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

Issue 11 - Evidence, October 21, 2009


OTTAWA, Wednesday, October 21, 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 4:10 p.m. to give consideration to the bill.

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

[English]

The Chair: Good afternoon and welcome to the witnesses. The committee will continue its examination of Bill S- 232, An Act to amend the Patent Act (drugs for international humanitarian purposes) and to make a consequential amendment to another Act. According to the bill's summary, Bill S-232 would have the following effect:

[Translation]

. . . 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]

This afternoon, we will hear from non-governmental organizations, some which undoubtedly have first-hand knowledge of Canada's Access to Medicines Regime and thoughts about the system as it is currently working or not working.

Our witnesses this afternoon are Rachel Kiddell-Monroe, Advisor, MSF Campaign for Access to Essential Medicines, Doctors Without Borders; Richard Elliott, Executive Director, Canadian HIV/AIDS Legal Network; and Cailin Morrison, Legal Advisor, Trade and Intellectual Property Law, Canadian HIV/AIDS Legal Network. As well, we will hear from Aria Ilyad Ahmad, UAEM Chapter Leader, University of Toronto, Universities Allied for Essential Medicines.

Mr. Elliott, please proceed.

Richard Elliott, Executive Director, Canadian HIV/AIDS Legal Network: Thank you for taking the time to meet with us. We have been working on this issue for many years, and I am pleased that you have some concrete proposals before you. I am a lawyer, previously in private practice. I have been working in the field of HIV and related legal issues for more than 15 years and on access to medicines for developing countries and the related international law issues of trade, intellectual property and human rights. I am joined by my colleague, Cailin Morrison, another expert in the field, who has been working for many years with developing countries on issues of intellectual property, international law and access to medicines.

I would like to note, before I get into the substance of my remarks, that you have a brief that we prepared for you. I hope you all have it with you. Let me note specifically the appendix that you will find in that brief. We have taken the proposed amendments from Bill S-232 and tracked them onto the text of the current legislation. I understand that should make it easier to follow how the final text of the law would look were you to pass Bill S-232 as it is before you. I hope it will be useful for you because I understand it can be difficult to follow the ins and outs of a bill unless you see the final product.

I will begin by setting aside one particular point of potential confusion that has marked some of the discussion about this issue to date: The validity of compulsory licensing of patented pharmaceuticals to supply developing countries with lower-cost medicines is not an issue. This issue has been debated at length internationally and has been solved. Let me explain why that is.

The World Trade Organization, WTO, treaties that govern intellectual property and specifically the agreement on the trade-related aspects of intellectual property, the TRIPS Agreement, is explicit in Article 31 that all member countries of the WTO have the right to issue compulsory licences on patented products, including pharmaceutical products. This is beyond question. It is an established matter of international law.

In 2001, all WTO members in the Doha Declaration explicitly reaffirmed that all WTO members have the unfettered right to use compulsory licensing. They also said that all WTO members have the freedom to decide the grounds upon which compulsory licences may be issued. They also said that this is one of the flexibilities, in WTO-speak, found in the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS Agreement, that can be used for the purpose of increasing access to medicines for developing countries. Specifically, they said that all WTO members can and should interpret and implement this treaty in a way that protects public health and promotes access to medicines for all. The WTO members have all agreed upon this as a matter of international law, the text of which was negotiated for months and is explicit.

They also agreed that developing countries were facing a problem in making effective use of this policy tool of compulsory licensing. Specifically, those companies that lack the capacity to make generic medicines cannot give a compulsory licence to a generic company within their borders. If they are to use compulsory licences to get lower-cost generic medicines, they need to import them from countries that can make those products. However, the TRIPS Agreement has a limitation that says that exporting countries with the ability to make the medicines must make them predominately for their own markets. Thus, a problem was created in getting medicines from the countries that can make them to the countries that need them, which the WTO set out to solve.

Two years later, in 2003, they came up with what they said was ``an expeditious solution'' to this problem such that you can issue compulsory licences on patented medicines in one country where there is a generic drug industry and export them to the developing countries that need to import them. That was the fundamental task that WTO members recognized they needed to address. That led to a decision in August 2003 on how that could be done.

