Health Committee on Nov. 27th, 2020

[Douglas Clark]

Frankly, it can't get much lower, can it?

I think one of the driving forces—the impetus behind these changes—is the realization that back in the day when we chose the basket of comparator countries that we've used since about the late 1980s, we did so on the basis of a policy presumption that we priced in line with countries that have a significant R and D footprint. We've come eventually to emulate that same footprint. In other words, we see an average 20%-25% R and D to sales ratio in those other countries, so if we offer a level of intellectual property protection and price in line with those countries, we'll come to enjoy the same level of R and D. Well, that hasn't exactly panned out.

For the government, I think the underlying rationale for changing the list of countries is that they're choosing to pursue different policy objectives. They've realized that there's no organic connection between the price in a country and R and D intensity. Many of the countries that we compare ourselves to presently have lower prices than we do, and considerably more R and D. I think the emphasis going forward.... The reason we have those new 11 countries is that the primary objective of the policy is to ensure that we're getting prices that are more in line with the OECD median.

[Don Davies, NDP, Vancouver Kingsway, BC]

Just for the record—and I think I speak for all of my colleagues—we would love to have more research and development in pharmaceuticals done in Canada. I think that's across all party lines.

I wanted to establish whether you have any concerns that these regulatory changes will negatively impact that, and I got my answer.

Similarly, do you think that the PMPRB regulatory changes proposed for January 1 will result in fewer clinical trials in Canada?

[Douglas Clark]

I guess that's the flip side or another facet of R and D. We don't see any evidence of that.

I will say that clinical trial intensity is going down in developed countries across the board, as industry kind of moves their R and D efforts into emerging markets. We've seen a bit of a decline in Canada in clinical trials recently.

[Don Davies, NDP, Vancouver Kingsway, BC]

That's under the current regulatory regime.

[Douglas Clark]

Yes. I guess you could say it's been declining for a couple of years now. The regulations were adopted in August 2019, so I'm not sure how that coincides with that time period. It's actually declining less dramatically in Canada than it is in many of these other countries, including the U.S., which has very high-priced drugs.

[Don Davies, NDP, Vancouver Kingsway, BC]

I think they're the number one country in the world for prices.

[Douglas Clark]

They are, almost without exception.

[Don Davies, NDP, Vancouver Kingsway, BC]

My last question is in this vein. Will the proposed PMPRB regulatory changes result in fewer drug launches in Canada?

[Douglas Clark]

Again, we tried to address this in the written answers to some of the questions we undertook to follow up on, on Monday. We certainly don't see that. Actual applications—what we call new drug submissions—to Health Canada for new active substances, in other words new innovative medicines, are actually up in the past fiscal year.

Since the regulations were finally adopted, and with these changes coming into force on the horizon, we're seeing an uptick in drugs coming to Canada, not a lowering. Then if you break it down quarterly, which we did in our answer, you see the same general trend. For the most recent quarter, it's actually above the average over the last three years. When you look at it quarterly, it's slightly above, 9.8 versus 9.

[Don Davies, NDP, Vancouver Kingsway, BC]

I'm going to just say it bluntly, if I can. It almost seems that the pharmaceutical industry—which controls where the R and D goes, where they launch drugs and where they have their clinical trials—is threatening to reduce these things in Canada if the government proceeds with regulatory changes that are geared towards reducing prices that Canadians pay for increasingly expensive prescription drugs, getting our prices more in line with what other countries are paying, and making some changes to improve the pricing process.

Would that be a fair comment?

[Douglas Clark]

Of course they are, and in doing so, they're just behaving rationally, and they do this in every country that tries to introduce reforms to try to contain pharmaceutical expenditures. It's just the nature of the game.

Again, Dr. Levine made this point in his opening remarks. We are never going to get an industry sector to sign on to changes that will result in their revenues coming down. I keep using the analogy with people that, for five years, we've been asking somebody if they want a haircut and they keep telling us no, and then we keep asking them, “Would you like your bangs cut shorter and a little shorter in the back?” They don't want a haircut, right?

You can consult until the cows come home, but you're never going to get industry to back changes to a regulatory regime that are going to result in less revenue for them. The bottom line is that you have to have a fair process and a transparent process. That's what we think we've managed to do.

[Don Davies, NDP, Vancouver Kingsway, BC]

The bottom-line question is this: Do you think these changes will help patients in Canada?

[Douglas Clark]

I do.

[The Chair, Liberal, Ron McKinnon]

Thank you, Mr. Davies.

That ends round one.

We start round two now.

Mr. d'Entremont, please go ahead. You have five minutes.

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

Thank you very much, Mr. Chair. I apologize for being a little late. I was doing a speech in the House. I know Ms. Sidhu was over there as well, so there may be a few different faces before us.

I want to go to where you left off with Mr. Kmiec. When you talked about patient groups that receive funding from pharmaceutical companies, we received a lot of patient groups writing in about PMPRB changes. I'm just wondering what threshold we are supposed to consider on support for our patient groups. It's a difficult one here.

[Douglas Clark]

It is. I think that's your challenge. I don't know if it's really my place to advise you in that regard.

