Health Committee on June 4th, 2021

[Luc Thériault, Bloc, Montcalm, QC]

Mr. Chair, in response to his question, I urge Mr. Van Bynen to read page 3 of the Research Canada paper on government investment matters. It states:

We believe that if we do not get this right they may threaten to undermine the government’s historic investments in research and innovation, constrain an increasingly vibrant health research and innovation ecosystem and market for high-quality jobs, and will ultimately restrict patient access to lifechanging treatments.

It is not the industry saying this, it's the people doing basic research. Somehow, there has to be a compromise. To get it right, those researchers first recommend delaying the implementation date of July 1. Second, a roundtable should be established to bring partners together to find common ground for the rest of the implementation process.

For example, they could decide to delay implementation and act on the recommendations from the papers, which, at the moment, show a consensus. They recommend reviewing the reference basket of countries and then sitting down with all the stakeholders, whether it's representatives from patient organizations, the research community, life sciences, the Institut national d’excellence en santé et en services sociaux, INESSS, which is doing important work, the Canadian Agency for Drugs and Technologies in Health, CADTH, the American Pharmacists Association, and obviously the PMPRB. They all want to discuss and really consult this time. We would also have representatives from the pharmaceutical and biopharmaceutical industries at that table.

Who would be against doing it that way? Wouldn't that be the way to go right now, faced with this mess, these distortions, these relationships and this jumping to conclusions? Do you really believe that they are going to get results if they don't do it like I just suggested to you, using an approach that's in line with Research Canada's?

Mr. Lévesque, would you be willing to sit at such a roundtable? Is that a solution, in your opinion?

[Paul Lévesque]

Yes, it's a solution.

As I have been saying since earlier, the list price, the catalogue price, is one issue. I see agreement that people are paying too much for drugs in Canada. I'm a taxpayer like everyone else and I have nothing against motherhood and apple pie. However, in my opinion, the price that counts is the price the provinces pay—in other words, a negotiated price.

I do feel we need to sit down at the table and be creative. It's been said that we haven't followed through on creative ideas. However, I don't see how a reform that simply sets a list price at half the U.S. price because the reference basket changes is going to fix anything. That's just the list price.

[Luc Thériault, Bloc, Montcalm, QC]

Thank you.

Ms. Grover, would you agree to sit at the roundtable?

You can just say yes or no.

[Kelly Grover]

Yes.

[Luc Thériault, Bloc, Montcalm, QC]

Thank you.

[Anie Perrault]

I'd like to say to Mr. Thériault that some key partners are missing from that roundtable, and I mean the provinces.

[The Chair, Liberal, Ron McKinnon]

Mr. Davies has the floor.

Mr. Davies, please go ahead. You have two and a half minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

When we undertook the study, the analysts from the Library of Parliament told us this about the PMPRB:

...an independent quasi-judicial body whose mandate is to regulate the prices of patented prescription and non-prescription medicines to ensure that the prices are not “excessive“ during [the] period of market exclusivity. It does not have a mandate to set the prices of patented medecines [sic] sold in Canada.

Dr. Batt, in a joint written submission to the committee, you said:

When independent stakeholders and industry representatives hold “divergent and even diametrically opposing points of view,” the PMPRB’s responsibility is not to strike a “balance” between the demands of industry and policies that serve the public interest. The PMPRB’s role is to come down firmly on the side of the public. It is not to protect the payers... and it is definitely not to make concessions to an industry that is far too powerful.

I wonder if you can expand on what you think the role of the PMPRB should be.

[Sharon Batt]

I see the PMPRB as a consumer protection organization. I have worked for a consumer protection organization in Quebec, where I was one of the editors of their consumer protection magazine. The concept of a consumer protection organization is that industry is very powerful and that individual citizens are not particularly powerful, and they need the government to step in and take their side when there is a contest between a powerful industry and the public interest.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I have a very quick question. Given that there seems to be broad consensus that prices are excessive in Canada, and given that it's the PMPRB's job to regulate that and it clearly hasn't, what do you think of the latest PMPRB reforms? Should we go ahead with them or not?

[Sharon Batt]

Yes, we recommend that the reforms go ahead. They've already been delayed twice, so I hope they're not going to be delayed again.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Also, I want to make a brief comment, if I may, because I think it is important.