The decision was unanimous between all WTO members as a matter of international law and formed the basis for what is now Canada's Access to Medicines Regime, CAMR. It was the basis for the legislation enacted in 2004 by Canada's Parliament with the support of every senator and every member of Parliament to allow for the compulsory licensing of patented drugs in Canada for export to developing countries. I stress that it is only for the purpose of export to those eligible developing countries. It is not for the purposes of supplying the Canadian market or other rich- country markets.

I should also stress that the problem of getting access to medicines for people in developing countries has multiple factors. One piece of legislation dealing with one part of that problem will not solve the entire problem. It is not sufficient. However, if we have the capacity to make those lower-cost generic drugs in Canada, then we need to be able to supply them to developing countries that need to import them.

Every single senator and member of Parliament agrees that we should allow compulsory licensing for the purposes of export. Even the brand name pharmaceutical industry has said repeatedly that they support CAMR. Everyone agrees that using compulsory licences in Canada in order to supply medicines to developing countries is acceptable in principle. Let us set aside any debate about whether this is a legitimate policy option because we have had that debate at the domestic and international levels. Supposedly, everyone is on board with that idea.

The issue before this committee is how to make that system work. As you will hear from my remarks and those of others, the system, as it exists, has not been functional and likely will not function in future unless we make significant but simple changes. It would be difficult to say that Canada's Access to Medicines Regime has been a success.

As you have heard, we have seen the export of one AIDS drug to one country in over five years, and in a limited quantity. When millions of people need access to affordable medicines, getting one shipment out the door to treat 20,000 people is a drop in the bucket. It is wonderful for those people. However, it does not mean that Canada's legislation has succeeded, particularly when there is no reasonable prospect that the legislation will get used again in its current form.

Let me focus specifically on the central reform proposed by Bill S-232 that is before you — the problem that it seeks to address and why.

As you have heard before, including from the bill's sponsor, Bill S-232 would enact a one-licence solution that would streamline the current compulsory licensing process found in CAMR, which is unnecessarily cumbersome, repetitive, inflexible and inefficient for the reasons I will mention.

At the moment, the access to medicines legislation limits a compulsory licence to fulfilling only a single order at a time by a single country for a pre-determined ``maximum quantity'' of a medicine. It does this only after a cumbersome process of attempting to negotiate for a voluntary licence from the companies that hold a patent on those products in Canada; and if that fails, then making an application for a compulsory licence to the Commissioner of Patents, a government official.

That process needs to be repeated every single time for every single drug order to each individual country. We propose, instead, a one-licence solution that would begin with the generic manufacturer making an application to the Commissioner of Patents for a compulsory licence that would authorize that generic manufacturer to supply multiple developing countries, which are already named in the legislation, without a fixed amount of quantity that they can supply.

This provides a more flexible solution. It is limited to developing countries only and to the quantities that are identified by developing countries as being needed. They will respond to bids that are submitted from generic manufacturers and say, ``We need to purchase X quantity of a particular medicine. Can you supply us with a good quality medicine at a competitive price?''

If a Canadian generic manufacturer already has in hand the legal authorization to do that, they can submit bids and compete with other manufacturers to supply the product that the country has identified that it needs. Because it is not limited to supplying just one country with one drug order of a fixed quantity, it reduces delays and transaction costs and allows developing countries to proceed with their normal drug procurement practices in a way that fits with how a generic manufacturer in Canada would be able to submit a bid to them.

It provides more certainty to all the parties involved and eliminates much of the red tape currently dissuading the use of Canada's Access to Medicines Regime. Also, because it would allow, under one licence, the supply of multiple developing countries, it facilitates economies of scale that would make the price of those medicines even cheaper for those developing countries. That is the point.

The Chair: Mr. Elliott, I apologize most sincerely — this is the messy side of the democratic process — but we have just been informed that we have a vote at 4: 35 p.m. I will have to adjourn the meeting for a moment. We have this room until 6:30 p.m., so, unless we have unexpected delays, we should not be gone for too long. I wonder whether we can try your patience and ask you to stay here and continue when we get back. Would that be acceptable?

