Industry Committee on Oct. 21st, 2010

[The Chair, Conservative, David Sweet]

Good morning, ladies and gentlemen. Welcome to the 39th meeting of the Standing Committee of Industry, Science and Technology.

One thing I should point out, particularly to the visitors--I think most of the regular members have gotten used to this--you'll see there are two clocks with two different times. We'll be operating from this clock, which is most representative of the Hill time that is displayed on our BlackBerrys. So in case you're wondering, we're actually on time.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

BlackBerry time is the right time, Mr. Chair.

[Voices]

Oh, oh!

[The Chair, Conservative, David Sweet]

Absolutely, I agree, and that's why we're following it. Thank you for that intervention, Mr. Braid.

Now I'd like to introduce the witnesses for today. We have in front of us Richard Elliott, who is the executive director of the Canadian HIV/AIDS Legal Network. Welcome, Mr. Elliott.

We also have Mr. Don Kilby, who is the president and founder of Canada Africa Community Health Alliance.

I understand both of you have opening remarks. Is that correct?

Mr. Elliott, we'll go to your opening remarks first, then we'll have Mr. Kilby's opening remarks, and then we'll go to our traditional rounds of questions.

Mr. Elliott, please begin.

[Richard Elliott, Executive Director, Canadian HIV/AIDS Legal Network]

Thank you, Mr. Chair, and thank you to the members of the committee for the opportunity to appear before you today. Thank you as well to the committee for actually studying this bill, because I know that was something that has been in some question.

I want to draw your attention to the material that we have provided. You will find a copy of our brief. I think it's been provided to you already. I will come back to it in the course of my remarks, and I hope it will address many of the questions that you have. I hope to answer those questions over the course of the next two hours.

By way of introduction, I'm a lawyer who has been working on HIV-related legal issues for 18 years. For the last nine years I've been working intensively on questions of international law, including WTO law, and access to medicines, including doing graduate work on the subject.

This is also a personal issue for me, not just an intellectual one. I was born in Africa and raised there for a significant portion of my life. I have worked for many years in Africa with various partner organizations responding to the global AIDS crisis.

The organization for which I work, the Canadian HIV/AIDS Legal Network, has been working on this particular issue for nine years now, from back when the World Trade Organization members were adopting a declaration recognizing that they needed to do something about the barriers that patents pose for developing countries in getting access to affordable medicines, to the discussions that led to the drafting of Canada's access to medicines regime--enacted unanimously by Parliament in 2004--to organizing international consultations with experts from around the world on pharmaceutical procurement and intellectual property law, to a consultation that we held earlier this year with the UN Development Programme. This consultation generated some analysis that will be coming to you as an additional submission on the question of whether the proposed reforms in Bill C-393 are compliant with Canada's obligations as a member of the World Trade Organization.

This is an issue on which we have a fair depth of knowledge. It is perhaps not a surprise, therefore, that the brief we've submitted to you is some 50 pages in length. However, I hope it will be of use to you, and I want to draw to your attention the appendix in particular, because I think it will be a particularly useful reference for you.

As you know from reading Bill C-393, the bill makes a number of amendments to two pieces of existing legislation, the Patent Act and the Food and Drugs Act. Of course, it's hard to get the real sense of what the bill does unless you track all of the changes that the bill would make to the existing statutory provisions. To make it simpler, we've done that for you; in the appendix to our brief you'll find the relevant sections from the Patent Act that constitute Canada's access to medicines regime and the relevant provisions in the Food and Drugs Act. We have tracked onto the existing text of the law the additions and deletions that Bill C-393 proposes to make so that you can actually read it through in its entirety and see what the final text of the law would look like with these proposed amendments. I find it's much easier to have the discussion when you can see what we're actually talking about, and not in isolation.

I'd like to cover four areas in my remarks today, if I could: I'd like to tell you what CAMR is supposed to do, but I won't belabour that too much, because you know that; I'd like to say what CAMR has actually done, but that won't take very long, because the answer is “not much”; I'd like to tell you what Bill C-393 would do; and I'd like to tell you what Bill C-393 would not do, because there is a fair bit of misinformation circulating, including some of what you heard from government representatives last Thursday at your meeting, claiming all sorts of things about what Bill C-393 supposedly would do, and that information is not in fact correct. Let me speak to each of those four, if I could.

