Industry Committee on Feb. 7th, 2019

[The Chair, Liberal, Dan Ruimy]

Welcome, everybody, to the Standing Committee on Industry, Science and Technology, as we pursue our study of the impacts of Canada's regulatory structure on small business. We have a full panel with us today, so I will be tight with my time.

From Pharmascience, we have David Goodman, Chief Executive Officer and Alain Boisvert, Head of Government Affairs and Market Access. From Consumer Health Products Canada, we have Karen Proud, President and Adam Gibson, Vice-President of Public Affairs. From MEDEC, we have Brian Lewis, President and Chief Executive Officer and Diana Johnson, Vice-President of Regulatory Affairs. From the Chemistry Industry Association of Canada, we have Bob Masterson, President and Chief Executive Officer. Thank you all very much for coming.

Each group will have seven minutes to present and then we will go into our rounds of questions for the remainder of the two hours.

Why don't we start with Pharmascience, Mr. Goodman?

[David Goodman, Chief Executive Officer, Pharmascience]

Mr. Chairman and members of the committee, it is with great pleasure that we appear today on behalf of Pharmascience before the Standing Committee on Industry, Science and Technology.

Before we share with you our recommendations to improve and modernize Canada's health product regulatory system, I'd like to first introduce our company and underline its unique contribution to the Canadian pharmaceutical industry and economy.

Pharmascience is a privately owned, entirely Canadian pharmaceutical company founded in 1983 by my father, Morris Goodman, and his partner and fellow pharmacist, Ted Wise, with a goal to offer high-quality, accessible and affordable pharmaceuticals to Canadians and global citizens. Our headquarters and manufacturing facilities are in the greater Montreal area. Over time, our growth has been very significant, and we've become the largest pharmaceutical employer in Quebec, all categories confounded, with a workforce exceeding 1,500 employees.

Through our affiliate Pharmascience International, we export close to $100 million of high-quality, Canadian-manufactured pharmaceuticals to more than 60 countries. Our exports have been growing above 10% per year for the last few years.

Less well known is our contribution to pharmaceutical R and D. We have invested more than $250 million over the past five years in R and D initiatives, which places Pharmascience among the top 10 investors in our field in Canada, and we have been ranked in the top 100 by Report on Business Magazine every year for the past five years. We employ close to 200 people in our R and D lab in Candiac, Quebec.

Pharmascience's R and D contribution goes far beyond product development and formulation. We are currently supporting and sponsoring a major clinical trial in partnership with the Montreal Heart Institute and Dr. Jean-Claude Tardif, its principal investigator.

The COLCOT trial, which we're involved with, will be a global, randomized trial of colchicine, an old agent used in the treatment of gout and in the prevention of morbidity and mortality outcomes related to cardiovascular diseases. This trial generates a great deal of interest in the international cardiology community. It will last 20 years and could shape the prevention and treatment of cardiovascular disease, which remains the number one cause of human death at the global level. Of significant importance, colchicine is a very affordable drug and would not pose the sort of financial challenges to health care budgets that we have become accustomed to with many new specialty drugs. The contribution of the COLCOT trial to Canada's health care system could be unique. Without Pharmascience's support, this trial could not have been undertaken. It is made possible because both the Montreal Heart Institute and Pharmascience are so deeply rooted in the Montreal community.

What truly distinguishes Pharmascience from almost all other pharmaceutical companies operating in Canada is the fact that what we produce and commercialize in Canada and abroad is essentially reinvested here to create wealth and economic growth locally. No foreign-owned company can offer this sort of contribution to the Canadian economy, with all the decision-making done locally.

This outstanding business contribution to the Canadian economy is completed by our philanthropy. More than $70 million worth of drug products have been donated by Pharmascience through Health Partners International of Canada to more than three million people in more than 100 countries since 1985.

The Goodman Foundation has supported the creation of the Goodman Pediatric Formulations Centre at the CHU Sainte-Justine in Montreal to help support the development of child-friendly formulations of essential drug products. The foundation is also a major supporter of the Rosalind and Morris Goodman Cancer Research Centre at McGill University, and is a major donor to the Université de Montréal's faculty of pharmacy, where the main agora bears our name.

