International Trade Committee on Jan. 28th, 2014

[Michael McBane]

We work with a couple of experts in the sector who studied what the industry was asking for, who studied the government briefing, and gave us the impression of what's in the new agreement. To the best of their ability, they estimated a range of what the additional costs would be.

There's no question there's going to be greater cost because there's going to be some delay in bringing generics to the market. It's not clear exactly what all the measures are. That's why there's a range. But there is going to be added cost, so I don't think it's credible for the government to say there's no impact on cost. In fact, the government's gone on since then to say if there is an impact, they will find a way to compensate. I think clearly there will be an impact on the cost.

Our other point is that we're rewarding bad behaviour with giving them more subsidies, when they're not investing here. We're already paying such excessive price levels, way more than Europeans are paying.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Trew, we have been told that nothing in CETA will require the privatization of any public services, such as provision of water or sewage and the like, particularly at the municipal level, but it is unclear whether CETA will impair or prohibit the retaking of such services back into the public sphere once they are privatized. Do you have any comment on that?

[Stuart Trew]

Yes. This is another concern we have around the coverage of services in the agreement, coverage of municipal services in particular. We've seen investor-to-state lawsuits in Europe related to re-municipalization, in this case it was health services. They haven't carved that out of CETA. There's going to be a standstill on municipal services, any attempts to bring those back into public hands, say, if the costs went up through the roof or if the service was poorly provided, those would be very susceptible to investor-to-state disputes. We think the government should take measures to make sure that's not going to happen and that would require complete carve-out for those water services, for example.

[The Chair, Conservative, Rob Merrifield]

Mr. O'Toole.

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

Thank you, Mr. Chair. Welcome back. Thank you for your continued leadership on the committee. Also, thank you to our clerk and researchers.

As well, thanks to both witnesses for appearing.

I'm going to try to divide my questions between our two witnesses, starting with Mr. McBane.

Your presentation is replete with what you describe as threats to our health care system. That led me to look into more of the reports that you have on your website.

I found it curious that your group challenges population aging and describes population and demographic change as a myth in regard to demographic change putting more pressure on our health care system. If I look at the other end of the spectrum, at the Fraser Institute report, say, that studied rising health care costs of 30% between 2006 and 2010, attributable mainly to demographic changes, how do you explain that?

I know that the two respective bodies are on opposite sides of the spectrum, but in many ways, trade, as you highlight, is to help with purchasing power, and increased trade could actually be a benefit in making health care more affordable in the long term, leaving aside the pharmaceutical question. How do you explain the difference in opinion on demographics and its impact on our health care system?

[Michael McBane]

Thank you for the question.

We don't believe that there isn't an aging population. What we believe is a myth is that the aging population is primarily responsible for the increase in health care costs. We think that's the myth part, not the fact that the population is aging.

The cost increase due to an aging population is less than one per cent of health care spending, so we shouldn't be scapegoating seniors as driving the health care bills. That's what our point is on demographics, that there are factors driving the costs other than the fact of an aging population.

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

Well, your report says that you feel that profit is driving the costs, but you're saying to this committee today that—and there's no scapegoating here—increased reliance on health care as people age, which is natural and understandable, contributes to less than one per cent of the pressure on provincial budgets. Is that what you're telling this committee?

[Michael McBane]

Yes. The cost pressures are not primarily from seniors, so we shouldn't be focusing on them if we're concerned about cost controls. The biggest cost escalation is the private sector involvement in health care.

Fundamentally, the biggest driver is pharmaceuticals, so we should be doing everything we can to get better value for money for pharmaceuticals if we're concerned about costs. Obviously, if we're concerned about costs, we should be having home care and other continuing care programs to keep seniors well and keep them at home.

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

My second question relates to page 4 of your presentation and your second recommendation dealing specifically with drugs. You quote a study that you describe as recent. There have been a few studies on this subject. Most were actually undertaken prior to the agreement in principle in the final terms. Is this study one of those prior to the agreement in principle, or is it more recent?

[Michael McBane]

It's more recent. We worked with the experts on this after we got the Government of Canada's briefing on what's in CETA. This came out in October 2013.

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

We did have representatives both from the generic industry and from the branded side of the pharmaceutical industry, and curiously enough, they both indicate that there is a balance struck through CETA. I haven't been in politics that long, but when you get two groups that are generally opposed saying there's a balance, that is generally an indication of a positive outcome. How can you say that it's not a positive outcome in light of that?

[Michael McBane]

Well, we're not an industry voice, so if the industry thinks it's balanced, then I guess the public interest needs to ask if it's in the public interest. I would say no. We're paying too much for generic drugs and we're paying too much for brand-name drugs. The fact that they're both happy is not necessarily a good thing if you're concerned about a sustainable public health policy.

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

You mention the U.K. and France on page 5 with respect to pricing. The changes in CETA would actually harmonize our intellectual property rules or guidelines with those countries. Does your group have more concerns inherently with intellectual property and the concept of patents?

[Michael McBane]

We certainly have a problem with patenting life essential medicines or any other public good, but in a sense, that's a separate philosophical issue. We think there's a social mortgage on all intellectual property, and so does international law. The patent question aside, because we don't really get into patents, we believe that regardless of what the patents say, governments should not have to pay the price that the brand names are asking. Most countries negotiate much lower prices through bulk purchasing agreements, which the Europeans do—

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

Which the provinces are now engaged in....

[Michael McBane]

—and which is starting to happen in Canada.

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

Thank you very much. I have to move on to Mr. Trew.

Thank you for appearing by video, Mr. Trew.

First off, I've followed the Council of Canadians for years. I haven't been an MP for long, and I see you're the trade lead or the trade researcher for the council.

Does the council support any trade? Can you point to an agreement that Canada has, either a protection agreement or an FTA, that the Council of Canadians supports?

[Stuart Trew]

Well, of course we support trade. In fact, most Canadians obviously support trade. It shows in the polling data. Eighty per cent of Canadians like the idea of a trade deal with Europe. We're no different.

We don't support the types of agreements that Canada typically pursues, the free trade agreements, and for some of the reasons we outlined today, the extent they go beyond trade issues to deal with intellectual property, to deal with procurement, to deal with investment protections which we think go too far. Having said that, if we look at the agreement we signed with the European Free Trade Association, we wouldn't object to signing the same thing with the other members of the European Union.

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

Getting back to what I was asking, Mr. Trew, I think for most Canadians Maude Barlow rose to prominence around the NAFTA and FTA. Can you point to a current FTA that Canada has which your council supports?

[Stuart Trew]

Of course not, because they are all based on the NAFTA model, which we continue to oppose for some of the reasons we laid out today. We think they give far too much power to corporations, that they have not been as good for the general public as we are told frequently that they were, and so long as they keep looking like NAFTA—

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

The answer is none. I can take that. None.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We're going to move on to our next one, but before we do that, Mr. McBane, you had mentioned that one per cent of growing health care costs is attributed to the aging population. Do you have a study that we can refer the committee to?

[Michael McBane]

Sure. There are some independent health research organizations that have estimated the cost impact of an aging population. I can forward that to you.

[The Chair, Conservative, Rob Merrifield]

I'd appreciate that.

Mr. Pacetti, the floor is yours.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair. Thank you to the witnesses for appearing.

Mr. McBane, I have a quick question. I'm viewing health care as services and products. I want to take the product side out, the pharmaceuticals, because we've had representation come before committee, whether it be from generics or research based.

Is the service part in jeopardy? Are there any services that are going to be more costly? I'm talking about services in terms of medical staffing, nurses, doctors, and specialists.