Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 13 - Evidence, November 4, 2009


OTTAWA, Wednesday, November 4, 2009

The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill S-232, An Act to amend the Patent Act (drugs for international humanitarian purposes) and to make a consequential amendment to another Act, met this day at 4 p.m. to give consideration to the bill.

Senator Michael A. Meighen (Chair) in the chair.

[English]

The Chair: Honourable senators, this afternoon, the Standing Senate Committee on Banking, Trade and Commerce is continuing its examination of a private member's bill, Bill S-232, An Act to amend the Patent Act (drugs for international humanitarian purposes) and to make a consequential amendment to another Act.

As you will recall, this bill was introduced by our former colleague and the former deputy chair of this committee, the Honourable Yoine Goldstein, on March 31, 2009. According to the bill's summary, Bill S-232 would:

[Translation]

This enactment amends the Patent Act and the Food and Drugs Act to make it easier to manufacture and export pharmaceutical products to address public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

[English]

We will begin today's hearing with the Stephen Lewis Foundation's Grandmothers to Grandmothers Campaign, an organization that provides assistance to grandmothers in sub-Saharan Africa, many of whom have grandchildren orphaned by AIDS.

You have certainly been busy and your letter-writing campaign is bearing fruit. As of yesterday, the committee had received more than 1,500 letters in support of this bill.

From the Grandmothers to Grandmothers Campaign, we have with us today, three regional representatives on the Leadership Team of the National Advocacy Committee as well as the co-chair of the committee. Representing Ontario South-East is Ms. Gillian Sandeman; representing Atlantic Canada is Ms. Marilyn Coolen; and representing the Prairies is Ms. Linda Watson. Last, but certainly not least, we have the committee co-chair, Kathleen Wallace-Deering.

Welcome to you all. Thank you for being with us. I am sure we will have an interesting session. Please proceed with your introductory statements.

Kathleen Wallace-Deering, Co-Chair, National Advocacy Committee, Grandmothers to Grandmothers Campaign: Honourable senators, we are extremely grateful as volunteers giving leadership in a citizen's grassroots national movement. We could not be here without your invitation. We deeply appreciate that.

As you may be aware, the Grandmothers to Grandmothers Campaign is an extraordinary movement that has sprung up in only three and a half years. From coast to coast, there are more than 220 groups of grandmothers and "grand-others" coming together deeply concerned about the plight of African grandmothers. There are more than 5,000 grandmothers in our national movement and several thousand people we call "grand-others." We are raising awareness and funds to respond to the desperate needs of African grandmothers. Those 1,500 letters, postcards and emails are from people who share our deep concern.

I will now ask Ms. Sandeman, who has prepared our brief, to explain why this bill is of such great importance to us and our volunteer movement from coast to coast.

Gillian Sandeman, Ontario South-East Representative, Leadership Team, National Advocacy Committee, Grandmothers to Grandmothers Campaign: I would like to reiterate Ms. Wallace-Deering's thanks to you to make it possible for us to be here today. I would also like to ask you to thank your committee staff. We are neophytes at this, and we have been helped and supported enormously by them.

The Chair: Thank you very much.

Ms. Sandeman: Honourable senators, the bill currently before you for consideration is of paramount importance to the Grandmothers to Grandmothers Campaign because of its vital importance to the constituency on whose behalf we speak. The focus of the Grandmothers Campaign is on grandmothers in sub-Saharan Africa who have seen their adult children die of HIV/AIDS leaving orphaned grandchildren for whom they now care. UNICEF estimates that by next year there could be 15.7 million children in sub-Saharan Africa who are AIDS orphans. These children are cared for in orphanages, by neighbours or in child-headed households — brothers and sisters bringing up the younger brothers and sisters. The luckiest children live with adult relatives, most often with grandparents.

In the context of Bill S-232, we see these women and children as representatives of thousands of others whom you have the power to help. If Bill S-232 passes, we can hope to see lifesaving, affordable, generic medicines reaching people who otherwise would die.

To us, this is first and foremost a humanitarian issue. The possibility — I would like to say the probability — that this bill will pass gives us great joy and hope. It will be one more positive solution among the many that are still needed to combat the AIDS pandemic.

In August 2006, Canadian and African grandmothers came together in Toronto for three days of meetings. They issued a joint statement at the close of these meetings. I would like to read to you some of the words of the African grandmothers. They said:

Each of our stories is different, each of our experiences is unique, and yet we are here as representatives of countless women who share in our tragedy: for every grandmother here today, there are fifty, sixty, seventy thousand at home. We have needs today, needs for the short-term and needs that will never go away. It is our solemn duty to the millions of grandmothers whose voices have never been heard that gives us the courage to raise those needs to demands — on their behalf, and on behalf of the children in their care.

They went on to say:

Today, we demand the ear of the powerful: these words are for the conference organizers and the 25,000 delegates assembled at the 16th International AIDS Conference [being held in Toronto at the time], for its host government, Canada; for the Global Fund to Fight AIDS, TB and Malaria; and for the United Nations. Grandmothers are worth listening to. We demand to be heard.

These are the words of the Canadian grandmothers in response to that demand to be heard:

. . . we are Canadian grandmothers . . . united with our African sisters. . . . We recognize that our African friends are consumed each day with the business of surviving, and so we have offered — and they have accepted — the loan of our voices. We pledge to act as their ambassadors, raising the volume on their long-suppressed stories until they are heard, understood, and acted upon. We promise to apply pressure on governments . . . . We will not rest until they can rest.

Since that gathering in Toronto, we in the Canadian Grandmothers Campaign have taken our obligation to speak to the powerful on behalf of our African sisters very seriously. From the beginning, we have known that one of their needs is for affordable antiretroviral drugs, ARVs. That means generic drugs must be widely available. These women cannot themselves afford expensive drugs. Governments and NGOs that may be able to directly provide or subsidize drugs for them can do more for less when lower-cost generics are available. The need is enormous, as you all know. I believe you have heard from other witnesses about the UNAIDS report issued on September 30, 2009, that highlights the substantial progress in treatment provision and care for people with HIV infection in the world's poorest countries. Two thirds of infections occur in sub-Saharan Africa — the worst-hit region in the world.

By the end of 2008, nearly 3 million people were on ARVs in sub-Saharan Africa. That is only 44 per cent of the people who need them, a percentage which is slowly increasing, but far too slowly. About 45 per cent of pregnant women with HIV receive drugs to protect their babies from infection. The good news is that it is up from 35 per cent last year.

The bad news is even more compelling: There are still millions of people living with HIV, at least 5 million around the world, including over 3 million in Africa, who still do not have access to life prolonging treatments and care. However, the G8, of which Canada is a leading member and host of the 2010 summit, has committed itself to universal access to care and treatment. This ranges from drugs to keep people alive to projects to stop them from getting infected.

Meeting this complex and challenging commitment demands a range of solutions, of which Bill S-232 can be an important one. Margaret Chan, Director General of the World Health Organization, who is a Canadian, says that governments and international partners must accelerate their efforts to achieve universal access to treatment. The Senate, as the senior partner in our Canadian government, has an opportunity with this bill to meet her challenge.

In 2008, we grandmothers prepared a petition to the government. As grandmothers talked to members of the public and sought signatures for the petition, they found strong support as people who realized the potential of getting more lifesaving generic drugs to Africa if CAMR were to be amended. The petition asked the government "to make the legislative changes necessary for Canada's Access to Medicines Regime to facilitate the immediate and sustainable flow of lower-cost generic medicines to developing countries."

We found that people naturally empathized with the sick who are prevented from accessing medicines because of their cost. It does not take a huge leap of the imagination to imagine oneself or a family member dying for lack of a medicine that is available but unaffordable. Many of the African grandmothers find themselves in this position and face it with great courage and dignity but with understandable frustration and sorrow. They told us that they have needs today for the short term.

At the time of the petition, over 32,000 people responded to this need and signed the petition. The petition was presented in the House of Commons by members from all parties in March 2009. Those 32,000 people, thousands of grandmothers and grand-others, and the many people who have heard the grandmothers speak on this issue, are convinced that amending CAMR is a way to bring help and hope. We are encouraged by the knowledge that the only shipment of drugs to leave Canada under the current legislation was of ARVs for the treatment of HIV/AIDS. I hope that senators will pass the amendments to allow many more drugs to go.

There is a particular need for medicines targeted for young children. Ideally, paediatric formulations should be combined in a single pill in doses that are suitable for a child's size, and need no refrigeration. The knowledge that Apotex, the generic drug company, is prepared to manufacture just such a drug when the bill is passed, is also a source of hope for us and for the African grandmothers caring for HIV-positive children.

In Canada, we are proud of our health care system under which access to treatment does not rely on ability to pay. We tell our neighbours to the south constantly how proud we are of our system, but the situation is different in Africa. Too many African grandmothers, their children and grandchildren, do not have medical insurance or government-provided medical care or affordable access to antiretrovirals. For them, AIDS has become a terminal disease when they become too weak to walk, are ravaged by thrush, pneumonia, cryptococcal meningitis, chronic diarrhoea, kaposis sarcoma or any of the other opportunistic diseases that HIV makes way for. Their suffering is terrible. The tragic thing is that, not only is it terrible, but it is also unnecessary. Their deaths are preventable.

