Health Committee on June 20th, 2006

[Nicole Demers, Bloc, Laval, QC]

Thank you, Mr. Chairman.

Good morning, Mr. Skinner.

I was surprised to hear you talk about the difference between generic drug prices and research drug prices in the United States and in Canada. I don't quite understand.

Pharmaceutical companies engaged in research manufacture drugs that cost less in Canada than they do in the United States, whereas generic drugs, which only require companies to conduct bioequivalence tests, are far more expensive in Canada than in the United States, 78% more expensive in fact. I have a hard time understanding why that is so.

In your opinion, should minimum access standards be brought in for drugs required by clients served by the federal government?

As you yourself mentioned, Quebec has a very good drug insurance program in place.

Certain drugs are known to be truly beneficial in the treatment of certain conditions. For instance, Lantus, which is available in Ontario and Quebec and covered under private insurance schemes, is beneficial in the treatment of juvenile diabetes and type 2 diabetes. Why is it that certain drugs like Lantus are not available in all provinces under similar programs? As you noted, some drugs may be more expensive, but at the same time, they may be more effective. I just don't understand. Can you explain this to me?

[Brett Skinner]

The research indicates, for instance, that of all the silos in health spending, drugs or pharmaceutical products have made the largest contribution to improving human health outcomes, in extending life expectancies, and so on.

Beyond drugs, the other parts of the medical system actually have not insignificant but smaller impacts on the outcome of population health statistics, like life expectancy, which are influenced by things like general vaccination programs, treatment of sanitary sewage, general levels of economic development, and so on. So drugs are very important and should not be discounted.

In fact, if you look at the history of health spending, at some point governments began to view doctors as part of a cost problem, and then, on the basis of research published by Barer and Stoddart, they capped the supply of doctors and created what everybody believes now is the doctor shortage. Hospitals were also looked at as a cost problem, so mergers were forced and hospital beds were cut. Now we've run into problems with waiting times.

Now drugs are the third evil empire of health care spending and we're trying to do the same thing with drugs--ration access. I think this is the wrong way to go.

I guess I'm backing up here, going in reverse, by answering your second question first.

But with regard to your first question on the price of drugs in Canada versus the United States or the price of drugs in Canada versus international cases, evidence and research produced by Canada's own Patented Medicine Prices Review Board as well as the United States Food and Drug Administration have both shown that Canadian prices for brand-name drugs are at the international median of prices for the very same drugs, but they are far below U.S. prices, so it's far more affordable in Canada than it is in the United States.

For generic drugs, the prices are much higher in Canada than they are in other international jurisdictions. In fact, they are much higher than the lowest prices in the world, which are found in the United States. If you were to adjust those prices on the basis of currency equivalency, you would still find that for the top 100 selling generic products in 2003--a sample of data I found for myself--the average price difference is 78% higher in Canada, and three-quarters of the drugs that are common to both countries are priced higher in Canada than in the United States.

That's a significant inflation in generic prices, a price that is being obtained far above what a free market would produce using the proxy of the United States for their far more competitive drug market. In my opinion, that's where we should be focusing in terms of drug prices.

[The Chair, Conservative, Rob Merrifield]

Barbara Mintzes, did you want to add?

[Dr. Barbara Mintzes]

I just wanted to respond a bit on the so-called rationing question. I think there's an assumption here that a new drug is necessarily going to be better than what existed before, and that certainly does not hold up to the evidence. If you look at large series of evaluations of new drugs, only a very small minority are actually breakthroughs that make a significant difference to health. The large majority are what are called “me-toos”, where you have a small change to a molecule—another triptan for migraine, another beta blocker for blood pressure, and so on. Those are the majority of drugs that we have.

