Evidence of meeting #9 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was generic.
A recording is available from Parliament.
NDP
Robert Chisholm NDP Dartmouth—Cole Harbour, NS
In those discussions, have there been any challenging of the numbers? Are there concerns that your numbers are out of whack, that they're creating problems, that they have information that would suggest otherwise? Has there been any of that kind of exchange?
I know I haven't had any success in getting that kind of response, and I wonder if you have.
President, Canadian Generic Pharmaceutical Association
The study you're referring to was done by two of the leading economists in the pharmaceutical sector in Canada: Aidan Hollis at the University of Calgary and Paul Grootendorst at the University of Toronto. It's their numbers.
They simply looked at the recent launches of generic products and asked what would have happened had those products been delayed according to the proposals. Barry mentioned one example, Lipitor. What would have happened to those? That's when they determined that, on average, new generic products would be delayed three and a half years. They then looked at the different pricing of generics—25% to 35% of the equivalent brand—and compared what the extra costs would be.
It's all laid out in their study—how they did the analysis—and the costs are there. If people want to change the assumptions or do different assumptions, they're all laid out. We have not seen any other analysis that challenges—
Conservative
The Chair Conservative Rob Merrifield
I'm sorry, Mr. Chisholm, your time is gone.
Mr. Cannan, the floor is yours.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you, Mr. Chair, and I appreciate the witnesses.
As we have limited time, I'll get right into a letter that Minister Fast received from the Alzheimer's Society, indicating that
Recent stats available on Alzheimer's disease speak to the urgent need to increase support for research and development of new medicines. Today, 1 in 11 Canadians over the age of 65 currently has Alzheimer's disease or a related dementia.
I know it's a serious issue. I represent one of the largest ridings in the Okanagan—my colleague, Mr. Albas, and I—that has aging demographics. It's a serious issue across Canada.
The letter goes on:
Recent new developments in Alzheimer research are encouraging but still much more needs to be done.
As a patient group and key stakeholder in Canada's life sciences sector, we believe that improving intellectual property standards for medicines in the Canada–EU CETA negotiations represents an exciting opportunity for the Harper Government to position Canada as a world leader in advanced medical research and a magnet for global investments to develop cutting-edge treatments and cures.
My question would be for you folks, whoever wants to answer it. You indicated that overall, as a percentage of sales, pharmaceutical R and D dollars have actually decreased. They indicate they've invested $1.5 billion in 2010. I was just wondering if you have a chart or some past history of the percentage of sales you could provide to the committee later, if you don't have that available today.
How, as a generic industry, would you say we can get more innovation, research, and development put into the serious issue of Alzheimer's research?
Chair, Canadian Generic Pharmaceutical Association, and President and Chief Executive Officer, Teva Canada
As far as the declining percentage of sales of research spending, there is a published document by the PMPRB that lays that out very clearly, and over the last nine years the trend has been decreasing.
Regarding Alzheimer's, certainly it appears to be an unmet need in the market. We're clearly in favour of innovation. We believe the intellectual property regime in Canada is sufficient to allow brand-name pharmaceutical companies to have an appropriate return on their investments, especially in new research with product categories like Alzheimer's.
It's not like the generic companies are against innovation. That's what keeps the pharmaceutical business going: new products that create innovation; markets grow and then their patent life expires; and then generics come out with cost-saving alternatives. It's a cycle that's been going on for years, and we think it's a very productive cycle.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
And thank you, folks, for coming.
I'll go to the pharmaceutical and generic drug industry as well, because it is a huge issue. If your figures are anywhere close, in our public health care system it would be a huge additional cost.
I do find it shocking that the government itself has not done any independent net benefit analysis of both your industries. In fact, the chief negotiator told us when he was here that while some internal analysis has been done on some issues, no specific analysis has been done on pharmaceuticals costs. I think the government is falling down in that regard.
I've met with the pharmaceutical industry, and your industry, and to be quite honest, I don't know who to believe. You've said that extending patent protection does not increase investment. Well, the pharmaceutical industry tells me it does. They say there is more investment as a result. They say that new drugs are found that will improve health and reduce health care costs.
Can you back up your allegation? Do you have any data you can leave with the committee that will back up your line of thought that extending patent protection does not increase investment on the pharmaceutical side?
