February 14, 1968

PC

William Howell Arthur Thomas

Progressive Conservative

Mr. W. H. A. Thomas (Middlesex West):

Mr. Speaker, may I direct this question to the Secretary of State. I should like to ask her whether she has received a request from the province of Ontario for assistance in respect of the serious flood damage suffered by southwestern Ontario and, if so, what decision has been reached.

Topic:   ONTARIO-REQUEST FOR FEDERAL ASSISTANCE
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LIB

Julia Verlyn (Judy) LaMarsh (Secretary of State of Canada)

Liberal

Hon. Judy V. LaMarsh (Secretary of State):

Mr. Speaker, I have not received any such request. If it were delivered to me I suppose I could only supply blotting paper. It would have to go to one of my colleagues. I would think perhaps it would be a matter for the Department of National Defence.

Topic:   ONTARIO-REQUEST FOR FEDERAL ASSISTANCE
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CANADA PENSION PLAN

REQUESTS FOR EXCLUSION ON RELIGIOUS GROUNDS


On the orders of the day:


NDP

Herbert Wilfred Herridge

New Democratic Party

Mr. H. W. Herridge (Kootenay West):

Mr. Speaker, I wish to address this question to the Minister of National Revenue. Has he any answer at the present time to the question I asked previously concerning persons wishing exemption from the provisions of the Canada Pension Plan on religious grounds?

CTranslation]

Topic:   CANADA PENSION PLAN
Subtopic:   REQUESTS FOR EXCLUSION ON RELIGIOUS GROUNDS
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LIB

Joseph Jacques Jean Chrétien (Minister of National Revenue)

Liberal

Hon. Jean Chretien (Minister of National Revenue):

Mr. Speaker, we are aware of that problem; however, we cannot do anything, because the legislation would have to be amended and this is not considered at the present time.

6724

February 14, 1968

Patent Act-Trade Marks Act [English]

[DOT] (3:10 p.m.)

Topic:   CANADA PENSION PLAN
Subtopic:   REQUESTS FOR EXCLUSION ON RELIGIOUS GROUNDS
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PATENT ACT-TRADE MARKS ACT AMENDMENTS RESPECTING IMPORTATION OF PRESCRIPTION DRUGS


The house resumed from Tuesday, February 13, consideration of the motion of Mr. Turner for the second reading of Bill No. C-190, to amend the Patent Act and the Trade Marks Act.


LIB

Harry Cruickshank Harley

Liberal

Mr. Harley:

Mr. Speaker, may I rise on a question of privilege. This arises as a result of something which came to my attention late last evening. During the debate on Bill No. C-190 on February 12 as reported at page 6851 of Hansard I stated that chloramphenicol manufactured in the United States by nine companies had been allowed back on the market after rechecking. My information, Mr. Speaker, was incorrect. These products have not been allowed back on the United States market. I apologize to the house and express my appreciation in particular to the hon. member for Simcoe East (Mr. Rynard) and the hon. member for Queens (Mr. MacLean) for drawing this matter to my attention.

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PC

John Angus MacLean

Progressive Conservative

Hon. J. A. MacLean (Queens):

Mr. Speaker, when I was speaking last evening I tried to stress the point that we in the official opposition agree with the stated objectives of this bill. However, we have grave concern on two main points. The first is the almost impossible task facing the food and drug directorate in attempting to assure the safety and quality of drugs for Canadians, if the drugs are easily imported from other countries without adequate supervision. Second, we are concerned that the legitimate pharmaceutical research in this country may be needlessly but seriously hindered and reduced as a result of this bill in its present form. With regard to the first point, I should like to quote a telegram which was received this morning from the president of the Canadian Medical Association. It is addressed to the president of the Pharmaceutical Manufacturers Association of Canada, with a copy to the Prime Minister and others, and reads as follows:

Re Bill C-190; further to our previous communications to the Hon. John Turner on this subject the Canadian Medical Association continues to be deeply concerned that Bill C-190 in the form now being presented to parliament may open the door to drugs whose safety and effectiveness are below the standard expected and deserved by the Canadian public. Although we too favour the availability of drugs at a lower cost we are not convinced that the implementation of Bill C-190 will accomplish

this end and we fear that the more important factors of safety and effectiveness may be compromised.

Our concern is not restricted to the importation of generic drugs. We fear that confusion may arise due to the importation of brand name drugs some of which have ingredients, physiological activity and dosage forms different from similarly named Canadian brands.

