International Trade Committee on April 19th, 2021

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you for opening, again, the question.

I'll go back to Mr. Sorenson.

I'm very curious about the process when it comes to getting ready. I always believe, regardless of which government is in place, that usually it is red tape that stands in the way of any development at such a very important and critical time when we know that we need to act fast and deal quickly with the pandemic and find solutions.

Can Mr. Sorenson tell us the most significant roadblock in his company's way to being able to develop the vaccine and to start producing it, knowing that the United Kingdom, within 10 months, was able to set up the manufacturing capacity and to produce vaccines? They are ahead of us, by far, when it comes to providing vaccines per capita.

[Brad Sorenson]

We have the ability to produce vaccines. That work that you're describing has been done in Canada. All of the manufacturing processes, the supply chain, and everything we need to start producing mRNA vaccines in Canada are in place. The only thing that's missing is the capital for us to secure the raw materials and commit to the plant times.

We've put a budget forward to the strategic innovation fund that would accommodate for the clinical trial material, but they've clearly communicated to us that their mandate is strictly on clinical trial and that it does not encompass scale-up for commercial activity.

I've reached out and asked if they would put me in touch with.... I spoke to the finance committee. I'm speaking to this committee. Quite frankly, I'm not that familiar with who makes that decision in government. Maybe it's Minister Anand at Public Services and Procurement Canada.

If I had an order.... I'm not looking for a handout. I'll take an interest-free loan; I'll take a deposit on an order. I don't care how it comes. I just need the capital so that we can start the process.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

We've spent billions of dollars on this. There are other companies in Canada that got some nice purchase orders to supply PPE.

Why not? How much capital are you looking for? I know that could be in the millions, but that's nothing compared to the amount of money we've spent so far. This is very critical, because this is not the solution just for today. I think that having companies such as yours will be a solution for the future, knowing that vaccines and problems as such will be things we're going to have to deal with for decades to come.

How much capital are you looking for? Why haven't you been able to get that? Why not? You mentioned that you don't know who to talk to. This is concerning.

[Brad Sorenson]

Well, we're talking to anybody who will listen.

The simple answer is, as I mentioned earlier, that our costs are $5 a dose. Those costs, 80% of that, $4 of that, are material costs that we have to spend up front. In this environment, where there's so much demand for this type of product, we have to make commitments six, seven or eight months in advance in order to secure these supply chains. If you want 50 million doses, it's simple: 50 million times $4 equals $200 million. If you want to have enough supply for an entire production run of 200 million, that would be $800 million.

The reality is that once we get there, we're going to be able to sell some vaccines and we'll be able to use those revenues to continue to purchase supplies.

I hope that's a straightforward answer.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Let me ask you a business question. If the government extended a purchase order to your company, wouldn't you be able to leverage that to get some funds to start producing?

[Brad Sorenson]

Oh, 100%. People ask me, “Well, if your stuff is so good, why don't you go out and raise money in the market?” Well, it's a point of value inflection. Yes, we're going to go to the capital markets. We're going to bring significant capital into Canada, but why would I do that at a competitive disadvantage to other companies that have received significant support from their governments and disadvantage my existing shareholders?

I know what our data is. I know that we are going to be able to do deals based on our data. If we don't get the upfront costs from Canada, we'll get upfront costs from other countries. The problem is that we'll have committed that production to another country, and we'll be exporting it out of Canada when Canada potentially needs it.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Sorenson.

We move to Mr. Arya, please, for five minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

My first question is to Mr. Mark Agnew.

Mark, you and I both support free trade agreements. We have talked, I think, in previous committees too. With CUSMA and with CETA, we have these free trade agreements. Those have made us dependent on our partners to keep the supply of essential goods and services open. Now, with the current situation, do you think our dependence for critical pharmaceutical products due to free trade agreements has come back to bite us?

[Mark Agnew]

Well, in terms of how trade agreements have been interpreted historically, governments have very large berths and lots of latitude to interpret what national security exemptions and public health exemptions mean in practice. They have come back to bite us only insofar as they were never really designed to protect us in these types of situations. If the EU decided tomorrow to block a shipment, I don't think we'd be able to bring a case under—

[Chandra Arya, Liberal, Nepean, ON]

Does it mean that we have to develop a new strategy to have self-reliance on critical items that are required to keep our society functioning?

[Mark Agnew]

Yes, and that includes being able to manufacture and source inputs and provide financing, as Brad was talking about, and having the regulatory and labour mechanisms in place, absolutely.

[Chandra Arya, Liberal, Nepean, ON]

Thanks.

My next question, Madam Chair, is to Mr. Brian Daley.