While Pharmascience is considered a large player in the Canadian generic space, we remain a small enterprise at the global level. Yet the future of our company will largely rest on our ability to grow in global markets and to create wealth in our country by exporting high-quality, Canadian-manufactured pharmaceuticals. It is from this perspective that we'd like to contribute to the work of your committee, to bring the perspective of a fully Canadian enterprise.

I'd like now to identify a few areas that Pharmascience views as needing significant regulatory modernization and improvement for small Canadian businesses that are involved domestically and globally in the pharmaceutical field.

First we will speak about how Health Canada's regulatory role is essential, and we are the first ones to recognize it. Health Canada has also pledged, as a fair regulator, to apply equal standards to all manufacturing facilities, domestic or foreign, and we have no doubt about its intent to do so.

However, our perception is that it has in fact been difficult to maintain an equal playing field between Canadian and foreign facilities regarding compliance audits. This can have a very significant competitive impact on Canadian manufacturers, which, because of their greater accessibility, are under direct control by Health Canada; whereas foreign facilities are certified indirectly through foreign regulators. In this context, it's difficult to fully harmonize application of the standards.

Our experience is that this has played against Canadian manufacturers such as Pharmascience, a situation that can greatly hurt our competitiveness and ability to create growth and wealth and reinvest it locally. We would ask that this matter be addressed jointly with Health Canada.

Submission fees are also now charged systematically to Canadian manufacturers of pharmaceutical products seeking a regulatory authorization to commercialize products. These fees can be substantial and are applied with a one-size-fits-all approach aimed at ensuring procedural fairness. The fee structure does not distinguish enough between large, small and very small enterprises, and it's not adapted to potential market size and anticipated product revenues. Consequently, submission fees can be disproportionate barriers to the decision to bring in a new product or formulations that would fulfill important health care needs.

The best examples of that are the pediatric formulations. Pediatricians in Canada have complained for more than 30 years that critical drugs they need to prescribe for infants or children are not available in child-friendly formulations and need to be compounded by pharmacists or parents before they are administered to children. Many of these products are available in other international markets. However, manufacturers are de-incentivized from bringing such pediatric formulations to market in Canada. Most of the time, drugs are off patent, and the costs of developing a new formulation would be impossible to recover in small, low-price markets such as those existing in pediatrics.

A solution would be to waive submission fees for pediatric formulations. Such an exception would be perfectly consistent with the public health objective to enhance the availability of child-friendly formulations. We need to have this discussion with Health Canada. Successful development of pediatric formulations will also require a specific pricing grid from the pan-Canadian Pharmaceutical Alliance, and federal and provincial drug pricing negotiation bodies where the federal plans are represented.

International harmonization is also a major goal of agencies such as Health Canada, and there are many trusted regulators with which it could be possible without impeding on public protection. However, we continue to experience multiple examples of Canada-only product standards, such as specifications or in-process testing standards, which make efficient production and market supply difficult, when not outright impossible. We must remember that Canada only represents 1% to 2% of the global pharmaceutical market. A greater collaboration effort to align with trusted regulators is essential.

The list of topics could be longer, but to foster a useful discussion with members of the committee, we'll limit ourselves to the above.

In closing, and before addressing members' questions, I wish to reiterate our gratitude for the opportunity to share our suggestions with the committee, and to assure you of Pharmascience's commitment to co-operating with Canadian governments—federal, provincial and territorial—in the pursuit of our common objectives of local economic growth and wealth creation in the health care field. Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Now we're going to move to Consumer Health Products of Canada, Karen Proud.

[Karen Proud, President, Consumer Health Products Canada]

Good afternoon, Mr. Chair and ladies and gentlemen of the committee.

My name is Karen Proud. I'm the President of Consumer Health Products Canada. I'm joined at the table by my colleague Adam Gibson, our newly minted Vice-President of Public Affairs, who has been with the association for about a month.

