International Trade Committee on April 16th, 2021

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Sure.

[Declan Hamill]

Professor Evenett pointed this out as well. Sometimes having a robust pharmaceutical industry doesn't necessarily insulate you from the difficulties that can occur as a result of a global pandemic. Clearly, it's helpful for your public health policy. It's also helpful for your economy, but that said, these things are extremely difficult to predict, and they're very difficult to manage in practice.

However, in terms of getting more infrastructure into the country, here I'll express a little bit of frustration, because there's a room somewhere at Innovation, Science and Economic Development Canada that is filled with reports about life sciences innovation over the years. Most recently, we had one which was put out by the health and biosciences economic strategy table, HBEST, in late 2018, by a group of industry, academia and government officials.

The deputy minister of health and the deputy minister of ISED participated. They put out a report on how to build a life sciences sector with greater capacity in Canada. It related not just to IP but also talked about regulatory barriers, taxation, labour skills, etc. It was a great report. Since the report came out, not much has happened.

We have a history in Canada of thinking very long and hard about life sciences innovation, but we don't really do very much. We don't implement our great thoughts. A good starting point would be to go back to HBEST, revisit that and implement some of its recommendations. That in and of itself will not necessarily, as Professor Evenett pointed out, yield direct benefits in terms of a pandemic vaccine, but it would create more infrastructure and capacity within the country in the medium to long term.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

To be ready to face a pandemic or any other challenge as such, it's not just about vaccination. There's also rapid testing, for example. Being able to provide rapid testing to keep the economy going and to have some security and certainty to what we do on a daily basis was not even there.

If the vaccine needs some kind of special licensing, an IP licence, to be passed in certain countries, I don't know where we failed. Do you agree there's a big failure in dealing with this whole thing? By the way, as a matter of timing, we knew about the pandemic coming our way months before it hit our border. What do you think of that?

I'll ask Ms. Fralick to comment on this as well as Mr. Evenett.

[The Chair, Liberal, Judy Sgro]

I'm sorry, but you're time is up. It's going to have to be a brief answer from Ms. Fralick and Mr. Evenett.

[Pamela Fralick]

There are a great number of things we could have done differently. I will be happy to have that conversation with you perhaps off-line to share some extra thoughts.

[Simon Evenett]

My brief observation is that the cost-benefit analysis of investments in vaccine production and development were not correct. We have, as you noted, a $1-billion investment by the Canadian government. The losses to the Canadian economy are orders of magnitude larger. You have to wonder if more money had been spent and invested along the entire vaccine supply chain, whether the result would have been different.

In this regard, the British experience, where they spent over 10 billion pounds doing this, gives you some sense of the type of money involved. I would argue that the British experience showed there was a very close partnership between industry and government, and that does not appear to be the case in Canada.

[The Chair, Liberal, Judy Sgro]

We move to Ms. Bendayan for five minutes.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Madam Chair, and thank you to all of the witnesses for this very interesting discussion.

Mr. Lipkus, in his opening remarks, identified three articles of the TRIPS agreement, articles 6, 8 and 31, which reflect current flexibilities in the TRIPS agreement.

Ms. Silverman, do you agree with Mr. Lipkus's reference to those articles? Were those the flexibilities you were referring to earlier?

[Rachel Silverman]

I would defer to him on the numbering of the flexibilities, but yes, generally speaking, those are the flexibilities to which I was referring.

[Rachel Bendayan, Liberal, Outremont, QC]

Ms. Silverman, is it your opinion that those flexibilities are not only useful but are sufficient at this point in time of the pandemic?

[Rachel Silverman]

The challenge with TRIPS flexibilities is not just in the letter of the law or what is technically written into it. It's in the actual applicability of those flexibilities. As Mr. Lipkus mentioned, many countries are also bound by bilateral trade deals with the U.S. or Europe or the U.K. or Canada or others. Then there are extra trade deal pressures that are often brought to bear against countries that try to exercise TRIPS flexibilities. Even though these are legal under the TRIPS framework, that does not mean there is no consequence for trying to exercise them.

It is my opinion that if these flexibilities could be exercised without retaliation or threat thereof, or without constraint within other bilateral trade deals, they would be sufficient. However, as it is, they are problematic.

[Rachel Bendayan, Liberal, Outremont, QC]

I see.

We also heard in earlier testimony that there hasn't been, at least to date, any issue in terms of granting these compulsory licences or in exercising these flexibilities—at least so far. Is that your understanding of the current situation?

[Rachel Silverman]

It is my understanding that there have been no compulsory licences issued for COVID vaccines thus far. It's hard to know to what extent that is, whether there is no opportunity for a compulsory licence to be issued where it would be useful, or whether countries are doing a cost-benefit analysis and finding that maybe there would be some upside to this but that they would expect trade retaliation from many other countries, so they do not want to do it. I suspect it's part of both. Probably the retaliation makes them hesitant to even consider it. On the other hand, there's probably no golden opportunity where the upside would justify doing so.

I think it's a little bit of both, but the retaliation certainly plays a role.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

Ms. Fralick, I believe you were interrupted earlier in your conversation with another colleague, when you had wanted to identify, along with your colleague Mr. Hamill, some of the risks we would be opening ourselves up to should we move forward with a TRIPS waiver.

I don't know if you wanted to expand on that, Mr. Hamill.

[Declan Hamill]

Thank you very much. I appreciate your bringing that back before the committee. Ms. Fralick may also want to add to this.

