International Trade Committee on Dec. 10th, 2013

[Russell Williams]

What I can say is that Canada will be more competitive. This is a fiercely competitive environment. I mentioned that we were spending well over $110 billion a year in research. Canada gets about $1.2 billion or $1.3 billion. About 75% of that is in clinical trials. So it's not the same kind of research you often see in bricks and mortars, but right in our health care system with patients, hospitals, and universities.

[Don Davies, NDP, Vancouver Kingsway, BC]

May I interrupt you, Mr. Williams?

[Russell Williams]

It's hard to quantify the growth. It has been shown in the past that research dollars have grown significantly and that jobs come with it.

[Don Davies, NDP, Vancouver Kingsway, BC]

Did you expect that kind of research to increase in Canada as a result of CETA?

[Russell Williams]

We absolutely, certainly hope so, and we are going to be working for it. Otherwise the battles are not among companies; the battles are among other jurisdictions within the same company to bring those research dollars here to Canada. That's our commitment to the country.

[Don Davies, NDP, Vancouver Kingsway, BC]

Is there anything in CETA that you have seen that you think would work to prevent the creation of a national pharmacare program in Canada?

[Russell Williams]

CETA wasn't the focus of that at all.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

So you don't see anything in there that bears on that subject at all?

[Russell Williams]

No. The Canadian health care system and the way we built our health care systems across the country make that rather difficult to do.

[Don Davies, NDP, Vancouver Kingsway, BC]

I just have to say quickly, the “drinking less, but...drinking better” quote I'm going to use on my wife. Thank you for providing that to us.

I think I'm out of time.

[An. hon. member]

That's thoughtful!

[Voices]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

I can't give you any advice on where to use that, Don.

[Voices]

Oh, oh!

[Don Davies, NDP, Vancouver Kingsway, BC]

I wrote it down.

[The Chair, Conservative, Rob Merrifield]

Mr. O'Toole.

[Erin O'Toole, Conservative, Durham, ON]

Somebody has Christmas holidays on his mind, clearly.

[The Chair, Conservative, Rob Merrifield]

It's because things break down about this time of year.

Go ahead.

[Erin O'Toole, Conservative, Durham, ON]

Thank you, Mr. Chair.

Thank you all for appearing today. As both sides would acknowledge, it's important for us to hear from people, and we've been hearing from witnesses not just here in Ottawa. We were in Halifax and we intend to go to Vancouver in the new year. Thank you for being key stakeholders throughout the process. This truly was a transformative deal for Canada but also a transformative process in terms of engagement with stakeholders throughout. That's been a consistent theme we've heard, so thank you for working with Mr. Verheul and Minister Fast and the team to get us to where we are today.

I have a few questions for both sides. First, Mr. Williams, you spoke about drug costs. Certainly we heard folks from the generic industry here, and we've seen a lot of speculation and numbers that are, in many cases, based on studies that were based on pre-final outcome IP aspects of the agreement in principle, so they are not helpful to the conversation.

You took a strong position that we won't see the sky falling, as some might suggest. I wonder if you could expand on that and include the fact that some of the commentary in this area has not addressed the fact that the provinces have been bringing efficiencies to bulk purchasing of pharmaceutical products in recent years which is putting a downward pressure, to begin with, on drug costs and the fact that we're committed to making provinces whole at the end of a period of observation. We think it's been an appropriate balance. Could you talk about that issue in more detail?

[Russell Williams]

Thank you for the question.

We did give you a bit of an overview of that in terms of costs. I will quickly highlight it as we go through it. One of the three elements of CETA is the right of appeal. It's pretty hard to predict what products you're going to have to appeal on and whether you're going to win them, and nobody is going to predict a budget based on whether you win an appeal on a drug case. That you can't cost out.

Data protection didn't change. That was the second of the three elements. Data protection remained at eight years even though Europe has ten years.

Patent term restoration is, as the question showed earlier, at the end of a patent, so these will be new products coming in. It looks as though what we are hearing—and I don't know this for sure, because it's going to take about two years to negotiate—is that it will be eight to ten years past the time at which we resolve CETA that patent term restoration would come into effect. That's why I can say there will be absolutely no cost increase during that period based on PTR.