Under present government requirements quality control is responsibility of the drug manufacturer under the supervision of the food and drug directorate, Department of National Health and Welfare. Under this new legislation allowing the importation of drugs it will be extremely difficult if not impossible for the food and drug directorate to maintain the same degree of supervision over foreign manufacturers.

We urgently request that this bill receive further detailed study and necessary amendments to provide adequate safeguards for the public. The association stands ready to aid in any such investigation.

Dr. N. J. Belliveau, President, Canadian Medical Association

Since coming into the house I have received another telegram which is brief but,

I think, very important because it comes from a large Canadian owned drug manufacturer which I think specializes in generic drugs. This telegram is addressed to myself and reads as follows:

As a major Canadian owned pharmaceutical enterprise Empire Laboratories is vitally concerned with consequences of Bill C-190. Contrary to statements by bill's advocates, bill seriously threatens existence of Canadian owned segment of drug industry. Moreover the public health is threatened. Food and drug directorate cannot possibly ensure every import is manufactured under sanitary conditions-

And so on. With regard to the second point, I should like to point out that during the course of this debate I have heard various supporters of the bill say a great many times that the pharmaceutical industry has earnings which are twice as high as those of the average industry in the country. However, at page 12 of its report the committee says: Your committee believes this to be true for pharmaceutical companies generally, whether they be so called "innovators" or "copiers"; or brand name or generic producers. It should be pointed out in all fairness (as seen in table 4 of the appendix E), that the pharmaceutical industry showed (in 1963) the seventh highest rates of return on resources employed, and are exceeded by distilleries, wineries, motor vehicles, petroleum and coal products, motor vehicle parts and accessories, wire and wire products, and office and store machinery.

So there is a wide range of activity here in which the new minister can indulge. With regard to the pharmaceutical industry, it is my belief that they are good corporate citizens generally speaking, and I believe they

February 14, 1968

would welcome negotiation or discussion with the Department of Consumer Affairs with regard to prices, advertising and guide lines which might be set down which would have the effect of reducing the cost of drugs to the consumer.

It seems to me that the government in drafting this bill has flailed about with a bludgeon in a situation where the deft use of a scalpel is what is required. We in the official opposition hope that the minister will see fit to withdraw the bill from committee of the whole and refer it to a suitable committee to bring it more into line with the recommendations of the special committee, while preserving its position on the order paper.

If the minister does not accept this suggestion, we in the official opposition expect that he will have the bill suitably amended or will agree to suitable amendments in committee of the whole on the points I have stressed, so that the public interest will be safeguarded. We of course reserve our position with regard to third reading until the final content of the bill is established by the committee of the whole.

Topic:   PATENT ACT-TRADE MARKS ACT AMENDMENTS RESPECTING IMPORTATION OF PRESCRIPTION DRUGS
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LIB

Stanley Haidasz (Parliamentary Secretary to the Minister of Indian Affairs and Northern Development)

Liberal

Mr. Stanley Haidasz (Parliamentary Secretary to Minister of Indian Affairs and Northern Development):

Mr. Speaker, I shall take only a few moments of the time of the house this afternoon to pay tribute, first of all, to the Minister of Consumer and Corporate Affairs (Mr. Turner) for having brought this legislation before the House of Commons. Both as a member for a workingman's area and as a physician, I have a deep concern for the health of our people. I believe that Bill No. C-190 is another step in the legislation introduced by this government to provide assistance for our citizens in order that they may achieve good health.

[DOT] (3:20 p.m.)

I have said in the past, and I repeat it today, that the cost of drugs to the patient who buys them at the drug store is much too high. In fact, we in this country pay one of the highest prices in the world for drugs. I welcome very much the assurances of the minister who has voiced his concern in the house about not only bringing down the cost of drugs through this legislation but also providing for the safety and efficacy of drugs.

I should also like to express my concern on the question of safety and efficacy.

It is my opinion that the telegram referred to by the previous speaker, sent to the Prime

27053-424J

Patent Act-Trade Marks Act Minister (Mr. Pearson) by the Canadian Medical Association, should be given serious consideration by the minister. We would like to hear in the course of this debate and in the study of the bill in committee, assurances that the food and drug directorate and the minister's department will do everything possible to ensure that drugs will be not only economical but safe, and will do the job they are intended to do.

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NDP

Edward Richard Schreyer

New Democratic Party

Mr. Ed. Schreyer (Springfield):

Mr. Speaker, like the previous speaker in this debate I shall be very brief. It is possible for me to be very brief because hon. members who have spoken in the debate in the last few days have gone into the technical aspects and ramifications of the bill in great detail. I was greatly impressed with the contributions made to the debate by those hon. members who are of the medical profession; in particular, the hon. member for Halton (Mr. Harley), my colleague the hon. member for Hamilton South (Mr. Howe) and the hon. member for Gatineau (Mr. Isabelle). I listened closely to what was said by the hon. member for Simcoe East (Mr. Rynard) and then read his speech in Hansard.

