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.