To your point, IP is only one factor in the cost of medicines. In Canada, you can see from the PMPRB in fact that innovative medicines have been in negative growth for a couple of years. The provinces of Canada have been negotiating, whether through bulk purchasing or a joint body or it's actually on the generic side, to drive down those prices. Indeed, I've always believed the failed public policy of this country was to overpay for generics.

The Canadian provinces have all the tools to control costs and negotiate costs, and they are doing that. What we're hoping to do with the provinces is to show the value of innovative medicines so that a dollar invested in innovative medicines or vaccines can actually save money in the rest of the health care system, but you're right that they control their purchasing agreements with us.

[Erin O'Toole, Conservative, Durham, ON]

Thank you very much, and thank you for the materials as well.

With this agreement there has been a clear strategy of trying to balance innovation and the clients you represent bringing new drugs to market to help Canadians with encouraging a culture of innovation alongside the balancing of costs and certainty for the generic industry as well.

Perhaps both of you could comment on the dual litigation issue. Certainly the agreement has expressed bringing the right of appeal to the branded side to the member companies in your organization. Really, would not both sides benefit from more certainty? Now that the patent linkage system is enhanced and offers that protection to both sides of the industry, shouldn't that really be where rights are determined rather than through the second route of the Patent Act?

Being a former lawyer myself, I know that certainly the whole system was good for lawyers but not good for certainty. Could you perhaps both comment on the potential to bring efficiency?

[Darren Noseworthy]

The first point I would make, and it's the point I opened with, is that we can have that discussion. If the government would like to discuss efficiencies and issues with respect to the current linkage regime, we're certainly open to that.

The fundamental issue for us is that the right of appeal is about fairness; one side has it and one side doesn't. As a starting point, everyone should have right of appeal. Now, in order to obtain the right of appeal, should we be forced to trade off some other substantive right? I think our position is clearly that we should not.

If we want to discuss the inefficiencies and issues with the linkage regime, I think there are obviously issues on both sides, and I highlighted a number of issues in my opening address. This is not simply a generic issue; it's an innovative issue as well. The fundamental point is that there shouldn't be any trade-offs in the current linkage regime to achieve the right of appeal for innovators.

If we want to have a discussion about some of the improvements that can be made to the regime as it currently exists, we're certainly open to that, but we're certainly not open to trading off rights that we have at the moment against the right of appeal.

[Erin O'Toole, Conservative, Durham, ON]

Mr. Williams, you talked about the previous changes—from that point in time to today—including a 1,500% increase in R and D spending in Canada. You'll know that some people had said there were promises of more.

In your opinion, using CETA as an opportunity, how can we encourage even more R and D investment, and high-end, high-value jobs in Canada?

[Russell Williams]

Thank you for the question.

Very quickly, again, I brought a document that shows the growth of investment since the mid-eighties, and we have honoured our commitment of 25 years. This is an updating of that.

To your question, we believe that the signal coming from the Canadian government regarding innovation is a very strong and powerful one. We can do our research anywhere in the world. We have good science in this country. We have some very good infrastructure, and, frankly, the government has invested quite well in basic research. What we are trying to do now is to be able to say that we can be competitive.

There are a number of other aspects, whether it's pricing regimes, which we talked about, or it's manpower or regulatory issues or questions of reimbursement. In CETA, at least, we have a signal that we can attract some of those new dollars.

One of the problems is that it's going to take two years to implement. Over the next two years, we still don't have those weaknesses that CETA is trying to correct. But the commitment of Rx&D is to use CETA and the improvements therein to attract more investment to Canada. When Canada moved Bill C-22 and Bill C-91, that gave a signal to increase those investments.

First and foremost, you need the right place to invest in good science. Canada has it, but we can't rest on our laurels. Science is improving around the world, and that's why we needed the harmonization. That's why we're hoping for three out of three, if I can say it that way, because the competition is ferocious.

But this is a step forward, and we're going to attempt to attract new dollars.

[The Chair, Conservative, Rob Merrifield]

We'll now move to Mr. Pacetti.

You have five minutes. The floor is yours.