Briefly, what is CAMR, the access to medicines regime, supposed to do? The fundamental purpose of CAMR, as reflected in the discussions that preceded it at the World Trade Organization, is to help developing countries make effective use of compulsory licensing. That is the terminology negotiated by World Trade Organization members, including Canada. They are to make effective use of compulsory licensing in order to address public health problems by getting more affordable medicines.

The goal, stated by WTO members themselves, is to promote access to medicines for all. This arises out of discussions at the WTO in 2001, nine years ago, in which WTO members, including Canada, explicitly recognized that patent restrictions on medicines are a barrier--not the only barrier, but a barrier, and an important barrier--to affordable medicines getting to patients in developing countries.

Very specifically, one of the things WTO members recognized was that when you have patent restrictions in a place like Canada, where there is the capacity to make generic medicines and to supply them to developing countries that don't, you need to have some mechanism to get around that; otherwise it's patent infringement for a generic manufacturer here to be producing and exporting these generics. So WTO members set themselves the task of coming up with a mechanism that would get around that barrier, and that was a decision adopted in 2003, about which you've heard a great deal and which is really the central piece of WTO law relevant to any discussion of the existing CAMR and the reforms proposed in Bill C-393.

The purpose of CAMR—to implement a mechanism so that developing countries can make effective use of compulsory licensing to get generic drugs from Canada—is aimed at harnessing the power of competition. We're operating within a market paradigm here and we're harnessing the power of competition in the market to drive the prices of medicines down for developing countries. That is the purpose, and that in fact is what we've seen globally, that when countries have had the ability to get generic AIDS drugs, the prices of those drugs have dropped from over $10,000 U.S. per patient per year to $100 per patient per year now for some regimens. That's an order of magnitude of difference, and of course it makes feasible the task of putting people on life-saving treatment.

Because of this we have now seen four million people with AIDS in the developing world getting life-saving medicines in just a matter of a few years. This has only been made possible because there was competition in the pharmaceutical marketplace for those countries, and generic medicines were available at much lower prices. None of that would have been possible if the limited moneys made available for donor aid to buy medicines had to be spent to buy $10,000 courses of a treatment per patient per year, as opposed to $100 per patient per year.

That's what CAMR is supposed to do. Second, what has CAMR actually done?

As you know, it's been more than six years since CAMR was enacted by Parliament, and in that time, after a lot of work by a number of NGOs, after the commitment from one generic manufacturer, we have seen one drug leave this country to go to one country. That's tremendously significant for us, because it shows that we can do things, that we can make a difference. But I think it would be wrong to conclude that it somehow proves that the current access to medicines regime works. That result came about, as I said, because of years of hard work by various NGOs. It came about partly by chance. It came about because of conditions that are not easily replicable in future, and the one generic manufacturer that had made a commitment to NGOs, that is, to Doctors Without Borders, to try to make this regime work has said it will not attempt to do it again because its experience so far has not been encouraging.

However, that same company has also publicly committed that if the legislation is streamlined the way Bill C-393 proposes to do, the first next step for them would be to make a pediatric version of this drug. Access to AIDS treatment for children living with HIV falls way behind access to treatment for adults with HIV—who already are less than half of the people who need treatment now, and who will die without it. That's why it's so important that we have pediatric formulations of antiretroviral drugs, because 80% of children who are born with HIV will die by the age of two if they do not get medicines.

There are some medicines out there now that are being used to treat children. In many cases, they are not particularly user-friendly. If you can imagine that you're a grandmother caring for several orphans, some of whom are HIV-positive, it's not a particularly helpful way to make AIDS treatment available to children if you have to periodically get to a clinic—if they have the medicine at an affordable price—to get a syrup that you have to carry back to your home, where you may or may not have refrigeration.

If you could instead get something in simple tablet form, that is, something much more portable and not requiring refrigeration for storage, or in the form perhaps of something dispersible so it could be administered more easily to infants, then you would really be trying to get into the real world of getting medicines to people in a form that is easily usable. That's something that we can do if we fix this legislation. It would be a first next step, and then we would move beyond that with more medicines from generics at lower prices.

