (Yellowhead, Canadian Alliance): Thanks for coming in and sharing this. It's a unique opportunity for us to have all of the pharmaceutical companies sitting before us, the brand names and the generics. Of course, if you've been following the hearings we've been having on this over the last month, you will have noticed that some of you have been victimized rather aggressively by some of the witnesses, so I want to give you an opportunity to defend yourselves and to lay before the committee this argument on the evergreening issue.

Jim Keon, I think you've laid out very clearly the problem you see.

I just want to give an opportunity to you, John and Nestor, to comment on the evergreening and give us your take on whether you're going to fess up to the abuse levied at you, or whether you're going to defend yourself. I'd like your comments.

Mr. John Stewart: Let me comment and then perhaps invite Murray Elston to comment as well, because he was part of the many presentations to the industry committee on that and I was not.

We have looked at much of that testimony, and it clearly indicates that the vast majority of new chemical entities in Canada have one or a very small number of patents associated with them. Evergreening, as described by Mr. Keon, is a situation where you have multiple patents coming forward in products.

From that perspective, I think you'll see that a relatively small number of patents--not a huge number of patents that come on over time--is the norm for the brand-name industry. Moreover, when you do find extended patents that pertain to new chemical entities, those patents are a result of true innovation. They represent differences from the original compound. One point that Mr. Keon did not bring out is the fact that the generic competitor is free to copy the product under the terms of the original patent. It's only the new patent and the new product that are protected. It does not protect the invention as described in the original patent.

Mr. Rob Merrifield: Don't you have to address all those new patents?

Mr. John Stewart: Not with the original product.

Mr. Rob Merrifield: I sat in on the industry hearings, and this is something there seemed to be some confusion about in the committee. Would you like to comment on that?

A witness: Yes. I have two comments. First of all, as to the number of patents on each product, what you find is that the number of patents on a product grows as the product is on the market for a period of time, so if you take a snapshot in time, you'll find that the mature blockbuster products have many more patents on them than some of the earlier products.

The second point is that the way the regulations are structured, unfortunately for the generic drug companies they do have to address all patents on the list, even if they're not after a particular strength and form and dosage type of a product.

Mr. Rob Merrifield: Can you produce the original...?

The Chair: Excuse me. I'm going to have to interrupt because the system is down all of a sudden, which means we're not capturing this testimony for review later. I'm going to have to declare a pause until we get this caught up, because we're not going to be able to record what's going on.

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ): Can I suggest the following? We have translation and we're already short on the time, and it's very important to share this information.

The Chair: It's not recorded.

Let us take a vote. Réal is suggesting that we go on even if it's not being captured. I think the researchers should comment first.

Does that matter to you?

They won't have a transcript, you see, and no one in the public will have a transcript. That's the important thing. A lot of people are following these hearings. I don't know how long it will be, but let us say five minutes and hope we can get a technician here quickly.

Thank you. We'll take a five-minute break.

¿ (0949)

¿ (0958)

The Chair: Apparently our system has been fixed, ladies and gentlemen, so perhaps you'll come to the table.

Mr. Merrifield will resume his questioning.

Mr. Rob Merrifield: Do you want me to start over?

The Chair: I think you can just go back to your last question.

Mr. Rob Merrifield: Then we don't get the testimony.

The Chair: I'm wondering when the recording stopped, Mr. Clerk.

We are not really sure, so maybe you had better start again, Mr. Merrifield.

Mr. Rob Merrifield: Okay. It's a rare opportunity to have generics and the brand names sitting at the end of the table answering questions. I want to cut right to the chase on the evergreening.

Jim, I think you laid out very clearly in your presentation that evergreening was occurring. We've had some serious debate and actually some testimony on that in the last three or four weeks as witnesses came forward.

I want to give the brand-name pharmaceutical companies the opportunity to defend themselves on just how valid this is and how they see it. I don't know who wants to take the question.

À (1000)

Mr. Murray Elston (President, Rx & D - Canada's Research-Based Pharmaceutical Companies):

Thank you very much, Mr. Merrifield.

I think there are a couple of questions you have to consider when you're discussing the whole area of linkage regulations. I might say to the committee that we're prepared to come back with full briefing materials, because although you were at the hearings, Mr. Merrifield, I think a number of other people were not. We'd be prepared to provide all of the background information on the issues, just so you know there's more than an answer, which we'll give you.

The thing is that there are issues to be addressed with respect to an application for a NOC biogeneric, but that doesn't mean you litigate all the patents. That doesn't mean you have to go through every item. What it means is you have to verify you're only after the original product.

What is important to know as well, when they talk about the big drug products, is that those are the ones that have the most work being done on them, because you do more work to understand how to formulate them better, how to make sure there's better compliance by perhaps moving them from three times a day to once a day, or even once a week in some cases. Every time we make those changes that make a new advance, they are then subject to patents. They're also subject to the same types of studies that require the clinical evaluations to make sure you still have the safety and efficacy. So we still have a lot of investment in those new advances.

Mr. Rob Merrifield: Yes. Let's leave that. I think your point is well taken. I don't think that in a minute or two you can describe that clearly enough for everybody here. Hopefully we'll get a proper opportunity for both sides to address that in a more aggressive and thorough way if we come back to it at another time.

I do want to get to Internet pharmacy, because that's something we have talked an awful lot about and have heard an awful lot about.

Jim, with regard to the numbers, the committee is really quite confused, because Health Canada was here saying that generics were actually priced 26% higher in Canada than in the United States. You're saying they're 28% lower. That's a vast difference in numbers.

When it comes to the Internet, we're seeing a tremendous number of brand-name pharmaceuticals going down to the United States, thus compromising, some people are saying, price and product availability in Canada.

