Health Committee on June 4th, 2021

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's okay.

On the public consultation—because that was going to be my next question—I have emails that I made public in an effort to share with the public what I found out.

I would like to know, do you think these public consultations were done impartially, now that we know about the emails they were sharing amongst themselves as follow-up to these meetings, and whether the PMPRB guidelines should go ahead July 1 or whether they should be directed to redo the public consultation in a fair and open manner?

[Kelly Grover]

We think the consultation should be redone in a fair manner. We've been public about that. We don't think that was done.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Chair, how much time do I have?

[The Chair, Liberal, Ron McKinnon]

You have 40 seconds.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

This will be my last question.

There are other patient organizations you've spoken to with regard to PMPRB. On a go-forward basis, do you feel the PMPRB will give your organization a fair shake, in light of the fact that they have this $56,000 communications project they're working on to discredit you and other patient advocacy groups?

[Kelly Grover]

I think the PMPRB is not set up to work with patient organizations, and they feel threatened by people when they speak up. When parents felt that there could be a barrier to their drug, they spoke up. I think you have to be prepared for that when you're forward-facing and you're changing drug policy that is life and death for people.

They were not prepared for that, and they felt it was very offensive.

I'm not condoning disparaging remarks. However, when people are feeling a sense of panic, they are going to talk to who they think is in the way of access to their drug, and that is what they did.

[The Chair, Liberal, Ron McKinnon]

Thank you, Mr. Kmiec.

We'll go now to Ms. Sidhu for six minutes.

[Sonia Sidhu, Liberal, Brampton South, ON]

Mr. Chair, I would like to thank all of our witnesses for being here today.

I will start my questions with Dr. Morgan.

Dr. Morgan, I know you have written about different models for pricing drugs and how they can better serve patients. Can you speak to how, with models based on fixed costs, a patient's ability to pay might apply in Canada? Is there room for such a system in the PMPRB's proposed model?

[Dr. Steven Morgan]

I'm not particularly clear on what you mean by models based on fixed costs. Actually, some of the other witnesses have mentioned....

I think everybody is opposed to excessive pricing of medicines, pricing that can't be defended on the basis of value for money in the health care system. For instance, pouring millions of dollars into treatment for a particular patient or a few patients is money that is not being used to meet other health care needs, including the other needs of the patients with the same disease.

Also, we know that we don't want to be providing excessive returns to investment in pharmaceuticals if there are other investments and innovations in health care that might deliver as much or more of a return to the health system.

There's a desire to stop excessive pricing, and there's also a desire to make sure that pricing reflects something approximating the value to health systems. We've heard, even today, that the best strategies are to set upper limits on what prices could reasonably be in a system that tries to reflect return on investment to R and D and value for money in health systems. Then, frankly, you need to let the buyers and sellers of medicines negotiate prices.

This is something that Canada lacks a strong capacity for, because we have a fragmented and uncoordinated system of private insurance in this country that lacks both the technical skills and moral authority to make value-for-money decisions in a health care system that is otherwise publicly financed.

Canada needs public agencies to do the negotiations of the final prices, those confidential net-of-rebate prices that make sense in terms of value for money. Increasingly, that also means engaging in risk-sharing agreements with manufacturers that address the real and significant uncertainty about whether products work as well in the real world as they are promised, based on often very small clinical trials.

Canada has the opportunity to build back capacity in the Canadian drug agency, which is currently in the process of being established at the federal level, and in partnership with the provinces and other national agencies and provincial agencies, concerning health technology and price negotiation.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you.

Affordability is an important concern for everyone. An issue that regularly comes up when I speak to my residents, Bramptonians, is how increasing drug costs and insurance premiums impact their budget. As we all know, the government is working to move forward to establish the fundamental elements of Canada's pharmacare.

To what degree do you believe that lower drug prices will result in an overall saving for Canadians, and on their insurance premiums, if the new guidelines are introduced?

[Dr. Steven Morgan]

The new PMPRB guidelines will affect prices to some degree in Canada, but it is important to recognize that if you bring down the list prices of medicines in Canada you may not have as dramatic an effect on the final net-of-rebate prices. For example, let's just pretend the list price of a medicine is $100 and the manufacturers and provincial drug plans have negotiated that a price of $70 is actually value for money, which is about right in terms of the average rebate that they negotiate on behalf of public health systems in Canada. Now, imagine that PMPRB regulations brings the list price down to $90, not $100, and the final price to the provinces is going to continue to be $70. The private insurance companies are going to save the $10 reduction in the list prices, but the net savings to Canadians in terms of the public programs is ultimately determined by price negotiation power.

