I call this meeting to order.
Welcome to meeting number 65 of the House of Commons Standing Committee on Health. Today we meet for two hours to continue our study of the Patented Medicine Prices Review Board.
In accordance with our routine motion, I'm informing the committee that all witnesses have completed the required connection tests in advance of the meeting.
Please allow me to welcome the witnesses joining us today. We have Matthew Herder, director of the Health Law Institute at Dalhousie University, and Douglas Clark, executive director of the Patented Medicine Prices Review Board. Thank you both for taking the time to be with us today.
You're probably aware that the convention we use at this committee is that the person posing the question to you has the right to interrupt you once the length of your answer exceeds the length of their question. That may or may not come into play today. Just so you know, if you get a two-minute question, you have two minutes to answer it; if you get less than that and go past the time, it's the member's prerogative to interrupt you. Sometimes they'll let you go and sometimes they won't. I won't intervene unless you're being treated unfairly in regard to that convention.
With that, we're going to begin with opening statements, starting with Mr. Herder.
You have the floor for five minutes. Go ahead, sir.
Thank you for the invitation to appear today.
I'd like to use my opening statement to pose some questions that I hope will inform the committee's inquiry.
The first question is about the PMPRB's independence.
When he appeared before this committee last week, claimed his decision to not consult with the board prior to November 28, 2022, was driven by a desire to protect the independence of the board. According to his testimony, when he finally wrote the acting chair of the board on November 28, he was simply exercising his duty to consult with the board under subsection 96(5) of the Patent Act. Why wait until the eleventh hour to consult with the board?
The minister had not been briefed by the PMPRB about its reforms on any occasion during his tenure. In what way does his request that we suspend our consultations—a step no previous minister of health has taken—help protect the board's independence?
Under section 96 of the act, it is the board that has the legal authority to make guidelines. During the fall consultation period, the industry publicly called for the board to suspend its consultations without naming what its concerns actually were. Instead, the industry went to the to ask him to repeat its request that the board suspend its consultations. The minister did exactly that, without ever meeting with the board to gain an understanding of the proposed guidelines. In this environment, how can the PMPRB credibly consult on guidelines in the future?
The answer is that it can't. Industry now knows it can bypass the PMPRB when it isn't satisfied with the board's policy direction and can get the minister to do its bidding. It is an arrow straight to the heart of the board's supposed independence.
My second set of questions is about influence, specifically industry's pervasive influence on pharmaceutical policy in Canada.
Look no further than the PMPRB itself. Several former officials have turned their time at the regulator into consulting careers, despite the fact that they are prohibited, under the Conflict of Interest Act, from acting in a manner that takes “improper advantage” of their time in office. One former executive director of the PMPRB moved to a VP position at Innovative Medicines Canada, only to return to Health Canada a few years later. She is, today, the head of Health Canada's Office of Pharmaceuticals Management Strategies and the lead official advising the assistant deputy minister, the deputy minister and the on all PMPRB-related matters.
There appear to be direct lines of communication between Health Canada and industry. Days before any public announcement was made about our resignations, pharmaceutical lobbying firms knew we were stepping down from the board. The newly appointed chair of the PMPRB is a practising lawyer with clients actively engaged in the development of patented medicines. How was the new board chair appointed, given these potential conflicts of interest? How did lobbyists know the executive director and I were stepping down? Did someone at Health Canada advise the not to meet with the PMPRB last fall?
My point is that the line between consultation and conflicts of interest has become completely blurred under the industry's influence. Unless we start taking conflicts of interest far more seriously, meaningful pricing reform will be impossible.
Finally, I want to raise a fundamental question about political courage in the face of industry's power. You have heard different accounts of what happened at the PMPRB. It's important for the truth to come to light, but it should not distract us from the larger issue.
I urge the members of this committee, Parliament and Canadians more broadly to remain focused on industry's power to control the policy conversation. They control it by playing fast and loose with the facts. They say pricing reforms will hurt research and development, but the evidence shows that the pharmaceutical industry's spending on R and D is already at an all-time low, and this in the absence of pricing reforms. Industry says pricing reforms will stop life-saving therapies from being launched in Canada, but the evidence suggests that almost all new drugs launched in the U.S. also make it to Canada. Trikafta, the cystic fibrosis drug, whose manufacturer threatened not to launch in Canada as a result of the PMPRB's pricing reforms, was actually exempt from our new pricing regime, yet industry continues to claim the PMPRB was to blame for Trikafta's delayed availability in Canada.
The industry plays fast and loose with the facts because patients are desperate for new therapies and because they pay the leaders of patient advocacy organizations to sell the line that the PMPRB is the problem. Industry plays fast and loose with the facts because they can and because we let them.
The question we should all be asking is this: When will we ever stand up to industry's power and take the steps that are needed to make medicines more affordable for Canadians?
Thank you. I welcome your questions.
I suspect that I won't follow Professor Herder's example in that regard. I may need a little more time.
Thank you for the invitation to appear before the committee today.
I have been the executive director of the Patented Medicine Prices Review Board, or PMPRB, since 2013, including during the latest consultation on new guidelines that took place last fall. However, I am currently on leave from the PMPRB and will be formally stepping down as executive director on June 1.
