Thank you very much, Mr. Chair. It's an honour and a privilege to have the opportunity to participate in your extensive study of a national pharmacare program.
My area of expertise is constitutional law, including the division of legislative powers. I will be confining my remarks today to that subject. I'm hoping I can be of some assistance to the committee in thinking about the constitutional pathways that are open to the federal Parliament if you were to decide to move ahead with a national pharmacare program.
I'll talk about several of the most important constitutional powers that are relevant to this discussion. I'll speak about both the opportunities they provide and the limits of proceeding pursuant to particular federal powers.
Let me begin by saying a few words about the federal spending power, which I think is central to this topic. From reviewing some of the transcripts of previous testimony and briefs that have been received by the committee, my sense is that many who have appeared before you to support a national pharmacare program are essentially assuming that the federal spending power and the mechanism of the Canada Health Act will be the route that Parliament would choose to move forward on a national pharmacare program.
The federal spending power is not set out anywhere explicitly in the Constitution, but it has been recognized by the courts as implicit in Parliament's power to levy taxes, which is class 3 of section 91 of the Constitution Act, 1867, put together with Parliament's power to legislate in relation to public property in class 1A, and to appropriate federal funds, which is section 106 of the 1867 act.
In Prof. Hogg's words:
| ...the federal Parliament may spend or lend its funds to any government or institution or individual it chooses, for any purpose it chooses; and that it may attach to any grant or loan [of federal funds] any conditions it chooses...including conditions it could not directly legislate.
The spending power has been the subject of quite a lot of controversy over the years, including in academic circles. There are many scholars who deny its existence or who question its validity, particularly when it comes to conditional spending in areas of exclusive provincial jurisdiction.
However, the courts have not shared the doubts of the scholars who question the existence of the power. On the few occasions in which the courts have been called upon to discuss the spending power, they have recognized its existence, have stated that Parliament is not constrained, when spending funds, to acting only within areas of federal jurisdiction. In other words, spending can take place in areas of exclusive provincial jurisdiction, and it's possible for Parliament to attach conditions to funds that it makes available to provinces.
I go into some of the case law in more detail in a brief I have provided to the committee, but the essence of it is that in a number of rulings, as I've said, the courts have recognized the spending power, recognized that federal governments can spend in areas of provincial jurisdiction and attach conditions to it.
It's not an unlimited power, and the precise nature of the limits on the federal spending power haven't really been spelled out in the case law, apart from the general principle that any federal legislation that is in pith and substance—meaning it has as its dominant characteristic—the regulation of a matter that falls within exclusive provincial jurisdiction is ultra vires the federal Parliament.
That's the fate, for example, that befell the unemployment insurance act when it was first put forward or proposed by the federal government back at the time of the Depression in a bundle of cases that we refer to as the New Deal cases, released in early 1937. The Privy Council struck down a number of federal legislative proposals, one of which was an unemployment insurance act.
Lord Atkin wrote in that opinion that the law that the government sought to defend as an exercise of the federal spending power was, in fact, in pith and substance the regulation of a provincial matter—employment contracts—and therefore was ultra vires Parliament.
More recent decisions from the Supreme Court of Canada have confirmed the existence of the spending power but have reiterated that limit: that at some point, federal spending can be too great an intrusion into provincial legislative jurisdiction and amount to the regulation of a provincial matter.
It's hard to know exactly where that limit is, but I would summarize the case by suggesting that while attaching general conditions like those set out in the Canada Health Act to federal spending in areas of exclusive provincial jurisdiction is acceptable—that's just a law that is in relation to the spending of federal funds, and general conditions can be attached to the receipt of those funds—at some point, if the conditions become too detailed, too precise an interference with or a dictation, if you like, of how the provinces should deal with matters that fall within their exclusive jurisdiction, like health care, then it will be ultra vires the federal Parliament.
