Health Committee on May 12th, 2009

[The Chair, Conservative, Joy Smith]

Good afternoon, ladies and gentlemen.

I'd like to welcome our guests today. We thank you very much for appearing at the committee today.

Before we start I wish to inform our honourable members that we have a parliamentary delegation in the room today from Pakistan. The delegation consists primarily of members of the National Assembly's Standing Committee on Finance, and is led by the Deputy Speaker of the National Assembly. The primary goal of their visit to Canada is to strengthen the role played in Pakistan by parliamentary committees and political party caucuses in the national budget-making process.

The delegates plan to use the knowledge and insights they have gained to make practical and realistic plans to strengthen the part that they and other parliamentary committees play in the budget process, particularly with respect to public consultations and engagements.

The delegates are primarily members of the Standing Committee on Finance in Pakistan's National Assembly. They are interested in all aspects of the budgetary process.

The meeting of our committee, the Standing Committee on Health, on this day, May 12, on the subject of the study of the main estimates for 2009-10, will give them yet another insight into the parliamentary budgetary process in Canada.

I would please ask the delegation to stand up so everyone can recognize you. I am very pleased and honoured on behalf of all members of the national health committee of Canada to welcome you to observe the meeting. Thank you.

I would invite you to observe part of our meeting. If you can't stay for the full two hours, we fully understand, but you're very welcome for any part you can stay for.

Today we have our witnesses, in terms of main estimates. I'm going to ask, with the indulgence of the committee, if we could stop at 5:15 because I have some committee business that has to do with travel and a couple of other issues.

Is it the will of the committee to suspend at 5:15?

[Some hon. members]

Agreed.

[The Chair, Conservative, Joy Smith]

Thank you.

Now we'll go to the witnesses. Pursuant to Standing Order 81(4), main estimates 2009-10, we will now go straight to the witnesses.

From the Hazardous Materials Information Review Commission, we have the president and chief executive officer, Sharon Watts. From Assisted Human Reproduction Canada, we have Elinor Wilson, the president and chief executive officer, and Margaret Strysio, the executive director of planning, communications, and outreach. Welcome.

From the Patented Medicine Prices Review Board, we have Brian Benoit, the chairperson, and Barbara Ouellet, the executive director. From the Canadian Institutes of Health Research, we have Karl Tibelius, the director of the targeted initiatives research portfolio, and James Roberge, the chief financial officer and the vice-president of resource planning and management.

We will start with our first witness, Sharon Watts, from the Hazardous Materials Information Review Commission. You have a ten-minute presentation. Once we hear all of the presentations, we'll go into Q and A.

[Sharon Watts, President and Chief Executive Officer, Hazardous Materials Information Review Commission]

Thank you very much, Madam Chair.

I would like to thank the committee for the opportunity to provide information to you again on my agency, the Hazardous Materials Information Review Commission, and to speak to the main estimates, of course, for 2009-10.

I was appointed president and CEO of the commission in August 2007, but I am by no means a stranger to the commission, as I was the vice-president for many years prior to my appointment.

I would like to give you just a brief overview of our role and mandate, and then some background to the main estimates of 2009-10. First, just by way of introduction, I would like to describe to you how the commission fits into Canada's overall system to protect the health and safety of workers and how we protect the industry's right to commercial assets.

In 1987, the Workplace Hazardous Materials Information System (WHMIS) was established through a consensus of industry, organized labour, and the federal, provincial, and territorial governments. The goal was an integrated and coordinated approach to ensuring that workers using hazardous materials had the information they needed to minimize risk of illness and injury.

The system ensures that appropriate information on the handling of hazardous materials is provided to workers through product labels—material safety data sheets—and that workers receive necessary education and training.

When WHMIS was established it was recognized that there was a need to balance the right of workers to have accurate and complete health and safety information with the right of industry to protect their commercial assets or trade secrets. The commission was set up as an integral part of this WHMIS system to provide that balance. Like WHMIS, the commission is a joint undertaking on behalf of labour, industry, and the federal, provincial, and territorial governments.

