Bill C-378 (Historical)

An Act to amend the Food and Drugs Act and the Food and Drug Regulations (drug export restrictions)

This enactment places certain restrictions on the export of drugs described in Schedules D and F of the Food and Drugs Act.

Food and Drugs Act

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, today we are examining Bill C-378, which seeks to control the cross-border trade of prescription drugs and vaccines.

Bill C-378 could be an answer to concerns about reductions in inventories of drugs designated for Canadians. It also seeks to restrict bulk exports of drugs. Although there is no shortage at present, this bill would establish preventive measures to avoid such a situation. Regulating drug exports would prevent an unfortunate situation from arising.

Bill C-378 seeks to restrict drug exports within the framework of NAFTA. According to this agreement, it is possible to limit exports to prevent a shortage. In the event of a shortage, the federal government could prohibit bulk exports of drugs in order to retain a sufficient inventory in Canada to safeguard public safety. Hence, the bill would give effect to these provisions.

Earlier I was saying that this bill could allay concerns about the possibility of reductions in drug inventories. However, the Bloc Québécois does have to raise one question. Although there seems to be a consensus on this issue, there are nevertheless some points to consider that are of particular interest to me. First, is there a risk of meddling in Quebec's jurisdiction if more powers are given to the federal minister? Second, does the Minister of Health not already have the authority to act in the event of an emergency? Third, it is not really clear that the United States would allow bulk importing given the power of the pharmaceutical lobby and President Bush's opposition to such a measure. Fourth, along the same lines, could the government act quickly if the United States decided to allow bulk importing? One might think that, under NAFTA and the WTO, there are already measures to protect against bulk purchasing of drugs, for example.

All these questions are apparently on the table and the introduction of this bill is certainly interesting. Nonetheless, as far as passing this bill is concerned, we are not there yet. In my opinion, we need more time since this evening's debate is the first one this House has held on this situation. We know that some sectors, including the Canadian Pharmacists Association, are worried about prescription drug inventories, which could be seriously jeopardized if such a situation prevailed. Apparently, if every American decided to buy drugs in Canada, after 38 days of making their purchases here, there would be no drug supplies left for Quebeckers and Canadians.

This is certainly a compelling matter and it requires us to look at this problem, which is currently not as much of an issue as it once was. We should perhaps qualify the dangerous situation we could find ourselves in. Why did the Americans want to buy their drugs here in Canada? Because the exchange rate was really good for the Americans. Since the value of the Canadian dollar has gone up, the Americans' appetite to buy in Canada is probably not as real today. That is my first observation.

The second observation is that there was a time when a lot of prescription drugs were being bought here in Canada. What is happening now is that the U.S. government implemented the medical insurance system called Medicare. This has slowed the Americans zeal to buy in Canada. Many people who were in a more vulnerable situation for purchasing drugs no longer do so here. The situation may not be as problematic as it was a year ago.

The volume of purchases has also declined. People came here to buy prescription drugs and they bought them through Internet pharmacies, which were a serious problem for some pharmacies that lost their pharmacists. Working for Internet pharmacies appealed to a lot of pharmacists. Small pharmacies began to lose their professional resources to lucrative positions with Internet pharmacies.

The situation in Quebec is perhaps a little different. I am not saying that nobody in the pharmaceutical industry is concerned, but in Quebec, we have set up some protection, and we know that Ontario has done the same. Western provinces are the ones trying to come to terms with Internet pharmacies. The provinces could just adopt legislation, but it is not up to me to tell other provinces what to do. I would rather talk about what Quebec has done to protect itself from various possible situations.

As in many other areas, Quebec is way ahead in terms of the sale and monitoring of prescription drugs. It has measures to prevent the online sale of prescriptions drugs to American clients. Under Quebec's Pharmacy Act, a pharmacist can sell prescription drugs only to patients whose prescriptions were written by a person authorized under Quebec law or the laws of another Canadian province to prescribe the drug if that person practices in Quebec. That makes it harder to do.

Furthermore, the Code of Ethics of Physicians states that in order to give a prescription to a patient, a physician in Quebec must have assessed the patient. If an American wants to buy prescription drugs online or in person, he must see a Quebec physician. A Quebec physician must assess the patient, make a diagnosis, develop a treatment plan, provide information and obtain consent.

I am rather concerned about that. It is all well and fine to buy drugs on the Internet or through other means, but one must also consider the quality of the product. Responsibility for a product can hardly be ensured when there is no medical prescription and the patient was never seen by a doctor. Many Americans should think about that too, because we cannot tell who is responsible for product quality and for providing the right treatment to the right patient.