That's the federal spending power. It's recognized. It exists. It has uncertain limits. I think the conclusion we can draw from the case law regarding it is that the least controversial route, I would say, to the implementation of a national pharmacare program is to amend the Canada Health Act so that it includes drugs that are provided outside of hospitals in the definition of insured services that have to be provided by the provinces. Currently, as you know, it's only when drugs are administered in the hospitals that they're covered under the Canada Health Act.
The scope and the details with regard to the funding and protection of drugs would be left primarily to processes of federal, provincial, and territorial negotiations if that amendment were put in place.
I'm not saying that it's uncontroversial in the sense that there wouldn't be any political resistance to taking that step, but from a legal point of view, there would be...I hesitate to say zero risk, but a very low risk of any uncertainty about the constitutional validity of proceeding in that manner.
What about other alternatives? The criminal law power is relevant in this context. Again, in my brief I go through the parameters of the criminal law power and some of the case law on it. There are several cases that have upheld provisions of the Food and Drugs Act and the regulations that have been passed pursuant to it, which, as you know, amount to very a extensive regulation of various aspects of the production and marketing of food and drugs. The courts have not doubted the validity of the Food and Drugs Act and its regulations from the point of view of the federal criminal law power.
The limits of the federal criminal law power are that it authorizes laws that are in pith and substance—that is, in their dominant characteristic—putting in place prohibitions, coupled with penalties, for a typically criminal public purpose, such as the protection of health or safety.
The Food and Drugs Act and its regulations meet that test, but any legislative response that seeks to go beyond a criminal law form—prohibitions coupled with penalties, or a criminal law purpose like protecting health or safety—would not be capable of being upheld under the criminal law power.
Parliament's power to pass laws in relation to patents is also relevant to the discussion of drugs. That's class 22 in section 91 of the Constitution Act, 1867. It's pursuant to that power that the Patent Act has been enacted. The Patented Medicine Prices Review Board is established pursuant to provisions of the act, and is tasked with regulating the prices of patented medicines sold in Canada to ensure that they are not excessive.
These are valid exercises of Parliament's jurisdiction pursuant to class 22 of section 91, but that power cannot enable Parliament to regulate the prices of unpatented drugs, so a comprehensive approach to the pricing of drugs can't be sustained pursuant to that part of section 91 alone.
More ambitious proposals to establish a new national agency that would regulate drugs, including the prices of both patented and unpatented medicines—and you've heard some ambitious proposals along those lines—could not be upheld under the spending power, the criminal law power, or the patents power.
One possibility that could be entertained by Parliament is the “peace, order, and good government” power, which is in the opening words of section 91, which can sustain legislation that is addressing a matter of national concern and also one that is not too diffuse or too broad. That seems counterintuitive, but the courts have been concerned that if we allocate to the POGG power matters such as health, pollution, or inflation, those subject matters are so broad and diffuse that to allocate them to Parliament's jurisdiction would upset the division of powers and would unduly interfere with the autonomy of the provinces.
A subject matter, to qualify under the national concern branch of POGG, has to be quite focused, narrow, and specific, and it's possible the national pharmacare program could meet that definition. It's highly debatable, I think, but it's possible that it's sufficiently discrete and focused to fall within the national concern branch of POGG.
Can I have one more minute, Mr. Chair?
I agree with very nearly everything that Professor Ryder just said, so I don't want to be repetitive. He did a great job.
You are putting both of us, however, in a somewhat difficult position, because we're asked to say whether pharmacare would be constitutional without real certainty as to what pharmacare is, which makes any opinion tough, right? You don't know what you're giving an opinion on.
If pharmacare means cheaper medicines for all, then it's motherhood and apple pie, and nobody could possibly say that's a bad goal or it's one that the constitutional scholars of the courts would be unsympathetic with. We're all sympathetic with it. The difficulty comes when you start asking how to achieve this.
Roughly speaking, in policy, there are three different ways. Option one is to amend the Canada Health Act, as Professor Ryder said, to make it include drugs given outside of hospital. Those currently are excluded from the Canada Health Act. Option two is for the federal, provincial, and territorial governments to co-operate in some way on drug pricing. Option three is for the federal government to legislate a national drug price regulatory system.