I'll give you a brief overview of our roles and responsibilities and our unique governance structure.

The role of our commission is to impartially render decisions on claims for exemption, hence the quasi-judicial nature of our agency. Full information on the chemical identity and concentration of all ingredients must be provided on a product, as well as protective measures workers need to take to prevent injury. The exception to full disclosure is when it would reveal a trade secret resulting in either an economic loss to the claimant or an economic gain to their competitors.

That is exactly why the Hazardous Materials Information Review Commission was created as an independent quasi-judicial body under the authority of the Hazardous Materials Information Review Act. Our mandate is to review economic documentation and health and safety information in all situations in which a hazardous material is a trade secret or purported trade secret.

The commission is unique because it is a single organization of government that serves all jurisdictions. The commission receives claims for trade secret protection, reviews health and safety documentation, issues compliance orders, and provides appeal mechanisms on behalf of federal, provincial, and territorial jurisdictions.

The commission's legislative mandate has been incorporated by reference into federal, provincial and territorial legislation. For example, the Commission is named in Saskatchewan legislation on workplace health and safety. The same is true of other provinces and territories.

I generally describe our activities as addressing three main areas. First, we conduct an economic analysis to determine whether the claimant's information provided to us is truly a trade secret based on regulatory criteria, and whether disclosure would have economic consequences. Second, we conduct a scientific analysis to ensure that the health and safety information being supplied to employers and workers about the product is accurate and complete. Third is administration of an independent appeals process. When a claimant or any affected party challenges a decision of the commission, we appoint an independent appeal board to hear that appeal.

The governance of our commission is unique, in the sense that our oversight is by a tripartite 18-member board representing all our stakeholders. There are two representatives of organized labour, two representing industry, one representing the employers who use those hazardous products in the workplace, and one representing the suppliers of those hazardous materials to the workplace. There is a representative from each province and territory across Canada. There is also a representative of the federal government, and that is the Ministry of Labour.

Under the Act, our Council of Governors is responsible for making recommendations to the Minister of Health about claims review procedures, appeal procedures, changes to the fee structure, and related matters. A critical part of our mandate is to strike a balance between the right of workers to know what is in the materials they deal with in the workplace and why they are hazardous, and industry's right to protect trade secrets.

I would like to talk about the commission's work and discuss the main estimates.

Fiscal year 2007-08 was a challenging one for the commission--one of change and transition. We worked very hard with all of our claimants and stakeholders to streamline our operations through regulatory, statutory, and administrative means. This culminated a ten-year renewal program that we had embarked upon in 1999. This was the ten-year project to amend our legislation that came before this committee last year and came into force on October 1, 2008.

However, with all these excellent initiatives, the capacity issue still plagues this commission. It's the single most chronic issue facing our commission, and it jeopardizes our ability to deliver on our statutory mandate. This capacity issue, coupled with a substantial increase in the volume and complexity of claims brought towards the commission, has resulted in a claims processing backlog of over two years.

In light of the scientific review this commission performs in order to review the material safety data sheets, the backlog has caused considerable delay in providing information to workers. The purpose of our work is not only to provide claimants with an exemption to disclosure, but also to review their MSDSs, correct them when necessary—95% of the time--and put them in the hands of workers in their workplaces.

When we look at the violation rates we continually report on in our annual reports, there is still 95% non-compliance. Generally, about 60% of those violations would be considered to be significant and of concern. We're talking about the presentation of toxicology information, whether it's respiratory issues or the absence of proper toxicology information, incorrectly describing the ingredients or the absence of an ingredient disclosure, and proper first aid measures. This backlog, in the context of that information, presented a risk to the commission that needed to be mitigated.

Through our business case we presented a case to the Treasury Board and to the Ministry of Health for an increase in resources to address our claims backlog. We presented a three-year backlog reduction plan. The first year was funded last year through a transfer from the Ministry of Health to this agency. The second and third years will be funded through the increase you will have seen in the main estimates 2009-10, representing about $2 million to this agency.