Mr. Elliott: Absolutely; we are in your hands. We are happy to do that.

(The committee suspended.)

—————

(The committee reconvened.)

The Chair: Our apologies again, Mr. Elliot, for the interruption. Please take up where you left off.

Mr. Elliott: As I said earlier, the issue is how to make Canada's Access to Medicines Regime work. I have described some of the problem with the current limitation of the case-by-case, drug-order-by-drug-order, country-by-country process and I have identified why there is a proposal before you for a one-licence solution that would allow one compulsory licence to issue so that a manufacturer of generic drugs can supply multiple countries on a flexible basis with the quantities those countries decide they need to purchase at the lower prices.

Let me turn then to comment specifically on some of the objections that have been brought forward against Bill S- 232. I will note five of them. I will focus my remarks on the last objection for now, but I will be happy to speak to the other four.

First is the question of health system infrastructure in developing countries. Second is a concern about the diversion of generic medicines into illegal sales. Third is the question of ensuring the quality of generic medicines that are exported from Canada under a compulsory licence. The fourth is the argument that this will somehow undermine the incentives for research and development into new medicines in Canada. Fifth is the question of whether the proposed reforms in Bill S-232 are consistent with Canada's obligations as a WTO member. As a lawyer with some expertise on this last issue, let me focus my remarks on that one and, specifically, the question of whether the one-licence approach and the other reforms put forward in Bill S-232 are consistent with those obligations of the WTO. Let me assure you that they are. Nothing in WTO law prevents Canada from making the amendments to Canada's Access to Medicines Regime that are proposed in Bill S-232.

Let me go through why I say that is so. The first issue is that of issuing a compulsory licence to a generic manufacturer at the outset of the process as opposed to waiting for a compulsory licence to issue until a single individual country has been identified.

I will direct your attention to page 11 in the English version of our brief. It is page 14 in the French version of the brief.

As I have noted, currently the CAMR requires that the process of trying to get a licence to export a generic drug from Canada can only get underway once a specific importing country is named. The country first needs to be named to the companies that hold the patents on the drug in question in Canada in an effort to seek from them a voluntary licence. In other words, ``We will pay you a royalty in exchange for the legal right to make a generic version of this drug to export to developing countries.''

The countries we are talking about are the developing countries named already in the current legislation. They are developing countries; they are countries that the WTO has already agreed should benefit from access to lower-cost generic drugs.

If you are unsuccessful in getting the voluntary licence to supply the one specific country you have named to the patent holders in your attempt to negotiate that licence, then you may apply to the Commissioner of Patents for a compulsory licence to supply that one particular country. The proposed reforms would eliminate the requirement that makes getting the licence contingent on first identifying a specific recipient country. This would not violate any of Canada's obligations under the WTO.

On pages 11 and 12 of our brief you will find the technical, detailed legal argument as to why that is. It includes a careful analysis of the TRIPS Agreement and of the August 2003 decision. Nothing in either of those legal instruments of the WTO says that you must identify the importing country before a compulsory licence can issue. This sequencing requirement currently found in Canada's legislation is not required.

The simpler procedure that we have proposed, which allows the generic manufacturer to get the licence at the first step in the process, and then export to eligible recipient countries, is WTO-compliant.

Second is the question of creating flexibility in the quantity of the product of the generic drug that can be exported to developing countries. For this, let me turn your attention to page 13 of the English brief, which is page 16 of the French brief.

Currently, as I have mentioned, Canada's Access to Medicines Regime limits the benefit and flexibility of a compulsory licence by mandating that the generic company that receives that licence can only export a ``maximum quantity'' of the product to that one country. That quantity must be specified in advance by the single importing country when it files a notification with the WTO, and it has to be noted in the generic manufacturer's application to the Commissioner of Patents for a compulsory licence. If the licence is obtained, that is the limit of the amount that can be exported to that one country.

This introduces unnecessarily some inflexibility into the regime. It prevents or inhibits changing the quantity down the road if — as happened with the one case where CAMR has been used so far — the developing country that is importing the product determines, after the compulsory licence has been issued, that it actually wishes to purchase more of the medicine because it is scaling up its treatment programs to put more people on medicine. At which point, the process needs to be started all over again. You must try to negotiate another voluntary licence for another quantity of that drug, not succeed, and then apply to for a compulsory licence for that extra quantity and so on, every time.