In our previous lives, however, Adam and I have both worked as regulators at Health Canada. I left Health Canada over 10 years ago, but Adam's departure from the public service was much more recent. In his last job with Health Canada, he was the director general of the natural and non-prescription health products directorate. Between the two of us, we have about 25 years of experience in regulating the very sector we now represent.

I will give you just a little bit about Consumer Health Products Canada.

We are the trade association that represents the companies that make evidence-based natural health products and over-the-counter medicines. These are things from sunscreens to vitamins to allergy medicines. They are what Canadians have in their medicine cabinets to treat their minor ailments every day. Within our membership, we have a wide range of members, from the very biggest manufacturers to small companies trying to make a go of their business in Canada. In fact, some of my colleagues who are here today are members of CHP Canada.

I'm really pleased to be here today to share our experiences and thoughts regarding this important study. I thank the committee for the opportunity to present.

I'd also like to offer our support to the witnesses you heard on Tuesday from both the Chamber of Commerce and the Canadian Federation of Independent Business. You heard a lot about red tape and administrative burden from those witnesses. We are fully aligned with what they presented to you on Tuesday. We would therefore like to offer input in some additional areas of the regulatory system. We won't touch on those areas that were already very well represented by those witnesses.

At CHP Canada, we are advocates for the necessary benefits of regulations. Our industry has long recognized the positive role that regulations play to ensure market fairness, consumer safety and investor confidence.

We have been around for well over 100 years and have witnessed the additive impact of new regulations over time and the resulting challenges faced by our members, particularly the small businesses. We've faced these challenges in the past by remaining engaged with government.

For example, we applaud the recent rounds of regulatory modernization that have been undertaken by the Treasury Board Secretariat. The renewed cabinet directive and the supporting suite of policy tools published last September represent a real step forward and, when applied by departments, will have a significant impact on businesses both large and small.

My experience over the years has been that the Treasury Board has not frequently consulted with stakeholders outside of government on these types of policies, and they really should be congratulated for the work they've done and the consultations they've had that have helped to contribute to the development of these new policies.

That said, we have not seen a consistent application of these sorts of policies in the past. Staying engaged with government has also become increasingly difficult, especially for small businesses. I hope to provide some insights from the point of view of our sector as to how we may improve the situation, so I've broken up the presentation into a few theme areas that we would like to raise for your consideration.

One relates to regulatory competency and capacity. One of the greatest challenges we have seen over the years relates to achieving a shared understanding between industry and the regulator of how the industry actually functions. Essentially, a well-informed regulator is one who will propose and ratify the most effective laws. However, the value of understanding industry is influenced by public service attitudes, management changes and perceived and real conflicts of interests, as well as resources.

At CHP Canada, we have taken it upon ourselves to offer education to our Health Canada regulators about how our industry works. We have an ongoing program whereby we provide access to our member experts at least twice a year to explain how our business functions. While our education efforts have been very well supported by the Health Canada officials, the challenge is that this form of industry comprehension is voluntary and is not a prerequisite to becoming a lawmaker. A lack of comprehension of small business factors only compounds these concerns.

The policies I mentioned earlier from the Treasury Board would help address issues through improved consultation; however, we have not seen their consistent application over the years. As a result, we believe more rigorous application of Treasury Board policies, as well as sector education within regulatory bodies, are partial solutions that are already before us.

I also want to speak briefly about the volume of regulations and the planning for input into regulations. There's always a challenge for both associations and government to effectively engage small businesses. They're busy. Because they have fewer staff performing multiple roles, they may often find themselves learning about issues as they face them, as opposed to being part of the consultative process in shaping those regulations.

The environment inherently puts small business at a disadvantage during regulatory consultations that may impact their operations. They're always at risk of not being represented and, therefore, appearing complacent or in agreement with regulatory proposals when their voices are not heard.

For example, in order to stay engaged over the last four months, small businesses in our sector would have had to have participated in 24 different regulatory-related consultations coming out of Health Canada alone. Almost half of those were only shared with industry associations, with some requiring as few as 10 days to respond. Many small businesses are not even members of industry associations and don't benefit from the input that we provide, and their voices are not heard.