In Quebec, efforts have been made to oversee a process with potentially serious consequences, since it is often difficult to undo things where people's health is concerned.

Already, the Collège des médecins du Québec has struck physicians off the roll for having illegally sold drugs on the Internet to Americans they had never even met. That is not a common occurrence, but it has happened. Nor are practising physicians in Quebec allowed to countersign a prescription from another physician without complying with the same requirements as for the prescription. A Quebec physician who countersigns a prescription from an American physician risks being sued, not only in Quebec, but also in the United States. Clearly, Quebec has tried to provide the best framework possible for all these transactions which could have a harmful effect on the health of individuals.

In terms of online business, Quebec already has the necessary tools to protect pharmacies' supply and ensure that patients receive the appropriate medication for their condition and information on how to use it. Some control is needed, and this bill might motivate the provinces to take action to increase protection and improve control. Physicians who did not comply with this procedure would risk prosecution. Harsh penalties have been applied, and some operations have even been shut down. Some practitioners were required to restrict their professional activities for 18 months and even pay fines for illegally running a business that was not approved.

This bill requires that we take a serious look at the situation. Hon. members will see from our questions how the Bloc Québécois receives Bill C-378 for the benefit of the public.

[Steven Fletcher, Conservative, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I am pleased to speak to this private member's bill. This is a very serious issue and the government takes the issue of security of supply of prescription drugs and the protection of the health of Canadians very seriously.

When, in late October, the member for St. Paul's introduced the bill, she mentioned concerns about the effect of the then recent and potentially future U.S. initiatives aimed at facilitating cross-border drug sales to the United States. These two initiatives were restricted to individual purchases rather than wholesale or bulk shipments.

As I will outline further, we have not seen any impact from these initiatives. In fact, total sales to the United States have declined.

The member referred specifically to a U.S. measure to allow Americans visiting Canada to return with up to a 90 day supply of prescription drugs for their own use. In other words, this provision affected personal physical imports only, so-called foot traffic.

Although the measure became law on October 4, 2006, it essentially endorsed the then current U.S. administration practice regarding personal imports.

Members should know that the value of foot traffic purchases of prescription drugs in Canada has remained constant in recent years.

There was another U.S. development last fall, also in October, but not specifically referred to by the member at that time.

The U.S. Customs and Border Protection Agency ended its approximately one year practice of selectively seizing individual prescription drug purchases sent by mail from Internet pharmacies in Canada. While such personal mail order imports continue to contravene U.S. law, they have been tolerated, enabling the Internet pharmacy business in the first place.

As with the measures for foot traffic, we have not noticed any increase in sales associated with this U.S. Customs decision. In fact, the latest information from Health Canada shows that Internet pharmacy sales to the U.S. dropped by an additional 20% in the last quarter of 2006, resulting in total 2006 annual sales of $211 million.

The overall sales have dropped by 75% from their peak of $850 million in 2004. Why the decline? Several factors are at play. These include: the introduction of the U.S. medicare act part D, which, for the first time, provides drug benefit coverage for millions of previously uninsured or underinsured seniors; actions by manufacturers to restrict the supply of drugs sold to Canadian pharmacies involved in cross-border drug sales; the higher Canadian dollar; and, U.S. residents pursuing imports from other countries have also contributed.

When Bill C-378 was introduced last October, the government's assessment of the situation was that the U.S. initiatives with respect to foot traffic and mail order seizures did not pose a threat to the Canadian drug supply. This assessment has been proven valid. In the case of foot traffic, that is because sales predate Internet commerce and have existed for about 20 years. They have never posed a concern with respect to Canada's drug supply and the volume of such sales has been stable in recent years at an estimated $500 million.

The halting by U.S. customs of selective seizures of drug imports did not really change anything either as such personal imports have already been tolerated for a number of years anyway.

The most recent statistics bear this out. Foot traffic remains stable and Internet pharmacy sales dropped by 50% in 2006 and likely have dropped significantly more due to the sharp appreciation of the Canadian dollar since the more recent statistics.

Over the past several years, officials with Health Canada and the Department of Foreign Affairs and International Trade have continuously monitored the value of cross-border drug sales to the United States and related developments in that country, including the U.S. measures in October. Let me assure the House that they will continue to do so.

In the meantime, the Americans face ongoing challenges posed by the world's highest priced prescription drugs, explaining their continued preoccupation with finding way to make drugs more affordable. That is why the idea of importing lower priced drugs from Canada and other countries continues to be a political issue in the United States.