I'm just wondering, Jim, are you fearful of or are you aggressively pursuing the Internet? If your figures are right and you're 28% cheaper here, then would your products be going into the United States via pharmanet or Internet the same way?

Mr. Jim Keon: You're right. The main trade on the Internet pharmacies is very expensive brand-name drugs in the United States, which has the highest prices in the world. Generic prices in the U.S. are relatively good value, but there are generic drugs being sold on the Internet--

Mr. Rob Merrifield: But didn't you say yours were 28% cheaper?

Mr. Jim Keon: On average they are, and there are generic drugs being sold via the Internet. Our companies--

Mr. Rob Merrifield: Do you know roughly what percentage?

Mr. Jim Keon: No, I do not. I think there's not good data on that yet. IMS is coming in here on Wednesday, I understand. They are the providers of data to both our sectors. We do not have good data. Our companies are not aggressively marketing their products on the Internet because of all the uncertainties, etc., but pharmacies are selling--

Mr. Rob Merrifield: Neither are the brand names. From what I understand, they don't like it either because--

Mr. Jim Keon: No, I didn't say we didn't like it. I just said we're not aggressively pursuing it. Clearly there are generic products being sold on the Internet because the prices are lower here, yes, but I can't tell you the exact numbers.

Mr. Rob Merrifield: It seems to be really odd when we go through the testimony we heard over the last while, particularly when we were in Manitoba talking to the health minister. It was the brand-name pharmaceuticals they were very concerned about because of the availability of product, the number of pharmacists that are being drawn into that, and also the price that was starting to move up on the brand names, but we never heard that from the generic side. It seems really odd to me if the numbers are right, if it's 28% cheaper for generics in Canada, that you're not aggressively pursuing it, because there's a tremendous market there.

Mr. Jim Keon: There are a couple of things. To commercialize our products in the U.S., we actually seek approvals in the U.S. and sell products there as well. Novopharm, Apotex, and Genpharm are all marketing their products directly in the U.S. as well.

The point I would make, and one of the reasons why we're not as concerned as well, is that virtually all our drugs are manufactured in Canada, so if there's an increased demand, we have the capacity and ability to step up and increase that output. So again, there is some increased demand coming through the Internet, but it's not a major part of our business and it's not a major issue for us.

À (1005)

Mr. Rob Merrifield: And you don't foresee it to be a problem?

Mr. Jim Keon: It's not a major problem for our sector, no.

Mr. Rob Merrifield: Okay.

The Chair: Did you want to share your time?

Mr. Rob Merrifield: I'll share my time with Grant Hill. I think he has some questions.

Mr. Grant Hill (Macleod, Canadian Alliance): There's one thing you've both said--and there is tension, of course, between the generics and the brand-name companies. This is obvious to anyone who has been around at all. But one thing you've agreed on is that the regulatory process is too slow for both of you. Is that fair? You would like to see the regulatory process streamlined. Is that fair?

Now everybody is nodding their heads, which won't be evident on the testimony.

Because there's agreement on that position, I'd like a representative of each of the groups to be a little more specific as to where the regulations could be streamlined without harming the safety. Of course, that's why the regulatory process is there: so that we have safety. Whoever would like to comment on what should be changed, please do.

Mr. Nestor Nituch: I can lead it off. I've been dealing with the therapeutic products directorate--in all its former names--for over 30 years. It's the most well-studied agency in the world. There have been about 15 or 16 studies that have looked at it.

In their most recent initiative, they have pulled together some of these recommendations. They came up--I have them in my briefcase and they're a little bit coffee-stained--with 400 to 500 recommendations that could be put in there. What we need is the political will to change it. There are various ways of changing it. Either you stay with the same process and throw more people at it or you get inventive and change the process, but what we need is someone to actually just do it.

There are many ways of solving the issue. The Australians have found some innovative ways. There are innovative ways. Our American friends are ahead of us in doing it. The information that comes out from their agency is public. It's the same information that we submit to our government, and therefore you have a look-see. It's a judgment call. It's as if you were an umpire at the World Series. You have an umpire in front of you and you have a better view of the plate. There's another one behind him. You're the third one behind him, making your judgment call after the other two have made theirs.

I think we can use what other countries have done. We can integrate it into our process and we can get there. I think there's no lack of good ideas. There's a lack of will to get it done.

Mr. Allan Oberman: I would add that if we were to compare and contrast to the U.S., there were 40 more reviewers added to the generic division of the FDA through additional funding. The federal budget included a commitment of $190 million over five years. If I divide that by five and then I divide by the average salary of a reviewer, I think we can afford an awful lot more reviewers here in Canada to speed up the process.

Mr. Murray Elston: But I might just say that one of the issues in moving forward has been that the $190 million is not just going to do the addition of reviewers, and that's a difficulty for us. There needs to be a focus on process.

I think the question you had, Dr. Hill, was about what regulations have to be changed. It's not so much the regulations themselves that require the changes; it is in fact the way the business is conducted. While there are steps being announced to make changes, none of the results have shown themselves yet to have been responsible for decreasing the review times.

Mr. Grant Hill: One of the most provocative things a witness said before this committee was that the vast majority of new pharmaceutical preparations that come on the market are no improvement whatever on old preparations. That's a condemnation, in fact, of the whole industry, both generic and brand name.

We've heard today from a Canadian company producing brand-new anti-cancer therapies. Cancer of the pancreas has been mentioned, and there is no cure for cancer of the pancreas.

Could each of you comment on that provocative statement that the new preparations coming on the market are, in the vast majority, no improvement on old preparations?

À (1010)

Mr. Nestor Nituch: I think at the time of entry into the market, that is not the case. It is an extremely difficult situation to try to discover a new drug, and everything we do is very.... We try to use predictive things to see what will happen.