The Chair: Mr. Elliott, can I ask you one point of clarification?

Mr. Elliott: Certainly.

The Chair: We had evidence the other day stating that delays in this whole process are not bureaucratic delays within the Canadian system but rather delays in negotiating the various agreements that must be entered into. Would you agree with that?

Mr. Elliott: I would not because I think the distinction is false. The negotiation process, which is where a good chunk of the delay has happened, is part of the Canadian system; it is mandated under the current Canadian law, which is partly why the proposal before you says: Let us circumvent that process and move directly to the issuing of a compulsory licence in exchange for royalties already specified in the legislation that would authorize supplying multiple countries at once.

This is one of the points that is contentious, but, as I will submit to you in a moment, it is, in fact, consistent with Canada's obligations under WTO law. It is open legally for Canada to take such an approach.

Nowhere, in WTO law, is there any requirement that, when Canada issues a compulsory licence to a generic manufacturer, it can only export the specific quantity of that drug named in the compulsory licence. That need not be a limitation on compulsory licences issued under the Canadian legislation. However, it is found in the law at the moment and it should be removed. Bill S-232 would do that.

WTO law does have a requirement that when you give a compulsory licence to a generic manufacturer, it is only for the purpose of exporting the quantities that the importing countries have identified that they need. That does not mean you need to have a compulsory licence that says, for example, that you are only authorized to export one million tablets to this particular country. You can put a condition in the compulsory licence that says that you are authorized to export to any of these eligible developing countries based on the their needs; the needs that they notify the WTO in writing about, for example. That complies with Canada's obligations under the WTO law. We do not need to unnecessarily make our regime inflexible by capping the quantity that can be exported.

The third issue that has raised questions about WTO compliance is the question of authorizing export to multiple countries under one licence. Nothing in WTO law says that Canada must limit a compulsory licence to supply one developing country; one country per licence. In fact, if you look at the explicit wording of the August 30, 2003, WTO decision, which was the basis for Canada's Access to Medicines Regime, it consistently and frequently refers to the plural when naming countries. It repeatedly and specifically refers to one licence that can be used to supply multiple countries. The plain-language reading of the text would allow this. Nothing is at odds with that agreement if Canada allows one licence to supply multiple countries.

In fact, some other jurisdictions have seen no need to impose a restriction that you supply but one country at a time. The European Union, for example, has adopted a regulation that implements the 2003 WTO decision that clearly states that a licence could supply a ``country or countries.'' That is the exact wording of the regulation.

There is no need for this one-country-per-licence restriction. Bill S-232 would get rid of that restriction; it would say that one licence allows you to supply any of the countries on the list under the legislation. Those are developing countries that everyone has agreed should be able to gain access to these lower-cost generic medicines.

Finally, I will address the question you alluded to a moment ago, Mr. Chair, of moving directly to an application for a compulsory licence and thereby circumventing the extensive delays that occur in the negotiating process. Let me explain how the negotiating process worked in the one instance where this legislation has been used to date.

It took more than a year of negotiating between Apotex Inc., the generic manufacturer that sought to export this AIDS drug to Rwanda, and the brand name companies that hold the patents here in Canada. One of the key hold-ups was that no specific country had yet notified, at that point, its intent to import the product. Without the country name being specified, it is open, under the law as it stands now, for the patent holders to say: The 30-day clock that we must run out for trying to negotiate does not start ticking until you tell us to which country you would want to supply this product. Had they been willing, they could easily have said: We will happily give you a voluntary licence that would let you export a generic version of this product to any of the countries already covered by the legislation. The condition is that you pay us royalties according to the formula already found in the legislation, based on whichever countries to which you end up supplying this product.

