Finance Committee on Feb. 18th, 2016

[The Chair, Liberal, Wayne Easter]

Thank you very much, Nancy.

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

Mr. Eisenschmid, I really enjoyed your presentation. You know that we support a pharmacare program for the entire country, in negotiation with the provinces that will manage it. There are problems in Quebec, British Columbia and Ontario. There are different models.

What I took from your presentation is that you do not necessarily support a pan-Canadian public program. You are more in favour of a mix of public and private, like what we have now.

It wasn't clear from your presentation that, should Ottawa and the provinces make an agreement, if you would be in favour of a pan-Canadian organization that would negotiate bulk drug purchasing for all the provinces and their hospital medication distribution system.

A single-payer system....

[Perry Eisenschmid]

No, we haven't said we're against a universal pharmacare program. All we're saying is, to date, that has been the one model that has dominated the discussion, and some of the economic modelling around that has turned out to be inaccurate.

Our most recent study showed that it would actually lead to a transfer of costs from the private sector to the public sector of an additional $6.6 billion. We're not against it. It has its merits. What we're suggesting is this is Canadians' hard-earned taxpayer money and we want to make sure that governments invest it wisely. We're about to come out with some research on different models of pharmacare, because pharmacare means different things to different people. Moving forward, we want to make sure that government is making an informed decision about the right implementation path.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Let's take the pharmacare system without the single-payer component, an organization that can buy in bulk and negotiate the purchase of necessary drugs in one go. Including or excluding this component makes quite a difference.

People often talk about New Zealand, where there are some interesting things. There, an organization can negotiate the purchase of medication. The prime example in the studies I have read is Lipitor. In Canada, one year's worth of Lipitor for an individual costs $811. In New Zealand, the cost is $15. The generic version of Lipitor costs $140 in Canada, while brand name Lipitor costs $15 in New Zealand.

Under the current system in Canada, generic drugs cost 79% more than the average for the same drugs in all OECD countries. The cost of generic drugs in Canada is four times higher than the best prices in all OECD countries. As for brand name drugs, they cost 30% more here than in countries like the United Kingdom, which has a bulk drug purchasing system.

When we talk about a pharmacare program, a public system, we are also talking about a component that would help to reduce the costs through bulk purchasing by an organization negotiating on behalf of Canada's hospital and healthcare system.

Do you agree with those numbers? Do you think a system like that could be an advantage for individuals who need prescription medication?

[Perry Eisenschmid]

That's a very powerful description you gave, and there are a number of different elements that I need to respond to in that.

First, without question, the greater the volume of drugs any purchaser is acquiring, the lower the price will be, generally speaking.

You mentioned the New Zealand model in some of those price comparisons. We have another research study coming out in the next few weeks. Some of the problems with the PMPRB studies that do these global comparisons is the ex-factory price. It's not the end consumer price. We've commissioned a study that's looking at the actual cost to the payer, whether it's the government or the private sector or the patient him or herself. There are great disparities when you look at it from that perspective, compared to just the ex-factory price. That's point number one.

Point number two is that there are also qualitative issues when you go to a central sole-source supply as New Zealand has done. We've done a lot of comparisons there, and there are some unintended consequences. For example, we know that to get innovative medicines approved by their purchasing plan, the time frame is about twice as long as it is in many other countries. People who are relying on critical new medications are seeing undue delays. We see significantly fewer drugs being listed by New Zealand than in other countries.

Again, there are advantages to single sourcing or at least to volume purchasing, but there are some unintended consequences that people need to consider before they commit to that kind of model. We are about to release some research to help inform that opinion.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair, and thank you to all of you for presenting to us today.

Perry, a lot of the testimony we've heard over the last couple of days has mentioned a national pharmacare program. What percentage of the population doesn't have drug coverage through their private employer?

[Perry Eisenschmid]

From all the research I've seen, about 10% of the population is not taking essential medications for cost reasons, so about 10% of the population is affected by that.

[Raj Grewal, Liberal, Brampton East, ON]

What's the cost to the government to cover that 10%, hypothetically, let's say?

[Perry Eisenschmid]

Again, our research that is coming out will look at a catastrophic coverage model, which will look at that gap. We don't have that research yet, but that information will be coming out in the next four weeks or so.

[Raj Grewal, Liberal, Brampton East, ON]

If you can send that to the entire committee, that would be greatly appreciated.

[Perry Eisenschmid]

Definitely, we'd love to do that.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, sir, and thank you for your submission.

Denise, I couldn't agree with you more on the importance of post-secondary education. As a recent grad myself, I know what education has done for me and I'm here because I had an opportunity to receive post-secondary education.