No one is cynical enough to sit in a boardroom with a bunch of scientists and say we're going to spend a billion dollars to produce a “me too” and be able to sell it. I think what happens is you have the best science you possibly can. We go out to get the expertise and then it's a crapshoot. It's a bet to see if you can make it to market and if that small biological difference, be it in animals or on very few humans in the beginning, will play out into something that is important.

In science, we find out things both incrementally, in small steps, and we also have quantum leaps. I'd love us to have more quantum leaps. It's a dirty-dog slog to get there the other way, and that's why this happens. Also, there is the issue of predicted values. My brother is an aeronautical engineer. He can analyse theoretically and mathematically whether a design will fly or not. He then builds a prototype, puts it in a wind tunnel, and says, yes, it can fly. He then makes his major investment.

We conduct clinical studies in a small portion of patients. We have to be selective because in a scientific experiment you have to control all your variables to see the one you're measuring, if that's the one that's changing. Then we go from 6,000 to 10,000 patients, exposed in clinical trials to a marketplace of a million or two million or three million or more, to patients who are more varied, to physicians who use our drugs in a different way--some the way it should be and some the way it shouldn't be--and sometimes that gold, that promise, doesn't pan out. It's not to say the drug is not valuable, because in drug development we develop drugs for populations. We look at averages. We look at statistics, but we're treating patients. So one medication that targets the same scientific route to doing something to the body may be tolerated by one person but not by somebody else. It does have merit in that it induces some competition in the marketplace.

Ms. Suzanne Cadden: I'd like to comment with regard to the issues of technological advancement.

I think one has to remember, at least from a biotech perspective, that we're moving on. We have to keep pace with the rate of technological change and the new knowledge we're gaining every year with the advance of molecules through drug development. Certainly, historically, 30 years ago we had drugs that were dirty drugs. They had to hit many receptor systems in order to exact a minimal effect in patients. Technology is moving on. We are trying to target those areas of physiology that can have an impact on disease.

I think we have to keep focused on the future. Look at where drug therapy is heading and it is gaining apace in Canada. We are losing the race to stay abreast of that change.

To Nestor's point about the law of averages, we see that day to day through our emergency drug program for pancreatic cancer. We have a patient in British Columbia who has lived for two years with pancreatic cancer. That's almost unheard of. We have others who have received the same drug. They have lived for three months and they're gone. However, does that mean we deny those drugs to those patients? No. We have to come up with better ways of testing these agents in fewer patients to make them available earlier. If we just averaged this out, one might say this drug doesn't work at this point in time, but that's not the case. That's based on an old paradigm and is something that really has to be kept in mind.

I'd also like to point out that the technology is highly significant in the genomics area in terms of the targeting patient disease area. I think the criticism of drugs not working, not really providing any advance in the clinic, is reflecting a very old paradigm and does not take into account the individual patient's reality.

When you get calls from patients' families on the phone saying they will pay anything for this drug for their dad, there has to be something in there that we can take to develop a new system. We can't just say, well, you know, on average, it doesn't work, so you're out of luck. It just doesn't wash. Sometimes I spend three hours on the phone with patients over a week because they say they are willing to try anything.

The established medicines, our old medicines--we're willing to combine these agents. If we look at AIDS as an example, if we just studied those drugs as single agents, we'd say they don't work. Anti-AIDS drugs don't work. We combine them and we get far more effective therapies. We advance that knowledge.

I think we're dealing with very old paradigms here. It doesn't reflect where technology is heading.

À (1015)

The Chair: Next we have Mr. Ménard.

[Translation]

Mr. Réal Ménard: Thank you.

I would like to make a comment and ask three questions. I would appreciate quick answers, because our chair is strict with me, even though there is a great deal of affection between us.

The Standing Committee on Industry, Science and Technology has given parliamentarians a document—which I will pass on to our researcher—which states that between 1993 and 2002, 24 decisions on the Linkage Regulation were handed down by the courts and that the new medicine industry lost 66 per cent of these decisions. I think we must take this basic piece of information into account.

I will not hide the fact that as a member of Parliament, I hope you'll be offered a new contract containing four points. First, the abolition of the Linkage Regulation and increased powers for the Patented Medicine Prices Review Board, to include the generic drug manufacturers. Next, as in Australia, there would be improvements to the registration system, and if the deadlines were not met, the industry would receive financial compensation, because your current situation is unfair.

Attention must also be given to the issue of advertising. I will try to convince my colleagues in the Bloc Québécois to support this position.

I believe it is also very important that no one defend the idea of going back to the royalty system. It must be clear that patents last for 20 years. Certain conditions apply in order to do research, and you are entitled to recover your investments, but the patent period is not 23, 24 or 25 years.

Mr. Elston, would you kindly table a list of the patents you have renewed in recent years in accordance with the regulations, so that we have access to this information? Elsewhere in your brief you say that the definition contained in the Income Tax Act of research and development must be reviewed. I'm going to quote you accurately. You state:

[...] develop and harmonize the definition of "research and development" in the Income Tax Act to make it match the OECD definition [...]

Please explain the difference between the two definitions. I have two other questions for you later.

Mr. Elston.

[English]

Mr. Murray Elston: First of all, we can provide you with the same materials we provided the industry committee. In terms of requesting the precise information where we've extended our patents, we can give you an analysis of the number of products upon which there is more than one patent filed.

But I think your premise is in error. For you to suggest that we live without linkage regulations would be condemning the innovative pharmaceutical industry to death because there would be no more innovative products in this country. I think your strategy for finding new medications for new patients through the research and development projects we have--not only inside our company members but also in partnership with the universities from one side of the country to the other in institutes--could not be sustained.

Your formula would be a good way of ensuring that there was no innovative pharmaceutical industry whatsoever in Canada. You said to live without linkage regulations, no linkage regulations and no protections for research and development.

