International Trade Committee on Nov. 15th, 2011

[David Skinner]

I'll make it a quick answer. What we're seeking is to have the data provisions that are in the switch legislation for the European Union included in the trade agreement so that we can parlay those into a Canadian benefit.

The reason for this is that Health Canada has said we will not put anything into our regulatory system unless directed to do so by an agreement. So far, the only existing agreement that impacts any kind of data exclusivity is TRIPS, and that's only for new chemical entities. It's the one that allows you to extend the use of something still under patent.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you. That relates to the area that I was going to ask about. Also, thanks for the information. It's interesting information that I certainly wasn't aware of.

On the cost side, though, it seems to me that what your organizations are asking for is to extend patent protection, using the trade agreement to do it. Number one, have you looked at the cost side? We're informed by the generic industry that the additional costs of longer patents would increase the cost to our public health care system, in one way or another, to $2.6 billion or $2.8 billion. The pharmaceutical industry, on the other hand, disagrees with those numbers, and they talk about there being new investment, new drugs, and better results, so the generic drug figure doesn't have as much merit as it sounds like on the surface.

So number one, have you looked at the cost side? Also, do you see our health care system being better off as a result or more costly?

[David Skinner]

Just to make a finer point, one of the things that often gets confusing, and for me as well, is that the patent extension period isn't really what we're talking about. I can speak to the principle of innovation around having a year to recoup your research costs for innovation in an area where there is an already existing product that can have a new use. When it comes to switching that product and making it available for self-care, we have looked at the cost-benefit side of it. We'll circulate some numbers after this meeting; I don't have them at my fingertips.

But here's the nub of it. When a product is switched, as I mentioned earlier, the costs come down for them; that actually reduces the cost to the provincial governments. I understand where the provincial governments come from in terms of their concern about there being any increased costs for products they're already covering, but when a product comes off prescription status for self-care use, then take it off the formulary so it's an immediate saving.

Sometimes they have to look at the unintended consequences of such an action. I remember when a cough syrup was taken off the Ontario formulary. That cough syrup was no longer reimbursed, but a codeine preparation was reimbursed, so all of a sudden it got substituted for codeine and there was no cost saving; there was a cost increase. Also, probably it was not the most appropriate therapy either, to expose a narcotic versus a non-narcotic....

So we're always aware of the unintended consequences of strict cost savings, but when it comes to self-care's value to the health care system, that is where the big numbers can crunch. We have just recently noted that just on the cost savings around cough/cold, for example, if only 10% of the very few people who run to see a doctor every time they get a sniffle were encouraged to do something for themselves--saltwater gargle or do whatever they need to do--half a million physicians would be freed up. There would be enough physician resources for half a million Canadians to have access to a GP who don't have that right now. So the impacts of small changes in self-care are huge in terms of cost savings.

[Wayne Easter, Liberal, Malpeque, PE]

You mentioned this at the end of your presentation, and I missed a couple of words, but on Article 74a for a year...can you explain that?

On this switch landscape, as you call it, it seems that we are far, far behind where we ought to be. Why wait for a trade agreement? Why not pressure the government now to do what might create some efficiencies, some innovation, and some investment? Why wait for the trade agreement?

Could you explain this Article 74a for one year...? I didn't quite catch that. Also, why wait?

[David Skinner]

Article 74a is what's in the European Union's legislation about a data protection period. It's a straight reference that can be pulled from the EU legislation.

[Wayne Easter, Liberal, Malpeque, PE]

Do we have anything in Canada that is similar?

[David Skinner]

No.

[Wayne Easter, Liberal, Malpeque, PE]

Why don't we?

Why would Health Canada take the position unless directed to by an agreement? They won't do certain things. I mean, they're supposed to be here to improve things, not to be an obstacle.

[David Skinner]

They would take the position that data protection—there is a section within the food and drug regulations called Division 8. It is the area where new uses for already new chemical entities can get some additional data protection, but it doesn't apply to anything that is more established.

They would say that is not in their mandate of protecting Canadians against fraud and danger. Unless the Canadian government says that it, as the Government of Canada, agrees to do this under a trade agreement, then they have no mandate to do it. That's common.

Now, we of course have been pushing for regulatory efficiencies for many years. In fact, that Division 8 provision has come up for discussion several times over the past 15 years. The unfortunate part, to be quite crass, is that our sector kind of gets thrown aside because the debate then starts to really centre around extending patent protection for Rx products. Then the generics industry and the Rx industry have their battles over that, and it becomes the sole focus and we get thrown aside.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chair.

Welcome to our witnesses. This is an interesting and I think extremely important discussion that we've started here. There seem to be some inconsistencies. I think everyone on the committee would be in agreement that we're looking to—let me say that I don't think anyone is against protecting intellectual property. The questions are for how long you protect it and how it affects other industries.

Ms. Benczkowski, you made a comment that we rank 23rd out of 29 of the OECD countries in innovation. Yet at the same time, you said that 5% of the new Alzheimer's drugs come out of Canada. That doesn't seem to jibe somehow. There is a disconnect there. It would seem that we actually are more than pulling our weight in innovation without any proposed changes if we're inventing 5% of the new drugs that are coming on the market.

