Industry Committee on Oct. 26th, 2010

[The Chair, Conservative, David Sweet]

Good morning, ladies and gentlemen. This is the 40th meeting of the Standing Committee of Industry, Science and Technology. We're studying Bill C-393, an act to amend the Patent Act.

I'd like to let you know that our meetings today are long and complex. We're going to have three one-and-a-half-hour sessions. The witnesses are going to have five minutes for opening statements. I'll introduce them in a second. We're also going to have witnesses, in two of the three segments, by video conference.

Here with us right now, from the Universities Allied for Essential Medicines, is Rachel Kiddell-Monroe. We also have Amir Attaran, who is a Canada research chair of law, population health, and global development policy at the University of Ottawa; and Richard Dearden, who is a partner at Gowlings.

As you can see, the screens are black right now, but our intention is to have, by video conference, from Tallahassee, Florida, Frederick M. Abbott, from the Florida State University College of Law, as well as Joshua Kimani, from the Canadian Medical Institute in Kenya.

We will start with the witnesses here in front of us, and hopefully, by technology, we'll have the others join us before the opening statements of the witnesses who are with us right now.

Mr. Dearden, I think you were the first one here, so you're probably the most ready. I'll let you begin with your opening comments, for five minutes.

[Richard Dearden, Partner, Gowlings, As an Individual]

Thank you, Mr. Chair and members of the committee, for permitting me to testify about why, in my opinion, Bill C-393 fails to comply with Canada's international treaty obligations.

I am a partner at Gowling Lafleur Henderson. I have practised international trade law for over three decades. You'll find a short biography in tab 1 of my written submissions. Those written submissions, members, explain why Bill C-393 violates the TRIPS agreement and also the carefully negotiated international solution to the access to medicines problem embodied in the WTO's General Council decision of August 2003.

Today I wish to address two points for your consideration, if I could. Firstly, Bill C-393's one-licence regime is not authorized by flexibilities found in the TRIPS agreement. And secondly, TRIPS article 30's limited exceptions provision does not authorize Canada to abrogate its compulsory licence obligations that Canada has agreed to, both in the TRIPS agreement and in the General Council decision.

Now, point one, you'll hear some people argue that you can replace CAMR, Canada’s access to medicines regime, through flexibilities available under the TRIPS agreement. The 2001 Doha declaration required members to maintain their commitments in the TRIPS agreement but recognized that there were flexibilities in the TRIPS agreement. And it gave several examples, one of which was compulsory licensing. But the compulsory licensing obligation that existed at the time was only predominantly for the supply of the domestic market, so it didn't solve the problem.

That's why, Mr. Chair and members of the committee, the WTO ministers gave the following instructions to the TRIPS council. And they're found in paragraph 6. That's why you hear of it as the “paragraph 6 system”. It reads:

We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem....

And that expeditious solution, Mr. Chair and members, is what you find in the 2003 General Council decision.

So Canada can only rely on this decision to issue compulsory licences for export if it complies with the conditions in that decision. And in my respectful opinion, CAMR does that and Bill C-393 does not.

I'd also, as a sidebar here, point out to you that my submissions only deal with TRIPS, but NAFTA has an almost identical compulsory licence obligation in article 1709(10). And you should know that Canada and the U.S. entered a memorandum of understanding that suspended the compulsory licence obligations you find in NAFTA article 1709(10)(f), which was identical to the TRIPS compulsory licensing obligation. That suspension is only valid with respect to the compulsory licence issued in accordance with the WTO General Council decision.

So if the Bill C-393 system were allowed, in my respectful submission, it would be violating NAFTA article 1709(10) because it allows for any drug, in unlimited quantities, for an unlimited term, for export to 140 countries. And that is not in accordance with the General Council decision. It would be offside the NAFTA obligations. And Canada, in my opinion, would end up in a dispute settlement panel under NAFTA.

My second point, Mr. Chair, is with respect to an argument that the single-licence regime proposed by Bill C-393 would be authorized by a limited exceptions provision we find in article 30 of TRIPS. Now, let's not forget, Mr. Chair and members of the committee, that the WTO membership rejected TRIPS article 30 as an expeditious solution to the access to medicines problem. But even if article 30 was available to Canada, the burden would be on Canada to demonstrate before a WTO panel that this one-licence regime is a limited exception; does not “unreasonably conflict with normal exploitation of the patent”; and does not “unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties”.