[Translation]

Mr. Réal Ménard: That's not what I asked. Industry Canada—and not Réal Ménard, or other members of Parliament—studied 24 rulings which were made since 1993...

[English]

Mr. Murray Elston: I can come to that. I was responding first--

[Translation]

Mr. Réal Ménard: ... and in 66 per cent of those cases, allegations of infringement were found to be unfounded. I am saying that we need a new agreement on protecting intellectual property for 20 years.

[English]

Mr. Murray Elston: No, no. That isn't quite accurate either. It says the court cases that went to a conclusion were at that proportion perhaps.

I'm not familiar with your document at this moment. I'll refresh my memory, and when we come back I'll be able to give you some more precise information. But if you look at all of the allegations that were commenced, they did not all go to a court conclusion, and what happens is that lots of allegations made by generics are pulled off the record.

If you look at the full range of all of the actions, not just the ones going to a conclusion, you will discover that it isn't 60:40. In fact, there are a number of times when we each win. In that sense, it is not so one-sided as that material would suggest. That means that sometimes we win, sometimes we lose. And you know what? Maybe it's best for you as a parliamentarian to let that court case carry on. Sometimes we win, sometimes we lose.

[Translation]

Mr. Réal Ménard: I think that sticking to the court system does not represent a lack of rigour. Twenty-four rulings were examined. I would be very pleased to address the issue in greater detail, but this phenomenon of automatic injunctions raises some questions, because it does not exist elsewhere. The subject should be studied further.

À (1020)

[English]

Mr. Murray Elston: Yes, it does. It does occur elsewhere. It occurs in the United States. There was some information that was brought to you before that there was a change.

[Translation]

Mr. Réal Ménard: The United States is in the process of reviewing the system. President Bush... Let's go out for a beer sometime.

[English]

Mr. Murray Elston: But yes, it does happen.

[Translation]

Mr. Réal Ménard: Can you tell us a little more about the definition, which you would like to see harmonized with that of the OECD? Who had talked about that? In your R&D brief, you say that the definition of research and development contained in the Income Tax Act should be harmonized with the OECD's definition. I thought that had been done in 1996. At a Health Canada briefing, I was told that the definitions had already been harmonized. This is a very important issue, since you say that we are losing out on research.

[English]

Mr. Murray Elston: No, in fact, that is not the case at all. The definition used for the calculation of research and development, under Canadian terms, is established by Revenue Canada. It is in fact much more restrictive than it is in OECD countries. As a result, the reports that were made by PMPRB, which uses that very definition, in some ways underestimate the full value of research and development made in Canada when compared to other places.

Having said that, it becomes a bit of a moot point, a theoretical issue, if we find the environment here deteriorating and we've discovered that by the trends being reported by PMPRB, under benchmark definitions. It means Canada is losing out on research and development that we probably would have had before.

The trending, I think, is an important issue. We would like to see our research and development being better defined so that we could have better benefit; however, at the end of the day, the trending is what is important. We're at that crossroads now where we are losing more often than we are winning.

[Translation]

Mr. Réal Ménard: I have two other quick questions. Mr. Keon, do you think the committee should recommend increasing the role of the Patented Medecine Prices Review Board, so as to also cover your activities?

You also talk about creating a partnership with the Council on Medical Education with regard to a code of ethics. Could you leave that with the committee, Mr. Elston? It would be interesting to have a look at it.

Mr. Jim Keon: With regard to the Patented Medicine Prices Review Board examining the price of generic drugs patented in Canada, we have already argued that the price of generic drugs in Canada are competitive with...

Mr. Réal Ménard: No, that's not my question. This is my question: would you agree with increasing...?

Mr. Jim Keon: No.

Mr. Réal Ménard: Why not?

Mr. Jim Keon: Because the situation is already monitored by the provinces, such as Quebec and Ontario. Provinces buy nearly 50 per cent of drugs in Canada.

Mr. Réal Ménard: You are going to be terribly disappointed, but that builds character. Here is my final question: can we get our hands on a copy of the code of ethics you mentioned?

[English]

Mr. Murray Elston: Can I describe two partnerships? We have one in Quebec with the

[Translation]

Collège des médecins du Québec and the Conseil de l'éducation médicale continue du Québec.

[English]

That product has been jointly developed, and we can table that with this group, plus we have our own code, which we are developing in relation to a partnership with the broader medical community, including the Collège des médecins du Québec. Both of those will be made available, although the first is available now in the format. The others are subject now to some amendments, which will have to be filed, and we will do that in due course.

[Translation]

Mr. Réal Ménard: Thank you.

Ms. Lambert.

Ms. Janet Lambert: Thank you. I think your main suggestion is to have the patent end at the end of the time period and to put the focus on the future. The future is in the area of patented medicines. I am talking about competitive intellectual property. There are regulations that benefit the biotechnology sector and human resources in the biotechnology sector.

This is a partial response to Dr. Hill's point, who spoke about the problems with the Health Canada process. One of the major problems has to do with human resources and synchronization with other jurisdictions. Sometimes it takes a year before the application is reviewed. This period is called dust time or collecting dust. This is where we have an opportunity to emphasize the future, at the beginning, when biotechnology plays a role.

À (1025)

[English]

The Chair: Thank you, Mr. Ménard.

Mr. Barrette.

[Translation]

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

Thank you for taking part in our hearings.

I would like to discuss some issues that have not been talked about this morning, even though they have been mentioned at previous hearings. I am thinking of promotional activities and advertising, and what is described as information.

I read—and I may have misunderstood—that more money was spent on these areas than on research. This phenomenon causes me some concern. I would like to hear your comments on this.

Ms. Janet Lambert: That certainly does not apply to biotechnology, because most of the products are not on the market.

