Thank you, Madam Chair, and good morning, honourable members.
We want to thank you for providing Canada's generic pharmaceutical industry with the opportunity to contribute to your study of the domestic drug supply system.
As the chair said, I am Jim Keon, president of the Canadian Generic Pharmaceutical Association, or CGPA. Our member companies research, develop, manufacture, and market generic drugs in Canada and internationally.
I am joined today by Dr. Jeremy Desai, the president and chief operating officer of Apotex. Apotex is a privately held Canadian company based in Toronto. Dr. Desai provides the experience of Canada's largest pharmaceutical R and D investor, manufacturer, and employer. He personally has extensive experience in working with Canadian, U.S., and foreign regulatory agencies.
I'm also joined by Monsieur Michel Robidoux, president of Sandoz Canada, a company that develops, produces, markets, and distributes a wide range of generic products. They are headquartered in Canada, in Boucherville, Quebec. Sandoz is the second-largest producer of generic drugs in the world.
CGPA member companies take the responsibility of providing high-quality, lower-cost generic drugs to Canadian patients very seriously. Millions of Canadians rely on these products daily to maintain or improve their quality of life. Generic drugs are dispensed to fill 60% of all prescriptions in Canada, and they provide significant value to Canadians. Retail generic drug prices are internationally competitive. Today, three to four generic prescriptions in Canada can be filled for the price of one patented brand-name prescription.
The generic pharmaceutical industry is devoted to working with all stakeholders to minimize the current shortages and to mitigate factors that could contribute to future shortages. We are aware of the distress caused to patients, families, and clinicians by disruptions in the drug supply, particularly with respect to drugs identified as medically necessary.
Most of the pharmaceutical manufacturing capacity that exists in Canada is operated by generic drug companies. We have two of the largest Canadian manufacturers here with us today, Sandoz in Quebec and Apotex in Ontario. Canada is fortunate to be home to an internationally significant cluster of generic manufacturers, which contributes positively to the Canadian drug supply.
In addition to supplying the domestic market with high-quality pharmaceuticals, we export about half of our domestic production to more than 115 countries around the globe, with the United States forming the single largest market for our products.
The generic drug industry is a highly competitive, low-margin industry that operates in a highly regulated environment.
Before bringing a new generic drug to the Canadian market, a company must carefully weigh several business considerations. These include the cost of development, the cost of production and market prospects. It also needs to navigate Canada's complex and costly legal environment, which creates a great deal of business uncertainty for a generic manufacturer seeking to make a new generic product available to Canadians.
It takes several years to bring a new generic product to market. Once Health Canada has reviewed and approved a new generic drug as being safe, efficacious and bioequivalent to a reference brand name drug, it can be sold anywhere in Canada. All pharmaceutical manufacturers are subject to ongoing reporting requirements and inspections aimed at ensuring the product meets current and evolving regulatory standards in Canada and other countries in which a Canadian-made product is sold.
To be reimbursed under the provincial drug programs and obtain significant sales volumes, the generic drug must be listed on provincial drug benefit plans. The manufacturer must submit a separate application to each province and await a response. It can take up to one full year to have the new generic listed in all provinces.
The generic manufacturer negotiates with pharmacy customers and other purchasers to sell its products. For the hospital market, group purchasing organizations conduct a tendering system where pricing is the main consideration. This has led to a number of sole-source contracts in the hospital market.
The generic manufacturer typically distributes the medicine to pharmacy customers through a wholesaler, although companies also have some in-house direct distribution to pharmacy.
Despite the best efforts of all parties in the pharmaceutical supply chain, shortages of prescription medicines can and do occur in Canada and other countries. There are various reasons why a brand or generic manufacturer cannot temporarily supply a drug. The specific reasons may vary and can be complex.
The most common causes for drug shortages are: issues around the active ingredient quality or the availability of the active ingredient; manufacturing issues; the evolving regulatory environment and, in the view of our members, an increasingly inflexible approach to enforcement by the U.S. Food and Drug agency; and marketplace issues.
When shortages of prescription medicines occur in Canada, generic pharmaceutical manufacturers aggressively pursue remedies, including finding alternative sources of products. Canada's generic pharmaceutical manufacturers recognize the importance of providing transparent information to help patients, health care professionals, and provinces and territories prepare and deal with current and anticipated shortages of prescription medicines.
CGPA has been a leader in the activities of the multi-stakeholder group on drug shortages, which includes representatives of several organizations that will appear before this committee, including Rx&D and CAPDM, which are here today, as well as the Canadian Pharmacists Association and the Canadian Medical Association, which you will hear from later this week. Health Canada has also participated in that multi-stakeholder group.
The work of the multi-stakeholder group led to an interim solution for the reporting of current and anticipated drug shortages on public websites operated by the University of Saskatchewan's Saskatchewan Drug Information Services and Sainte-Justine Hospital in Montreal. CGPA member companies have been reporting to these websites. The information has also been available on our own CGPA website. The availability of these websites has been promoted to health care professionals.
Recently, CGPA and Rx&D have been working very closely to accelerate the development of a national bilingual reporting website for Canadian drug supply stakeholders. Our associations have each committed up to $100,000 to accelerate the development of this website. Earlier this week, the website www.drugshortages.ca went live. The French website is available at www.penuriesdemedicaments.ca.
We consider this an important milestone. We are now focused on continuing our communications efforts with the goal of providing robust, timely, and transparent information to all drug supply stakeholders.
Cooperation and joint action between the generic and brand-name industry is not particularly common in Canada or any other jurisdiction. The fact that we have set aside our differences and come together to combat drug shortages in Canada we believe demonstrates how critically important both sides of our industries view this issue and how committed we are to finding workable solutions.
While the reporting of backlogs and shortages to all drug supply stakeholders is important, reducing the potential for backlogs and shortages is a high priority for the generic pharmaceutical industry. To mitigate the potential for disruptions in our domestic drug supply, our member companies have invested more than $100 million over the next three years in new systems, personnel, equipment, and facilities. They have heavily allocated additional resources, both human and financial, to quality control and quality assurance operations to ensure continued compliance with the evolving regulatory environment. They have improved forecasting capability and prioritized production to better adapt to shifting market demand. They are working with Health Canada on an ongoing basis to prioritize product reviews and approvals based on shortages or potential shortages. They are implementing industry best practices guidelines for the prevention, notification, and management of drug shortages. A copy of the CGPA “Best Practices Guidelines for the Notification and Management of Drug Shortages” has been provided to committee members.
CGPA and its members remain committed to working with Health Canada and all our partners in the prescription drug supply chain to develop solutions to help mitigate the impact of prescription drug shortages in Canada.
Dr. Desai, Mr. Robidoux, and I would be pleased to answer any questions you may have. Thank you.