They could have done that, but chose not to. As a result, it was only once the logjam was broken and Rwanda became the first country to say that they would like to get this product that the official period of negotiating a voluntary licence could begin as a matter of law. In the end, they did not succeed in reaching agreement between the parties on the terms of the voluntary licence. Thus, Apotex did make an application to the Commissioner of Patents. It is true to say, as some do, that the time from when Apotex filed the application for a compulsory licence to the day the Commissioner of Patents issued it was relatively short. However, that misses most of the picture for what it actually took, and will take in the future, to get from starting discussions about getting a licence to actually having the licence in hand. Nothing, of course, can move until you have the licence in hand. It was actually over a year.

The Chair: Is the point you are making that those negotiations are required by the present law?

Mr. Elliott: Yes, they are required by the present law. They need not be required. The WTO law would allow a more streamlined, direct process that would allow you to move directly to a compulsory licence. The compulsory licence would issue, of course, with the requirement that you pay royalties to the brand name companies that hold the patents. No one says otherwise; everyone is in agreement on that point. The law already has a good formula for determining what the royalties are, depending on what country you are supplying.

Therefore, everyone knows with certainty that if you supply X quantity of this drug to Rwanda, this is the royalty you must pay on the value of your contract with Rwanda. If you negotiate, under the same licence, a contract to supply Zambia with that product, we know already the formula for the royalty you need to pay. None of that is changed by Bill S-232. The bill cuts to the chase and gets us to the point of a simple, easily workable regime to get a licence in hand for the company that can make the product at a lower price and sell it to a developing country that has said that it wishes to purchase this product.

Let me say two things about this move directly to a compulsory licence as opposed to having to go through a drawn- out negotiation. First, the WTO TRIPS Agreement, in Article 31(b), already explicitly says that there is no need to attempt to negotiate for a voluntary licence when you are dealing with an emergency or other circumstance of national urgency; nor is there a need to attempt to negotiate for a voluntary licence with the patent holder when we are talking about using the generic product for public non-commercial use.

As it stands, Canada's legislation fails already to take advantage of the flexibility that is explicitly set out in WTO law. At the very least, in those circumstances, there should be no question that if Canada gets rid of the requirement to negotiate, we are entirely in compliance with our WTO obligations. We have, so far, failed to take advantage of the flexibility available to us.

Things are a little trickier when we are talking about circumstances other than emergencies or supplying generics for public non-commercial use. However, it is entirely open to Canada, as a WTO member, to create limited exceptions to patent rights in its domestic legislation.

Article 30 of the TRIPS Agreement says explicitly that this is open to WTO members. It is quite open to Canada to say that it will do away with the requirement to negotiate for a voluntary licence in all circumstances and move directly to a compulsory-licence process because this is a limited exception to patent rights.

It is a limit that we have already agreed upon as WTO members. Countries are able to use compulsory licensing. It is a policy tool Canada should use to get affordable medicines to developing countries. This is something to which clearly WTO members have already agreed. Canada should, as a matter of ethics, and can, as a matter of law, take advantage of this flexibility in the TRIPS Agreement of the WTO.

Senator Moore: Is this detailed in your written presentation?

Mr. Elliott: That is correct, from page 19 onward.

I am looking at the clock. I think I have covered what I need to say on the particular question of WTO compliance of Bill S-232.

I noted some other objections that have been raised. Let me say that they are without foundation. Some of the other witnesses on the panel, I am sure, will speak to some of those, and we want to leave time for questions.

Thank you for your attention. I would be happy to take any questions you may have.

The Chair: Thank you, Mr. Elliott. I think it best to hear all the presentations and then go to questions.

Ms. Kiddell-Monroe has a brief, which you all should have received. Please proceed.

Rachel Kiddell-Monroe, Advisor, MSF Campaign for Access to Essential Medicines, Doctors Without Borders: Thank you very much for giving me the opportunity to appear here today on behalf of Médecins Sans Frontières, MSF.

I want to address first why I am here. This is an issue of patents, and I work for a humanitarian aid organization. I have been working in Africa for five years; I worked in Latin America for another five years; and I worked in various countries of Eastern Europe. I have been seeing the direct effect of people not having access to treatment when I know those treatments exist for us living in rich countries. I am here because of my outrage at the injustice of that. This is the basis of the reason that MSF has become involved in these issues.