Canada lost a WTO case involving a Patent Act provision that allowed generic manufacturers to stockpile pharmaceutical drugs for the last six months of a 20-year patent term. We lost that. Canada defended it by arguing that it was okay using the limited exceptions under article 30. The panel rejected that, saying six months was a commercially significant period of time, especially since there were no limits at all on the volume of production allowed or the market destination of such production. So rather than being a limited exception, Mr. Chair, Bill C-393is an unlimited exception because it authorizes a compulsory licence for any drug, in unlimited quantities, for an unlimited duration of time. It does not take into account the legitimate interest of patients who benefit from the incentives that patent protection provides for research and development of life-saving drugs or drugs that improve Canadians' quality of life.

In conclusion, Mr. Chair, what are the proponents of Bill C-393 asking you to do? They're asking you to bypass the WTO and unilaterally renegotiate Canada's compulsory licence obligations through this one licensing system. But what has changed in terms of compliance with our international treaty obligations since the Minister of Industry's 2007 report on the statutory review of CAMR? The only change has been that Canada has accepted the protocol amending the TRIPS agreement that would make the general council decision a permanent amendment. So rather than Canada retreating from CAMR, Canada has in fact further entrenched its commitment to CAMR.

Thank you, Mr. Chair and members.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Dearden.

We'll now move to Madam Kiddell-Monroe for five minutes.

[Rachel Kiddell-Monroe, Chair, Universities Allied for Essential Medicines]

Good morning. Thank you for inviting me to your meeting. I am very happy to be here.

I also want to thank my students from McGill University, who gave me permission to be here today. Another professor is replacing me, and I'd like to thank him as well.

I have worked with human aid organizations, mostly in Asia and through the Doctors Without Borders organization. Memories of Africa still haunt me.

My team took over a project from the French military in 1994 in the dying gasps of the genocide in northwestern Rwanda. We walked into a very fine hospital with fine surgical units, with wards where the patients could be. There was one room where the doors were locked. I asked, “What is behind this door?” I was told those were people I could do nothing for and just to focus on the people I could help. I asked to look behind those doors, and what I saw basically were breathing skeletons. They were people who were dying from HIV/AIDS. At that time, while patients in Canada, Britain, the U.S., and many other developed countries in the world were able to receive life-saving HIV/AIDS treatment, those people did not have access.

I called my headquarters and asked if we could get some medicines for those people: “What we can do? We have to help them.” They said they were sorry, but it would cost $12,000 per patient, per year. They said: “These people have a chronic disease. We cannot help them.” So we had to sit every night and hold these people's hands. We had to comb their hair and talk to them because we were the last people who were to have any contact with them. We watched those patients die.

I believe it's important to bring that to you people here and to those who say we shouldn't make this an emotional issue. But this is about human lives. This is about people who are dying while people in our countries do not have to die. This is about a situation where people do not have access to essential medicines.

It's not the first time I have appeared before this parliamentary committee in the last seven years, which is how long I have been working on this issue. I first appeared in 2004 before this same committee, urging it to reform Canada's access to medicines regime as was then proposed, because there were fundamental flaws in it. The legislation was passed as it was, and we decided as Médecins Sans Frontières to try to test the legislation, because there was so much goodwill, both in the government, the Prime Minister's Office, and from all parties who voted in favour of the legislation and making this work.

So we decided to try to test it. After four years—four years—we managed to get one drug for a limited number of patients to one country. In those four years, about 40 million people died because they did not have access to essential medicines.

We're not saying that Canada is the solution to the whole crisis, but that Canada has a role to play. Canada is not a panacea, but it has an international commitment that it took in 2003 to try to make the August 30 decision work in Canada. We still have that commitment today. We can do it better, and we should do it better.