In any case, first of all, I take issue with the statement made with respect to the financing of the vaccine production. It's not the case that this has all somehow been underwritten by governments. Governments have funded and have provided significant support. It depends on the vaccine manufacturer, but it's not the case, as is portrayed by some, that this is some sort of issue where, to put it colloquially, the industry has “already been paid”, and, therefore, there's nothing to recoup anymore. That's simply untrue. There have been huge investments made.

In many cases, there hasn't been success. Huge multinational entities with vaccine expertise—for example, Merck, GSK and Sanofi—have tried, and ultimately they have not been successful so far with respect to COVID-19 vaccines. A lot of costs are assumed by these manufacturers.

[Rachel Bendayan, Liberal, Outremont, QC]

I'm sorry to interrupt, Mr. Hamill, but does that put us at risk, perhaps, for future pandemics in terms of having these players in the market?

[Declan Hamill]

Yes, precisely. They are making significant investments. They make these investments based on a playing field that they believe they understand. Intellectual property is part of that. In terms of their business planning, in terms of how they're going to map out expansions in productions, and in training skilled personnel, developing resources and working with partners in other jurisdictions, they have to understand the lay of the land. If you have a situation where the rules might change because somebody decides that this is a situation where the rules must change, that will clearly be disruptive.

On the idea that there's no consequence, I think that's simply not the case.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Monsieur Savard-Tremblay, you have two and a half minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

My question is for Mr. Hamill and Ms. Fralick.

As far back as 2003, the Naylor report on the SARS crisis was very critical of Canada's lack of scientific research capacity on a national level and suggested that significant dollars be spent to increase that capacity, while linking it to academic institutions through several partnerships.

In February 2020, Dr. Gary Kobinger, a highly regarded Quebec microbiologist, contacted the government and said that discussions needed to be set in motion to form partnerships, as was being done in Britain, for example. So, from the beginning, Canada could have formed partnerships for domestic production of a vaccine.

Earlier, you told us about the lack of communication with the Prime Minister.

Did Ottawa's inaction cause us to lose several months?

[Pamela Fralick]

Thank you for the question.

I will respond in English, just to keep it straight.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Please feel very comfortable.

[Pamela Fralick]

Thank you very much.

You have captured the situation well, I think. If I could raise it one level, in general, governments of all stripes in all countries do not put the emphasis on prevention and early warning systems.

Speaking specifically to Canada, we have not done a good job of using the knowledge that we have, whether it's from SARS or H1N1, or of looking at some of the work maybe outside of Canada, like that by Bill Gates. That work was predicting a pandemic in 2015, I believe. There were many signals that many countries, including Canada, should have looked at and should have been better prepared with.

In Canada itself, I've said this before and I'll say it with a note of optimism, because you have an industry represented here by me and by my colleague that is ready to engage with government to have these tough conversations.... We appreciate that it's industry. There's always a bit of tension there, but we do believe that there's a much better solution for Canadians when industry and government are talking regularly with one another. That has not been the case. I do believe that it has been a factor in all of the decisions that have been made along the way.

Again, we have global leaders who are used to meeting with Boris Johnson—in deference to our colleague from the U.K. who is here—and with Emmanuel Macron, U.S. President Biden, Prime Minister Suga, etc. They are confounded as to why they've not been able to get a meeting here in Canada, so that is, I believe, a significant part of this.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go on to Mr. Blaikie for two and a half minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Ms. Silverman, I want to return to your comments at the end of my last period of questioning.

I do think that one of the possibilities here is that governments the world over are showing that they're prepared to take more aggressive action in order to be able to ramp up vaccine manufacturing. It might help. I recognize that there are already efforts within the pharmaceutical industry, but it might help incent more rapid collaboration and a wider extent of co-operation, and it might also play into some of the conversations that are rumoured to be happening at the board tables of some of these companies.

There have been reports that they're already talking about when they could raise the prices of the COVID-19 vaccine. There has been talk about differential pricing: selling vaccines at different costs to different countries, depending on who they are negotiating with.

I wonder if you would want to speak to the question of galvanizing governments at the WTO to show that other options are possible and, as a way of getting leverage with existing manufacturers, to accelerate their attempts to expand within the voluntary licensing system and to keep their prices low.

[Rachel Silverman]

I think that's exactly [Technical difficulty—Editor]. In my opening remarks, I referenced the role of the TRIPS waiver campaign in helping create some of that momentum and increasing pressure. I also think a policy of non-retaliation around use or indication of existing TRIPS flexibilities would be very helpful in this space, because it would allow countries the space to drive their own negotiations with pharmaceutical companies within existing legal boundaries and our existing IP framework. I think that's a way of driving this forward that addresses some of the concerns of industry about unpredictability and the idea of changing the rules of the game midway. These are the rules of the game, so it's not changing them. It's using the rules as they're written.

The one thing I would just respond to in your specific comments is around tiered pricing. We do need to be on the lookout for changes to pricing that pharmaceutical companies might want to put in place later on, after they perceive that public pressure around the immediate pandemic has receded. However, tiered pricing is not always a bad thing. It's often quite a useful way of getting access to low- and middle-income countries and getting universal access to prices that are affordable to different countries, understanding that different countries have different capacities to pay for medicines, even if they're respecting IP and even if they want to contribute to the overall innovation ecosystem.

Therefore, I don't think tiered pricing is necessarily bad, so long as the prices are affordable in every setting in which they are offered.