Mr. Speaker, I too want to commend my colleague from Windsor West for bringing this issue forward. I know it is an issue very near and dear to him.
I am pleased to speak to Bill C-274, an act to amend the Patent Act. This bill would seek to repeal the notice of compliance regulations and reduce the extent of patent protection. It was actually a former Conservative government that introduced these regulations in the first place that this bill seeks to amend. The Conservative Party today continues to believe that the intent of a pharmaceutical policy should be to achieve a balance that encourages the development of new drugs and treatments for Canadians, and at the same time provide those drugs to Canadians at an affordable price.
What this means is that the Conservative Party supports regulations that respect property rights and encourages research and development into new drugs by brand name companies. At the same time we support regulations that allow generic manufacturers to offer similar medicines at a lower price after a reasonable period of time. We also support the existing system now where the Patented Medicine Prices Review Board regulates the prices of brand name drugs here in Canada, which actually does not happen with the generics, and that is an important point we should make here.
I want to identify two types of pharmaceutical manufacturers. It is important, especially for viewers watching this, to be aware of this.
The first is what is called the brand name or the research-based pharmaceutical company like Pfizer, GlaxoSmithKline, AstraZeneca, Merck Frosst, et cetera. These companies do the basic research and create drugs from scratch. These drugs are certainly expensive to research and develop, and they are one side of the pharmaceutical industry.
The second type of manufacturer is the generic manufacturer. In Canada, basically the two largest are Apotex and Novopharm. The generic companies copy a brand name drug after its patent expires, although as the question I asked the member earlier indicates, through the early working provisions they actually research that so that they are able to go to market as soon as the 20 year patent expires. It is important to note though that they copy certain drugs. The generic industry copies the drugs which are generally the most lucrative, and that obviously makes economic sense to them, but they do not copy all the drugs, especially the ones that do not in fact raise a lot of revenues.
As written, Bill C-274 in our view would seriously harm the brand name pharmaceutical industry in Canada by removing all the protection regulations currently provided to the brand name companies. The stated objective of the bill is to exclude drugs from the scope of the regulation-making power provided for in subsection 55.2(4) of the Patent Act, while making other amendments to reduce the extent of patent protection for medicines. The bill would achieve its objective in part through appeals in the notice of compliance regulations.
In our view, the bill would ignore our obligation under the TRIPS agreement, under these multilateral agreements, to provide 20-year patent protection for brand name pharmaceutical companies. The fact is that no other country treats pharmaceutical patent issues the same way it treats patents for cars, telescopes or other industries. For example, and I know the member in his speech mentioned this, the pharmaceutical industry does have patent rules that are particular for that industry, but that is the same as in other countries.
The fact is that if a generic manufacturer ignored a patent and put its product on the market before the patent had expired, it would take years for a brand name pharmaceutical company to go through the regular court system and a full infringement action. If the brand name won, it would likely never gain back the market it lost to the generic company because that is how quickly people would switch because of difference in price. It would take more time to recoup damage costs.
Our concern is that if this bill were passed companies like Merck Frosst and GlaxoSmithKline would likely remove themselves as much as possible from Canada. I know some people do not see this as a concern. Speaking personally as a member from Edmonton, I know that these companies invest a lot into R and D of infectious diseases, for instance, Dr. Lorne Tyrrell, the former dean of medicine at the U of A, is researching into hepatitis B and hepatitis C at the U of A.
These are the companies that are investing the money into trying to research and create new drugs to lengthen or to certainly improve human life. Canada's brand name industry spends roughly $1 billion on R and D. It hires extremely well educated Canadians, most obviously with post-secondary degrees, and it produces some truly amazing drugs such as the asthma drug Singulair in Montreal.
I acknowledge that there are problems with litigation on certain drugs which have multiple patents. I support efforts to reduce the litigation, at which I know the government is currently looking. I support the member for Windsor West in making an effort to bring those regulatory changes open, whether it is before a committee or before the House.
However, we want to seek to preserve that balance. It is important on the patent issue to make this known. In the hearings we have had, both Health Canada and Industry Canada pointed out that most drugs had either one or two patents. It is the big, blockbuster drugs like Paxil or Losec that have eight patents, which is the big cause of most of the litigation between the generic and the brand names in Canada. That is an important point to make. In our view the bill shifts the balance away from that precious balance to entirely in favour of the generic manufacturers.
In our view the generation and development of new scientific knowledge is pivotal to the growth and the prosperity of the Canadian economy. The Conservative Party would like to see the brand name manufacturers invest more money in R and D. We have asked them to do that and we will push them to do that, and to hire even more well-educated Canadians.
If the bill were passed, it would have quite the opposite effect on the industry, and it would have a negative effect on the Canadian economy.
I understand fully that the pharmaceutical industry is litigious, but even as former industry ministers from the government side have pointed out, will this ever stop? I think the changes in the regulations that the government is looking at now will certainly reduce that. The fact is with the amount of money around the industry, it is likely to be litigious long into the future.
I would like to explain some of the issues relating to patents and how the automatic injunction and early working provisions work. Normally a patent is exclusive. A patent cannot be broken before it expires. However, the notice of compliance regulations allows generics to copy and conduct clinical trials of drugs still under patent as part of a system called “early working”.
To use plain English and to use a specific example, before its 20 year patent expires, the generics can create a copy of the asthma drug, Singulair, for mass production. They can conduct their human trials on the copy and they can get Health Canada to review and approve their copy before the original patent on Singulair, which is owned by Merck Frosst, has expired.
The problem is that once this copy has been approved, the generics do not want to wait until the patent expires, especially if it is a blockbuster drug like the ones I mentioned, the anti-depressant Paxil or the ulcer drug Losec. Generics, according to the testimony from Health Canada, challenge patents to get on the market earlier. They will take the brand name companies to court and argue that the patent does not apply to their specific copy of the drug.
As members before me mentioned, the Standing Committee on Industry in June 2003 conducted hearings on this matter. We asked Industry Canada if it was common for generics to attempt to break brand name patents before the patent has expired.
To quote the question my colleague from Yellowhead asked at the time of Industry officials, “Have the generics challenged the 20 years? Have they tried to put a product on [the market] before the 20 year period [has expired]?” The resounding answer from officials was yes. To quote them, “Yes, I'm not aware of a drug where they haven't”.
Make no mistake, early working provides the generic companies with a distinct competitive advantage over the patent holders and over other countries where early working does not exist, such as the United States. Thus, there is a counterbalancing measure in the notice of compliance regulations which is called an automatic injunction. It is also known as linkage regulations by the brands.
When a generic wants to copy a brand name drug, it must inform the brand. The brand has 45 days to advise the generic company as to whether or not the brand believes the generic is infringing on its patent rights. If the patent holder agrees that patent has expired, then the generic is given permission to go to market. This happens repeatedly once the patent is not contested.
However, if the brand believes their patent would be infringed by the introduction of a generic product, the brand is granted an automatic injunction. The brand goes to the federal court and is granted 24 months for the case to proceed.
The generics call this practice evergreening. Their argument is that the brand gets its 20 years plus the 24 months, so at least 22 years. However, what this fails to disclose is the fact that the generics can actually introduce in year 17, 18 or 19 and the 24 month period can actually be within the 20 year patent. If the generic tries to get on the market in the 20th year of the patent and the brand is granted an automatic injunction, in that case it extends the life of the patent.
We, in this party do not support the bill because we believe it upsets the balance between the research companies and the generic companies.