It's important to understand a little bit of history here. Maybe that would help you at least contextualize it. It used to be that the federal government contributed to charitable organizations like patient advocacy groups, but in the mid-1990s, they decided to no longer fund organizations of that kind if they had a policy-lobbying arm, because the government didn't want to have to engage with an organization that's ultimately giving it grief for a policy that it didn't like. That created a vacuum, and in defence of these organizations, they had to fill that gap somewhere, so industry was only too happy to step in and provide that funding.

It varies across the developed world, but in some countries they continue to fund their patient groups only on the condition that they prove that they're independent from industry. In many of those countries, it's much easier to have a rational, evidence-based discussion about policy changes, in particular policy changes of this kind.

I'm not saying that every patient group that accepts money is biased, and I'm sure they certainly don't feel that way, but there's a lot of research out there to show that, when you take money from someone, it—even implicitly, without your knowledge, subconsciously—impacts your views. There's definitely a correlation, and a pretty strong one, between where patient groups stand on these reforms and the extent to which they accept funding from industry. Whether it's positive, I don't know, but there's definitely a correlation. It's hard to deny if you go through those briefs.

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

Yes. I go back to one of the meetings that we've all had with CF Canada. CF Canada said they wanted Trikafta to be covered, but if that became difficult, then they would turn quickly on Vertex as well. I don't think their intention is to necessarily support the pharmaceutical companies, but in the absence of direction, I suppose that you're the target of that.

[Douglas Clark]

Well, that's an interesting point you raise, because, as I mentioned on Monday, a lot of other countries have struggled with the prices for these new, very promising, life-changing cystic fibrosis drugs. There was a stalemate in many of these countries between the reimbursement body and the company because they wouldn't bring their price down. Some of the patient groups in the U.K. and Switzerland, for example, decided that they were going to switch strategies and seek out a compulsory licence and obtain a generic version of those drugs from a South American country. It was only when that threat was made that you started to see progress made at the negotiation table.

I think that's something for patient groups to consider, not just with respect to this particular product line and this company, but more generally. It doesn't make sense to me that a company that saw its second quarter results go up 62% most recently and made $2 billion selling four cystic fibrosis drugs is not in the hot seat to the same extent as the government because it refuses to bring out product to us unless we pay among the highest prices in the world. It just doesn't seem sensible to me.

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

Let me switch gears just a bit. It was in the news yesterday—so I'm sure you're aware of it—that Innovative Medicines, I think, was talking about vaccine production in Canada. They sort of tied it back over to the PMPRB changes. I'm wondering if you had any thoughts on that or if you have seen that report.

[Douglas Clark]

Yes, I have. I will say that we've adopted a policy on a temporary basis to only look at these vaccines on a complaints basis. If we get a complaint from a provincial or federal minister of health about the price, that's when we'll look at it.

The companies have already committed to providing these products at public, non-commercial, so-called humanitarian or compassionate prices for the duration of the pandemic, so I don't know why they would say that, unless they were saying that their intention was to price excessively in Canada, but that now, since the PMPRB is not going to look at them proactively, they'll bring the drugs here. I don't understand the statement.

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

I think it has to do—

[The Chair, Liberal, Ron McKinnon]

Thank you, Mr. d'Entremont.

We go now to Mr. Kelloway.

Mr. Kelloway, go ahead for five minutes.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Thank you, Mr. Chair.

Hello, colleagues, and hello, witnesses.

I just want to say how insightful I find this conversation, and I know Canadians do as well, with the great questions from all of my colleagues and the answers that follow.

I have three questions. We'll see if we can get through all of them.

The first one is around investments. Several other countries benefit from significant pharmaceutical industry investments while having considerably lower prices than Canada. For example, Belgium receives four times more investment dollars than Canada, despite prices being 20% less.

For both witnesses, can you identify any lessons from the evolvement of the drug regulation processes of our international partners, particularly those within the PMPRB11, that Canada could apply to our own drug regulation processes?

[Douglas Clark]

I'm not sure whether there's anything we can do within the context of our drug regulatory processes that could change the basic ratio that we're seeing today. The key distinguishing factor or feature between us and these other countries you point to that have lower prices for more R and D is that they have a homegrown industry there. Companies tend to focus their R and D efforts around their international headquarters, and we don't have a homegrown.... We have a homegrown vaccine research facility that now has been purchased by Sanofi, and it's an incredible facility. We have Glaxo for vaccines in Quebec, and Medicago, which is a world-class pioneering vaccine facility.

In the late sixties and early seventies, the government introduced a number of policies that gave rise to a very robust and vibrant generic industry, with Canadian companies that were true powerhouses internationally, but in the late eighties I guess they decided to tie the wagon to a different horse, or bet on a different pony, or however you wish to describe it.

I will say that, in fairness, there's one thing we could do, and that is to harmonize or align our processes so that it's much easier to go from regulatory approval to actual reimbursement and sale. In Canada, it's like a relay race because of overlapping and competing jurisdictional roles, and that's really why I think a lot of people are advocating for a Canadian drug agency that would sort of collapse all these functions into one.

[Mike Kelloway, Liberal, Cape Breton—Canso, NS]

Is that for greater clarity and flexibility? Is that what I'm hearing?