INST Committee Meeting

37th PARLIAMENT, 3rd SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Tuesday, February 24, 2004

Á

1105

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

Hon. Lucienne Robillard (Minister of Industry)

Á

1110

Á

1115

Hon. Pierre Pettigrew (Minister of Health)

Á

1120

Á

1125

The Chair

Mr. James Rajotte (Edmonton Southwest, CPC)

Hon. Lucienne Robillard

Hon. Pierre Pettigrew

Á

1130

Mr. James Rajotte

Hon. Pierre Pettigrew

Mr. James Rajotte

Hon. Pierre Pettigrew

The Chair

Mr. James Rajotte

Hon. Lucienne Robillard

The Chair

Mr. Andy Savoy (Tobique—Mactaquac, Lib.)

Hon. Lucienne Robillard

Á

1135

Mr. Andy Savoy

Hon. Lucienne Robillard

Mr. Andy Savoy

Hon. Lucienne Robillard

Ms. Marie-Josée Thivierge (Director General, Marketplace Framework Policy Branch, Department of Industry)

Hon. Lucienne Robillard

The Chair

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

Á

1140

Hon. Lucienne Robillard

Ms. Marie-Josée Thivierge

Mr. Paul Crête

Hon. Pierre Pettigrew

Á

1145

The Chair

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

Hon. Pierre Pettigrew

Mr. David Lee (Director, Office of Patented Medicines and Liaison, Therapeutic Products Directorate, Health Products and Food Branch, Department of Health)

Hon. Pierre Pettigrew

Á

1150

The Chair

Mr. Grant McNally (Dewdney—Alouette, CPC)

Hon. Pierre Pettigrew

Mr. Grant McNally

Hon. Pierre Pettigrew

Mr. Grant McNally

Hon. Pierre Pettigrew

Mr. Grant McNally

Hon. Pierre Pettigrew

Mr. Grant McNally

Hon. Pierre Pettigrew

Mr. Grant McNally

Á

1155

Hon. Pierre Pettigrew

Mr. David Lee

Hon. Pierre Pettigrew

The Chair

Mr. Brian Masse (Windsor West, NDP)

Hon. Pierre Pettigrew

Mr. Brian Masse

Hon. Pierre Pettigrew

Mr. Brian Masse

Hon. Lucienne Robillard

Â

1200

Mr. Brian Masse

Hon. Pierre Pettigrew

Mr. Brian Masse

Hon. Pierre Pettigrew

Mr. Brian Masse

Hon. Lucienne Robillard

Mr. Brian Masse

Hon. Lucienne Robillard

The Chair

Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ)

The Chair

The Chair

Mr. Andy Savoy

The Chair

Ms. Suzanne Vinet (Director General, Trade Policy, Services, Investment and Intellectual Property Bureau, Department of International Trade)

Mr. Andy Savoy

Â

1210

Mr. Andy Savoy

Ms. Suzanne Vinet

Mr. David Maloney (Vice-President, Policy Branch, Canadian International Development Agency)

The Chair

Mr. Andy Savoy

Mr. David Maloney

The Chair

Â

1215

Mrs. Cheryl Gallant (Renfrew—Nipissing—Pembroke, CPC)

Mr. David Lee

Mrs. Cheryl Gallant

Mr. David Lee

Ms. Marie-Josée Thivierge

Mrs. Cheryl Gallant

Ms. Marie-Josée Thivierge

Â

1220

The Chair

Mrs. Cheryl Gallant

Mr. David Maloney

The Chair

Mrs. Sandra Black (Director, Social Development Policies, Policy Branch, Canadian International Development Agency)

The Chair

Hon. Joe Fontana

Â

1225

The Chair

Mr. David Maloney

Hon. Joe Fontana

Â

1230

Mr. David Lee

The Chair

Mr. Réal Ménard

Ms. Marie-Josée Thivierge

Mr. Réal Ménard

Ms. Marie-Josée Thivierge

Â

1235

Mr. Réal Ménard

Ms. Marie-Josée Thivierge

Mr. Réal Ménard

The Chair

Mr. Réal Ménard

Ms. Marie-Josée Thivierge

Mr. Réal Ménard

Ms. Marie-Josée Thivierge

Mr. Réal Ménard

The Chair

Mr. James Rajotte

Â

1240

Ms. Suzanne Vinet

Mr. James Rajotte

Ms. Suzanne Vinet

Ms. Marie-Josée Thivierge

Mr. James Rajotte

Ms. Marie-Josée Thivierge

The Chair

Mr. Paul Crête

Â

1245

Mr. David Maloney

Mr. Paul Crête

Mr. David Maloney

Ms. Marie-Josée Thivierge

The Chair

Mr. Paul Crête

Ms. Marie-Josée Thivierge

The Chair

Ms. Marie Gervais-Vidricaire (Director General, Global Issues Bureau, Department of Foreign Affairs)

Â

1250

The Chair

Mr. David Lee

Mr. Paul Crête

The Chair

Mr. Brian Masse

Ms. Suzanne Vinet

Mr. Brian Masse

Ms. Suzanne Vinet

Â

1255

Hon. Joe Fontana

Ms. Suzanne Vinet

Mr. Brian Masse

Mr. David Maloney

The Chair

·

1300

Mr. David Lee

The Chair

Mr. James Rajotte

Ms. Marie-Josée Thivierge

The Chair

Hon. Joe Fontana

The Chair

Mr. James Rajotte

The Chair

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CANADA

Standing Committee on Industry, Science and Technology

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NUMBER 002

l

3rd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, February 24, 2004

[Recorded by Electronic Apparatus]

Á  (1105)  

[English]

    The Chair (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good morning, everyone. I would like to welcome everyone to the February 24 meeting of the Standing Committee on Industry, Science and Technology, and to make a special welcome to Ministers Lucienne Robillard and Pierre Pettigrew, who are here to help us kick off a very important study of Bill C-9.

    Just before we start I would like to thank my colleagues for electing me their chair. I will do my best to serve the committee faithfully and dutifully. I'd also like to congratulate our vice-chairs James Rajotte and Marlene Jennings for their important roles.

    I want to let you know that at one o'clock, when this meeting is over, we'll have a business meeting of the committee.

    Without any further ado, we would like to start our study of Bill C-9. Again, thank you to our ministers for being here today. I understand the Minister of Industry, the Honourable Lucienne Robillard, will kick things off.

    We ask that if you can, you limit your remarks to a maximum of ten minutes each or less, giving ample time for colleagues around the table to ask questions.

    For those in the seats, the first hour is dedicated to the ministers and any of their officials who will participate, and then in the second hour we will be hearing witnesses from Industry, Health, CIDA, and Foreign Affairs and International Trade.

    Madam Minister.

[Translation]

    Hon. Lucienne Robillard (Minister of Industry): Thank you very much, Mr. Chair and members of the committee. I am pleased to be here today as you prepare to examine Bill C-9. I am joined by my colleague the Honourable Pierre Pettigrew who, in his capacity as Minister of Health, is responsible for the Food and Drugs Act, one of the two statutes Bill C-9 proposes to amend. The minister and I are also accompanied by several officials from our respective departments.

    I do not need to tell anyone in this room the enormous and terrible impact that infectious diseases are having on the developing world. Ninety-five percent of the estimated 40 million people now living with HIV/AIDS are in developing countries. Last year alone, the disease claimed roughly three million lives worldwide. HIV infection also fuels other epidemics of global concern, most notably tuberculosis and malaria. On average, malaria kills an African child every 30 seconds. This individual suffering is, in turn, contributing to a devastating social and economic dislocation that is driving the gap between rich and poor countries ever wider.

    What is particularly tragic is that many of the diseases plaguing poverty-stricken countries are largely treatable but for the lack of available medicines. Hopefully, through this legislation, we can take an important step towards redressing this injustice.

[English]

    As the members of the committee are aware, this legislation has come about as a response of the August 30, 2003 decision by the World Trade Organization to waive certain provisions of the agreement on trade-related aspects of intellectual property rights, called TRIPS.

    The TRIPS agreement sets out the rules WTO members must subscribe to in protecting intellectual property, such as patents, copyright, and trademarks. TRIPS is intended to be a flexible agreement that allows members to override the rights of a patent holder when there is compelling public interest to do so. This is accomplished by licensing out the use of a patented invention to a third party. However, TRIPS contains provisions that prevent developing countries with no manufacturing capacity from asking generic drug firms in developed countries to produce drugs for them under compulsory licence.

    The August 30 decision is intended to rectify this situation by allowing, subject to certain terms and conditions, the export of licensed versions of patented drugs to WTO member countries unable to manufacture their own.

    While no national government is obliged to undertake any particular action as a result of the August 30 decision, the Government of Canada believes there is a compelling need to act and to act quickly. We must provide leadership on this issue, which will hopefully relay other similarly fortunate countries to follow our example.

[Translation]

    In this context, the government introduced Bill C-56 last November. Although that bill died on the Order Paper when Parliament was prorogued on November 12th, 2003, this initiative remains a priority. This is illustrated by the fact that the renumbered version of the bill, now before you, was among the very first from the previous session to be reinstated upon resumption of Parliament on February 2nd last.

    I should note that this bill could not have been drafted so quickly and effectively without the invaluable assistance and cooperation of brand name and generic pharmaceutical industry stakeholders, as well as representatives from various NGOs such as OXFAM and Médecins sans frontières. We are indebted to their expertise and commitment to this issue.

    For example, they pointed out to us that a drug used to prevent the mother-to-child transmission of HIV was absent from schedule 1. Officials followed up on this request and determined that, in fact, it was listed on the World Health Organization's list of essential medicines, is still under patent in Canada and therefore should be listed on schedule 1.

    I intend to suggest a technical amendment to update schedule 1 to include this, and three other drugs, all used in the treatment of HIV, all on the WHO list, all patented in Canada.

    Several serious legal and technical challenges arose during the drafting of the legislation. It is important to be aware of these factors, as they will surely shape the lens through which the legislation is debated in the coming weeks.