In brief, I think options one and two would be constitutional; option three is almost certainly not constitutional. The reason is that if one were to legislate a national drug price regulatory system, that's obviously a very complex regulatory scheme, and it would be looked at by the courts under the trade and commerce power of the Constitution, which is class 2 of section 91. We've had some adverse experience lately with that power in the Supreme Court. The reference re the proposed securities act, that case of about five or six years ago, determined that a national securities regulator, as was proposed in greater detail than pharmacare now is being proposed, was not going to withstand a constitutional challenge under class 2, section 91, the trade and commerce power. The reasons are that for something to survive under that power, to be valid as federal law, it shouldn't focus on a single industry—of course, pharmacare would focus on a single industry—and it should be a matter in which there's some demonstrated provincial incapability to act.
Of course, you already have the provinces, through the Council of the Federation, acting on drug price rather energetically. As an aside, I'll say they're not doing a very good job. Being a professor, I'm allowed to hand out marks. I will give them a D. However, they are being energetic and they're trying in such a way that you can't really say there's provincial incapability.
The other case from the Supreme Court that gives me pause is the reference on assisted human reproduction, which was again about five or six years ago, in 2011. That concerned a regulatory scheme for such things as in vitro fertilization. It too didn't survive constitutional challenge at the Supreme Court. It dealt with an aspect of the health care system that advocates wanted regulated for reasons of safety, quality, and appropriate clinical practice. Well, that's exactly the set of reasons offered for a pharmacare system.
What the Supreme Court said was that aside from the few criminal law sections of the Assisted Human Reproduction Act, most of the rest was unconstitutional. This echoes Professor Ryder's point that if something is in pith and substance purely criminal and takes the criminal law form, it will survive, but the regulatory scheme attached to it for human reproduction, and potentially for pharmacare, would be very constitutionally vulnerable.
In my final two minutes here, how would you do this? If you wanted a national pharmacare program, how would you do it? The spending power, as Professor Ryder said, matters, and you could do it by expanding the spending as well as the scope of provincial obligations under the Canada Health Act. That said, the Canada Health Act is very poorly policed by the federal government. If this were the approach taken, there is no doubt in my mind that provinces would flout whatever new mandate was put in place and the money would not be used in the best possible way.
Another way to go about this is perhaps through a series of contracts, because while legislation is constitutionally vulnerable, contracts are not, or very much less so. You could have the federal government and the provincial governments enter into a contract for how they would purchase medicines and agree on the modalities to do it, and perhaps designate a common buying agent. By doing this contractually through private law rather than legislatively through public law, you have certainly more latitude than you would otherwise. In fact, you would have so much more latitude, I think, that it would be foolhardy to attempt this under public law where that option exists.
Let me say one final thing, and it's an afterthought. I apologize, because it doesn't really fit with the rest of this.
My students and I have published research on the prices of drugs in Canada. The findings are scandalous. Particularly for generic drugs, we pay way too much. As a terse illustration of that, some drugs made by Apotex, a Canadian company, after the intervention of the provinces, cost more in Canada than they do in other countries. How can the product of a Canadian company cost more in Canada than, say, in New Zealand? And yet, that's happening in some instances with Apotex products, so there is a very serious problem here. In the Q and A, I would explain to you, if you wish, why I think there's a need for the Competition Bureau to look at some of the practices in this industry sector.
I'll leave it there, and thank you for hearing me out.
I suppose one model, of course, is the Canada Health Act. The idea is that the Parliament of Canada takes the lead in establishing national standards, reflects values on which I believe there is great consensus in Canadian society, and then leaves the details to the provinces, in negotiation with the federal government.
Of course, there is an argument for a stronger federal role than the one that exists through the federal spending power. The argument relates to the kinds of considerations that Professor Attaran was exploring earlier, such as whether or not we're dealing with subject matter that is really beyond the capacity of the provinces to deal with effectively.