I'm starting to hear more and more that health care is a provincial responsibility. That is actually not correct. In the Constitution of Canada, subsection 92(7) gives to the provinces “The Establishment, Maintenance, and Management of Hospitals, Asylums”. Actually, constitutionally, health care is a shared responsibility according to the Supreme Court of Canada, so I think it is important we remember that it's a very important role for both the federal government and the provinces, and not exclusively the provinces.

Thank you, Mr. Chair.

[The Chair, Liberal, Ron McKinnon]

Thank you, Mr. Davies.

We started late and I've made an allowance for that. We have used up our hour and a half pretty much for this panel.

I'd like to thank all of the witnesses for sharing your time with us today, your expertise and helping us with our study.

That being said, I now suspend so we can bring in the next panel.

Thank you, all.

[The Chair, Liberal, Ron McKinnon]

We will now resume the meeting.

Welcome back to meeting number 41 of the House of Commons Standing Committee on Health. The committee is meeting today to study the Patented Medicine Prices Review Board guidelines.

I'd like to introduce the witnesses at this point. From Innovative Medicines Canada, we have Pamela Fralick, president, and Declan Hamill, vice-president, legal, regulatory affairs and compliance. From the Institute of Health Economics we have Dr. Christopher McCabe, chief executive officer and executive director. From the Liv-A-Little Foundation, we have Erin Little, president, and J. Scott Weese, professor.

I will now invite the witnesses to present their statements.

Just as a matter of procedure, when you're nearing the end of your time I'll display a yellow card and when your time is up I'll display a red card. When you see the red card, you don't have to stop instantly, but do try to wrap up.

Thank you very much.

With that, we will go to Innovative Medicines Canada for six minutes.

Please go ahead, Ms. Fralick, I presume.

[Pamela Fralick, President, Innovative Medicines Canada]

Mr. Chair and honourable members, thank you for the opportunity to present today. I'm joined, as you've just heard, by Declan Hamill, our vice-president for policy, regulatory and legal affairs.

We are here on behalf of Innovative Medicines Canada, which represents 47 member companies from the innovative medicines and life sciences sectors. The pandemic continues to underscore the importance of innovative medicines to the health of Canadians. Most importantly, it is demonstrating why timely access to innovative treatments and vaccines is so critical.

It's also one of the reasons we are calling on the government to suspend for the duration of the pandemic the implementation of the Patented Medicine Prices Review Board's regulatory changes, which are set to come into force on July 1.

The government has previously cited COVID-19 as a primary reason for delaying the implementation of the PMPRB's regulatory changes. I think we can all agree that the same rationale applies today. More importantly, delaying these regulatory changes will also ensure that we all have the time needed to re-evaluate the desired policy outcomes, the effectiveness of the consultation process and the premise on which the PMPRB's new regulations were developed.

Since the changes were first proposed, there has been a strong consensus among industry representatives and many stakeholders that the consultation activities were not intended to inform decision-making. From initial steps, which included a 2018-19 steering committee and working group, through to later stages, many points of concern were raised and disregarded.

The lack of meaningful engagement led industry to undertake serious actions, including two Federal Court legal proceedings and a constitutional challenge in Quebec. Most recently, in its submission to the Quebec Court of Appeal, the Attorney General of Quebec submitted that the proposed PMPRB changes infringe on provincial jurisdiction and that therefore all the regulatory changes should be disallowed.

Providing the appropriate time and process to consider any PMPRB regulatory changes will also ensure that any decisions are based on accurate understanding of where Canada stands regarding the price of medications compared to those in other key countries. Contrary to PMPRB's assertions, Canadian drug prices are in the middle of the current list of those of comparative countries, not at the top.

Overall, median international prices were 16% higher than Canadian prices. Increases in the annual Canadian price of patented medicines have been on average less than the rate of inflation as measured by the consumer price index.

Further review will also demonstrate that the price of innovative medicines is not the primary cost driver for Canadian public and private drug plans as PMPRB claims. Rather, increased drug use by Canada's aging population and the related growth in chronic diseases are the primary cost drivers, not the price of medicines. Although the need for Canadians to have access to the most innovative medicines and vaccines is clear, the PMPRB regulatory changes will impact the market incentives that encourage early access availability in Canada.

Information obtained through an access to information request shows that PMPRB's analysis concludes that prices for certain medicines will drop between 90% and 99%. There is a point at which price reductions make it not commercially reasonable for companies to introduce drugs for approval in Canada or alternatively that they will be introduced significantly later. This is already an issue in Canada.