A lot of my younger cousins are now not going on to university but to colleges, and specifically the trades, but they're having a lot of issues getting apprenticeships. Our federal government has come out with this very ambitious infrastructure investment plan. What percentage of apprenticeships should be involved in each project that the government approves?

[Denise Amyot]

What percentage? I think no project should go ahead if it doesn't have apprenticeships. That would be my easiest answer for you.

To establish a ratio would not be fair because different parts of the country have different realities, so you would need to take this into account because it's very important.

One of the things we are suggesting is to have an incentive for employers to ensure that they both take and encourage the apprentice to finish their year three and year four. Very often they do not have their Red Seal because they have good pay after years one and two, and unfortunately they leave. That's part of our submission, to ensure that they will have an incentive to continue their studies. Then automatically if you have this extra benefit of having the infrastructure that is required to have apprentices, I think a lot of construction companies would certainly have an increased incentive to pursue.

[Raj Grewal, Liberal, Brampton East, ON]

I used to be a co-op student way back when at Bell. I know what co-op did for my resumé in getting my first full-time job as an analyst in the finance industry.

From your perspective, what can we do to encourage Fortune 500 companies to take on more co-op students, apart from the initial tax incentive we provide when hiring students?

[Denise Amyot]

We could have tax credits, maybe. That would be one way to increase it. Or for each student they take, they could have one who is sponsored, if you like, with payment for that.

Unfortunately, a number of youth do not have the chance to have internships or co-ops, because in some communities there's a lack of opportunity. That's why we're asking for some incentives for those companies, to make sure that we provide jobs like the one you had, which in fact helped you get a permanent job later on.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you very much.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Grewal.

We'll go to Mr. McColeman and Ms. O'Connell for four minutes each. Then we'll have one quick question from Mr. Liepert and Mr. MacKinnon in order to get everybody on.

Mr. McColeman.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Thank you, Chair.

Mr. Marshall, I have great empathy for the ups and downs of your industry. I was once in an industry that was either boom or bust, and that was the building industry. I know the bad times and I know the good times.

That said, how important is accelerated capital cost recovery to some of the companies that are doing mining?

[Brendan Marshall]

Thanks for the question.

The difference between a capital cost allowance and an accelerated capital cost allowance is that, with the latter, you can write off in three years what currently would take 14 years. If you're looking at development of a project in mining, where all of the costs are up front, keep in mind that companies have zero revenue stream relative to investment until they process and bring to market the first pound, ounce, or tonne of material that they've extracted from the ground. That means they're the most over-leveraged, from a cost investment standpoint, relative to revenue stream at the point of production.

If you look at how quickly it takes a company to recoup and become profitable after that investment, an accelerated capital cost allowance can accelerate and therefore improve project economics for projects moving forward.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Obviously that creates jobs, and it produces revenue for the government with the faster recovery of tax dollars once the project comes to fruition.

[Brendan Marshall]

That's right. Tax and royalty formulas operate based on profitability. When profits are high, taxes and royalties are higher. When profits are low, taxes and royalties are lower. When there are no profits, there are no royalties.

The more quickly a company can move into a more profitable point of production, the greater the return to the government on investment for credits like that.

[Phil McColeman, Conservative, Brantford—Brant, ON]

Thank you.

Ms. Amyot, having been involved in university and secondary education in a deep way, as a governor of Wilfrid Laurier University and in building a new university in my community—and a background of apprenticeship, which was brought up by my colleague across the way—this is a provincial jurisdiction. I wonder, through you, whether your organization would be willing to advocate to this new government....

They're continually talking about how they're somehow building new relationships with their provincial partners in various ways. I'm just seeing an opportunity here, and I'm asking if your organization would be willing to go to, say, the Province of Ontario and ask them to reduce the ratio of apprentices to tradespeople to appropriate levels, as it has in other provinces.

In Ontario right now, under provincial regulation, many of the trades are 1:1. Why don't people get into apprenticeships? Why is it hard to get the training out on the job site? It's because the Province of Ontario requires one tradesperson for one apprentice. Many other provinces are 4:1, 5:1, 6:1.

Is that something you think would benefit people who are in the trades in terms of getting solid jobs in the future? Is that something your organization would be willing to back?

[Denise Amyot]

This is certainly something we would love to examine with the different associations that look after those matters.

I know that the Atlantic provinces, for example, have put in place very interesting initiatives to have better harmonization of the trades. They're starting with a certain number of specific trades, and then, by a certain date, the four Atlantic provinces will have the same prerequisites.

I hope the wave will come from the Atlantic and in fact go west so that there is better harmonization.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Ms. O'Connell. You have four minutes.