May 27, 1961

PC

Edmund Davie Fulton (Minister of Justice and Attorney General of Canada)

Progressive Conservative

Mr. Fulton:

My hon. friend from Essex East reminds me that the institute of microbiology of Montreal is also engaged in that field. I say this not in the way of boasting of the fact that these inquiries take this long,

tMr. Fulton.]

but simply to ask hon. members to realize that a proper sense of proportion suggests that inquiries of this kind in other countries as well as in Canada are necessarily time consuming, and even after they are concluded it is not possible to take startling and widespread action in a matter of days or weeks. We shall, however, be looking forward with interest to the report of the commission, at which time we shall be able to ascertain what action it is proper to take to deal with whatever problem is outlined in the over-all field and, I repeat, if in the interim a study of the material now available enables me to make any useful recommendation to my colleagues as to what could be done on an interim basis I shall do that, and I have arranged that the material should be studied, from that point of view. This study is going on now.

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CCF

Frank Howard

Co-operative Commonwealth Federation (C.C.F.)

Mr. Howard:

Before this item carries, may I say I can appreciate that these matters do take a considerable period of time to examine and study. Perhaps other hon. members will now appreciate why it sometimes takes a long time to talk about this in the House of Commons.

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PC

Gordon Minto Churchill (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Churchill:

I wonder if the hon. member will permit a question. In a house with a present membership of 261, does he realize that on Thursday and Friday of this week he occupied approximately 25 per cent of the time spent examining the estimates of the Department of Justice, and perhaps he has been doing the same today? I wonder if he thinks that is fair to the other members of the committee?

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LIB

Paul Joseph James Martin

Liberal

Mr. Marlin (Essex East):

On a point of order, Mr. Chairman, I am not rising now to defend the hon. member for Skeena or to confirm the validity of the things he has said over the past two days, though I do not quarrel with him on what he has been discussing now. But I do strongly take the position that it is not in order for an hon. member, and particularly a minister of the crown, to rise and complain about the length of time taken by a member of parliament in discussing the items brought before this committee. If any hon. member wants to catch your eye, Mr. Chairman, he has that privilege and he will catch your eye. This is certainly an indication of the growing arrogance of this government-

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PC

Gordon Minto Churchill (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Churchill:

Steady, now. Hold yourself to the point.

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CCF

Murdo William Martin

Co-operative Commonwealth Federation (C.C.F.)

Mr. Marlin (Essex Easl):

-when one of its

ministers rises to complain about the participation in the debate by a private member of this house.

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?

An hon. Member:

He only asked a question.

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LIB

Paul Joseph James Martin

Liberal

Mr. Marlin (Essex East):

The hon. member against whom the complaint has been made does not belong to my party, but I believe so strongly in the value of this house that I would fight for the rights of any member, including private members supporting the government, and for the minister to complain because an hon. member has discharged his responsibility as he sees it, is, I contend, an indication of the increased arrogance of a government which is growing in public disfavour.

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PC

Gordon Minto Churchill (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Churchill:

That is a lot of nonsense. I was making no complaint about the hon. member exercising his right to speak. I was speaking on behalf of the other members of this committee who should have the opportunity to take part in a discussion of the estimates of this department.

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CCF

Frank Howard

Co-operative Commonwealth Federation (C.C.F.)

Mr. Howard:

Yes. I cannot help it if the minister's supporters are hesitant and bashful in approaching these matters and if they do not want to engage in an examination of the workings of the department. If the minister wants to have a bunch of silent Sams or rubber stamps behind him, that is for him to decide.

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?

An hon. Member:

There are no rubber stamps behind the minister.

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CCF

Frank Howard

Co-operative Commonwealth Federation (C.C.F.)

Mr. Howard:

What did the Prime Minister say the other day about inveterate babblers? In any event it applies to the hon. member for Saskatoon, I can say that.

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PC

Harry Oliver White

Progressive Conservative

Mr. While (Middlesex East):

On a point of order, I think the hon. member should withdraw the statement that we are a bunch of rubber stamps. It is not true.

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CCF

Frank Howard

Co-operative Commonwealth Federation (C.C.F.)

Mr. Howard:

I think that there is a certain amount of special concern attaching to the activities of the retail pharmacists within the pharmaceutical industry. The retail pharmacists are, of course, subjected to the largest degree of complaint by the general public, a great deal of which is unjustified. This arises because the retail pharmacist is the individual with whom the consumer deals.

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PC

James Stanley Speakman

Progressive Conservative

Mr. Speakman:

On a point of order I do not believe retail pharmacists come within the jurisdiction of the Department of Justice.