Independent data sources show that Canadians have access to only 48% of all new medicines launched globally, which means we are behind countries like the U.K., Germany, Japan, and France. This gap in access will increase if the proposed PMPRB changes proceed.

Additional time to consider PMPRB regulatory changes will also provide an opportunity to reflect on the true breadth of the Canadian biopharmaceutical sector's economic contributions. According to a recent report from Statistics Canada, the sector generates almost $15 billion in economic activity and $2 billion annually in R and D spending. Calculations based on this data put the industry's ratio of R and D to sales ratio at 8.8%, which is more than twice that reported by PMPRB, which uses a 1987 definition of research and development.

To be clear, our industry is not opposed to modernizing PMPRB, but we believe it can be done in a way that maintains patient access to new treatments and medications, builds on Canada's talent and expertise, and attracts international investment.

A vibrant life sciences sector in Canada starts with clear and balanced policy objectives. We believe a whole-of-government approach involving Health Canada, Innovation Science and Economic Development, Finance and International Trade is essential. It also includes fair and accurate reporting on patented medicine pricing, on understanding the real cost drivers to the system and prioritizing the value of saving lives.

IMC and our international counterparts remain committed to working with the federal government and all stakeholders. Our global CEOs have reached out to the Prime Minister on several occasions over the past three years, hoping to engage in collegial and collaborative dialogue, and to this day remain keen to develop a productive working relationship.

Thank you for this opportunity to speak with you today. I respectfully request that the committee recommend that the government delay the implementation of the PMPRB’s regulatory changes.

We look forward to answering your questions.

[The Chair, Liberal, Ron McKinnon]

Thank you.

We go now to the Institute of Health Economics.

Dr. McCabe, please go ahead for six minutes.

[Dr. Christopher McCabe, Chief Executive Officer and Executive Director, Institute of Health Economics]

Thank you, Mr. Chairman and honourable members. It's a privilege to be able to address you today.

Canada spends over $15 billion on pharmaceuticals each year. Therefore, how we decide prices is a crucial issue of public policy. I think it's useful to identify the principles that should guide public policy in this space.

The first principle I would propose is that governments do have a responsibility to pursue good value in how they spend taxpayers’ dollars. The second is that all Canadians are equal before the law. The third is that we here in Canada look after our neighbours.

The new PMPRB regulations consist of two components: the revision of the reference price basket of countries and the adoption of a form of value-based pricing for some drugs.

I view the first change as uncontroversial. It ensures that Canadian prices will remain in line with our economic peers, most of which receive larger industry investments than we do. The removal of the U.S. from the basket is reasonable, given that the U.S. is recognized as a global outlier for pharmaceutical prices and its prices drive significant access problems in their own country. Given the remaining reference basket of countries have very good access to pharmaceutical products, any changes in the supply of drugs to Canada after the implementation of the new regulations cannot, I would argue, credibly be attributed to a reduction in our prices.

The adoption of a modified value-based pricing for category I pharmaceuticals is more controversial. Patient groups are legitimately concerned that innovative drugs will not be brought to Canada, and the pharmaceutical industry has raised equally legitimate questions about its impact on investment in developing future innovative therapies.

In its pure form, value-based pricing is a way of operationalizing the principle of equality. Value-based pricing sets the price for a product to ensure that the health gained from buying the product is at least equal to the health lost by other Canadians that results from diverting health care funds from their current activities to pay for it.

The importance of caring for our neighbours drives a divergence from this pure form. The PMPRB’s version of value-based pricing will sacrifice equality to ensure patients in need can access highly effective innovative treatments. For breakthrough treatments, the PMPRB regulations will establish prices that sacrifice at least six years of good health for other Canadians for each year of good health the new innovation produces.

It is legitimate to ask whether this 6:1 trade-off is sufficient to attract investment in developing future innovations. By setting a value-based price, the PMPRB—essentially on behalf of Canada—is signalling to future investors our willingness to pay for future products, which they will take account of. Is the proposed value-based price sufficient to encourage investment to address unmet needs?

Dr. Aidan Hollis of the University of Calgary evaluated the recent highly effective innovative therapies for cystic fibrosis to examine whether the prices the manufacturers would like payers to pay were required to achieve acceptable returns on investment. His detailed evaluation established that standard pharmaceutical industry target returns would have been achieved with prices approximately one-tenth of those that the manufacturers wanted to charge. The evidence does not support this concern that the implementation of the new PMPRB regulations will impact upon investment in the development of novel pharmaceuticals.