Federal legislators and state and municipal governments continue to see imports as part of the solution. Individual Americans, especially those without drug coverage, are also looking to other countries for relief from high drug prices.

At the federal level, in previous sittings of the U.S. Congress, a number of bills have been proposed to legalize drug imports, including bulk imports, from Canada. These legislative proposals were not able to gain a lot of support or traction, primarily due to the Republican majority in Congress and opposition by the U.S. administration. This was the case despite the fact that some bills were sponsored by Republicans.

However, I should point out that while some individual Republicans have supported and even sponsored drug import legislation, the official Republican Party position remains steadfast in opposing drug imports and in accepting high U.S. prices.

As the members in this place know, the U.S. legislative environment has been affected somewhat by the Democratic win in both houses of Congress last November. In this context, it is important to note that legalizing drug importations from Canada and other countries has reportedly been among the legislative priorities for some leading Democrats.

As I just noted, some Republicans have supported drug importation. In January of this year, a bipartisan group of U.S. Congress and Senate lawmakers introduced a bill that would allow importation from other countries. The pharmaceutical market access and drug safety act of 2007 would legalize both bulk or wholesale, as well as individual retail imports, including transactions via Internet pharmacies.

A democratically controlled Congress does suggest a greater potential for U.S. legalization of bulk imports. However, the overall view of Congress is that the prospects of enactment of legislation giving a clear green light to drug imports is dim at best.

To illustrate the point, let us look at developments in the last few months. In the U.S., opposition to the legalization of drug imports remains strong in many quarters. The enactment of legislation to legalize drug imports, without provisions for major impediments to such imports, is unlikely. This is especially the case given the Bush administration's opposition to drug importation.

There is potential for legislative horse-trading after such a controversial bill is introduced in the U.S. Congress. The U.S. Senators “endorsed” drug importation in early May, but included a provision--and this is very important--to disallow such imports unless the Secretary of Health and Human Services first certifies that they “pose no additional risk to the public's health and safety”, and that they will significantly reduce costs to consumers.

Proponents of importation have labelled this amendment as a poison pill, and with good reason. All observers agree, including the bill's lead sponsor, Senator Dorgan, that it has effectively neutralized the bill's drug importation provisions. This is because the actualization of those provisions would now require U.S. administration support but the president, by virtue of his past opposition to drug importation, is not expected to offer that support.

Even if the provisions were to be put into force, the administrative burden included in the bill, which is 140 pages long, is so onerous that its implementation would be significantly slowed. Its extensive administration and oversight regime includes requirements for inspections of exporting facilities and multiple procedural requirements of both exporters and importers. This suggests that there would be very slow uptake in the provisions.

I could go on but the bottom line--

[Dave Batters, Conservative, Palliser, SK]

Mr. Speaker, I listened to the member for St. Paul's with great interest.

First of all I would like to take this opportunity to commend her on this effort. I know she has put a lot of work into this private member's bill.

I was shocked to hear in her remarks just how quickly the Canadian drug supply could be depleted if we were to continue to allow bulk exports of pharmaceuticals to the United States. In particular, if the situation were to change in the United States and the Americans were to allow for bulk importation, our drug supply that we need for Canadian seniors and youth, people from coast to coast to coast, could be depleted in as little as 38 days by our huge neighbour, the elephant living to the south of us, the United States.

Bill C-378 is trying to be proactive and take measures to stop our supply from being depleted before it ever happens, to protect the Canadian drug supply.

If the government is not proactive and reacts, if legislation changes in the United States and allows for bulk importation, what tools does the government have at its disposal to react? How quickly could the government act and make those changes? We realize we would not have much time. We would have 38 days until our entire supply was depleted. What tools does the government have and how quickly could the government respond in a crisis situation like that?

[Carolyn Bennett, Liberal, St. Paul's, ON]

moved that Bill C-378, An Act to amend the Food and Drugs Act and the Food and Drug Regulations (drug export restrictions), be read the second time and referred to a committee.

Mr. Speaker, I am pleased to have the opportunity tonight to discuss with my colleagues from all parties Bill C-378, An Act to amend the Food and Drugs Act and the Food and Drug Regulations (drug export restrictions).

My bill is aimed at controlling the cross-border trade in prescription drugs and vaccines. The bill would amend the Food and Drugs Act to prohibit the export of drugs set out in schedules D and F to the Food and Drug Regulations, Vaccines and Prescription Drugs, except as permitted under the regulations.

The bill would make it an offence under the Food and Drugs Act to export prescription drugs in prohibited circumstances. By amending the Food and Drugs Act, the legislation will protect Canadians.