Á  (1110)  

[English]

    The first challenge stems from the very language of the August 30 decision itself, which is somewhat vague. As a result, certain provisions are open to wide and differing interpretation. Even a question as fundamental as the nature and scope of drugs covered by the decision remains a subject of considerable debate. Some contend that it is limited to those needed to treat HIV/AIDS, tuberculosis, and malaria only, while others insist that no restrictions whatsoever apply. With no precedent upon which to rely, the government was left to make a reasoned judgment, and we believe that we have chosen the most appropriate course of action.

    The second challenge that arose when drafting the legislation stemmed from the fact that the August 30 decision constitutes a waiver of only two of the 12 TRIPS obligations pertaining to compulsory licensing, some of which are nominally at odds with the humanitarian nature of this initiative. We were thus required to tread a very fine line between maximizing compliance with TRIPS and devising an effective and functional regime.

    One particular obligation that proved challenging in this respect was article 31(b) of TRIPS, which stipulates that before a licence may be granted, its applicant must have made efforts to obtain a voluntary licence from the patentee on reasonable commercial terms. The manner in which this obligation has been implemented provides the patent owner with a right of first refusal. In essence, it requires that an applicant for a compulsory licence first disclose the terms of its agreement with an important country to the patentee, who then has the option of pre-empting the grant of a licence if it is prepared to supply the needed medicines on terms no less favourable.

    I will speak a little more about this in a moment.

    Ultimately, the government was confronted with the need to ensure that these amendments maintain the integrity of Canada's intellectual property regime for pharmaceuticals, while at the same time facilitating the flow of low-cost medicines to countries in need. Thus, while measures must exist to ensure that the regime is not abused by unscrupulous parties who would divert licensed medicines to more profitable markets for personal gain, they must not be so burdensome as to frustrate the efforts of those whose intentions are truly in keeping with the humanitarian aim of this initiative.

    Mr. Chair, the government has tried to create legislation that strikes an appropriate and effective balance between competing objectives, and I believe we have succeeded.

[Translation]

    On the question of the scope of eligible drugs, for example, the government opted for a compromise solution between those who wanted a narrow definition and those who wanted no definition at all. The bill contains a schedule with an initial grouping of drugs taken from the World Health Organization's list of essential medicines which are patented in Canada. The WHO list provides a sound guide to the most efficacious, safe and cost-effective medicines for priority conditions in a basic health care system.

    At the same time, this schedule can be readily amended by regulation as an international consensus emerges around the intended scope of the decision. To facilitate this process in a timely way, the bill provides for the creation of an expert advisory committee which would advise the government, as required, on the need for amendments to the schedule.

    I have already touched upon the issue of “right of first refusal”. This is perhaps the most contentious issue from the perspective of both the generic industry and the NGOs. Despite these concerns, we believe that Canada cannot simply forego the requirement in paragraph 31(b) of TRIPS that some degree of negotiation take place between patentees and prospective applicants prior to the grant of a compulsory licence.

    There are three basic reasons we have chosen the mechanism outlined in the bill. First, given that a generic drug can take from two to five years to develop and prove, encouraging the provision of medicines from their most immediate source (the patentee) was viewed as consistent with the underlying policy objective of getting medicines to those in need as quickly as possible.

    Second, it ensures that the patentee has proper notice of a country's intention to import. This is an essential component of procedural fairness which is not clearly provided for under the decision.

    Finally, it was seen as sending a positive signal to the international community that humanitarian initiatives in this area can be effective and yet have due regard for the property rights of patentees.

Á  (1115)  

[English]

    Another issue that is now generating considerable debate among stakeholders, I should say, involves the calculation of the royalty a licensee must pay to the patentee. Brand name companies, in particular, are concerned that the fixed royalty rate of 2% is inconsistent with TRIPS. In considering these questions, I would caution that any change must be examined within the context of its repercussions on the existing balance between the interests of each stakeholder.

    Other key operational aspects of the regime include a health and safety review of all licensed drugs, as well as a requirement that they be distinctively identified and marked; a two-year renewable term applicable to all compulsory licences; a requirement that licences be limited to the quantity of drugs specified in the contract with the importing country; an obligation on the part of the licensee to post the conditions of the contract on a public website; and a number of other measures intended to promote transparency and minimize the possibility of abuse.

    I should also point out, Mr. Chair, that we have included a three-year review provision in the bill. This will allow us the opportunity to fix the legislation if certain deficiencies or problems become apparent after its implementation.

    Mr. Chair, in closing, we have before us an opportunity to do some good and to provide leadership on an important humanitarian issue. Other countries will be looking to Canada for guidance, and it is therefore paramount that we get it right. We must be true to the humanitarian nature of this initiative. At the same time, we must never forget the importance of intellectual property rights, such as those embodied in patents. After all, such protection supports the continued advancements in medical science upon which we all depend.

[Translation]

    Mr. Chairman and members of the committee, I am confident that we are going in the right direction. I welcome the views of committee members and look forward to any suggestions you may have to improve the regime.

    While I understand that the principles underlying this initiative enjoy all-party support, I would urge the committee to accord each stakeholder group the time to fully air its views on this matter. Only in this way can we be assured of doing justice to this most important cause. Of course, as I have mentioned, we have tried to strike a sound balance between sometimes competing interests in order to have a workable regime. I hope that committee members keep this in mind while listening to stakeholder views, and take into consideration how the various proposals that you will hear will either support or upset this balance.

    With these considerations in mind, my colleague, the Honourable Pierre Pettigrew, would now like to say a few words about the legislation from the perspective of Health Canada.

    Hon. Pierre Pettigrew (Minister of Health): Thank you very much, Ms. Robillard. Thank you very much, Mr. St. Denis and members of the committee for giving me the opportunity to address the committee this morning.

    My colleague, the Minister of Industry, has already described the main features of the legislation as it pertains to the Patent Act. As Minister of Health, I will outline changes to the Food and Drugs Act.

    Before doing so, allow me to wholeheartedly concur with my colleague as to the significance of this legislation. The public health problems facing some societies have reached a magnitude no developed nation can ignore. Tremendous effort in a range of areas well beyond the specific measures in this bill will be required to combat pandemics.

    This initiative is a single step, one aimed at addressing the delivery of important medicines to countries which cannot manufacture them for themselves. The origin of this global initiative goes back to a World Trade Organization meeting in Doha, Qatar, in late 2001, where developed countries recognized the need to make trade rules sensitive to the needs of least developed and developing countries.

    I should tell you that at that time I was Minister of International Trade and I'm very proud that Canada was a driving partner in the 2001 effort to achieve this objective after many months of extremely intense work. We were gratified when the WTO General Council finally achieved the needed consensus on August 30, 2003, after two years of effort. Since then, we have made it clear that we are committed to rapid implementation of this agreement.

Á  (1120)  

[English]

    The government's objective has always been to draft legislation that is responsible. It attempts to achieve the goal of true assistance without, of course, undermining the advance of research to develop new medicines that are so critical to combating such diseases.

    As you turn to consider the proposed measures, you will find that Health Canada plays a key role with respect to two elements. The first is to ensure that Canadian pharmaceuticals exported under the general council type of compulsory licence meet the same rigorous standards for safety, efficacy, and quality as those destined for the Canadian market.

    The second is to take measures against diversion as prescribed by the WTO General Council. Health Canada will be ensuring, prior to export, that the pharmaceuticals exported will be appropriately marked and labelled to assist in the prevention of diversion.

    I will explain both roles in more detail, but I wish to emphasize from the outset that in performing these roles Health Canada will be allocated additional resources for the implementation of the proposed regulatory regime to ensure that there is no impact on the department's ability to meet its other key priorities, including the government's commitment to improve domestic access to drugs.

    As I stated, this bill makes two changes to the Food and Drugs Act. The first is that the bill alters the existing export regime so that Health Canada can assess the safety, efficacy, and quality of the medicines being exported under compulsory licence. Under the current legislation, Canada's export provisions do not require the assessment of drugs for export only. The assessment is typically done by authorities in the importing country. The reason we are proposing a different approach with respect to drug approvals under this initiative is that we are faced with the fact that many of the countries to which exports would occur under this new legislation are unable to conduct their own extensive assessments, so we will take that responsibility.

    The second change relating to the Food and Drugs Act is with respect to measures against diversion. The change would provide for regulations that would require drug companies to mark and label their drugs being produced under these compulsory licences.

    I've tabled with the committee a document entitled “Draft Proposals for Consultation Purposes”, which provides more details on the various aspects of these requirements. Let me take this opportunity to highlight a few points.

    In the requirements relating to the prevention of diversion, we have found it appropriate to go beyond mere labelling and require the marking of individual capsules and tablets. We recognize that divergence could take a number of forms and that black marketing could involve the removal of labels. In addition, we are proposing that the government be provided the ability to inspect shipments before they are exported under compulsory licences to ensure that the marking and labelling requirements are met.

    The proposed design of the regulatory process on Health Canada's part will allow for the early filing of submissions relating to safety, efficacy, and quality. The remainder of required information relating to divergence can then be processed relatively quickly at the time when a company is applying for a compulsory licence with the patents commission.

Á  (1125)  

[Translation]

    In our international efforts to address epidemics such as HIV/AIDS, Canada will need to work on more than just bringing down the price of medicines. We are well aware that price is not the only barrier to increased access to treatment.

    The legislation we are discussing today will complement Canada's involvement in many initiatives currently underway around the world, such as the World Health Organizations “3 by 5” campaign that is fully committed to achieving the 3 by 5 target: getting three million people on antiretroviral therapy by the end of 2005.

    At the same time, Canada will continue to promote a coordinated approach built on effective collaboration between international partners; a comprehensive approach that ensures consistent attention to prevention, care, treatment and support; and an integrated approach in planning and delivery of medicines and other forms of care which supports the strengthening of national health systems.

    I would like to conclude by reiterating the sense of commitment that the government has to this initiative and that we will be very eager for the committee's report.

