Evidence of meeting #115 for Health in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was diseases.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Keith Fowke  Professor, Department of Medical Microbiology and Infectious Diseases, University of Manitoba, As an Individual
Salim Yusuf  Distinguished University Professor of Medicine, Population Health Research Institute, McMaster University and Hamilton Health Sciences, As an Individual
Marc LePage  President and Chief Executive Officer, Genome Canada
Aled Edwards  Chief Executive Officer, Structural Genomics Consortium
Raj Grewal  Brampton East, Lib.
Maxwell Morgan  Director, Policy and Legal Counsel, Structural Genomics Consortium
Cindy Bell  Executive Vice-President, Corporate Development, Genome Canada
Clerk of the Committee  Ms. Marie-Hélène Sauvé

10:10 a.m.

Liberal

The Chair Liberal Bill Casey

Thanks very much.

We're going to Mr. Grewal.

10:10 a.m.

Raj Grewal Brampton East, Lib.

Thank you, Chair, and thank you to the witnesses for being here.

My background is that of a corporate mergers and acquisitions lawyer, Dr. Edwards. You gave your example of open science and how you started a company and your investors got a good return. You spoke about the importance of how these companies will be profitable but will not have extreme profits. How do you coordinate that with fiduciary duties to maximize the value of shareholder wealth? How is that a sustainable model?

It sounds really good, and I'm not disagreeing with you that it probably should be the model, but from a practical standpoint, how can that be implemented?

10:10 a.m.

Chief Executive Officer, Structural Genomics Consortium

Dr. Aled Edwards

You're too young to remember the days before this shareholder optimization stuff that Harvard Business School put out in the eighties, right? A company used to be described as the community, the employees, the company and the shareholders, all of equal value. With the shareholder value stuff, a lot of the other stuff has gone by the wayside.

Paul Newman's company, the one that makes the salad dressing—do you know it?—employs people, makes a profit and makes a good product. There are no shareholders. It all goes to the Paul Newman foundation. He's given away $560 million to the world. In that, you have the community impact of the company, and it makes a profit. It's just that the excess goes to the public good, akin to the new pharmaceutical businesses, where the excess would go to the affordability of the pricing.

It's completely achievable. It changes the way in which you value the company, and I think that's not a bad thing.

10:10 a.m.

Brampton East, Lib.

Raj Grewal

Yes. I mean, that's up for debate, but I think the reason it will be very difficult to get buy-in is the fact that the majority of people out there.... I hate to stereotype individuals, but my background not just on Bay Street, but even in Brampton East, which I represent, tells me that people are out there to make money. That's their number one goal.

At the same time, obviously, we want to live in a healthy and vibrant society. That's where I believe government's role is; from a public policy perspective, it's to come up with that balance. That balance is really difficult to achieve when it's a for-profit company. Are we now looking at not-for-profit corporations that are going to be able to do public good? What's the cost-benefit analysis of investing in them?

At the same time, what are your views on tax policy reform? Are there certain jurisdictions that get this right when it comes to giving tax incentives to large companies or pharmaceuticals or not-for-profit research organizations to benefit the public good when it comes to open science?

10:10 a.m.

Chief Executive Officer, Structural Genomics Consortium

Dr. Aled Edwards

I'll let my attorney take care of this one.

10:10 a.m.

Voices

Oh, oh!

10:10 a.m.

Maxwell Morgan Director, Policy and Legal Counsel, Structural Genomics Consortium

I'll give you a little background on M4K Pharma. Our company, as in the Newman foundation scenario, is wholly owned by a charity. You could conceive of scenarios in which you attract impact investors who are willing to balance returns with other socially minded objectives when they place an investment. This would all be dealt with in a shareholders agreement in which it's very clear that maximization of value is not the sole criterion by which performance is evaluated.

We're envisioning a division of labour between the development and clinical trials of the drug and the sales and marketing, which Dr. Edwards was talking about before. This new business model would, for lack of a better term, de-risk an asset to the point where it's commercially attractive at a lower price for an actual industry participant who is looking to maximize profits to take on. There would be a negotiation between the business development entity and the manufacturing-distribution entity around pricing. We would be handing over a fully de-risked asset to that company at that point, where we could say that there's a business case to be made for selling at that price because they haven't borne any of the research and development risk.

10:15 a.m.

Brampton East, Lib.

Raj Grewal

That's very interesting. Has that ever been implemented?

10:15 a.m.

Director, Policy and Legal Counsel, Structural Genomics Consortium

Maxwell Morgan

We're piloting the model right now. We have a lot of interest for doing it again in other places.

10:15 a.m.

Brampton East, Lib.

Raj Grewal

That makes a lot of sense, because the whole existing business model is that it's because of the research investment and costs to develop that the cost of the drugs on the flip side.... It means you have some financial analysts sitting there on Excel just figuring out the break-even price.

