Evidence of meeting #15 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ceta.
4:35 p.m.
Conservative
The Chair Conservative Rob Merrifield
Very good. Thank you for your presentation.
I will now move to Mr. McCauley. The floor is yours.
4:35 p.m.
Gordon McCauley Chair, Board of Directors, LifeSciences British Columbia
Thanks very much. Thank you for the opportunity to share our views with the committee.
Welcome to sunny Vancouver. I want you to know you're breaking one of the rules: when you come to Vancouver on a day like today, you're not supposed to be in a room like this—
4:35 p.m.
Voices
Hear, hear!
4:35 p.m.
Chair, Board of Directors, LifeSciences British Columbia
—but bienvenue nonetheless.
My name's Gordon McCauley. I am the chair of LifeSciences BC. I've been an investor in this space for about 15 years. Over that period of time I've been directly involved in raising and deploying about $200 million of capital from major investors in Canada, the United States, and Europe. In addition, I've served as president and CEO of a company that took a promising compound that showed potential in animals, and over the course of almost eight years, $100 million, and 10 human clinical studies, all but one of which was effective, it ultimately failed.
I share all that with you simply to say that I've enjoyed some success in this industry, but I've also experienced some defeats as well. I understand the risks and the opportunities pretty well.
In addition to my commitment to LifeSciences BC, I serve on the board of a couple of other biotechnology companies: The Centre for Drug Research and Development, a national centre of excellence at UBC; BIOTECanada, our national organization; and until recently, I was the only Canadian on the board of the Biotechnology Industry Organization, in Washington, D.C.
I'm joined here by my colleague Paul Drohan, the president and CEO of LifeSciences BC. Paul joined us last year after a lengthy and successful career with Genzyme, and now its parent company, Sanofi. Paul was the senior executive responsible for their business in Canada, the United Kingdom, Ireland, Australia, and South Africa. He has a uniquely global perspective from the driver's seat of one of the original biotechnology companies.
We share all of this background simply to demonstrate that the two of us have fairly broad global backgrounds in this industry, including research, clinical trials, regulatory filings and approvals, in multiple jurisdictions. We join you today on behalf of roughly 200 members of LifeSciences BC, from the biotech, pharmaceutical, medical device, and electronic health care sectors in this province. Our members—companies, research institutes, and academia—contribute over $1 billion of GDP and are responsible for something like 17,000 jobs in this province.
Our members are globally competitive because they have to be. They operate in a fiercely global industry. The research in our public institutions here is equally globally competitive and recognized around the world as among the leaders in many fields, including HIV/AIDS, prostate, heart and lung, neurosciences, and cancer. Every day, in every corner of the world, someone lives longer, sees better, survives heart surgery, breathes more easily, among so many other things, directly as a result of the work of these researchers and these companies. The promise of the work being done today is of equal measure to the successes of the past. We have every reason to anticipate many, many more groundbreaking developments.
Before diving into CETA specifically, we would like to give you a sense of some of the unique features of our industry. Others have no doubt already told you about the $1 billion and 10 years it takes to typically get a new medication approved. These factors are certainly critical to any understanding of the challenges faced by our members, but we'd like to emphasize something else: this industry is highly, highly mobile. At the end of the day, our companies have only two assets that really matter: the people who come up with novel products and guide them through a difficult, lengthy, and expensive process to prove that they work; and the intellectual property that protects them against these ideas and this work from being stolen or copied by others.
I don't need to tell you that people and IP can be anywhere. Indeed, they will actively seek out the best environment from the options around the world. Of course, capital is the fuel that drives this business. Clearly, the only thing more mobile than people and intellectual property is capital.
Given all that context, I hope you'll appreciate why LifeSciences BC is so supportive of CETA. It is a groundbreaking agreement that is very important to the global competitiveness of our sector.
There are two points that we would like to emphasize, subjects we know you've dealt with in the past, patent term restoration and the right of appeal.
Hopefully I'm not boring you by covering them again. No doubt, others have covered these subjects as well.