That's an idea that informs both the interpretation of the general regulation of trade branch of Parliament's trade and commerce power under section 91, class 2, as well as the interpretation of the national concern branch of the POGG power.
My view is that there is a case, and I'm not sure I'm quite as pessimistic as Professor Attaran is. I don't think it's—and I'm not quite sure how you put it—almost doomed to failure. I think there is an argument, and it may be a strong argument, under the national concern branch of POGG. This is not so much under the general regulation of trade branch of trade and commerce, because it doesn't allow regulation of a specific industry, and that's what we're dealing with here.
The national concern branch of POGG, as I discussed earlier, just asked if this is a question of national importance. I don't think there is any doubt about that. Is it a subject matter that's defined with sufficient focus and specificity? I think there is an argument that it is.
In thinking about that, is this something that the provinces can deal with effectively, acting on their own? There are arguments, of course, that while they have dealt with this subject for some time, there are serious problems in accessibility and in achieving affordable prices of drugs as a whole that can only be addressed through a national program.
If you accept that argument, then I think there is a powerful basis for using the POGG national concern branch, but it would mean going out on a limb that Parliament rarely climbs out on, and it's not completely sturdy.
We're parliamentarians who love to put lawyers in difficult positions to see the different opinions because, really, it's essential.
You talked about defining what pharmacare is. I think it would be prudent for us, as a committee, maybe, to get the minister here, just to see how she sees that, because we have a huge scope here, which could go a number of different ways.
I think it was Professor Ryder who said that constitutionality is an important aspect, but I think it's an essential aspect.
I remember dealing with some of these issues years ago. I think it was a witness who said that to get agreement on how to amend the Canada Health Act, it might be easier just to get rid of the provinces and territories and have one central government do it.
Right now things are clearly defined, in terms of what is provincial jurisdiction and what is federal jurisdiction. I think we have some challenges because of the modern expectations that Canadians have—in other words, “a Canadian is a Canadian is a Canadian.” We hear that a lot. Maybe in Ontario you should be treated the same as in Alberta, but there are certain realities out there that mean that Canadians aren't quite equivalent, depending on which provinces they're in.
I would like to follow up, Dr. Attaran, on some of the comments you made.
You mentioned that it might be best to follow through with a series of contracts. How would you see this? Could you expand a little bit on the idea of common buying agents, or private law versus public law? I was wondering if there are even any precedents for that. Do we have precedents?
I think you'll hear two different stories. I agree; I think it does fit that test very well. We talked earlier about the securities reference, which of course was focused on a different power.
Similar arguments, of course, were made by the federal government in support of the proposed securities act—that is, that it would be more efficient; uniform regulation is desirable in the area, for a number of reasons; and that if we don't have 13 different securities regulators in each province and territory but one national securities regulator, there are real advantages.
The court essentially said that arguments based on efficiency and the value of uniformity aren't sufficient to take a matter that's been within provincial jurisdiction for so long and pull it into federal jurisdiction. The test that the Supreme Court of Canada has articulated for determining whether federal legislation fits under what's known as the general regulation of trade branch of the trade and commerce power is different from the test for the national concern branch of POGG.
The courts have articulated a provincial inability test as something that's beyond the capacity of the provinces to address effectively. It doesn't weigh quite as powerfully in the POGG national concern jurisprudence. In fact, the way it was phrased in the Crown Zellerbach decision from 1988, which is the leading case, was that it is “relevant to consider” provincial inability; it didn't say that the federal government had to demonstrate that it is met.
As a relevant factor about whether this a matter that's truly of national concern, requires national leadership, has transcended provincial capacities, and has sufficient specificity to not upset the balance of the federation, I actually think that's a decent argument, but there are reasons to be cautious because of how careful the courts are about preserving the balance and the division of powers between Parliament and the provincial legislatures.