It's important to note that these funds are sunsetted. They will disappear in 2010-11, and at that point we will retain $800,000 to sustain our ability to continue to work without a backlog of claims. It's our plan that the resources we have received to date will address the elimination of the backlog. The workers who were hired to do that work will be let go at the end of the three-year period.

By September we will be halfway through our three-year backlog reduction plan. I'm very pleased to report that we're right on target for clearing up the backlog of claims.

During the coming fiscal year, we will be focusing on the important goal of eliminating that backlog, but we will also continue to work on information sharing and partnerships with other national and international jurisdictions in our role as a WHMIS centre of excellence for review, claims and assessment of material safety data sheets for compliance with WHMIS legislation.

In conclusion, the commission has built a relationship with its council of governors representing all of our stakeholders based on trust, respect, and a shared vision. Our approach is simple and straightforward. Canadian taxpayers' interests are best served by considering and balancing the needs of workers and industry alike. The solution is one that protects both of them.

[The Chair, Conservative, Joy Smith]

Thank you so much, Ms. Watts, for that very insightful presentation. We appreciate it.

We'll now go to Elinor Wilson, president and chief executive officer of Assisted Human Reproduction Canada.

[Dr. Elinor Wilson, President and Chief Executive Officer, Assisted Human Reproduction Canada]

Thank you, Madam Chair. I appreciate this opportunity to talk to the committee about Assisted Human Reproduction Canada's role and responsibilities.

Assisted Human Reproduction Canada is the newest member of the health portfolio. It is a regulatory agency that reports to Parliament through the Minister of Health. The agency administers the Assisted Human Reproduction Act and has a mandate to protect and promote the health, safety, dignity, and the rights of Canadians who use or are born of assisted human reproduction technologies. It also fosters the application of ethical principles in the use and development of these technologies.

Let me take a moment to distinguish between the role of the agency and that of Health Canada. Health Canada is responsible for developing policy related to assisted human reproduction and regulations under the Assisted Human Reproduction Act. The agency's role is to oversee the implementation of the act and the associated regulations. Most of the prohibitions under the act came into force in April 2004, and the consent-to-use provision with its applicable regulations came into force in December 2007.

As part of AHRC's mandate to promote and ensure compliance with the act, the agency has been encouraging and facilitating this role, based on a cooperative approach involving clinics, physicians, and other organizations. Once the other provisions of the act and regulations being developed by Health Canada come into force, the agency will be responsible for licensing, inspecting, and promoting compliance relating to activities controlled under the legislation.

I want to point out that the agency is fully engaged on other fronts. In addition to its compliance and regulatory hat, it wears other hats under the AHR act. In the two years since the agency became operational, much has been accomplished towards laying the groundwork and building the capacity that is vital for the successful implementation of the regulations. This means that as soon as the regulations are ready the agency will have in place all the mechanisms it will need in order to assume its full regulatory role. This entails doing the preparatory work to help our stakeholders understand the regulations and their effects.

Equally important is the work that we are doing to develop a national personal health information registry, as mandated by the act. This secure registry will contain prescribed health information on donors, persons who undergo AHR, and persons who are conceived by means of these procedures. The personal health information registry is necessary in order for AHRC to fulfill its mandate relating to the identification of health and safety risks and its obligation to provide information to Canadians.

We are also working on the development of a research agenda that will help inform policy. We are monitoring and evaluating developments in Canada and throughout the world, and we are consulting with interested individuals and organizations. Finally, we are providing information to the public and the professions on AHR, including risk factors associated with infertility. This is done through our website, in publications, and via a toll-free information line.

The agency is guided in its work by a board of directors. It is responsible for the overall management of the agency, including the provision of advice to the minister, approval of the agency's goals, operational policies and budget, and evaluation of the agency's performance.

Shortly after I took office in February 2007, we decided to make it a priority to meet with various people and organizations across the country who represented the interests of those who have a responsibility to comply with the provisions of the AHR act and its regulations, or who might be affected by the provisions of the act. Taking the time to hear what they had to say was invaluable to us. Health professionals, patient groups, and other partners contributed valuable information.

