Public Accounts Committee on March 23rd, 2023

[The Chair, Conservative, John Williamson]

I will open this meeting.

Thank you, first of all, for your understanding, everyone. We just had a few votes in the House of Commons.

Welcome to meeting No. 54 of the House of Commons Standing Committee on Public Accounts.

Pursuant to Standing Order 108(3)(g), the committee is meeting today as part of its study of Report 9 of the Auditor General of Canada, entitled “COVID-19 Vaccines”, and the motion adopted on Thursday, March 9, 2023.

I will read the text of the motion adopted:

That the committee invite, at the earliest opportunity, the representatives of Moderna, Sanofi, Pfizer, Medicago, AstraZeneca, Johnson & Johnson and Novavax, and the Law Clerk and Parliamentary Counsel, in view of its study on Report 9, COVID-19 Vaccines, of the 2022 Reports 9 and 10 of the Auditor General of Canada.

As members are aware, the committee is currently debating the motion of MP Nathalie Sinclair-Desgagné, which I will not read, but you're all very familiar with it.

Just to bring members up to speed, AstraZeneca, Johnson & Johnson and Novavax declined the invitation to appear, but they did send letters to the committee that you have and can consider. You should have received from the clerk these letters in both official languages.

I would now like to welcome our witnesses.

Thank you very much for agreeing to appear today.

From Medicago Inc., we have Toshifumi Tada, president and chief executive officer, by video conference. From Moderna, Inc., we have Patricia Gauthier, president and general manager, Canada. From Pfizer Canada, we have Najah Sampson, president, and Fabien Paquette, vaccines lead, mRNA vaccines and antiviral portfolio, by video conference, and from Sanofi Canada, we have Jean-Pierre Baylet, general manager, vaccines.

Also with us today is Michel Bédard, who the interim law clerk and parliamentary counsel. He will not be making an opening statement today, but he is here should there be any questions.

Each of the witnesses will have five minutes for their opening remarks. We will start with Medicago, then go to Moderna, Pfizer Canada and Sanofi Canada.

Mr. Tada, you have the floor for five minutes, please.

[Toshifumi Tada, President and Chief Executive Officer, Medicago Inc.]

Thank you very much.

Ladies and gentlemen, I would like to thank this committee for inviting me to attend with the panel of witnesses today.

My name is Toshifumi Tada, president and CEO of Medicago since May 2022. Before that, I was a director of the board for Medicago for four years, representing Mitsubishi Tanabe Pharma, our majority shareholder.

First, I would like to share with you that our shareholder, Mitsubishi Chemical Group, announced last month that it had decided to cease and proceed with an orderly wind up of our business and operations.

Medicago is a Canadian biopharmaceutical company with sites in Canada and the United States, specializing in the resource and development of new vaccines using plant-based virus-like particle technology. Our vaccine for the prevention of COVID-19, Covifenz, was approved by Health Canada in February 2022. This was intended as a first commercial product.

We had been preparing for the transition to commercial-scale production. However, considering the significant changes to the COVID-19 vaccine landscape, the global demand and market environment for the COVID-19 vaccines, and Medicago's internal challenges in transitioning to commercial-scale production, Mitsubishi Chemical Group determined that it would not pursue the commercialization of Covifenz.

They also judged that it was not viable to continue to make further investment in Medicago. It would have required hundreds of millions of dollars and years of testing to enable commercial-scale production. Therefore, we will cease our operations in the United States on April 14 of this year and in Canada on June 2 of this year.

Next, I would like to clarify Medicago's position on the requested disclosure of the adjuvanted vaccine supply contract, which we executed with Public Services and Procurement Canada on November 13, 2020. Given the cessation of our operations, our position is not to oppose the disclosure of an unredacted copy of the contract to the committee. However, we request that the committee keep the confidentiality of our commercial and clinical information in the contract in the context of its audit.

As we did in collaborating with PSPC to answer an access to information request in February 2021, we must stress again that the contract contains commercial and technical information that ought to remain confidential. We request the same grounds be given full weight and consideration by the committee and that the committee consequently ensure that all our commercial and technical information be kept confidential.

While we are working to wind up operations, some of our tangible assets, including facilities and equipment, and importantly, intangible assets such as our intellectual property rights, may be sold or transferred to other organizations. We must ensure that unauthorized disclosure of our confidential information will not jeopardize or lower the value of such transactions.

More specifically, and in summary, we request that the contract information redacted in our answer to PSPC in the context of the access to information request of February 2021 be kept confidential for the following three reasons.

First, such information is, in and of itself, confidential and has consistently been treated as such by PSPC and Medicago because it concerns our pricing, supply quantities, facility locations and availability plans, which have direct commercial applications.

Second, the disclosure of such information could reasonably be expected to result in material financial loss to us and to prejudice our competitive position, because it would permit our competitors to gain valuable insight into our proposed products and our marketing strategies and would unfairly enhance the position of such competitors.