    Thank you, Mr. Chairman.

[English]

    The Chair: Thank you, Madame Robillard and Mr. Pettigrew.

    We're going to start the questioning with Mr. Rajotte. So you know, I'm going to go back and forth, from the Conservatives to the Bloc, back to the Conservatives, and then to the NDP.

    James.

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

    Thank you very much for coming in today. As you know, we in the Conservative Party support this legislation. We did so from the outset in November. In fact, we, with the other opposition parties, were ready to pass it in one day, but the government felt their legislation needed to be improved. So we look forward to seeing the improvements that you're recommending.

    I think the first issue I want to touch upon is the whole issue of it being one thing to export cheap drugs or to get cheap drugs to try to address this problem, but it's a completely different matter to ensure that the drugs get to the people who need them, that the people who need them have the proper nutrition, have clean water, have physicians or nurses or a medical infrastructure in place so they can properly take these, so that we are actually addressing the problem.

    What steps is the Government of Canada taking, besides amending the Patent Act, to ensure that these drugs actually get to the people who need them, that they have a medical infrastructure in place so that we are actually improving their lives?

[Translation]

    Hon. Lucienne Robillard: My colleague might want to add to this, but I think that the question is quite relevant. It's one thing to pass this bill, but it's another to make sure that, in fact, the medication reaches the populations in need. I think the process set up to assure us that the medication does actually reach the population in need will certainly be examined very closely by our colleagues from CIDA who are used to dealing with this kind of situation, that is sending medications to less developed countries.

    I wonder, Mr. Chairman, if this isn't a matter that could be examined in depth with our colleagues from CIDA who, unless I am mistaken, will be appearing before your committee in a few minutes to explain what process they are presently using.

    I would simply add that in the bill we have quite clearly indicated that if the country who wants to import the medication judges it does not have all the necessary infrastructure, a legal representative might help with the importation of the medication. That representative might very well be one of our international NGOs.

    Once again, I think this question should perhaps be raised with our friends from CIDA to get a more detailed or specific response.

[English]

    Hon. Pierre Pettigrew: Tout à fait, it is mostly the CIDA people who have these networks, who know the NGOs and their counterparts, but Health Canada as well has part of the answer.

    We already are working and participating in international initiatives such as the three-by-five initiative, which is precisely one of these mechanisms to reach the three million people. So there is some expertise at Health Canada that we are developing in partnership with other international initiatives, and certainly our CIDA people....

Á  (1130)  

    Mr. James Rajotte: To follow up on that, then, how much money is Health Canada committing this year on that three-by-five initiative?

    Hon. Pierre Pettigrew: There is no particular budget or amount that is specified on this at this moment, but we can do it with the reallocation of resources in the department.

    Mr. James Rajotte: Okay, but how much money, then, is Health Canada committing to the three-by-five initiative? Or should I ask the CIDA officials how much money the Government of Canada is committing to ensure that these drugs actually get to the people who need them?

    Hon. Pierre Pettigrew: It will be an appropriate question for the CIDA people. It will be development money.

    Do you want us to have the CIDA people at the table now?

    The Chair: We'll do it in the next hour.

    Mr. James Rajotte: The second big issue we've all heard from various stakeholders is going to be the right of first refusal.

    Ms. Robillard, you talked about ensuring that we comply with paragraph 31.(2)(b). Are there any other ways, any alternatives this committee should be looking at in order to ensure that Canada does comply with paragraph 31.(2)(b), beyond the right of first refusal, or is this, in your view, the only or the best way that Canada can comply with that section?

[Translation]

    Hon. Lucienne Robillard: That's a very good question, Mr. Rajotte. That was the subject of much debate before Bill C-56 was introduced and at that time there was a consensus by all parties concerned that the right of first refusal complied with paragraph 31(b) of the Agreement on Trade-Related Aspects of Intellectual Property Rights.

    And why was that? It is because, according to paragraph 31(b), a request must be made, first and foremost, to the holder of the copyright for a voluntary licence, and it was thought that through the right of first refusal that objective could be attained.

    Second, we wanted very rapid access to the drugs and the fact that the two industries might be able to offer the best drugs seemed the best way to us.

    So when it was introduced, there was a consensus. But I'm quite aware of the fact that since then questions have been raised more particularly by the generic drugs industry and the NGOs. I have to tell them that I'm waiting for the results of your deliberations to find out what your suggestions may be in order to see whether there are better ways of complying with paragraph 31(b) while aiming for the objective we all hold in common. So I'm going to be following your deliberations very closely and I'm open to examining any proposal that might be made to improve that matter.

[English]

    The Chair: Thank you, James.

    Mr. Savoy, please.

    Mr. Andy Savoy (Tobique—Mactaquac, Lib.): Thank you very much, Mr. Chair.

    Welcome to the committee.

    On Mr. Rajotte's note about the right of first refusal, obviously the generic companies will be meeting with the interested parties in various developing countries to negotiate contracts and will spend a lot of time on the front end of negotiations, only to come back here and see the right of first refusal possibly invoked.

    That presents a serious concern for them, I would think, about access and about negotiating these contracts. In terms of the workability of this solution, are we going to see a situation where eventually the generic manufacturers lose interest in the whole scheme because they will see the right of first refusal invoked on a very frequent basis, or do you envision that it will work itself out through time?

    I guess my question is, can we learn from other jurisdictions where they're going with right of first refusal? Is there a requirement, in terms of WTO general council, to offer the patent holder right of first refusal, and what alternative solutions are we looking at to this very serious potential hindrance to the solutions we're providing?

    Hon. Lucienne Robillard: First of all, I think we cannot look at other jurisdictions, because we're the first one to apply the decision of the WTO.

[Translation]

    So it's a huge challenge for us because we're the first ones. I understand full well the concerns of the generic drugs industry. Our government would absolutely not want to find itself in a situation where it would be passing legislation whose consequence would be that no one, after that, would want to participate in sending drugs to the importing countries requesting them, especially the less developed countries. We absolutely would not want to find ourselves in that kind of situation.

    That is why, I think, the work of your committee is going to be very important in order to see, not only with the generic drug industry but also with the brand name industry how we could arrive at a balance that would allow the participation of both industries. There are certainly a few things to explore in order to improve that part of the bill.

Á  (1135)  

[English]

    Mr. Andy Savoy: Merci.

    As I understand it, there are other countries we can look to as examples—who are in the developmental stage, let's say.

    On another line of questioning, about the terms of the consultation and the schedule of drugs we're providing under schedule 1, was there consultation with the developing and least developed countries about what their requirements were for these drugs? That's the first part of my question.

    Secondly, we realize the least developed countries are all permitted to participate in this initiative. We have found that the developing countries in fact have to be members of WTO to participate in this initiative. What is the logic behind this? If we are trying to get generic drugs on the ground to the people who need them the most in developing and least developed countries, what is the logic that developing countries have to also be members of WTO to be allowed to participate?

    Hon. Lucienne Robillard: Let me try to answer. You have two questions, if I understand correctly. The first one is about the medicine list, schedule 1, and you're asking if we have consulted with some people about that list.

    Mr. Andy Savoy: Yes, developing countries and the least developed countries, in terms of their needs.

    Hon. Lucienne Robillard: Mr. Chair, I'll ask Marie-Josée Thivierge, from my department, to answer that question.

    Ms. Marie-Josée Thivierge (Director General, Marketplace Framework Policy Branch, Department of Industry): Thank you, Mr. Chair.

    Essentially, to address the issue of the medicines per se, there were some discussions with NGOs, certainly, that have experience on the ground in dealing with some of these countries.

    As the government was to establish how best to come to eligible products, it was felt that the World Health Organization list of essential medicines was a good starting point in terms of establishing those pharmaceutical products that would be eligible under the regime.

    Why that particular list? Essentially it's because those are the medicines that are the most efficacious, safe, and cost-effective for priority conditions in basic health care systems, and as such it was felt that this was a good starting point. That said, it was also felt that in the event that an importing country were to have a requirement for another product, we should provide for that flexibility.

    In this particular context, the proposal before you offers the opportunity to expand schedule 1 to include other products. In that context, wanting to ensure that the government benefits from the best expertise available, an advisory committee of experts is being provided for, which could assist the government in establishing those products that should be added to schedule 1.

[Translation]

    Hon. Lucienne Robillard: As for the second question about the list of countries, you seem to be saying that in the bill we took into account strictly those countries on the list of the World Trade Organization. That's not quite correct. In appendix 2 of the bill, you will find the list both of the less advanced countries that are members of the World Trade Organization, but you will also find another 19 countries that were added to that list.

[English]

    The Chair: Thank you, Mr. Savoy.

    Mr. Crête, and then we're going to go to Mr. Fontana, and Mr. McNally.

[Translation]

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

    First, I'd like to emphasize the wish of the Bloc Québécois to undertake a quick and exhaustive examination of this complex matter. It's a bit of an impossible dream, but still we do hope we'll be able to report to the House a bit before Easter break so that if there were other events, the bill would not be delayed too much. So we are aiming for that outcome, but the examination must still be done seriously.

    Has Industry Canada, or the government in general, forecasted the goals that Canada might reach, let us say, in five years, in terms of freeing up product supply? Could we have some idea of the government's goals?

Á  (1140)  

    Hon. Lucienne Robillard: I'm going to ask my colleagues from the department to give you an answer, but there are surely no five-year forecasts. First of all, this is unchartered territory and we are trying to strike a balance in order to enable both of our industries to participate. That is why the bill is before you for study. I have to tell you that we are quite sensitive to the fact that because this is uncharted territory, that there may be certain risks that are unforeseeable or cannot be planned for at this point in time. That is why the bill provides for a review in three years. I think that all of us together are going to be trying out this legislation. We hope to produce concrete results.

    If Parliament passes this legislation, it will then take some time to enact regulations, but we do believe that according to schedule, i. e., by next fall, we should be in a position for our industries to begin participating in this system.