While not all of these consultations that I mentioned introduce new burdens, the sheer volume, timelines and communication practices mean that in many cases there is neither the ability nor the time to engage small businesses.

I don't want to suggest that the government stop consulting with industry, or that the pace of the necessary changes be slowed. We support the vast majority of what our regulators are working on and really greatly appreciate the opportunities and the efforts to engage with us. We'd simply encourage government to tailor their engagement activity to small businesses.

I know I've run a little bit over time. I'll just touch very quickly on one last point that was raised by the witnesses on Tuesday with regard to the lack of an economic mandate. We would just like to confirm and support the commitment in the fall economic statement requiring regulators to look at things like economic competitiveness. We're very happy to see that the government was looking to explore legislation that would include regulatory efficiency and economic growth as an integral part of regulators' mandates.

In conclusion, I'd like to thank the committee again for the opportunity to appear. We believe Canada has a great opportunity to lead the world in our regulatory approaches for small business, and see this study as an important part of that effort. I'll be happy to talk in more detail about the efforts that we are undertaking, including some research that we're currently involved in to look at the economic impact and competitiveness of our sector in Canada.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

I encourage you to submit a brief that has everything that you weren't able to get through today. That would be good.

That applies to everybody, of course.

Now, from MEDEC, we have Brian Lewis, President and Chief Executive Officer. You have seven minutes, sir.

[Brian Lewis, President and Chief Executive Officer, MEDEC]

Thank you so much.

Diana and I both represent MEDEC, the trade association representing the medical technology industry in Canada, which includes surgical equipment, pacemakers, in vitro diagnostic blood tests and medical imagining equipment; that's the breadth of our membership.

I'm going to give you a little bit of background in terms of the environment for small technology businesses.

What we know is that jurisdictions that have robust technology business ecosystems have efficient regulatory processes and health system adoption practices that enable timely adoption of medical technology solutions that improve patient outcomes. We absolutely need that sort of situation to occur in Canada.

Access to the Canadian marketplace is very complicated. There have traditionally been licensing hurdles to overcome at the federal level and procurement issues at the provincial level. The other thing to remember, which has been stated by some of the other witnesses around the room, is that human and financial resources are very limited. Some companies have fewer than 10 employees, so it's important that we look at red tape and the amount of burden that we have in terms of processes to actually better enable these businesses.

In the seven minutes, we'd like to quickly go through some of the licensing hurdles that exist out there, including authorization timelines and slow or unpredictable regulatory approval times for medical technologies. We have global harmonization efforts, which we applaud and which should absolutely be made, but they should not introduce Canada-specific requirements. Implementation should be harmonized as much as possible. With regard to the auditing process, which is very important for safety, there needs to be recognition of small business capacity and reduction of red tape in terms of multiple short-term audits. What we're talking about there is duplicative audits within a short time frame. We need to relieve the burden on small Canadian businesses.

Another hurdle is the difficult clinical trials framework for devices. Conducting clinical trials is important and it's a real draw for business and an important aspect for business. Novel and digital technologies are another hurdle.

Next we will go through each of these very quickly and also talk about what Health Canada has been putting into place. For about the last year, we've noted that Health Canada's consultations have increased dramatically, and the amount of work that has been done by Health Canada to try to improve the situation has increased. There has been progress, but what you're going to see here is that it's important that it continue. The work done to date is appreciated and it's been well accepted by small Canadian businesses, but it must continue.

For authorization timelines—that's the approval of your product—slow or unpredictable regulatory approval times for medical technologies are a disincentive for those particular companies. For the companies that want to launch products in Canada, want to export products or want to invest in R and D, it is highly important that this regulatory approval occur in Canada.

One of the great things is that Health Canada has been addressing those processes, as I mentioned earlier, to meet the target timelines. They've been developing the process, and have also been providing training and new guidance documents. Under something called MDSAP, close to 200 companies have participated in Health Canada training so that situation could get better, but as I said earlier, it's really important that this continue, because it's just starting.