President, Canadian Generic Pharmaceutical Association
Yes, we can table documentation on research and development spending and how it has declined despite increased intellectual property protection in Canada. We can also table where the new research and development spending is going internationally.
Liberal
Wayne Easter Liberal Malpeque, PE
If you could table anything and everything you have in that regard, it would be good.
Secondly, as a result of the CETA, do you see any additional market opening up in the European community for the generic industry companies from Canada?
And the last question, Mr. Chair, is to the fish industry. I recognize your concern on tariffs, and I'm trying to remember...I think the main culprit in the European Community is Denmark, on shrimp.
Derek, could you give me what the current tariff level is and whether that is the problem country?
Chair, Canadian Generic Pharmaceutical Association, and President and Chief Executive Officer, Teva Canada
On the first one, exports, our industry has about 8,000 manufacturing jobs. We depend on exports. About 40% of what we make in Canada goes to Europe and the U.S. If we are to remain viable manufacturers in Canada, those export mandates are essential. These proposals will further delay and strengthen patent IP protection, which will clearly impact our ability to attract global manufacturing mandates.
Conservative
The Chair Conservative Rob Merrifield
Okay, thank you.
Mr. Butler, do you want to comment very quickly?
Executive Director, Association of Seafood Producers
Yes, Mr. Easter, that's a key issue, the ATRQ. What we hope for in a CETA is that we'll get to zero, period, and we won't have to worry about the ATRQ, which has an autonomous tariff relief quota of 20,000 tonnes at 0%.
The problem with the ATRQ, which expires this year, is that it has end-use restrictions. We can't use it for certain forms or product, so then we get back to the duties of 12%, 15%, and 20%. It also prevents us from doing domestic branding. If you've got end-use restrictions, you can't get it into the market in a form that we can put Canada on it because it has to get so much more processing within Europe.
Conservative
The Chair Conservative Rob Merrifield
Mr. Shipley, you'll close this questioning off. You have three minutes.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
I have just a quick one, and it goes to Kathleen.
You say we have the greatest trade opportunities in a generation. The concern is around beef, pork, and biotech regs. We know that about 25% of the Canadian exports will be agriculture. That's a huge impact. Agriculture, in all our agreements, has been a major player. We know that.
Can you tell us what trade barriers and non-trade barriers you are facing that we need to deal with?
Executive Director, Canadian Agri-Food Trade Alliance
I think the biggest problem we have with the European Union right now is differences in how we deal with biotech issues. Eighty-five percent of our canola is exported. Right now it's our largest cash crop in Canada. Canadian consumers have been very accepting of genetically modified products; the European consumers, not so much. We can't force European consumers to eat biotech products if they don't want to.
Europe is also a very important market for our canola industry for biofuels and for feed, and there needs to be much better harmony between the regulations we have in Canada and the regulations they have in the EU. We don't have a problem with market access for canola into Europe right now. It's really the regulatory issues that stop us cold from pretty much shipping anything. Those have to be dealt with or all the trade deals in the world won't help us at all.
Conservative
Executive Director, Canadian Agri-Food Trade Alliance
Yes, we do have challenges with beef and pork. Regulations for our meat slaughtering plants in particular here in Canada are different from those for plants in Europe. We have said that on the food side, all our regulations have to be, first of all, based on human safety and animal welfare, but we really need to focus on the end result. We may do things differently in a processing plant, but if the product at the end of the day is as safe as it is in Europe, that's really what we need to focus on.
Conservative
Bev Shipley Conservative Lambton—Kent—Middlesex, ON
Is harmonization or some sort of regulatory process the key issue on all three?
Executive Director, Canadian Agri-Food Trade Alliance
It is the key issue, and in the future we need to spend far more time ahead of time talking about what the regulations are going to be if we're going to have commercial trade with Europe. I think part of the problem we've discovered is that because we're not trading with Europe in some of these areas, we haven't talked to them as much as we should. So the regulations we passed and the regulations the EU passed don't necessarily match. We do need to spend far more time talking to our counterparts in government and industry, which is why, as you know, we spend quite a lot of time in Brussels and in Europe now.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
I want to thank the witnesses for coming. I apologize for the brevity of the questions and answers. We may well have to have some or all of you back again to get a more fulsome discussion, but for now we want to respect the planning that has gone into our second panel.
