Public Accounts Committee on Nov. 23rd, 2011

[The Vice-Chair, Conservative, Daryl Kramp]

Thank you very much, Mr. Wiersema.

The time's up.

We will go to Mr. Hayes, please.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you, Mr. Chair.

Mr. Wiersema, it's nice to see you again. I've enjoyed working with you in my very short time on this committee. You've provided great guidance and direction, and I wish I'd had you around many years ago when I had my own business. My business might have lasted a little longer. It did all right.

I do thank you for your 33 years of service. It's similar to my father's: exactly 33 years of service in the Royal Canadian Air Force. I'm probably a little bit passionate about our military because of that, so my questions are going to focus on chapter 5.

I think specifically, as I recall yesterday, you stated, “Regarding maintenance and repair of funding allocations, we determined that National Defence has an effective forum in place to allocate financial resources to define priorities”. Can you elaborate on what exactly that means, on what effective forum is in place, and how does the department define its priorities?

[John Wiersema]

You'll have to forgive me on this one. It's in a level of detail in the chapter that I'll have to re-familiarize myself with, because my backup on this chapter isn't here. He had to go to another meeting.

The specifics on the way DND presently allocates its resources to priorities are described in paragraphs 5.17 to 5.21 in the report. There are a number of fora in which receipts for demands for needed military equipment can be presented. They are evaluated by senior committees within National Defence. They use what information they have available to make the best decisions they can make with respect to the allocation of those resources.

We note in the chapter that the requests for funding always exceed the department's capacity to fund the demands. They're only able to fund about 70% of the demands received. But the department does have a good mechanism in place to ensure that they make the best use they can in allocating those funds to the priority projects.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you.

Former Auditor General Sheila Fraser said the following:

My sense is there is good control. But I think once the decision is made to send our people into war, we have to make sure they are equipped properly, that they are well supported and well protected. And the costs of these things becomes almost a little irrelevant in the whole scheme of things.

Do you believe that the Department of National Defence and this government are ensuring that our men and women in uniform have the necessary equipment to complete their tasks?

[John Wiersema]

In my opinion, the Department of National Defence has been successful to date in ensuring that military equipment is properly repaired and maintained, but it does face significant challenges and opportunities going forward in continuing to be able to provide that level of support.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

You made a statement that National Defence has adopted new approaches and these new approaches have the potential to help National Defence better manage maintenance and repair activities and realize cost savings.

Can you discuss these new approaches that National Defence has adopted?

[John Wiersema]

There are two new approaches. The first is called the optimized weapon management system. It applies primarily to existing fleets. The department is trying to consolidate what were previously thousands of contracts into fewer numbers of contracts to support various fleets. They've adopted that system for four fleets within the air force, and they have a strategy of trying to consolidate the contracts into nine multi-year contracts.

We think that approach has a lot of promise. Unfortunately, it wasn't deployed broadly across the Department of National Defence. When the project leader who was leading this initiative left the project, the initiative lost momentum. We think this approach has a lot of potential, and we encourage the department to continue to move forward with it.

The second new approach is the in-service contract support system. The thinking here is that when the Department of National Defence buys new equipment it will also buy a long-term support contract to repair and maintain that equipment--in some cases, up to decades into the future. There are huge risks and challenges here for the department in terms of the potential to lose expertise within the department and the reduced financial flexibility of the department, particularly in light of the fact that the funding cycle is so short.

We think this approach has some potential as well, and we encourage the department to identify the key risks associated with moving forward with it and making sure it has the appropriate mitigating actions in place.

[The Vice-Chair, Conservative, Daryl Kramp]

Thank you.

That's it.

Next is Mr. Byrne, please.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you very much, Mr. Chair.

Mr. Wiersema, the chapter on regulated pharmaceutical drugs and Health Canada's activities is particularly pertinent to each and every Canadian. Our health and our health care are some of the most tangible and visible things that affect our lives.

On what struck me about the chapter, you gave an overall description of the industry. It's a $31-billion-a-year industry in Canada, and over 500 million prescription medications are dispensed on an annual basis. The stakes are pretty high. That's one of the things you could not help but see in the chapter you wrote. This is big business. This is big money.

You noted in the chapter that the process of constraining or preventing conflict of interest has been somewhat suspect. Can you describe exactly what your concerns are about conflict of interest, not only within the regulatory approval process with outside players, but also within the Department of Health itself?