With respect to the reasons which have been advanced by members of the official opposition who are opposed to the bill, I find myself completely unconvinced by their arguments. The two main arguments put forward in opposition to proceeding with this bill, as I gather from listening to them and then reading the speeches in Hansard, are that while the legislation shall bring into the Canadian drug market a greater degree of price competition, it will somehow lead to a deterioration of quality control and will make it more difficult to maintain high standards of drug safety.

They also make much of the argument that if the profit of drug companies is reduced their capability to conduct research and development will be lowered. In advancing these arguments hon. members apparently failed to take account of some obvious facts. First, as was shown clearly by the hon. member for Halton (Mr. Harley), drug safety inspection can be taken as a fact. It must be policy on the part of any government to see that medicines and drugs put on the market, regardless of price, measure up to certain criteria or standards of safety. Any attempt to relate price to drug safety is spurious and illogical.

February 14, 1968

Patent Act-Trade Marks Act

In respect of the argument that any reduction in the margin of profit will encourage a greater degree of price competition in the industry and lower the capability of that industry to undertake research and development, let me point out that the industry spends about four and a half times as much on promotional advertising as it does on research and development.

If research and development is a prime function of the industry, as it ought to be, there is nothing in this legislation which will reduce the capability of the industry to engage in research. The industry may have to cut back on its promotional activity but, as has been suggested by several hon. members, particularly those of the medical profession, there seems to be a proliferation on the part of the industry to seduce the medical profession, through the use of a great number of brochures and advertising gimmicks. As has been said, many doctors in this country feel the time has long passed when material emanating from the pharmaceutical manufacturing houses serves any useful purpose. Much of this material is consigned to the wastebasket. All this promotion increases the expenses of the firms, which they pass on in good measure to the consumer.

Let me refer to one other point which was brought forward by the hon. member for Edmonton West (Mr. Lambert). He took exception to what the minister sponsoring this bill said about the inclusion of those charts which were appended to Hansard for Monday, and which indicated that the price of drugs in Canada was much higher than in most other industrialized countries.

That hon. member suggested that these charts were misleading because they do not take into account the relative purchasing power and wage scales in these other countries where drug prices are considerably lower than in Canada. The hon. member was obviously suggesting that since wages or incomes are lower in these countries, the price of drugs should be lower. Apparently he feels there can be some reason for higher drug prices in Canada if only because of higher incomes. While there may be some validity to the argument, the hon. member has ignored one essential point.

The pricing practice used by pharmaceutical houses is obviously divorced from production costs and the cost of research. Obviously their pricing practice is not related to the cost of production as it should be, but rather to some judgment as to what the market will

bear, or what the Canadian consumer will pay without complaining too much. The differential between costs and selling price is enormous. The practice over the years has been to increase the price little by little over a period of time. Whenever it is felt there is imminency of consumer price complaint, the increases are stopped.

I suggest that if it were not for action of responsible public bodies such as parliament, this practice would likely continue. Many interesting pieces of information were brought to light in evidence presented to the committee on drug costs and prices, and by evidence presented to two other investigating bodies. Inasmuch as much of this information has been aired and discussed in this chamber,

I feel I would be serving no useful purpose in referring to it again.

Let me conclude by saying there is no question but that there is a direct and obvious responsibility on this government and parliament to pass this legislation, even though, taken by itself, it may not have a great impact. Together with other measures the minister has indicated this government is contemplating, this measure will have the effect of bringing drug prices in this country down to levels which can be justified by the cost of production and research. I wish to commend the minister and his colleagues for the enlightened and bold position they have taken which was not really expected.

Topic:   PATENT ACT-TRADE MARKS ACT AMENDMENTS RESPECTING IMPORTATION OF PRESCRIPTION DRUGS
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LIB

Lucien Lamoureux (Speaker of the House of Commons)

Liberal

Mr. Speaker:

I must remind hon. members that if the minister speaks now he will close the debate.

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LIB

John Napier Turner (Minister of Consumer and Corporate Affairs)

Liberal

Hon. John N. Turner (Minister of Consumer and Corporate Affairs):

Mr. Speaker, I should like to thank hon. members of the house for allowing me to close the debate at this time, so that the bill may go to the committee of the whole for further discussion and elucidation, particularly in respect of some points referred to in general terms during this debate on second reading.