My bill is constructed to protect the Canadian pharmaceutical supply from being bulk exported south of the border. There is such a large price differential between American and Canadian pharmaceutical prices that there is great pressure on the U.S. at this time to import cheaper drugs from Canada.

With over 35 million members, AARP is the leading non-profit, non-partisan membership organization for people age 50 and over in the United States. It wields an enormous amount of power and is at this time launching a very major communication initiative.

However, during my meeting with the organization in Washington during the break week, it was clear that its real intention was not to import pills from Canada, but to import prices from Canada and to make Americans very angry that they were paying too much for brand name prescription drugs.

Let me put it plainly. Canada cannot become America's discount drug store. Canada needs to protect itself from dramatic expansion of importation by the U.S. of drugs intended for our patients. The prospect of the U.S. legalizing large scale purchases from our domestic supply is real.

The threat to Canada's drug supply increased on January 10, after some U.S. politicians stepped up their efforts to facilitate bulk imports of prescription drugs from Canada with the introduction of the pharmaceutical market access and drug safety act of 2007. The legislation was introduced by Senators Dorgan and Snowe and Representatives Emanuel and Emerson, who are co-sponsoring the companion house legislation.

The legislation, which has the backing of key U.S. Democrats and Republicans, would allow individuals to directly order medications from outside the U.S. It would also allow U.S. licensed pharmacists and wholesalers to import FDA approved medications from a number of countries, including Canada.

In May senators both approved the measure and then voted to require U.S. health authorities to certify drug imports were safe. Since the U.S. federal drug administration has already made it clear that it will not provide certification, the bill was dead on arrival. The House of Representatives is set to debate a similar measure soon, but few expect things to change.

However, Representative Emerson has stated that she is committed to finding a way to make this legislation happen. Because it is unlikely the legislation will get through the house and energy committee, we believe she is looking to attach drug importation to another bill. Furthermore, dozens of U.S. jurisdictions at state and local levels continue to introduce measures designed to help local citizens, government employees, retirees and others buy Canadian drugs.

Any of these measures pose an imminent and serious threat to the security and integrity of Canada's drug supply, and a genuine threat to the health of Canadians. It may have been good short-term politics, but it is terrible long term policy.

American seniors are rightfully outraged by the high prices of pharmaceuticals in their country, but outsourcing price controls is not a responsible approach.

In Canada we have addressed price control with the Patented Medicine Prices Review Board, which regulates drug prices to ensure that the prices of patent protected brand name drugs are not excessive. Canada has regulated drug prices for the past 15 years.

The United States does not have a similar control mechanism, and the problem is exacerbated by U.S. drug companies spending millions of dollars every year to defend their higher prices. Every year, U.S. drug companies spend hundreds of millions of dollars on political influence, including lobbying, campaign donations and extensive ad campaigns to defend their high prices and fight against price control. The American drug industry employs over 600 lobbyists in Washington alone, more than one for every member of congress. This system drives U.S. prices even higher.

Another important difference between the Canadian and American system is the regulation of advertising.

Prescription drug advertising is one of the most controversial practices in the American pharmaceutical industry. During the first nine months of 2002, American pharmaceutical companies spent over $16 billion promoting their products to physicians and consumers. This kind of advertising drives prices up and is prohibited in nearly all other western countries.

In Canada, the Therapeutic Products Directorate strictly regulates prescription drug advertising.

I would also like to discuss how drug importation legislation represents a threat to American patients by allowing relinquishment of necessary community based medication monitoring and management at increasing risk from potential counterfeit drugs.

The incidence of counterfeit medicines is small but is growing in developed nations. The recent tragic death of a British Columbia resident, determined by a coroner to have been caused by counterfeit medicines in her possession, serves as a reminder that North America is not immune from the global phenomenon.

The counterfeiting of medicines is an issue that threatens the quality and integrity of Canada's drug supply, a problem that will be greatly exacerbated if U.S. drug importation legislation is passed into law without a clear and effective Canadian prohibition on bulk drug exportation.

I was pleased to see the public safety committee's report entitled “Counterfeit Goods in Canada — A Threat to Public Safety” which included this recommendation:

--the Government of Canada institute a campaign to raise awareness of counterfeit and pirated goods to make the public aware of the economic and social costs associated with this scourge, and emphasize the public health and safety hazards they represent. The campaign should also raise Canadians' awareness of the involvement of organized crime in the counterfeiting and piracy of goods.