[Debbie Benczkowski]

What I did say is that in the “International Report on Access to Medicines”, Canada ranked 23rd out of 29 OECD countries in access to medications for the mental illness class of drugs. That was what I was talking about.

That's just to correct the record.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

What this discussion is about...if we break it down to the lowest common denominator, it becomes a vote. There's a little bit of a new wrinkle into the switch idea, because it certainly would seem to me—I'm hesitating to comment because I don't want to sound like I'm speaking for government—that we're at a committee here and having a discussion on this. A year's extension of exclusivity for patent protection doesn't seem to be the end of the world.

I don't know how Canadians lose by that. It encourages the switch, which is what you've discussed, and it allows some additional patent protection for a one-year period, which is fairly brief, to get out there in the marketplace.

Do you have examples of how many drugs or number of drugs that have come up that could have been switched for a different application and that didn't occur because they couldn't get the one-year patent protection?

[Debbie Benczkowski]

That's your question.

[David Skinner]

Yes.

I have several examples of ones that eventually occurred but that took many years.

Famotidine is an example of where you would have had to research a different use for an already established prescription product. Famotidine has long been used, and has a good safety record, to treat ulcers. But it was perceived by researchers that it could also be used for other upper GI indications--heartburn, reflux esophagitis, and so on. Since the original research as a patented molecule never focused on that aspect of it, it wasn't an approved use for that product. Therefore, our industry had to research and do the clinical trials and so on to show that it could also be used for this other indication, this other use. That cost considerable money. That was one of the products that was switched early in the U.K., and it took another seven years or so in Canada to get that through.

There are other product examples I can give you, such as naproxen sodium--Aleve is a brand name--in the United States. Virtually everybody else in the world switched it, and it took almost 12 years for Canada to do so.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

My other question has to do with patent extension. Let's say there's a three-year patent extension. Could you comment on how that would affect the generic drug companies in Canada?

We know that generic drug costs are higher in Canada than in many countries in the world, but we have a very robust generic industry in Canada. If it were simply a matter of delay, where their business plan would change in the short term but not in the long term, because it would only be a delay of three years, they'd still be in business. I don't see any reason why that would close the industry down.

Do you want to comment on that? Have you really looked at what that would do? It's extremely important for Alzheimer's disease as well that we have access to plentiful and quality cheaper drugs.

[Debbie Benczkowski]

The only comment I would make is that we don't have any Alzheimer's drugs in Canada that are off patent protection yet because the drugs are so new.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Aricept must be.

[Debbie Benczkowski]

Not yet; the drugs are still so new that.... I think Aricept will be the first one to go off patent protection, but it isn't yet. I don't have the dates for the other ones.

We really have only four drugs that are available, and they're really only available in the mild and moderate stages of the disease. After that time they become ineffective and really don't work very well, so people go off them. The decline is then quite steep once they go off those medications.

On the cost to the health care system, I would just also comment that there is a huge cost to the health care system of not making sure that we have investment in research. I talked a little bit about the investment that's needed in brain research to treat all the many neurological conditions for which we have really no treatment and no cure. We know now that the cost to our society of people having Alzheimer's disease is $15 billion a year. Within a generation, or by 2038, that cost will balloon to $153 billion if we do nothing.

So there's a cost to doing nothing as well.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We need to set aside a little bit of time to go in camera, but first I want to give a couple of minutes to Madame Péclet.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

Good afternoon. Thank you very much for being here today.

I would like to talk again about intellectual property and patents. We know that, if Canadian regulations adjust to the European legislation, the duration of patents will change. We know that the direct consequence of that kind of decision would increase the cost of prescription medication.

You are talking about reducing the costs to the provinces, but I think instead it's a question of increasing the spending of the health budgets of provinces. We also know that the ratio of research and development in Canada is 6.9%. In France and the United Kingdom, it's double, but the cost of medication is 10% less than the cost of medication in Canada.

In 2009, the Canadian pharmaceutical sector received $2.3 billion in financial support, as part of the support to the private sector for research and development, which generated $1.5 billion in investments in the area of employment. So it cost Canadians $1.48 in public financial support to the pharmaceutical company to generate one dollar in economic spinoffs in payroll. So the spinoffs are less than about 32%.

What will the consequences be of increasing patent duration on job creation and research and development? Will it increase research and development in Canada?

[David Skinner]

I can maybe provide a very quick answer from our perspective.

We're not advocating the patent extension period. What we're talking about is a separate issue; that is, data protection for new uses. I don't really have anything I can provide you on the costs that might accrue to provinces for extending the patent of a prescription drug that's on their formulary. We're talking about how you actually provide some incentive for establishing new uses for already established safe products that will give a greater impetus to lowering the costs.

If there were 20 candidates for switch and ten of them were to switch, you could lower the costs of provincial health care considerably because those would come off formulary and they would lower in price, even if you had more than one year's data protection—and the only reason we're saying one year is that we have no years now.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

I want to thank you both for coming in. It's indeed been an enlightening and a differently slanted look at the EU negotiations and agreement we're discussing as a committee.

We'll suspend very briefly to go in camera. We'll have to clear the room for those who are not supposed to be here for the in camera session.

[Proceedings continue in camera]