With regard to unique Canada requirements, as I mentioned earlier, we're dealing with the process of global harmonization, which is key if someone is exporting from Canada. Canada is only 1%-2% of the world, so our Canadian-headquartered companies have to be able to export, and global harmonization is key to reducing that regulatory burden. We and Health Canada play an active role in these particular processes. It is key, but no harmonization effort should introduce Canada-specific requirements. Harmonization with global initiatives, such as those taken by the International Medical Device Regulators Forum, IMDRF, must be maintained. They must go on. The challenge with these is, at present, the need for regulators to implement the agreed processes across the board, which means all countries doing it at the same time.

A recent example highlighted here is the implementation of the medical devices single audit program, with only Canada mandating its use. MDSAP can be used with the four other authorities, but it has not been mandated. It's really important that we maintain that degree of harmonization.

Health Canada did react well to the input provided by the auditing organizations and industry to ease the burden on manufacturers, but in the future it would be good if we were more harmonized.

On the increased audit burden, scheduling multiple audits within short time frames is inefficient for small business. For example, small Canadian companies have reported to us undergoing an extensive medical device single audit, followed approximately three months later by a Health Canada MDEL audit. This is a large drain on their resources. The audits are essentially very similar in process, so we have to realize the impact of that red tape when conducting audits in the future.

Clinical trials are a very important element we were talking about earlier. Canada needs to stay competitive with the rest of the world, and we need to change the process regarding investigational testing authorizations, ITAs, to future-proof the regulations and bring innovation to Canada. At this time, Canadian start-up companies are being forced to go outside Canada for studies on low-risk products for timely adoption. This has huge impacts on small businesses. Health Canada tried to address this by coming out with guidance to facilitate the process. Unfortunately, that guidance had the opposite effect: it doubled the review time and the bureaucracy required by the investigator is significantly more.

We know Health Canada has an action plan to continue, and we look forward to their addressing this particular issue.

In the area of novel technologies, a new approach to the Canadian approval and adoption of innovative medical technologies would enable growth for the sector and deliver better patient outcomes. Health Canada has already begun to focus on this area with the creation of a new digital health division within the medical devices bureau and a new standing scientific advisory committee. The division is welcomed by industry, but more work is required there.

For the regulatory review of drugs and devices, we see very positive comments from Canadian-headquartered organizations on the early pre-submission scientific advice discussions with manufacturers during the development stage of innovative products. You get to talk to the regulator about how you should improve your submission and what information will be required to make this submission more efficient. Further, it allows the regulator to see what types of capability they'll need inside to conduct that review.

I have some final thoughts as we move into these areas of novel technology and digital health. Health Canada should focus more on developing guidance documents rather than regulations because there's going to be a lot of change management in the regulations as they develop them. Guidance documents are easier to revise than regulations, so they should stay on top of it and, wherever they can, put out guidance rather than regulations.

They should continue to drive global harmonization and implementation, and always consider additional burden when introducing new initiatives to reduce that audit burden. We made prior submissions.

Again, as I stated at the beginning, the biggest thing is that Health Canada is moving forward. I think if your committee can put forward a plan so they continue to be resourced to go forward, we'll end up very shortly in a much better situation.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Finally, from the Chemistry Industry Association of Canada, we have Bob Masterson.

You have seven minutes.

[Bob Masterson, President and Chief Executive Officer, Chemistry Industry Association of Canada]

Thank you, Mr. Chair and committee members. I will be brief.

Canada's $55-billion-a-year chemistry industry is a significant contributor to the economy. We're also a fast-growing industry. Many would not know it, but we added $10 billion in new chemistry investments in Canada, announced during the past year. Nevertheless, to be perfectly frank, we believe Canada has a very serious problem with regulatory competitiveness.

According to the World Economic Forum, Canada ranks 14th out of all OECD countries in its overall competitiveness but 38th out of 40 when it comes to the overall burden of government regulation. Just imagine how far up the rankings we could move in our overall competitiveness if we could tackle this chronic issue of regulatory under-competitiveness.