Internationally the WHO is very concerned about counterfeit drugs. The WHO has struck the International Medical Products Anti-Counterfeiting Taskforce, tasked with increasing international collaboration to combat counterfeiting.

I would also like to point out that allowing bulk prescription drug imports would not significantly reduce U.S. prescription prices for very long. Even a recent University of Texas study concluded that based on the worst case scenario, Canada's stocks of prescription drugs would amount to about a 38 day supply for the United States, assuming all U.S. medications were Canadian sourced. Once U.S. demand depletes Canadian stocks, prices will almost certainly rise, narrowing or even possibly eliminating the difference between U.S. and Canadian pharmaceutical prices.

Some may argue that Canada should just increase manufacturing of pharmaceuticals to meet U.S. demand.

However, Canada's innovation-focused pharmaceutical industry develops, manufactures and distributes drugs designed to meet the needs of Canadian patients and the Canadian market. It bases its production on the size of the population and the incidence of the illness or condition to be treated.

Manufacturers produce sufficient prescription drugs to meet the expected national demand. Consequently, if one country imports its prescription drugs from another, it diminishes the exporting country's stock of drugs to meet the expected needs of patients in that country.

Labelling regulations also differ from country to country. As a result, prescription drugs produced for the American or South American markets cannot just be sent to Canada to meet an unexpected need.

Given the complexity of calculating annual estimates of the needs of Canadian patients, together with the detailed methods used by drug companies to manage their inventory and respond to patients' needs, it is unrealistic to think that products manufactured for Canada could meet American demand.

Cross-border trade is not only detrimental from a public policy perspective, it is also virtually impossible to do.

I would like to underline again that Canada cannot meet the prescription drug needs of approximately 280 million Americans without putting our own supply at risk.

Take for example the events of the fall of 2005. In November 2005 when Roche Canada took the unprecedented step of suspending sales of Tamiflu to the Canadian market, there were reports that Internet pharmacies were busily filling foreign prescriptions at a significant profit. One B.C. pharmacy alone was reportedly filling 400 orders a day from the U.S. That is a significant number when according to the Canadian Pharmacists Association only 4,000 Canadians received the drug that September. Another Internet pharmacy in Montreal issued news releases promoting to U.S. customers its Tamiflu stocks.

The Canadian Pharmacists Association reacted to the Tamiflu incident by saying that the government should have acted to protect the country's supply of the drug. Again, when supply gets siphoned off to the U.S., it is Canadians who come up short.

This situation is a perfect example of the types of scenarios Canadian patients will face if Canadian governments continue to allow drugs to be diverted to the U.S.

This is not an issue unique to North America. In April of this year the European Union passed resolution 31 stating:

Is concerned about the intention of the US Congress to authorise parallel imports of medicines from the EU Member States, that may create obstacles to the EU patients' supply and favour counterfeiting of medicines; asks the EU, therefore, to raise this issue at the forthcoming Summit--

I would also like to take the opportunity to commend my colleague, the member for Vancouver South who in 2005 when he was health minister anticipated this problem and put forward legislation, Bill C-28 to consensus in the House. Unfortunately, an election was called before the bill went forward.

Current Canadian policy is to use only reactive measures and seek to manage shortages once they have already occurred. This is not enough and it may well be too late.

The issue of bulk exports to other countries of medicines and vaccines destined to Canadians should be an issue of concern to all of us. It is of particular interest to the Canadian Pharmacists Association and the Ontario Pharmacists Association.

I believe the passage of Bill C-378 is essential to protect the supply and integrity of prescription drugs here in Canada and will send a strong message to our American colleagues of the futility of their short-sighted legislative initiative.

I urge all colleagues to support my private member's bill, Bill C-378.

[Carolyn Bennett, Liberal, St. Paul's, ON]

moved for leave to introduce Bill C-378, An Act to amend the Food and Drugs Act and the Food and Drug Regulations (drug export restrictions).

Mr. Speaker, I am pleased today to introduce the bill, an act to amend the Food and Drugs Act and the Food and Drug Regulations. In view of the recent law enacted by the U.S. Congress after October 4, President Bush has opened the border to prescription drugs which has caused the U.S. customs service to stop seizing these purchases entering America from Canada.

We believe this is a first step to the full legalization of prescription drug imports from Canada that could come by the end of this year. We need to protect ourselves from this dramatic expansion of importation. We need to ensure that we avoid becoming America's drug store and yet we believe that since coming to office the new Conservative government has taken no action and, in fact, the health minister has said that he is not worried and that he will only respond when drug shortages occur.

(Motions deemed adopted, bill read the first time and printed)