Industry Committee on Feb. 7th, 2019

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Are you aware of whether the government has had to engage in the use of the special access programme to procure drugs that are in short supply in Canada over the past few years?

[David Goodman]

We're well aware of that, but most of the special access products are for products that were never registered in Canada. It's a workaround to get them into the country.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Is that a regulatory problem that you would identify that we're having today, where we have products that we need to use the special access programme to access because they're not registered in Canada? Is that a regulatory barrier?

[David Goodman]

It is a regulatory barrier because the solution to it is to register them. The cost to register them and the barriers to support that registration are so high that in some ways companies that have these products in other markets say, “Why bother going through this burden when, if the patient needs it, they'll import it?” These are typically for small-market products for small needs.

Instead of doing the right thing about registering them, they can do without it. No one is forcing them to do it.

I think a better approach would be to look at these needs and have Health Canada say, “We want to have these products approved. We want to review them. Let's do it the right way, but let's realize that these aren't blockbusters, and let's not charge a fee. Let's use policy the right way.”

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

From an economics perspective—a cost-benefit analysis—is the cost higher to purchase these things when the government has to engage in these special access requests, because they're not registered? If we were to lower the regulatory requirements for registration or the fees, do you think it would it actually save the Canadian government money in the long run, because they would have better access to these drugs?

[David Goodman]

The bigger issue is if we go to Canadians, the Canadian consumer is paying a huge price for the special access because they are not getting it reimbursed in their plan. The consumer is being killed in these cases. They're getting denied. If they can get it, it's coming out of their pockets.

If it were to be registered, then it becomes a fair game. It gets to be evaluated on its merits, and its pricing gets to be discussed through other mechanisms.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Masse. You have seven minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I am curious about the waiver of fees for pediatrics. It would seem that would be a reasonable approach—when the company may be making no profits in other divisions, that it wouldn't consider that as the loss leader for brand development, and so forth.

Is it the fees so much so that it basically makes it non-competitive? If we have a low market here—despite Ontario being one of the largest consumer commercial markets in North America compared to many states—just waiving the fees or the regulations would make the difference for putting drugs on the market. Do you have an example of that, that we could pull for this study? That would be really interesting.

[David Goodman]

Well, if you were to ask me, I now have submitted two products. One got approved. One is waiting for approval. I'm in discussions with Health Canada about the fees they are charging. We haven't resolved it, so I prefer not to discuss that.

I could say, from a company that started this as a service project—because we've also supported the foundation, the centre, and we continue to support it—that we're taking a step back from doing additional ones because of the experience we have had, and the pending regulations that are proposed that will make it even more expensive. Health Canada has created a climate not to do this, versus to do it.

The pediatric population is an unmet need, but it's small. There are so many of these unmet needs that are small, and Health Canada puts on one price, really, for every product that they want to register and manage. The proposed new regulations say that if you're a small company, they will give you a fee reduction, and if you're a large company, you get nothing. What we're saying is, shouldn't it be more about how well the product sells? If somebody is going to keep something that people need in the pharma space.... We do things that people need. Don't make it so impossible for us to do things as a service.

[Brian Masse, NDP, Windsor West, ON]

I understand. I guess I just have a hard time understanding what drugs for pediatrics are being denied to Canadians right now. I'm on the Windsor-Detroit border. If we're looking at people having to modify their own medications, as opposed to a pharmacist, and we're being denied that with Ontario's market economy, which is much more robust than those of most U.S. states, it would seem that this economic argument isn't always valid.

It would seem that perhaps there are other things that might be barriers. Maybe it's packaging or some other type of regulatory burden. I don't know. Especially given the fact that we've done a number of different initiatives since I've been here, everything from lowering corporate taxes.... We've been pushing, and I know that for this committee in particular, it's the SR and ED tax credit system, which is very difficult even to this day. It's getting a little better, but it's been a nightmare for many.

It would just seem that it may be very much a harsh thing, which is that Canadians are dividing their medications and so forth for pediatrics because companies just can't make a buck here. Is that what's happening? Is that what you're saying?

[Alain Boisvert]

I think the answer to this is that, from the start, the patient populations are very small in pediatrics. Also, these are disease states that are almost regularly rare diseases. The formulation problems happen with drugs that have been on the market for many years, have become generic and are now accessible at a very low price for Canadians. Formulating a pediatric drug requires some additional R and D investment in formulation at a time in the life cycle of the product where this product is no longer profitable, so it's this joint—

[Brian Masse, NDP, Windsor West, ON]

If I could just comment, how much would a fee cost? What x amount of dollars would that be? If you're saying that if the fees were waived—the suggestion was to waive the fees on that—how much would that cost? I'm just trying to get a practical.... People are going to be looking at this report.

I'm sorry to interrupt. I'll let you finish, Mr. Boisvert.

[David Goodman]

The fee that was proposed for us to pay for just Health Canada approval was $167,000.

[Brian Masse, NDP, Windsor West, ON]

That's important evidence that we need to know, right there.

[Alain Boisvert]

Sometimes—often—the whole of the Canadian market for these products can be much less than $1 million in all provinces, all jurisdictions.

Just your regulatory fee is $170,000, and you also have to pay a fee for the Canadian Agency for Drugs and Technologies in Health, CADTH, to assess the cost-effectiveness of the drug, which is another $70,000. INESSS in Quebec has a fee of about $40,000 to do the exact same thing. Just in fees, you're covering almost half of the market for the drug, and there is development work that has to be done by the company to formulate the product and get it through Health Canada. Adding in all of these costs becomes a real barrier.

[David Goodman]

You never know if Health Canada is going to approve it or not, so there's a risk at development.

[Brian Masse, NDP, Windsor West, ON]

There's risk. This is very helpful to get to it.

Once they pass all those hurdles—the word hurdles was used—is then that process not applicable anywhere else other than just Canada, in terms of any of our trade agreements and so forth? Once you've invested all those fees and stages, are you then able to transfer any of those costs anywhere else?

[David Goodman]

The fees, no—every jurisdiction wants its own fees.

[Brian Masse, NDP, Windsor West, ON]

Okay. This is important.

[David Goodman]

Yes.

[Brian Masse, NDP, Windsor West, ON]

This is where we're trying to get a distinguishing difference; walk it right through the entire—

[David Goodman]

In the case of Health Canada, there's no value added outside.

[Brian Masse, NDP, Windsor West, ON]

It's no good for you in the U.S.

[David Goodman]

No.

[Alain Boisvert]

In fact, U.S. comparison can be detrimental to Canada because the fees are roughly the same in the U.S. and in Canada except that the market is 10 times smaller here. The cost of getting the drug to market, with this fee structure, is disproportionate in Canada.