moved that Bill C-248, an act to amend the Patent Act, be read the second time and referred to a committee.
Madam Speaker, I am pleased to stand in the House today to speak to Bill C-248, a bill that will attempt to basically make prescription drugs affordable to those who need it most.
I commence my remarks today by thanking my colleague, the member for Yukon, for seconding my bill.
Bill C-248 basically reduces the patent life of a new drug from 20 years to 17 years. It also reduces the period of market exclusivity on a new drug from 20 years to 4 years. Market exclusivity is the patent holder's monopoly on sales.
The largest increases in sales volume of a new drug typically occur during the first four years. After that the largely Canadian generic firms would have the right to manufacture copies on payment of a royalty to the brand name patent holding firms, a system called compulsory licensing.
In essence Bill C-248 provides for competition among prescription drug manufacturers that now have monopoly pricing authority under government Bill C-91.
This bill is supported by literally tens of thousands of seniors and thousands of other people in Canada who are ill and require prescription drugs. It is supported and endorsed by the Canadian Health Coalition, by the Government of Saskatchewan, by the Canadian Labour Congress and by many other organizations.
Debate on the patent drugs issue has often confused the two ideas of patents and market exclusivity. The two points were only made synonymous when the pharmaceutical bill, Bill C-91, was introduced in 1991. Bill C-22 in 1987 did not eliminate compulsory licensing. It simply extended the period of market exclusivity from four years to seven years.
Bill C-248 includes the best of the pre-Mulroney regime on prescription drug royalties and pricing. It respects so-called intellectual property rights by establishing a royalty payment to the patent holder, but it does not intervene in the market to create a monopoly for an undue length of time.
It is different from the 1987 system in that instead of a flat royalty rate Bill C-248 would allow for a sliding royalty scheme that rewards brand name pharmaceutical firms that actually did the majority of the research on a particular drug in Canada as opposed to now when they do it outside the country.
This proposal was adopted by the federal NDP as part of its platform in the last election. The NDP is the only party to consistently support competition in the prescription drug industry. This bill fulfils part of our campaign commitment to continue the fight for fair prescription drug prices.
I want to talk for a few minutes about costs and benefits. I believe it is time that we as parliamentarians admit that the current government policy of granting generous patent rights to foreigners as an enticement to establish a Canadian pharmaceutical industry just has not worked.
The policy sees public funds used to pay for these generous patent rights through billions of dollars in drug costs from our provincial medicare and drug plans. The drug companies get a five year average return on capital of over 14%. In return for this generous ROI, layoffs, a trade deficit in pharmaceuticals, less R and D per sales in the U.S. and expensive drugs for those who need them most are the rewards for Canadians.
We have not even begun to pay the worst of the costs yet. Health economists like Stephen Schondelmeyer and Queen's health policy group have examined the costs of Bill C-91. If we take their most conservative estimate and compare the situation under Bill C-91 to the case under Bill C-22, which was by no means perfect, the cost to consumers is between $4 billion and $7 billion over a 10 year period.
Most of that $7 billion will be paid after the year 2000, which as everyone knows is the new millennium. If you catch the millennium bug, the millennium drug prices are going to kill you. That is because the last of the drugs approved with a seven year market exclusivity under Bill C-22 will be able to go generic in 1999. We have not even begun to feel the pain, in other words.
In return for $4 billion to $7 billion in additional drug costs, we have received maybe $500 million in additional R and D which was already required to meet Canada's drug approval regulations. We lost over 2,000 jobs as well. We sustained huge cutbacks in transfer payments and social programs to pay down the debt and deficit, along with all the hardship and unemployment they entailed.
People say that the Patent Medicine Prices Review Board is there to protect against price gouging or skyrocketing prescription drug costs.
What exactly has been done by the PMPRB, the great defender of the people of Canada? The Patent Medicine Prices Review Board lacks accountability, which is a bit of a problem. It lacks transparency, which is a bit of a problem. It has no mandate to serve the public interest. It serves the interest of large multinationals across the world. Its methodology is skewed to give the appearance of price control while it permits drug cartels to charge the highest drug prices in the industrialized world.
Why do I say that? For example, they use in their formula for checking price controls seven OECD countries such as Britain, France, U.S., Switzerland and Sweden that have the highest costs of living anywhere in the world. They are more expensive than Canada. Yet the PMPRB uses as a reference retail prices which are never charged to the citizens of those countries or their drug plans because they always buy at discounts of up to 40%. It is very clear that we pay the highest prices anywhere in the world.
Our view is that the PMPRB has to make some changes. It needs a legislated mandate to protect the public interest, not large corporations. It should make drug comparisons of all twenty-nine OECD countries, not the seven most expensive countries in which to live in the OECD.
Drug price comparisons should be made against the real price, the 40% discount price, and not the retail prices charged in these countries. Finally, some due diligence should be exercised and the price data from large drug cartels in European countries should be independently verified to determine for sure whether or not the prices are accurate.
My bill will basically restore competition and perhaps encourage the PMPRB to do the job it was supposed to do at the outset.