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CCF
PC
?

An hon. Member:

You have not.

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CCF

Frank Howard

Co-operative Commonwealth Federation (C.C.F.)

Mr. Howard:

I say that this complaint is registered against the retail pharmacists because they are the individuals with whom

Supply-Justice

the consumer deals. He sees his fifteen or twenty dollars passed across the counter, in exchange for which he gets a small bottle or vial of tablets or cream or lotion. There is an activity in the retail field which does,

I think, give rise to concern and contributes to the high cost of drugs. I should like to cite two examples. I refer, first, to a prescription which was given for aspirin, ordinary aspirin which anyone can buy. The purchase price of aspirin on this prescription, which was supplied here in Ottawa, was 50 cents. Without a prescription aspirin costs 32 cents. This is an indication of the effect of what is known as a prescription fee within the pharmaceutical industry. I have been told by others of an instance in which some tablets were sold by prescription at $1.15 a dozen, or a total cost of $9.90 a hundred. When sold by the hundred without prescription, because they are not an ethical drug, the selling price is $1.85. This represents a difference of some $8.00 and indicates another contributing factor to the high cost of drugs in this country.

In addition to that there is, of course, an

II per cent sales tax on drugs, and on some items a tariff is applicable also. I think in essence we can say that in relation to the sale of drugs in Canada patents have been and are being used to create monopolistic situations which Canadian law appears to have been designed to prevent and the control exercised over the manufacture, distribution and sale of certain drugs through patents has virtually eliminated price competition in respect to these drugs and has encouraged other forms of competition. These, while possibly bringing other benefits to the public have resulted in prices being increased rather than decreased. Practices which are quite legal and unobjectionable in themselves- promotion, use of trade names and the like- appear to have been carried to extremes because of the insulation of certain sectors of the industry from price competition by reason of the control exercised through patents.

As is indicated below, the effects of the control exercised through patents affect the prices of certain drugs only. On the other hand, the practices of retail druggists affect the prices of all products sold in drug stores. These practices have resulted in the virtual elimination of price competition at the retail level.

Prices of drugs in Canada are among the highest in the world. These prices tend to reflect current prices of the same or comparative drug products in the United States, but because of the sales tax applicable in Canada prices to consumers in Canada are about 11 per cent higher.

Supply-Justice

The general information that we have indicates that prices of proprietary drug products are not unduly high in any sense, and I refer to those that are not included in the ethical drug field. Also, an established brand which has wide public acceptance is normally sold at a premium price. There are numerous substitutes available, and the consumer has a wide choice of products at various price levels. It is obvious that, because of considerations of health and personal well being, brand name product preference is likely to be more important in cases of proprietary drug products, than in the case of other merchandise.

In the case of standard, widely available ethical drugs, the situation is much the same. Brand preference is somewhat more important, and products of long established ethical drug firms, which enjoy a high reputation for the quality of their products, are able to command premium prices. There are practical limits to the amount of the premium which can be charged. The history of the industry indicates that once a drug becomes generally available to manufacturers, numerous alternative products are offered and prices tend to fall until they reflect only a modest mark-up over actual cost of production. As a drug becomes widely available, manufacturers usually stop promoting it aggressively and concentrate on promoting their more exclusive lines. This reduces the general costs of sale and distribution of the particular drug.

Regardless of what conclusions may be reached in respect of such matters, the fact which makes high prices possible is the patent control exercise over such drug. The clear intention of the special provisions of the Canadian patent law, is that this situation should not obtain. However, advantage has not been taken of these provisions, and the drug industry in Canada is, for all practical purposes, operating under conditions determined by the patent law of the United States.

Patent controlled drugs are imported into Canada by a few small firms, other than United States companies, generally classified as foreign, without any licence arrangements with the Canadian patent holders. The basic fact is, that such importations are made, and that importing firms offer dosage forms of such drugs at lower prices than the equivalent products offered by the patent holders.

To date, the availability of such products does not appear to have had any significant effect on the prices charged by the firm holding patents, except to a very limited extent in the case of some institutional buyers. This is due to a controversy which has raged and continues to rage about the quality of the imported products, and the products of small

firms. Until doctors generally are satisfied as to the quality of such products, their impact on the market and on the prices of established brand name products will continue to be slight. This situation, of course, would be entirely different if such drugs were available to all manufacturers.

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PC

Gordon Drummond Clancy

Progressive Conservative

Mr. Clancy:

Would the hon. member tell me the difference between generic and brand name drugs?

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May 27, 1961