Health Committee on Nov. 27th, 2020

[Douglas Clark]

That's my personal take on the situation. I shouldn't say that; it's more than personal. The data supports the conclusion that companies tend to focus their R and D efforts, resources and investment in proximity to their international headquarters.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you.

Many of our international partners have updated the rules to constrain rising drug prices many years ago. The new PMPRB guidelines appear to be quite similar, or drawn directly from those that are already in place in other countries, including those with large pharmaceutical industries, such as the United Kingdom, France, Japan and Australia.

Considering this, would you identify some of the challenges that PMPRB has faced in fulfilling its mandate of protecting Canadians from excessive pharmaceutical prices over the years, and how will these new guidelines help address some of these challenges?

[Douglas Clark]

We have a number of sort of motherhood, seminal policy documents out there that I think I would refer you to. It's a big question with a long answer, so I think I would refer you, first and foremost, to our 2015-18 strategic plan. It really sets out exactly what you're talking about in writing, and in a way that I hope is accessible to most people.

Going back to Dr. Levine's opening remarks, it's the dramatic shift that we've seen in the nature of the products that are dominating the market. These go from small-molecule drugs that treat common ailments and that arguably are within the means of ordinary people, to complex biologic drugs to treat more rare diseases that clearly are not within the means of anybody and even institutional payers struggle with. That's one big change. It has necessitated a corresponding change to our regime.

There's another big change. Canada pioneered this practice of international reference pricing as a way to ensure we were getting a reasonable and fair price, but since doing that in the late eighties, through the creation of the PMPRB, most other countries have copied that. One of the ways industry has responded, to try to make that a less effective policy, is by negotiating confidential rebates and discounts off the public list price. That has driven pricing underground, which has proven to be another big challenge for us.

The changes that have been made to the regulations and the guidelines go directly to the heart of those changes. The new regulatory tools, the economic tools, the pharmacoeconomic value and market size will enable us to ensure that Canadians are getting value for their money for these products that have nosebleed price tags.

One of the other changes, which is currently before the Federal Court of Appeal, requires patentees to provide us with the information on those confidential discounts and rebates so that we can regulate the true price in the market.

I know that's a long-winded answer, but if you want more information, I'd really encourage you to go to our website. We've been very transparent over the last five years about what the problem is, what our proposed solution is, and the path for getting there.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Great. Thank you.

[The Chair, Liberal, Ron McKinnon]

Thank you, Mr. Van Bynen.

[Tony Van Bynen, Liberal, Newmarket—Aurora, ON]

Thank you.

[The Chair, Liberal, Ron McKinnon]

Mr. Thériault, go ahead for two and a half minutes.

[Luc Thériault, Bloc, Montcalm, QC]

Thank you, Mr. Chair.

I would like to come back to the last question I wanted to put to you earlier and did not have time to finish.

Would you agree with a multipartite assessment and oversight committee being created to make the process a bit more objective?

[Douglas Clark]

I certainly agree with there being a committee, but I don't know whether I would call it an oversight committee. That doesn't seem compliant with the laws and regulations that govern us.

We definitely have a lot of back and forth with other stakeholders to help us do our job properly under the new regime.

[Luc Thériault, Bloc, Montcalm, QC]

Like a number of other people, I have a lot of questions about the impact of the new guidelines on the life sciences ecosystem. Quebec has adopted the Quebec 2017-2027 life sciences strategy, which is in fact an economic development tool. The same concern comes up in the brief submitted by the LifeSciences British Columbia organization.

Regarding the reform you are proposing, people are not seeing a concrete analysis of the direct impacts it would have on the life sciences ecosystem. I am talking about impacts not only on industry, but also on research institutes, teaching hospitals, research organizations under contract and clinical trial sites.

Could you assure us today that you have taken into account the overall impact of the new guidelines? I assume that, in five years, you have had enough time to produce those analyses. If so, how have you integrated this into your thought process and your reform?

[Douglas Clark]

I think that my testimony today is pretty clear: we think that the data from research does not support some of the claims being made. It's as if the stakeholders were making unfounded statements and are asking us to prove the opposite. To our mind, there is no link between the price and industry's intensity in research and development in Canada. I don't know how else to answer this question.