What are our major concerns as a regulated community? Well, let's start with the serious levels of overlap and duplication across all levels of government, all jurisdictions. Add to that the rushed-out and poorly thought-out regulations that very rarely ever take into account the regulated entity's willingness to achieve the policy objectives but in a manner that will allow them to do so in a least-cost manner. We don't get that opportunity often enough. Then there are the uncertainty and timeliness issues we've heard about. Obtaining an approval in Canada generally takes an average of 249 days. That's double the OECD average and triple the amount of time required in the United States.

In short, we see a regulatory system that's multi-layered across departments and jurisdictions without clear authorities, which often results in delays, administrative burdens, and unnecessary costs to both government and business.

We're often asked in fora like this to identify one thing that could be done better to address this issue of regulatory competitiveness. I would encourage this committee to forgo simplistic solutions. You don't get to be a poor performer in any field by doing just one thing wrong. If you're at the bottom of the heap, there are a lot of things you're doing wrong, and you need to make systematic changes. This issue of regulatory competitiveness, to quote the deputy minister in Ontario, is a chronic disease with a heavy economic drag across the whole country.

While the regulatory burdens do cross multiple jurisdictions, we are here today to share our concerns specifically with the federal regulatory regime. We are also very, very pleased to see that our concerns are shared. In his fall economic statement, Minister Morneau did identify regulatory competitiveness as a key concern and did announce a number of measures to address it. Those measures included the recent cabinet directive on regulation. That's welcome, but I would suggest that there will be no meaningful improvement at all, whatsoever, unless the central agencies drive adherence to that directive with the same zeal and timeliness they drove government renewal and program review efforts more than two decades ago. Presently, we see absolutely no sign of this on a day-to-day basis.

I might also note, and perhaps this is most important of all, that the directive is completely silent on the question of jurisdictional issues within Canada and, unlike program review, poses no challenge for federal entities to consider the extent to which the issue in question is, or should be, the responsibility of our provincial governments and territories. The smart regulation initiative of 2004-05 offered a much more critical examination of the needs and benefits of cross-jurisdictional regulatory co-operation. As the issue of jurisdictional overlap and duplication is so prominent—perhaps the most perennial and important issue of all—this is an area in need of further urgent attention within that directive.

In my remaining minute, let me point out to you two examples of what in our view are actually very good practices of regulatory effort within the federal government. They both avoided many of the shortcomings that plagued the regulatory competitiveness issues in the system more broadly.

Within Health Canada and Environment Canada, the development and implementation of the chemicals management plan, first launched in 2006, has been a welcome exception. It's a complex program. It's difficult. But they've done a very good job managing the competitiveness aspects. The program remains on track to achieve all its objectives, and is being emulated by other jurisdictions across the world. Likewise, Transport Canada's multi-faceted approach to better managing the risks associated with the transportation of dangerous goods is also a complex policy and regulatory effort that has been remarkably well delivered. I encourage you to invite representatives of those programs to your committee to share their perspectives on why their regulatory initiatives are working so well when most of the others are simply not.

Finally, the Province of Ontario has also started important efforts in this area. A comprehensive red-tape challenge process was initiated by the previous government. The recommendations out of that are being delivered by the current government. Deputy Minister Giles Gherson has been at the helm of that exercise throughout. He too would make an excellent witness to this study. The deputy minister is guided by a vision of eliminating those regulations that add cost to business and to government but that do not add any benefit to the province or its citizens.

I'll just conclude by saying that the study being undertaken by this committee is most welcome and, in our view, urgently overdue. I encourage you to be honest and frank about Canada's regulatory competitiveness problems and to be just as broad and creative in your recommendations for addressing them.

Thank you for the opportunity to share our perspectives with you, and I certainly look forward to your questions.

[The Chair, Liberal, Dan Ruimy]

Thank you, all, for presenting to us today.

We're going to jump right in to our questions.

Mr. Baylis, you have seven minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Thank you, Mr. Chair.

I'll start with you, Mr. Goodman.

