Health Committee on Dec. 4th, 2023

[Jennifer Saxe]

There is a range of experts. There are experts in health services, law enforcement and the criminal justice system. We need to listen to a range of experts. They all bring their own expertise. There are some who have brought and highlighted the risks and benefits. There are some concerns. We need to look into those, as well. We need to look at what is working, where it is life-saving, and how we adjust so we can continue to improve the programs that we have. That's exactly what we're doing.

When we hear from the Canadian Association of Chiefs of Police, whether it is in terms of decriminalization or whether it is pharmaceutical alternatives, it is really looking at it as a suite of services that they are proposing.

[The Chair, Liberal, Sean Casey]

Thank you, Ms. Saxe.

Colleagues, that concludes the first panel. We're going to suspend briefly for the second one. Before we do, on the opioid study, we have not yet set a deadline for witness lists. May I suggest that the witness lists be in by the time the House rises, say, Friday, December 15, at 4 o'clock? Is everyone okay to have all their witnesses in by then?

[Some hon. members]

Agreed.

[The Chair, Liberal, Sean Casey]

Thank you. That will allow the analysts time to prepare a work plan over the winter.

To all of our witnesses, thank you so much for your patience and your professionalism, as always. We very much appreciate your being with us. This is the first step in a fairly long journey and study, and it has laid the foundation for all of us to be able to do our work. We're grateful to you for what you do and for your assistance to us in connection with this study.

With that, we're going to suspend while the next panel gets situated, so probably about five minutes.

[The Chair, Liberal, Sean Casey]

I call the meeting back to order.

Pursuant to Standing Order 108(2) and the motion adopted on November 8, 2023, the committee is beginning its study of the government's advance purchase agreement for vaccines with Medicago.

I would like to welcome the officials who are with us today.

From the Department of Public Works and Government Services, we have Andrea Andrachuk, director general.

Also with us today is Ms. Joëlle Paquette, the director general of the procurement support services sector.

From the Office of the Auditor General, we have Andrew Hayes, deputy auditor general, and Susan Gomez, principal.

Colleagues, we received notice during this meeting that the Auditor General herself wasn't able to be here. I don't have any explanation for you except that it was a development that was very recent.

First of all, to all of our witnesses who are here, thank you.

We have two opening statements, the first from the Auditor General.

I presume that will be you, Mr. Hayes. You have the floor for the next five minutes. Welcome to the committee.

[Andrew Hayes, Deputy Auditor General, Office of the Auditor General]

Mr. Chair, thank you for giving us this opportunity to discuss our report on COVID‑19 vaccines in connection with the review of the planned vaccine purchase agreement signed by the government with Medicago. Our report was tabled in the House of Commons in December 2022.

I'll begin by acknowledging that this meeting is taking place on the traditional unceded territory of the Algonquin Anishinaabe nation.

With me today is the principal, Ms. Susan Gomez. She was in charge of the audit. The audit examined how the federal government purchased and authorized COVID‑19 vaccines, and also how they were distributed to the provinces and territories to ensure that Canadians could be vaccinated.

In our meeting today, we will focus on the part of the audit concerning procurement. Overall, we determined that Public Services and Procurement Canada had supplied solid support to the Public Health Agency of Canada, enabling it to obtain enough doses of COVID‑19 vaccines to vaccinate everyone in Canada. Between December 2020 and May 2022, the federal government purchased 169 million vaccine doses. Over 84 million of these were administered to the population.

Public Services and Procurement Canada used its emergency contracting authority. This provided the department with flexibility on a number of fronts, including using a non-competitive approach to procure vaccines from companies recommended by the COVID-19 vaccine task force.

The department established advance purchase agreements with seven companies that showed the potential to develop viable vaccines. We found that the department exercised due diligence on the seven vaccine companies. For example, the department examined whether the companies had the financial capability to meet the contractual requirements and were eligible to do business with the federal government. The department reached an agreement with Medicago on November 13, 2020.