The PMPRB is concerned with protecting Canadians from excessive—as distinct from abusive—pricing. Value-based pricing is a robust operationalization of the concept of “excessive”. When we spend over $200 billion a year on health care, the idea that the price for any single technology is unaffordable is not credible.

“Excessive” can be operationalized by considering whether what we have to give up to pay for a new drug is justified by what we gain. As a starting point, giving up more than you gain is excessive unless there are extenuating circumstances—hence, value-based pricing. Having a conceptually robust operational definition of “excessive” strengthens the PMPRB’s processes and provides greater certainty for manufacturers and investors.

The revised regulations are consistent with important Canadian values—

[The Chair, Liberal, Ron McKinnon]

Pardon me, Doctor.

I stopped your time. I want to ask you to raise your microphone to about the level of your upper lip. You're getting a lot of popping and so forth, and it is very difficult to hear.

Please carry on. I'll resume your time at this point.

[Dr. Christopher McCabe]

The revised regulations are consistent with important Canadian values of value for money, equality and caring for our neighbours. The available evidence, while limited, does not support the concerns that the change in the return on investment will damage investment in future innovations. The experience of countries in the reference price basket, in accessing innovative pharmaceuticals, does not suggest that Canadian patient access should be impacted by price reductions.

There may also be benefits to industry and patients. Aligning PMPRB's regulations with the methods used by payers to evaluate drugs should expedite the currently lengthy price negotiation process, allowing companies' products more time on market with reimbursement.

Further, the downstream pressure on prices will strengthen companies' incentives to be more efficient in development, manufacturing and marketing of their products. Companies that can always pass costs on to the price taking consumer are unlikely to be as efficient as those that cannot.

In addition, the downward pressure on average prices will allow payers to provide coverage for more drugs for more Canadians from the same limited resources, and in the long-term should reduce the costs of prescriptions to Canadians.

Thank you, and I'm happy to answer any questions.

[The Chair, Liberal, Ron McKinnon]

Thank you, Doctor.

We'll now go to Ms. Erin Little, for six minutes, please.

[Erin Little, President, Liv-A-Little Foundation]

Mr. Chair and members of the committee, thank you for the opportunity to appear before you to share my personal views about the Patented Medicine Prices Review Board and my personal experiences as a rare disease advocate.

My name is Erin Little. I am the president and co-founder of Liv-A-Little Foundation.

Liv-A-Little Foundation was founded in 2013, two years after our daughter, Olivia, was diagnosed with the rare disease cystinosis. We are a volunteer-run organization committed to supporting the advancement of treatments and, ultimately, a cure for cystinosis.

Procysbi is an excessively-priced drug that was flagged by the PMPRB in 2017. It's a perfect example of how the PMPRB protected patients. I have provided you with the PMPRB statement of allegation regarding Procysbi.

The Cystinosis Research Foundation funded every bench study and early clinical trials at UCSD, which resulted in the development of a slow-release form of cysteamine. In 2016, Raptor Pharmaceutical was bought by Horizon for $800 million. Procysbi is the result of a business deal, not R and D. How many other companies are using this same business model to build their portfolios?

As members of Parliament argue about the PMPRB spending $56,000 to invest in an effective communication plan, I would recommend they be more concerned that in 2020, Horizon's CEO raked in $21.63 million U.S., which is more than the PMPRB's annual budget. Let us be honest, the PMPRB can use all the help it can get when it comes to educating patients and Canadians on what and why it does what it does.

In 2019, Recordati brought the new, non-patented drug Cystadrops to the Canadian market with a sticker price of $120,000 a year. No patent meant no protection from the PMPRB review board. Cystadrops is another example of taking an old drug, tweaking the delivery mechanism and marking it up by 4,000%.

Recordati's GM and I were discussing the price. He admitted the drops would be expensive and then proceeded to tell me that all they're asking for is a little bit more from each taxpayer to cover the cost of a small population of patients. I sat there in dismay for two reasons. First, I was in shock that pharma prices drugs based on what the market will bear and not on what it cost to make them. The second was that I am one of those taxpayers.

What are we going to do about this? Are we printing money to continually pay for high-cost drugs? If we are, then let's print it for clean water, for the 215 bodies just found, for the homeless, for the kids who go to school hungry, for mental health services and for LTC homes. When we pay for excessively priced drugs, the money needs to come from someplace, which means someone else goes without. If and when we hold big pharma accountable to charge what the drug is worth instead of what the market will bear, we all win.