All of you have touched on the same topic, which is that none of you are against the regulator, but that there's that balance between the regulator and innovation and between the regulator and overburdening companies, specifically small companies. If that balance is lost, we're actually hurting, not helping, Canadian consumers and our citizens. We're actually making it worse for them.

You brought up the example of the pediatric formulation, which is near and dear to my heart. Could you expand a bit on the challenge that you're having to bring drugs into the country that are formulated for children so that we are not just saying to parents, “Take an adult pill, cut it up, crunch it and try to make it work for your child”?

[David Goodman]

Certainly. The problem with pediatric formulations is exactly what you said: products are not formulated for children. I think the real problem in Canada has been that many of these products that are formulated for children—they may not be optimal, but they're improvements over the crushing—are available in many other markets in the world, but for different economic reasons, the brand companies have never introduced them in Canada.

One of the initiatives that we supported, at the request of the CHU Sainte-Justine, was to make some of these products available to Canadians. One of the things that we discovered was that Health Canada was treating many of these products—that were 20 years old and had approved indications in children—almost like they were new products, like they were products that it had never heard of. Second, they were assessing fees on them to bring them to market that were almost at the same cost as new chemical entities. We started this initiative to think about how could we make pediatric formulations and bring innovation to them. We started off with the lowest level of innovation by just introducing things that were available elsewhere and seeing how the market would accept them, and we found this huge barrier to getting even those products to market.

Where did Health Canada hurt us? Health Canada helped us by paying attention to us. Health Canada listened to the issues, but its regulations, as we were told, forced it to charge us fees that made the development of these products really uneconomical.

Second, Health Canada followed its rules about looking at health and safety, but it did not look, as many of us on the panel have said, at the foreign regulatory bodies that have looked at this. It has access to those communications, yet it insisted on things being redeveloped here, which became another burden.

The centre has done a pan-Canadian study of all of the children's hospitals across Canada. They are all suffering from the same issue of inaccessibility to products. The alternatives to compounded products are well known to be inferior and to have potential safety issues. There's a will, but the regulations do not permit the fast adoption of these products.

[Alain Boisvert, Head, Government Affairs and Market Access, Pharmascience]

If I may add, Mr. Chairman, I think that the pediatric example is a perfect one of a regulatory problem that has become chronic. I'm a pharmacist by training, and I was trained as a hospital pharmacist at the Sainte-Justine hospital in the 1970s. Already the problem was in existence, and very little has evolved over the past 30 years because of the reasons that Mr. Goodman has mentioned: regulatory barriers, lack of consideration for the economics of introducing child-friendly formulations, and the presence of—

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Thank you for that; I appreciate it.

I'm going to move to you, Mr. Lewis, because you did touch on something about harmonization. Then you gave an example of where harmonization, which is supposed to help our companies—and specifically our Canadian companies—went awry. I'm talking about MDSAP, where Canada worked with other jurisdictions to harmonize a process to the market, but then became the only one to mandate it. To my understanding, that's had a very negative impact. Can you elaborate on that, please?

[Diana Johnson, Vice-President, Regulatory Affairs, MEDEC]

Thank you. I'll take that question, if I may.

One of the things with the MDSAP audit was that it's a great idea. The idea is that one audit could potentially get you approvals from a quality system perspective for five different jurisdictions at the same time, thereby reducing the audit burden. However, that only works if all of the countries are really looking for that MDSAP certification.

At the moment, Canada is the only one that's insisting on an MDSAP certification. It take longer to get your certificate because the audit report has to be reviewed by five different authorities at the moment, so it's a lot of work for a company to undergo that MDSAP audit if they're really only seeing a benefit in Canada. As we've heard before, Canada is a relatively small market. If the U.S. had mandated it.... Europe still hasn't gotten to that point yet. If those markets were mandating it, then we wouldn't have had this issue, because manufacturers would have seen the benefit and been able to adopt it much more easily and readily.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

You also touched on another point about the rate of change and the need to introduce innovative changes, for example, when something needs to be regulated that didn't even exist before. You mention guidance documents as opposed to always the regulator trying to drop it in.