So what CAMR has actually done so far is relatively little. I don't think we can say that one drug to one country in six years is a success, given the need out there and given what was promised.

What would Bill C-393 do then?

You will have heard and seen in our material that we have described the core of Bill C-393 as putting in place what we call a one-licence solution.

Under the current legislation, every single drug order for each individual country requires a separate process of trying to get a licence to supply that country with a fixed quantity of medicines. It also requires that you know ahead of time the country and the specific quantity of medicines that you want to supply. In CAMR's experience to date, that has proven to be one of the most significant stumbling blocks, and it explains in part why it took two and half years to get to the point of having the first licence issued. I can explain to you why that is.

Our proposal in Bill C-393, which we fully support, is to change that process of licensing so that a generic manufacturer will get one licence, once, that will authorize that generic manufacturer to supply any of the eligible developing countries that are already recognized in the WTO law and in the Canadian legislation with the quantities of those medicines that developing countries will notify from time to time.

That will reduce the transaction costs of using the system. It would put generic manufacturers in a better position, because they can bid to supply multiple countries simultaneously, knowing that they already have the legal authorization in hand to do that. In the current process, they have to go into a bidding process individually with the different countries, without even knowing whether they'll be able to get the licence in the end to supply the drug, should their bid be chosen, because they will need to go through the current cumbersome CAMR process. Bill C-393 would simplify that and cut through that.

[The Chair, Conservative, David Sweet]

Mr. Elliott, you're substantially over your time. I'll give you another minute if you want to wrap up.

[Richard Elliott]

Thank you.

Perhaps I could save the fourth part of my remarks--the question of what Bill C-393does not do--for the question-and-answer session, because I expect that I will get a number of questions about what it is claimed that Bill C-393 will do, and I would be happy to correct the record.

Thanks very much.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Elliott.

Now we will go on to Mr. Kilby. You have up to ten minutes for your opening remarks, sir.

[Dr. Don Kilby, President and Founder, Canada Africa Community Health Alliance]

Thank you very much for having me here. I will keep my remarks a little briefer than my colleague and make sure I stay close to time.

I'm a family physician, an HIV primary care physician, and as you've heard, I'm a founder of the Canada Africa Community Health Alliance, a small local volunteer-based charity based out of Ottawa working with partners in Africa to improve the health of rural African villages. There are about 150 to 200 Canadians a year who choose CACHA in order to volunteer on medical missions. They volunteer their time and underwrite the full cost of each mission, including the medications that we dispense free of charge and the medical supplies, as well as surgical supplies needed to enhance the level of care of our partners.

We work on a determinants of health model, and we believe that health is proportional to access to housing, secure food supplies, education, water, sanitation, transportation, employment, and personal security and freedom. We do not restrict our efforts to medical care only. We also support orphans and vulnerable children programs; build infrastructure, including a made-in-Canada floating dispensary; provide solar lighting in villages for students to study; drill wells; support microfinance; and support people living with HIV and AIDS. Given the recent reports on Canadian charities, we do this using at least 90% of all taxable revenues directly in the countries. This is a young organization, an organization that's only been around since 2002.

Today what I want to talk about is the whole issue of access to medications in resource-limited countries and the role Canada had hoped to play and could still play in order to contribute in a significant manner to the world's continued and growing needs for affordably priced essential drugs.

In 2003 I was here supporting legislation for Canada's access to medicine regime, and we believed at the time that it was the right thing to do and it was a good move. I will admit that also at that time, given the complexity of the regulations around securing a compulsory licence to produce, we seriously doubted that any drug under this regime would ever make its way from Canada to another country. We didn't criticize Parliament's efforts at the time but rather took pride in the fact that Canada was the first G-8 country to amend its national laws in order to implement the World Trade Organization's decision to allow generic versions of still patented drugs to be manufactured and exported under compulsory licensing.

Canada's leadership would bolster efforts in other countries to do the same, so that developing countries could have access to a steady supply of cheaper drugs available in a more competitive market. In the area of HIV, access to generic, co-formulated, triple-drug therapy available from India became the hope of nations in the scale up of treatments of AIDS in Africa. So in 2003 we had 400,000 people in low- to middle-income countries who received antiretroviral drugs. By 2005 we had 1.3 million, and by the end of this year, there will be 5.2 million people on antiretroviral therapy in resource-limited settings. In 2009 alone, there were 1.2 million new patients initiating antiretroviral therapy.

