Industry Committee on Oct. 21st, 2010

[Brian Masse, NDP, Windsor West, ON]

The bill also.... I want to touch on this briefly. There's been the suggestion that this is going to affect research and development, big pharma, that they would actually pull back funding from Canada. That's actually suggested by the department here, which is interesting. If the big pharma.... I don't care who it was, it would be a public relations issue, that they would actually punish a country for innovating and doing something different.

But they actually get a royalty. They will get payment out of that. Can you touch on that? They're not just going to watch their research and development and their thing be basically put on the Internet and thrown out there. There are provisions that protect. And second of all, they get a payment stream from the generics for that.

[Richard Elliott]

And they get a payment stream on sales that they are themselves not making now because their pricing strategy in developing countries is not one that makes it affordable for the vast majority of people who have to pay out of pocket for medicines. So those are unrealized sales for the brand-name companies now. If you create competition in those markets by allowing generics to get in there and compete with them and bring the prices down, they will be lining up customers that will be making sales to patients who were not getting medicines before and indeed paying royalties to the brand-name company on those contracts, which the law requires them to disclose.

The royalty scheme that's in the law now is based, actually, on a proposal that we put forward back in 2004, so that the poorer the country, the less developed the country, the lower the royalty payment should be. The maximum royalty that should ever be payable is 4% of the value of the contract. That was the standard that was used when we used to use compulsory licensing regularly in Canada to supply the Canadian market. So there's no reason that poorer countries should be paying anything near what we used to pay by way of a royalty when you're supplying a rich country market.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[The Chair, Conservative, David Sweet]

Now we'll move on to Mr. Lake, for five minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair. And I thank the witnesses for coming today.

I was listening to Mr. Masse's comments, the focus on “Making CAMR Work”, and talking about what the officials said or didn't say before the last meeting. I guess I heard differently than what Mr. Masse was hearing. I heard the officials say it wasn't so much that CAMR wasn't working, it was more about the fact that there are other things that are actually working better.

I think back to the invention of the car. Obviously when the car was invented, people stopped using horses and carriages. That didn't mean horses and carriages didn't work; it just meant there was a better solution for moving people around. And eventually people stopped using horses and carriages.

In this circumstance I see that we have 400,000 people who were treated in 2003, 1.3 million in 2005, and it will be 5.2 million people by the end of 2010. We're making progress, largely because it sounds as though the global fund is being used to buy drugs from India. And for whatever reason, drugs are being supplied by India cheaper than they're being supplied by other countries, including Canada under CAMR. To me, the fact that the number of people being treated is going up as quickly as it is is a good thing.

The first question I would have is this. In regard to India, if it enacted its patent legislation in 2005, and if most of the drugs being supplied to Africa are coming from India, why has the number of people being treated with these drugs gone up from 1.3 million to 5.2 million? I just want a comment on those numbers.

[Richard Elliott]

Sure. Could I just offer a correction, or a clarification?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Sure.

[Richard Elliott]

In the one instance when CAMR was used, it was not the case that the Indian generic manufacturer was offering it at a lower price. The prices were actually matched.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Right. Generally, though, that's the case.

[Richard Elliott]

That's right. Well, we only have the one use so far of CAMR, and in that case it was a competitive price.

Part of the reason why we've seen the number of people on treatment go up is precisely because the generics have been available. The global fund money, for example, has been able to stretch that much further because you're paying 20¢ per tablet rather than five bucks a tablet. That's why we have 5.2 million people getting treatment now.

But as I was saying before, that source of Indian generics is now very much in question. And the tap is turning off because of these patent act changes. Now those changes were made in 2005. The drugs that were already being produced in generic form up to 2005 were grandfathered. So those are still able to be supplied. And because of where we are in the history of scaling up people onto AIDS treatment, it's still the case that the majority of people are on those first-line regiments, which are coming from Indian generic manufacturers.

What we're starting to see now, as Dr. Kilby was saying—and we will see more of it in the future—is that those first-line drugs are starting to fail for people as their virus mutates and develops resistance. So then they will need to switch onto second-line drugs and because India now has patent protection, these are the ones that are going to be patented in India. And so getting them in generic form from India is really very much an open question. We don't know how that's going to play out yet.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

One way or another, though. We don't know.