Any facts I cite in my opening remarks or in my ensuing answers to your questions can be corroborated by either the relevant documentary record, which I understand the committee is seeking to obtain or by remaining members of the board who were involved in last fall's consultation, the management team at the PMPRB, and of course Professor Herder who is with me today. I will try my best to limit my remarks to those facts and to keep any expressions of opinion to a minimum.
I want to first address the confusion from last week's testimony around the protocol for briefing the minister and who dialogues with whom between the PMPRB and Health Canada. Before doing so, I should point out that the PMPRB chairperson position is a part-time appointment and has always been occupied by persons residing outside of the National Capital Region and who juggle multiple other professional responsibilities. As such, in order for the PMPRB to operate effectively day to day, the executive director is often called upon to exercise functions that, based on a pedantic interpretation of the PMPRB's org chart and reporting structure, would normally fall to the chairperson.
Accordingly, with the exception of the current minister, I have personally briefed every minister of Health on guidelines reform as far back as Minister Ambrose under the previous government, either on behalf of the chairperson or together. Some of these ministers I have briefed on this topic multiple times. To the best of my recollection, every such briefing was initiated and arranged by the deputy minister's office, often at the behest of the minister's office.
In addition, as Mr. Bélair indicated in his testimony last Thursday, it is routine for meetings to take place at the working level between PMPRB staff and Health Canada officials. Insofar as last fall's guidelines consultation is concerned, PMPRB policy staff met with and briefed their Health Canada counterparts a total of seven times between early October and late November. At no time over the course of those consultations did Health Canada officials express concern about the proposed guidelines. On the contrary, the feedback we got from them was consistently supportive and that our policy approach was sound.
While it's perfectly fair to describe the guidelines proposed last fall as a departure from the status quo, their content was informed by recent developments in our operating environment and based on the best advice of our policy and legal experts. It was also endorsed by our board, the members of which are appointed based on career-long knowledge and expertise in subject areas relevant to our mandate.
Although the initial reaction from stakeholders was muted, it did not take long for anti-PMPRB rhetoric from industry to ramp up along recent lines.
On November 10, IMC—Innovative Medicines Canada—issued a news release calling on Health Canada to direct the PMPRB to suspend its consultations, failing which “Canadian patients will be deprived of potentially life-saving new medicines.” On November 22, IMC issued another news release claiming that the PMPRB was “misleading” Canadians because the findings in our latest annual report about domestic R and D did not agree with the report IMC commissioned from StatsCan. This is the same annual report that the PMPRB has published every year for the past 35 years, which is bound by a legislative definition of R and D set by Parliament and the Minister of Health.
Despite assurances from Health Canada officials about the proposed guidelines, the acting chairperson became increasingly concerned that no briefing with the had been scheduled, and industry reaction to them had me sharing that concern. She directed me and one of my senior staff to seek out such a briefing. She also instructed me to push back on industry claims in my meeting with them.
As a result, I personally made multiple overtures to the 's chief of staff and senior policy adviser via texts, emails and phone calls. The chief of staff told me he would get back to me on my offer of a briefing, which he never did, and the senior policy adviser refused to take or return my calls.
Again, in my 10 years as executive director, under all previous ministers I would routinely speak or meet with members of her staff to discuss matters of overlapping concern, as authorized by the chairperson, and most such meetings were initiated by staff, not me.
On November 22, I and several other senior PMPRB staff met in person with IMC and approximately 20 industry representatives to discuss the proposed guidelines. At the end of that meeting, I urged those present to cease calling for a suspension of the consultations. I explained to them that under the act, the board was the master of its consultations on changes to its guidelines and that it was highly inappropriate for them to be calling for such an intervention on the part of Health Canada or any other third party.
A colleague and I met virtually with the acting chair later that same day. She was pleased to learn of my having passed that message along on behalf of the board.
Nevertheless, as you know, on November 28 the minister wrote to the acting chairperson to request precisely what the industry had called for in its November 10 news release. To say that I was surprised by that letter would be an understatement. Its content was of grave concern to me and my senior staff and our general counsel.
As you know, the acting chairperson responded to the minister in a letter dated November 30, in which she expressed her own surprise at learning of the minister's concerns. She also drew his attention to the fact that consulting on changes to the guidelines is a legislative function that goes to the heart of the board's expertise and independence.
In closing, I would like to try to put these recent events in their broader context.
The PMPRB is a microagency of fewer than 80 people that regulates a market of about 1,300 products that account for about $20 billion in annual sales in Canada. It has no legal obligation to issue guidelines—only to consult if it does so—and any guidelines it chooses to issue are not binding on anyone. They have no force of law. The only binding authority the board has in relation to pricing is to make a determination, following a public hearing, that a patented medicine has been priced excessively.
I will be pleased to answer any questions you may have.
Thank you very much, Mr. Chair.
Welcome to the witnesses, and thanks for being here.
Last week our witness, Madame Bourassa Forcier, was cut a little bit short, so I'd like to read into the record something from her letter, which I think is relevant to this meeting today regarding the new chair, Thomas Digby.
