Health Committee on June 6th, 2016

[John Oliver, Liberal, Oakville, ON]

Absolutely, yes.

[Dr. Gregory Marchildon]

You're correct, in that, of course, there are a number of private plans. That said, it's important to keep in mind that the public sector, for various historical reasons, has more of the so-called private plans than even the private sector. What we're talking about is that on the public side, whether you're talking about the federal government or provincial governments, it's really a reallocation of a public budget.

When it comes to the private plans, as we know, those have been shrinking in proportion to the number of Canadian workers simply because of the fact that these plans tend to be concentrated among the larger companies and more unionized workforces. We know that the level of unionization has dropped and that more and more companies have shifted, and are dropping or are reducing, their benefits and their private plans because of their cost.

Of course, that does not deny the fact that there is going to be some cost that would be required. There's no easy way to deal with that except for the federal government. Let's say it were a largely federally financed plan, as opposed to a federal-provincial plan. It's a little bit easier for the federal government to do this in a sense. It may involve a very small type of tax hike in the short run, but that too would involve largely a reallocation on the federal government's part, because currently the Canada health transfer is set at 25% and slightly above all provincial health expenditures.

I don't want to get into detail about this, but the earlier social compact on that was it was supposed to be 50% of all provincial medicare expenditures. It went down to 25% because of the block transfer through the EPF in the 1970s.

[John Oliver, Liberal, Oakville, ON]

I have one more question I need to ask.

[Dr. Gregory Marchildon]

I will speed up.

The end result was that it was supposed to be 25% of medicare expenditures. Well, it's 25% of all provincial health care expenditures, so if the federal government were to take pharmacare out, it would be a very significant saving. The Canada health transfer or the amount distributed to the provinces and the territories could actually drop, and that money could then be used as part of start-up funding for national pharmacare.

[John Oliver, Liberal, Oakville, ON]

It would be wonderful to see those two alternatives fleshed out a bit more, and their pros and cons. If you had an opportunity, it would be great to receive that at the committee level.

My last question is for Innovative Medicines. You're doing great work supporting research across Canada and working with the Canadian Institutes of Health Research and other groups. I do want to thank you for that.

I heard your testimony. Right now, in your view, the public plans are inadequate in bringing innovative medicines forward and making them available on formularies, but you seem to be running up against a very strong Canadian.... We heard that something like 91% of Canadians want this kind of change to happen.

Is there no way you can see a public-private partnership in the formulary development that will ensure that you have a voice and a say in a national pharmacare model with a national formulary to be bringing your clients medicines faster? Do you not see that there could be a win for your clients in this model versus simply a lost advantage to Canadians?

[Brett Skinner, Executive Director, Health and Economic Policy, Innovative Medicines Canada]

My first response would be to ask what the likelihood would be that benefits would improve under a national public plan, when we have existing public plans that are not providing adequate access relative to the private sector in Canada or to other countries' public plans. That's our main concern.

[John Oliver, Liberal, Oakville, ON]

Do you see a role for yourself in making sure that doesn't happen? Do you see a way to engage with CADTH or whatever the groups are, rather than favouring the status quo, thinking that we'll never be able to change it?

[Brett Skinner]

Sure. I think our industry would take the position that it would be a willing partner at the table with any government decision to move forward in this area. Our main concern would be that we would move from a status quo position that would improve access for everybody and not require decreased access for any Canadian.

[The Chair, Liberal, Bill Casey]

That's it.

[John Oliver, Liberal, Oakville, ON]

Thank you.

Seven minutes goes too quickly.

[The Chair, Liberal, Bill Casey]

Ms. Harder.

[Rachael Thomas, Conservative, Lethbridge, AB]

All of my questions are for Innovative Medicines Canada. As I have seven question, I have one question per minute. You can help me pace this out.

My first question is for you, Mr. Monteith. The Canadian Generic Pharmaceutical Association says that the companies you represent are funding research at a historically low level. That is my understanding, yet Canadians are paying the second-highest cost of drugs out of any country in the world. I'm wondering if you can explain this for me today and/or clarify whether or not I understand this correctly.