[Richard Elliott]

We don't know.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Right.

[Richard Elliott]

We know it's going to be more difficult now to get generics from India. It may be impossible. Who knows? But there's certainly a patent barrier that has now gone up in India that will start to take effect.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

The flip side to that, though, is that with those changes in terms of the market approach to this, we may see--and you've spoken about that, Mr. Elliott--that it may lead to more people looking at CAMR as a solution as well.

I know my time is short. I want to get another question in here.

I'm looking at your brief, Mr. Elliott, on page 45. You talked earlier about the changes to the Food and Drugs Act. This was brought up as a concern by the officials the other day. I'll tell you, as I read through your brief here, I have some concerns.

The way that I see this, what you have crossed out is that the “act applies in respect of any drug or device to be manufactured for the purpose of being exported in accordance with the General Council Decision” and “the requirements of the act and the regulations apply to the drug or device as though it were a drug or device to be manufactured and sold for consumption in Canada”.

That's what you've crossed out.

What it's replaced with is: “No person shall export a product described in subsection (1) unless one of the following requirements is satisfied”. That's “one” of the following requirements. I look down the list there, and there are a few you've referred to that make some sense, but only one of them has to be satisfied.

Paragraph 38(3)(b) reads: “The drug regulatory authority of the country to which the product is to be exported has given written approval of the product”. That would mean, basically, that if Rwanda says that the drug works, then we can automatically export it to Rwanda, whether Canada would approve that drug or not.

Paragraph 38(3)(c) goes even further. It reads: “A drug regulatory authority of another jurisdiction has given written approval of the product and the government of the country to which the product is to be exported, in writing, that such approval is satisfactory”, so what paragraph 38(3)(c) says is that if Rwanda approves it, and then Tanzania says it accepts Rwanda's approval--

[The Chair, Conservative, David Sweet]

You have to get to the point here, Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I know.

I have concerns as I read that. That changes things dramatically from where we are right now, which is that we say Canada has to approve it. It has to be approved as if someone in Canada were being treated.

[The Chair, Conservative, David Sweet]

Respond as briefly as you can, Mr. Elliott.

[Richard Elliott]

I will do my best.

Let me first of all draw your attention to subsection 37(1) of the Food and Drugs Act, which is not changed by all of this. It is already the case in Canada that any drug that is made in Canada for export is not subject to Health Canada review; it is only in the case of a drug that is produced under CAMR for export that the requirement was made that Health Canada must review it. There was already, if you will, a demonstrated lack of concern on the part of the Canadian government for drugs being exported. However--

[The Chair, Conservative, David Sweet]

You can do some cleanup on this, because the next round is Mr. Scarpaleggia. I'm sorry; I need to be fair to all members. Then we'll come back to the Conservative Party and others as well.

Go ahead, Mr. Scarpaleggia, for five minutes.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you, Chair.

I will give the remainder of my time to Mr. Rota. I'm substituting here, so I haven't been following the debate. You'll have to excuse me if my questions have already been asked or are too simplistic.

You mentioned that India was tightening up its patent regime. Do you anticipate that China will become a player in these markets at some point?

[Richard Elliott]

It could, and China is one of the countries that has what's called a “state directive” to implement the WTO decision from 2003, which was the basis for the Canadian legislation. China is one of the countries that has this.

It's very deficient, not the least because it's quite limited in terms of the diseases for which medications can be produced. Whether China will become a big player on this or not.... It's possible. I don't know.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

You were talking about the Rwandan case. You said that the argument that it only took 68 days leaves out a lot of the struggle that occurred before those 68 days. You mentioned that having to identify a country first is a problem. Could you elaborate on that? I'm not sure I understand.

[Richard Elliott]

MSF made the commitment to Apotex that if Apotex developed this drug, this three-in-one fixed-dose combination that they needed in the field, they would seek to purchase it under CAMR from Apotex. Given the way the law is worded, in order for MSF to be able to do that, they needed a country to come forward and notify the WTO of their intention to do this and also of the quantity of the drug that the country expected to need.