I worked with my colleagues inside of MSF, and Cailin Morrison in particular, as well as Richard Elliott from the Canadian HIV/AIDS Legal Network, to try to make this order happen, with all the best intentions and goodwill. We went to many countries through our MSF teams, asking governments to please apply and to use that piece of legislation. When we approached the health ministries, they were all thrilled. They would say: “Wonderful, it's another way maybe we can get drugs for our people at last. We need every single mechanism we can find to treat our patients.” We were hopeful. Then when they went to their foreign affairs ministries or to their trade ministries, a block was put on it.

Why was that block put on it? The block was put on it because of the experiences of countries like Thailand, who tried to use flexibilities in their regimes to use compulsory licensing, as Richard Dearden was saying earlier, in domestic situations. When Thailand used a compulsory licence, sanctions immediately came down on them. Abbott, a pharmaceutical company, withdrew drugs and threatened to withdraw other drugs from the Thai market if they didn't change the way they were acting. The U.S. government put Thailand onto the 301 watchlist, as a partner who should not be trusted in matters of intellectual property.

The European Union trade commissioner, Peter Mandelson, sent a letter to the Thai government, threatening them over their use of compulsory licenses and saying they should spend more time negotiating with pharmaceutical companies. They had in fact held over 20 meetings with pharmaceutical companies on this issue to try to get AIDS drugs for the dying Thai population.

Why is the law failing? Some people will refer to market failures, as my colleague on my right will say. Well, I would respectfully submit, the market failures are not an issue for parliamentarians around this table. What you have to do is to make a law that has all the best chances to win, which Bill C-393 has. The market issues are things that should be left to the pharmaceutical companies and the generic companies in trying to make it work.

I would say that references to other forms of fixed-dose combination, which are not same as the fixed-dose combination Apotex produces, will not give fair price comparisons.

Finally, I would like to raise something that has been of great concern to me and many of my colleagues. We've been hearing that there is a move afoot to kill Bill C-393. In the next session, when a vote has to be held on the new sponsor of this private member's bill, there will be people who will prevent it from passing. I would like to submit that this is not a way to democratically deal with the bill, and it would definitely undermine the extremely important work this honourable committee is doing. So I wanted to raise that to your attention, and I do sincerely hope, as a new Canadian citizen, who got her citizenship in March this year, that this is not what Canada would do to this bill.

As a final thing, when I came here to Canada with my family, I had promised the patients I had worked with for over 15 years in Africa and Asia that I would be able to do something here. I believe that Canada is a great country and we have a power to make change.

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Madam Kiddell-Monroe.

Now we go to Amir Attaran for five minutes.

[Dr. Amir Attaran, Canada Research Chair, Law, Population Health, and Global Development Policy, University of Ottawa, As an Individual]

Thank you, Mr. Chairman, and good morning.

I'm an anglophone, so I'll speak in English, but I would be more than happy to answer your questions in French.

I'm a professor in the faculties of medicine and law and the Canada research chair for population health and global development policy at the University of Ottawa.

I began my research on access to medicines over a decade ago while employed at Harvard, Yale, and Chatham House in London. I've published on the subject in The Lancet and in the Canadian Medical Association Journal. In full disclosure, I am or have been on the editorial teams of both those medical journals. I've also been unusually privileged to serve on all sides of this debate as a consultant. I have served Médecins Sans Frontières as a consultant at one time and I've served developing country governments such as Brazil and Malawi. I've served drug companies such as Novartis and international organizations like the World Health Organization and the World Bank.

I thank you for calling on me to discuss Bill C-393, and as I sit here I know all of you, all members, all political parties approach this bill with good intentions. This is clear. And you have hopes and prayers that will help the world's poor. This is clear. It is therefore my unhappy job to tell you why I think the bill will probably have zero results for public health and would likely even do harm. Please let me explain.

When CAMR was enacted in 2005, its raison d'être was to make it possible for poor countries to buy cheaper generic medicines manufactured in Canada. To make this possible, CAMR authorized patent overrides of a kind called compulsory licences, and Parliament believed that by overriding patents in cases of acute humanitarian urgency like malaria, like AIDS, poor countries would beat a path to Canada's door for those medicines.

However, as you know, it hasn't worked out that way. Everyone agrees that CAMR has been a one-shot wonder, and only a single country, as Rachel correctly said, Rwanda, bought medicines under CAMR from a Canadian company, Apotex. As Apotex's own spokesperson, Elie Betito, said to the Ottawa Citizen, “We will not be doing this again.” Everyone agrees, this law is a failure.