In 2002 at the International Aids Conference in Barcelona, we were all told it couldn't be done. I remember attending a presentation that was done by Médecins Sans Frontières, who were working on a project outside of Cape Town in South Africa, and a Harvard group in a project in Haiti. They had presented successful demonstration projects that we then used in order to replicate these thousands of times across Africa and the Caribbean.

At that time I remember a very heated discussion and a lot of criticism coming from the International Monetary Fund and the World Bank. It was said at the time that people in resource-limited settings would not be compliant with therapy, not as compliant at least as people in North America or Europe, that local governments could not put in place the infrastructures as well as the procurement and distribution systems necessary to get drugs to patients, that there were not the trained personnel needed to treat so many people, that the world could just not afford it, and that the business model was flawed.

To the credit of the G-8 leaders, at the insistence of groups like Médecins Sans Frontières and others, and the World Health Organization's global fund, and the bilateral U.S. President's emergency plan for AIDS relief, they committed to the goal of three million people in treatment by 2005.

So procurement processes were put in place, thousands of allied health-care providers were trained, clinics were built, testing programs and mother-to-child transmission strategies were expanded, as well as programs dealing with the social and economic fallout, including millions of orphans and vulnerable children. There are now home-based programs and local AIDS service organizations in place throughout all of the world today.

Essentially what we have been able to do is develop a comprehensive model of care many believed could never be built, and this in only a few short years. What was accomplished is nothing short of a miracle: 5.2 million people on treatment by 2010.

CAMR and other compulsory licensing programs should also have evolved during this time to ensure that we have a continuous flow of medicines at affordable prices. In all other areas, other than procurement of drugs, the concerted international efforts ensure today that all that needs to be in place to get medicine to people is in place.

CACHA is working with partners in Benin, Gabon, Tanzania, and Uganda, now since 2002. We concentrate our efforts in the hardest-to-reach populations in remote rural communities where there were no services for people living with HIV and AIDS. We help our local partners articulate needs, identify those infected through testing, and secure infrastructure necessary to treat people with HIV. And we secure this through strategic partnerships that are south-south, north-north, and north-south.

In Tanzania in three remote village areas we have seen our partners go from no HIV patients in care to more than 10,000 people in care in less than three years. Up until recently drug procurement and access has not been an issue. But this success is now being threatened in other countries, not only in Tanzania, by the limited supplies of affordable therapies.

The supply issues have nothing to do with getting drugs to local markets. The problem is procurement of cheaper, first-line therapies in sufficient quantities to treat all those who should be on treatment. Today, 5.2 million need to remain on treatment, and close to another 5 million need to be on treatment.

Canada's access to medicines regime should become a viable source of affordable medication available in a manner consistent with traditional procurement practices of purchasing countries that would allow these countries to ask for competitive tenders in order to ensure best pricing and timely delivery of product to market.

What we have in place is not meeting the desired goal. We have worked with government officials in two of the countries and we have examined with them the procurement mechanisms in both cases. And both countries have found that they are too cumbersome when other markets were available to them, despite their strong desire to purchase drugs from a North American generic company.

The other issue we have is that today, as people fail on therapy because of drug intolerance or toxicity, or compliance issues, countries now need to invest in newer drugs, second-line therapies, but these are at ten to fifty times the costs of first-line therapies. Health-care budgets in these countries cannot sustain such costs without significantly limiting the number of new patients who would access cheaper first-line treatments. Compulsory licensing, therefore, is needed even more today. It is needed to ensure an adequate supply of both affordable first and second-line treatments.

We can't rely on a system that's so encumbered by regulations. We need a system of compulsory licensing that is not time-limited, with no set limit on quantities to be purchased, and that can turn on a dime.

