Evidence of meeting #37 for Industry, Science and Technology in the 39th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was generic.
A recording is available from Parliament.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Has the government been helpful with their R and D and with the research money? Have you been able to take advantage of that? Have you got any recommendations or possible suggestions that would either improve or--
E. coli Project Manager, Bioniche Life Sciences Inc.
The Government of Canada has indeed been helpful with that. We have been working with the Industrial Technologies Office on the second generation--
Conservative
Bloc
Robert Vincent Bloc Shefford, QC
Thank you, Mr. Chair.
Mr. Keon, from Mr. Van Kesteren's question, I gathered that 50% of products in Canada are generic, while in the United States, the figure is 67%. Is that correct?
President, Canadian Generic Pharmaceutical Association
In Canada, 50% of prescriptions are for generic medications. In the United States, it is 67% of prescriptions.
Bloc
Robert Vincent Bloc Shefford, QC
In 2006, there were 29 new active substances. I assume that they were patented or something of the sort. But of those 29 new substances, only four were significant innovations over existing medications. They can be put in the category of discoveries providing somewhat significant advances. But the 21 new substances in category three mean that the medications are the same, with only small or minor advantages over existing ones.
Does that prevent a generic drug being produced? If a new patent is applied for, are we dealing with a "new product" that actually is not new? Maybe we are only talking about one improvement, but if another 20-year patent applies to the product, it means that we still have the same products and that only 2% goes to the research and development of new products. The rest goes to improving old products, but they cannot be copied and sold more cheaply.
Is that why generic products only represent 50% of prescriptions in Canada?
President, Canadian Generic Pharmaceutical Association
When a new product is put on the market, It is difficult to say whether a generic manufacturer is going to produce an equivalent in 12 or 14 years. In Canada, the average exclusivity period for brand-name products is more like 12 to 14 years, not 5 to 9 years as my colleagues have mentioned. If a product is on the market when its patent expires, the generic product manufacturers will decide if they are interested in producing it, and can still make a profit while selling it at half the price.
Bloc
Robert Vincent Bloc Shefford, QC
I am going to ask my question a different way.
If a company decides to make substantial improvements to an already patented product, thereby obtaining a new patent, does that mean that a manufacturer of generic products cannot copy it, given that the patent protection process is once more in effect? Am I mistaken?
President, Canadian Generic Pharmaceutical Association
I will answer in English.
If a patent represents a substantial improvement, and if it is a new product, then that patent will protect the product and the generic will not be able to come to market until that new patent has expired. What we find with evergreening is that there are many patents on minor variations. For instance, it could be a different polymer or a different salt in the product, which does not change the product, does not in any way enhance the product. But these patents would have different expiry dates. The difficulty is that with the patented medicines regulations, the generic cannot come to market until it proves in court that it's not going to infringe on any of these patents.
The Supreme Court said that the patented medicines regulations were being abused, that irrelevant patents were going on the list and were delaying generic drug companies. The government said the same thing in October 2006. Terrific! Let's get rid of them. Health Canada was taking them off. The courts were taking them off. Terrific! Generics were able to come on the market when basic patents were expiring.
Now, again without consultation, the government is saying that brand name companies will be able to re-establish those patents on the patent list. And that's clearly going to delay the entry of generics, as the government has said itself. That is the difficulty we have with the evergreening patents.
Conservative
Bloc
Robert Vincent Bloc Shefford, QC
Yes.
According to what I have been told, the companies that you represent could move manufacturing and packaging of their products to China. Is this just a rumour or is it true?
President, Canadian Generic Pharmaceutical Association
Our companies have at least 8,000 or 9,000 jobs in the manufacturing sector in Canada, mainly in Ontario and Quebec. We are fighting hard to protect those jobs in Canada.
Vice-President, Federal Government Affairs and Federal Provincial Territorial Relations, Canada's Research-Based Pharmaceutical Companies (Rx, & D)
As their name implies, innovative pharmaceutical companies are involved in innovation and in research and development. That is where we concentrate our efforts, mainly in order to attract new investments. For every medication we make, Health Canada requires that the licensing and the safeguards are checked, wherever they are manufactured or for whatever market they are intended.
Vice-President, Federal Government Affairs and Federal Provincial Territorial Relations, Canada's Research-Based Pharmaceutical Companies (Rx, & D)
There are no job losses in our case because we concentrate on research and development and on the added value that new medications bring.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Thank you.
Some of my friends call me naïve at times, and I am very proud of that. I would like to ask a naïve question to the brand-name pharmaceutical manufacturers.
When the patents that protect your products have expired, generic manufacturers legally adopt your idea and sell it at rock-bottom prices compared to what you were asking when you had to invest in research or recover that investment. I have always wondered, when the patent on a medication has expired, why the manufacturer, who knows that a good product of his is about to be copied and sold at half of its current price, could not cut his own price in half and keep providing the product to his clients.
I do not why you do not do that as a reflex action. Are there business reasons hidden behind your reluctance to lower your prices?
Vice-Chair, Federal Affairs Committee, Canada's Research-Based Pharmaceutical Companies (Rx & D)
Thank you for your question. I don't think your question is naive at all. We get asked that question quite often.
I think it comes down to the fact that brand companies have tried to get into the generic business. As a matter of fact, some of them are in it. Our company tried that business and we found that we weren't very good at it; in other words, we couldn't compete with the generics in the generic business.
Independent
Vice-Chair, Federal Affairs Committee, Canada's Research-Based Pharmaceutical Companies (Rx & D)
Yes.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
With your own products, you cannot compete with the guys who copy them?
Vice-Chair, Federal Affairs Committee, Canada's Research-Based Pharmaceutical Companies (Rx & D)
It's a different business. You're selling to a different market; you're dealing with a different distribution system. And the big thing that we have in Canada is an automatic substitution policy at the provincial level, which says that the lowest price gets the market. So what happens to us is that as we approach patent expiry, if we are to drop our price, we have to make sure that we indeed have the lowest price to get that business. Even with that cost structure, we found that we could not lower it enough to compete with the generics, so we chose not to get into that business.
There have been examples where we've licensed out products. In certain circumstances, we've licensed out with generics to do that. But again, you only get a fraction of the revenue. So that's why you see us, by and large, in the innovation business, not the generic business.
Vice-President, Federal Government Affairs and Federal Provincial Territorial Relations, Canada's Research-Based Pharmaceutical Companies (Rx, & D)
I would like to add that, even though its patent has expired, a medicine can still be sold, not as a copy but in its original form. In some cases, doctors continue to prescribe the original medication because its beneficial effects and its side effects are not exactly the same as the copy. Everyone reacts differently to a medication. So there is always some kind of a market. Under those conditions, companies often prefer not to put a generic version on the market, for reasons that Mr. Livingston has explained.
