Mr. Speaker, in the next few minutes, I intend to share my comments and concerns about the motion tabled by the hon. member for Regina-Lumsden, who is asking the House to repeal the Patent Act Amendment Act passed by the House in 1993 and better known as C-91.
I must tell you right away that I strongly oppose this motion and I will now explain to my hon. colleagues the reasons behind my position.
To understand all the elements of this debate, we must go back to the past to see what the situation was like in Canada before Bill C-91 and its predecessor, C-22, were passed in 1993 and 1987 respectively.
In 1960, a royal inquiry commission found that drug prices in Canada were too high and recommended establishing a procedure to issue compulsory licences to import and sell patented pharmaceutical products. That is what Canada did in 1969.
This reform led to the creation of a number of pharmaceutical businesses which, after obtaining the compulsory licences, produced and sold generic drugs at lower prices than brand-name drugs. Although the purpose of the reform, namely to control and reduce drug prices, was achieved, it also had a very negative impact. Research in the Canadian pharmaceutical sector dropped dramatically.
To promote research and the growth of the pharmaceutical industry, the federal government created the Eastman Commission in 1984. In its report made public the following year, the commission proposed a major reform which was approved by the government and led to C-22, an Act to amend the Patent Act.
This reform had an ambitious goal: to stop the exodus of Canadian researchers to the U.S., convince pharmaceutical companies to invest more money in research, and put Canada back on the list of industrialized countries where high-tech medical research is done.
Now that we know the background, we understand better the various elements and the reasons that led to this trench war still being fought between generic-drug manufacturers and innovative companies. After supporting the former for over 25 years, the government lived up to the challenge of helping innovative and research companies while ensuring that drug prices remain under control.
We can identify three real consequences of this reform. First, innovative companies made a public promise to increase significantly their investments in pharmaceutical research. These companies kept their word. So these two pieces of legislation resulted in the biggest research and development expansion program ever undertaken in the medical research sector in recent history.
Before 1987, brand-name drug makers spent only 3.5 to 4.5 per cent of their sales revenues on research and development activities. After C-22 was passed, the ratio of research and development spending increased to 6.1 per cent in 1988 and to 9.7 per cent in 1991. The latest figures available, for 1993, show a ratio of 9.9 per cent.
We see that investment on research and development has practically doubled since the two bills were passed, from less than $100 million to more than $400 million invested in medical research, within less than seven years.
Just on this point, we can see that these two laws were a success, but we must hope that drug makers will continue and raise R and D spending to over 10 per cent of sales, to come closer to American innovative companies that invest 14.2 per cent in R and D and their British counterparts, who invest up to 20 per cent.
A second major consequence of this reform was to maintain the price of patented drugs. That was the biggest concern of opponents of C-22 and C-91. Even today, we see in this House that it is still this aspect that seems to give the greatest concern to opponents of this reform.
We must admit that drug prices account for much of the health spending of various governments. An aging population, greater consumption of health care and increasingly sophisticated research affect the kind and amount of drugs consumed and the funds allocated for drugs.
To avoid sudden increases in patented drug prices, the prices review board was created with the mandate, which it still has, of ensuring that innovative companies do not jack up above their actual value the price of patented drugs leaving the factory. The board must therefore take into account the price of drugs sold in other countries, the price of other medication in the same therapeutic category and other factors to determine whether the drug price is excessive. The Minster of Industry and the provincial ministers have the right to intervene at the board's hearings.
From 1987 to 1992, the price of patent drugs increased at an annual average rate of 2.9 per cent, compared to 4.2 per cent for the consumer price index. Since 1988, the price increase has remained lower for patent drugs than for drugs as a whole. We must therefore conclude that the Patented Medicine Prices Review Board, with the added power delegated to it by Bill C-91, was able to fulfil its role and prevent undue price increases for patent drugs.
The third consequence of the reform is mainly the result of Bill C-91, which is the legislation we are now being asked to revoke. Yet, this consequence, which I would call global realignment, is absolutely normal and was unavoidable. In these days of trade liberalization and free trade zones, Canada must provide its industries and its economy with a legislative framework that will allow them to be competitive at the international level. The two acts were passed with that objective in mind.
It is interesting to make a comparison with other industrialized countries. While, as a rule, patents for drugs are granted for 20 years, some countries have gone even farther by extending that 20-year period so as to absorb the marketing period, which can sometimes be up to ten or twelve years. This is the case with the EEC which, since June of 1992, may grant a five-year extension, depending on the length of the marketing period, so as to guarantee exclusivity to patent holders for 15 years.
Japan and Australia have also granted extensions of five and four years. It is in Canada's interest, given its limited market, to ensure that intellectual property laws are governed by GATT proposals. Indeed, the primary objective of Bill C-91 was to align the Canadian legislation on intellectual property of patent drugs with the laws and regulations in effect elsewhere in the world.
The fact is that before Bill C-91 became law, Canada was the only industrialized country which did not treat drugs like any other invention. There is no doubt that in 1993, when it decided to abolish the compulsory licence program for pharmaceutical products and harmonize its policy on intellectual property with the rules governing its major competitors on the international scene, Canada gave itself one of the best tools to get the investments it needs.
The motion asks us to repeal the 1993 act, better known as Bill C-91, to make patent drugs more affordable. Clearly, the provisions contained in the federal act can ensure the protection of consumers against price increases for prescription drugs, while at the same time promoting research and development, as well as the creation of highly skilled jobs.
The protection provided by Canada to pharmaceutical patents before Bill C-91 became law kept product manufacturers from being competitive. While Canadian companies had a seven-year protection, their American and European competitors were being granted exclusivity for 14 years.
Canada and Quebec cannot overlook the favourable conditions offered by our foreign competitors.
I think I have shown that Bill C-91 also provides an adjustment mechanism in this era of freer trade. This legislation enables Canada to adjust and to harmonize its laws and regulations with the international agreements to which it is a party. Bill C-91 was the outcome of a reform which has had positive and desirable consequences on the economy of Quebec and Canada, and this is why I firmly oppose this motion.