Well, how come? In a correct diagnosis, CAMR has failed for economic and not legal reasons. The causes of failure are not in the statute of CAMR, which Bill C-393 could amend, but in reality the causes of failure are in global medicine markets, which no conceivable bill can affect. Rachel's correct about this. I'm sorry to say so, but Parliament simply is powerless to make this law work.

Here's the basic problem: for CAMR to succeed and achieve regular exports of Canadian generic medicines to poor countries, it's necessary for those Canadian generic medicines to be priced competitively compared to other generics on the global market. If Canadian generics cost more than foreign generics, poor countries will buy foreign generics, as well they should: that's how free trade works.

Canadian generics, though, and this is unfortunate, are among the most expensive in the world. And let me share with you some data from the federal government's Patented Medicine Prices Review Board. In 2006 this federal agency compared generic medicine prices in Canada and abroad and it found that compared to Canada generics cost 35% less in America, 51% less in Finland, and a whopping 77% less in New Zealand. Now, I emphasize that these are not industry-sponsored data. They are not activist-sponsored data. They are federal government data of a federal government agency and are trustworthy. What they show is that Canadian generics are among the most expensive in the world, and certainly the most expensive in that study. And as you might guess, overpriced medicines don't sell.

So put yourself in the shoes of an African health minister. Why use CAMR to buy generics from Canada when you can buy generics from America, Europe, India, China, New Zealand, and what have you, for less? This economic reality makes it puzzling why certain AIDS activists insist on supplying the world's poor with Canadian medicines manufactured under CAMR. It's patriotic of them. It's definitely well-meaning of them, I don't wish to take that away; it is well-meaning, but it's also naive.

By selling poor countries more expensive Canadian medicines, the corollary is that fewer patients could be treated on a given budget. It could do harm.

Knowing this, the activists support Bill C-393's amendments to amend the Food and Drugs Act and remove generics produced under CAMR from Health Canada's regulations. That aspect of Bill C-393 is, frankly, terrifying. For activists to champion the deregulation of life and death medicines to save a buck, it is not simply vertiginously irresponsible, it's also medically unethical.

If I may have one minute, I'll wrap up.

In closing, my advice is to forget about Bill C-393 and accept the present reality that including Canada, as elsewhere, there are about 30 countries with such laws. Laws such as CAMR don't work.

This is not to say the House should cease caring about public health in poor countries--far from it. Please maintain your interest, but take the energies, the very good, well-intentioned energies you and others have, that are now absorbed in the sinkhole of CAMR and direct them to reforms of other kinds.

Fix the fact that CIDA is a sclerotic agency. Fix the fact that one-third to one-half of malaria medicines, like I'm holding here, are fakes, are counterfeits in developing countries. They kill children. Stop exporting asbestos. These are things Canadians can do that will save lives. Bill C-393 I don't believe will.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Attaran.

[Dr. Amir Attaran]

Thank you for listening to me this morning. I appreciate your efforts on this bill.

[The Chair, Conservative, David Sweet]

Now we have our two guests by teleconference. Thank you, gentlemen, for taking the time to join us.

I'll go first to Joshua Kimani, who's in Nairobi, Kenya.

Sir, if you could keep your opening remarks to five minutes, that would be appreciated.

[Dr. Joshua Kimani, Canadian Medical Institute in Kenya, As an Individual]

Thank you, Mr. Chair and members of the committee.

I'm Kenyan. I live and work in Kenya, currently with HIV-infected individuals.

Kenya has a population of 38.5 million people; 1.4 million are living with HIV/AIDS. Out of that group, we've currently started 406,000 of them on antiretrovirals, with a current...[Inaudible--Editor].

My interest in this bill is because...[Technical difficulty--Editor].

By 2001, we had only 1,000 antiretrovirals. By 2005, about 10,000. These were drugs from big pharma. By 2005, PEPFAR came in with funds and some money came from the Canadian government. From the generics, we now have 406,000 people who are taking antiretrovirals.

If it were not for the generics, many Kenyans would have died.

[The Chair, Conservative, David Sweet]

Mr. Kimani, just one moment. I'm sorry to interrupt you.

Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

The interpreter says it's almost impossible for him to translate what's being said because he can barely hear us.

[The Chair, Conservative, David Sweet]

All right. Just give me a second.

I think the problem is with the connection that we have, Mr. Kimani. Sometimes the audio cuts in and out, and I think that's what's giving the translators the difficulty.

[Dr. Frederick Abbott, Edward Ball Eminent Scholar, Professor of International Law, Florida State University College of Law, As an Individual]

We just need to be careful because they're having some trouble with the Kenyan transmission.

[Dr. Joshua Kimani]

Is it very slow?

[The Chair, Conservative, David Sweet]

Mr. Abbott, could you make sure that your mike is muted? That might be an issue as far as Mr. Kimani's transmission. Thank you very much.

Go ahead and begin again, Mr. Kimani. We'll see if that works better.

[Dr. Joshua Kimani]

Okay. Thank you.

As I said, I'm Kenyan...[Technical difficulty--Editor]...in Kenya and in Canada. I'm currently the clinical director for the Kenya AIDS control project, which is co-managed by the University of Nairobi and the University of Manitoba, in Winnipeg, Manitoba.

My interest with the bill is because I'm taking care of Kenyans who have HIV and AIDS. Kenya has a population of about 38.5 million, with 1.4 million living with HIV and AIDS. Currently, 406,000 are on the antiretrovirals, but this wouldn't be possible were it not for the generics.

If I go back in time, only 1,000 Kenyans were on antiretrovirals by 2001 when the big pharma were selling the antiretroviral drugs. By 2005, only 10,000 were on antiretrovirals. But something changed in 2005, when we started accessing generics from all over the world--from Brazil, from India--through PEPFAR, the presidential emergency plan for AIDS relief in Africa. We currently have 406,000 Kenyans living with HIV/AIDS on antiretrovirals, and that's a big jump. If it were not for those generics, the majority of these Kenyans would be dead.

In 2010 we changed the...[Technical difficulty--Editor...antiretroviral program to 350. This pushed the number of Kenyans who might go on antiretrovirals to about 610,000. This will require funding from some source. Currently, about 65% are funded by PEPFAR, and the rest are funded from other sources--global funds, pension funds, and Kenyans. But it's all generics.

With the previous association between Kenya and Canada, I think the only thing we need to get from Canada is generics. I know that somebody has said that generics can come from anywhere, but maybe the good people from Canada could invest in this, because with the increase in individuals on antiretrovirals for long periods, we expect a bigger number to become resistant, and not all antiretroviral drugs are in generic forms.

[The Chair, Conservative, David Sweet]

Mr. Kimani, I'm sorry. We appreciate your time and everything, but with the connection we have it's almost impossible for me to understand. This has nothing to do with your capability and command of the language. It's the connection over the Internet.

I will leave it to our technicians to try to re-establish the connection so we can hear your testimony. For now we'll move on to Mr. Frederick Abbott and hear his testimony while we try to work on the connection with you so we can hear you more clearly.

[Dr. Joshua Kimani]

Thank you.

[The Chair, Conservative, David Sweet]

Mr. Abbott, please keep your opening remarks to five minutes.

[Dr. Frederick Abbott]

All right. Can you hear me?

[The Chair, Conservative, David Sweet]

We can hear you clearly, Mr. Abbott.

[Dr. Frederick Abbott]

Good morning.

I appreciate the opportunity to appear before the committee regarding the bill to enact proposed changes to the CAMR.

I appeared before this committee on March 10, 2004, during what was then consideration of Bill C-9, which, as amended, was ultimately enacted as the CAMR. In the course of dialogue with committee members in 2004 I raised several concerns regarding the terms of the then draft legislation. I was of the view that a number of the restrictions and limitations under consideration would hamper effective use of the legislation as then proposed.

Though some improvements were made in the legislation prior to its adoption, it was clear that Canada had decided not to take full or effective advantage of the flexibilities in the TRIPS agreement, the Doha declaration, and the August 30 waiver. It was foreseeable that limitations would significantly restrict the ability of the CAMR to address very serious public health problems confronting developing countries, with limited or no capacity to give effect to compulsory licensing. It's therefore not surprising that this committee is revisiting CAMR with the objective of making it a more effective and useful mechanism.

