Health Committee on March 28th, 2007

[Dr. Brien Benoit]

All countries, except the United States, have price regulation systems, which are different from one country to the other. We are precisely studying these various systems right now in order to check whether there are components that could be applied here in Canada. The United States do not have any regulation, except for payees such as Medicare and Medicaid. These two organizations negotiate prices that may be somewhat lower than what the average consumer might pay at the drugstore.

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

But what about you? Is it not part of your role to make sure that this group of countries can still be used as a benchmark to compare with the sales prices here in Canada?

[Dr. Brien Benoit]

We are acting pursuant to the Patent Act and these countries have been selected for us. So this cannot be changed. If you ever decide to amend the Patent Act, you may then be able to change the list of countries.

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

Earlier, in your answers to my colleague, you said that it was written in the act that pharmaceuticals must report to you as to the percentage of research and development they are doing.

Does it happen that some companies do not comply with this provision of the act and do not provide you with any figures?

[Dr. Brien Benoit]

I must say that the answer is no because we have the necessary tools to require them to provide us all the information that we need. Some of them may sometimes be late and we must encourage them somewhat, but I believe that they all comply with the act.

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

Is the definition of research and development activities very restrictive, or is it rather wide ranging?

[Dr. Brien Benoit]

No, it is rather well defined. Promotion, for example free medicines given to doctors, is not included in research and development. So it is rather well defined.

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

Is it limited to fundamental research?

[Dr. Brien Benoit]

No, it covers clinical research as well.

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

Earlier, you told us in your introductory remarks that the number of public hearing requests has increased rather rapidly in the last year. Do you know why?

[Dr. Brien Benoit]

We suppose that it is because pharmaceutical companies do not have what we call blockbuster medicines that they can sell at high prices and so they are simply bringing minute changes to their existing medicines. They want to give some return to their shareholders. So they are sort of sending trial balloons, so to speak. There certainly was a climate change in the pharmaceutical industry. This may be encouraged by parent companies in the United States, but we do not know for sure.

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

Why, in your introductory remarks, did you see fit to indicate that this movement might not be repeated in future years, that it might have been limited to a specific period?

[Dr. Brien Benoit]

Because we are presently considering changes to our guidelines. I am not saying that we will do this, but if we decide to change our guidelines to allow a price premium, a slightly higher price for relatively minor innovations, this might perhaps calm things down. But we do not know yet, we are not there yet. We are holding public hearings. We have had five of them until now on the changes to our guidelines.

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

On this very point, are you able to tell us about a number of preliminary recommendations that might come out of these meetings?

[Dr. Brien Benoit]

Mr. Malo, I am not able to do that. This is a very complex situation and we are presently hearing not only from the pharmaceutical industry, but also from provincial governments, from the federal government and from people who utilize the drugs, patient groups, and so on.

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

Do you have a specific timetable?

[The Chair, Conservative, Rob Merrifield]

Thank you, Mr. Malo. Your time has gone.

Go ahead.

[Dr. Brien Benoit]

Let us say two years.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Fletcher.

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

Thank you, Mr. Chair.

My questions are in three areas. I'm wondering how regulatory changes have affected the PMPRB. On June 17, 2006, the government introduced some regulations dealing with data protection, increasing the time for data protection but also reducing the ability to evergreen. I wonder if that has affected your operation in any way.

I will expand on Ms. Brown's comments on the 10%. It is irritating that the 10% commitment is not being followed. I'd like you to discuss that a little more, expand on it, and share with us how we can better deal with that challenge.

Finally, why are generic drugs generally more expensive in Canada than patented drugs? Perhaps you could share some of the surprising results you alluded to. If generic drugs are more expensive, do the big pharmaceutical companies extend the sale of their drugs beyond the patent expiry date? They might as well.

[Dr. Brien Benoit]

If I can remember that multifaceted question, first of all, the regulation changes in June of last year do not affect us, really--not at all. It was an interesting thing, and there were pros and cons expressed by the industry and the stakeholders and so on.

With regard to the question about the R and D, the reason they're not investing more in Canada is very complex, and we don't have the answer for it. It may be the subject of some inquiry by an organization other than ours. We have no regulatory power with regard to research and development. We simply report, and we're reporting basically what the pharmaceutical industry tells us.

Finally, regarding the generics, when we started reporting on generics, we were surprised to see that Canada is actually higher than, let's say, the United States. So the prices of generic pharmaceuticals in Canada are quite a bit higher than those in the United States. With regard to patented medicine, as you've heard, we are below the international median, so we're doing well on patented medicines. On generics, however, we're not doing so well. When you dig down into the subject, you'll realize that in Canada there's very little competition in the generic pharmaceutical industry. Basically, 90% of sales are by two manufacturers, and I believe one of those does actually quite a bit more than the other, so there's no competition.

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

Were there other surprising results that came out of your studies?

[Dr. Brien Benoit]

Those are the main highlights. We are now, as is mentioned in our fourth report, which will soon come out, going to study what happens when the patent expires. Some medications are big sellers, and you would expect that when the patent expires, the generics would enter the market and run with it, but that's not always what happens. The reason for that isn't totally clear. It has something to do with profits.

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

Are you able to provide any suggestions on how to deal with the generic pricing?

[Dr. Brien Benoit]

Our mandate now is to report, and that's what we're doing. If you want to give us more work, we're going to need more money.