    Have there been any more global forecasts, Ms. Thivierge?

    Ms. Marie-Josée Thivierge: No, we have not done any more global forecasts.

    Mr. Paul Crête: I still think that the potential medium term impact will have to be looked at.

    On another point, without revealing any secrets, can we expect there to be, in the next budget, an action plan that would address the concerns expressed by Mr. Rajotte about providing the necessary support to make this operational?

    We've heard horror stories about drugs winding up in warehouses somewhere in a developing country, only to learn that they are passed their expiry date. It takes time for the drugs to get there, and we are dealing with dire situations here.

    Is the federal government, which is taking the lead globally in this area, going to put money into insuring that this type of situation doesn't happen again, by making sure, for instance, that drugs are administered under acceptable conditions?

    Hon. Pierre Pettigrew: We don't necessarily know yet how much there will be in the budget, but that is a real set of problems. There are horror stories, but at the same time, we need to make sure that on the ground, delivery goes smoothly.

    As I said, we are participating in this initiative for the 3 million cases we anticipate treating by 2005. We are working with NGOs, Doctors Without Borders, and other very serious and dedicated people. Naturally, CIDA also has very good contacts in the field. So we are going to be very vigilant on that score. It doesn't necessarily require a huge budget, what's most important is the determination to succeed.

    If I could just go back to your first question for a moment, you have to understand that what we are trying to do is to let Canadian industry be the first to take advantage of the fact that we have lifted certain international intellectual property obligations. That's what we are trying to do here. Globally, we have eliminated certain obligations, but not all, of course. Some obligations have been lifted. So we want Canadian industry, whether it's the patent industry or the generic drug industry—as a government we are neutral—to be able to benefit from the lifting of these international obligations. Through CIDA and Health Canada, we are going to do the best job possible to get these drugs to the right people on time.

Á  (1145)  

[English]

    The Chair: Thank you, Paul. You'll have to come back.

    Mr. Fontana.

    Hon. Joe Fontana (London North Centre, Lib.): Thank you, Mr. Chairman, and welcome to the ministers.

    I appreciate a couple of things, initiating this on behalf of the world and the country and having this interesting obligation and responsibility to be the first country to essentially put in place a regime to help the most needy in the world. I think this is an important responsibility, but it weighs heavily in making sure we get the bill right in its mandate. From what I've heard so far, it's a unique opportunity, in that all political parties essentially agree with the principle of the bill and want to move it fairly quickly, as Paul has indicated. I think that bodes well.

    There are a couple of things I think we need to put in perspective, and they lead to my question. Because we are the first and because we are blazing the trail, so to speak, for other countries, we had to build a lot of flexibility into the bill. First, we must be able to add to the list of pharmaceuticals that might be available from Canada. Second, there is adding to the list of countries; if an emergency erupted in another country not presently listed, I believe the system could move fairly quickly to add other countries to the list. Third, an interesting concept that the committee and I think past committees would want to adopt: we have a three-year review of this particular bill to make sure it actually works.

    I think, Mr. Pettigrew, you said it best. I hope this does not turn into the typical war between the generics and the brand companies, because I think both of them are doing some wonderful things in the world now. We have brand companies supplying some countries with free medicine. You have generics, some of the best--and the Canadian solution is always to have a balance between the brands and the generics--also doing some very good things.

    I hope most of the concerns are administrative and it's not clouded by causing the problem where Canada won't be able to supply the world with the needed medicines because we can't get these administrative things in place. I think there are 49 pharmaceuticals listed on schedule 1. Most companies are multinational, and some medicines are very complicated; you need a cocktail of medicines to deal with HIV and so on. There are some medicines that have yet to be approved by Health Canada, but are in the area of being processed. Will those additional medicines be available to the countries? They're not listed, but Canada is already developing those particular drugs with brand companies.

    Hon. Pierre Pettigrew: Mr. David Lee from my department will give you a quick answer on that one.

    Mr. David Lee (Director, Office of Patented Medicines and Liaison, Therapeutic Products Directorate, Health Products and Food Branch, Department of Health): There have been discussions going on about some of the cocktail therapies and what we're calling fixed dose combinations, where you have the combining of several different actives in one dosage form. There are international discussions occurring right now, and Health Canada has been participating in those with other international regulators. So we're establishing right now the principles you'd have to use to take a look at these particular drugs. As you point out, some of them can be pretty tricky, not only in respect of formulationg, but in respect of what they can do to a patient if we don't get the combinations right. So after having those international discussions, we'll be bringing that into our domestic look at the drugs under our regulations.

    Hon. Pierre Pettigrew: All these things were explained to me in some detail, and it's quite fascinating. Some of these drugs have to be taken on an empty stomach, others on a full stomach. So what do you do with the combination? Some of these drugs go on longer than others. This is a very tricky balancing act, but we're very active on it.

    To go beyond your question, Joe, with adding a medicine or a drug, we are making it relatively easy. A Governor in Council approval could actually add a medicine to the list. That means the government could take the initiative of adding it, and we wouldn't have to revisit Parliament, because of what could be invented and developed.

Á  (1150)  

    The Chair: Thank you, Mr. Minister.

    We can come back to you, Joe.

    Mr. McNally.

    Mr. Grant McNally (Dewdney—Alouette, CPC): Thank you, Mr. Chair.

    It's obviously a worthwhile initiative. Thanks for coming today.

    I do want to follow up on some of my colleagues' comments in regard to cost. It's been alluded to briefly. Could you elaborate on what the cost would be on a yearly basis to the government?

    Hon. Pierre Pettigrew: We will need some extra resources at Health Canada. My predecessor as health minister made it very clear that we need some extra resources to carry out these inspections. We're talking about some 12 individual salaries, that sort of thing, not necessarily huge sums of money. So there are some costs related to the initiative, but we don't believe they are huge. It amounts to a certain number of salaries for increasing our inspection capacity. As I explained in my remarks earlier, we will have to conduct inspections--

    Mr. Grant McNally: You don't have a firm total right now from within your department or across others that might be involved.

    Hon. Pierre Pettigrew: We're talking about 10 or 12 individual salaries for inspectors we don't have at this time.

    Mr. Grant McNally: That would be within your department at Health Canada. Obviously, this is an initiative that crosses different departments, the Department of Industry obviously, five in all. Has there been some coordination among the ministries towards an analysis of what the dollar total will be to put this in place on a yearly basis?

    Hon. Pierre Pettigrew: There is not necessarily much of a financial element. We're changing two laws in order to allow Canadian industry to participate in it. The other initiatives would be in parallel. If CIDA decides that fighting AIDS in Africa is a priority, it will allocate the resources within its established budget or from the increases CIDA could get in the next budget. As you know, the Prime Minister has regularly said this would be a Canadian priority. Changing these regulations to allow Canadian companies to participate in the new initiative by the waiving of international trade obligations is not a dollar figure thing.

    Mr. Grant McNally: I guess what I'm referring to is more the infrastructure side of the program that was alluded to by Mr. Rajotte and others. How are we going to make sure these drugs get to the people who need them? Are we going to be directly involved in establishing those programs? What is the cost of those programs? Are there going to be accountability measures to make sure the program is reaching its goals?

    Hon. Pierre Pettigrew: By contributing with the international effort of “three by five for 2005”, as we call it in English,

[Translation]

    we are using resources from within the department itself. You could discuss infrastructure costs with the people from CIDA. But CIDA, with its health partners, is already very active in that whole area. It wouldn't necessarily require vastly different infrastructure because they already have the right contacts.

[English]

    Mr. Grant McNally: Will we see the regulations before the committee? Will they be tabled here?

    Finally, you mentioned reallocating funds within the department to cover salaries. What areas would you then have to cut in order to provide those services? You mentioned about 12 salaries. Do you know specifically which areas you would have to cut to reallocate within the department?

    Hon. Pierre Pettigrew: You have from my department the explanation of proposed regulations. It is already there, and you would be able to look into it during your examination in the committee.

    Mr. Grant McNally: Thank you.

    The last question concerned reallocation within the department. What would be cut in order to provide for this program spending?

Á  (1155)  

    Hon. Pierre Pettigrew: What I told you before I thought was exact, but I'm told there are new funds that have been identified for it, so I prefer to be contradicted now rather than later.

    Go ahead, David.

    Mr. David Lee: Given that enviable job, I'll tell you the resource allocations we got were for the drug review and inspection. We recognized that we didn't want to draw from our domestic obligations to make sure Canadian citizens got their drugs, so we made sure we got those resources in.

    On the “three by five”, we're committing a lot of expertise. We've been doing that for many years on other international programs, but that's not so much a dollar contribution.

    Hon. Pierre Pettigrew: So I'm not being contradicted. I like that. Thank you.

    The Chair: Thank you.

    We're going to go to Brian Masse.

    Mr. Brian Masse (Windsor West, NDP): Thank you, Mr. Chair, and thank you to both ministers for appearing before this committee.

    I'd like to start by saying that we in the New Democratic Party support this initiative, provided it's going to actually get the services out to people across the world. As well, we'd be anxious to get this behind us so we can work on a notice of compliance on drug costs for this nation as well.

    I think it's important to note the work that happened prior to the break, specifically what happened in respect of this bill. The first right of refusal is one of the biggest issues we'll have to deal with here. What triggered the department to add this? It wasn't in the first round of negotiations; from my understanding, it was added later on through the process. So what triggered that addition to this legislation?

    Hon. Pierre Pettigrew: It's under international trade obligations. You can discuss that with the international trade experts here who will be following us. I'm not supposed to speak about my former job, but what I remember from those days is that there has been a waiver of a certain number of international trade obligations. That particular aspect, though something can be done on refining it during your work here, is an international trade obligation that has not been waived for the brand companies, the patent companies. So it is in calculating that element that we have promoted that aspect, but I know there will be some work done to make it appropriate.