Consider Carol who lives in Meru, Kenya. She is a bright, grade 9 high school student who dreams of becoming a doctor. This dream is based on her childhood experiences. When she was seven years old, she tended to her mother as she died of AIDS. Then Carol went to live with her grandmother. Carol was HIV positive and already experiencing painful sores and persistent infections. It occurs to me that that little girl must have been terrified, having seen what had happened to her mother and knowing that it was beginning to happen to her. Her grandmother sold off pieces of land to pay the medical bills, but treatment was neither readily available nor affordable. Carol's condition deteriorated and at age 11 she was sent home from a small hospital to die. Then she experienced her personal miracle. A small NGO was able to provide ARVs and treatment for the tuberculosis that she also had. At 14, she was in grade 5. She excelled at school. Her fees were paid to go to a prestigious high school.

I ask myself and I ask you: What difference could Bill S-232 and the provision of affordable generic drugs have made to Carol? Well, to start with, her mother could be alive today. As well, her own illness was preventable. If her mother had received treatment at the time of Carol's birth, the likelihood of transmission from mother to child would have been very small. Her grandmother's life could have been transformed. There would have been no need to care for a terribly ill grandchild; no need to see her daughter die; and no need to sell off her land. This would have given her opportunities to use that land productively and have a very different life. Bill S-232 is for Carol, her mother and her grandmother.

I ask senators to consider the situation in Uganda, which has the greatest population of young people under the age of 18 — 50 per cent — in the world. Remember that the middle generation is gone in a country like Uganda. It has among the highest rates of HIV/AIDS in sub-Saharan Africa. Conflict, illness and death mean that the numbers of orphans has reached crisis proportions. One in five of the under-18s is an orphan. There are 1.7 million of them in that relatively small country, many living in orphan-headed households. Grandparents are living with daily stress and trauma.

The problems in this war-torn country are complex and monumental. Clearly, solutions are not always easy to find or to apply, but that should not be an excuse for refusing to make small changes in the absence of a panacea. The provision of affordable drugs to treat HIV/AIDS could mean that more of the adult population survive to rebuild that ravaged country. Bill S-232 is a relatively small contribution to survival for countries like Uganda, which need so many kinds of practical help, but it would be an enormously helpful contribution.

Consider Mama Zadwa, who cared for her daughters until they all died of AIDS. She had one remaining child, a boy. Recently, she returned home to find the burned body of her only son, who was HIV positive. He had poured kerosene over himself and had lit a match. He was 18 years old. He left her a note: "Dear mother, I am sparing you the pain of nursing me to my death." Bill S-232 is for Mama Zadwa, for her daughters and for her brave and caring son.

I supplied to the clerk of the committee some photographs that I hope you received. The first one is of a chubby, healthy little girl aged 18 months sitting in a little armchair.

We have a picture we can hold up.

Ms. Wallace-Deering: We can pass it around.

Ms. Sandeman: She looks very serious and worried, I suspect she was a little nervous of the camera. We know that she was deeply loved in the orphanage where she lived. She was born HIV positive and orphaned as a tiny infant, which means that her mother transmitted the virus to her. Any grandparent would be proud of that chubby, healthy-looking child. Under the care of the nurses in the orphanage, she gained health, weight and strength. Still, she died before she was two from the complications of AIDS.

It is known that 50 per cent of all HIV-infected babies die before their second birthdays. In sub-Saharan Africa, HIV has become one of the major killers of young children. In the world, more than 2.3 million children under the age of 15 are infected with HIV, and 90 per cent of them are in sub-Saharan Africa. It is estimated that 780,000 need ARV treatment. World-wide, only 15 per cent are on treatment, and in sub-Saharan Africa, this number falls to 6 per cent. The statistic I quoted earlier that 44 per cent of people are receiving antiretroviral treatment refers to adults only. The child population with HIV infections is very undertreated. Early treatment in the first few months of life can improve dramatically the survival rates of children with HIV. A recent study in South Africa found that mortality was reduced by as much as 75 per cent in HIV-infected infants who were treated before they reached 12 weeks of age.

With the photograph of Amanda, there is a photograph of her coffin in the cemetery. That serves as a symbol to remind us of the current realities and needs that could be alleviated if the amendments to CAMR allow lifesaving paediatric drugs to reach young children. Bill S-232 is for Amanda and for the millions of other HIV-infected children.

We grandmothers are not naive. We know that Bill S-232 and the companion Bill C-393 in the House of Commons cannot fix all of the problems of improving access to medicines in developing countries. However, they can go some way toward addressing one key part of the problem: the need for medicines that are more affordable. The one-licence solution proposed in the bill will make it simple to get a single compulsory license to export lower-cost generic medicine to the developing countries already covered by the law. The current law requires a separate negotiation and licensing process for every single drug order from every single country, with all the associated transaction costs and delays. The one-licence solution would clear the way for generic suppliers and developing countries to navigate the bidding and procuring process without multiple hurdles and uncertainty along the way. One-license would make CAMR the rapid solution that was promised to developing countries years ago but that never materialized.

The lives of the grandmothers and children whose stories you have read in our brief could have been very different had the promises been kept. How much longer will we ask them to wait? How much longer can we go on pretending that legislation that has delivered only one shipment of drugs in five years is working well and needs no changes?

We have heard other arguments against amending CAMR that seem to put up straw men and still ignore the needs of people dying for drugs. There is the argument that the proposed changes will hurt the pharmaceutical companies that developed the formulas and will jeopardize further research and development. However, the formula in the amendments for royalties for use of patented drugs remains unchanged. Canadian and WTO rules on intellectual property authorize the export of the generics only to developing countries. In fact, sales of the patented medicines in rich countries account for the vast majority of profits and drive decisions about investment and research and development.

We have heard other arguments, which you have heard too, that the answer is a voluntary program of donations by drug companies and that the proposed legislation is not WTO-compliant. We have read all of the witness statements delivered to this committee and we have heard from others. We are convinced that the bill meets all the legal necessary requirements of the WTO.

For us, the major argument in favour of Bill S-232 is to be found in the answer to this simple question: What makes the experience of a Canadian woman with HIV/AIDS different from that of the grandmothers and children whose stories you have heard? It is not the cause of her infection. HIV is here in Canada, sadly, still circulating, as it is in Africa. It is not the progress to severe illnesses, AIDS, that happens sometimes quickly or sometimes after many years to everyone infected with HIV.

The difference is in the treatment she receives. Some of the women that we know and care about have received treatment and lifesaving drugs, but many of them have died and many will continue to die because affordable drugs are not available for them. Canadians live; our African sisters are under a death sentence.

Now grandmothers and grand-others across this country want Canada to do the right thing for them. We are upset, even outraged, that Canada has not been able to follow through with the original promise of CAMR — drugs for international humanitarian purposes. That legislation passed unanimously with all-party support five years ago. We know that the Canadian public, a large constituency agree with us. We are grateful that the Canadian Senate has shown leadership in asking for the changes through Bill S-232 that will help us keep our promise to Africa and the rest of the developing world. We expect that Canadian senators will do the right thing. We would be happy to answer questions.

The Chair: Thank you, Ms. Sandeman, for the eloquent presentation.

Senator Massicotte: Thank you for presenting today. The greater our sense and understanding of the issue become, the more we can be of help and support the proposed legislation. All of us here today appreciate the need to find a solution to the problem. There is no debate about that. We are all sympathetic. We all live in the same world, and we have to help each other where we can. At the same time, we want to make sure that what we do is a solution to the problem and that we do not find ourselves thinking five years from now: We thought we solved it but we have not helped.

We are trying to understand the issue. We know there is proposed legislation and that some people feel strongly that it is the solution. We need to have more details. Some people have wondered when two shipments from Canada went out, why 20 or 30 shipments have not gone out. There must be at least 50 countries in the world that produce generic drugs and have the capacity to come through on this problem. The WTO passed a resolution that, with international understanding, generic drugs are to be made available to countries in Africa.

Why is it that none of the countries have come to any significant aid to those countries? Brazil seems to have done a little bit under old legislation, I understand, but not under new legislation. Obviously, these other countries do not have the same problems that we have with existing legislation, which we are trying to amend. There must be something else that is inhibiting a solution to their problem. What is it and how do we get there to find the right solution to really fix the problem?

Ms. Sandeman: I think you have heard some expert answers on that. Our understanding is that, yes, there are generic drugs available. CAMR deals with drugs that are currently under patent. The WTO decisions made it possible to supply drugs that are currently under patent through special licences, making them into generic drugs, if you like. However, many countries are still grappling with trying to write legislation that meets that decision. Canada was the first, I understand, and we are being watched by other countries.

We have not quite got it right yet; they are still grappling with it. Some of the reason for lack of uptake, as has been suggested to you by other witnesses, is that it is complex legislation. When Médecins Sans Frontières and Apotex, working together on the Apo TriAvir, which is a combined dosage, tried to encourage countries to take an interest in it, they found that, finally, Rwanda would. However, seven other countries, including Tanzania and Ghana, said, "No. We cannot get into that." I believe a Tanzanian official was in Canada and made a speech to that effect, by saying, "We cannot use your legislation." I think the Canadian legislation is definitely a barrier to the lack of uptake.

