The senior member for Halifax has just left the chamber. It is unfortunate that neither member for Halifax is here at the present time. If I were either of those hon. members I would want to spend a great deal of time in the chamber because I would not be in the house very much longer. But it is refreshing to know that principles still play a major part in politics, and if a man honestly disagrees with the interests of his constituents I think it is courageous of him to say so in the House of Commons. I think it is a noble quality.
As I said, Mr. Speaker, the junior member for Halifax has adopted almost completely the position of the drug industry in this regard. Let us, therefore, examine some of the arguments which have been brought forth. First of all, the hon. member places great reliance upon the safety issue. Of course, safety is like
motherhood. As I said last evening, it is good debating technique, if you are on otherwise weak ground, to attempt to find an emotional argument that will obscure and cloud the facts. This is an understandable tactic which from time to time a great many people in all walks of life find it necessary to adopt. But in actual fact the overwhelming body of evidence in a series of inquiries suggests the quite obvious fact that in patent legislation safety and quality are two different things. Patent legislation in effect gives a monopoly. It is a sort of economic device which gives a monopoly that has had an inflating effect on the cost of drugs. Safety and quality are covered by the Food and Drugs Act.
[DOT] (3:40 p.m.)
It seems to me that if there are problems with regard to safety, quality and control they must relate to the food and drug directorate. In fact, one of the ingredients of the package proposed by the government is an increase in the facilities of the food and drug directorate so that it will be able to deal with the present and future situation. So the hon. member for Halifax, together with the drug industry, has brought the red herring of safety into this debate.
The second argument used by the industry, and again used by the hon. member for Halifax in his defence of the industry, is that research and development naturally lead to higher costs and therefore since it is necessary to conduct research in a research oriented industry this in the end affects the price to the consumer, and in effect the steps the government is proposing to take through this legislation would wipe out research in Canada. It is further argued that it is socially desirable that Canada encourage research. I think everybody agrees with that. It is like motherhood, and we all agree with that. It is said further that the lack of patent protection will lead to secrecy and less courageous investment. These are allegations made by the drug industry and by the junior member for Halifax.
It is understandable that the drug industry would perhaps balk at any changes in the present framework. Under the present system their average profit in the last 12 years has been approximately double that of other manufacturing industries. In taking his courageous stand the hon. member for Halifax has asked his constituents in Halifax to live with this situation. It is understandable that the drug industry would not welcome changes
February 13, 1968
that would affect the balance. This is understandable from their point of view. But it seems to me it is the responsibility of parliament and the government in this matter to lay the framework and ground rules to make this industry more productive.
In their reports the Hall commission and other commissions have pointed out that in fact very little research is actually carried on in Canada. In the evidence before the standing committee which studied this matter and in the evidence given before other bodies it was pointed out that there are other factors which determine the location where research is carried on. The drug industry is a world wide industry. The drug manufacturers are not interested particularly in the markets of one or another country; they are world wide. Therefore there are other economic factors which dictate the location of their major research facilities. In fact, the evidence given before the committee quite clearly pointed out that it is a fallacious argument to link the patent laws with research. This is the second red herring introduced quite understandably by the drug industry but not quite so understandably by the junior member for Halifax who seems to be so afraid of any change that he will support any existing system on the basis that the devil you know is better than the devil you don't know, while in the meantime his constituents in Nova Scotia and all our constituents must pay among the highest prices in the world for drugs.
The evidence which has been collected by means of the various studies shows that approximately 7 per cent of the manufacturers' dollar is spent on research. This is not a very high figure, particularly when one relates it to the fact that they spend 30 per cent of that dollar on selling. When one looks at the ratio of detail men to doctors-I heard it was ten to one and later that it is eight to one-it is quite clear that it is a higher ratio than in any other industry in Canada. This suggests that there are a great many ways in which to lay a framework or ground rules so that we will have a more competitive industry and one which will lead to lower costs. Therefore I do not believe that the argument concerning research is one that carries any weight when we consider the facts. The drug industry and one of its principal spokesmen in the House of Commons, the junior member for Halifax, have used this red herring.