The exception to that rule is with these very expensive drugs for drugs that treat very serious conditions. We've heard some examples with CF treatments, and there are other examples across the spectrum of needs of patients, where, because there are just one or two medicines that truly, effectively treat a given condition, the prices can be so high that there is no such thing as people paying cash or buying the medicine at the pharmacy. Pricing is entirely arrived at by negotiation between public plans and the buyers. It's in those negotiations where the PMPRB regulation has significant potential to prevent the systems that we have for our public health care from being abused in the sense of being held captive against really excessive price asks by manufacturers.

I'll just add—I know the chair has raised a yellow flag for the time allowed—that this is one of the reasons why countries around the world are paying close attention to what's happening here in Canada with these regulations. I think there are countries around the world.... I say this as a person who, for the last 15 years, has hosted an annual meeting of people responsible for pricing, regulation, and health technology assessment, in about a dozen high-income countries, and I know that the members of that group—known as the “Vancouver group” because I'm their host—have often reflected on these regulatory reforms that are under way in Canada. They see them as potentially valuable even in their systems.

[The Chair, Liberal, Ron McKinnon]

Thank you, Ms. Sidhu.

Mr. Thériault, you have the floor for six minutes.

[Luc Thériault, Bloc, Montcalm, QC]

Thank you, Mr. Chair.

When an organization responsible for promoting a reform and holding consultations plans to discredit the stakeholders and the people involved in the consultation, I think that things are starting badly and could end up worse. As I read all of the submissions, I see points of convergence that stand out, and that is what we should focus on today.

For those who are concerned about conflict of interest, there is an organization called Research Canada, which represents academic health science centres, universities, colleges, associations of research societies, charities, networks of centres of excellence, organizations in the biopharmaceutical sector, in short, a number of “institutional people”, if I can put it that way, who have the same concerns as you, Ms. Perrault.

The organization states: “In essence, the federal government is flying blind into the implementation of its PMPRB reforms...” That's on page 2 of the brief, for people who are going to ask me where I got it. It comes to the conclusion: “in the absence of an inclusive consultation that not just the guidelines..., but the PMPRB reforms as a whole, may prove unaffordable for our economy, our health system and our most vulnerable patients.”

What do you think?

[Anie Perrault]

I'm assuming that question is for me?

[Luc Thériault, Bloc, Montcalm, QC]

Yes, it is.

[Anie Perrault]

In our opinion, the current reform clearly seems to have been designed in a vacuum, whereas our ecosystem works horizontally. The ecosystem is a chain of innovation from research in academia to, hopefully, the commercialization of new drugs. Along that chain, there are many players, including us, the biotech companies, and the clinical and preclinical research organizations. We all work in an integrated way. If we affect one of the links in the chain and weaken it, the whole chain will be weakened.

Unfortunately, changes to regulations are being made in Ottawa in a vacuum, based solely on the price of drugs, when the life sciences ecosystem is much more than that. It is research, innovation, economic development, clinical research and the application of the innovation to patients. This is much broader and the broader consultations have not been held in Ottawa.

In Quebec, we are working with the Québec Life Sciences Strategy, which is the responsibility of two ministers: the Minister of Health and Social Services and the Minister of Economy and Innovation. This already shows the integration and an understanding of our ecosystem, where stakeholders work horizontally, not in isolation.

So that is very important. We are certainly disappointed to see the lack of consultation with all the partners in the reform, whether it is us, the biotech companies, the patient groups, the people in clinical research, and above all, the provinces, because they are the ones responsible for health care in this country.

Right now, the Quebec government is officially opposed to those changes to the PMPRB. The Ontario government has expressed reservations. The Alberta government has expressed reservations. You can't put a strategy like that in place without including those who are going to implement it, like the provinces.

[Luc Thériault, Bloc, Montcalm, QC]

Actually, we have the Quebec life sciences strategy, but no such strategy exists for all of Canada. As you were saying, because of that lack of strategic and holistic vision, the price of drugs is seen strictly as a cost rather than an input from a therapeutic perspective.