10:15 a.m.

Director, Policy and Legal Counsel, Structural Genomics Consortium

Maxwell Morgan

Exactly. We're decoupling the research and development costs from the marketing and distribution costs.

10:15 a.m.

Brampton East, Lib.

Raj Grewal

Just playing in hypothetical scenarios here, would there be a licensing agreement, or would there just be a handing over of the intellectual property, essentially?

10:15 a.m.

Director, Policy and Legal Counsel, Structural Genomics Consortium

Maxwell Morgan

There would be a licensing agreement. We would be licensing the regulatory data and the regulatory approval, if it went that late in the development process.

10:15 a.m.

Brampton East, Lib.

10:15 a.m.

Director, Policy and Legal Counsel, Structural Genomics Consortium

Maxwell Morgan

That's a real, tangible asset. It gives you an entitlement to protection from generic competition. In Canada, for example, we have innovative drug status for new chemical entities that come to market. That gives you eight years when you have sole market protection. That's a real, tangible asset that you can license. There would be a license agreement that would spell out things like access and affordability provisions. We'd be negotiating that on behalf of the contributors to this open science development process.

10:15 a.m.

Brampton East, Lib.

Raj Grewal

My last question is—

10:15 a.m.

Liberal

The Chair Liberal Bill Casey

No, your time's up. Sorry.

10:15 a.m.

Brampton East, Lib.

Raj Grewal

It's a really good question. It's worth it.

10:15 a.m.

Liberal

The Chair Liberal Bill Casey

I'm sure it was a really good question, but we're going to go to Mr. Webber now.

10:15 a.m.

Conservative

Len Webber Conservative Calgary Confederation, AB

Thank you, Mr. Chair.

I'd like to thank the panel for your information.

I'm certainly not an emergency room doctor, or a pharmacist, or a corporate lawyer, or a self-described nerd. Actually, I'm very much not a nerd. I'm very much a layman here, so some of my questions might be pretty basic.

I'm just going back to 2015, when I was campaigning for the first time as a federal MP. I represent Calgary Confederation, where there are a lot of research scientists at the research park at the University of Calgary. I go to their doors and ask for their support, but they say, “No, I'm sorry. You muzzled the scientists. I can't support you guys.” I leave graciously and I'm thinking, “Okay, we obviously must muzzle these scientists, so something should be done about it, I guess.”

Has anything changed? I'm going to be door-knocking again in that particular area in about a week or so. Are there still muzzles on these scientists as we speak? Are they happier now than they were in 2015?

10:15 a.m.

Chief Executive Officer, Structural Genomics Consortium

Dr. Aled Edwards

I'll take this one.

You need to remember that other scientists, like the ones around the table here, work at universities, and we're “unmuzzleable”, as it were. However, regarding the scientists that work in the government labs, my understanding was that they were told to keep on message. You could see that there was a slight reason that it might have been a good thing, because you don't want randomness out there, but arguably it went too far and it became more about controlling the message.

In my view, transparency is always better. Even if there is a disclosure of something that you might not want to be disclosed, it's probably, in the fullness of time, in the public good to have complete transparency about what scientists do.

It is better now. It wasn't evil before, although you could see what was going on, but in our collective opinion, it went too far, because science advances through transparency and through critique. We think that should be the mainstay of how we support our scientists in the country.

10:15 a.m.

Conservative

Len Webber Conservative Calgary Confederation, AB

You say it is better now. What changes have been made? Has the government put policies in place to say that now you're allowed to take the muzzle off?

10:20 a.m.

Chief Executive Officer, Structural Genomics Consortium

Dr. Aled Edwards

We don't represent the sector that was muzzled, but my understanding is.... Does anyone on the line know more than I do about the policies internal to the ministry of the environment, etc.? No? We would have to ask the ministries.

The folks that I know in there are happier, so I presume they have been let off the leash.

Do you guys know?

10:20 a.m.

President and Chief Executive Officer, Genome Canada

Marc LePage

Just as a broad sweep, I think you're right.

The academic side is “unmuzzleable”, so it goes all over the place. Of course, government science works for organizations, as do people who work in big corporations. I think there was a time when there was a fair bit of pressure to line up with whatever the messaging of an organization was. There is a sense now that there are policies that allow people—at least for their scientific work—to speak more freely, or at least it's perceived that they can speak more freely.

10:20 a.m.

Conservative

Len Webber Conservative Calgary Confederation, AB

Okay.

When they speak more freely, then you get these private corporations that take advantage. By listening and then going out and developing research from that information, they are making excellent returns from it and selling it to foreign countries. They make good profits. What does the public purse get in return, from all the investment they put into it initially?