Another facet of that is that there have been generic drugs available, say, from India. However, with the introduction of the patent legislation that they had to introduce under the WTO rules in 2005, the supply of generics from India will dry up. Consequently, it is more important that we have facilitating legislation to make generics available for drugs currently patented. I am not sure that answers your question.

Senator Massicotte: If there are 50 countries that make generics, I suppose nearly 50 are sympathetic to the problem. Why is it that the other 49 countries did not get there? It cannot all be due to legislative hurdles. There must be something more fundamental on the demand side; maybe it is the country side. I am trying to grapple with the issue.

Linda Watson, Prairies Representative, Leadership Team, National Advocacy Committee, Grandmothers to Grandmothers Campaign: I understand that there have been repercussions on developing countries that have made use of the compulsory licensing provisions in the past. In Thailand, Abbott Pharmaceuticals and the U.S. government imposed sanctions, and other things, when they tried to make use of these kinds of alternatives. That is probably part of the reason that, of the eight countries that were contemplating dealing with Canada and working through this, in the end, seven declined.

That kind of story is disturbing — that is, that this might be going on at all. I do not have documentation for it here and now, although we could provide that to you if you do not have it elsewhere. I believe that is an ingredient.

Additionally, in the developed world there is resistance from the brand-name pharmaceuticals to let this roll. I believe that is a factor in some of these other countries. Consequently, nothing has sprung forward. We had the landmark legislation. We have had the first order and the first application of this, and the first opportunity to see where there is, perhaps, need for modifications.

The Chair: Before I turn to the deputy chair, Senator Hervieux-Payette, I am interested in knowing whether you have had the opportunity to make representations to similar committees. In 2007, there was a House of Commons examination of CAMR.

Ms. Watson: We were not part of that.

Ms. Wallace-Deering: We were aware of it and we applied, but I think our movement was too new to be granted that opportunity.

The Chair: We are glad that you made our list.

Senator Hervieux-Payette: Since I am the official grandmother of the committee — I qualified several times — my question is pragmatic. We are dealing with humanitarian problems. Why would generic drugs be the way rather than the official drug, if it is not a matter of price? I want you to say what your opinion would be if the price was accessible, whether it was from the drug company or from a generic company.

In this committee, I have learned that drugs are more expensive and that the generics in Canada are less expensive, but there are generics from other countries that are less expensive still. How can we use the dollars we want to spend? As a country, should we create jobs or save people's lives?

Ms. Watson: I do not believe that is the choice. First, firms that make generics in this country employ 11,000 people here. They do research and development; they donate drugs; they are very active. If Canadian generics flourish as a result of some of this, that benefits Canadians. Of course, it benefits the brand-name pharmaceuticals as well if things go through generic, because they gain the royalties.

We must keep an eye on the goal. Originally, this legislation went through both houses with unanimous support, on the humanitarian premise that there were lives being lost in our world due to a want of proper treatment medicines. We have the capacity to produce the drugs through the brand names; through generics. Let us do it. It is the right thing to do. We can do it.

I have been impressed by some of the results of studies, and so on, in various parts of the world. For instance, the United Kingdom published an all-party parliamentary report on AIDS in September of this year. They say that the most important factor in reducing prices has been generic production. Competition increases incentives for suppliers to find ways of driving cost reductions.

The first issue around treatment access must be coverage and affordability. Generic competition has made the cost per person per year to be on antiretrovirals in the developing world drop from $10,400 per person per year in 2001 to $88 in 2008. That is for first-line medicines.

The issue that is being encountered already, and will surface more and build a second layer of problems, is that there are people developing resistance to the first-line medications. The cheapest that second-line treatment medication is available at the present time, through generic companies, is $597 per person per year. That is seven times the cost of the first-line medications. The brand-name products — the same basic bio-chemical products through the brand name companies — would be 17 times the cost of what the generic manufacturers are able to provide currently.

It is a basic principle of a market economy that competition drives prices down. In this case, this competition does not simply mean that you get patent leather shoes cheaper, it means lives are saved. We would appeal to you to keep that objective or goal first and foremost in your minds as you go through the process that still awaits you — the question is one of saving lives.

If we could blanket sub-Saharan Africa in antiretrovirals, we would do it. We would carry it in our tote bags. We would get it there whatever way we could.

Generics will help it happen. It will mean that many more people get treatment; that many more people will have a chance to live; that many more people could raise their own children; that many more children could have a chance to live past the age of five.

Senator Hervieux-Payette: Drug companies are afraid that there will be a black market and smuggling. They believe the system would be abused and that drugs, in fact, would not go to the clientele. They say some people would trade the product for their own benefit.

What would be a safer channel of distribution to guarantee that the initial low price will go to the right person in the right way?

Ms. Sandeman: It is clear more and more the major NGOs — Médecins sans frontières, UNICEF and so on — are the driving forces for purchase of drugs in developing countries. They work with the governments of those countries. Their checks and balances are quite stringent.

Countries are desperate to save their populations. Those countries themselves, whatever the difficulties — the word "corruption" is hovering in the air around us — have such strong incentives to improve the health of their people, in all possible senses, that antiretroviral drugs are less likely to be sold back to the developed world than almost anything else.

The protections in the legislation for the generics are clearly spelled out. There is no change in the bill before you from the original legislation. There are clear protections against diversion of the medications. One cannot promise, you never can, in this world that no criminal activity will take place. Many drugs are already going to the developing world and diversion does not seem to be a problem with this kind of drug.

My sense, and I think that of the people here, is that there may be a small risk. We are realistic. There is always a risk of criminal activity. Step out on the street and someone may snatch your purse. It does not stop you from going out on the street.

Some risks, when compared with the benefits, are so small that we must say that life is a risky business. We must be prepared to take some of these very small risks for the sake of a huge humanitarian benefit.

Senator Hervieux-Payette: Do the grandmothers of Africa as well as the grandmothers of Canada promote different means of prevention? We need to educate people to reduce the rate of infection so the number of cases will diminish and put less pressure on these countries. Once we have provided medication to those infected, we do not want to see the number of patients increase exponentially over the years.

Marilyn Coolen, Atlantic Representative, Leadership Team, National Advocacy Committee, Grandmothers to Grandmothers Campaign: Nor do the grandmothers of Africa want to see that. One of their greatest goals is to have their grandchildren educated. That is a very difficult process for them in itself. They are certainly trying to educate and to stop this pandemic at its roots by working with a lot of the projects, clinics and so forth.

Unfortunately, the problem is widespread. It is a pandemic. It will take another generation even to begin to make a dent in the numbers. That is why this is a humanitarian issue. It is important to realize that small risk is worth it because of the huge benefit that is possible. As someone suggested earlier, why is the life of an African child worth any less than the life of a Canadian child?

Senator Harb: Thank you for your excellent presentation. We heard two things from you today.

First, Canada has let down Africa because we made a promise and we did not deliver on that. We introduced a law and put it before industry, but it did not work. I think, by and large, you will find many of us in agreement with you on that. I will not ask you any questions on that.

Second, with regard to the obligations of the bill, some of you are knowledgeable in the area. I presume you have had a chance to read the bill. When we write bills and pass them, we have to ensure those bills pass the test in terms of our obligations both internationally at the WTO and domestically in regard to our laws such as the Patent Act. Canada has obligations.

You already said you support the bill and we understand that. Are there aspects of the bill that you think may not pass the test at the WTO or with the Patent Act?

Ms. Watson: We are not lawyers, let alone intellectual property lawyers. You have had intellectual property lawyers before you in this committee. There has not yet been an exception to them telling you that this bill, as it stands, is WTO-compliant.

We know that the Canadian HIV/AIDS Legal Network presented a 45-page brief which constitutes a legal opinion. In it, they break down every detail of the proposed amendments and compared them to the Doha Declaration, to TRIPS (trade related aspects of intellectual property rights), the August 13 decision and so on. In every case, they made it clear that the amendments are WTO-compliant. I think the executive director of the Legal Network was here earlier and dropped off something else for your consideration. He has created a table that identifies each select issue and shows how it fits into these various clauses and paragraphs, et cetera.

Everything we have seen persuades us that there is no question about compliance.

I understand there is a possibility that before this week is out, that an opinion will be directed to this committee from a legal expert within the WTO to confirm that. That question is settled, as far as we are concerned. You have the documentation, which is very persuasive.

Senator Harb: That is very important. We hope that the opinion will be made available to the committee members.

You said that you really do not care whether the drugs are generic or non-generic just so long as the product is delivered into the hands of those who need it so lives can be saved. I did not hear you say that there is a shortage of money. There are foundations, governments and commitments. Canada made the financial commitment but cannot spend the money because there is no mechanism for us to do so. We could encourage Canadian companies to make the product and ship it to Africa, but the system does not work. Money is not the issue but the will and the mechanism to do it are the problem. You said that other countries are looking at Canada to introduce a law that works so they can replicate the same system.