Patients continue to die because they do not have adequate access to treatment. I want to zoom out onto the picture that really provides the basis for why Canada went into this in the first place, and why it is imperative for us to have a system that works and is able to respond to that.

One of the key reasons that people continue to die is because they are too poor to pay for the medicines that they need. How is it still possible that today every second African child under the age of two infected with HIV/AIDS dies? Why does only 1 out of 10 HIV-infected children in Africa receive any treatment? How can we tolerate the fact that today alone over 2,000 children will die from malaria while we are sitting here in Ottawa?

All of this happens while we know that the treatments exist, but they are simply not available to those people. This is the fundamental moral issue with which we are dealing.

After 15 years with Médecins Sans Frontières, I have witnessed first-hand the devastation of AIDS in communities in Rwanda, Burundi and El Salvador. We were not even able to treat patients because the treatments were prohibitively expensive and only accessible to people in our own countries. I have seen Congolese patients dying from malaria because the treatments they needed were not affordable for them; yet the foreigners in those countries had treatments that were able to cure them from the same disease. However, we did not have those drugs for the people we were trying to treat. Those of us working on the ground are frustrated and angry at seeing our patients continue to die from treatable diseases. We know there are solutions present and lie in the hands of legislators and pharmaceutical companies worldwide. Despite that knowledge, nothing seems to change.

Presently, Médecins Sans Frontières works in over 70 countries providing independent medical humanitarian assistance. We are treating around 140,000 AIDS patients in more than 20 developing countries today. We have over 1 million malaria patients who we are treating around the world. We are also working with approximately 30,000 tuberculosis patients in 39 countries. As a result, we spend considerable sums of money every year in drug procurement. This includes a part of the $22 million that we raise from the Canadian public. These costs are only set to increase. The price of newer AIDS drugs for second and further lines of treatment is dramatically higher than the costs of the old drugs. While some costs have come down, the cost of the cheapest second-line regimens needed when someone develops a resistance to the first-line treatment ranges up to U.S. $1,000 per patient per year. This is about eight to twelve times more expensive than the older first-line regimens. This is becoming a critical issue now. The patients who we have been treating since 2001 now need to move on to those second-line regimens, and we are having a very hard time finding affordable versions.

The focus of this committee today is Bill S-232, a much-needed initiative brought forward by the Honourable Senator Goldstein to reopen the debate on Canada's Access to Medicines Regime. We are trying to propose a domestic solution to address the failings of CAMR. Along with many other people, we were disappointed in the process and the results of the legislative review of CAMR in 2007. Médecins Sans Frontières commends the vision and commitment of Senator Goldstein in bringing the spotlight on this issue, a problem that some insist on pretending does not exist. We are here to tell you that Senator Goldstein is right: This problem does exist; it is very real and requires international and domestic action.

In order to better understand why this bill is before you, I would like to provide some context, which Mr. Elliott has been touching on. I may repeat some of the issues he came across.

In Canada, we are supposed to have already enacted legislation to deal with those issues. That was meant to provide an expeditious solution to the problem. Those are the words contained in the August 30 decision. In doing so, Canada was to provide leadership and an example to the rest of the world. Representatives of the pharmaceutical industry, who will appear before you, will tell you that the existing CAMR legislation is fine as is and that there is no need to change it. They will point to a single order made by a small African country during the four years of its existence as clear evidence of its success. The reality, of course, is quite different.

While 22,000 patients in Rwanda have had access to a critical AIDS therapy for two years, which we salute, Apotex has made it clear that it will not repeat the process under CAMR to enable further shipments to be made. No other generic companies are lining up to use this regimen. No other orders are going out in countries that have legislated domestically on August 30. No countries have followed Canada's example, nor have any other developing countries, aside from Rwanda, given notice that they intend to use CAMR. The August 30 decision was supposed to provide an expedient solution. Literally hundreds of thousands of people die every year from AIDS, tuberculosis and malaria. Less than 10 per cent of children have access to treatment, and many other neglected tropical diseases exist as well. We have one order throughout the whole world today that took four years of legal wrangling and expenses — it was an expensive process; that is an important note to make — as well as intense input from NGOs, one of the leaders being Mr. Elliott and the legal network. The fact that it took all of that to make it happen is hardly a testament to an expeditious regime. It is a testament to the failure of the August 30 decision.