[English]

The Chair: I think this applies more to Rx & D companies, so maybe Mr. Elston would like to comment.

Mr. Murray Elston: Yes, on two things, but first, I think people exaggerate the numbers by including, in a number of cases, the administrative overhead we use to operate our companies when they come up with those numbers.

But let me tell you two things that are important to understand. One is that we do not have the same regime they have in the United States, which is called direct-to-consumer advertising. In many cases, you will see particular ads that address product to condition and suggest that people visit their doctor to figure out whether or not they are subjects who would be helped by the product.

Here in Canada we have prohibitions against direct-to-consumer advertising, but we do have a lot of activity carried on with respect to direct-to-physician interactions, which tells the physician about new products that are available to assist in their treatment of individual patients. That's the only way we can actually make information directly available to people who are dealing with patients.

We can put information in journals. We can put in a notation that says we have a product. But if we have a product, we can't tell anybody what the product is used for. People can go to our drug monographs, which are associated with the approvals of our products. They can be read if people actually open the packages.

We don't have the same advertising regime, which I think a number of people may have been suggesting was consuming so many of the dollars you heard about earlier.

[Translation]

Mr. Gilbert Barrette: We might say that while the sample system is not an incentive, it is an invitation. We know that there is a great deal of assistance—not to say something else—that goes into the holding of conventions and that these are linked directly to medical professionals, including doctors. It is only human, but the fact remains that this may be an incentive for them to prescribe one drug rather than another.

[English]

Mr. Murray Elston: There are two things that are important to know about sample or clinical evaluation packages. There is the effort made by a physician who has not made use of a particular new product to understand how it would help or work for a particular patient who may not be responding well to other therapies. There is the ability for an individual physician to study how their patients respond to new products, which is assisted by being able to have the clinical evaluation package without the individual physician having to put out from their own pocket to study.

So you're right, we end up having these clinical evaluation packages available to physicians so they can try out the product. Now, when they go through this, it becomes a clinical mini-study for them. They get to evaluate how it responds. Sometimes it works and sometimes it doesn't, but in each case, the interesting thing that occurs is the new knowledge transfer taking place in the office of the physician when he or she judges what is happening.

At the same time, there's the opportunity to discuss some of the material around the way the science has changed with respect to the new product, so it is technology transfer. It is assisted by the leaving of the clinical evaluation package with the individual physicians. It is not all bad that people learn new things by how people respond to new medicines.

You made a statement about people being assisted to go to educational events. In fact, for a long time there has been a decrease in governments in this country putting money into assisting the upgrading of educational opportunities for physicians. You can see it without exception from one side of the country to the other.

The refusal of governments to provide what would be a stipend for continual learning has meant that our companies have moved in. We in fact do support the putting on of particularly high-level events for educating physicians, and even, in many cases, events certified for the purpose of continuing education.

We don't apologize for being responsible for transferring information to the medical community. We don't apologize for stepping up when the government has removed itself from that area. We don't apologize at all for being in the business of helping people to understand what medications can do for patients. If we weren't there doing it, it would be very difficult and in fact would be a burden that would be impossible for most physicians to take onto their own shoulders. If we weren't there, to be quite honest, I think we would still be far, far removed from being as advanced as we are in our health care system in taking advantage of some of the newest and most recent discoveries.

À (1030)

The Chair: Thank you, Mr. Barrette.

If no one is ready, I have some questions.

Dr. Bennett, I don't know if you're saying yes or no.

Oh, I'm sorry. Mr. Robinson is next. I'm just trying to line up things.

Mr. Robinson.

Mr. Svend Robinson (Burnaby—Douglas, NDP): Thank you. I just want to follow up on a couple of issues that were raised.

Mr. Elston, the companies you represent are not charitable organizations. They're in business to maximize profits and to maximize return on investment for their shareholders. We all understand that. You're not educational institutions. I mean, I appreciate your noble endeavours to educate the medical profession, but all of your activities are premised on the assumption that they will in fact maximize the return on the investment that is made. You're not going to, for example, direct-advertise to consumers unless that increases your profits.

Again, I'm not questioning that. That's your job in terms of your shareholders. But when you say, for example, that we don't have the same ad regime--and this is almost verbatim--that consumes so many dollars in Canada as they do in the United States, the fact of the matter is that your organization is lobbying hard to change that.

Mr. Murray Elston: That's not true.

Mr. Svend Robinson: So the--

Mr. Murray Elston: It's not true. I mean, we have so many other places, Mr. Robinson, where the environment in Canada can be made better: with respect to regulatory approvals, with respect to protecting our intellectual property, and with respect to having our products listed so that they can be used by various people. The issue of direct-to-consumer advertising, while of interest to some, is not the focal point of our existence. In fact, we ourselves would like to be able to continue to discover new medications.

Also, while we are not charities, let me just put this on the floor--

Mr. Svend Robinson: Just before you go onto the other point, let me understand your position. Are you or are you not calling for a change in the law to facilitate direct-to-consumer advertising?

Mr. Murray Elston: That's not been one of our primary goals. Our primary goal is to ensure--

Mr. Svend Robinson: I didn't ask you if it was a primary goal. Is it--

Mr. Murray Elston: Everybody has secondaries. This is not one of our biggest goals. If it doesn't happen--

Mr. Svend Robinson: Are you calling for that change or not?

Mr. Murray Elston: If it doesn't happen, a good number of our companies would be happy that it was the case. From our perspective--

Mr. Svend Robinson: Hold on, now. I just want to understand, Mr. Elston. What is the position of Rx & D on direct-to-consumer advertising? Do you support it or not?

Mr. Murray Elston: If it happens, fine, but we would like to see the environment change to protect what we really do, which is discover new medicines.