We are all familiar with the term “grooming” when it's referencing sex trafficking children, but no one is yet talking about how pharma is grooming advocates. Grooming is when someone builds a relationship, trust and emotional connection with someone so they can manipulate, exploit and abuse them.

In November 2017, Horizon Pharma invited us and a select few Canadians to a round table meeting. The meeting wasn't about our concerns; it was about building a common advocacy voice shaped by Horizon. I have provided you with the agenda from that meeting along with a letter of intent. That meeting is an example of grooming patients.

Horizon has also created the platform RAREis on Instagram. RAREis gives patients, advocates and families a place to share their stories and be heard. This is a perfect example of building trust and emotional connection with vulnerable advocates, which leads to manipulation and abuse. The repercussions of these relationships mean that advocates turn against our government.

In October 2018, I sat at this table and heard what it would cost to keep Olivia alive based on the average life expectancy at that time. It was hard to hear this, as a mother who wants nothing more than to outlive her child. I also understand why she had to bring that cost to the committee's attention: High-cost drugs are not sustainable in our health system.

I want to share with you the current cost faced by two different families living with cystinosis. Family A has a Procysbi cost of $56,000 a year and Cystadrops is $120,000. For family B, Cystagon costs roughly $18,000 a year and compounded drops are just under $3,000. All four of these drugs are made with cysteamine.

The first evidence regarding the therapeutic effect of cysteamine on cystinosis dates back to the 1950s. The delivery is changing, but not the ingredients. Is the change in the the delivery mechanism worth a 4,000% increase?

In conclusion, I support the implementation of the new guidelines and I strongly suggest we look hard at advocacy groups that are funded by industry and question whether they are being groomed by the industry. I strongly believe that every patient deserves to access drugs that are safe, effective and affordable.

Health Canada needs to do a better of job of listening to the patients, caregivers, and organizations not funded by pharma. We once trusted our child's life in the hands of a Canadian organization only to be betrayed, as their agenda was to support the industry. This organization happens to receive funding from both pharma companies treating cystinosis patients in Canada.

I will end with this. I am not against for-profit companies, but I am against the greed, manipulation and control they hold over the lives of every Canadian. Our child like many others would die without access to these drugs. I remember the days when I feared if Olivia would live. Now I fear if she will be able to afford to stay alive.

Thank you, and I'm willing to answer questions.

[The Chair, Liberal, Ron McKinnon]

Thank you, Ms. Little.

We'll start our round of questions now. I believe we'll start with Monsieur d'Entremont.

Go ahead, please, you have six minutes.

[Chris d'Entremont, Conservative, West Nova, NS]

Thank you very much, Mr. Chair.

Where do we go from here? The PMPRB has been around for a while. We were talking about it on our first run-around. We've had some very good testimony here today—very emotional.

Ms. Little, thank you so much for your presentation on that as well.

It's hard to figure out where to start on this one. Maybe a quick question here is on how a lot of concepts are getting caught up in our discussion here. We've got expensive drugs, rare diseases and a rare disease strategy issue that we need to be talking about. I don't know if it belongs in here. It does, but it doesn't. We have the issue of pricing that belongs in here and it doesn't. We have the issue of this pharmacare that's been promised to Canadians on a number of different occasions. That's caught up in here. It's hard to figure out.

Maybe I'll go to IMC for a few minutes.

Where do you think things should go from here? If the government has already twice held back from expanding the regulations.... I have to figure out how to actually ask this question correctly. Do we hold them off again? I ask because I'm sure that holding them off twice now has created even more challenges within the system, because the system is probably very anxious on how pricing is going to happen, how the reviews are going to happen, how PMPRB is going to work. So is holding it off for another six months conducive to the companies? Maybe that's the first question for Pamela.

[Pamela Fralick]

Through the chair, thank you very much for that question.

It's not about delay for delay's sake. It never has been. It is about reaching a better outcome than we feel is possible through the current regulations that are being proposed. Without taking up time on this call, I have a pile of correspondence that has gone to ministers and the Prime Minister from us at the association, from our global CEOs, requesting that dialogue. We believe, as Monsieur Lévesque mentioned in the previous session, that better solutions are possible. That, to me, is what the delay is about. It's to have that time, especially with this kind of a hearing that this committee is so generously offering to those of us interested in this issue. Let's truly get to that discussion that will lead to a better outcome than what is currently on the table.

[Chris d'Entremont, Conservative, West Nova, NS]

I have a simple question. Are drug prices too expensive in Canada?