Thank you very much for a very informed presentation from both of you.
I just want to say, Mr. Attaran, that as Mr. Davies said, many of us are seized not just with the fact that we're overpaying for pharmaceuticals. What's more important to me is that many Canadians are uncovered, uninsured, and cannot afford prescription drugs. I think that pool is growing with the changes in the workplace and the changes in jobs.
My questions, then, are not just about pricing strategies; they're about how to include all Canadians in a coverage model. If you could broaden your answers a bit beyond just pricing, that would be helpful.
It seems that we're dancing around a whole lot of things, yet we already have a very well-established mechanism at the federal level to ensure coverage, which is the Canada Health Act.
First, going back to the Medical Care Act and the 1984 CHA, have there been any constitutional challenges? As well, is there any reason to think that this vehicle is insufficient for us to redefine insured services?
I appreciate the question. The passage you've read is an important one, and it expresses themes that we can find in many different cases involving the interpretation of the division of legislative powers. The Supreme Court of Canada is very concerned about a balanced approach and prefers co-operative solutions, and the securities act reference is a prime example of that.
However, each head of power has its own distinct characteristics and the interpretation of its scope and limits is different, so the national concern branch of POGG is a little bit different from the general regulation of trade branch of the trade and commerce power. It's helpful in thinking about whether this a subject matter that could be upheld under the national concern branch of POGG. It's helpful to keep in mind those concerns for sure, but also to keep in mind what subject matters have been allocated in the past to the POGG national concern branch, what the features are that they share, and whether we could we say that elements of pharmacare share those features.
What are those subject matters? In the modern era, it's aeronautics, and not just international or interprovincial airline traffic, but all, including all the local aspects.
It's nuclear power.
It's the national capital region. The zoning of the national capital region would normally be provincial or municipal, but as you know, it is conducted to a large extent by the federal Parliament.
It's marine pollution in the Crown Zellerbach case.
What the court said, or has said, and what scholars have said about this handful of examples—because that's really all we have from the modern era—is that they're each specific and focused in their definition so that they don't upset the balance in the division of powers to a great deal if we allocate them to exclusive federal jurisdiction, because that's the effect of the POGG national concern branch. It's as if you had a new head of federal power. It's as though marine pollution is now written into section 91, as well as aeronautics and the other examples I mentioned. They're very specific in focus. The words the court uses are not too diffuse; they're not so lacking in definition that they have no bounds that we can identify.
The other argument that has been made in the scholarship and in the case law is that the provinces lack the ability to deal with the matter effectively. If we were to leave some aspects of the regulation of air traffic, for example, to local governments, there would be serious risks for the safety of travel by air, and there's a strong case for national, and indeed international, regulation.
Thank you all very much for coming.
I found this very interesting. This is outside my training. I'm a physician, although I was raised by a lawyer. In retrospect, he's right. After listening to this, I know I would have enjoyed law.
I've been looking at this from a physician's standpoint. I see things like the first-hand adverse effects on the patients who can't afford their medications and the data as to the potential cost to the health care system. This has been very near and dear to my heart, this whole study.
We've been going through these different points, which are fascinating, about the different routes we can take. You had the question, what would this look like? You would have liked having that question beforehand.
We'd like to have something to give you. I'd like to propose a scenario to review, to see if you see any bumps in the road with this arrangement.
If you started with a group of medical experts and you had an evidence-based formulary and they said, “These are the drugs that are essential, and they will be covered. We will only cover the generic versions of them. We won't cover anything more expensive than what has been proven safe.” Now we'd have this evidence-based formulary. That's step one.
Step two, have the federal government negociate one bulk buy of all these items on the list for the provinces. Step three, apportion these drugs to the provinces. You will give these to people who need them, free of charge. We've paid for them. They're covered. Then, if the province wanted to offer additional coverage of any other drugs, you wouldn't be stepping on their toes on that. Can you think of anything under Canadian law, the Constitution, or anything that would prevent that or cause any legal challenge?