The evidence presented before the special committee on drug costs and prices is to the contrary. It indicates that it is measures such
Patent Act-Trade Marks Act as the government's fiscal policy, the policy of the Department of Industry and the clinical testing required by the regulations of the food and drug directorate which have encouraged the little research we have had in Canada. Therefore the argument does not hold water. I should also like to point out that Canadian patents are overwhelmingly owned by foreigners who in the past have found it more efficient to concentrate their research activities elsewhere. The modest increase in research in Canada has been due to government policy and the clinical testing required by the food and drug directorate. This is the reason, and it should not be confused with the existing patent laws.
It has been mentioned also that research is socially desirable. I believe we all agree with that, but if we bear in mind the evidence given by the industry before the royal commission and before the special committee of the House of Commons we find there are other ways in which to encourage research. Surely in this country we are not to be placed in the position of encouraging a minimum amount of research on the backs of the wage earners. That is not the situation. I disagree that that is the choice. I do not accept the premise that it boils down to the choice of the small amount of research we have justifying the high cost of drugs. I believe that the changes proposed by this legislation and the other steps which the government is taking and will take can lay the ground rules and framework for this industry to achieve the laudable goal of lower prices without affecting the small amount of research which is now carried on. However, if there should be any merit in the argument that the small amount of research we have is dependent upon patents, then I seriously question, certainly in the Atlantic provinces, how one could defend the high cost of drugs that the average wage earner pays to support this small, albeit sophisticated, industry. That is not the dilemma.
The junior member for Halifax had an opportunity to have his cake and eat it but he did not seize it because he is too hidebound, I presume, in the traditional trading concept of opposing change inasmuch as any change at all may be unsettling and therefore undesirable. Ninety five per cent of the Canadian patents are foreign owned. There is no reason to believe that the patent system will result in the disclosure to Canadians of any drug discoveries that would not otherwise occur.
February 13, 1968
Patent Act-Trade Marks Act
It is also said by the industry and by the the Canadian market if these patent amend-man who has championed their cause here in ments are put into effect. I feel this sugges-the House of Commons that if this bill passes tion goes against the nature of business. I there would be no reason for a manufacturer believe increased competition can only result to maintain production facilities in Canada in companies demonstrating a willingness to and that all they would need would be distri- maintain such services in order to capture button houses in large Canadian centres from their share of the market. This argument also which to market their drug products manu- suggests a high degree of petulance because factured in low wage areas. On the basis of companies would be saying in effect: If we the studies which have been undertaken I do cannot continue with the present system of not think this is a weighty argument. Espe- making a high rate of profit we will not go cially in view of the high margin which into business with the new ground rules exists, I believe it is reasonable to assume which reduce profits more in line with those that it would still be profitable for them to in other industries; we will do something else, continue manufacturing in this country. This I am quite sure the private enterprise motive is quite obvious particularly in relation to still exists and that there are many people some of the smaller independent producers who will want to survive in the drug industry who would find it easier to import the basic and make money. Therefore, if it is good fine chemicals than to import drugs in dosage business practice to perform these services
form. The changes, therefore, which are permitted may lead to more of this rather than less. There are very few true production facilities existing now and at the moment importation takes the form of basic chemicals so the changes ought not to affect this procedure substantially.
[DOT] (3:50 p.m.)
It is suggested also that if this situation is brought about the people of Canada will be dependent on foreign countries for their sources of drugs. This is said with a certain amount of conviction and force on the part of the opponents of this bill. Immediately there is an emotional appeal and people say, we are going to be dependent upon foreign sources for our drugs; this is terrible. People use the word "foreigner" to suggest that something is wrong. In actual fact this situation exists today. I feel, therefore, there is no merit in this argument. Today we do import basic prime chemicals, so this argument would again seem to be one of the smokescreens employed by the industry and by the junior member for Halifax.
It is suggested also there are many life-saving products that enjoy a limited market which a company makes fully available only because they are part of a total operation. I am referring now to special and rare drugs. It is alleged that without reasonable patent protection a company may well decide it could not afford this kind of treatment of their important drugs and would not introduce new products, especially if they were used only for rare diseases. There is a suggestion here that drugs will be deliberately withheld from
they will be performed.
I do not believe we should expect our private enterprisers to undertake a service for completely altruistic reasons. If they do these things they are obviously attempting to get good will for their companies, to show that they are community-minded. They will, of course, reap benefits from such action.
Topic: PATENT ACT-TRADE MARKS ACT AMENDMENTS RESPECTING IMPORTATION OF PRESCRIPTION DRUGS