Third, the disclosure of such information could reasonably be expected to interfere with our contractual or other negotiations with customers.

In conclusion, we respectfully request that the committee maintain the already recognized confidentiality of our commercial and technical information in the context of its audit.

Thank you very much for your attention.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Tada. I appreciate that.

Turning now to Moderna, Madam Gauthier, you have the floor for five minutes, please.

[Patricia Gauthier, President, General Manager, Canada, Moderna Inc.]

Good afternoon.

Thank you, Mr. Chair and members of the committee.

My name is Patricia Gauthier, and I represent Moderna Canada.

In November 2020, at the height of the pandemic, I was hired as Moderna Canada's first employee. Before COVID‑19, Moderna was a small, research-oriented biotechnology company founded in 2010 to deliver on the promise of mRNA science to create a new generation of transformative medicines for patients. We had no marketed product.

At significant risk to our business survival, we made the bold choice to pivot all our focus towards playing a critical role in combatting the COVID‑19 pandemic globally. The crux of that action was the development of a revolutionary new technology known as mRNA. Now globally known, mRNA was, at the time, a cutting-edge technology into which Moderna had invested over a decade of research. Because we had this platform, we were able to use it to create our vaccine in record time, just under 12 months. That vaccine remains our very first product.

Moderna had to scale its biomanufacturing operations to a global level. I did not have staff. I answered calls from government officials, members of Parliament and provincial officials expressing urgent needs. I worked with a small team globally.

We worked to secure a safe supply and ensure we were responsive to the needs of the federal and provincial governments in Canada. Core to our ability to meet this extraordinary request was the clear, good-faith balance between two key principles: The first was transparency to the government, and the second was the protection of intellectual property and commercially confidential information. With these elements, Moderna could focus on vaccine production to meet these urgent needs.

As we accelerated and partnered on our research, we also started building our manufacturing capacity in parallel. Now, three years on, our vaccine has been administered to nearly one billion people across the globe. It has played a vital role in helping us move toward an endemic world, which is vitally important, given the pandemic has taken the lives of more than 51,000 Canadians.

The Auditor General's report acknowledged the successful efforts of the Canadian government to secure a diversified supply of vaccine and therapies in this very intense period, early in the pandemic. The federal cabinet, relevant departments, the Public Health Agency of Canada and the Auditor General of Canada always have full access to our vaccine contracts, at all times. We also understand that Parliament has a full version of the contract, redacted only for the intellectual property and commercially confidential information we have discussed. This is the same type of redacted documents provided to other parliaments globally.

I would like to expand on the contextual importance of confidentiality as it relates to the biopharma model and its high-risk environment.

Ten years before the COVID‑19 pandemic, we invested billions of dollars in private funding to develop and test our innovative mNRA platform. Our investment into this platform and its intellectual property has been possible due to the rules supporting innovation and research. In 2023, we will invest $4.5 billion in research and development globally to continue transforming the future of medicine. To provide context, this is about twice the pharmaceutical industry standard.

There are two elements relevant to our discussion today. They are related to securing intellectual property and the rule of law, which link to the sensitivity of contracts with governments. The first is domestic access to secure, safe manufacturing supply chains, and the second is linked to Canada's international trade commitments.

By its very nature, biopharmaceutical intellectual property and its resulting supply chain are considered sensitive areas by governments globally. For Canada, this means our innovation and supply chain are captured in the national strategy for critical infrastructure and through the Government of Canada's biomanufacturing strategy. Many additional security, privacy and safety protocols apply to our research contracts and supply chain. To ensure that neither our innovation nor our vaccines are compromised, our manufacturing methods and production supply chains are treated with the strictest confidence.

The second important issue is related to Canadian international trade commitments. These commitments establish minimal protections globally, including patent and trade secrets. They encourage innovation. Canada has benefited from these multilateral international trade agreements. It's important that Canada's respect for these agreements continues.

Moderna is invested in building Canada's capacity and capabilities to play a key role in exploring the potential of mRNA technology for pandemic readiness and other scientific priorities, as well as onshoring the manufacture of vaccines here in Canada.

This innovation could not take place if it were not for the sound legal and regulatory foundations that exist here—made possible by legislators like yourselves. The knowledge that our contract information and supply chain details remain confidential is directly linked to how we operate globally.

I look forward to answering your questions and to continuing our constructive dialogue.

[The Chair, Conservative, John Williamson]

Thank you very much, Mrs. Gauthier.

Ms. Sampson, you have the floor for five minutes.

[Najah Sampson, President, Pfizer Canada]

Good day, Mr. Chair and members of the committee. My name is Najah Sampson. I'm president of Pfizer Canada.