Implementing patent term restoration in CETA so that companies can recover up to two years of the lost time on a patent as the result of lengthening the regulatory process is crucial. As you know, Canada is the only G-7 nation that does not provide any form of patent term restoration. In the U.S. and EU, patent term restoration is five and ten years respectively. Implementing a two-year system will not equal what we're competing with around the world, but it is definitely a step in the right direction. Our companies need a level playing field, or as close to level as possible, to compete around the world, and patent term restoration will help.
The second issue important for B.C.'s LifeSciences community is the right of appeal. This issue is really one of fairness. As you know, the companies that patent innovative products are not allowed to appeal court decisions when a patent is ruled invalid. An appeal process is currently available to challengers, but not to the company that created the patent. Clearly, candidly, the status quo is absurd and can be a bit of a joke in other jurisdictions. Any competitor, in any arena, wants to know that basic fairness is inherent in the system. The right of appeal process in CETA will provide essential fairness and balance in our legal system. Without question, there is much to be understood about the specific mechanisms of right of appeal and we encourage you to closely examine those mechanisms when they're available but also to implement right of appeal.
Before we conclude, let us cover two other quick comments. First, regulatory cooperation in biotechnology is absolutely welcome. The EU is significantly faster at reviewing and approving products without any trade-off in safety or cost. These timelines should be the standard and if we can't match them, perhaps we should think about EU approvals as a mechanism of approving Canadian products.
Along the same lines, the EU has had an orphan drug policy for almost 15 years and the U.S. for 30 years. The data are quite clear. There is no rational debate to suggest that a similar orphan drug policy in Canada would be anything but a win for patients, a win for drug developers, and a win for our health care system.
Second, temporary entry is an important component. If you ask any biotech CEO—probably anywhere in the world, but certainly in B.C. and Canada—what their biggest challenge is after money, the answer is attracting talent. The temporary provisions of CETA will facilitate the movement of talented individuals. We would suggest that beyond the inter-company transfers and professionals, life science researchers should be included. Ours is an ecosystem that requires ideas, innovation, money, but most of all, talented people.
While we look forward to the full details of CETA on behalf of the members of LifeSciences British Columbia, we endorse this agreement. We represent the best and the brightest innovators in the world, developing new products and services for the health care sector, products that are and will be sold in B.C. and Canada and exported around the world. CETA is an important element of keeping Canada and our companies competitive.
Thank you very much.
4:45 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
With that, we'll move to question and answer.
Mr. Davies, the floor is yours.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Van Keulen and Mr. McCauley, for being with us today.
Mr. McCauley, I know that Canada's patent linkage system is quite complicated. In CETA, there is a commitment by the Canadian government, as it changes our patent system, to also look at ending the process of dual litigation. I'm sure you're familiar with what that is, but of course, as part of giving additional rights to patent holders, like the right of appeal in the patent term restoration.... Presently, right now, a patent term holder can take a generic to the Federal Court, lose, and then initiate litigation in the superior courts of the province under patent legislation. That's what we understand—there's going to be a negotiation to end that.
Are you in favour of the ending of the dual litigation problem to bring more certainty to the industry?
4:45 p.m.
Chair, Board of Directors, LifeSciences British Columbia
I'll let my colleague, Paul Drohan, also respond to this.
I think the important thing is fairness in the process and I think having some level playing field and balance is critical. Until you see the real specifics of how that breaks down, it's really hard to give you a direct answer. I think...absolutely in favour of a competitive process that's level and balanced.
Paul, if you want to add to that....
February 3rd, 2014 / 4:45 p.m.
Paul Drohan President and Chief Executive Officer, LifeSciences British Columbia
I think duplicity...removing the immense burden that's on the federal courts is a good thing. The proof in the pudding is always in the eating, and it will be how that appeal process works. The first few times through it as a precedent will determine whether or not other companies want to go that route, or whether they're going to go to federal courts and bypass the appeal process in totality.