Mr. Svend Robinson: Okay. In terms of one of the most important issues from the perspective of the public and consumers of drugs, they want to know that those drugs are safe. In the United States, the results of clinical trials are public documents. In Canada, they're not. Why is that?

Mr. Murray Elston: Let me, before you escape from me responding to some of your opening premises, which are wrong.... Can I answer them?

À (1035)

Mr. Svend Robinson: If we have time, but--

Mr. Murray Elston: No, no. That would be unfair to us as an industry--

Mr. Svend Robinson: We have limited time.

Mr. Murray Elston: --because in fact while you don't think we are charities, we are put in a position day after day, as was just described by Ms. Cadden, where we in fact have to provide our products free of charge to people because there are long delays, because there is slow approval time. We have had to step in.... And in fact we are educational institutions, where we require ourselves to get the material approved and certified that is put in front of physicians at various educational forums, so they can keep up their continuing education credits.

So while you say we are not, we are in fact in those businesses. We are not charities, but we are donating large amounts of products free of charge--

Mr. Svend Robinson: Check out the obscene level of profits documented by a study at the University of Quebec in Montreal by Léo-Paul Lauzon and Marc Hasbani, who appeared in front of our committee in Quebec City--

Mr. Murray Elston: And you take a look at spending $1 billion on average to find one product when in fact one out of 10,000 molecules ever gets to market, when in fact--

Mr. Svend Robinson: What about clinical trials, though?

Mr. Murray Elston: --only three out of ten can return a recouping of the investments that are made, Mr. Robinson. At the end of the day--

Mr. Svend Robinson: These returns on investments, do you take that into consideration?

Mr. Murray Elston: --the profits we generate are going to be put back into play to find new products. They're put back into play to provide products free of charge to individuals who need them--

Mr. Svend Robinson: What about clinical trials?

Mr. Murray Elston: --and to deliver charitable donations to various players in our communities and around the world.

Mr. Svend Robinson: What about clinical trials?

Mr. Murray Elston: Now, as for clinical trials, clinical trials are all made available to the regulatory authorities to be reviewed before a product is in fact determined to be safe. We have a regime here in Canada whereby every clinical trial here is registered. They're known by Health Canada--

Mr. Svend Robinson: That wasn't my question.

Mr. Murray Elston: --and they are brought forward and they are assessed by the public officials to make sure the data is all recorded in the review to make sure it's safe.

Mr. Svend Robinson: Why doesn't the public have a right to see the results of those clinical trials, as they do in the United States?

Mr. Murray Elston: The results of the clinical trial can be delivered in truckloads, actually, so to be quite honest--

Mr. Svend Robinson: So is your industry prepared to make those results public?

Mr. Murray Elston: To be quite honest, here is the problem: what is it that each person would like to see and how many copies of these things do we have to make? This is not an inexpensive process.

Mr. Svend Robinson: One copy would be fine, Mr. Elston.

Mr. Murray Elston: For everybody to read?

Mr. Svend Robinson: Now you don't make any copies available.

Mr. Murray Elston: We make it available to the public reviewers, and I can see a situation where if the broad public had to see all of the files before they got reviewed by the reviewers, it would cause us a delay that would be neverending.

Mr. Svend Robinson: No, we're not talking about that. Why aren't you prepared to make available to the public the same information you make available to the reviewers, as is done in the United States?

Mr. Nestor Nituch: I think I can answer that one. The same information that is submitted to the FDA is submitted worldwide by our company. It makes no sense to take anything away. It is the most rigorous; that's the data set that you give anywhere. Currently the law does not permit us in Canada to have that transparency, but we've even asked the TPD to put a link to the FDA website. We're willing to have that. If the data is public, it's public. If it's on the Internet, it's public.

Mr. Svend Robinson: You're saying the law doesn't allow you to make clinical trial results available to the public. Would you support a change in the law to make that available?

Mr. Nestor Nituch: Yes, we would, with the caveat that what we're looking for is transparency, and what the FDA does is allow our results to be looked at, but it also looks at their deliberations, their analysis of the data, and on what basis they approved it. We would love to see that from the Canadian authorities.

Mr. Svend Robinson: So you would support making Canadian clinical trial results available publicly in Canada?

Mr. Nestor Nituch: In the same fashion that they are in the FDA, yes.

Mr. Svend Robinson: Just one other question. I'm not going to debate at great length the issue of the charitable nature of pharmaceutical drug companies, but have a look at the UQAM study of the nine biggest multinational pharmaceutical companies from Rx & D and check out the rate of return on investment. As I said, there's one word that comes to mind and that's obscene.

My last question is with respect to the generic industry. Certainly I support many of your recommendations, as you know, around issues such as evergreening and other recommendations, but I have to say that I was absolutely appalled at the conduct of one of your members, and that is Apotex with respect to Nancy Olivieri. I thought it was shameful.

Nancy Olivieri is a distinguished scientist who was attempting, in the best interest of scientific pursuit of the truth and the health of Canadians, to bring to the public's attention concerns she had as a scientist. Apotex tried to muzzle her, and I believe Apotex may still be in court pursuing Nancy Olivieri.

I think that does a grave disservice to the vast majority of your members, Mr. Keon, who in fact should be embarrassed by this conduct. I want to ask whether there's any way you can communicate—and I'm not speaking on behalf of the committee here—to one of your members that this kind of conduct just doesn't help at all in advancing the cause of generics in Canada.

À (1040)

Mr. Jim Keon: I will certainly ensure that our member company has the transcript, and I will undertake to have them respond to you and to the committee on that issue directly.

The only point I would make is that, interestingly, the drug product on which the dispute with Dr. Olivieri occurred was actually not a generic drug; it was a new innovative drug that Apotex was bringing to market.

Mr. Svend Robinson: I believe Apotex is a member of your organization.

Mr. Jim Keon: Apotex is our largest member, yes.