    Mr. Brian Masse: We know the NGOs and the generics are identifying this as a stumbling block, and I think everybody is talking about it here today. The pharmaceutical companies really already have a first right of refusal, because they are the patent holders. If they wanted to provide these medications abroad at a lower cost, they could do so already without this legislation. Is that not correct? There's nothing stopping them from havng a two percent mark-up and providing the drugs immediately, as opposed to waiting for this legislation, then putting them on the market.

    Hon. Pierre Pettigrew: And many do. Many companies already contribute a great deal and have individual programs. Many individual companies do a great job on that front, and we should certainly acknowledge that. Mr. Fontana did a little earlier today, and our government commends that work. What we want to do through this legislation is allow the whole Canadian pharmaceutical industry to contribute to that effort.

    Mr. Brian Masse: I agree, there's some terrific work being done out there, but was there major opposition from them to this bill? Because once again, they can do this already if they want to. Have they presented any objections to you about dropping first right of refusal if we can get this out of the legislation?

    Hon. Lucienne Robillard: When we tabled the bill in the last session, there was a general consensus among the two industries. Since then the people have looked at the legislation more closely and raised some issues we have to deal with, but I don't feel there is a reluctance from either industry to participate. They just want a fair system. Perhaps you will have the opportunity to listen to them and make your own judgment.

  (1200)  

    Mr. Brian Masse: Good, that's hopeful.

    Hon. Pierre Pettigrew: It took two years at the WTO to get to where we are now.

    Mr. Brian Masse: If there is agreement with all parties, there's no reason we can't simply achieve this. So it's good to hear that they haven't had major objections through the department here.

    To follow up on some of the presentations with regard to divergence, a concern, obviously, is the black market and circumventing the system. What about proposing a harsh penalty code? It could be also done through the company aspect for those who are looking at divergence. Is that something that's being looked at? Maybe we can get around some of these other issues if there is a harsh penalty process for those who are involved in the black market or divergence.

    Hon. Pierre Pettigrew: You have to respect the law. I don't know exactly how we will be penalizing those who have not respected it. Our job at Health Canada is to make sure we can identify the companies that would eventually do it or the misdirection that could take place. The courts will then determine the costs for a company that does not respect the law. We will go pretty far, as I said, not only labelling the box, but marking every individual caplet, so we will be able to do a good follow-up on it.

    Mr. Brian Masse: To the Minister of Industry, I know you have an amendment. Could you elaborate a little on your amendment?

    Hon. Lucienne Robillard: I've said I will follow very closely the work of the committee and will look with you at any proposal. That also includes the bill you have in front of you.

    Mr. Brian Masse: You had an amendment, though, that you were going to....

    Hon. Lucienne Robillard: Oh, the amendment about the medicine list. I'll bring it forward. I think it was one of the NGOs that asked why that medicine is not on schedule 1, and they were right. When we double-checked that, we discovered three other medicines that should be on the list. So whenever you want, I'm ready to bring that to you.

    The Chair: Thank you, Brian.

    We have to start our second session, so I'll go to Andy, Cheryl, then Réal on the next group. We have to let the ministers go, unless there are final comments. We were scheduled to go until--

    Mr. Réal Ménard (Hochelaga—Maisonneuve, BQ): You cannot stay five minutes for another question?

    The Chair: If we do, we're going to start with Mr. Savoy, but it's 12:05, and we want to hear from CIDA; there were some important questions on CIDA. So we will end this session and call the other witnesses representing the Department of Industry, the Department of Health, CIDA, and Foreign Affairs and International Trade to the table.

    Thank you very much to our ministers for their time.

    We're going to suspend for two minutes.

  (1204)  

---

  (1206)  

    The Chair: It looks like we have our witnesses almost ready to start. I see we have Industry represented, we have Health represented, we have CIDA, Foreign Affairs and International Trade. I think we'll just go in the order in which you are listed on the agenda for today. We won't ask everybody from each of the departments, if there's more than one to speak.

    Oh, there are no presentations. We'll go right to questions. Mr. Savoy, you're up first.

    Mr. Andy Savoy: Thank you very much, Mr. Chair.

    Welcome, ladies and gentlemen.

    I should start out by saying I applaud this initiative. I think it's groundbreaking; around the world we are the first. It's something we should be very proud of. That being said, there are obviously some issues we have to deal with.

    One of the issues that comes to mind immediately, and I asked the minister about it previously, is that of the least developed countries versus developing countries, who is included and who is not included. In the Doha declaration of the TRIPS agreement they talk about access to medicines for all--in other words, putting the medicine where it's needed most. In schedule 2 any least developed country is included, WTO member or not WTO member. In schedule 3 and schedule 4 we have excluded countries that fall under the UN classification of developing countries who are not WTO members. They include East Timor, Vietnam, and Turkmenistan. Is that an issue in international trade? Must you be a member of the WTO to participate in this initiative? Or is it just a matter of exclusion resulting from not thinking this through?

    International Trade should probably be the first to talk on the issue of East Timor, Turkmenistan, and Vietnam and the fact that they're not able to benefit from this initiative.

    The Chair: Okay.

    Ms. Vinet.

    Ms. Suzanne Vinet (Director General, Trade Policy, Services, Investment and Intellectual Property Bureau, Department of International Trade): Thank you, Mr. Chair.

    On the question of how we went about including or not including countries, first of all, the agreement was done by WTO members, so de facto it applies to WTO members. But as part of Canada's approach to assisting developing countries, in prior initiatives we had a policy of extending a lot of the initiatives to the least developed countries, as recognized by the UN list, which is why we went ahead and included all of the other LDCs as well. It was in recognition of past policy.

    In terms of the remaining developing countries that are not WTO members, a number of them, about 18 in fact, are currently in the process of acceding to the WTO. That leaves about 10 countries--for example, North Korea, Iraq, Marshall Islands, and so on--that are not included in the legislation. But there is the ability of the government to intervene with these countries, so although they're not explicitly in the schedules, there are other means by which the government could provide assistance, if it so wished.

    Mr. Andy Savoy: So what you're telling me is that medicine to those in need will not occur in all situations, basically, that we don't have a plan in place to make sure that these other developing countries that are not included in this process, because they are non-WTO members, will receive the needed medicines. Basically, that's what you are telling me.

    A voice: Not necessarily.

  (1210)  

    Mr. Andy Savoy: Well, it's a grey area, let's say.

    To my mind, we as a committee should address this. If we can't get the medicines to where they're needed, based on the existing legislation, then we should address this.

    Ms. Suzanne Vinet: Based on the existing legislation, they're not included, but there are other humanitarian initiatives we can take.

    Maybe my colleague from CIDA could address these other means.

    Mr. David Maloney (Vice-President, Policy Branch, Canadian International Development Agency): It's clear that the humanitarian needs do extend, in a number of cases, beyond countries that, as you say, are members of the WTO. As my colleague from the international trade department has pointed out, we have already gone beyond the agreement, which is fundamentally a WTO agreement, through a waiver. So we have already gone beyond it in the case of a number of LDCs, as Minister Robillard mentioned. There are 18, I believe.

    There is a balance here in terms of countries to include or not include. The one point that I think is worth reinforcing is that CIDA is working in a number of these developing countries that are in the ranks above the least developed.

    So in terms of the programming--and I hope I will have a chance to respond to one of the other questions--CIDA is doing a lot in terms of helping those countries deal with their problems in such areas as HIV/AIDS, malaria, tuberculosis, and others. But this particular instrument has been designed to implement an agreement that Canada's party to, specifically the WTO convention.

    The Chair: Very short, Mr. Savoy.

    Mr. Andy Savoy: Very short, yes.

    My second question is with regard to diversion, and the allocation of drugs in the countries they're intended for. What role will CIDA play? What measures are you putting in place--a similar question was asked earlier--to ensure that in fact on the ground the drugs do get to the needy parties?

    Mr. David Maloney: I think there are two aspects to that question.

    First, with regard to diversion, Health Canada looks at the kinds of inspections that will be required, and I think they can answer that part of the question in terms of the design of the program as it's put in place, and issues such as marking and so on, which will help ensure that the drugs go to those for whom they are intended. CIDA's efforts are focused very much in terms of building capacity, in the countries that are neediest, in order to implement.

    If I may, Mr. Chairman, since the question of what we're doing in general in this area has come up a couple of times, I could perhaps go quickly over it.

    In terms of financial commitment, CIDA has put a very direct and significant focus on building the capacity of countries in the area, especially in the care and treatment of HIV/AIDS. To give you some numbers, between 2000 and 2005, for example, CIDA has committed to doubling our spending in the area of health and nutrition, in the order of around $150 million to $300 million. In the area of HIV/AIDS, we have the commitment to quadruple the amount, from roughly $20 million to $80 million a year. This year, when we add in other initiatives that CIDA has in place--through multilateral facilities, for example--CIDA is spending $120 million in terms of HIV/AIDS alone.

    So when we look across five years, through bilateral and multilateral facilities--for example, the global fund to fight HIV/AIDS, tuberculosis, and malaria--CIDA has a commitment of $540 million. This is very directly focused on building the capacity to, as you say, deal with care, treatment, and delivery, and capacity on the ground in these countries. A small amount of that is also to deal with research on, for example, an HIV vaccine, very specifically focused on Africa.

    So our end is building the capacity so that these pharmaceuticals will be used properly.

    The Chair: Mr. Maloney, I think you've answered, at least to some extent, questions of several colleagues, so perhaps you could table that or provide us with an outline of what you've just given to us, with anything additional.

    We're going to Mrs. Gallant, then to Mr. Fontana and Mr. Ménard.

  (1215)  

    Mrs. Cheryl Gallant (Renfrew—Nipissing—Pembroke, CPC): Thank you, Mr. Chairman.

    Now, aside from increasing inspections, can you describe specific measures that are going to be put into place to ensure that Canadian-made drugs are not siphoned off to inappropriate markets for profit?

    Mr. David Lee: There will be, or at least we're looking at, requirements for, again, the marking and labelling. So it's deeper than just inspecting before the drugs go over the border. We're going to be looking at the safety, efficacy, and quality of each of the types of drugs. In addition, we'll be receiving information that will set out how they're going to mark the individual dosage forms. Now, there are some limitations, because a powder you can't really mark, but all the capsules and tablets will each be individually marked.