It has been 30 years since the birth of the world's first test-tube baby, and in those 30 years we have witnessed a scientific revolution in assisted human reproduction, which has challenged us on many levels. It has sparked fierce debates about the application of IVF and has led to innovative practices and procedures allowing Canadians to benefit from these technologies and related research.

I believe the agency has an important role to play in helping Canadians make informed choices, because the bottom line is that AHR is a public health challenge. It directly affects about one in eight Canadian couples struggling with infertility, as well as individuals who are dependent on non-conventional methods to build their families.

We have so much more to do. The agency remains committed to working closely with Canadians to build the strong and open relationship that allows us to work with them to protect the health, safety, rights, and dignity of those who turn to AHR to create the families they desire.

That concludes my presentation, Madam Chair. Once again, thank you very much for having given me the opportunity to talk to you about Assisted Human Reproduction Canada.

[The Chair, Conservative, Joy Smith]

I thank you for your comments, Ms. Wilson.

Now we'll go on to the Patented Medicine Prices Review Board. Mr. Benoit, the chairperson, will be presenting.

[Dr. Brien Benoit, Chairperson, Patented Medicine Prices Review Board]

Thank you, Madam Chair.

The other presenters have stated a bit of their mini-CVs, saying how low they've been with their various organizations. I should probably tell you that I've been with the PMPRB for four years as chair. I was appointed chair in the fall of 2005.

We are pleased to appear before this committee. We were here a few months ago, and the only thing that's really different is that the snow is gone. But undoubtedly you have some questions for us relating to these main estimates.

I am here today with our executive director, Barbara Ouellet. We would be happy to answer your questions following our opening statements.

Our board was established by Parliament in 1987 under the Patent Act as a quasi-judicial tribunal. We are part of the health portfolio, but we are independent in an operational way from the health portfolio and act at arm's length from the Minister of Health.

The PMPRB has a dual role. The first, and the one that has the highest profile, is to regulate the prices of all patent medicines sold in Canada. I wish to emphasize the word “patent medicine”, because there are 6,000 medicines sold in Canada, and we only regulate those that are under the Patent Act and currently under patent, which is approximately 20% of those. However, that 20% is a large chunk of the total expenditures for medicines in general.

Our other role is to report to Parliament annually on pharmaceutical trends of all drugs and on research and development spending.

The Board's budget for fiscal year 2009-10 is $11.4 million. We have 76 people on staff.

The evolving nature of the environment in which the board operates has led to a substantial increase in the workload, and consequently, our budget.

The evolving nature of the environment in which the board finds itself is now affecting its work and has led to a substantial increase in our workload and consequentially our budget. Several factors have contributed to this budgetary increase.

The first is decreased compliance, leading to more investigations and hearings. You will read from our annual report, which is due to be published shortly, that in 2004 the rate of compliance with our guidelines was around 95%, and now it's slightly less than 90%. So there's been a trending down towards decreased compliance. This, of course, has increased the number of investigations and to a lesser extent the number of hearings and generally has contributed to our increased workload.

We are also making a major revision of our excessive price guidelines. We hope to complete this exercise by June 2009 and implement it in January 2010. There is an evolution in the pharmaceutical environment in general. There are fewer breakthrough drugs being introduced in the Canadian market now, but there are many that have incremental innovations and that are better in certain relatively minor ways and deserve a premium. Our new guidelines hopefully will reflect this.

As an example of our increased workload—and I think you have these notes before you—in 2008 we had 125 investigations, which means drugs that are triggering our staff to look at their price, and in 2004 there were only 43. So by that percentage we have increased the number of investigations.

The excess revenues that have been paid out by the pharmaceutical manufacturers under voluntary compliance undertakings and board orders has increased significantly also. The figures you have in your notes are based on a fiscal year, but just to put it in context, prior to 2006 approximately $25 million was recovered in excess revenues. Since 2006, that amount has increased to approximately $50 million. I'm rounding out these figures for emphasis' sake here.

The number of notices of hearings has also increased. Between 1987 and 2005 we had eight, and in the few years since then that number has doubled.