The Chair: Thank you, Mr. Robinson.

Dr. Bennett.

Ms. Carolyn Bennett (St. Paul's, Lib.): Just to follow up, Mr. Keon, when you talked about the Internet pharmacy, can you tell me what your approach to Internet pharmacies should be or what you think Canada should do?

Mr. Jim Keon: We have not taken a strong public stance. We sell our products to licensed pharmacies in Canada, and some of that, we believe, is being sold on the Internet down to the United States. According to Canadian and U.S. laws, that will be sorted out. This is really a problem generated by the United States, and I think it's very difficult for Canadian regulators to settle it and solve it for the United States.

Ms. Carolyn Bennett: Do you think it's a good thing or a bad thing?

Mr. Jim Keon: Since 90% of the issue is with respect to brand-name drugs, I think you should ask them. It's really not a generic drug industry issue.

Ms. Carolyn Bennett: Does your organization have an opinion on this?

Mr. Jim Keon: We believe that drugs should be sold according to the rules of law in Canada and the United States.

Ms. Carolyn Bennett: Mr. Elston.

Mr. Murray Elston: There are two things that are important. One is that not all products that are approved for use in Canada may be approved for use in the United States. That is in fact one of those circumstances that makes the sale of some products in that sense illegal in the United States, and there is very little control over whether or not the sales are taken legally.

Two, we think it's bad for the purposes of Canadian patients because it's taking away resources. First, the number of pharmacists we need has increased, and we are losing those people to serving the U.S. market. That means people in Canada will go without the type of help that is required to make sure their needs are met.

Second, the Canadian innovative industry is structured to meet the needs of the Canadian marketplace, and to the extent that we have a 300-million-person market looking to access Canadian supplies, it becomes a harder process for us to supply. We end up with the prospect of having difficulties in serving. That's where we are. So it looks like it's bad for Canadians.

Ms. Carolyn Bennett: Well, as a physician I just think it's bad medicine and bad everything when someone writes a prescription for somebody they haven't seen and for somebody for whom they won't be doing the follow-up or looking at the side effects.

Has your organization investigated what Canada would have to do, through international trade, Industry Canada and Health Canada, to stop this?

Mr. Murray Elston: Well, there are a couple of things that could take place. One could be a ramping up of the regulatory authorities to make sure the people who are exporting products are registered as exporters per se.

Ms. Carolyn Bennett: Maybe I should expand the question so you can give me the full answer to what we would have to do.

I understand that at a conference in Ann Arbor last week Canada was accused of having the largest trade in counterfeit drugs going into the United States now. The drugs from Thailand and from all over the place that are counterfeit drugs are actually coming through Canada and going to the United States. Obviously it's bad for us and bad for your industry if the Americans are getting counterfeit drugs from Canada.

Mr. Murray Elston: That's kind of where I was starting. If people were exporting products out of Canada, to have a licensed facility to make sure you knew where all their products came from into the country or where they got their products from, that might help us to manage to review something like counterfeiting.

I think the other problems you raised are real ones. The more remote people are from dealing with individual patients, the more difficult it is to make sure they're not going to have some problems.

Ultimately, we could do a couple of interesting things. Maybe we could end up having pharmaceuticals placed on a drug and export control list, which would require a special regimen to be created so you could follow it.

It's an interesting thing when people start talking a lot about the costs associated with medications. One of the things that has occurred over the last several years is that the regulations around not only the discovery and the testing of products for approval in the marketplace and the use by Canadian patients has expanded, but also the way in which the products are followed from our manufacturing facilities to wholesalers or other distributors right into the pharmacies is controlled and is overlaid by the view of regulators. All of those expenses are being assumed by us.

It seems to me that perhaps we need to make sure that the same type of rigour with respect to the source of products coming from Canada and their final disposition transferred to a patient wherever should be something that should be paralleled. I think in that sense the regulations should be increased here in Canada to review what a Canadian seller of that product is doing.

À (1045)

Mr. Jim Keon: If I could add one word to that, as a generic drug industry we're obviously not supportive of counterfeit products going from Canada, clearly. We would strongly oppose more restrictions on export of products, though. As we said earlier, we have 10,000 employees here. Our products are made here. Our products are exported to about 120 countries around the world.

A voice: Legally.

Mr. Jim Keon: Legally. That is something we would want to maintain. When the Canadian industry is healthy, those exports increase and it means good jobs for Canada.

The Chair: Dr. Fry.

Hon. Hedy Fry (Vancouver Centre, Lib.): I just wanted to follow up on Dr. Bennett's line of questioning. I don't think anyone is discussing bulk exports of legal exports. That's a trade issue.

I just wondered if anyone felt there was a role here for the College of Physicians and for the College of Pharmacists in curbing this. I think Dr. Bennett said it very well when she said this was just bad medicine. You cannot prescribe for somebody you haven't seen just because somebody across the border says they think you should. There is no monitoring, and I think physicians are very liable if they do this.

I think the college in Manitoba talked about that already and have just clamped down very hard on physicians here who were doing that, but there doesn't seem to be any clamping down by the College of Pharmacists on pharmacists who are doing this.

I am from British Columbia, and I can write prescriptions in British Columbia, but when I need something I have to go to Dr. Bennett because I cannot prescribe in Ontario. Yet we have people transferring drugs individually across an international border. I think for me it's the issue of bad medicine. The issue of trade is one thing for legal export, but this bad medicine practice should not be going on.

As you quite rightly said, to deal with the problem that should be dealt with in the United States by their regulators with regard to the pricing of drugs in the United States and the accessibility of drugs is their problem. I just wondered if you saw any way in which the College of Pharmacists could play a role here.

The Chair: The College of Pharmacists appeared in Winnipeg. We invited them to come here but they declined. I don't know if it's fair to ask the pharmaceutical companies to be suggesting what the College of Pharmacists should say.