In the event that a name brand drug company, which has spent billions on R&D to develop a product, were to say that it had a problem with the bill, what would you tell that company? Would you be prepared to discuss suggestions to amend the bill to make it work or would you tell them, notwithstanding your concerns about the Patent Act, you wanted it anyway.

Ms. Watson: The latter, emphatically.

Ms. Sandeman: I would tell them that I would be more convinced by their arguments if they were able to produce and would produce the drugs that are needed, in particular the paediatric formulations, at the same price that generic companies are producing them.

I guess the bottom line is the cost. I do not believe it is entirely true to say that there is money floating around that cannot be spent. The Global Fund for AIDS, Tuberculosis and Malaria is grossly underfunded. This is usually the time of year when commitments are made to that fund. The fund is now scrambling to determine which of the desperate needs being put forward by countries they will have to turn down. There simply is not enough money available for the generics, let alone the expensive brand name drugs.

Another advantage of getting affordable generics to them is that the money, which I as a taxpayer through the Canadian government am contributing to the Global Fund, can go further. If it has to be spent on an expensive brand name drug it might save the life of one person but if that same money were spent on affordable multi-formula generics, it could be spread so much further.

Perhaps I am a bit naïve, but I am not clear about why the brand name companies are producing so many arguments that certain clauses in the bill are not compliant with various other pieces of legislation.

Senator Harb: We have not heard from them; I am merely speculating. I am an engineer. If I work 18 hours to devise and produce a product, I will be protective of that product. As you can appreciate, the brand name companies invest a great deal of money and expect the same thing.

The Chair: Did we not hear evidence that the royalties were agreed upon, for the most part, and that no one had a great problem on either side of the argument? As you said earlier, it is the delivery system that is the problem. We know that for the many reasons that we have heard, so maybe we should try to attack that problem.

Senator Harb: As the chair has said, that was an issue in the past. Should government and the generic companies discuss this problem? Otherwise, from what I hear, you will do it anyway. Should it be found that there is non-compliance in the bill in terms of the WTO, they have the right to sue the government under international law, which will delay further the transfer of drugs to those who need it.

Ms. Coolen: It is highly unlikely that the government would be sued. We have not seen anything that would indicate such an extreme. Certainly, our point is: Whatever it takes to get the drugs to sub-Saharan Africa, do it. It is the right thing to do. We have to go back to the initial spirit of CAMR when it passed both Houses and just do it.

The Chair: It is frustrating because we had such a large measure of agreement among political parties in both Houses. Yet, with all the best intentions, it has not succeeded.

Obviously, you are passionate about this. Who have you been talking to? I am not asking for trade secrets but have you talked to people from the brand name and generic companies?

Ms. Sandeman: They are on our list.

The Chair: We are the first target.

Ms. Sandeman: We have been talking widely, and some of the senators around this table have been gracious in their welcome into their offices. We have been talking to MPs, the AIDS legal network, and we heard from MSF. You probably know there are networks of people concerned about the problem of AIDS around the world. We are part of those networks and talk to all of those people.

The brand pharmaceutical companies do not seem to be part of the network. We need to expand. We will talk to them, if they would like to meet with us.

The Chair: Fine. Do not go away too quickly. Thank you very much indeed for being here today. You have been most helpful to the committee's study.

We have now had a change of witnesses. We welcome the next group of witnesses to our session. Obviously, you have stirred up quite a bit of interest. We appreciate your presence.

[Translation]

We are now ready to hear from the representatives from GlaxoSmithKline, Boehringer Ingelheim (Canada) Ltd. and Canada's Research-Based Pharmaceutical Companies on the topic of Bill S-232.

[English]

In 2007, the Commissioner of Patents issued a compulsory licence under CAMR for patents held by GlaxoSmithKline and Boehringer Ingelheim. This licence allowed Apotex to export Apo TriAvir to Rwanda. Both firms have experience with the regime from the perspective of patent holders and can, therefore, inform us about the strengths and weaknesses of and possible improvements that can be made to CAMR.

Canada's Research-Based Pharmaceuticals Companies members hold a number of pharmaceutical patents which could potentially be impacted by Bill S-232. We are therefore pleased to be hearing their views on the bill and its implications for them, if enacted.

Today, we have with us Mr. Russell Williams, President of Canada's Research-Based Pharmaceuticals Companies, the grouping; Mr. Richard Dearden, Partner at Gowling, Lafleur, Henderson; Mr. Paul Lucas, President and CEO of GlaxoSmithKline; and Mr. Uwe Looper, Manager, Patents at Boehringer Ingelheim (Canada) Ltd.

Gentlemen, thank you for being with us. Mr. Williams will make a statement. Please proceed.

[Translation]

Russell Williams, President, Canada's Research-Based Pharmaceutical Companies: Mr. Chair, my colleagues and I are pleased to be here today to discuss Bill S-232.

Let me first make it clear that our association and our companies support Canada's Access to Medicines Regime.

[English]

We believe it is a useful response to the challenge of providing much-needed medicines to people in developing countries. CAMR must be placed in the proper context in light of the many other partnerships, innovations and initiatives of increasing access to medicines in the developing world. Furthermore, we welcome the opportunity to engage in this discussion because it is about helping those in need. We firmly believe that by engaging in debate, we can have progress and innovation when it comes to getting medicines to those people who need it.

[Translation]

I mean that the regime is useless in combating disease in developing countries.

[English]

Over the last 17 years, our member companies in Canada have been participating in Health Partners International. We have voluntarily donated over $225 million of product. Health Partners International ensures the product gets to the right people in the right way. Internationally, since 2000 — and we are global companies — our innovative pharmaceutical companies have donated well over $9.2 billion U.S. to provide better health care to over two billion people.

I am giving those figures because we are proud of the work that we have done, though much more needs to be done. Some of this work is beginning to pay off. A recent report by the WHO found that more than four million adults and children were receiving antiretroviral therapy in low-and middle-income countries in 2008, which is a tenfold increase in just five years. The greatest increase was in sub-Saharan Africa, where the need is greatest. Similar gains have been made in providing medication to pregnant women to prevent the spread of AIDS to their children.

Turning now to the CAMR process and the changes to it proposed in Bill S-232, I would like to begin by addressing the issue of patents, both generally and specifically, when it comes to the Rwanda case. The case is a very important one, as you will hear, because it is the only time the rules of CAMR have been followed. Indeed, it represents the only example of any of the WTO nations who have implemented a similar piece of legislation.

You probably heard that the CAMR process is excessively complex. You have probably heard that the only way out of the complexity is to collapse the current CAMR process in favour of the so-called one-licence solution. That would provide open-ended access to patents: Unlimited length of time; unlimited volume of product; and no acknowledgment of whether or not a country has requested a particular medicine. These claims and these solutions are not borne out by the facts.

Within approximately two months following Rwanda's request for assistance in the summer of 2007, the federal government granted Apotex authorizations covering the intellectual property of our three member companies: GSK, Boehringer Ingelheim and Shire. The exact elapsed time of the entire process from start to finish was 68 days. As we moved forward to this fall, Apotex requested the federal government for a two-year extension of the original two-year authorization. That was on September 10. The extension was granted on September 17. It took seven days to get that extension.

Over the 27 months since the request came in, approximately 2.5 months were related to CAMR. Based on these facts, we respectfully disagree that CAMR mechanisms were difficult to use and resulted in significant delays.

Notwithstanding these facts, the three R&D members involved have taken another important step to continue our commitment and important work. On October 19, our members announced a commitment going forward to allow Apotex a further authorization of another two years of this royalty-free status. I believe this is a clear statement showing that we support the principles of CAMR.

When it comes to patents, patents play an important but a certain role when it comes to making medicines available. Without patents, you do not discover new medicines. The WHO has designated 319 medicines as being essential for human health in developing countries. More than 90 per cent of those are not under patents and, therefore, could be produced by generics.

The other 10 per cent, through the leadership of our companies, have been made available throughout the network. We increase the flow of medicines by differential pricing, donations and open licensing agreements.

As you know, CAMR implemented the WTO's 2003 General Council decision to create a compulsory licensing regime for pharmaceutical products to be exported to eligible countries subject to mandatory conditions.

Bill S-232 eliminates all reference to the TRIPS Agreement and General Council decision. It renders the proposed compulsory licensing regime at direct odds with Canada's international treaty obligations.

[Translation]

I would like to discuss the four main provisions that the legislation deals with.

[English]

First, the current obligation to seek voluntary license within CAMR would be repealed. Second, the existing country notification and limits on product quantities would be repealed. Third, the bill contains no provision permitting the termination of a licence when the circumstances that led to it in the first place no longer exist. Fourth, the bill before you will unilaterally abrogate Canada's international trade law obligations and call into question this country's compliance with treaty obligations that Mr. Dearden will talk about later.

[Translation]

I would also like to mention three other matters. These are product safety, price limits and diversion.

[English]

Safety of products, price limits and potential are some of the checks and balances that you see in the current CAMR. They have been conscientiously placed there by Parliament and would not be dealt with appropriately by this bill.