[John Wiersema]

Thank you for the question, Mr. Chairman.

Under the government's Treasury Board policy on the code of conduct for public servants, each department is expected to assess the particular risks that apply to its operations and ensure it has measures in place to mitigate those risks.

So with respect to regulating pharmaceutical drugs, in my view there are potential risks of conflicts of interest. Two examples come to mind, Mr. Chairman.

One is what I would refer to as complacency risk. If you're working with the same drug manufacturer too long, there's a risk you'll become too familiar with its processes and perhaps become complacent in your review.

Another risk I can think of off the cuff is the risk of financial benefit. Decisions to approve or not approve drugs could have impact on trading values of pharmaceutical companies, and public servants could inappropriately take advantage of that.

What we've found is that the department has not yet assessed its particular situation in regard to the risks that apply to the regulation of pharmaceutical drugs. We've encouraged them to do that and ensure they have appropriate mitigating actions in place.

The last comment I'll make, Mr. Chairman, is that I am aware that the department is now seized with this issue, and as recently as last week--Neil?--has undertaken certain initiatives to remind its employees of their conflict of interest obligations.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you very much.

You recommended in chapter 4--in section 4.63, I believe--that the disclosure of information related to drug approvals be not only for drug approvals but also for rejections. The industry itself has always rejected that, claiming that it should not be forced to provide proprietary information on something that was actually rejected.

But the department, Health Canada, has actually agreed with your recommendation. How far should this go? There's a difference between just simply saying, “Yes, we agree, we should provide more information...”. What information really should be provided?

[John Wiersema]

Mr. Chairman, I'll ask Mr. Maxwell to answer that question.

[Neil Maxwell]

Thank you, Chair, for that question.

Just broadly speaking, we had two concerns. One was about timeliness and one was about transparency. This question gets to the transparency of the regulation of drugs. In that particular recommendation, we said that Health Canada really hasn't dealt with the commitments it has made in the past to increase the transparency.

[The Vice-Chair, Conservative, Daryl Kramp]

The bells are ringing, but might I suggest that the chair will allow this round of questioning to be completed in its entirety, with Mr. Byrne? Then we will break for votes and return immediately after the votes, unless I have a unanimous motion to suggest otherwise.

Yes?

[Andrew Saxton, Conservative, North Vancouver, BC]

We agree with you and we support that recommendation.

[The Vice-Chair, Conservative, Daryl Kramp]

We're comfortable with this? Okay.

Let's take off the time off for my conversation.

Mr. Byrne, please finish.

Mr. Maxwell?

Thank you.

[Neil Maxwell]

I'll be brief.

We recommended that Health Canada disclose information both on rejected applications and on the ones in which the companies actually withdraw the application. Largely that was because of the practice of other regulators in other countries. We cite the case of the European Medicines Agency, which in fact is to disclose that very information....

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

So in agreeing to that particular recommendation, Health Canada really cannot come back and now say to us as parliamentarians that it's all really subject to privacy information or proprietary rights.

You understand it to be that Health Canada will be disclosing all the information that is pertinent for transparency purposes in a rejection or in some of the other cases you also noted, like withdrawals with conditions or approvals with conditions. Would that be a fair categorization?

[Neil Maxwell]

Yes, Chair, the response to our recommendation begins with the word “Agreed”.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Yes, I couldn't agree more.

On the issue of--

[The Vice-Chair, Conservative, Daryl Kramp]

Yes, you can have another half a minute.

[John Wiersema]

Pardon me, Mr. Chair.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Sorry, Mr. Wiersema, you wanted to...?

[John Wiersema]

Very briefly, Mr. Chair, Health Canada will have to comply with the laws of the land in what information it discloses, so if there are legal requirements that prevent it from disclosing information, I don't think you can categorically say it is going to ignore the laws of the land.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

No, but I think what's important here is that when the government says “agreed”, it is doing so with full knowledge of what the law is, so it has already determined within its own ranks that by disclosing this information it would be in compliance with the law.

From our point of view as parliamentarians, Mr. Wiersema, I'll just say what you just said a little while ago. When you say “we agree”, then you do so with a full understanding of what you're agreeing to. We hope that's what Health Canada has indeed done and they're not playing a little bit of pokey-wokey.