Can you elaborate on that?

[Diana Johnson]

The difficulty is that regulations take a long time to promulgate and bring to fruition, and sometimes you really need to be able to adapt to changing circumstances more quickly.

With a guidance, you don't have to go through the Canada Gazette process, which automatically makes it a long process. You can still put your guidance out for comment, get feedback and put it into practice much more quickly. If you could, for example in regulation, have content satisfactory to the minister—that's what the regulation requires—then in guidance define what that satisfactory evidence would look like, it would be easier for people to react and manage.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move on to Mr. Lloyd.

You have seven minutes.

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

Thank you, Mr. Chair.

Thank you to the witnesses.

First off, Mr. Masterson, I was really pleased when you were talking about new investment in the chemicals industry. In my constituency, Pembina Pipeline just announced quite a large project with many jobs, so I was very pleased about the contributions of our chemical industry to this country.

My question is going to go into the overlapping jurisdictions and issues of internal trade. We had the Agreement on Internal Trade that was negotiated in the 1990s and updated under the previous government. Now we have the new Canadian Free Trade Agreement.

I was wondering if you could comment on whether this agreement was able to harmonize some of these overlapping jurisdictions or eliminate them in order to make it easier for the chemicals industry to compete in a regulatory environment in Canada.

[Bob Masterson]

No. Our products are freely traded across provincial boundaries, so that's a non-issue. The key issue of regulatory overlap and duplication in large, complex industries, absolutely not.... There's been no science. Any positive progress that's been made in jurisdictions like British Columbia and now jurisdictions like Ontario is entirely homegrown and them looking at their own affairs.

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

Is it currently a major issue that provinces have their own regulatory regimes?

[Bob Masterson]

That's not the issue. We have the Constitution with a division of powers. I think the challenge is that there's a lot of fuzziness, especially in key areas like environmental regulation and transportation regulation. Rather than just pretend that there isn't fuzziness and each level of government proceeding full steam ahead, maybe they ought to have a conversation.

Let me share an example of what has gone well and another recent example that's going less well. For most of the last eight years, we've had a very comprehensive, multi-stakeholder, federal-provincial process to discuss how to improve the important issue of air quality across Canada. That process has been complicated. It's complex, and there's going to be a lot of money spent to achieve the objectives, but from day one there's been clarity on what the role of the federal government is and then what the role of the provincial governments is. Yes, it's a complex process, but it's moving very well.

We're currently in discussions with Health Canada on a consultation where they're positioning or proposing a very significant new role for the federal government that would involve managing the risks of workplace exposures to different substances. We are committed to continual improvement in managing workplace exposures, but until today, until this consultation started, that was clearly a role for the provincial governments. I could list at length all of the requirements they have.

It's not that we oppose a federal role. Perhaps there's a gap that the federal government needs to fill, but we would only say that, before they jump into that arena and start to play, perhaps they need to have a discussion with the provinces to really identify what that gap is and then figure out the appropriate role for the feds.

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

Thank you. I appreciate that.

My next question is to Mr. Goodman from Pharmascience.

I am hearing in my constituency, usually from pharmacists and the front lines, that Canada has less access to drugs today than it did even a few years ago. They've been critical of some changes to regulations.

Could you elaborate? Are you seeing that recent changes to regulations are having an impact on Canadians' access to drugs?

[David Goodman]

There are two types of denial of access. There are drug shortages, which people know of all the time. These are products that people are used to taking, and for different reasons they are not available in the market. The second part is products that are approved in other markets and brand companies aren't bringing them into Canada.

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

Is there a particular reason why these drug shortages are happening, or is it just a supply and demand issue? Is there a regulatory reason?

[David Goodman]

A key part of it is regulatory and another part is economic. The prices of the generic products have been reduced substantially, and the regulatory burden to support them has gone up enormously.

In the plans that we're hearing of from Health Canada, the cost of maintaining products on the market—which are already approved—is going up substantially.

While the margins are going down, the cost to operate or to keep it are going up.

That's one of those points where I say the big picture is being lost in the cost recovery.