One of my greatest concerns is that Bill S-232 would allow medicines to be exported from Canada to developing countries without Health Canada safety approval. In effect, it would create double standards. We would have standards for medicines available for Canadians and a different standard for those medicines being shipped to developing countries. On that point, the generic manufacturers agree and oppose this aspect of the bill.

Our next concern relates to the potential for diversion. Some witnesses have asserted that diversion is a non-issue. It clearly is a serious concern. The WHO has said that one out of four medicines in developing countries is counterfeit.

[Translation]

The whole area of counterfeiting is a concern for our companies and the representatives from those companies can discuss that later.

[English]

We have to ensure, as the United Nations Secretary-General urged, collective action to protect people from falling victim to this insidious and illicit trade of counterfeit medicines. Bill S-232 would render unclear the current CAMR safeguards that prevent diversion to the black market. In particular, we would ask what purpose is served by removing the ability to seek termination of a licence if a humanitarian product were found to be re-exported from the country to which it was originally sent. It is a fundamental question.

We want to work collaboratively. Our companies want to develop the various partnerships and initiatives I mentioned. We are actively developing and participating in projects around the world. We believe that CAMR is one tool. We are proud of our commitment. There is more to do. We do not believe, at this point, that Bill S-232 responds to the concerns that we have been hearing from the developing world.

Paul Lucas, President and CEO, GlaxoSmithKline Canada: Thank you for the opportunity to appear today to express GlaxoSmithKline's experience with Canada's Access to Medicines Regime and our company's extensive efforts in improving access to health care in the developing world. I would also like to explain why the proposed amendments to this legislation should be of concern to all of us, both in Canada and in the international community.

I would like to make three points. First, CAMR has been efficient and effective at achieving its objectives, when used. Second, the provision of medicines is only one essential element in addressing health care issues in the developing world. Third, GSK is committed through action to addressing these issues.

[Translation]

In our experience, the regime allows Canada to reconcile two key objectives: fulfilling its international obligations and ensuring access to medicines in developing countries.

[English]

The following chronology of events is important. It demonstrates that only 68 days elapsed from the time Apotex made the request of GSK until they were granted authorization to begin exporting zidovudine and lamivudine. Please allow me to outline that for you.

You will recall that Bill C-9 came into effect in May 2005 creating the Jean Chrétien "Pledge to Africa Act," now CAMR. Almost a full year passed before GSK and two other patent owners were approached by Apotex requesting voluntary licences. GSK responded promptly. This indicated a willingness to discuss the granting of a licence. We sought clarification on key questions related to anti-diversion and patient safety — both very real issues. Apotex did not respond at that time to our request for further information.

Fourteen months later, GSK received another request from Apotex for a voluntary licence. Within 26 days, we provided our consent to the Commissioner of Patents to issue an authorization pursuant to CAMR. Ultimately, another year passed before the first shipment of a triple combination HIV/AIDS drug was shipped by Apotex from Toronto to Rwanda.

Apotex took more than one year to start shipping their generic drug to Rwanda. It was not because of red tape or a complex and lengthy process, but for reasons outside the administrative and legal process and not within the control of GSK.

[Translation]

Our experience proves that the regime can work when it is put to the test. Very recently, my company went even further by stating that we want to continue to work constructively towards the achievement of Canada's objectives.

[English]

We must not lose sight of the needs of patients in the developing world. We must refrain from using CAMR as a means to reopen the intellectual property debate in Canada. This would create further instability and drive away crucial investments our country needs.

With this in mind, I want to touch on one thing that CAMR has reinforced for GSK. Simply delivering medicines, whether brand name or generic, does not address the challenges developing countries face, such as poor sanitation and education, insufficient infrastructure and diversion of medicines from the intended patients.

GSK has long taken an innovative, responsible and sustainable approach to improving the health of patients in the developing world. Working in partnership with governments, NGOs and the private sector, GSK has, among other things: deliberately focused R&D efforts on diseases of the developing world, such as HIV, TB and malaria; sought to eliminate many diseases, including lymphatic filariasis, one of the world's most disabling diseases; and consistently offered preferential pricing on antiretrovirals and vaccines.

This legacy of commitment is not enough. We have stopped saying, "It is not our fault there is no infrastructure to deliver health care." We have started asking ourselves: "What can we do to ensure that the infrastructure does exist?"

Consequently, we have established several new initiatives that continue to address these broader issues and significantly advance GSK's leadership role. Specifically, we have: recently begun sharing our intellectual property on neglected tropical diseases by setting up a patent pool and inviting others to join us; opened the doors of our research centre dedicated to diseases of the developing world to other researchers; reduced the prices of patented medicines in the least developed countries to no higher than 25 per cent of the price in the developed world; and committed to reinvest 20 per cent of the profit made on medicines in these countries back into local healthcare infrastructure projects.

In closing, we have illustrated that CAMR is only one piece of a larger puzzle. That piece has proven to work effectively and efficiently to achieve its objectives when put to the test. GSK's belief is that our collective efforts and intentions are best served by focusing on the broader issue of improving health care in the developing world through leadership and action. Thank you for your time.

Richard Dearden, Partner, Gowling, Lafleur, Henderson LLP: Thank you, honourable senators, for permitting me to testify about why Bill S-232 fails to comply with Canada's international treaty obligations under the TRIPS Agreement. I am a partner at Gowling, Lafleur, Henderson. I have practiced international trade law for over three decades. I was retained by the government of the United States in the implementation and negotiation of the Canada-U.S. Free Trade Agreement, as well as the government of Mexico on the implementation and negotiation of NAFTA. I also chaired the Chapter 19 panel that overturned the Department of Commerce's determination that Canadian softwood lumber exports were countervailable subsidies. I have given you my biography and you will see my expertise in international trade law is set out there. I am recognized by certain peer-reviewed publications.

I have filed with the committee written submissions that explain why Bill S-232 violates compulsory licence obligations that Canada agreed. These are in both article 31 of the TRIPS Agreement and in the very carefully negotiated international solution to the access to medicines problem that is embodied in the General Council Decision of 2003. I wish to address three points for the committee's consideration.

First, Bill S-232's one-licence regime is not authorized by flexibilities that are found in the TRIPS Agreement. Second, TRIPS Article 30's limited exceptions provision does not authorize Canada to abrogate its compulsory licence obligations. Third, if Bill S-232's regime were implemented, it would be a unilateral renegotiation of Canada's current compulsory licence obligations.

On my first point, the committee has heard several witnesses claim that Bill S-232 can replace CAMR through flexibilities available under the TRIPS Agreement. There are no such flexibilities that authorize the one-licence regime. The only compulsory licence flexibility that existed at the time of the Doha Declaration in 2001 was for domestic consumption. There were no flexibilities in the TRIPS Agreement that allowed for the issuance of compulsory licences for export. I will read why the ministers gave the following instructions to the General Council for TRIPS in paragraph 6 of the Doha Declaration adopted on November 14, 2001:

We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.

That expeditious solution was the General Council Decision of August 2003. Canada can rely only on that decision to issue compulsory licenses for export if it complies with the conditions that are set out in that decision. CAMR does that and Bill S-232 does not do that.

As an aside, my written submissions deal only with the TRIPS Agreement. If this bill were to be enacted, it would violate NAFTA article 1709, paragraph 10, which contains essentially the same compulsory licence obligations as found in the TRIPS Agreement. Canada and the United States entered a Memorandum of Understanding consenting to the suspension of NAFTA article 1709, Paragraph 10(f) as between themselves with respect to compulsory licences "issued in accordance with the terms of the WTO General Council Decision." Bill S-232 abrogates the terms of the General Council Decision.

On my second point, some witnesses have told this committee that Bill S-232's regime is authorized by Article 30 of the TRIPS Agreement. It is not so authorized. Let us not forget that WTO members rejected TRIPS Article 30 as the solution to the access to medicines problem. Even if Article 30 were available to Canada to defend a WTO panel regarding the measures in Bill S-232, it has to comply with the three conditions that are laid down in that article, and it does not.

Canada lost a WTO case that involved a provision in the Patent Act that allowed generic manufacturers to use a pharmaceutical patent during only the last six months of the 20-year term of that patent. The provision that allowed generic manufacturers to stockpile a patented drug and have it ready for sale as soon as that patent expired was found to have violated Article 30. It did not meet the conditions in Article 30, and the Panel on Canada agreed with the European Communities that:

. . . six months was a commercially significant period of time, especially since there were no limits at all on the volume of production allowed, or the market destination of such production.

Bill S-232 is a far more egregious violation than the stockpiling provision that the WTO panel struck down. Bill S-232 is not a limited exception but an unlimited exception that authorizes a compulsory licence to be issued for any drug, not just drugs that are necessary to combat diseases such as HIV or malaria. It authorises export in unlimited quantities; for an unlimited duration of time; and to over 140 countries. In essence, the regime that Bill S-232 advocates, bestows patent ownership rights on generic manufacturers and does not take into account the legitimate interests of patients who benefit from the incentives that patent protection provides for research and development of new medicines that save lives.