4:45 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
You talked about jobs, some 17,000 people employed in the industry. I congratulate you on that and thank you for those jobs. I imagine they're quite high-quality jobs. The government has been relying on a 2008 study that preceded CETA and that claimed CETA might create as many as 80,000 jobs in Canada.
If CETA were implemented, how many extra jobs would be created in British Columbia in your sector as a result?
4:50 p.m.
Chair, Board of Directors, LifeSciences British Columbia
There are probably two ways to answer that question. The first is that when people look to make an investment they look at all of the key economic drivers. One of the critical economic drivers that we are not competitive in today is IP, as we discussed. So absolutely, it is critical that be addressed.
4:50 p.m.
Chair, Board of Directors, LifeSciences British Columbia
I don't have a number to give you, but I can tell you something more important, which is that if you ask the question the other way around, ask the members of BIOTECanada nationally what proportion of them are looking at going elsewhere, what you hear is that one in five are looking at going elsewhere, because economic issues are challenging domestically.
I think you have to look at that question both ways.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
So it's too early to tell, I would say.
Would it be fair to say that you need more details on CETA before you can make that kind of analysis?
4:50 p.m.
Chair, Board of Directors, LifeSciences British Columbia
I think it's fair to say that more detail would clearly come up with a defendable number.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Mr. Van Keulen, I'm going to turn to you.
It's known that the European Union heavily subsidizes its agricultural sector, including dairy. Is that a concern to the dairy farmers in British Columbia?
4:50 p.m.
Board Member, British Columbia Dairy Association
Of course, yes.
We share the market nationally with all our other counterparts, and if they have unfettered access or increased access into this country, they're competing against us unfairly.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
You've described that CETA would allow an additional 18,500 tonnes of tariff-free cheese to come into the Canadian market. That's taken us from about 4% over quota to 8%.
I understand that one of the three pillars of supply management is import controls. Do you view the alteration of the 4% to 8% to be a violation of that pillar?
4:50 p.m.
Board Member, British Columbia Dairy Association
No, it's going to be, hopefully, a predictable import control. To say it's a violation of import control..... The violation is all these other holes that we have of all these other products that are coming in. CETA does provide us with a predictable amount of product coming into this country on the cheese alone. The point of my presentation was to say that we are in a negative balance in trade already because of a whole other range of products coming into this country that are not within the tariff rate quotas that CETA is providing.
I want to say that I'm not against trade, our farmers are not against trade. I just want to point out that we don't want to be the sacrificial lamb to enhance another industry. We are giving a tremendous amount of our industry to trade already. I just wanted to demonstrate that.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
This committee is going to be studying the TPP tomorrow. I've heard Mr. Yves Leduc testify at committee in Ottawa. One of the concerns that was raised was with TPP—as we'll study tomorrow—involving countries like Australia, New Zealand, and the United States, which have targeted Canada's supply management system for years, is that the additional 4% to 8% in CETA might be just getting the foot in the door and prying it open.
Is there any concern that future trade deals may make further incursions into the cheese and dairy industries in Canada?
4:50 p.m.
Board Member, British Columbia Dairy Association
Of course. We are very much aware of that. The point of this presentation is to make sure that this trade committee and the government know that if they're going to do the TPP....
I'm here tomorrow to speak on it too.
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Okay, we'll ask that important question.
I should have mentioned Wally Smith as well, from British Columbia. Wally is a great representative of the dairy industry across the country.
How much time do I have, Mr. Chairman?
4:50 p.m.
Conservative
4:50 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Do you have an estimate on the number of jobs that the dairy industry has here in British Columbia, Mr. Van Keulen, and what effect CETA may have on that job count?
4:50 p.m.
Board Member, British Columbia Dairy Association
I think the number was 36,000 direct and indirect jobs that are created from the industry. Any type of erosion of our market, whether it be through TRQs or whether it be through things sneaking under those TRQs, is going to have an effect on jobs.
The way our industry is going right now, we're probably stagnated. Business that is stagnant is going to try to find other efficiencies, so whether it is job loss or consolidation, there might be less. Consolidation is probably what's going to take place.