Mr. Speaker, it is very interesting to listen to the political posturing of the hon. member for Regina-Lumsden. He knows very well that Bill C-91 is up for review in 1997. Unfortunately, he is trying to show how conscientiousness and how concerned he is about this matter.
I speak against the bill presented by the hon. member for Regina-Lumsden. I would like to explain why the bill is not appropriate.
First, it ignores the important role that intellectual property protection plays in the Canadian economy by reducing the patent term for pharmaceuticals and by reintroducing compulsory licensing.
The bill would shorten the patent term for drug patents to 17 years from the date the patent application is filed. It reintroduces the compulsory licensing regime that was eliminated when the Patent Act was amended by Bill C-91 in 1993.
The House will recall that before the Patent Act was amended, patented medicines did not enjoy full patent protection. Instead they were eligible for a period of marketing exclusivity for seven to ten years. This bill would not even allow innovative drug companies that protection. The holder of the patent under this bill would have only four years before the generic companies could copy the formula under a compulsory licence. The bill would allow the patentee to receive a royalty and the compulsory licence could be refused or delayed if a patentee has been unusually delayed in commercializing the medicine.
Perhaps the hon. member for Regina-Lumsden believes that these provisions would be sufficient to encourage companies to continue research in Canada. Perhaps he thinks that Canada would continue to attract R and D investment under these terms. Perhaps he thinks that these measures would be suitable in today's knowledge based economy. I assure the hon. member that these measures would not be sufficient. Why would a company invest in a country where it is not assured adequate property protection, including patent protection?
The hon. member should know very well that he comes from a province where the government quite often will attract businesses and will change the agreements for those businesses halfway through the agreement period. That is why that province is not attracting this type of R and D. In particular, the province of Saskatchewan does not attract this R and D because the government changes rules on companies that come into that province.
Since patent protection was first enhanced in 1987 through Bill C-22 the ratio of R and D to sales by pharmaceutical patentees has continuously increased. Last year the innovative companies spent $624 million on R and D. That represents 11.8 per cent of their sales revenue, nearly doubling the ratio of 6.1 per cent achieved in 1988.
The brand name pharmaceutical companies are among Canada's leading investors in research and development. Last July, when the publication Research Money listed Canada's top corporate R and D performers, 17 integrated brand name companies were among the top 100. This investment in research and development means highly qualified jobs for Canadians. It means jobs in the brand name companies, jobs in the universities and hospitals that support their research, and jobs in the many small and medium sized businesses that have flourished in the past few years as Canadians respond to the challenge of designing new products for the health care industry.
The growth of small and medium sized biotechnology companies has been particularly impressive. In fact, when we look at the Research Money list of the top 100 R and D performers, seven of the companies are Canadian research based biopharmaceutical firms. The growth and success of these young companies has been built on a solid foundation of world class intellectual property protection in Canada.
During this period of increased R and D, the prices of patented drugs have been kept under control. According to the Patent Medicine Prices Review Board, an independent body which regulates the price of patented medicines, the prices of patented medicines actually fell by 1.75 per cent in 1995. They dropped at a time when the consumer price index rose by 2.14 per cent. This is the second year in a row they have dropped.
Furthermore, an international comparison of the top 200 selling patented drug products produced by the Patent Medicine Prices Review Board showed that for the first time Canadian prices on average were below the median international prices in 1994.
If this bill was passed, Canada would become one of the only countries in the industrialized world where pharmaceutical intellectual property would not be effectively protected. Canada would become the only developed country in the world with compulsory licensing regimes for drugs. In addition to the detrimental effect on jobs and growth, we could expect a strong reaction from our trading partners.
This brings me to my second reason for opposing Bill C-311. The measures proposed in the hon. member's bill contravene Canada's international obligations under the World Trade Organization and the North American free trade agreement. The patent term of 17 years from date of filing for drug patents would violate Canada's international obligations under the WTO. These drugs require a minimum patent term of 20 years from the date of filing a patent application.
There is another aspect of this bill that runs counter to our international trade obligations. Both the WTO and NAFTA require that patent rights be enjoyable without discrimination as to the field of technology. A compulsory licensing regime for pharmaceuticals would constitute discriminatory treatment toward pharmaceutical patentees. We could expect action under both the WTO and NAFTA as a result.
The government has signed these international treaties because we believe they will promote economic growth. Canada must
compete with other countries not only for global market shares but also for investment and technology.
International trade agreements that provide for strong intellectual property protection create the necessary climate for investment and technology transfer. Canada, as a trading nation, is not prepared to ignore its international obligations. The challenge with Canada's drug patent policy is to ensure that it conforms with our international trade obligations and supports the development of our pharmaceutical industry while making patented drugs available at prices that are not excessive.
With respect to some of the comments that were made by the hon. member, it is very interesting that he referred to the growing revenues of these companies. He never referred to what their profits are. Revenues are not necessarily profits. It is also interesting that he wants millions of dollars to be spent by companies on R and D. Then he wants the fruits of this R and D, which is in the hundreds of millions of dollars, to go to other companies that have put no money into R and D.