So CACHA supports a one-licence solution: one compulsory licence on patented medicine, regardless of quantity of medicine ordered or the number of eligible countries requesting the drug. Doing this will cost Canadian taxpayers nothing, beyond the international aid dollars we have already committed. And doing this will do nothing to reduce the profits of multinational pharmaceutical companies. There really is virtually no market for their patented drugs in developing countries, and without a market there is no real threat to their future or to the future of research and development in resource-rich settings like our own. In fact, CAMR royalties from otherwise non-existent markets would be paid to these patent holders.

This doesn't mean that these drugs that are produced in Canada that are destined for other markets would make their way back to Canada to be sold on the black market in resource-rich settings. We have enough processes in place in terms of the labelling and sanctions, and in fact if we look at our market and at that of our neighbours to the south, virtually all people with HIV and AIDS have access to drugs that are paid for through either private or public funding mechanisms. So enacting Bill C-393 will make the much-needed medicine more accessible and, through competition, also more affordable.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Kilby.

Now we'll move on to questions, starting with Mr. McTeague and the Liberal Party for seven minutes,.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Chair.

Witnesses, thank you for being here and for being very thorough in your presentation.

I had a question at the outset, because I was given a figure, and I'm not sure it's correct. For the daily mortality rate in Africa as a result of AIDS, indirectly or directly, does either one of you have a figure?

[Richard Elliott]

The most recent figure I've seen--and it may be a year or so out of date--is approximately 8,000 deaths a day from AIDS.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

The bill before us, you readily admit, is not the perfect silver bullet or panacea, but you have said it's a step in the right and very important direction. You've both offered the one-licence solution.

I'm wondering why in all of this we didn't take into consideration the possibility of untangling the complex nature of these agreements between the patent holder and those seeking generic products to provide to Africa through compulsory licensing, and why the federal government wouldn't itself be the one administering, negotiating, and ensuring a streamlined process so that we could actually target the countries we wish to help. Admittedly we are not going to help all of them, but we could do a much better job at the one or two that we would pick. Has any thought been given by either one of you to the possibility of the federal government actually working with a brand-name company, and assigning a generic company then, if possible, to deploy the necessary medicines under a compulsory licensing regime?

[Richard Elliott]

In 2003-04, when the discussions were under way about drafting what is now CAMR, this issue did come up a few times in discussion. There was very little appetite to do that, it appeared, on the part of the federal government departments that were involved at the time, and I suspect that appetite is as little now as it was then, and perhaps for good reason. I think there is certainly a role for entities like CIDA to play, obviously in mobilizing funds and in drawing the attention of developing countries to the options that might be available to them to get lower-priced medicines, but this is fundamentally a mechanism that is about making the market conditions such that private actors—in this case generic drug companies—are going to see that it is worth their while because they will at least recoup their spending on this and make a small amount of profit, and about making it possible for developing countries to use this.

The idea is that the mechanism should be one that brings the purchaser and the producer together. I'm not sure you would necessarily improve the situation by sticking the government in the middle of that when you could actually just make that process work simply for the two parties instead of having the government as some sort of middleman.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I'm just curious. With regard to simplicity, we're talking about some fairly complex legal documents. I'm referring not only to the cumbersome nature of the legal requirements and hurdles that have been placed before a generic to be able to provide, such as in the case of Apotex in Rwanda, but also, of course, to the strategic problems of addressing multiple barriers to access in Africa. Governments are different from country to country. The ability to administer is also made more complex.

I'm just wondering, if we had one player, an impartial umpire who had an interest, as dedicated by Parliament.... On the road to good intentions, we all agree we should do more. The problem is that what we are pursuing has not worked, and we're not sure about CAMR being the silver bullet to overcoming some of these trial-and-error issues we have found ourselves in for which if it's not Canada it will be another nation.

Let me address something in the form of a question for both of you. It is going to be an important one, and I know my colleagues will ask this as well. As CAMR is currently written, there appear to be two prevalent concerns. There are obviously others, but one deals with the obligations and the possibility of trade sanctions under WTO. The second concern is about rushing into Africa medicines that may not be appropriately approved here in Canada. Could I have your comments on either of those, please?

[Richard Elliott]

On the first question, about compliance with WTO obligations, the proposals that are in Bill C-393 have been drafted with the expertise of people who know what the WTO law says, and very much taking that into consideration.

