Health Committee on Dec. 4th, 2023

[Andrea Andrachuk]

Medicago owns the IP.

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

It's a Japan-based company.

[Andrea Andrachuk]

It is owned by Mitsubishi.

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

Do you know how much Medicago paid for Philip Morris's remaining 40% in December of last year—almost a year ago?

[Andrea Andrachuk]

No, I do not have that information.

What I can confirm, as I mentioned in my opening remarks, is that the amount paid by Canada to Medicago was $150 million, not $200 million.

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

No, it's $150 million for the breaching of a contract—their inability to deliver the vaccines. We also paid almost $200 million of taxpayer money to develop the vaccine.

[Joëlle Paquette]

We put a contract in place with Medicago for 20 million doses. At the time, we paid the $150 million for at-risk manufacturing, because the company did not have an authorized vaccine at the time. They would have had to start manufacturing the vaccine prior to the authorization.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Perkins.

Thank you, Ms. Paquette.

Next, we have Mr. Jowhari, please, for six minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

First of all, good morning and welcome to our committee.

I have a preamble. It was during a very difficult time. Our government chose to take a multipronged approach. We signed, as you highlighted, seven advance purchase agreements. That's the purchase part of the vaccine. It was both international and, in the case of Medicago, domestic. We invested a lot of money into R and D, both domestically and internationally. We also realized that we really needed to build a domestic capacity.

When we look at Medicago, this is a cross between the very well-thought-out strategy of purchasing, which is hedging bets; focusing on R and D, both domestically and internationally; and building domestic capacity.

Was it a sound strategy? I would say yes. Did we execute it? I believe, when we look at the $172 million that was spent.... Did it generate the result? I would say, yes, it did, because we managed to get a vaccine approved by Health Canada. Did we know that the World Health Organization was not going to approve this vaccine because of its affiliation with a cigarette-manufacturing company? I don't know, and we are not 100% sure. That might be an area that's worth diving into a bit deeper.

On the issue of IP, the federal government, through various programs, invests in the work of many companies, and the IP remains with the company. I just finished making an announcement on Friday about a company, Visual Defence, into which the Government of Canada, through Scale AI, invested about a million dollars, and the IP belongs to the company. I'm not sure that who owns the IP should be the focus of this.

I think what we need clarification on...and this leads to the question I'm about to ask you. What did the Government of Canada pay $150 million for, aside from the $172 million, which we can justify? What did we pay the $150 million for, and what did we get as a result of that?

Anyone can answer that question.

[Andrea Andrachuk]

The $150 million was an advance payment. It was intended to support at-risk manufacturing by Medicago, meaning that Medicago had to proceed to conduct activities before it knew whether it would have Health Canada authorization. That represented a risk for the company. These payments were intended to fund those at-risk activities.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Can you expand on what an at-risk activity means? In my mind, I'm looking at $172 million, and the $172 million went into R and D, setting up a facility, hiring people, doing R and D, growing, extracting, running clinics, etc.

What is the difference between the $172 million and the $150 million?

[Andrea Andrachuk]

As officials from Public Services and Procurement Canada, we can't speak to the strategic innovation fund amounts. For those questions, I would refer you to Innovation, Science and Economic Development Canada.

For the advance purchase agreement, the $150 million advance payment was intended for at-risk manufacturing, meaning activities leading up to the commercial-scale production of the doses that were intended to be done prior to Health Canada authorization. That was to enable Medicago to get doses produced as quickly as possible, so we could get them in the arms of Canadians.

Remembering the context at the time, we know that when we entered into this advance purchase agreement, there were no COVID vaccines approved anywhere in the world.

[Majid Jowhari, Liberal, Richmond Hill, ON]

In my mind, if I go back and say that we allocated $150 million to Medicago to start building the facility, with the anticipation that $172 million was going to pay off and that we were going to have a vaccine, and we wanted a manufacturer ASAP, that is where the money went. Am I right to understand this?

The terminology “at risk”, for a layperson like me, is a bit difficult. Is this where we spent the money?

[Andrea Andrachuk]

Due to confidentiality clauses in the agreement related to negotiations, we can't go into details on where the money was intended to be spent and what it may have been spent on, but we can say that it was for at-risk manufacturing.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay, it was for at-risk manufacturing.

I have about 30 seconds left.

Can you explain why confidentiality clauses would still apply even when the contract was unfulfilled?

[Andrea Andrachuk]

Confidentiality clauses were included in all seven advance purchase agreements, and they survive the termination of the contract, meaning that even when the contract ends, those clauses remain applicable, both to the supplier—Medicago—and to the Government of Canada. It's a two-way confidentiality clause.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Jowhari.

Ms. Vignola, you have the floor for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Ms. Andrachuk, you mentioned in your address that Medicago had met all the conditions of the forward purchase agreement signed with the Government of Canada.

Can you tell us what these conditions were?

[Andrea Andrachuk]

Unfortunately, I can't answer your question because of the confidentiality clauses.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay.

I won't speak about the conditions, Mr. Hayes, but if they were met, I'd like to understand why $150 million was entered under the heading “Losses of public money due to an offence, illegal act or accident”.

[Andrew Hayes]

The advance payment was properly reflected in the government's financial statements. That year, a loss was recorded because the agreement between the government and Medicago was terminated without any doses of vaccine having been delivered.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

That must therefore be categorized as an accident. It is certainly neither an offence nor an illegal act.

Is that right?

[Andrew Hayes]

Yes, that is the case.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

All right. Thank you.

Ms. Andrachuk, would you agree that the World Health Organization, the WHO, decided to reject the vaccine, not because it was ineffective, but because a minority shareholder was a tobacco manufacturer?