    So that information will be given to us. We'll be looking at the packaging and the labelling and the information associated with the drug, and all of those will be in requirements. They won't be negotiated. Those will be firm requirements on each of the companies.

    Inspection will just be before the drug is shipped and on a periodic basis, or occasionally afterwards, to make sure that there is compliance. But the normal kind of compliance we ask for when we're looking at drugs, even for domestic use, will be in place as well. Inspection gets done in that regard, and we do have information about the drug on the safety and efficacy side.

    Mrs. Cheryl Gallant: What will be the penalties if the drugs are indeed found in other countries that are not on the list?

    Mr. David Lee: To the extent that this gets into possibly questions of infringement, I'll turn to my Industry Canada colleagues. But certainly you'll see that there's a piece in the proposed bill that says that Health Canada can notify the commissioner of patents when the applicant is not in compliance with the food and drug regulations any more. So if they're not marking properly, we can tell, or Health Canada can tell, the commissioner about that. At that point, that triggers, I think, the end of the licence.

    Ms. Marie-Josée Thivierge: Mr. Chair, I think I will speak to the two questions that you have raised.

    One of the other features that is being built in the Patent Act is that before the product is exported, the exporter in Canada must post, on a website, the destinations for the product, the quantity of the product itself, as well as publicly disclose to the world what will be the distinguishing features that meet the requirements of the Food and Drugs Act. Part of that process, before the product actually goes out, is to ensure that everybody knows that this is about to hit markets and that it does reach destination. So that is one of the features that was provided for in the Patent Act.

    To address the issue of under which conditions or what would be the effect if a significant portion of the products were re-exported, the Patent Act does provide that the compulsory licence can be terminated if in fact the product is found in a different market from where it was intended to be exported.

    Mrs. Cheryl Gallant: I guess what I'm getting down to, Mr. Chair, is policing, because we have the same sort of situation with cigarettes. They're marked and packaged in a different way, and yet they come back to Canada by the boat load. Many more cigarettes get into the hands of Canadian citizens without paying the taxes than are ever confiscated. So can you describe the policing of this?

    Ms. Marie-Josée Thivierge: I would just say that the changes that are currently contemplated to the Patent Act are really to allow for the compulsory licence regime to take effect. Now, the Patent Act has domestic jurisdiction, so essentially jurisdiction over Canada. So our obligations are to ensure that everything is done, before the products are exported, to ensure they reach the destination that is intended. This very much reflects the requirements of the August 30 WTO decision.

    After it reaches the country, then laws in other countries apply. One of the things that was felt to be instrumental in ensuring that diversion is limited was the whole public disclosure element of the August 30 decision. The world will know when products are about to be exported under compulsory licence, what that product is, where it is intended to go, and what it looks like, so that the world can see or can expect that if they find that product in their market, they can signal that to the patentee and immediately the compulsory licence can be terminated.

  (1220)  

    The Chair: Very short, Cheryl. Very brief.

    Mrs. Cheryl Gallant: That will be useful information for those who seek to divert it if it's made known that widely.

    The compliance framework--this is more for CIDA. Even with antibiotics here in Canada, literate Canadians do not take antibiotics correctly and we have a real problem with infections now. Can you describe what measures are being implemented, specific measures, to ensure that once these medicines actually do get into the hands of the people who need them, they are going to be taken correctly?

    Mr. David Maloney: I may turn to my colleague, if I may, Mr. Chair, to speak to specifics.

    You're absolutely right, in that, as was mentioned earlier, some of these cocktails are more and more complex. Even in different settings inside a country like Canada, the ability to have these cocktails used as designed does vary. Part of what CIDA and our partners in the WHO and other donor agencies are trying to achieve is increased capacity--the medical settings, doctors, treatment protocols, nurses, other health workers--so that we are, in fact, building the capacity, the ability to have these medicines actually improve outcomes. But it very directly is a challenge. As I said, we're putting some quite significant financial resources into this area now.

    The Chair: Anybody else on that? Then we will go to Mr. Fontana.

    Mrs. Sandra Black (Director, Social Development Policies, Policy Branch, Canadian International Development Agency): I think, regardless of this scheme, which obviously has some extra conditions to it, because diversion is an issue that affects all of us, and we want to pay particular attention to that, the recognition of the provision of therapeutic interventions in developing countries is very different from what it is in North America. We're very cognizant at CIDA that we have to work with our international partners, especially the World Health Organization, who have the responsibility to develop normative standards as to what those therapeutic interventions should look like in developing countries, and how, as part of that international community, we can work with developing countries to have the best scheme in place at the country level that is country-defined, country-owned, and that there are mechanisms for measuring the efficacy of actually what is done. There is a huge pressure in the international community for that to happen, and we realize lots and lots of challenges.

    I don't think that should stop us from trying to do the best we can. I think it's very important to emphasize that we're hoping that the countries will take a lot of responsibility for this, and that we can work with them and help them put that responsibility into place.

    The Chair: Thank you very much for that interesting line of questioning.

    Mr. Fontana.

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

    I do want to pick up a little bit on your last statement with regard to responsibility. I think that as we get into the bill, you will see that the Government of Canada has gone to great lengths with regard to the transparency of contract, the transparency of the negotiations and so on, to make sure that the diversion and enforcement are important. But we seem to be spending so much time talking about enforcement and diversion. I agree that those are absolutely essential and key, because we want to make sure that the pills don't get into the hands of those who would profit from them. But as I think James and others have talked about, how do we make sure from a humanitarian basis that the pills and medicine actually get to the people who really want them?

    Let's be realistic here. We've got a list of countries that in fact don't even have governments, don't have civil societies, and don't have the social infrastructure to deliver the very complicated drugs we're talking about. In some cases, such as malaria, you have to take a pill every six months.

    I think this is an important field, but people will tell you that the cost of the drug is minuscule compared to the rest of the process, of delivering the drugs and making sure that we're actually contracting and/or talking to the very people who are in a position of authority in those countries, because in some cases those countries don't even have governments, and yet we want to make sure from a humanitarian basis that those people who are dying each and every day are actually getting the medicines Canada can deliver.

    So I'm just wondering, within the five departments that are going to be involved, is there a plan to make sure that once Canada is delivering the drugs that we're going to be satisfied that the governments, the NGOs, or the whole infrastructure, including the brand company or the generic, is going to do everything possible to make sure that the drug is actually getting to the very people who need it?

    My second question is on most of those countries being unable to afford to buy their drugs in the first place, which we know. Therefore, I wonder if someone can tell us who would be monitoring that, because in some cases these countries don't have any money, and they will get the drugs either through the United Nations or even directly from our own governments. I'm just wondering whether or not you can address the question of who is going to pay for the drugs, and therefore, when we're actually negotiating the price, should we not be negotiating with the generics and/or the brand companies?

  (1225)  

    The Chair: Are there any volunteers?

    Mr. Maloney.

    Mr. David Maloney: Yes, I will start.

    With respect to who will provide the purchasing power for these drugs, it's quite clear from the effort I've described that CIDA is already putting in place in excess of $100 million this year through bilateral efforts and through the multilateral community, the Global Fund, for example, and others. CIDA is working hard to build that capacity to deliver. We are working directly with governments, we are working with civil society partners to have a counter-party capacity. It's important, I think, in respect of the proposed legislation. What we are doing here is enabling or improving the ability of Canadian manufacturers to enter into negotiations with the government of a country in need or with an agent who is specified by that government. So there is a counter-party.

    Other donor governments in the developed countries are also putting very considerable resources into this area, but as you're implying, those resources don't go as far today, because some of the drugs themselves have been more expensive. There's an opportunity here for the Government of Canada, in a way, to better leverage not just our own donor resources, but the ODA efforts of all the developed world. We will help to increase the possibility of a supply at an affordable price. Indeed, we have the potential here to send a signal to other governments to do the same.

    As to the plan, one other aspect we've not discussed here is that though these are very early days in the global community--as has been mentioned, we are the first--there are efforts now. The WHO is looking at it, through the “three by five” initiative, for example, that was discussed. Separately under the WHO, a facility already exists called the global drug facility. Canada was one of the founding donors. CIDA put something like $30 million into that a few years ago. This was designed to help purchase drugs to combat tuberculosis, which is one of the specifically mentioned maladies here, but that approach may be broadened. The World Bank has just released technical guidelines to help developing countries procure anti-retroviral drugs. They have just announced that they will start training government officials in third world countries to purchase them. CIDA is looking at providing some financial assistance for that.

    So I think there is, in fact, a range of efforts, and that will grow, building the capacity to get the drugs to those in need.

    Hon. Joe Fontana: Maybe you can help the committee understand how the process would work by tabling that World Bank study.

    Lastly, with regard to the cost of drugs, I know it's important for diversion and enforcement, but it would seem to me to demand that each pill be labelled separately. Aren't we adding to the costs of production of pharmaceuticals, when we're trying to keep the costs as low as possible? I know we're trying to prohibit the underground economy from profiting from this, but I'm trying to understand if anybody has done a cost analysis on now having each and every pill different from one that already exists for the purposes of getting it there.

  (1230)  

    Mr. David Lee: Thank you for that question. It's a very good one. In fact, we have had discussions. We had a short workshop with generic manufacturers to understand how burdensome the technology might be for marking. Labelling is something that's done in the business all the time, so you're very likely looking at expected overheads. Also, capsules and tablets are typically marked anyway, so it's probably a matter of not very much investment. But we are sensitive to that whole line of questioning.

    The Chair: We will go to Réal, then we're probably going to get to James and Paul.

[Translation]

    Mr. Réal Ménard: A letter was sent to Prime Minister Paul Martin, signed by around 15 organizations, including the Canadian HIV/AIDS Legal Network, which is a national strategy partner, Oxfam-Quebec, etc. These are people who are very concerned about the distribution of drugs in combating AIDS. A reading of the bill gives rise to three concerns. I would like you to try to clear up a certain number of ambiguities.

