Mr. Chair, I appreciate the opportunity to address this urgent matter of public health.
As my hon. colleague the Minister of Health has made clear, the Government of Canada is committed to securing the access of Canadians to an uninterrupted supply of safe and affordable drugs, particularly those used for serious or life threatening conditions.
The fact is that drugs may be in short supply for any number of reasons, including a shortage of raw material or an unforeseen breakdown in the manufacturing process. These are not desirable situations, but they are understandable.
What is not acceptable, however, is if our pharmaceutical supply in Canada becomes strained because we have sold off our medicines to a higher bidder. That puts the health of Canadians at a grave and immediate risk. To mitigate that risk, the Government of Canada is taking action now, bold and decisive action that will immediately protect our domestic drug supply. The strategy proposed by our government will have a direct and measurable impact on the health of Canadians.
Other effects of these measures will be felt over the longer term. By protecting uninterrupted access to safe and affordable drugs and by reducing pressure on the cost of our drugs and the pricing system, the initiatives we are proposing will help keep our health care system viable. As part of the measures we are planning, we intend to increase the security of prescription drug sales in Canada, something that will benefit all patients, whether they live in Canada or elsewhere.
Americans are keen consumers of our Canadian medications. They come in person over the border or order their medicines online. Without question this is good business for the Canadian drug manufacturers and pharmacies. According to IMS Health, total cross-border drug sales to the U.S. reached $1.35 billion in 2004. That may be a drop in the bucket for America's $300 billion retail prescription market, but it represents a sizeable 8% of the same market domestically.
It is not just the scope of the phenomenon that we are concerned about, it is the staggering growth rate as well. Consider that between 2002 and 2004, cross-border drug sales escalated by about $7 million to $60 million per month. We all know what is driving this trend: money.
For some time now Americans have been taking advantage of Canadian drug prices that are on average 40% lower than the cost of comparable products in the United States. While U.S. prices have soared in recent years, the costs of prescription drugs in Canada have been held in check by the Patented Medicine Prices Review Board.
With the growing price differential between our two countries, cash-strapped U.S. state governments, institutions and individual seniors have looked northward to meet their ever expanding needs.
Now if we could stop time so that nothing moves, we could meet the current demand for export handily. But nothing, obviously, is static. The demand for prescription drugs in the United States continues to grow, as in Canada, and reasonably so, since the population is aging, more people have chronic illnesses and the number of new drugs increases.
In addition, from time to time, a new demand arises, as with the recent rush to buy Tamiflu as protection against the effects of a potential flu pandemic. As well, the American Congress is currently considering nine bills all, more or less, involving the legalization of bulk drug imports from Canada.
We have no way of knowing the size of the American bulk drug import market, but we do know that it will be too big for Canada to handle without compromising its own supply. If the bulk market legislation revives cross border sales of drugs that meet American standards, from the current 0.5% to 1% of the American market, the impact on Canada would be considerable. It would mean that one drug in six intended for use in Canada would be diverted and sent out of the country.
The potential risk to public health is self-evident but there is another consequence to consider, the impact on our health care system. Right now, thanks to our made in Canada drug pricing regime, patented medicines here cost about 9% less than the international median. That is an important price break for us because patented drugs make up 80% of Canada's total drug expenditures, $18 billion of the $22 billion spent on all types of drugs in 2004.
What is more, we spend more on drugs than any other component of our health care system, including physician services. One dollar of every $6 we spend in health care goes to medicines. As we look toward the future, drug expenditures are projected to grow faster than any other component of health care. In other words, by preserving the access of Canadians to affordable drugs, we are also protecting our domestic drug pricing regime and that will contribute to the sustainability of our health care system.
To address these challenges, the Government of Canada has proposed a three part strategy. First, we would create a pan-Canadian drug supply network. The network would furnish us with precise, comprehensive and up to the minute data on Canada's drug supply. Information like this is crucial for governments to make effective plans and take meaningful action to safeguard Canadians' access to medicines.
The second element of the strategy would amend the Food and Drugs Act to allow the Government of Canada to restrict drug exports whenever necessary to protect human health. We could, for instance, impose bans on the export of individual drugs or classes of drugs if Canada appears in danger of suffering serious shortages.
The third and final element would reinforce conditions on the sale of prescription drugs. Physicians would be required to have an established relationship with their patients before issuing prescriptions to them. This would hold true whether the patients were Canadian or from any other country.
As the details of our strategy take shape, we are asking Canadians to provide their input. Toward that end, we launched public consultations on October 6. People can contact us with their thoughts either through online forums or other channels until November 7. Health Canada has also recently completed face to face consultations with representatives of the drug industry, wholesalers and distributors and professional associations representing pharmacists, medical practitioners and their regulatory authorities. A meeting with provincial and territorial ministers of health is slated for November.
Over the past seven months there have also been discussions with other federal departments, as well as with Americans, including the health and human services secretary and members of Congress.
It should be clear that the Government of Canada is paying very serious attention to protecting Canadians' access to safe and affordable drugs.
We are not trying—and I underscore this—to shut down the activities of any industry. Rather, our intent is to give priority to health protection, the security of Canadians and the viability of our health care services and system.
However, we cannot be paralyzed into inaction. We must plan and prepare today and be willing to take bold and swift action whenever the need arises, indeed before the need arises. That is why we have put forward the response strategy I described, to give us the information and tools necessary to secure Canadians' access to a safe and affordable supply of prescriptions drugs. I encourage my hon. colleagues to support these initiatives.