The Board is about to complete its in-depth review of the excessive price guidelines and a broad public consultation process on the guidelines.

The guidelines explain, clearly and transparently, how patent medicine prices are reviewed, thus making the results of the review more predictable for patentees. In the past, our guidelines encouraged voluntary compliance by helping patentees set prices for their medicines that were not considered excessive. As I said before, compliance has diminished recently.

The issues raised go to the heart of price determination. For example, categorization no longer adequately recognizes the current type of innovation in the pharmaceutical environment. Prior to our current guidelines review we had three categories of medicines, based on their effectiveness and safety. Now, hopefully, we're going to introduce a fourth category with an associated price test that is going to generally recognize the incremental innovations in new products that are on the market. As the notes say here, the price tests are going to reflect these new four categories.

The new guidelines have been the subject of many consultations with our stakeholders, who include not only the pharmaceutical industry, but also the federal-provincial-territorial governments, the private payers, and patient care groups. These consultations are all done now, and we hope to publish the final product at the end of June.

For practical reasons and at the request of several stakeholders, rather than implement in the middle of a fiscal year we're going to put off the implementation until January 2010. During that six-month period, there will be a lot of outreach, educational sessions, and consultations with the stakeholders on how these new guidelines are going to apply.

The board continues to carry out various activities that affect Canadians' lives, whether through its mandate to regulate and report, specialized analyses for provincial and territorial ministers of health, or major projects, such as the recent review of our excessive price guidelines.

Basically, those in summary are my comments. We are continuing, hopefully committed to carrying out our responsibilities in a manner that is very transparent, effective, and accountable.

We'll be ready to answer your questions whenever you get there.

Thank you.

[The Chair, Conservative, Joy Smith]

Thank you very much.

For the Canadian Institutes of Health Research, Mr. Tibelius is going to be answering questions rather than giving a presentation.

What we are going to do now is go into our first round, of seven minutes for questions and answers. We're going to start with Ms. Murray.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you, Madam Chair.

Having just had the benefit of some comprehensive remarks from a number of agencies, I'm going to direct my questions to the agency we didn't hear from.

Mr. Tibelius, I understand that there are reductions in funding for CIHR. While the reduction is 0.5%, I presume this hasn't been adjusted for inflation. If inflation has been taken into account, perhaps you have the figure for what the actual real dollar reduction is.

My question is, which research programs and initiatives will be receiving fewer funds this year?

[James Roberge, Chief Financial Officer, Vice-President, Resource Planning and Management, Canadian Institutes of Health Research]

I'll be pleased to answer the question. Thank you.

This year, strategic review will result in a reduction to our reference levels of approximately $1.5 million. That is as a result of our no longer holding competitions under the open team grant program. Existing team grants will continue. Those recipients will continue to receive their funding according to our previous arrangements with them.

This means that over the next few years, as those grants fall off, the amount of reductions related to this will rise and reach a maturity at around $27.5 million. That is for the open team grant program.

In addition, the intellectual property mobilization program is being terminated. That program will result in no reductions in this estimates year; however, next year and in subsequent periods that program will be eliminated, with a result in savings of $2 million.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Was inflation adjusted in, or was this more like a 2.5% decrease if inflation and adjusted dollars are taken into account?

[James Roberge]

These are the nominal dollars, and they will continue to be. So over time, inflation would reduce and affect the amount of the reduction.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

I'm interested in the process the institute goes through to determine where to make the cuts. What kind of process is used? Who's involved? What kind of consultation happens? What criteria are you using to determine what to cut, what to eliminate? Is there an impact on any multi-year projects that are currently under way?

[James Roberge]

In answer to your question, the process of strategic review is determined by the Treasury Board. It's the same process for all entities that undergo strategic review. They identify the criteria, which are those you would normally see in an evaluation: Is the program relevant? Is it effective? Is it efficient? Are there alternatives? Is this part of the federal role? The questions are of that nature.

You're asked to review 100% of your spending, so you're required to write a Treasury Board submission for each program, answering those very questions and providing recommendations on which reductions you're proposing to ministers. Through that process, ministers make a decision on which of your proposals they will accept or reject.

