Health Committee on Feb. 23rd, 2017

[The Chair, Liberal, Bill Casey]

Time's up. Thank you.

Mr. Kmiec, go ahead.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I'm not going to continue reading from the court decision, but I want to ask questions about this provincial inability versus provincial inaction. Both of you have referenced these two different things, and it sounds like our provincial cousins do try to manage the cost. They just do a bad job of it. I'm seeing some heads shaking.

There are other politicians doing something. They're trying to manage these costs. They're getting into agreements with companies. They're just not doing it very well, but they are acting in concert, so it's not that there's an inability; there's just slow action or poor action.

If government at the provincial level is not getting it done, why would government intervention at the federal level fix it? If government is getting it wrong, why would more government fix it? I always start from that point. I'm from Alberta, so I can't help but say that. More government doesn't seem to be the solution.

Professor Attaran, I think you said the price-fixing was by fiat. It just kind of happens. It's very nebulous. There's not a lot of information on how that goes. Wouldn't that then happen to the federal government? Whatever mechanism you use to move it to a federal sphere, jointly or co-operatively, wouldn't the federal government then experience those exact same problems? If you cannot pinpoint exactly where the issue is and you cannot define it, study it, look at it, and really understand it, then why would moving it to the federal sphere fix it?

[Prof. Amir Attaran]

Each level of government is susceptible to different sorts of pressure from different lobbies. What the federal government is susceptible to by way of pressure is very different from what an individual province might be susceptible to, and it varies province to province. Ontario has a rather big drug industry within its borders; Saskatchewan does not. Based on that, you might predict that Saskatchewan would be more willing or more capable of being aggressive on prices than Ontario before the premier's phone rang and threats were made to close a factory or that sort of thing.

I don't accept the premise of your question that simply shifting from one level of government to another replicates the problems in that other level of government. You would just create a different set of problems, but perhaps ones that are more amenable to being solved.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

What do you mean by “amenable to being solved”? Is it because the federal government, versus a smaller provincial government, would have greater powers to compel certain action?

A good example is Ontario. Ontario is not just another province; it is the biggest province in Canada, with far more ability to constrain companies within its jurisdiction. I can understand a small province, maybe in the Maritimes, not being able to. You know, you only have so many public servants who can do so many tasks. There's the scarcity of time, the scarcity of resources, so what would these problems be? You're saying they would be different and not similar. You just wouldn't shift the problem, but I just don't see how that would fix it.

[Prof. Amir Attaran]

I think it would change it. I'm certainly not meaning to say that if you removed many functions of medicine purchasing from provincial hands and placed them in federal hands, automatically the birds will sing, the sun will shine, and people who are ill will spring out of their beds. That's not my contention at all. Rather, my point of view is this. Each province is now doing a job of bargaining for price, and each one of them offers a certain market size to a supplier. The larger the market size, the more pressure they can bring to bear on the supplier for a volume discount. Obviously if you're buying 10 units of something or buying 100 units of something, you'll get a different price, and if you're buying more you'll get the better price.

If the provinces aggregated their needs and involved the federal government, without necessarily placing the federal government in charge but through a partnership that is contractual in nature, we would then have an aggregated national requirement that could be supplied in a single transaction—or maybe two or three, a small number. Plain economic theory says we're going to get a better deal doing that.

Thus far the provinces have not cohered in this way. They've tried to cohere, but they haven't done it well. I gave them a D as a grade. I would like to give them something better, but I think that will only come about with a greater federal role and perhaps some use of the spending power. As Professor Ryder says, where there's a carrot in terms of federal money, you'll get co-operation that wouldn't otherwise exist.

[The Chair, Liberal, Bill Casey]

Go ahead, Ms. Sidhu.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you, professors, for giving us testimony. It's very knowledgeable.

I know we've already discussed that generic drugs are very expensive and that Canadians pay the second-highest drug prices in the world. You also wrote an article in the Toronto Star entitled “Canada is Needlessly Bleeding Money on Generic Drugs”. In that piece, you point to Canada's high generic drug prices and you mention Australia and New Zealand. We just heard from the representative from New Zealand in this committee. Can you point out why you think these countries have an easier time getting in competition? Also, you are giving a D grade. How we can get to an A?

[Prof. Amir Attaran]

I think that's the subject of our entire hearing and your entire study. I think it's tremendously important to get to an A, and I trust this committee will find a way.

The brief answer to how New Zealand does a better job or Australia does a better job is that they purchase medicines following a negotiation, and our provinces in many cases do not. When prices are set, they're set by fiat, by some arbitrary percentage of the brand name price. You'll set a generic drug at 18% of the brand name price. Formerly in days past, that was 25% or 35% or 40%. The percentage keeps dropping, but it's always arbitrary. Eighteen per cent of the brand name price may be a great deal for one drug and it might be a blatant rip-off for another drug. Why would you do it this way? What Australia and New Zealand do is bargain, drug by drug.

[Sonia Sidhu, Liberal, Brampton South, ON]

Do you recommend some kind of agency to do that, one agency or province by province?