Let me deal briefly with those points referred to by hon. members on all sides of the house, particularly the chief spokesman for the official opposition, the hon. member for Simcoe East (Mr. Rynard). He suggested that the bill was confiscatory in that it took away property rights of patentees under the Patent Act. I assure hon. members that I listened to his point with the greatest interest.

February 14, 1988

[DOT] (3:30 p.m.)

I want to say to the hon. member in general terms that this bill does not, to use his words, virtually abolish patent protection. In effect, a five year monopoly under the patent is maintained because of the period that elapses under the present food and drug regulations, and thereafter the patentee, if there is a compulsory licence issued, will enjoy the protection he has gained through establishing a position in the market. This is a position he would enjoy under ordinary circumstances for five years under the patent. In addition, he will enjoy the royalties from any new rivals who may have been able to obtain a compulsory licence from the patent commissioner. This is not confiscation of property, Mr. Speaker, because what we are doing here is diluting, to a certain extent, the patent protection in a way that is analogous to reducing a tariff.

The purpose of this bill is to reduce the effect and use of a patent as an analogous economic weapon, if you will, to the tariff. I may say that the domestic drug industry will still obtain the 15 per cent most favoured nation tariff. Both the patent and the tariff are economic institutions that are designed to achieve particular economic ends. I want to say to the hon. member, through you, Mr. Speaker, that much research, innovation and invention is not patentable. I want to say also to the hon. member that patent laws vary widely around the world according to the needs of the individual economies. A patent right is not an absolute right. It is a right that has to be weighed in the balance of economic convenience. In this case, it is the objective of the bill to weigh the legitimate rights of the Canadian consumer against the legitimate rights of the inventor and the drug industry. In this sense, this bill moves Canada closer to the position already adopted by the United Kingdom and the United States.

Many members were worried about the fact that this bill, if carried by the house, would have an effect on employment. In my opening speech, sir, I recited the figures relating to the people employed by the drug industry in this country. It is my view, on the basis of the best advice I was able to obtain, that this bill will not adversely affect employment within the drug industry in Canada. About 85 per cent of the Canadian drug industry converts the basic chemical ingredients from their basic form into final dosage form, that is to say into the pill, the tube or syrups. This

Patent Act-Trade Marks Act bill, if effective, would introduce more competition into that manufacturing process. It should not affect the amount of manufacturing done in Canada. It would tend to make manufacturing more competitive, but the amount of employment should not be affected to any degree.

Some members were disturbed by the possibility of Canada importing large amounts of drugs from Italy, Hong Kong and other parts of the world. Here again, I want to remind the house, if I may, that 85 per cent of the Canadian drug manufacturing industry in Canada really exists on importation of the basic ingredients, and conversion of those basic ingredients into the final dosage form. We already import 85 per cent of the basic chemicals into Canada. We do not expect this bill will unduly rearrange this percentage.

Then, some members were concerned, and perhaps I would share their concern if I were criticizing this bill, about the possibility of research in Canada being adversely affected by this measure. It is our view again, sir, and I hope I was able to make this point in my opening speech, that patent protection by itself is not an inducement to research. We have had patent protection in this country ever since confederation.

Until very recently only three major drug companies did any appreciable research in Canada, and the increase in research done in this country was probably attributable more to direct government intervention by way of research grants and tax incentives than it was by virtue of the patent system. The existence of a patent, therefore, is not the sole reason for research being done here. I hope that government programs for research within the competence of the Minister of Industry (Mr. Drury) would amply encourage the continuance of whatever research in drugs is done in Canada.

I think the house ought to recall that the drug industry is an international industry. All the major companies having 85 per cent of the business in this country are controlled abroad, either in the United States, Switzerland, the United Kingdom or some other country. When these international concerns, subsidiaries and related companies in various parts of the world decide where they are going to put research, they will put research where the market is or where available scientists can be found.

6728 COMMONS

Patent Act-Trade Marks Act

In most cases, research has to be concentrated in one place because of the highly complicated, highly specialized nature of the research and because of the expensive equipment needed to mount it. Not very much of the international research done in the drug industry has found itself resident in Canada. There is nothing in this bill, to our mind, which would promote the changing of the location of research in Canada, if that research were otherwise economically desirable here.

Finally, I want to deal with a point that seemed to be occupying the minds of most speakers who had the courtesy to enter the debate, and that is the question of safety. I was particularly impressed by the learned address by the hon. member for Simcoe East (Mr. Rynard) and by the hon. member for Halifax (Mr. Forrestall) last evening, as well as the very respected member for Queens (Mr. MacLean). They dwelt particularly on this subject.