When Canada introduced the legislation in 2004, when the law was passed, we said that we were very concerned about the August 30 decision. We believe that it contains some fatal flaws. We believe that the CAMR legislation also has some issues that were added in that are problematic, but, in good faith, we tried to use that legislation. Therefore, when I am speaking about the problems in the legislation, I am not doing so from theory. This is from our actual practical example as a humanitarian aid organization trying to use this legislation.

The first major barrier we experienced in making an order with Apotex under the Canadian regime was exactly what Mr. Elliott was talking about, namely, the requirement for the prior voluntary licence negotiations between the generic company and the patent holder before the compulsory licence application could be made. While the compulsory licence itself was granted rapidly, the steps necessary to get to the point of applying for a compulsory licence were extremely long, very expensive and drawn out, and ate up at least one year of time.

As we tried to find a country to make an order, we found an even more insidious problem embedded in the August 30 decision — the requirement to notify the World Trade Organization of the intention to use the waiver. In practice, countries were reluctant to do that because of the real possibility of repercussions from rich nations and the pharmaceutical industry itself. This is no empty fear. We only have to look at the case of Thailand, where we have seen how the U.S., the European Union and Abbott Laboratories retaliated against Thailand for using legitimate compulsory licensing to meet the health needs of its own people.

Another reason for the lack of interest shown by developing countries is that the system is not automatic. It is actually desperately complicated. The two PowerPoint slides that you have printed out illustrate that very well. The first slide shows how a regular drug order looks. MSF faxes its order to the company, the company confirms the order and the estimated date of delivery, and then the project receives the drugs. This is how MSF works. The second slide shows how the process works under Canada's Access to Medicines Regime. You can see multiple steps coming from all different directions. This was produced by some of the government officials when we were trying to explain to generic companies back in 2004 how the system worked. This is what we have today.

Most developing countries do not have the means or the luxury of time to navigate such a convoluted system. This concern has been expressed openly by developing countries in international fora. In fact, in 2006, Tanzania's High Commissioner to Canada noted, ``It is not that we do not want to do it. It's just that we haven't because . . . all the bureaucratic, administrative, and legal requirements take a lot of time. . . .The system is too complicated.'' He also presented the same concern during a meeting that we had at the AIDS conference in Toronto in 2006.

All of this is in addition to the core problem of the August 30 decision that is being faced by Rwanda and Apotex today. The decision implements a drug-by-drug, country-by-country, case-by-case decision-making process. The compulsory licence Apotex received is limited to a specific number of pills and to one country. If Rwanda were to request Apotex to fill another order, Apotex would be required to start all over again with the voluntary licence negotiations. The hard reality is that, through the one compulsory licence issued, with one hand, Canada gave some 20,000 Rwandan AIDS patients hope; with the other hand, we took that hope away.

I found out yesterday that the three brand name companies who hold the patents for the three drugs included in the drug Apo-TriAvir said that they would give Apotex the authority it needs to produce the drug. The timing of that statement is extremely interesting. If it shows me anything, it shows that we are at the complete mercy of these companies. Thus far, being at the mercy of these companies has not proved beneficial to people living in developing countries.

The fact that Apotex will not use the current legislation is, again, very telling. The August 30 decision ignores the fact that economies of scale are needed to attract interest from producers. Without the pull of a viable market for drugs, generic manufacturers will not seek to produce for export. Apotex has been clear in this regard, and no other generic manufacturer has shown any serious interest in this process.

As if all these August 30 barriers were not enough, the Canadian government also added its own made-in-Canada hurdles: CAMR is 100 articles long and is a complex piece of legislation that contains a restrictive list of medicines. Such a restrictive approach has already been discussed and rejected, including by Canada. CAMR also adds additional time-consuming Health Canada approval and a requirement for NGOs to seek importing country approval. None of these were required by the August 30 decision.

As a result of these barriers, international and domestic, we are now in a situation where no country, aside from Rwanda, has notified WTO of its intention to use CAMR, and no other generic company seems willing to produce a drug under the regime. It now seems clear that the law is not able to meet the noble objective that you honourable senators vested in it back in 2004. Bill S-232 may provide a good opportunity to revisit the means by which it can fulfill this objective.