[Glenn Monteith]

First of all, the way in which they measured or made the statement about research and development funding is on a very historical basis, going back to 1986 on the definition of what would be considered research and development costs. The evolution of drug development has changed dramatically. Back in the day, 30 years ago, a lot of that was really related to bricks-and-mortar equipment and technology. Now, it is heavily financed on clinical trials. In Canada, for example, we have over 9,000 clinical trials going on in Canada at any given time. If they are part of a multinational trial and that trial originates outside of Canada, none of those dollars are counted toward research and development in Canada. That grossly understates the spending.

Sorry, what was the second part of your question?

[Rachael Thomas, Conservative, Lethbridge, AB]

You answered it.

[Glenn Monteith]

Okay.

[Rachael Thomas, Conservative, Lethbridge, AB]

That was exactly it, that if it weren't true, could you help me clarify that? You have done that.

[Glenn Monteith]

Oh, yes, and on the statement that Canada has the second-highest prices, the PMPRB shows that this is actually not true. In fact, depending on how you want to measure it, for the comparator eight countries for the PMPRB—this is the government's own agency that watchdogs this—we are number three or number four, depending on what measure you want to use.

[Rachael Thomas, Conservative, Lethbridge, AB]

Mr. Monteith, I wonder if you can comment on the trends with regard to the cost of bringing new medications into Canada and putting them on the market.

[Glenn Monteith]

One of the major developments that have occurred over time—and it is both important and costly—is that the science is getting better. We are getting much better at understanding how diseases work, how illness conditions work, etc. However, that means that the folks whom we would be developing drugs to treat are more complicated and that we have to design our trials in ways that are very different from those in the past. That makes the clinical trials part of the drug discovery journey much more expensive than in the past.

Today, Tufts University in Massachusetts, which generally maintains the biggest database on the cost of R and D for pharmaceuticals, estimates that the average drug coming to market—this is worldwide cost, mind you—cost about $2.6 billion U.S. The vast majority of that is in clinical trials, because of the costs and sophistication of those trials. As we get more targeted in our populations, we have to do a lot more sophisticated trials to show the evidence that they work.

[Rachael Thomas, Conservative, Lethbridge, AB]

I have another question for you as an organization that represents the supply side of the industry. I am wondering if you can explain for us the different hurdles that are in place right now with regard to getting a product on a public formulary, compared to a private insurance plan, let's say. That is one question.

As well, I would like you to comment on the timelines for clearing those hurdles.

[Glenn Monteith]

It is fair to say that the timelines are getting longer, on average. I will quickly go through why.

The first step, prior to getting, or even seeking, public reimbursement—or, for that matter, private reimbursement—is that you have to go through the Health Canada process to get your market authorization to sell. Canada does a pretty good job on that process. Our HTA processes at CADTH, and INESSS in Quebec, are also quite well-established processes. There are a couple of factors, though. Health Canada, on average, tends to be slower to approve a drug than, say, the European Union and the FDA. There are some reasons for that we can talk about later. We also find that our members, on average, tend to file a little later, because we see them moving a little more slowly. You could find, for example, that an American or a European patient may have access to a drug that is available in the world much sooner than one in Canada, just because of the filing times, when they choose to file.

Once it comes through and gets a market authorization, it goes into CADTH or INESSS, depending on whether it is going for reimbursement in Quebec or the rest of Canada. That process runs fairly well. There was a bottleneck at some point in time. That determines, from an HTA or a health technology assessment point of view, the clinical goodness compared to other drug therapies, and establishes cost-effectiveness. A recommendation then goes out to the payers. What is now in place, through the pan-Canadian Pharmaceutical Alliance, is a negotiating table. The challenge of this table is that, when you go to negotiate, they have only so much capacity, and there has to be a minimum number of jurisdictions that agree to participate to make it worthwhile for both parties to do that.

Some of those go quite quickly. Some of those take very long. I will pass it on to Brett here, but I believe that, on average, that process—from time of filing at Health Canada to reimbursement—is now in the order of four years.

[Brett Skinner]

I don't have the data in front of me or committed to memory, but the time from the issuance of a notice of compliance that a drug is safe and effective and should be made available for sale in Canada, in other words approved by Health Canada, to final reimbursement in the public plan is 449 days on average.

[Glenn Monteith]

Some private plans do some processes, many do not. For example, in many of the union plans, it's written that if there's a notice of compliance, in other words if the drug is available for sale, and there is a price, it usually gets added within about 100 days.

[Rachael Thomas, Conservative, Lethbridge, AB]

Okay.

[The Chair, Liberal, Bill Casey]

Your time is almost up.