[Luc Thériault, Bloc, Montcalm, QC]

Okay. My understanding is that, in five years, you have not analyzed the economic or overall impacts of the reform on life sciences. Is that right?

[The Chair, Liberal, Ron McKinnon]

Mr. Thériault, your time is up.

[Douglas Clark]

No, we have not analyzed the impact on life sciences. However, we have done an analysis on prices, and we believe there will be no impact, as no data....

[The Chair, Liberal, Ron McKinnon]

Mr. Thériault, thank you.

We go now to Mr. Davies, for two and a half minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks.

Mr. Clark, I have two and a half minutes. I'm going to ask you three questions and ask you to try to answer them succinctly so I can get them all in.

First of all, generally, what percentage of research dollars that go into patented medicines is publicly funded?

[Douglas Clark]

That depends on the country. Are you talking about Canada or—

[Don Davies, NDP, Vancouver Kingsway, BC]

Canada.

[Douglas Clark]

I don't have that number at my fingertips, but it's a considerable amount. Mariana Mazzucato, an economist, does a lot of work in this area. I can certainly get back to you with that.

For example, in the U.S. Trikafta was developed on the basis of quite a bit of funding from the National Institutes of Health and from the Cystic Fibrosis Foundation. It's not uncommon. In fact, it's more common than uncommon.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I was going to move to Trikafta because, obviously, special access is not working for the many Canadians who are living with cystic fibrosis. I'm wondering how best we should proceed to ensure that CF patients can get access to this life-saving, life-altering medicine. What would you recommend?

[Douglas Clark]

If I were omniscient and omnipotent, I would do as the government committed to do a few years back and pursue the establishment of a national drug agency. I think that is the single most well-substantiated complaint about penetrating the Canadian market, that it's like a relay race where you have to go through one hurdle after another. You think you're there, and then suddenly you have to submit information to the PMPRB, to CADTH, and finally you get to the public reimbursement point.

So I think more buying power and a Canadian drug agency—

[Don Davies, NDP, Vancouver Kingsway, BC]

You did briefly mention compulsory licensing. As I understand it, that's the power of the state. When a patent holder refuses to act on a patent and they have access to a life-saving molecule or something of great public interest, it allows the state to act on that patent if the private patent holder won't.

Is that something we could look at? If Vertex will not apply in Canada to make Trikafta available to the patients who need it, is compulsory licensing an option?

[Douglas Clark]

That's a really good question. As I said, that's what patient groups were threatening to do in the U.K. and Switzerland, and that's kind of what brought Vertex back to the table. That's my understanding.

There are a number of provisions in our Patent Act that allow for compulsory licensing. One—section 65 and section 66—refers to the kind of situation you just described, when the patentee refuses to provide the product on reasonable terms, but there's a much more open-ended provision, section 19 in the act, that allows the government to override a patent for public, non-commercial use or in emergent circumstances.

All of these provisions.... As you probably know, Mr. Davies, Canada used to have a compulsory licensing system in effect that allowed generics to produce patented drugs at any point in the lifetime of the patent, but in the early 1990s and mid-1990s we entered NAFTA and we entered the WTO TRIPS agreement, and those agreements have a lot of standards and restrictions on the degree to which countries can avail themselves of those provisions, so our provisions reflect the language, track the language in NAFTA and TRIPS.

However, it's not an impossibility. When I go abroad and meet with my counterparts, a lot of countries are saying they lack the tools to deal adequately with the types of prices they're seeing and they need to explore this option of compulsory licensing more and see whether they need to make changes to their legal regimes and whether they need to amend the multilateral agreements they've entered into. They're saying, “Have we gotten to a point where we're in the same position that developing countries were 20 years ago with drugs for tuberculosis, AIDS and malaria, where we just can't afford the market price?”

I think developed countries increasingly find themselves in that same situation, so now there's an openness to talking about compulsory licensing more broadly.

[The Chair, Liberal, Ron McKinnon]

Thank you, Mr. Davies.

That brings us to the end of our questioning for today.

Thank you, Mr. Clark and Dr. Levine, for giving us your time and your expertise today.

Thanks to everyone on the committee for your excellent questions.

With that, we are adjourned.