I work as a drug evaluator, so I'm involved in a lot of comparisons between drugs, basically carrying out the reports on safety and effectiveness that provincial governments or the common drug review might use as a basis for their decisions. The question we always looked at was, is there evidence of an advantage in terms of safety or effectiveness, or both, for a newer drug compared with other drugs that exist? If there isn't, and if the newer drug is costlier, why would it be a rational way to use public tax revenues to pay more money for something that's more expensive but is no better? If it's better, yes. Or you have these restrictions where some people can use certain things as a second line.

The idea that you simply pay whatever the asking price is because it's newer and that doing so will give you a better health system is certainly not something that has stood up to scrutiny.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Fletcher.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Thank you, Mr. Chair.

I'd just like to comment on Mr. Skinner's discussion of bulk exports. The Conservative Party, when we were in opposition, brought forward a motion banning bulk exports, which was passed. Certainly, that position has not changed, so rest assured that will not be allowed to happen. If the United States does pass legislation in that regard—which I understand has been stalled—that would probably be viewed by many as public policy folly on their part, if they were looking to Canada to solve their drug issues.

It wasn't in your speaking points, but did you say that the Internet pharmacies in Canada are exporting generic drugs?

[Brett Skinner]

Yes, in fact, what the data show is that over time, generic drugs are taking up an increasing proportion of the volume of prescription drugs being sold through Internet pharmacies to the United States.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Why would that be the case? If generic drugs cost more here than in the United States, you would almost think that the Internet drug flow would be the other way.

[Brett Skinner]

Well, that's a very good question. It's a question I asked myself when I observed that too. I thought I should check the patent status of those drugs in both Canada and the United States. What I discovered was that 50% of the sales value of generic drugs going through the border to the United States was of products that were generically available here but still under active patent protection in the United States, with representative savings of sorts to consumers who were buying them. But this also represents an enormous rip-off of intellectual property that I think threatens our trading relationships.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

Are you aware that some data protection provisions were gazetted recently by the federal government?

[Brett Skinner]

I don't know if they would prevent the Internet pharmacies from profiting from the arbitrage of patent-protected drugs by selling generic versions of those drugs to U.S. consumers through Internet pharmacies, all of which is perfectly legal in Canada but very questionable on an international level.

[Steven Fletcher, Conservative, Charleswood—St. James—Assiniboia, MB]

I'm just going to shift gears here a little bit. We've seen that there is a rationale for monitoring and evaluating real-world drug safety and effectiveness, and we've seen that that is compelling. Determining the best way to proceed is more complex. There are a variety of stakeholders, government health care professionals, patients, pharmaceuticals, researchers, and private insurers, and so on, with each stakeholder having a different perspective, but there could be common ground, and an integrated and comprehensive pharmaceutical surveillance system could be built.

In your opinion, is there a common understanding of the problem, and based on your analysis, what would be the best way to proceed in bringing everyone together?

[Brett Skinner]

The only reason to require drug evaluation is as an exercise in central planning. There are other ways to structure insurance programs to make them sustainable, to protect patient preference, and to protect the prescribing rights of physicians; that way is simply to make patients responsible for some of the costs at the point of service, through a deductible, which is normal insurance design, or through utilization-based premiums, for instance. Even with a community-based premium--one that is flat--everybody pays the same rate. It is a much different way of structuring a drug program than tax-based redistribution of financing. The only reason we have to engage in the central planning exercises of drug evaluation is because of the nature of our drug programs.

Secondly, I would say that those jurisdictions that have engaged in restricting access to drugs have not shown great achievements in cost constraints. In fact, B.C. introduced quite massive deductibles, twice changing the deductible by a range of $200 and dramatically reducing eligibility for benefits under their program in the process. That is where they achieved their cost savings. In fact, some of the prices of the drugs they were dealing with changed over that time, and even in the United States, they became lower. So all of the supposed cost savings in the B.C. model are really illusory. In fact, we've seen the same evidence from other jurisdictions, such as New Zealand, which has tried similar approaches.

I think the third and most important point is that restricting access has an impact on patient health outcomes. Let's face it, we're not all genetically the same; we don't all need the same drug product. We are trusting our physicians as our health care agents, and in conjunction with my physician, I would like to have my right to make those decisions for myself protected.