On my third point, Bill S-232 would be a unilateral renegotiation of Canada's compulsory licence obligations. The representative for Doctors Without Borders, Ms. Kiddell-Monroe, testified before this committee on October 21. She said that CAMR has failed because the 2003 WTO General Council Decision is fundamentally flawed and the General Council Decision is the root of the problem. She said that Bill S-232 seeks to deal with these flaws. In other words, the alleged problem lies with the General Council Decision solution that Canada and the other WTO members negotiated to deal with this problem. The Doctors Without Borders representatives also told this committee that the General Council Decision is a real problem and that we need to revisit it and tell the WTO that it does not work. In other words, the proper forum to address any alleged problems with the General Council Decision is the WTO in Geneva. The proponents of Bill S-232 are asking you to bypass the WTO in Geneva and unilaterally renegotiate Canada's current compulsory licence obligations through this one-licence regime.

In conclusion, I ask in terms of Canada's compliance with its international treaty obligations: What has changed since the issuance of the Minister of Industry's 2007 report on the statutory review of CAMR, which found there was no need to amend it? The only change since that report occurred in June 2009 when Canada accepted the protocol amending the TRIPS Agreement that makes the General Council Decision a permanent amendment to the TRIPS Agreement. Canada has not retreated from CAMR but has further entrenched its commitment to CAMR by adopting the protocol that will make a permanent amendment to the TRIPS Agreement by incorporating the General Council decision.

Thank you for your time.

The Chair: Thank you, Mr. Dearden. It is not always easy to present legal views in a concise way but you have done very well in that regard.

Mr. Dearden: Thank you, sir.

The Chair: Mr. Looper, please proceed.

Ywe Looper, Director of Patents, Legal Affairs, Boehringer Ingelheim (Canada) Ltd.: My role in the process for Boehringer Ingelheim was to be involved substantially in the drafting of two voluntary licenses that were provided to Apotex with a non-assert declaration in the context of what Boehringer Ingelheim has in a European access policy. During our question and answer period, I would like to go into greater detail but, in a number of respects, that approach allowed us to have superior terms to what would be imposed by the CAMR.

I work at the research site of BI, which chose to establish its global research site for virology in Laval, Quebec. Everybody has a role to play in furthering the humanitarian objectives of the CAMR. A very important one is that a steady supply of second-line anti-HIV medicines be brought to the market so that we have drugs, such as nevirapine, for export. If those drugs did not exist, we would not be discussing the CAMR regime.

At Laval, 165 scientists work at discovering and optimizing the best-in-class and next-in-class compounds that are not only antiretrovirals. Today we are also looking at medicines for drug-free remission, which is a big step forward.

I think that we can envision the day where we would have a CAMR system that exports for humanitarian purposes not only Canadian-made antiretroviral products but also Canadian-discovered and made antiretroviral products.

The Chair: Thank you very much, Mr. Looper.

I have quite a list of questioners and there may not be time for the chair to ask questions at the end, so I will abuse my position and ask one now.

Mr. Dearden, this is a complex area for those of us who have had little or no experience in the pharmaceutical industry and the export of products. You may have covered this in your remarks, but Senator Fox, who is not with us this evening, at one point in one of our sessions, raised the possibility of tweaking Bill S-232. Let us suppose that a tweak here or there would make it much more acceptable to all parties. Is there any mechanism in the WTO to apply for what in another context one might call an advance ruling?

Mr. Dearden: None that I am aware of. When I said that we have to go back to the WTO if these alleged flaws are indeed flaws, you have to do the negotiation in Geneva.

The Chair: That is a negotiation between the party asking for it, namely Canada, and all members?

Mr. Dearden: It would be all members. When they negotiated this solution, they took everyone's legitimate interests into account. You are absolutely correct, it is a complex area. However, patent rights were also part of the interest that had to be taken into account. Patent rights were guaranteed in article 31 of TRIPS before this problem arose and the Doha declaration dealt with it. It did not deal with it in the flexibilities that existed; they had to create a brand new solution. That is why I quoted paragraph 6. The council was told, "Come up with an expeditious solution." Like it or not, for those who think there are flaws and for those who do not, that is the international solution that Canada signed on to. In June 2009, it was accepted as a permanent amendment. If anyone wants to change those obligations, it must be done in Geneva with the whole membership.

Senator Harb: Thank you for your presentations.

I was interested in what I heard. First, there is a patent. You do not want to see anything in terms of laws being introduced that could create a mechanism for infringement on the patent. Second, there was the issue of diversion. I heard you had great concerns about the difficulties that people have in terms of diseases. Mr. Lucas mentioned that you put in about $9.2 billion that benefited close to two billion people around the world in fighting diseases. Mr. Dearden raised an interesting point by saying that you can do all you want, but, in the end, any law that does not meet international obligations can be challenged and struck down.

Along the lines of the questions that the chair was asking, an earlier witness said that there is an opinion coming to the committee from WTO on the compliance of the bill with the provisions as set out at the negotiation at the WTO. If that is the case and that opinion is to arrive, I suspect that Mr. Dearden, who is extremely knowledgeable in the field, will grab it, look at it and re-evaluate it. Am I correct?

Mr. Dearden: You are correct that I would do that, but I am also most intrigued to read that opinion. I would love to see an opinion that explains how the elimination of the voluntary licence requirement is compliant with TRIPS. I would say that it is impossible for anyone to say that a regime that would eliminate the compulsory licence obligation that is point blank in TRIPS article 31 is compliant. I do not know if there is a WTO official who will give an opinion that Bill S-232's regime is WTO compliant. I am intrigued with the possibility that there would be a person that would say that. There is one example where I cannot see it.

Mr. Lucas: You mentioned the issue of diversion and that we did not seem to be concerned about that. I wanted to address that.

Speaking on behalf of my company, I am very much aware of a number of cases of diversion, in Africa particularly. What goes on in Africa with respect to diversion is pretty egregious.

I can give you one concrete example. My colleague in Africa has stood on a runway and seen an airplane land. An envelope changes hands and the plane takes off and goes back to Europe. This happens frequently and it is a serious concern. We have had to take extraordinary security measures to ensure that this does not happen. We will continue to be concerned as we see these things happen.

Senator Harb: When the generics appeared before us, they seemed to be quite eager. They did not say anything negative about name brands. In fact, they are interested in working with name brand companies and research-based pharmaceuticals. Is there a possibility, for example, for you to sit with them and strike a memorandum of understanding so that we can use Canada as a model of cooperation between generics and name brands to do the good that you are doing and that the generics want to do? Is there any possibility of that taking place?

Mr. Williams: There are a number of possibilities. We went through examples quickly. Over the last 16 years, with Health Partners International Canada, we have donated products for distribution in developing countries; the generics and the medical devices group do as well. This is one way in which was can collaboratively work together.

As Mr. Lucas has said, we must ensure that the product is delivered safely and correctly and that there is not diversion of the products. The example of CAMR, the example of GSK, Shire and Boehringer Ingelheim (Canada) Ltd., shows that all three companies are willing to move forward voluntarily and cooperatively. Instead of focusing on this debate that may have to be settled elsewhere, we could get together in a creative way we can up our game for Canada, and not just in pharmaceuticals, brand names and generics. Then Canada as a whole could play a more active role in aiding this humanitarian crisis.

Senator Harb: Would it be fair for the chair to circulate the letter to both your association and the generically based association to get a meeting of minds?

Mr. Williams: We are always open to try to move forward and come up with creative solutions.

The attention that has been focused on this one tool has been surprising. It is a massive situation across the world. This is one tool but there are so many others with which we can be quite creative. I just listed a couple. We have a substantial documentation that we can send to the Senate committee to show the other examples that we do in collaboration.

Senator Harb: Thank you. I hope you do that.

Mr. Looper: On the idea of having a concerted approach and the ability for the legislation to contemplate that, under the current CAMR, there is an obligation of a 30-day period within which the generics approach the patent holders. That can be useful.

The experience that I had during the past Apotex application was that the 30-day provision enabled us to recognize that we at Boehringer Ingelheim had a pre-existing program, which we call the Nevirapine access policy. I tabled documents that set out exactly the generous way in which Boehringer Ingelheim does not assert patents in Rwanda, in all of Africa and in all the least-developed countries. This is a greater territorial scope than anything that could be available under CAMR. Were it not for that 30-day period, it would not have been possible to forward that non-assert declaration together with an offer of a voluntary licence.

I was involved in the drafting of the terms of the voluntary licence. They did not have to follow the CAMR requirements because it was outside CAMR's scope. That illustrates the importance of a concerted effort within TRIPS in order to dovetail with other programs that pre-exist.

There were specific ways in which the BI voluntary licences were superior to the terms and conditions provided by CAMR. In regard to the territory, the voluntary licence offered to Apotex, and in fact two proposals were made during the short time that we were in discussions, extended to any country covered by the non-assert declaration. A copy of that non-assert declaration has been tabled and is available for anyone's review. It included any country on the continent of Africa, any least-developed country, according to the UN's definition, and any low-income country according to World Bank definition.

The voluntary licence that was offered, that was not accepted, also was not restricted to the 15,600,000 tablets that were on the notification filed by Rwanda.