    First of all, suppose we were to find ourselves in the following situation: a third or fourth world country places an order, generic companies bid on it, and we wind up in a situation where brand name companies end up filling the order. So the generic companies negotiate the contract, but it is the brand name companies that fill the order. Apparently when it comes to issuing licences, even in a situation where it is the generic companies that get the contract, all that will be negotiable every two years. That raises a problem. Some AIDS activists say that it won't be worth it for generic companies to engage in the procurement process. How do you respond to that?

    My second question follows on what my colleague, Mr. Savoy, was saying. We know that there are third and fourth world countries that are members of the WTO and are on the list, but there is concern about those that are not, for example, Vietnam and East Timor. There is a series of countries that are described as countries in urgent need, but that are not on the list. It is not enough to know what CIDA has done: the question remains, how can we get them on the list?

    Third, there is concern that NGOs and international organizations will not be able to place drug distribution orders. Given that they are often in the field, where they play a high profile role, why have they been excluded from the process?

    Those are three straightforward questions.

    Ms. Marie-Josée Thivierge: I am going to try to answer the first one. You talked about the right of first refusal structure, and, among other things, the two-year period provided for in the bill. When it came time to determine the duration of a compulsory licence, that was based on article 31(c) of TRIPS, which provides that the duration of the licence must be limited to the purpose for which it was authorized.

    In this context, the two-year period was considered reasonable to meet the needs of a so-called standard drug supply contract, given that drugs have a limited shelf life and that at that point in time, one of the things that people wanted to ensure was that the exported drugs would not be expired. That said, the bill provides that the initial period will be two years, but in the event that not all of the product to be exported has in fact been exported yet, the bill provides that the period can be renewed so that all of the product can be exported.

    Mr. Réal Ménard: Is that done through tendering?

    Ms. Marie-Josée Thivierge: The extension is obtained by way of an application to the Commissioner of Patents, in which the licence holder informs the commissioner that not all of the product that was to be exported has in fact been exported, and so an extension is sought. At that point, there is an extension for an additional two years. The extension expires when all of the product has been exported.

  (1235)  

    Mr. Réal Ménard: The possibility of generic companies tendering but brand name companies actually providing the supply is a plausible option, one that is even contemplated under the architecture of the bill itself.

    Ms. Marie-Josée Thivierge: Indeed, the right of first refusal as such was to balance things, to encourage the involvement of the industry as a whole. It was about recognizing the fact that only two of the 12 conditions under TRIPS had been suspended in the context of the August 30^th agreement. We also wanted to ensure that the plan would allow for drugs to be sent quickly, which was one of the objectives of the August 30^th decision, where we stated that we wanted drugs to arrive at their destination in a timely fashion.

    In that context, given the fact that it can take between two to five years for a generic drug to be developed and marketed, we saw the advantage of involving the pharmaceutical industry as a whole.

    Mr. Réal Ménard: And now for my second question.

[English]

    The Chair: A very quick question, a short one.

    Mr. Réal Ménard: I'm just waiting for an answer to other questions.

[Translation]

    Ms. Marie-Josée Thivierge: We were talking about third world countries, if I'm not mistaken. My colleague described earlier on how the lists are structured. There are three schedules. Currently, the schedules include WTO countries...

    Mr. Réal Ménard: I know that, but why aren't certain countries such as Vietnam and East Timor not there, and how can we rectify that?

    Ms. Marie-Josée Thivierge: In the bill, there would be legislative amendments to allow for the implementation of the August 30^th agreement. It is a WTO agreement and therefore, in theory, WTO member states are the beneficiaries. That being said, it is a government decision which is in keeping with its policy on developing countries to include least developed countries on the list, and they are on the list.

    As far as other countries are concerned, what is provided is that in the event that other countries were to join the WTO, they could be added. If the United Nations were to add least developed countries to the current list of 49 countries, that would be possible as well. The authority prescribes it currently under the bill. It would be done through the Governor in Council. If the WTO or the United Nations makes a decision, Canada, which is a member of the council, will be informed of it and through the Governor in Council, the schedule will be amended.

    Mr. Réal Ménard: Why can't NGOs supply...?

[English]

    May I ask a short one?

    The Chair: No. We're going to come back.

    Mr. Rajotte.

    Mr. James Rajotte: Thank you very much, Mr. Chairman, and greetings to everyone here.

    I have about five questions. I will put them all on the table, and if you cannot address them, I certainly understand. You could address them in writing. Some of them are actually points.

    With regard to schedule 1, could we get a listing of which companies have the patent for which drug tabled with the committee for our information?

    Second, my colleague asked about the regulations. I wasn't quite sure of Minister Pettigrew's answer. Can we see the regulations before we pass this bill? I know it's very important to many of the stakeholders that they know what's in the regulations before we pass the bill itself.

    Third, with regard to schedules 2, 3, and 4, I know it's been addressed, but I'm still not certain of the exact differences, as a lay person going through the list. You have South Africa in schedule 3, but you also have Liechtenstein there. I want to understand why they're in that schedule and to get a precise explanation of the difference between schedules 2, 3, and 4.

    I appreciate the information about what we're providing to the global health fund, and I'd like you to table all that information, but if you could even just describe for us.... Suppose a brand name or a generic signs an agreement with Botswana. We've gone through all the legal process, now take us from the drug leaving here to the medical infrastructure and everything else, so that it actually gets to the person who needs it and addresses their health needs. I'd like it if you could provide that.

    Finally, and perhaps you could start with this, the Minister of Industry talked about a concern over royalties. This bill suggests a fixed royalty rate of 2%, and she said brand name companies say this is inconsistent with TRIPS. Could you explain why? Is this consistent with TRIPS? Is it not? Is there another way perhaps to address this that would be more consistent with TRIPS?.

    Those are all the questions. You can start from the last and work backwards if you like.

  (1240)  

    Ms. Suzanne Vinet: I can start with the last question, on the consistency with TRIPS. TRIPS specifies that it should be on the merits of each case, so there is some flexibility. There's not a lot of jurisprudence on how it's been interpreted. One way would be to specify a rate of royalty, because the circumstances under which we would issue a compulsory licence are quite precise. On the other hand, it could be interpreted to the effect that we should do it on the merits of each case and not have it codified in the legislation. So there is more than one way of looking at this, and we're looking for suggestions. If the way it is codified now is not satisfactory, we'd have to evaluate the options. But certainly, under TRIPS it could be done either way.

    Mr. James Rajotte: So doing it under the merit of each case, the royalty rate would vary then for each contract signed between a nation and a generic or a brand name drug producing company.

    Ms. Suzanne Vinet: That's right. It would have to be negotiated for each contract.

    Ms. Marie-Josée Thivierge: And I will add in here, if you would like, that what is currently provided is the application of a royalty rate in the amount of two percent to each compulsory licence, and each licence varies in terms of the quantity of the product that is to be shipped and also in the value of that contract. So technically the actual amount of compensation will vary on a case-by-case basis according to each licence.

    If the chair will agree, my colleague has asked me to address the issue of schedules before he speaks to the example that you recall. Is that agreeable?

    Mr. James Rajotte: Yes, sure, thank you.

    Ms. Marie-Josée Thivierge: I will quickly walk you through the schedules. Essentially what we have attempted to do through the schedule is to track specifically the combination of the August 30 decision text and also the chairman's statement, which needs to be read with that text. The legislation provides that when one refers to the decision, those two documents apply.

    Now, starting with schedule 2, essentially schedule 2 provides for least developed countries, both WTO members as well as not WTO members. So there are 48 least developed countries currently captured on schedule 2.

    Schedule 3 captures developing countries that did not self-identify as using the regime under specific circumstances. Those are found in schedule 4, and I will explain. A number of countries have said that they will use the regime only in cases of national emergency or extreme urgency, and therefore will use the system in very specific circumstances. Their use of the system would be triggered by advising the WTO when they are facing those conditions. Those countries are found in annex 4. There are 21. So annex 3 technically captures the remaining countries that are WTO members and have not put any kinds of restrictions on their participation.

    Now I would also like to point out that, of the 146 countries, WTO members, 23 self-identified as never using the regime. They will not be importers under this decision or this waiver. Therefore, in this context, those countries are in fact not eligible for the compulsory licensing regime.

    So that's how the countries were essentially captured on the schedules based on the actual text of the decision. You can track the two in parallel.

    The Chair: Thank you.

    Thank you, Mr. Rajotte.

    Mr. Crête and then Mr. Masse.

[Translation]

    Mr. Paul Crête: Thank you, Mr. Chairman.

    Earlier on ministers told me that they could not spell out concrete results with respect to the expectations, but I would like you to tell me, for each one of your departments, what kind of results you hope to gain from this initiative in five years' time.

    Obviously we're not doing this to enhance Canada's corporate image; we want results on the ground. For each one of the departments, could you tell us what a success in five years would be, in your opinion, if the bill works. Moreover, was is the biggest challenge when it comes to implementation of the bill for each of your departments over this period?

    We can start with CIDA.

  (1245)  

    Mr. David Maloney: Certainly. What would we like? As I've already explained, CIDA is already spending significantly. So, for us, the best possible result to be gained from this initiative, this bill, would be, for instance, for other countries that already have the capacity to manufacture these products to follow suit. And so, over time, the price of these essential drugs on the ground would be greatly reduced. As I've already stated, what we hope is that our funding, our aid and our efforts will lead to better health results and help in the fight against these diseases. We are already involved in this fight; it's about using our resources as efficiently as possible.

    Mr. Paul Crête: What is the main challenge for CIDA?

    Mr. David Maloney: Our biggest challenge already exists. I would say that it is to make sure that our partner countries follow this process.