[Prof. Amir Attaran]

As I said earlier, I think if the different provincial buyers came together under a federal umbrella and aggregated their needs, then you would have the maximum economic leverage. You would have what economists call a monopsony situation to procure drugs at the best price following a negotiation with all the suppliers who could meet your needs.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you.

Mr. Ryder, you have written many articles and papers about Canadian federalism and have suggested an approach of greater provincial autonomy.

Can you speak to this view in light of the current discussion? How do you now classify the need for reformulated federalism and how would that impact a national pharmacare plan?

[Prof. Bruce Ryder]

How would a renewed approach to federalism do that?

[Sonia Sidhu, Liberal, Brampton South, ON]

Yes.

[Prof. Bruce Ryder]

I'm not sure I totally understand what kind of an approach you're imagining, but let me just speak to the direction in constitutional law about the nature of our federation, which I think is very well articulated by the Supreme Court of Canada. It is focused on an idea of co-operative federalism and balanced federalism that really leans towards negotiated solutions and contractual solutions and puts a high premium on intergovernmental negotiations.

An area like this, where there's both a strong demand for national leadership and the establishment of basic norms that express fundamental Canadian values as well as a long-standing tradition of provincial jurisdiction in relation to hospitals and the regulation of medical profession and the delivery of medical services, is a context that fits well with the conception. The only way that can really happen is through a co-operative approach of some kind, whether it's contractual or whether it's through interlocking legislation.

I think that's the dominant approach at the moment. Of course, there are many different approaches, and some would argue that it doesn't leave enough room for national leadership and that doctrines such as that the national concern branch of POGG need to be tested by Parliament. We don't really know what their boundaries are because we so rarely test them.

[The Chair, Liberal, Bill Casey]

Thank you very much. Time is up.

For our final round, we go to Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I have only three minutes, so I'm going to ask you all to be as brief as you can.

Under what constitutional head of power is the Canada Health Act passed?

[Prof. Bruce Ryder]

It's a valid exercise of the federal spending power, so it's not any single explicit power, because it's not mentioned anywhere in the Constitution, but it's a combination of the federal taxing power in class 3 of section 91 and the power to dispose of public property.

[Don Davies, NDP, Vancouver Kingsway, BC]

However, health is mentioned in the Constitution, and it is explicitly provincial.

[Prof. Bruce Ryder]

Not the word “health”, but hospitals, yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

It strikes me after listening to all this that the very easiest way to do this constitutionally is to just expand the Canada Health Act, which already provides for universal, free, publicly administered services.

The example that I think of is that if I cut my finger, I go to a doctor. I walk in. The doctor looks at me. He treats me by sewing up my finger. I walk out of there. I never see a bill. The bill gets paid. It's done.

If I went into the doctor and got diagnosed and the treatment was not stitches but a pill, he would write a prescription. I go to the pharmacy. I pass the prescription. I walk out of there with my pills. I never see the bill.

Can we not just expand the Canada Health Act on exactly the same constitutional basis, on exactly the same principles by simply expanding the medical services to a different kind of treatment, which is pharmaceutical treatment as opposed to surgical or some other intervention?

[Prof. Amir Attaran]

That's one way to do exactly what you said. The other way to achieve exactly the same outcome is through the series of contracts that I mentioned. Both are equally possible goals to get to where you want to go.

[Don Davies, NDP, Vancouver Kingsway, BC]

Finally, Dr. Greg Marchildon, who is at the University of Toronto, has commented on the two options. The first is the one I just mentioned, which is the traditional program financed by the federal government under a few national criteria and administered and financed for the remainder by the provinces and territorial governments.

The second option, he says:

is a national pharmacare program financed and administered entirely by the federal government. While jurisdiction in most areas of health care is principally provincial, pharmaceuticals are one of the only subjects in which the federal government has a secure constitutional foothold. Coverage would be provided to all Canadians by the federal government and would replace private and public coverage plans currently in place with a single universal plan.

He says the way to do that is to give provinces the right to opt out. Therefore, if they opted out, Bob's your uncle. Is that also a second possibility for the federal government or is that...?

[Prof. Bruce Ryder]

The difficulty with it is the suggestion that there's a secure constitutional footing. I'm not sure what Professor Marchildon was referring to. I read his testimony with interest and was wondering exactly what he meant by that. The existing secure constitutional footing is, of course, the Canada Health Act, the spending power; the criminal law power, which supports the Food and Drugs Act and regulation that's designed to ensure the safety of drugs and protect consumers from deception—those are valid criminal law purposes—and, of course, as I mentioned earlier, the federal patents power, which supports the Patent Act and the regulation of patented pharmaceutical products.

Those are the secure constitutional footings. What he's suggesting, it seems to me, goes beyond them. That's why we get into this debate that we've had today. Where's the home for that “beyond”? It's actually a new constitutional footing, and I don't think it's entirely secure, with all due respect for Professor Marchildon, because in my view it means, as I've suggested, testing the limits of the national concern branch of the peace, order and good government power.

[The Chair, Liberal, Bill Casey]

Your time's up.

[Prof. Amir Attaran]

Very quickly....