We'll suspend now until we get the other panel in very quickly, and then we'll move on. Thank you.
Conservative
The Chair Conservative Rob Merrifield
We'll call the meeting to order.
I want to thank, first of all, Mr. Williams here from Canada's Research-Based Pharmaceutical Companies. He has some people with him, and I'll let him introduce them.
We also have Wally Smith, president of the Dairy Farmers of Canada, and from the Canadian Cattlemen's Association, we have John Masswohl in Calgary, I believe, via video conference.
It's good to have you with us.
We will start very promptly with Mr. Russell Williams.
The floor is yours, and thank you for coming.
Russell Williams President, Canada's Research-Based Pharmaceutical Companies (Rx & D)
Merci beaucoup. Thank you very much for the opportunity to appear today.
I'm accompanied by Brigitte Nolet from Hoffmann-LaRoche Canada, one of our member companies, which has facilities in both Mississauga and Laval, and also Declan Hamill, our VP of legal affairs.
Our industry, the innovative pharmaceutical industry, is a key player in Canada's knowledge-based economy. Our members range from international firms to early start-up companies. We represent 15,000 employees; we invest $1.3 billion in research every year; and we employ indirectly another 40,000 people. We are also the largest private sector investors in health research in the country. We've invested $20 billion in the last 20 years.
Most importantly, we discover and create and deliver innovative medicines and vaccines that save lives and prevent illnesses. Our medicines allow Canadians to live with and manage chronic conditions. Can you imagine a health care system of the future without innovation? Our medicines and vaccines are part of the solution to our health care sustainability challenge.
Besides, our innovative drugs account for 5% of all health care spending.
We believe that through the opportunity presented to Canada through CETA, if we seize this moment, we can strengthen our intellectual property regime for the life science sector. Each time Canada has strengthened the IP regime in the past, it has been good for Canadian patients, our health care system--as the graph shows--and our economy, both for our members and for the generics.
Earlier today you heard from the generic manufacturers, who argued that Canada uses weak IP as a tool to control health care costs, yet other countries in the world do not do that. No other country in the world does that. In fact, Europeans have better IP rights than Canada does, and most European countries spend less on health care as a percent of GDP than Canada does. We believe that a knowledge-based economy like Canada's must be built on a foundation of innovation, not imitation. IP rights help protect and drive that innovation across all industrial sectors.
We believe Canada should provide the following improvements: create an effective right of appeal for innovators--and that's a simple matter of fairness; improve data protection regulations to be effective for ten rather than eight years, as Europe does; and implement patent term restoration, which is already in place in all but three countries in the OECD, including Canada.
As you can see on the chart on the screen, Canada lags behind both the EU and the U.S. in terms of pharmaceutical IP. Those are the facts. We are not competitive.
Brigitte Nolet Director, Government Relations and Health Policy, Specialty Division, Hoffmann-La Roche Limited, Canada's Research-Based Pharmaceutical Companies (Rx & D)
Mr. Chair, not unlike members of this committee, our industry employees are proud Canadians who are responsible for promoting and advocating Canada's interests abroad.
We are the ambassadors of Canada in all our companies abroad.
We are passionate that Canada has many key advantages that allow us to successfully attract global investments in research and development.
Despite these benefits, intellectual property remains the cornerstone of our industry. It is a key factor in global investment decisions, as it reflects the importance attached to the protection of new discoveries.
The IP gap that Russell highlighted is the most pressing policy challenge for our industry when Canadian affiliates compete internally for global investment dollars. At Roche, Canada's IP system is noted and questioned by our global leaders. Other nations, both developed and developing, can also boast of their business climates and top-flight scientific talents. In a fiercely competitive environment, Canada must keep pace.
Five years ago, the federal government improved pharmaceutical data protection. These changes are just now showing results. For Roche Canada, it was an important factor to attract a $200 million global pharmaceutical development hub that will expand our Canadian facility and create 200 high-skilled jobs in Canada. With improved IP, our entire industry would have the tools to help maintain and draw even more opportunities like this one.