The government's strategy was to secure agreements with several vaccine companies, in case Health Canada authorized only one vaccine. While this approach meant Canada could end up with a surplus if all seven vaccines were eventually approved, it also increased the chances of securing enough doses to support the largest vaccination program in the country's history.

Mr. Chair, we are happy to answer the committee's questions where possible. However, given the confidentiality of the agreements, we are unable to discuss details relating to contracting costs or fulfilment for any of the specific agreements.

This concludes my opening remarks.

Thank you.

[The Chair, Liberal, Sean Casey]

Thank you very much, Mr. Hayes.

Next, from the Department of Public Works and Government Services, we have Andrea Andrachuk for the next five minutes.

Welcome.

[Andrea Andrachuk, Director General, Department of Public Works and Government Services]

Good afternoon, Mr. Chair.

I'm pleased to be appearing before the Standing Committee on Health to discuss the work of Public Services and Procurement Canada on the advance purchase agreement for COVID‑19 vaccines with Medicago.

I wish to acknowledge that this meeting is being held on the traditional unceded territory of the Algonquin Anishinaabe nation.

I am accompanied today by Ms. Joëlle Paquette, the director general of the procurement support services sector.

From the earliest days of the pandemic, the Government of Canada’s objective was to secure safe and effective vaccines as rapidly as possible. Early in the pandemic, there were many uncertainties and it was unclear whether developing safe and effective vaccines was even possible. This uncertainty created high global demand and Canada made every effort to secure advance purchase agreements with vaccine companies for future promising vaccines.

Scientific and industry experts on the COVID‑19 Vaccine Task Force advised that the quickest route for the government to get vaccines was to pursue a diverse portfolio of potential vaccines as early as possible.

Public Services and Procurement Canada, on behalf of the Public Health Agency of Canada, established seven advance purchase agreements with promising vaccine manufacturers, including Medicago, a Canadian supplier. The advance purchase agreement with Medicago was signed in November 2020 and included a firm commitment of 20 million doses, to be delivered before the end of December 2021, with options for up to an additional 56 million doses.

The contract was approved by the then Minister of Public Services and Procurement, following the approval of the Public Health Agency of Canada, and following approval by a Deputy Minister Committee for COVID‑19 vaccines.

As Medicago had received authorization from Health Canada for its Covifenz vaccine in February 2022, the contract was amended to allow the delivery of doses before the end of December 2022.

As part of overall supply management in mid-2022, the Public Health Agency of Canada expressed an interest to reduce or eliminate Medicago dose deliveries, in an effort to right-size inventories, and prevent wastage and logistics costs.

Also at that time, Medicago was experiencing production challenges, which caused some delivery delays. Discussions were undertaken with Medicago to terminate the contract.

In February 2023, Mitsubishi, the parent company of Medicago, announced intentions to proceed with an orderly wind‑up of Medicago operations in Canada and the United States and not to pursue the commercialization of the Covifenz vaccine.

The government recently shared that a $150-million non-refundable advance payment was made to Medicago in accordance with the advance purchase agreement, that Medicago met all terms for the payment, that the contract was terminated by mutual consent, that Medicago was released of its obligations under the advance purchase agreement and that no doses of Covifenz were delivered.

This advance payment was agreed to in negotiations in order to fund at-risk production of the vaccine prior to Health Canada authorization. In the termination by mutual consent, the government had no contractual right to request a return of the payment.

The government is committed to being as transparent as possible while respecting the confidentiality clauses in these vaccine purchase agreements. Significantly, this agreement with Medicago, along with the six others, was the subject of the Auditor General's report in December 2022. In April 2023, the government shared unredacted copies of the seven advance purchase agreements with the parliamentary Standing Committee on Public Accounts. Senior officials from Public Services and Procurement Canada appeared in two in camera sessions with the committee.

Mr. Chair, Public Services and Procurement Canada played a key role in supporting the Public Health Agency of Canada's efforts to ensure the delivery of COVID-19 vaccines as soon as we could acquire them, helping save Canadian lives.