In terms of consultation, again there were very strict instructions that there was to be no consultation with stakeholders. It was really an internal exercise. However, we did have an external advisor appointed by the minister to give us another perspective. Internally, of course, we consulted with staff, with our governing board as well.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Was there consultation with provincial and regional deliverers of the--

[James Roberge]

No, there was no consultation with any outsiders at all.

In terms of the impact on existing multi-year grants, the nature of our reductions is such that no existing grant holder is affected. If you are a current recipient of a program that's terminating, you will continue to receive your funding until that funding expires.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

I understand now that there was no consultation outside of the organization, but how did you create a sensitivity to issues and needs and programs in, say, the north compared with British Columbia, compared with Ontario? Did the people based here in Ottawa have information that would enable them to factor in regional issues?

[James Roberge]

One of the considerations for any proposed reduction is that you do an impact assessment. The impact assessment looked at, among other aspects, regional distributional effects.

Many of our programs are open, meaning that they're commonly available to all Canadians, so researchers from any province in any discipline can apply for assistance. It is really impossible to tell who might be affected by a reduction of that program, except by sort of using averages. For many of our programs, regional distribution was not really a major consideration because of the nature of the program itself.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Could you tell me, in terms of the CIHR's objective to work with other jurisdictions with partnered initiatives, what, if any, impacts there were on those kinds of partnerships? Further to that, do you have any concerns about Canada's reputation in terms of health research on the international stage, based on budget reductions?

[James Roberge]

As I mentioned earlier, by far the largest reduction was to the open team grant program. That program is not a partnered program by design. There is a corresponding program, the strategic team grant program, which has more of a partnered nature, so that program was preserved. Again, there really was not much of an impact in terms of partners. That was one of the things we looked at in terms of our choices. So there should be really no impact on partners.

[The Chair, Conservative, Joy Smith]

Thank you very much, Mr. Roberge.

We'll now go to Monsieur Malo.

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

Thank you very much, Madam Chair.

I would like to thank the witnesses for being here with us today.

Dr. Benoit, you are right in saying that we met not long ago. We met in February when we were discussing supplementary estimates. Allow me to take up where we left off back then.

In the graph on page 16 of the main estimates, the line representing funds allocated to the board you chair is very steep. As such, we have reason to wonder why there has been such a sharp increase.

You said that the 2008 annual report was on its way. It is unfortunate that we do not have it here now. According to what you said, patented medicine manufacturers have adopted a new approach to the Patent Act and now tend to be a little less cooperative. I would like to know exactly which provisions of the act enable you to tell us that today. When I look at the graph on page 10 of your 2007 report, the numbers for new patented drug products for human use tend to be relatively stable. I do not see significant fluctuations, but your budget has increased significantly.

When you appeared before us, I asked you whether a lot of the additional money went to pay for litigation. You told me that there was an SPA fund with money for hearings, and that the money was refundable.

Can you tell us whether money from the previous budget placed in the fund was returned to the government, or did you use it?

[Dr. Brien Benoit]

I cannot answer your technical question specifically, Mr. Malo, but I will ask Mrs. Ouellet to address it.

Right now, we are spending that money. We have eight hearings underway, one of which has been going on for 10 years. This is an unfortunate way to have to resolve certain issues. A hearing should never go on for 10 years, but there are all sorts of legal reasons for it.

Right now, eight hearings are active. When they are finished, any extra money will be returned.

As I said in my opening statement, there has been a slight decrease in compliance. Over the past five years, the rate of compliance has dropped from 95% to a little under 90%. The numbers will be available in a month. Our annual report must be submitted to the Minister of Health before being approved by Parliament. You will see that the rate of compliance is dropping.

We have returned significant amounts of excess revenue to the federal government. We sign up to $15 million worth of voluntary compliance undertakings. That money goes into the federal treasury and is redistributed to the provinces according to a rather complex formula.

Our hearings produce positive results with respect to compliance with our mandate.

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

You are saying that, in most of the cases in which you are involved, the Federal Court rules in your favour.