The PMPRB claims that it will have no impact on drug accessibility and claiming otherwise will fuel a pro-pharma campaign, if not a misinformation campaign.

What is your opinion about the matter?

[Anie Perrault]

I'll tell you what I think about it and I'm also going to ask Mr. Lévesque to comment and tell us what he would do, as the head of a company, if he had to make decisions about drugs that he was working on.

Market access is a key factor in the innovation chain. When you restrict that access, in Canada, unfortunately it's sure to have a negative impact on the ecosystem.

Here at home, we're already seeing less clinical research being done. Fewer innovative drugs have been launched around the globe and none of those drugs have been launched in Canada. I'm not talking about a company deciding to have its drugs approved in Canada, I'm talking about them deciding to not even launch them in Canada. So patients won't be able to benefit from them.

So there will certainly be repercussions. We're convinced that there will be negative repercussions. We haven't considered that entire chain.

As the CEO of a company working on drugs right now, perhaps Mr. Lévesque could answer this question.

[Paul Lévesque]

If a Canadian drug is half the price of its U.S. equivalent, we will not be able to launch it. I can tell you that right now.

I have to deal with situations like that. No one else in the company makes those kinds of decisions but me. If a drug sells for $100,000 in the United States, nobody pays that, by the way, so that means it's negotiable. A list price in Canada at 50% of the U.S. price is unsustainable. We can't work in that environment.

All I can tell you is that, 20 years ago, the Canadian pharmaceutical industry was vibrant, but it's become marginalized over time because of policies like the ones we have on the table. This policy is going to result in fewer and fewer innovative drugs being introduced in Canada at a time when, as someone said earlier, a lot of these very high-value drugs are coming. We will be able to treat diseases with gene therapies that we couldn't treat before.

For cancer and all kinds of diseases, this reform comes at a very bad time. We're emerging from a pandemic, and you saw the value the industry was able to create.

What I think is right at this time is to nurture the pharmaceutical industry so that they have something homegrown that can help you out. Today you need a vaccine; tomorrow you're going to need an antibiotic. Who's going to do it, the government?

You need a strong pharma industry. Does that mean that you have to pay super high prices? The answer is no. Get a reorganization; get a reform. Dr. Morgan said that. We can be more efficient in the way we negotiate at the provincial level.

However, this is the wrong reform at the wrong time. We are actually trying to impact the wrong variable in the whole equation.

I hope I've answered your question well, Mr. Thériault.

[Luc Thériault, Bloc, Montcalm, QC]

Thank you, Mr. Lévesque.

Mr. Chair, you are on mute.

I could have taken the opportunity to ask another question. See how disciplined I am?

[The Chair, Liberal, Ron McKinnon]

I'm wise to those things, but thank you. I apologize for being on mute.

Thank you, Mr. Thériault and Mr. Lévesque.

We'll go now to Mr. Davies, for six minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

My first questions are for Dr. Morgan.

In 1987, Bill C-22 amended the Patent Act to expand the patent rights of patentees of medicines. Those amendments included, among other things, an extension of the patent term from 17 years from the date of the issuing of the patent to 20 years from the date of filing of a patent application. To ensure that the prices of patented medicines are not excessive during the expanded period of market exclusivity, that bill also amended the act to create the PMPRB.

As a general statement, would you say that pharmaceutical prices in Canada are excessive?

[Dr. Steven Morgan]

Yes. In comparison with international comparators, most notably those in Europe and Australasia, there's no question that we pay higher prices. In comparison with what private insurance companies in the United States pay and what national agencies like the Veterans Health Administration pay in the United States, unquestionably our prices are excessive in Canada.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I see figures putting Canada either third or fourth in the world, depending on the source, in terms of the prices Canadians pay for pharmaceuticals. Is that accurate?

[Dr. Steven Morgan]

Yes, approximately. In fact, that's an account of list prices. If you looked at comparator countries, high-income countries with universal health care systems, Canada is probably one of the highest price-paying markets for pharmaceuticals even after you account for the negotiations that our provinces undertake. That's because a significant proportion of our medicines are purchased by private insurers or by uninsured Canadians, both of which have little or no negotiating power with manufacturers.