Thank you. I'm happy to take your questions.

[The Chair, Liberal, Sean Casey]

Thank you very much.

We'll now begin with rounds of questions, starting with the Conservatives for six minutes.

Mr. Perkins, go ahead.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, witnesses.

My questions will all be for Public Services and Procurement Canada.

October 18, 2020, is when the first agreement was signed with Medicago for $200 million. Presumably on the advice of Health Canada and all the organizations, you signed that agreement. Were you aware that the World Health Organization would not do business with any company that is owned by a tobacco company?

[Joëlle Paquette, Director General, Procurement Support Services Sector, Department of Public Works and Government Services]

Thank you for the question, Mr. Chair.

We put a contract in place with Medicago for doses at a time when we needed—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I don't need an explanation about what the situation was like.

You knew Medicago was 40% owned by Philip Morris. Is that correct?

[Joëlle Paquette]

Yes, we did.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You knew the WHO would not interact with any company that had anything to do with tobacco, regardless of the efficacy of a vaccine.

Is that correct?

[Andrea Andrachuk]

I'm not sure whether or not we were aware. I'm just not—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It's an international agreement signed by the Government of Canada in 2005.

Are you not aware of the WHO's international agreement on the relationship with tobacco companies?

[Andrea Andrachuk]

With the advance purchase agreement with Medicago, the intention was to procure vaccines for Canadians to respond to the pandemic. It was an emergency contract for the sole purpose of—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I understand it was an emergency contract.

In other words, you weren't aware of it. You knew it would have no ability to.... Either you didn't know and didn't do your due diligence, or you were aware there would be no ability to have any kind of international purchase beyond this country. The reason this is important is that, when you signed for—according to the president of Medicago at the public accounts committee—$773 million in vaccines that were never produced, you knew all of those doses would have to be consumed in Canada. They could not be exported.

What's the purpose of signing a contract with a company and investing $200 million of taxpayer money for those dosage numbers, in addition to everything else the Auditor General outlined, 180 million doses of various vaccines? It seems totally irresponsible for the government to do that, knowing it wasn't possible to have those exported.

[Joëlle Paquette]

We put the contracts in place to obtain enough doses for all Canadians at the time. We did not know—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

That's enough for five or six doses.

[The Chair, Liberal, Sean Casey]

Mr. Perkins, you took a minute to pose the question. You need to listen to her try to answer it for at least a minute.

Go ahead, Ms. Paquette.

[Joëlle Paquette]

We did not know, at the time, which vaccines would actually be authorized. No vaccine existed at the time we put these contracts in place. We took the risk of putting in contracts with various suppliers for enough vaccines for all Canadians.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You spent over $200 million as a commitment to develop a vaccine that was not mRNA and that was owned by a tobacco company, not knowing that the WHO agreement that Canada signed would prohibit it from going anywhere else in the world. It doesn't seem very responsible to me. Then, you contracted $773 million for doses, according to Medicago. This is a billion-dollar scandal over taxpayer money for zero doses received. You just admitted there were zero doses received.

Who owns the IP?

[Joëlle Paquette]

Medicago owns the IP.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Wow, that's unbelievable. That's $200 million of taxpayers' money to fund a company owned by the Japanese in order to develop a vaccine that I understand had over 70% efficacy. It got developed knowing it couldn't be released. On top of that, it was contracted for about.... I don't know how many doses $770 million would buy at $20 a dose. That's probably about 10 doses per person in Canada.

We're on the hook for $150 million. They never produced a single vial of the vaccine, and you think that's good.

The Auditor General thought this was good efficacy, too. It goes to whether or not they did a value-for-money audit. I don't know how spending $773 million on a vaccine that could never be produced or exported is good value.

What is the motivation for the department to sign such a horrible deal, when we don't even own the IP? Now the Japanese own the IP, on top of everything else. Is that correct?