I want to say again that, regardless of the economic motives for this bill, that is to say, to provoke more competition, to encourage more free enterprise, to encourage competition in price rather than merely in a promotional sense, there are two other objectives. As I said at the outset, the first of these objectives is to maintain safe, efficacious, high quality drugs in Canada. There is no doubt about that. I want to restate my concern and the concern of the government on that score. The second objective is to maintain a viable domestic drug industry.

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PC

John Patrick (Pat) Nowlan

Progressive Conservative

Mr. Nowlan:

Will the minister permit a question? If the prime purpose of this bill is to affect prices, would the minister not agree that just about all manufactured products in Canada could be brought into this country much cheaper, but that is part of the price of having a Canada?

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LIB

John Napier Turner (Minister of Consumer and Corporate Affairs)

Liberal

Mr. Turner:

The hon. member for Digby-Annapolis-Kings is enticing me into an argument which I should like to have with him on any public platform.

Topic:   PATENT ACT-TRADE MARKS ACT AMENDMENTS RESPECTING IMPORTATION OF PRESCRIPTION DRUGS
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?

An hon. Member:

He is not a leadership candidate.

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LIB

John Napier Turner (Minister of Consumer and Corporate Affairs)

Liberal

Mr. Turner:

The relevant argument is free trade against protection. I think that this country, in terms of surviving economically, must always weigh the balance of having free trade for the benefit of the consumers, and a certain amount of protection for the benefit of a viable domestic industry. I am saying to

DEBATES February 14, 1968

him that indeed this measure tends to have an aspect of freer trade attached to it. By lowering the patent protection we are, in effect, lowering a non-tariff barrier to trade.

[DOT] (3:40 p.m.)

On the other hand Mr. Speaker, the domestic drug industry, even after the passage of the bill-assuming the bill gains the assent of this house and the other place-will have a good deal of protection left. For example, there will be the 15 per cent most favoured nation tariff and the advance five year period under the new drug status of the food and drug regulations. The industry will have the advantage of its high promotional and selling detailmen. It will have the advantage of having imprinted on the minds of the public the brand names under which most of the major companies sell drugs. So that the protective element in the drug industry is still quite considerable; and it is because we are able to weigh the balance of economic convenience that we have confidence that the bill will not adversely affect the domestic drug industry.

I want to get back to safety, Mr. Speaker. A number of hon. members expressed concern that the bill did not contain what they referred to as adequate safeguards respecting quality and safety of drugs. I would emphasize what I said previously, Mr. Speaker, namely that in the government's program designed to reduce the price of drugs, the need to supply the Canadian market with safe and efficacious drugs is paramount. If I or the minister of health, or if the government were not satisfied that this objective could be achieved when the program becomes effective, then I would not have introduced the bill.

The patent and trade marks legislation is not designed to deal with matters of this sort. This is primarily a question for the food and drug directorate of the Department of National Health and Welfare, who administer the legislation respecting safety and quality of drugs. The proposed section 41(13) of the Patent Act makes it mandatory upon the commissioner of patents to give immediate notice of any application to the Department of National Health and Welfare and the food and drug directorate.

In the preparation of this bill I had the advantage of the advice of officials of the Department of National Health and Welfare, the food and drug directorate, the Department of Finance, the Department of Justice and the Department of Industry, as well as the advice of senior officials from my own

February 14, 1968 COMMONS

department, which at the time was that of the Registrar General, now the Department of Consumer and Corporate Affairs. Therefore, Mr. Speaker, this bill has received the consideration of the most senior men in a number of government departments.

Since we announced our intention to introduce the bill, and the introduction of the bill itself, I have received delegations from all major and smaller companies manufacturing drugs in Canada that wanted to see me. On two occasions I had interviews with the executive of the Pharmaceutical Manufacturers Association of Canada. I also saw the Canadian Independent Drug Manufacturers Association and other bodies interested in the industry.

I want to say to hon. members that when we get into committee of the whole I will entertain all amendments that might be presented, and will look into them thoroughly. If they add to the protection accorded the Canadian public, then they will certainly meet with my approval and with the approval of the government. However, I want to say that the food and drug regulations at the moment do provide, in our opinion, adequate authority to control fully the importation of drugs.

In this regard I want to read into Hansard section C.01.055 of the food and drug regulations, which provides:

In the case of a drug sought to be imported into Canada, the director may require-

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PC

J. Michael Forrestall

Progressive Conservative

Mr. Forresiall:

"May" require.

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February 14, 1968