Thank you very much.
I would like to express my thanks for this opportunity to appear before you to discuss the landmark Canada-European Union Comprehensive Economic and Trade Agreement. It is a historic accord.
My name is Russell Williams. I am the president of Rx&D. I am accompanied by Darren Noseworthy, vice-president and general counsel of Pfizer Canada.
Our industry, the innovative pharmaceutical sector, is a key player in Canada's knowledge-based economy.
Rx&D applauds the Government of Canada on the CETA agreement in principle, which is an outstanding and truly historic achievement. With this new agreement, Canada is setting the pace. CETA has been recognized around the world as a model for other 21st-century trade agreements.
From the start of CETA negotiations, Rx&D has been a strong and consistent supporter of the Government of Canada's goal to reach a mutually beneficial trade agreement with the European Union.
We believe a knowledge-based economy like Canada's must be built on the foundation of innovation, not imitation. And IP rights help protect and drive innovation across all sectors.
There's no escaping the fact that Canada lags behind our other trading partners when it comes to life sciences IP. With CETA, Canada is taking one step towards establishing a more level playing field for life science investments, and sending a positive message to international investors that Canada is a market that supports innovation. And I say this despite the fact that only two of three requests were actually acknowledged within CETA, but those two, which I'd like to describe now, are a step towards levelling the playing field.
The life science IP improvements in CETA include, first, patent term restoration, which has offered to research-based pharmaceutical companies the potential to recover up to two years of time lost on their patents as the result of lengthy development cycles and government regulatory approval processes. I'd like to remind the committee that Canada is currently the only G-7 nation that does not have any form of patent term restoration.
The second improvement that you find in IP in CETA is something called the right of appeal, which will allow research-based pharmaceutical companies to more effectively appeal court decisions when a patent is ruled invalid. An appeal process is currently available to the challengers, but not to the patentees, so this is a matter of fairness in front of the courts.
Why do these changes matter? They matter because improved IP protection will help drive investment, support higher-paying jobs, and lead to an improved health care system and better health care outcomes for Canadians.
And we know it works. Each time Canada has strengthened its IP regime in the past, it has been good for Canadian patients, our health care system, our economy, and for our members as well as the generic manufacturers. The IP reforms enacted by the government 25 years ago drove a 1,500% increase in annual investment over time, unprecedented domestic growth in pharmaceutical R and D, and one of the fastest growth rates for the sector among leading OECD countries.
To be fair, we acknowledge that our member investments, which still exceed well over $1 billion annually, have declined over the last few years. This is due in part to other countries surpassing Canada's IP regime. As a consequence, the global pool of well over $110 billion in annual life science investments is migrating to other jurisdictions. Other nations also boast supportive business environments and top-flight scientific talent. It's a fiercely competitive global environment. Canada must keep pace.
However, it is more than simply an economic issue. Innovation continues to provide more efficient and effective means of fighting some of the most complex health problems. We hope to be able to decrease the number of hospitalizations and the need for surgical procedures.
Throughout the negotiations, CETA opponents have argued that the health care system would be imperilled by IP improvements. They made the same arguments—the same arguments—against the historic NAFTA agreement with the United States and Mexico. They were wrong then, and they are wrong now. Their recycled arguments make for sensational headlines, to be sure, but their analysis is simplistic and biased.
This speculation fuels fear, but adds little value to meaningful policy discussions. Moreover the dire predictions have continuously been revised. It used to be $2.8 billion, then it was $1 billion; next week it will probably be something else.
Let's now consider the facts: first, drug prices will not increase due to CETA; second, nothing in CETA restricts or impairs the ability of any Canadian government to manage and control its health or medication costs; third, as the Government of Canada has stated, the CETA changes will have no significant impact for a good 8 to 10 years, and will apply to medicines that aren't even available today; fourth and finally, the European Union has higher IP protection than Canada, yet somehow the EU countries spend less on health care as a percent of GDP than Canada.
The costs of new medicines must be placed in proper context. According to a recent analysis of the data from PMPRB, the total cost of patented medicines has grown by only 4.1% over the last five years and, in fact, there's been negative growth in recent years. At the same time, according to data from CIHI, total spending for the whole health care system in Canada grew by 28.5%.
CETA opponents also completely disregard the value of innovative medicines in improving the health of Canadians. Recent studies prove that investments in new medicines offset health and social costs by at least two to one. Imagine the positive impact that might have on managing future health care costs, of even small increments of innovation in the medicines—keeping employees off disability, keeping them at work, and promoting productive citizens.
The development of new medicines has changed the world: think of polio, asthma, rheumatoid arthritis, and HIV/AIDS.
There are still too many Canadians living with disabling, painful and potentially deadly illnesses. This is unacceptable. It is why a number of Canadian patient groups strongly support the IP changes in the agreement.
CETA by no means resolves all life-science IP issues, but is an important step in the right direction. It will help our members to advocate within the respective organizations to secure those new investments in clinical trials, in product management, and plant improvements.
The committee recently heard some presentations that referred to dual litigation, so I'd ask my colleague Darren Noseworthy to make a few comments on dual litigation before we finalize the presentation.