In fact, it was a voluntary licence that contemplated a mechanism by which, when any country filed a notification and was added to that voluntary licence, it would automatically continue until the full amount was fulfilled.

This voluntary licence exceeded the conditions set by CAMR with respect to its term. The CAMR statute regime is a two-year term with a two-year renewal. The voluntary licence was for the life of the patent.

Last, it was royalty-free.

I bring this forward because it was only because of the requirement that patentees were approached in advance that we were able to say, "We have something in place already outside the scope of the CAMR by way of a company policy that would allow full production, a licence for production of Nevirapine, for humanitarian goals."

The non-assert declaration has now been made available. It was followed up by a first offer of voluntary licence and that was done all within 12 days of the Apotex request to the patentees. I know that much has been made of the delays that were involved, but this is a case where in 12 days from the date of the Apotex request on July 13, 2007, a non-assert declaration was provided that was broader in scope, and then 19 days from the date of the request a voluntary licence was offered.

The Chair: Thank you, Mr. Looper. Other senators may wish to pursue that.

It is interesting that the versions of the negotiations surrounding the voluntary licence are, not to put too fine a point on it, diametrically opposed.

My recollection is that the generic drug representative suggested it would have been better to be obliged to go straight to compulsory licence because it served no purpose whatsoever.

It was interesting to have your side of it.

Mr. Lucas: If I may comment: It was back in 2006 that Jack Kay called me and asked me what I thought of this and would we be prepared to go ahead. I told him we would be perfectly happy to go ahead and let us move forward.

Frankly speaking, I seemed more anxious to make this go ahead than he did because he did not call me back for a year. Two months after I spoke to him we wrote him a letter, asking whether he was interested in pursuing this, and we heard back from him a year later. It seems a little strange.

Senator Ringuette: You have been donating medicine for the last 19 years. What is your distribution system?

Mr. Williams: The example that I used is through Health Partners International Canada. They do the distribution and they have set it up through the appropriate channels.

Senator Ringuette: What are the appropriate channels?

Mr. Williams: I think Health Partners International Canada has applied to come here and they can give you the specifics. On November 18 they are scheduled to come to the Senate. It would be more appropriate that they go to the specifics of that.

I also mentioned that over the last nine years, the global companies have donated over $9 billion of product, and that is through the global community.

Senator Ringuette: I understand that in Canada there were $228 million in the last 19 years, which is $11.8 million a year, divided by your 50 partner companies, which is $236,000 a year.

Coming back to the issue of distribution, do you have any evidence that the two shipments of generic drugs that were sent to Africa have entered into the black market?

Mr. Williams: I do not. I do not know anything of the shipments, no.

Mr. Lucas: Because CAMR has that safety net in it, hopefully, it has not happened.

Mr. Williams: There are protections built in to stop that. We are worried about losing those protections.

Senator Ringuette: Exactly. That is the unchanged in this bill. I was intrigued that you had brought forward the black market issue. When you are distributing medical supplies, I would like to know what your mechanism of distribution is and how you ensure that it does not go into the black market. What is the evidence? If you raised the issue, do you have evidence that the two shipments that were sent to Africa have entered the black market? Those are fair questions.

Mr. Williams: It is an excellent question. Because of CAMR protections, they have not, as far as I know — I have no evidence to that effect. We are worried about losing those.

Mr. Dearden: There are some concerns, senator, on the anti-diversion measures in Bill S-232.

There is no pre-export notification to help Canada to inspect. For some reason, that has been repealed under Bill S-232.

As previously mentioned, the ability to terminate a compulsory licence for export, if it turns out it was not used for the purpose for which it was supposed to be used, has been also taken out under Bill S-232. I cannot speak on the factual situation, whether there is a black market. There are concerns whether the anti-diversion measures in the bill are what will be required to prevent diversion.

Senator Ringuette: I am not a lawyer, and you are certainly quite a scholar in the field. However, as I read the bill, I was under the impression that we are not trashing CAMR; that we are adding to it. Therefore, how did we manage to repeal what you are saying?

Mr. Dearden: With the example I gave you, it absolutely is repealed. I did not say that you were trashing the anti-diversion measures currently in CAMR completely with what is in Bill S-232. There are some measures that you are trashing.

Mr. Looper: I would like to comment on one aspect of CAMR that would be repealed and that is directly related to diversion and the potential for diversion. That is the requirement regarding labelling and packaging of medicines. That is seen as being a very important part of the mechanism in order to identify products as being manufactured in Canada for humanitarian purposes.

I would also like to comment on why there is always a potential for diversion. It is because there is always a demand for the products, particularly with regard to countries that apply the theory of international exhaustion of patent rights on products that are sold. That is to say, where a sale is made in bulk of medicines from Apotex to Rwanda, many countries under their legal doctrine apply what is called the exhaustion upon sale. This means it can be imported and is no longer subject to the patent. The patent rights have been exhausted on that sale. That is what drives a market for parallel import and re-exportation of articles after sale.

The packaging and labelling requirements identifying this as being for humanitarian purposes was an aspect that we considered very important to be included in our voluntary licence approach outside of CAMR.

Senator Ringuette: Mr. Looper, do you see evidence of the black market in either the products that the 50 companies are sending on a yearly basis or in the two shipments that were sent to Africa?

Mr. Looper: I was not involved in the delivery. I do not have evidence —

Senator Ringuette: I am asking you the question.

Mr. Looper: I do not know if there was or was not.

Senator Ringuette: Thank you.

Senator Massicotte: Thank you for appearing. We are getting a lot of information. Obviously, we are having a difficult time reconciling and understanding the issue. I guess that is what we are trying to get at.

I would like to rewind a little bit. What I am hearing from you is that we all agree with the objectives of the bill that were passed some years ago in order to help the poor countries such as Africa to get generic drugs at an inexpensive price. You agree with that objective.

All of us thought — I was not at the table — when they passed this bill that it would be the solution and that Canada would be at the vanguard of a solution. However, we sit here many years later and we have sent two shipments, which in most people's definition is failure, or at least immense disappointment in the results of this program. Some people are saying it is a success, but I would strongly argue that two shipments is not good enough.

I am hearing all kinds of reasons as to why, such that maybe WTO is a problem, et cetera. Let us go back. We agree with the objective. You people have international experience. You have distribution systems. You know the territory very well. You know the issues; that is your job, your corporate life and mission in life.

What is the solution? How do we get there? If we forget the excuse of WTO, et cetera, what do we have to do to get there tomorrow? I do not want to hear about what else you are doing. How do we correct CAMR to get to the solution? What do we have to do in order to ensure that in the next two years we get 20, 30 or 40 shipments?

Mr. Lucas: It is important to recognize that the landscape has changed significantly in Africa within the last few years. For example, GSK with its licensed partners in Africa has shipped 350 million doses of HIV medications to Africa. Those are at preferential, low prices. CAMR has shipped 15 million doses. The availability of cheap medicines in Africa is widespread now.

Senator Massicotte: Has the problem disappeared?

Mr. Lucas: No, the problem has not disappeared. I think CAMR is another tool that can be used in certain circumstances. We as a company, and many of the other companies in the innovative industry, are selling their products at low prices in Africa and to the developing world. Low prices are available quite extensively for medicines for the developing world, and we are competing there.

Senator Massicotte: Is that why we only had two shipments because other products came to satisfy the demand?

Mr. Lucas: That must be one of the significant factors because these prices are available.

Senator Massicotte: The objective of the bill has been largely satisfied, so it has little relevance today. Should we spend the time to correct it or correct something else that is a problem?

Mr. Lucas: That is a great question. I do not think we should be spending the time fiddling with CAMR. We should be looking as a country at what else we can do in the developing world. It was mentioned earlier that a number of the funds are requiring money so they can buy these medicines at the lower prices and distribute them but can also address some of the infrastructure issues in Africa. That is a key component that needs to be addressed right now. Maybe that is where Canada should be focusing its efforts, to make a bigger impact than we probably ever can through CAMR.

Senator Massicotte: This is very important. You are saying that the nature of the problem has changed so dramatically because it has been largely satisfied — not fully satisfied but largely satisfied — so that even the old legislation does not have much merit and certainly our efforts do not have much merit to get there because there are better solutions available. Is that a good summary of what I heard?

Mr. Lucas: Yes, that is a good summary of what I said.

Mr. Williams: One of your points was when you passed it, you thought it was the solution. That is the way it was being portrayed. It was one of the solutions. That is part of it. We must do much more.

Senator Massicotte: It was obviously a failed solution.

Mr. Williams: I am perplexed because we are having this debate on the assumption that it does not work. I do not understand why Apotex has not made a second attempt. We are talking about this humanitarian crisis. We are all sitting around having this debate and wondering how we fix it, which is a fair question. Why would you not go back? If you had four or five examples when it did not work, then you might have a point.

Senator Massicotte: If it did not work, why do you think Apotex and those other generic companies are not pursuing this if there is no problem?

Mr. Williams: They have another agenda on that. So be it. When we look at it, the problem is not there. Why have they not tested the system more? If it worked in two months, let us do it again and let us do it properly.