Mr. Murray Elston: I would just volunteer one thing. Steps have been taken in Quebec and people have been called to account for their type of activities. I don't want to underestimate the amount of work we know has been going on with the pharmacy regulators in several provinces. It's a particularly heated issue, and I think there are a number of people who are wrestling with the very questions you are....

Ms. Carolyn Bennett: But that's on individual scrips. What I want to know is, what is done by individual scrips? And what could the State of Illinois or the City of New York order from drug trading bulk amounts that aren't for an individual patient, and what would happen?

Mr. Murray Elston: That's a different question, though, than Dr. Fry and I were talking about. Right?

Just to conclude, I think a number of pharmacist regulators are grappling with this, with more success in Quebec than in others at the moment, but they are really dealing with it.

The bulk question I'm afraid I'm a little bit out to sea on, but let me do some checking around to see if we can come back and provide you with some insight on that.

À (1050)

Mr. Jim Keon: I believe the bulk importing of drug products into the U.S. would require changes in the U.S. law. That in fact is what is being debated in the U.S. Congress now as part of its medicare bill. There are reimportation provisions in that bill to change the U.S. law. My understanding is that currently it's just prescriptions for individual use, for 90-day use, that are legal into the U.S. currently, but that the bulk commercial import into the U.S. would require a legislative change, probably at the federal level, and that's being actively debated there now.

The Chair: Thank you, Dr. Fry.

The bell is going to start in a minute for a vote, apparently, so I'd just like to get some questions on the record and hope that somebody might write back with some answers, preferably Murray Elston.

We've heard now from two sources. It was in Fortune magazine and from a study out of the University of Montreal, the economics department, suggesting that Rx&D companies in the United States and the Canadian study in Canada are getting this 45% return on investment. In the Fortune magazine case it was suggested that the next industrial group below that was at I think 15%, 14% or 16%. I would like somebody to justify that to me, if that's true, first of all.

Second, why would any industry need a 45% return on investment if in fact it has anything other than profits as its primary goal? Murray tried to lay that out for us, the good things that Rx & D companies do, which I believe, but on the other hand, all those good things are offset in my mind by a 45% return on investment. I'd like to have some comment on that.

Mr. Murray Elston: Just as long as I can ask permission to include a broader group of companies in the study, because not everybody makes the same return. In fact, if you go to particular industries you will find a segment that is leading and you'll find a segment that is following quite considerably. I just want to be able to do a broader review.

The Chair: Yes, but these are the totals for the whole industry, so they have factored in the....

Mr. Murray Elston: Just as a matter of interest, when I came to this position, which is now five years ago, a number of companies that were in existence then no longer exist, and some of them were smaller companies. In fact, they were organizations that had products being sold, but as a result of having only one product the companies no longer exist or have been sold and no longer get the type of return that you have said are reflected in those top nine.

The broadest view of the industry is that it's a particularly heavy risk-oriented world to be in. Some people are doing it very well while others are not doing it very well. It's possible, for instance, to say that the entire world is a Microsoft and that's your industry, but that's not the entire industry, right?

The Chair: Yes. I really don't want a verbal answer. I'm happy with any response you write to me, Murray. You can put all those parameters in, but I would like to have your industry's position as a response to those two studies we've seen. I just want to put these things on the table because I want to close off the meeting, and I hope somebody will write back to me on this or write to our researchers.

Mr. Svend Robinson: Just to clarify, the study to which the chair is referring was done at the University of Québec in Montreal by Léo-Paul Lauzon and Marc Hasbani in April 2002. Could we get a response to that?

Mr. Rob Merrifield: Can we get that same information from the generics as well? If we're going to ask from one, let's have it from the other.

The Chair: Yes. I'd like to know if you have some information. I don't think they were included in these studies. They may have been, but I would like to know about return on investment in the Canadian generic industry as well.

We're always talking about how much research and development goes on. Most Canadians kind of picture a lab with people in white coats grinding powders. I'm sure that's going on in the biotech industry, but I would like to know from the generics and the Rx&D companies, what percentage of all the research is actually in pure research? What percentage is in clinical trials? We've had some evidence that suggests that the really high-paying jobs and the really interesting science is being done somewhere else. A high percentage of what they're claiming as research is essentially clinical trials in which Canadians are trialling their drugs.

I know the generics do this, so this is more for Rx & D. I would like to know how many of your companies are doing manufacturing in Canada, how many of them are doing packaging, and how many of them are just doing quality control. Having talked to a number of executives from these companies, I find that very little is happening in Canada except quality control and a lot of detailing of physicians as part of the clinical trials.

À (1055)

Mr. Murray Elston: We lost a lot of the manufacturing volume with the intervention of compulsory licensing in the sixties. The seventies and eighties were not a particularly good time for the industry. Now that we're losing our environment again, we're under a serious stress with respect to what we can and can't do.

The Chair: I recognize that all manufacturing is under stress to move to Puerto Rico and Thailand and these various places, so you wouldn't be alone in that situation. I'd just like to know what percentage of your companies, or how many companies out of the total number, are actually still having manufacturing jobs in Canada.

I also want to put on the table the idea that we have been somewhat disturbed by some of the confidentiality agreements. It has been suggested to us that we bring in some whistle-blower protection legislation in this field. Maybe it would be more general, but it has been suggested to us that people who are dismayed with what's going on, maybe in a lab or in a clinical trial, have no protection. How would you respond to whistle-blower protection?

All those things will be in the transcript, but I don't want to take time to do it now because we're being called to vote.

I want to thank you very much for your participation, your thoughtful presentations, and all the background material you added. I would like to thank you very much for coming.

I declare this part of the meeting adjourned. Thank you very much.