The Liberals opposite have said that they will work within the system, will go to the industry committee meeting and will fire tough questions at large multinationals written by the Minister of Industry, the Minister of Health and their colleagues to make drug companies look good.
Working within that system has not really paid off. There have been no tangible results. I say this with some sympathy for colleagues in the Liberal government who faithfully toiled away in the industry committee last year on Bill C-91. They lobbied their caucus and they lobbied their Minister of Industry. They had every expectation that some minimal response would be provided. As we know, nothing actually happened. The Liberal government was able to slide into another election because the review was being done until the election call last spring.
What reward did they get for this? The biggest defender of the large multinationals, the chair of the industry committee, David Walker, got his reward. He was defeated by my colleague, the NDP member for Winnipeg Centre, for all the great work he did misleading the people of his constituency and not doing his job to stand up for the public interest when it came to price gouging by large multinational drug companies.
What about those who did not get defeated? Not very many of those who supported the drug companies were not defeated by an NDPer. They simply got humiliated by the cabinet's complete capitulation to the multinational drug companies just last month.
I argue that the only way to fix Bill C-91 is to scrap it and to support Bill C-248. That is why I am asking for support of the bill. It will make some definite changes, bring competition to drug pricing and help those who need it most.
Large foreign drug companies wanted 20 years of market exclusivity on new drugs for four reasons. First, they said it would create jobs. In fact there are 2,000 fewer people working in our pharmaceutical industry as a result.
Second, they said that it would keep drugs affordable. In fact costs for brand name drugs have skyrocketed since 1987, forcing provincial government drug plans to pass on more of the cost to the sick and elderly.
Saskatchewan is the best example. It has been unable to defend its citizens who require prescription drugs to maintain their health because of skyrocketing costs of brand name drugs and the exclusion of generic companies from manufacturing competitively priced drugs for those who require them.
It has also driven the cost of medicare extremely high. Prior to 1987 prescription drugs accounted for less than 8% of Canada's medicare costs and now it is over 12%, a 50% increase in medicare costs for prescription drug purchases alone.
The third idea they put forward to allow Bill C-91 to pass was to generate funds for research. Although most research money is spent on company directed clinical trials that are required by law anyway, only one new breakthrough drug has been developed in Canada since 1987, the AIDS drug 3TC. Even now it is being manufactured in Ireland. How many jobs did that create in Canada? Probably none but maybe one or two to sell it.
A commitment by large foreign drug companies to help fund pure research through the Medical Research Council was scaled back and still remains unmet. The shortfall in the MRC's budget is having drastic consequences for Canadian medical scientists.
To use the R and D pitch by the drug pharmaceuticals in Saskatchewan as an example, there were approximately 123 requests for clinical drug trials in Saskatchewan. The international pharmaceuticals approved none of the 123 requests, not one. Yet they are travelling from province to province claiming to be spending billions and trillions of dollars on more and more R and D. It is all a big lie by the pharmaceuticals.
Fourth, they said they needed Bill C-91 and could not change its provisions because of international trade obligations under the WTO. Members of the House who sat on the industry committee will recall that witness after witness, including international economic advisers and lawyers, appeared and said that the WTO permitted member countries to pass laws to seek to protect the public interest.
If the public interest is being gouged by large pharmaceuticals or any other company unfairly, any government can take the decision under this clause to protect its public from unfair pricing practices. The government does not want to do that because it would jeopardize its contributions from companies like Glaxo Wellcome which gave the Liberals $90,000 in contributions. Another pharmaceutical, Merck Frosst, gave the Liberals about $16,000 to help buy this protection under Bill C-91 and not to support a bill like Bill C-248 which I am putting forward in the House today.
It is clear the policy has not worked for the Liberals. The Liberals in opposition agreed with abolishing Bill C-91. Their critic, Ron MacDonald, the former member for Dartmouth, would not even run in the last election because he was so embarrassed by the flip-flop of the Liberal Party. The Prime Minister stood in the House as leader of the opposition under the Mulroney government and said “The Prime Minister of Canada always sides with the multinationals and not the sick and poor. When are you going to repeal Bill C-91?”
Now that the former leader of the opposition is Prime Minister of Canada, he should look in the mirror and ask the same question. Perhaps he should answer it by taking some initiative to help people who are suffering under unfair prescription drug pricing practices by multinational companies.
Today bankruptcy statistics were announced: 91,000 personal and business tragedies, a record number in the country.
This is something, in my view, that is going to hurt those families even more when they require prescription drugs to maintain their health.
The Liberals were persuaded very unanimously by their lobbyist, Judy Erola, the chief lobbyist for the Pharmaceutical Manufacturers' Association of Canada. Judy Erola is very persuasive because she is a former Liberal cabinet minister under Prime Minister Trudeau. They bought this line of sustaining Bill C-91 hook, line and sinker.
The cost and benefits of the current government policy on patent drugs does not add up. I challenge parliamentarians in this House to say that the emperor has no clothes and that the process that we have under Bill C-91 does not work. If we do not fix it soon the future of medicare is on the line and certainly the lives and future of all Canadians.