There is extensive discussion in our brief of this very point. It walks you through why it is that the provisions that are core to Bill C-393 are in fact compliant with the decision of the WTO General Council from August 30, 2003--which is the key instrument here--and with the underlying treaty, the agreement on trade-related aspects of intellectual property rights, TRIPS.

There are international legal experts who have been tapped to provide input in the drafting of this bill. I mentioned earlier that we convened a consultation of a number of legal experts earlier this year with the UN Development Program. We spent a day going through the provisions of Bill C-393, looking at whether these were compliant with the requirements of the WTO. The answer was pretty much yes.

There were one or two places--as you'll see in the report of that meeting, which is coming to you as soon as it's back from translation--where the experts said, “This is compliant with WTO. However, you could see that there might be some ambiguity here. So here is a recommendation about how you make a slight tweak to remove any question that this is compliant with WTO obligations.” That was the purpose of the consultation. We wanted to know if it was compliant with WTO, and if it's not, what we should do to address that. The answer was that it's compliant as is, but here are some things you can actually do to make it even better.

I think that will be useful for the committee's deliberations once you have it, and we'd certainly be happy to discuss the details there.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

The medicine's part of it, the accuracy, the....

[Richard Elliott]

Yes, the second question, yes.

There is, I think, a somewhat simplistic mischaracterization of what the bill would do on this question of ensuring the safety and quality of medicines. The first thing I should say is, as an advocate for treatment for people, I want people to get good quality medicines. I don't want people to get substandard medicines. That would defeat the entire purpose.

The bill as proposed would preserve Health Canada review of any drugs that are being exported as one option, one pathway to ensuring that the product that is being exported is of good quality and is safe. However, it adds other pathways to achieving that objective, including for example the World Health Organization's pre-qualification program, which is actually supported in part by Health Canada with technical assistance. It was set up by the WHO as a program specifically to provide assurances to countries that the manufacturers and the products they were getting have met quality standards. That's why it's there. Many developing countries--

[The Chair, Conservative, David Sweet]

I'm sorry, but the time is marching on, and again we're well over. Mr. Kilby, even though we're well over, did you want to comment on this?

[Dr. Don Kilby]

Just on the quality of the medications. As Richard has said, the bioequivalency of these drugs needs to be identical to what we have available to us here in Canada. The thing that we have when we're dealing with partners in Africa, now that we know that.... There's a great deal of trust in terms of the system that we presently have in place to ensure that quality, in comparison to the trust that there may be for the other drugs that are arriving to market today.

[The Chair, Conservative, David Sweet]

Thank you, Dr. Kilby.

It is now the Bloc Québécois' turn. Mr. Malo, the floor is yours for seven minutes.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

Thank you, Mr. Chair.

Good morning and thank you for being here with us for this first meeting with witnesses, with the exception of the officials who appeared before us last week.

Dr. Kilby, I understand from your testimony that, as of now, there are enough drugs for AIDS on the African market to meet the needs as expressed by your partners working in the field with the affected groups. But you are telling us that there could now be an access problem since the 2010 objective is to treat 5.2 million patients. That's what I understood from your testimony.

During our last meeting, we realized that India was an important, if not the most important, supplier of antiretroviral medications for African countries. Is it because India's production capacity is no longer sufficient to meet the demand that you feel problems could arise right now?

[Dr. Don Kilby]

That is correct. Up to now, 5.2 million people have started therapy. Our goal is to double that number so that people will be treated sooner. At the moment, people in Africa are not treated the same as people elsewhere. In Africa, they wait for people's immune system to be really compromised. We now understand that, if we wait for too long, even if we succeed in bringing down the person's viral load, the life expectancy will not be the same as if we had started earlier. So, to be fair, we would like people in developing countries to have access to treatment earlier.

That means that we would have to almost double the number of people being treated. But we have already started to see problems of access to the medication in Tanzania and Uganda, because suppliers are no longer able to provide the required quantities so that the medication is on the market on time.

[Luc Malo, Bloc, Verchères—Les Patriotes, QC]

When you talk about doubling the numbers, does that mean the total will be 5.2 million or 10.4 million?

[Dr. Don Kilby]

There will be 5.2 million people undergoing treatment by the end of 2010, but there should be close to 10 million.