I just think if we go at this from a different angle and we look at a proper way to structure our insurance programs, we'll end up with a better result.

[The Chair, Conservative, Rob Merrifield]

Thank you, Mr. Fletcher.

Ms. Priddy, you have five minutes.

[Penny Priddy, NDP, Surrey North, BC]

Thank you.

If I could, I'll ask for a short answer, at least for the first question, because I have a bit less time.

My first question--if you could each answer either with a yes or a no--is whether your work is funded by individual drug manufacturers or related companies or industries. Yes or no will be fine.

[Brett Skinner]

I'll answer the question first.

I don't think a yes or no answer in fact is adequate because of the implication of what you're saying.

[Penny Priddy, NDP, Surrey North, BC]

Well, since I have five minutes--

[Brett Skinner]

I will say that less than 5% of the funding of the Fraser Institute comes from pharmaceutical companies, and that's declining over time. I will say that we have had members of the pharmaceutical industry on our board of trustees, and that includes both generic and brand-name companies.

[Ken Fraser]

It's less than 1% for the Fraser Group.

[Dr. Barbara Mintzes]

None.

[Dr. Ingrid Sketris]

None.

[Penny Priddy, NDP, Surrey North, BC]

Thank you.

My next question would be to Ms. Mintzes.

You talked about Vioxx. I'm wondering if there's been any modelling done. I realize this must be very difficult to estimate, but on the cost of drugs from the U.S. direct-to-consumer advertising seen in Canada, I wonder whether there's been any modelling done on drug costs in Canada.

[Dr. Barbara Mintzes]

I haven't seen modelling on the effects of direct-to-consumer advertising in Canada. There certainly have been a number of studies in the U.S. The National Institute for Health Care Management, for instance, looked at annual increases in retail drug costs. They found that approximately half were due to the 50 drugs that were being advertised to the public--this was between 1999 and 2000--and the other half were due to the 10,000 additional other drugs. They certainly saw a large association between those two.

In the study I did in physicians' offices--in both a Canadian setting, in Vancouver, and in a U.S. setting, in Sacramento--I certainly saw an effect on volume of prescribing in individual consultations. If a person asked for a specific advertised drug, three-quarters of the time they walked out of that consultation with that specific prescription. They also almost always had at least one new prescribed product. Other patients, around one-third of the time, had a new prescription. So there certainly was an effect, in terms of volume.

I could go on about other research evidence.

Also, in terms of volume, say, of off-label prescribing of a drug, there was a study done in the U.S. that looked at off-label prescribing. It looked at whether physicians prescribed an antidepressant that was being heavily advertised to patients who came in with a normal life situation versus clinical depression--whether they had asked for the drug or not. If they had asked for the advertised brand, they were much more likely, with a normal life situation, to end up with a prescription for an antidepressant.

[Penny Priddy, NDP, Surrey North, BC]

Thank you very much.

Anybody who wishes to comment in the time we have left can do this one, but a couple of people have sort of indicated how they would like to go about this. But for those who have not, could you offer your thoughts on how the government should determine eligibility for catastrophic drug coverage?

[Brett Skinner]

I would be willing to answer that.

I think I've stated earlier that the way to do that is to identify those with catastrophic levels of drug expenses. Roy Romanow has offered $1,500 per person per year as a catastrophic level, and he identified 3% of the population with those expenses. We could look at a much smaller percentage of the population that has that level of expenditure and lacks the income or the insurance to pay for it on their own.

Surely, if you're a wealthy person, if you're a member of a wealthy family, if you're Conrad Black maybe, you don't need the federal government or the provincial governments to subsidize your drug purchases, even if they're at a catastrophic level. You have the means to pay for that yourself, so that's the way we should design our drug assistance from governments. We should focus on those who have catastrophic levels of expense and lack the income and the insurance to pay for it themselves.