Mr. Speaker, I thank the member for Windsor West for bringing this issue forward and giving us all a chance to make some comments on it.
In order to foster growth and create high quality, well paying jobs, the government has set, as one of its core priorities, the building of a 21st century economy. In furtherance of this, the government must continue its work to support sound marketplace framework laws.
A fair, efficient and competitive marketplace, combined with an effective regulatory framework, creates a business environment that is supportive of innovation, investment and economic growth.
To foster an efficient and competitive marketplace in the pharmaceutical sector, it is necessary that the government's drug patent laws strike an appropriate balance between encouraging pharmaceutical investment and innovation by providing effective patent protection for innovative medical therapies while, at the same time, facilitating the earliest possible entry of non-infringing, lower cost generic pharmaceutical products.
The patented medicines, notice of compliance) regulations, or the PMNOC regulations, and the “early working exception” under the Patent Act are both integral to the maintenance of this balance, a balance Bill C-274 will most certainly undermine, if passed, given that it calls for the outright repeal of the PMNOC regulations.
In the pharmaceutical industry, the early working exception allows generic drug manufacturers to use a patented innovative drug for the purpose of seeking approval to market a competing version of that drug.
Normally, conduct of this kind would constitute patent infringement but an exception has been made so that the generic drug companies can compete with Health Canada's regulatory approval process while the equivalent innovative drug is still under patent. This is done so the generic can be in a position to enter the market as soon as possible after the patent expiry. This ensures that the patentees do not enjoy a de facto monopoly beyond the life of the patent by virtue of the time it takes for a generic drug company to complete Health Canada's regulatory review process.
While early working is intended to promote the timely market entry of generic drugs, the PMNOC regulations are necessary to ensure that this exception to patent infringement is not used improperly by generic drug companies that might seek to sell their products during the term of the competitor's patent.
Patent protection is an important incentive in encouraging investment and promoting research and development and giving the difficulties traditionally associated with protecting pharmaceutical patent rights by way of conventional infringement litigation, and the PMNOC regulations are intended to operate as a potent patent enforcement mechanism.
In this way, the regulations and the early working exception work in concert to maintain a balance in Canada's drug patent policy. It is important that neither instrument be considered in isolation as the intended policy can only be achieved when the two operate in a balanced fashion.
Overall, the government's drug patent policy appears to be achieving its objectives of encouraging investment and fostering competition. Since the introduction of the early working and the PMNOC regulations in 1993, total R and D spending in Canada by innovative companies has more than doubled.
Over that same period, the Patented Medicine Prices Review Board reports that manufacturers' prices of patented drugs in Canada have followed a consistent pattern of decline or near negligible increases and the price of patented drugs in Canada has gone from being 23% higher than the medium international price to 5% below the median and 40% lower than the price in the United States. In fact, the price of patented drugs in Canada has risen by less than the consumer price index in almost every year since 1988.
Despite these positive outcomes, the PMNOC regulations remain a contentious policy instrument. In recent years, representatives of the generic pharmaceutical industry have become increasingly vocal in their allegations that brand name companies are abusing the regulations to unfairly delay generic competition.
Industry Canada, with the assistance of Health Canada, has completed a comprehensive assessment of these allegations and found that while the fundamentals of the regime are sound, there have been instances of behaviour complained of by the generic industry involving some top selling drugs.
While the behaviour in question is exceptional, it has been facilitated by a number of recent court decisions and could potentially grow in the years to come. To prevent this occurrence, a package of regulatory amendments has been developed and will restore the original balanced policy intent underlying the early working exception and the PMNOC regulations. These amendments were re-published in the Canada Gazette , part I, on December 11, 2004.
Repealing the PMNOC regulations would be an extreme measure which would completely undermine the government's attempt to maintain its balanced drug patent policy. It would allow generic manufacturers to continue to use the early working exception while stripping pharmaceutical manufacturers of the most effective patent enforcement mechanism at their disposal. This would tip the policy balance between intellectual property protection and the generic entry wholly in favour of the generic industry.
Bill C-274 would also have a number of negative consequences for Canadians. In the absence of strong and effective patent protection, innovator companies would drastically curtail their domestic R and D, which would result in a corresponding loss in research intensive employment.
Canadians' access to the latest medical therapies may also be compromised as innovator companies would be less inclined, absent effective patent protection, to bring their latest products to the Canadian market.
It is my hope that the member for Windsor West will instead support the government's recently proposed amendments to the PMNOC regulations and, in so doing, support this government's effort to foster a fair and competitive marketplace for pharmaceutical products.