Senator Massicotte: Can I get copies of your correspondence with Apotex? You said Apotex made a demand and you responded. Can we get a copy of that correspondence?

Mr. Lucas: I think that is available.

Mr. Looper: I tabled that yesterday, and I see a copy on Senator Oliver's desk.

Senator Massicotte: We often ask the question: Why are companies not making them now? Why are they not following the process? There is written documentation about a problem with Abbott and Thailand. Companies like yours said if you go the generic and cheap route, even if it is not in your financial interests, we will be less cooperative in the rest of our relationship with you. You use your financial leverage or medication leverage to discourage companies from doing so.

Some people would say you scared those countries so much, those that are not strong enough, that they will not use this process because they are scared of retaliation. I call it blackmail, but that is probably too strong a word. Could you clarify the issue there and help us along? What are the facts? Of course you would not do that yourselves, but it looks like someone else did.

Mr. Williams: I am not aware of that situation. I think those allegations are unfounded.

We work in collaboration. You can look at the number of exercises we have done in trying to come up with different pricing, donations and other ways of making the product available.

I have heard the rumours, but I am not aware of that.

Mr. Looper: A moment ago, I was asked for evidence of diversion.

Senator Massicotte: I did not ask that.

Mr. Looper: I have not seen any evidence that there has been undue pressure from pharmaceuticals.

Senator Massicotte: Are you talking about diversion or Thailand now?

Mr. Looper: On diversion.

Senator Massicotte: What question are you trying to answer?

Mr. Looper: I was asked for evidence. I understand you are asking us to comment on allegations of —

Senator Massicotte: Discouragement. You are saying there is none?

Mr. Looper: That is right.

Senator Massicotte: That is the answer I heard.

The Chair: Mr. Williams, I am sure you read Apotex's testimony. You know the answer to the question as to why they have not tried again. Am I correct? They said the bureaucracy, not including Health Canada, was too much. That is their answer.

Mr. Williams: It is two months.

The Chair: You can read their testimony and may or may not agree, but they say it was too much.

Mr. Williams: A lot of time has passed since CAMR was passed. There are many issues around generic pricing in this country. We talked to 25 African ambassadors to get a better understanding of their needs. They said it is important for them is to have resources to be able to deal with this issue versus a domestic intellectual property discussion. That was a very clear message.

Senator Carstairs: Clearly, I disagree with a great deal of what has been presented today. Not the least of which is because there is not availability of cheap medications. We know that most of the antiretroviral drugs are, in fact, provided by the generic manufacturers.

You raised the issue of diversion. We are talking about malaria, tuberculosis and HIV/AIDS medications, which are rarely diverted. You raised the issue that it does not meet the needs of Health Canada, but you do not raise the issue that it must be WHO-compliant. I would suggest we have heard rather selective evidence.

I have a great deal of respect for Mr. Dearden's legal opinion. Can you point to a specific provision in the August 2003 WTO decision that prevents Canada from issuing a compulsory licence before a specific country has been identified?

Mr. Dearden: It all follows from the total terms and conditions that you find in this decision. There are importing country obligations and exporting country obligations. The first obligation in the decision is need for notification. Notification triggers everything. It is not a matter of picking one or two of the obligations in this decision. It has to be all of them.

Paragraph 2(c) says that Canada as the exporting member has to notify the council for TRIPS of the grant of the licence including the conditions attached to it, the name and address of the licensees, the products, the countries they are going to, the quantities, et cetera.

You need notification from the importing eligible country as to the expected quantities they need, which is a number. It is not only a narrative saying "this licence was issued because of the expected quantities." You need a number and the name of a country before the compulsory licence is issued. That is the information Canada has to provide. The solution of August 30, 2003 is a holistic regime.

The solution in Bill S-232 is different. It does not meet the conditions that you see in this decision. You must have notification first.

Senator Carstairs: I would argue differently because I do not see anything different in the agreement that says that.

You used the term "expected quantity." CAMR talks about "maximum." Why has Canada been tougher than even the rules within TRIPS, the WTO and the decision of August 2003?

Mr. Dearden: TRIPS provides minimum standards. A WTO member can give stronger patent protection if they wish.

Senator Carstairs: Why?

Mr. Dearden: That is a minor issue.

My point on the quantities issue is that it is unlimited quantities. You must have a number in the compulsory licence to control what will be manufactured and how you use that patented pharmaceutical licence.

Bill S-232's regime does not require any number. The quantity is unlimited. The duration of the licence is unlimited. It is like patent ownership being bestowed on a generic manufacturer. That is wrong.

Senator Carstairs: With the greatest respect, TRIPS says "expected quantity." It does not say "maximum." The present legislation says "maximum."

Why do we, in Canada, feel we have to go that next step forward? We can now look back and decide it is not working. Maybe one of the difficulties — I picked only one very narrow area — is because Canada has gone even further than we were requested to by the WTO.

Mr. Dearden: My answer to that is a question back to you.

Why does Bill S-232 not require a quantity to be specified? The decision requires numbers and Bill S-232 does not. A generic manufacturer can use a pharmaceutical patent for completely unlimited quantities of any drug whatsoever for as long as they want to go into 140-plus countries. That is not TRIPS-compliant. That was my only point, senator.

Senator Carstairs: Mr. Lucas, I was very pleased to hear you say you were keen on granting licences to cover multiple countries. I cannot understand what your objection is to the bill.

Mr. Lucas: Basically, my position is that this has been tested once on a complex medication — a triple combination — that had never been made before. You would think that would take a long time. It did not take a long time. It is been tested once and it worked effectively and efficiently. The time frames were short. I do not know why we would change a law that has never failed. The one time it was tested, it worked.

Senator Carstairs: My final comment — more than a question — is with respect to this disagreement between Apotex and what we have heard today. It would be very helpful if both parties filed all of their correspondence. We had one group that says it took 14 months to get a voluntary agreement and the other says it took 14 days. There is a big difference between those two numbers.

Senator Massicotte: Mr. Chair, will we follow up? I do not see what you referred to earlier.

The Chair: Yes.

Senator Frum: Apotex testified that one of the problems they had is that they did not make any money from this. Is the CAMR process not designed to be a market mechanism? One of the problems is that you are trying to do humanitarian work within the context of a market scheme that is not working.

Mr. Dearden, you said twice that this bill would open the gates to any drug. I understand that CAMR has a specific list of drugs for specific diseases. Can you clarify that for us?

Mr. Dearden: Yes. Schedule One in the Patent Act has a list of drugs. It has been amended twice to add two additional drugs since CAMR came into effect. The drugs are WHO-approved and recognized as drugs that serve the needs and purposes for which this solution was developed.

The problem I was expressing with respect to Bill S-232 is that the bill changes that to any drugs. There is no list of drugs anymore. Any drug known to mankind qualifies. It is not only the drugs needed in these developing and least developing countries that we were supposed to allow a compulsory licence for export. It includes all kinds of drugs that will not be needed. Yet that licence can be granted for any drug under the Food and Drug Act. That is a huge change. The product scope will never pass a WTO panel scrutiny.

Senator Frum: Does that amendment appear in this bill?

Mr. Dearden: Yes. They got rid of Schedule One. It defines a drug as any drug under the Food and Drugs Act. It broadens very widely the type of drugs that would be subject to a compulsory licence for export.

The Chair: Before we adjourn, I want to be sure we are all fairly clear in terms of documents. I would like to ask Dr. Gravel to tell us what documents we have that have not been distributed because they have not yet been translated.

Line Gravel, Clerk of the Committee: This afternoon at two o'clock we received copies of the correspondence in English only. I think I have a letter here dated July 25, 2007. It was sent to translation immediately. You will have it as soon as it is translated. It is a letter to Mr. Radomski at Goodmans.

Senator Massicotte: I would like to see the request made to yourselves saying here is where we would like to get approval. I would like to see your letter saying, "Please give me this information." I hope it is not 22 pages. I want to get a sense of it, and then the correspondence. I want to find out what the facts are. If we could get that, it would be much appreciated.

The Chair: We clearly have not got to the bottom of the two different versions of the time it took, but I can assure you they are very different.

I have one other question. Mr. Dearden, is this what I was brought up in my practice to believe is a legal opinion? I do not see any signature on it.

Mr. Dearden: I will sign it right now if you want, sir.

The Chair: That would be great.

Mr. Dearden: Do you want me to sign it? It absolutely is an opinion.

The Chair: If you tell me that is your opinion and that it would be covered by your insurance and all the rest of it, that it is a proper legal opinion, then we can deal with it as such.

Mr. Dearden: Sure, it is.

The Chair: You refer to it as a submission, which I guess it is.

Mr. Dearden: I will sign yours personally, Senator Harb.

The Chair: I think Gowling's insurance is wider than your own. You have told me that it is your legal opinion. That is fine.

Thank you all very much. I appreciate your attendance. It has been edifying. It may have answered more questions than it raised, but we will have to study the evidence. If we need some further clarification from your point of view, may we go back to you? You can always give us a written submission.

Mr. Williams: Absolutely.

(The committee adjourned.)