Brian, you talked about a reasonable approach. You are basically, if I'm not wrong, suggesting a sort of reasonable approach that creates interdependence that will ensure that the supplies are there when we need them, if my understanding is right, and you are opposing the waiver.

You mentioned CUSMA and CETA. They have solutions, but they seem to have not worked, or it may be possible that the solutions currently available may not yield results in the immediate term. What do you think?

[Brian Daley]

Well, as one of my colleagues said earlier, we are getting suppliers who honour their contracts with us, so we have not seen our major trading partners impede supplies to Canada.

My idea behind the regional suggestion is that we really shorten some of the supply chains and limit the number of countries we deal with in order to reduce risk.

As everybody knows, in a crisis you're never going to be able to enforce what is essentially a contract between states. You'll never have that contract honoured in cases of national crisis. People are always going to act in their self-interest in a crisis, but I think reducing the number of people we depend on helps us achieve a higher level of security, even though the idea of absolute security is never going to happen.

[Chandra Arya, Liberal, Nepean, ON]

I think I heard differing views. Mr. Marc-André Gagnon seems to suggest that production capacity is not a constraint, while Mark Agnew seems to suggest that production capacity is a constraint.

Mr. Marc-André Gagnon, can you address this issue, please?

[Dr. Marc-André Gagnon]

It's not an issue of the production capacity being a constraint or not; it's a question of whether we have available production capacity right now that is not being put to use.

The answer to this question is “yes”. The other question is, “Why is this?” On this, trying to maintain the system in place will not help to contribute to production capacity.

We have Mr. Sorenson here, but we would have basically the same story from Donald Gerson at PnuVax, for example, who could tell you exactly the same thing. He has the same issues in trying to start producing the vaccine. If we don't have a government that is applying its weight in order to help these businesses and partners, or by producing these vaccines itself through a public manufacturing capacity, basically we're stuck in the situation we are in right now.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Agnew, what do you say?

[Mark Agnew]

Just to clarify my earlier remarks, when I was talking about the manufacturing piece, it was in reference to the TRIPS waiver specifically. Waving a magic wand over the TRIPS waiver for six months is not going to suddenly make capacity issues in other jurisdictions go away. I think that's a nuance I want to put there.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Your time is up, Mr. Arya. We'll go on to Mr. Savard-Tremblay for two and a half minutes, please.

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

Mr. Gagnon, you talked about the WTO. Do you think certain sections of the agreements themselves should be revised or amended? In other words, are reforms needed?

[Dr. Marc-André Gagnon]

That's a good question.

Are you referring to regional trade agreements such as the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA?

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

Yes, CETA is a good example.

When CETA was signed, there was no indication, under certain sections, that a crisis was going to force the signatories to override certain provisions of the agreement.

[Dr. Marc-André Gagnon]

There's actually a difference between the agreement and the way in which the agreement can be interpreted. The TRIPS Agreement was signed in the mid-1990s. From that point on, countries sought to interpret the agreement through what are known as TRIPS-plus provisions.

That caused considerable problems, leading the WTO to adopt the Doha declaration, calling on countries to be more flexible. It didn't take long to realize that the TRIPS Agreement was ill-equipped to address public health needs and did not take into account responses to health emergencies.

All that to say, agreements could certainly stand some changing, but it all depends on how they are interpreted.

As Mr. Daley said, the definition of a health emergency is still unclear. Countries have to fight to establish what constitutes a true health emergency. AIDS remains a health emergency in Africa, but the provisions in various agreements are not used to address the emergency.

Canada should stop promoting the TRIPS-plus approach, which calls for the strictest interpretation possible.

Not suspending the TRIPS Agreement is one thing, but not including COVID-19 products in schedule 1 of the Patent Act makes no sense. Accordingly, the flexible measures in the TRIPS Agreement can't be applied to those products. That is unacceptable.

The way to achieve better results is to suspend the TRIPS Agreement. Technology and expertise could then be pooled and shared, which would give the current fight against COVID-19 a significant boost.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

I'm sorry. Your time is up, Mr. Savard-Tremblay.

We'll move on to Mr. Blaikie for two and a half minutes.

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

Thank you.

Mr. Sorenson, we know that in the rush to try to get the initial vaccination done, Canada is very reliant on some of the large pharmaceutical companies. I think that's an understatement. We also know that as the pandemic continues, if COVID-19 vaccines are going to be part of a regular vaccination course, it seems to me it would be in the long-term interest of Canadians to have a more competitive market and a domestic supply, but the behaviour of the government in not providing support for what you guys are doing out of Calgary and Winnipeg is inhibiting that.

Do you have any concern that the short-term imperatives of the current vaccination rollout are causing the government to behave in ways that discourage competition in the long term?