Thank you for your invitation to share Pfizer’s perspective on the motion before you. I am here with my colleague Fabien Paquette, our mRNA vaccines and antiviral portfolio lead in Canada, who is joining us remotely.

Today I want to highlight why disclosure of our confidential agreements with the government sends a very concerning signal about how this country upholds its contractual obligations and could challenge its reputation as a reliable partner for future contracts across all business sectors.

First, I must tell you how proud Pfizer is of its partnership with the Canadian, provincial and territorial governments in our fight against one of the most complex health challenges of our time. What was accomplished on behalf of Canadians was unprecedented and should be recognized as a model for collaboration moving forward.

For our part, Pfizer has engaged in ongoing transparency with Canadian health officials and the public. Throughout the pandemic, we worked in lockstep with the public health authorities and with Health Canada to share all data related to our vaccine as it became available. We regularly shared our timeline of manufacturing targets to help manage expectations and logistics, and, as a result, public health authorities, health ministers, premiers and the federal government have praised Pfizer’s collaboration and the reliability of our contribution to the immunization campaign.

Independent analysis of the Canadian vaccine response to the pandemic has been overwhelmingly positive. The Canadian Medical Association Journal concluded that Canada performed better than most other G10 countries in terms of vaccination rates, infection rates and mortality.

The Auditor General examined all agreements related to COVID-19 vaccines, and this committee had the opportunity to question her and numerous officials about her findings. Her report highlighted several success factors, including the expedited process to authorize, procure and distribute vaccines. The report also contains recommendations to make Canada’s response to a future pandemic even more robust. Pfizer supports these recommendations and will continue to work with its partners in government on behalf of Canadians.

However, nowhere in the Auditor General’s report does she recommend further scrutiny of vaccine provider contracts or the contracting process. In Pfizer’s case, our work against COVID-19 continues. We remain actively engaged with authorities around the world on the supply of our vaccines, and each country has its own requirements for supply. We stand by the obligations we have accepted in our commercial agreements with these stakeholders. These contracts contain commercially sensitive information that would likely be of interest to our competitors and also prejudice our discussions with other partners.

We believe that proper and robust oversight of the vaccine procurement process, including parliamentary oversight, has occurred. Canada’s response to the pandemic has been subject to public review by the country’s highest auditor, and the AG fulfilled her commitment to Parliament and to Canadians.

Pfizer's approach around the world is to maintain the confidentiality of the agreements for all of our medications, and our COVID-19 vaccine has been no different. Respectfully, it is fair to say that disclosure of our confidential agreement would be an extraordinary use of authority. Contractual trust and stability remain a cornerstone for a country like Canada to attract investment and innovation. Although it isn't represented here today, we’re quite sure that the Canadian government would agree with this principle. Eroding this predictability sends a concerning signal about how this country will uphold its contractual obligations, not just in health care but across all industries.

I ask members of this committee to take the time to carefully consider our perspective before creating a precedent with unintended consequences on Canada’s reputation. It would send a strong message to business partners and to companies looking to invest here that here in Canada confidentiality protections negotiated in good faith with the federal government may not be binding.

Pfizer deeply values the level of co-operation with government throughout these unprecedented times, and we take very seriously the agreements that have governed this collaboration to date.

We appreciate the opportunity to share our perspective and welcome any questions you may have. Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

I will note something just to get ahead of some of the questions that will come, so that it doesn't continue to be an issue. It was referenced as well in some of the letters we received.

The motion before this committee is to maintain these documents in camera. That is to keep them secret. I will correct those who refer to this as being a public release of any sensitive documents. I just wanted to lay this out because it came up several times in several of the letters. I thought it should be corrected.

I will now turn to our last witness who is presenting.

Mr. Baylet from Sanofi, you have the floor for five minutes.

[Jean-Pierre Baylet, General Manager, Vaccines, Sanofi Canada]

Mr. Chair, hon. members of the Standing Committee on Public Accounts, good afternoon.

My name is Jean‑Pierre Baylet, and I'm general manager of the vaccines unit at Sanofi Canada.

Sanofi is an innovative global health care company. It is driven by one calling: Pursue the miracles of science to improve people's lives. We develop treatments and vaccines that change the lives of patients around the world every day, including here in Canada, but also in the world's poorest countries.

Sanofi has been firmly rooted in Canada for more than a century. Over the decades, we have built one of the world's largest vaccine research, development and manufacturing facilities in Toronto on a 54-hectare campus.

Today, Sanofi is on track to make more than $2 billion in investments in Canada by 2028.

As Canada's largest vaccine manufacturer, each year Sanofi protects over 7 million Canadians from infectious diseases and also exports to more than 60 countries around the globe.

We employ more than 2,000 people across Canada and help create thousands of associated jobs in many sectors. We provide work-study opportunities to over 100 Canadian students every year.

We invested $143 million in research and development in 2021, making us one of the top life sciences investors in the country.