    Ms. Marie-Josée Thivierge: I think when it comes to the goal and results sought by the proposed amendments under the Patent Act, we recognize that there is a very fine balance. On the one hand, we want to make sure that there is a quick and additional supply or demand of drugs for countries who need them. On the other hand, we want to make sure that the intellectual property system will continue to create necessary incentives for the development of new products in Canada, and that it will continue to attract necessary investment in order to offer products to Canadians as well as to beneficiaries in other countries. Therefore, for us, the goal is to strike a balance between the government's goals for the system.

[English]

    The Chair: Did you want to jump in?

[Translation]

    Mr. Paul Crête: I have a supplementary question. In your opinion, does the passing of the bill require the support of patent holders as well as generic drug companies?

    Ms. Marie-Josée Thivierge: I think the Minister of Industry has already clearly said that the entire industry should be involved. Indeed, the needs vary from one country to another. Some countries' needs run over the very, very short term. In its ruling handed down on August 30, the WTO noted that some countries are in a crisis, and that they will still find themselves in a state of national emergency. So there are circumstances where countries will need drugs over the very, very short term, and there are other situations where they will need the drugs over the medium or long term.

    The Chair: Ms. Gervais-Vidricaire.

    Ms. Marie Gervais-Vidricaire (Director General, Global Issues Bureau, Department of Foreign Affairs) Thank you.

    Very quickly, from the foreign affairs standpoint, from the Department of Foreign Affairs standpoint, I think our goals are very similar to those expressed by my colleague from CIDA. We want to make a real contribution to the improvement of health on the global level, but above all, I would say that we have to send a signal to other countries that are able to make a contribution in this respect. This will, I hope, allow us to act collectively, act as an international community, and deliver on the commitments we made, whether they are the Millennium Development Goals or the commitments made during the special session devoted to HIV-AIDS, for example. This is not something that Canada can achieve alone, but only as part of the international community. This is how things must be achieved.

  (1250)  

[English]

    The Chair: Merci, Paul.

    Are there additional comments from the witnesses?

[Translation]

    Mr. David Lee: For Health Canada...

    Mr. Paul Crête: I would like to make a brief comment. There are not any goals for the 46 products. I am not asking you to respond, but maybe just think about this. Right now, I think there are 46 patented drugs on the list. Perhaps one day, during a simulation, we should find out what can happen for all of these products. I am not saying we should proceed one at a time; however...

[English]

    The Chair: Thank you, Paul.

    That was a comment.

    Okay, Brian.

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

    We heard about it earlier, and we're going to hear a lot about the first right of refusal again. But we heard from the minister that the pharmaceutical industry wasn't necessarily the objecting body in removing this or insisting that it had to be part of the legislation, that it was actually the WTO rules that required this.

    Did we get a legal opinion about those rules and how it applies to this legislation?

    Ms. Suzanne Vinet: The decision that was arrived at by the 146 WTO members in August only waives two obligations in article 31 of the TRIPS agreement.

    The first obligation it waives is the fact that compulsory licences should be issued predominantly for use in the domestic market. We've got to understand that the TRIPS agreement has a principle of territoriality; it means that when you apply the protection, it applies in your own domestic territory. The current TRIPS agreement requires that the product with a compulsory licence be used predominantly in the domestic market. So it waives that obligation, and through the waiver it allows production under compulsory licences for the export market.

    It also waives some of the requirement related to how you compensate the patent holder in terms of the product, in that it requires taking into consideration the economic value to the importing country.

    The right of first refusal in this case is not article 31(b), which has been referred to as the requirement, which was not waived under the August decision. The way the waiver is applied is that we can allow for compulsory licences for products to be produced and exported, but we still have to comply with the rest of article 31. In this case, article 31 would normally operate by requiring a generic company or producer to negotiate a voluntary licence with a patent holder on reasonable commercial terms. If that is unsuccessful, then the generic manufacturer could seek a compulsory licence. That compulsory licence could be issued at that time. So that requirement has not been waived.

    So whether it needs to be done in the way it currently is in the legislation, or if there are alternative ways of respecting our trade obligations, we're certainly open to suggestions on how that could be done.

    Mr. Brian Masse: Okay, so we could pursue then.... I guess I'd suggest that if we are going to look at altering it, or the form of the way in which the right of first refusal might be evolved, we maybe start seeking legal opinions on that.

    If we're going to work on this committee and suggest some alterations, or we're going to hear delegations coming forth who are suggesting alterations, I think it's important that we start to be proactive to be able to get those opinions. If this is the only holdup to a consensus or if this item appears to be a stumbling block, what are the other things we can start doing proactively to eliminate those barriers or to address them through our trade agreements?

    Ms. Suzanne Vinet: I guess the opinion here is that article 31(b) has clearly not been waived. So how we approach the ability of generics to obtain a compulsory licence would still have to respect the trade obligations laid out in article 31, which include article 31(b).

  (1255)  

    Hon. Joe Fontana: Can I answer on behalf of the minister, and just assure my colleagues that I think the minister was clear this morning, and I think the officials have been pretty clear, that this was the preferred course to achieve certain objectives. I think what the minister says...and when we as a committee start to listen to our witnesses and to look at the other possible options than the right of first refusal, which you've alluded to, Brian, then everything's on the table for us to look at those options.

    As to the legal framework as to what might be workable or not, I think the officials and the ministers can help us and assist with regard to whether or not they would meet the test of the WTO requirements and the TRIPS requirements.

    Ms. Suzanne Vinet: If I may, Chairman, that's exactly right.

    We would be more than open to assess any kinds of proposals or options that have been put forward, or would be put forward, and assess their compatibility with our trade obligations.

    Mr. Brian Masse: I'd hope that we'd also have the ability to reach out to other groups and organizations who are going to give opinions on this as well.

    With regard to CIDA, I just have a quick question going back to the global fight on AIDS and the projects there. As we introduce different remedies for some of the very serious problems the communities are facing in fighting these diseases, is there going to be any monitoring of drug companies, whether they be pharmaceuticals or generics, and their introduction of other products into these countries, which perhaps don't have as extensive a background as we have in North America in using medications for treatments? Will there be any monitoring of advertising, packaging, and safety issues, and whether these companies are going to expand other markets in the area? There will be affluent people in these markets who will also be able to purchase drugs, as opposed to those who are too poor to afford their own treatment right now.

    Mr. David Maloney: I think the most important aspect is that this mechanism will be used only when a partner government formally notifies the WTO that it wants to take advantage of this. Then it basically puts out a request for proposals from manufacturers to supply under this mechanism, or it designates an agent. That agent could be an NGO or some other civil society organization. So there will be definitely be a government involvement from the start.

    As has been mentioned, purchasing power is an issue, and this will very definitely be the case in some of CIDA's partner countries. For example, in December we announced $35 million of new efforts specifically for Mozambique and Tanzania, new investments for care and treatment, new protocols, therapies, and so on. If CIDA is a supporting agency for that specific government or if any of the other major donors is, all of us now have very clear guidelines and practices in place that require specific results to be identified before money flows, that there be very specific monitoring mechanisms, that there be results assessment, evaluations, audits.

    That approach, which is part of what CIDA refers to as strengthening aid effectiveness--and a paper was put out in 2002 to that effect--is central to how we and all the major donors work now. Because this will be country-owned and led, because that's what the WTO appropriately requires, you will have donors working through that. So I think it's fair to say you'll see all that focused on results and reporting results, as is the case in our programming generally in this and other areas now. This will be an example. I'm not sure we'll need extra sorts of results, because we have made, I think, great strides already.

    The Chair: Thank you very much.

    Before we wind up, I'd like to take the opportunity to ask a quick question. On the regulations, is anybody here capable of telling us whether we would see them soon or down the road? I think the minister said we have the RIAS available to us.

·  (1300)  

    Mr. David Lee: I would answer with my colleagues at Industry. Both Health and Industry, I think, will have to deal with regulations. Ours will probably be a bit more extensive, because the changes we put up are pretty lightweight, so most of our work is occurring in regulations. That's why we've given you that pre-consultation document. Submitting wording is not something we're in a position to do, although our thoughts have been very focused on all of these measures. We're in a very high stage of development in our thinking on the matter.

    The Chair: James, do you have a comment on regulations? I'll ask Joe to comment as well.

    Mr. James Rajotte: In our brief here it says “subject to parliamentary approval, the legislative amendments and their subordinate regulations will come into force on the same day.” If this committee approves the bill and sends it back to the House, I think all members of this committee want to know what those regulations will state, as well as the stakeholders. There is some genuine concern as to what the regulations will say.

    Ms. Marie-Josée Thivierge: From Industry Canada's perspective, we have provided the committee with an explanation of what the regulations will cover. Most of the features are in law. Most of the provisions are amending the Patent Act. What is left for regulations is essentially the fee to be paid by a potential licensee in seeking a compulsory licence before the commissioner, and also the forms that will be used in applying for a compulsory licence. Those things are mostly administrative and technical in nature, as most of the features are found in legislation. We have provided the committee with an explanation of the scope of the regulations.

    The Chair: Joe.

    Hon. Joe Fontana: To add to James' question, which is a very good one, and Marie-Josée just answered it, I think what's clear is that you can't write specific regulations until the bill has been passed. As you know, the regulations are open for public comment. When I was chair, we were one of the very first committees, the committee on citizenship and immigration, to actually look at the regulations as posted to make sure they were in keeping with the intent of the legislation. Some of them are very technical. I think you have an explanation on what you would want to see in the regulations, the whys and the wherefores--that's what the RIAS is all about--but the specific language usually waits until the bill is at least past the House, after which the regulations are formed. It wouldn't be implemented, obviously, until such time as the regulations are in place. That's when this committee could have some additional input if it wanted.

    The Chair: I think we can work that out as part of the business of the committee.

    Mr. James Rajotte: The last bill that the last Minister of Industry introduced contained the regulations, so I don't think it's accurate.

    The Chair: I want to thank our witnesses very much.

    I remind colleagues that after a couple of minutes' break we're going to have a business meeting. Hopefully it won't be too long Members of the committee, please stick around.

    We're adjourned for today.