Health Committee on March 19th, 2013

[Dr. Steven Morgan]

I have actually published a couple of papers on innovation in the pharmaceutical sector over the past roughly half century. Although it is true that the total number of drugs being developed in the pharmaceutical sector has fallen quite considerably since the 1990s, if you look at the number of new drugs that are what you might consider novel in their therapeutic or pharmacological properties, that are close to something that is breakthrough medicine, the rates of those truly innovative or at least pioneering medicines have actually been fairly stable over time.

The cycles of drug development that we observed in the 1990s were largely a function of a business model focused on basically leveraging as well as possible both the clinical and the economic opportunities of treating risk factors for disease and other chronic treatment categories. Those economic and clinical opportunities began to wane, in essence, around the turn of the millennium, and we've seen a subsequent decline in that business model. We've seen the pharmaceutical industry lay off literally tens of thousands of people in both research and development and marketing—

[The Chair, Conservative, Joy Smith]

Dr. Morgan, I'm sorry. You're over time, so can you just wrap up your sentence?

[Dr. Steven Morgan]

Very quickly, I think changes in innovation are explainable in part just by different changes in scientific paradigms, and they're not necessarily a major problem for us.

[The Chair, Conservative, Joy Smith]

Thank you.

We'll now go to Ms. Block.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Madam Chair.

I would like to welcome all of our witnesses in every format they have joined us today. It was good to hear from you.

I am very interested in what you had to say, Dr. Gagnon. It sounded to me as though you were saying we are not getting the biggest bang for our buck when it comes to return on investment and how well the pharmaceutical industry is doing in comparison with the innovation that we may not be seeing and the need to transform therapeutic innovation.

We've heard often throughout this study that there are barriers to innovation. I am wondering if any of you can identify for me what you see as some of the barriers, whether they have to do with intellectual property—where the research is done and who owns the intellectual property—or whether they have to do with regulatory restrictions.

Would any one of you like to answer that question for me?

[The Chair, Conservative, Joy Smith]

Go ahead.

[Dr. Marc-André Gagnon]

In terms of getting bang for the buck, when it comes to innovation policy, I always think it is a bit weird that basically our industrial policy for developing the pharmaceutical sector is based on how much we will pay out of the health budget. For me, the health budget should be paying for health services and not for developing industrial sectors.

With regard to barriers to innovation, I did my post-doc at the Centre for Intellectual Property Policy and we worked a lot on the whole question of pharmaceutical patents, especially with biologics. We need to understand that patent protection can help innovation and help to attract R and D investment, but it can also be a barrier to therapeutic innovation. The thing is if you have new research based on a specific biomarker, and if in terms of the genes there are already 40 companies that own patents over the genes you need to do some research on in order to develop your product, basically there is no financial interest for you to develop this type of research.

So what do you do? Well, you stick to the drugs you already own and you try to work from those molecules and try to adapt them a little bit and find a new patent on those, rebrand it, and resell it.

It's not only that. Just in terms of basic research, I was talking with people at the University of Minnesota at one point and they were telling me it cost them $26,000 just to find out if there might be a possibility they were infringing on a patent. They were doing the research and they didn't know if there were patents. They didn't care, but they needed to spend $26,000 just to kick-start the research to know if they were infringing upon patents or not. So patents are becoming more a part of the problem rather than the solution to this sometimes.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Okay. Thank you.

Dr. Morgan.

[Dr. Steven Morgan]

I would very briefly say that if we want to actually secure investments in innovative activities in Canada in the health field, we need to start thinking very strategically about how we invest directly in innovative platforms and science. Think tanks on the left and right of the political spectrum in Canada have pointed out that we rely far too heavily on indirect incentives created by tax expenditure subsidies and by the presumable argument that if we pay more for medicines in Canada we'll get more R and D.

The fact is that if you really want to attract excellence in R and D, you have to invest in the capacity, and, in a sense, that will come, because building capacity will attract R and D. It does require that we be strategic. Canada has never been a major player in what you would call the “small molecule pharmaceutical sector”, the traditional drugs of the past, but we have been a major player in biotech and other parts of the emerging pharmaceutical paradigm. What Canada may need is a national strategy to leverage where we're already fairly good and to take us from being fairly good to excellent as a mechanism to attract private investment.

[The Chair, Conservative, Joy Smith]

There are a couple of seconds left. It's impossible to ask any questions in that time, so we'll go to Dr. Morin, please.

Thank you.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

Thank you, Madam Chair.

My questions are for Mr. Gagnon.

First of all, even though you didn't tailor your presentation specifically to us, I thought it was excellent, full of information that I look forward to absorbing later when I read it more closely. The more we talk, the more the same questions keep coming up, although we are delving deeper into the subject.

The fact is the pharmaceutical sector is very lucrative, as we all know. I will explain what I mean a bit more afterwards. You showed where things stand on slides 6 and 7. The industry is even more lucrative than any other area of activity. Slide 11 illustrates what is, to some extent, idleness on the part of companies as far as focusing on innovation goes. They prefer to fall back on molecules that require less effort, but promise just as much profit.

Furthermore, I'm glad my colleague Mr. Carrie mentioned an industry problem when he asked a question earlier. New molecules and new drugs are tested against placebos as opposed to existing molecules whose therapeutic properties have already been approved.

Slide 19 shows that public financial support is a bad investment. At the very least, we could make public investment in the industry more effective, both federally and provincially.

The conclusion I draw from all of that is there is too much marketing and too little innovation. You made four suggestions. We hope the government will take our study of technological innovation under consideration and adopt the right solutions. In the short term, what should we target first?