I quote the translated version: “I have not met the new chairperson, who has expertise in intellectual property and has previously worked in the pharmaceutical industry. I see this experience not as a problem but as an asset. It's important to know the industry and its strategies well to identify the elements that will motivate change in practices. I'm also confident that this new chairperson will know how to create the change required within the PMPRB so that this agency can fulfill its mandate in the best possible way for all Canadians.”
Professor Herder, before I ask a question, I'd like to take umbrage with the allegation that members of the government didn't take the opportunity to challenge, particularly in the case of Trikafta, suggestions from industry that the PMPRB was standing in the way of access to that drug.
I have a young man in my riding named Liam Wilson, who's an extraordinary young guy. I talked to him almost every week throughout that process and ensured that his family was aware of the fact that the manufacturers had not yet applied for regulatory approval, while the pharmaceutical industry was alleging that the PMPRB was the stopgap.
I'll go on to my questions.
Mr. Herder, the Court of Appeal of Quebec found that the amendment in question that would allow the PMPRB to collect price information on third party rebates and the new price regulatory factors, including their associated reporting requirements, to be outside the patent power and therefore invalid. That was the Court of Appeal of Quebec. This was corroborated by the Superior Court of Quebec, the Federal Court and the Federal Court of Appeal.
Do you think the Court of Appeal was wrong?
Professor Herder, in your letter of resignation, you describe the pharmaceutical industry as hostile. Your media release came at the same time as your resignation, we understand that, but it shows that you were far from being a neutral and impartial member regarding certain stakeholders.
Yet in the chair’s guidelines for member conduct, which you probably signed, board members are held to a high standard of impartiality because of the quasi-judicial nature of the hearings and their responsibility as Governor-in-Council appointees.
Why did you remain in your position after the Court of Appeal verdict and the government’s decision not to challenge it? Your letter shows that you were no longer neutral or qualified to be commissioner during the hearings. Why did you resign only in February?
The first point to make is that administrative tribunals are composed, in this case, of folks who have expertise relevant to the work of that tribunal. They are not held to the same standard as a matter of law as in the case of a court or a judge. The level of impartiality is not supposed to be the same. They are invited or appointed in those roles because of their expertise, and we bring that to our work.
I did not have decided views in any way about whether a particular price of a particular medication was too high. That is the work in which I need to maintain a high level of impartiality in the context of the hearing.
In making policy decisions, the other role that board members play, about what the guidelines should look like, how we should consult and so forth, I'm allowed to have particular views about what that process entails and how many communications and meetings with stakeholders we ought to have. When taking into account all of our stakeholders, not just industry, we're losing patients in the equation here. What should be the best decision about how to move forward?
Respectfully, I disagree that I lacked the level of impartiality required for that work.
Thank you to all the witnesses for being with us.
My question is to Mr. Herder.
In your letter, you stated that you believe the Minister of Health undermined the board's independence. However, subsection 5 of section 96 of the Patent Act states that the PMPRB must consult with the various parties, including the Minister of Health. Before that issuance of any guidelines, this requirement to consult and who must be consulted was also highlighted in the letter published on March 3, 2023, by the former acting chairperson.
How can you say that the minister undermined the board's independence in light of the requirements of consulting in the Patent Act?
I think communicating and talking in depth about what potential issues might arise if we were to move forward with those proposed guidelines—all of that is best practice.
What you have to remember is that we didn't have any of those conversations until a request to suspend occurred, which I interpreted as a very strong suggestion, if not a demand. There was no communication directly with the minister until that point in time.
The same request had been made in December by the most vocal stakeholder—to suspend, and not to consider our concerns and reflect as a board and make a decision about whether to extend or to move forward, etc., but rather to stop the consultation altogether. The language echoed the point very closely, I would say, very closely in time on the same day that we got the letter from the minister. It's my understanding that we also received a similar request from Innovative Medicines Canada. Again it was to suspend.
It's in that context that our independence was undermined.
Again, in the context of a fall consultation period when there was no dialogue or briefing directly with the , the language of asking us to suspend is what hurt our credibility.
Second, there were broad similarities. Of course the wording was not exactly the same. The language of “shortages” could be interpreted to refer to “Well, we won't launch products in this country if these pricing reforms become real.” That is very much a talking point that industry has offered.
With the uncertainty of new guidelines, of course there was going to be a period of change. There was going to be a transitional period when we collected information and started to apply the new guidelines in practice. Of course, nobody likes change, but there were new regulations, so we needed new guidelines.
That point about uncertainty was also very similar to industry's talking points.
The Patent Act says, “Before the Board issues any guidelines, it shall consult with the Minister”.
Last week, though, the told this committee that it would have been inappropriate for him to contact the chair to initiate the consultations without an invitation from the chair.
The acting chair at the time, Madam Bourassa Forcier, said that the rules said she couldn't meet him. She was told that she was the equivalent of a deputy minister reporting to the minister and that she had to wait for the minister's invitation to meet him.
Help me explain it. How is this mandatory consultation called for by the Patent Act supposed to occur if neither the minister nor the chair of the PMPRB can initiate the consultation, or is there something wrong with what we were told?