Let me spend a few moments explaining why I might reasonably be considered to have expertise on the subject of legislation to implement the August 30 decision. I've written and published extensively on the subjects of the TRIPS agreement, trade and IPRs, and on the relationship between that subject matter and public health, including access to medicines. I regularly have served as an expert consultant to the World Health Organization, the World Bank, the WTO, UNCTAD, and other multilateral organizations regarding trade, IP, and public health matters.

I served as legal consultant to the group of developing countries that formulated the proposal for the 2001 Doha declaration, worked with those countries throughout the process in which it was negotiated and adopted, and subsequently advised a core group of developing countries that was primarily responsible for negotiating the August 30 waiver at the WTO from the inception to the completion of that process. I have written and published about those negotiating processes in the American Journal of International Law and The Journal of International Economic Law.

I prepared for the World Bank a set of model-implementing legislation and documents for developing countries to implement the August 30 decision. I would note that one of my draft notification forms was used by Rwanda in its notification to the WTO. I've been to Canada again in the review of the CAMR. I've participated as an expert consultant at UNDP to reconsider this bill.

Finally, I would note, as a matter of disclosure, that I'm presently advising the Government of India in dispute settlement consultations at the WTO, where India and Brazil have initiated consultations with the European Union concerning the seizure of generic drugs in transit through airports in the European Union, and that Canada is a third-party participant in that set of consultations.

The August 30 decision has been criticized by NGOs promoting access to medicines, by some academics, by some generic producers, and by some developing countries for establishing an overly cumbersome set of rules that make it difficult to give effect to the basic objective of permitting export of low-priced generic pharmaceutical products to developing countries. I've consistently observed that the decision was a process of a long and intensive negotiation involving stakeholders with decidedly different perspectives, and that the August 30 decision represented a compromise between those perspectives.

Neither the NGOs seeking to provide the easiest mechanism for facilitating access to medicines nor the originator pharmaceutical industry found or find the August 30 decision to reflect an ideal world of either access to medicines or industrial protection. But my own view is that it can be made workable with appropriate implementing legislation and with conscientious work by lawyers, pharmaceutical procurement specialists, and others, in giving effect to the provisions of the August 30 decision. Nonetheless, for whatever reason, the CAMR was designed to add obstacles to the provisions of the August 30 decision, which make it more difficult to implement in practice.

Why the approach of Bill C-393?

Bill C-393 seeks to streamline CAMR to take advantage of flexibilities inherent in the August 30 decision by providing a pharmaceutical producer with the opportunity to obtain a single licence from the commissioner of patents that will authorize it to make and use a patented pharmaceutical invention for purposes of export to developing countries that identify public health needs.

A principal reason for proposal of the single licence is to solve a significant problem affecting the way international pharmaceutical procurement works in practice.

Many or most pharmaceutical procurement authorities acquire medicines by publishing a request for bids or proposals for supply of medicines, soliciting a response from industry. Competitive bidding isn't always practised. Nonetheless, it's extremely difficult for a producer, for example a prospective Canadian supplier, to respond to a bid request conditionally, indicating that supply is predicated upon obtaining a compulsory licence and that obtaining that compulsory licence may be a lengthy process that involves modifying a government list to add the subject-matter medicine to a list of products, opening negotiations with a patent holder or patent holders for a voluntary licence, and awaiting an ultimate determination by the commissioner of patents regarding whether a licence should be issued.

A public health procurement authority in a developing country would and should be understandably reluctant to award a contract based upon the fulfilment of an uncertain set of contingencies on the part of the producer-supplier.

Requiring a Canadian producer to request a compulsory licence on a case-by-case, country-to-country basis presents obvious difficulties. It presumes that a producer can and should develop a pharmaceutical production line to fulfill a single contract to be negotiated and put into effect over a protected period of time. But the licence is set to terminate after two years.

Simply put, you have heard and undoubtedly will hear from Canadian generic producers that this is a non-economic proposition. It's almost certain to drain business and personnel resources--

[The Chair, Conservative, David Sweet]

I'm sorry to interrupt you--

[Dr. Frederick Abbott]

But you would like me to wrap up.