[Dr. Marc-André Gagnon]

I want to come back to the fact that new drugs are tested against placebos. It is important to understand that the scientific research that the pharmaceutical and medical sectors engage in is set up like a marketing campaign. Private research serves to produce private arguments that support the sale of a product. The issue is whether the product is better than the other guy's.

For example, a study conducted by Merck will show that its product is better than the other guy's. Otherwise, there's no way Merck would publish the study in medical journals. A competitor, Johnson & Johnson, will claim its product is better than Merck's. Who cares. What doctors want to know is which is the better drug to prescribe to a specific population with a specific problem.

That research doesn't happen in the private sector. Pharmaceutical companies aren't going to engage in that kind of research. Their sole aim is to research their own drugs to find out whether they are more effective than a placebo, plain and simple. Then, they more or less choose the data they want published, that which demonstrates the most beneficial properties.

I know this opens another door, but the important thing to consider is, where is this research being done. Where is the research that seeks to answer questions for the public good being done? Who is determining the best treatment option for the population suffering from condition X?

In the U.S., the National Institutes of Health produces this kind of research from time to time. Every time, the agency does extraordinary studies based on public clinical trials that can show whether prescription habits are problematic and whether the best drugs are not being prescribed. That's the kind of public research needed.

As long as we continue to dump public funding on a private sector that produces therapeutic innovations based on rather mediocre testing, nothing will change. We won't be able to equip ourselves with the techniques or the health technology assessment capacity needed to support the best possible innovation outcomes.

[Dany Morin, NDP, Chicoutimi—Le Fjord, QC]

I agree with you, but I also wonder whether the government shouldn't endeavour to limit the marketing side of things.

Before becoming a health professional myself, I was a medical secretary in an office. I have respect for pharmaceutical representatives, but I did observe certain things regularly. For example, to learn more about a company's drug, doctors would be offered the training on cruise ships. Ethically speaking, as a politician, I wouldn't be comfortable accepting that kind of reward-based training.

Should the federal government do something about improper marketing tactics like that?

[Dr. Marc-André Gagnon]

Something very simple could be done: address the culture of marketing-based medicine by favouring evidence-based medicine.

[The Chair, Conservative, Joy Smith]

I am so sorry. Our time is up.

[Dr. Marc-André Gagnon]

Right now, CADTH assesses health technologies. It could be given more resources to share its research findings with all doctors.

[The Chair, Conservative, Joy Smith]

Thank you so much. Thank you, Dr. Morin.

Mr. Brown.

[Patrick Brown, Conservative, Barrie, ON]

Thank you, Madam Chair, and thank you to the witnesses for your comments today.

I've asked a variety of panels on technological innovation about the federal regulation of medical devices. I want to get your feedback on that too. Obviously, a lot in health care is administered by the provinces. The one area in which we do have a direct role is the regulatory process. I know that we've heard comments on both sides.

I had one doctor, Dr. Rob Ballagh, say that it was extremely frustrating. I had another one, Dr. Emad Guirguis, who thought it was actually quite seamless, in his opinion, compared to the U.S.

Is this an area that we could improve on, and what type of improvements do you envision?

[Dr. Marc-André Gagnon]

In terms of medical devices in the pharmaceutical sector, we still have a lot of regulations. Sometimes there is maybe too much regarding some issues; sometimes not enough on other issues. As for medical devices, the problem is that it's still a bit of the far west out there in terms of the regulatory process, both in the U.S. and Canada. With regard to the health technology assessment, we have very little capacity to really determine the value of these new medical devices.

You have this whole sector where the type of marketing you have in the pharmaceutical sector is also evident among the manufacturers of medical devices. You don't have the regulations to ensure that it's not going adrift. For this not to go adrift...the regulations in the pharmaceutical sector are at least embedding the practices. With medical devices, we're seeing weird stuff going on.

Maybe Steve Morgan could add to this. Basically, from what we see from the FDA and the reports out there, the problem of evaluating value for money for that and the marketing practices that are going on as well.... My understanding is that it's very problematic. I know that we're trying to beef up our understanding.

[The Chair, Conservative, Joy Smith]

Perhaps we could get Dr. Morgan to comment. Would you like to—

[Dr. Michael Rachlis]

Yes, Madam Chair.

[The Chair, Conservative, Joy Smith]

And Dr. Rachlis, so both of them.

Could you give a succinct reply, Dr. Rachlis, so that we could get Dr. Morgan in as well, please?

[Dr. Michael Rachlis]

I think that Marc-André has characterized it well. Clearly, some organization, I would argue, at a national level, the federal level, should keep track of the drugs that Canadians are getting and properly link those to side effects that they're experiencing, because both marketing and surveillance is a huge problem.

I agree with Marc-André that it's even worse around medical devices. We very much need the federal government to be involved in ensuring that there are registries for joints, heart valves, and other products at the very least, to ensure that we're tracking what people have inside of them. That's the very least we can expect from the federal government.

[The Chair, Conservative, Joy Smith]

Dr. Morgan.

[Dr. Steven Morgan]

I don't think I'll add much to this other than to emphasize that yes, medical device regulation is a particular challenge for a number of reasons.

It would strike me that one of the questions to ask might actually be the extent to which Canada is collaborating with regulatory agencies abroad on device regulation. I know that our regulatory agencies have meetings of what they call the heads of agencies network.

It would seem to me that this would be the kind of topic they should be discussing at an international level, in part because the science undermining devices or medicines isn't just brought to bear to Canada, but is brought to all sorts of markets comparable to us. We basically struggle with very similar problems in different countries. We probably could learn what they might call regulatory innovations from other countries.