With respect to COVID‑19, the partnership between the vaccine industry and public authorities has enabled Canada to achieve broad vaccine coverage, which contributed to reducing hospitalizations and deaths.

Sanofi has been one of the few companies to make its global manufacturing and supply network available to other companies so they can accelerate access to their vaccines worldwide.

This commitment to addressing urgent public health needs recently led us to make one of the largest investments in Canadian life sciences history, in partnership with federal, provincial and municipal authorities, to strengthen vaccine manufacturing capacity and national preparedness for future pandemics.

At Sanofi, we take the confidentiality of our business operations very seriously. We require confidentiality to be able to pursue our investments in Canada and abroad.

While we're committed to transparency, some of the information in the advance purchase agreement is very commercially sensitive. For this reason, the agreement includes confidentiality obligations, and Sanofi expects them to be met.

Strong intellectual property and trade secrets legislation are essential: They foster innovation and promote long-term growth.

The Auditor General's review and report on the COVID‑19 vaccine contracts provides an objective and independent assessment under the law, and it doesn't compromise business confidentiality.

Disclosing commercially sensitive information would set a dangerous precedent.

In closing, Sanofi is committed to Canada and the health and well-being of Canadians every day. We want to continue to advance health care innovation with respect for the confidentiality of our business operations and our ability to remain competitive in Canada and abroad.

Thank you very much for your time.

[The Chair, Conservative, John Williamson]

Thank you again.

I am now going to turn to questions from our members. The first four members will each have six minutes.

Dr. Ellis, you have the floor for six minutes.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

Thank you very much, Mr. Chair.

Thank you to all the witnesses for being here.

I think it's interesting. Here we are, three years later. I can remember the early days of the pandemic very clearly, when I was running a COVID unit back in northern Nova Scotia. All of us wondered whether or not the world was going to end, yet here we are, three years later. It doesn't seem a whole lot has changed, but many things have.

Mr. Tada, I'll start with you, if I may, sir.

I want to thank you, first of all, for being honest and agreeing to release information to this committee—if I heard you correctly. Certainly, I think the members of this committee want to be very clear in helping you and your colleagues understand that this information is not for public release. I'll reiterate that, as the chair did.

Part of the question I have.... You said you agreed to release some information. Does that make any sense? Why would you put intellectual property in an advance purchase agreement contract?

[Toshifumi Tada]

Thank you very much for the question.

If I caught it correctly, the question was why we would have intellectual property in the contract.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

That's correct.

[Toshifumi Tada]

It is a product of many years of investment, but we did not prohibit, in the contract, the government reselling the vaccine. If necessary, they have the licensing rights to use our intellectual property, so the vaccine, for pandemic preparedness, can be produced domestically in Canada.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

That's interesting, sir.

I think you said your company is leaving Canada on June 2. Who owns that intellectual property, then?

[Toshifumi Tada]

Medicago owns it, currently.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

Okay.

Is it true, sir, that there is an advance purchase agreement with Medicago and the Canadian government for 20 million doses of your vaccine, which was never ever produced?

[Toshifumi Tada]

Yes. Although we got an approval from Health Canada in February of last year and were preparing for the launch of the product, we faced unexpected quality problems. While we were fixing these, market needs for the vaccine evolved toward bivalent vaccines. Our vaccine is monovalent. Therefore, we just.... The approved vaccine was irrelevant, because of the market evolution.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

That's very good, sir.

Is it also true the WHO would not accept your product because of the involvement of Philip Morris with your company?

[Toshifumi Tada]

Yes. It was not because of the qualify of the product itself, but because of our shareholding structure at that time.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

That's right.

Is it also true, sir, that the Government of Canada invested $173 million in Medicago, in terms of physical space, buildings, equipment, etc?

[Toshifumi Tada]

The contract we have, as I said, was for the development of a COVID-19 vaccine, as well as for building biopharmaceutical capability in Quebec.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

Sir, in my understanding, then.... Even though we don't know for certain, if we're going to talk about $30 a dose, 20 million doses, $173 million.... Your company—without giving Canada a single dose—has received at least $773 million from the Government of Canada.

[Toshifumi Tada]

We used that....

First, we appreciate all the support from the federal Government of Canada, as well as the Quebec government. Those funds were intended to finance our COVID-19 vaccine and the building of manufacturing capacity in Quebec. Those objectives were actually fulfilled. We spent all of those monies to fulfill the approval of the Covifenz COVID-19 vaccine, and we were proceeding with the construction of local manufacturing capacity, until the recent decision made by our shareholder.

[Stephen Ellis, Conservative, Cumberland—Colchester, NS]

Sir, again, to be clear, it was $773 million, with no doses delivered.

[Toshifumi Tada]

Not really.... When we were preparing the first launch, we faced a quality problem. We decided not to release an out-of-specification product, certainly.