I also want to address the issue of infrastructure and resources. With this, I am talking about on the ground. One of the things that we often hear coming from Canada's Research-Based Pharmaceutical Companies, Rx&D, is that the real issue here is infrastructure and resources, not patents. In our experience, generic competition has been one key, vital way to provide access to medicines for millions of people. Yes, infrastructure and resources on the ground are critical issues, I am certainly not denying that, but they are not the only issues.

In fact, infrastructure and medicines are both essential components. If there are no medicines, what are clinics and medical staff expected to dispense? I have seen countless spotless health centres in Africa with proud, trained medical staff ready to treat patients, yet the pharmacies in those same health centres stand empty.

The reality is that with the implementation of the TRIPS Agreement worldwide, the small window that was pushed open to save untold numbers of lives over the past 10 years is closing. No matter how many trained medical staff and new health clinics you have, patients will die if affordable medicines are not available.

Shortly after the August 30, 2003, decision was announced in Cancun, Médecins Sans Frontières called on countries to ``act now to use the Doha Declaration to access the best priced medicines for their populations. The experience they gain by doing so will test the limits of the WTO rules and be invaluable to revising WTO patent rules after Cancun.''

In 2004, CAMR was intended to be Canada's tests of the limits of the WTO rules. Unfortunately, and for the reasons previously mentioned that Mr. Elliott spoke to, CAMR failed to provide the expeditious solution it was expected to deliver. We know that because we have first-hand experience of its failure at Médecins Sans Frontières.

In the past five years, we have appeared three times before the Canadian Parliament to testify about this issue, and we will say the same again. CAMR has failed to deliver because the August 30 decision of the WTO is fundamentally flawed. Bill S-232 seeks to deal with a number of those flaws, and, in this regard, it is a very important step. However, over and beyond Bill S-232, the Canadian government must play an even more fundamental role by calling for an immediate review by WTO members of their August 30 decision to properly address its flaws. Canada is ideally placed to do this. Our objective is access to medicines for all, and we believe that Canada can help to make that a reality.

Aria Ilyad Ahmad, UAEM Chapter Leader, University of Toronto, Universities Allied for Essential Medicines: Good afternoon. I would like to begin by thanking the Senate committee for giving voice to Canadian civil society and to students who represent our future health care professionals, innovators and policy-makers on what we consider literally to be a matter of life and death. My name is Aria Ahmad, and I am a graduate student of international pharmaceutical policy at the University of Toronto. Today, I speak to you as the chapter chair of the Universities Allied for Essential Medicines, UAEM, which is a non-profit organization founded and maintained by students at over 40 top research universities around the world, including eight across Canada. We work to ensure that biomedical end products, such as drugs, developed in campus labs are made accessible and affordable in low- and middle-income countries.

UAEM members were witnesses during CAMR discussions in 2004 and have continued to be vocal over the past five years. However, my mandate today comes not only from student associations but also from civil society organizations and citizens across the country who, over the last year, have signed thousands of postcards and written hundreds of personal letters to their representatives in the house and the Senate urging them to act on the morally unacceptable WTO statistic that 1 in 3 people around the world do not have regular access to medicine or have no access at all, needlessly causing an estimated 10,000 deaths per year.

As a cross-disciplinary student group, we recognize that the drug access gap is multifactorial. However, we are acutely cognizant of the fact that drug costs remain the greatest share of health care expenditure for people in low- and middle-income countries. With medicines comprising up to 80 per cent of out-of-pocket health care costs in these countries, even slight price increases can make life-saving treatment unaffordable for the most vulnerable, including the 20 million HIV/AIDS patients waiting desperately for antiretroviral drugs.

As Canadians, we take great pride in the fundamental role that John Humphrey played in the drafting and ultimate adoption of the Universal Declaration of Human Rights. When access to essential medicines was recognized as a core human right, Canada stepped up once more, symbolizing our global leadership in social equity by becoming the first World Trade Organization member to implement the August 30 decision in what became known as Canada's Access to Medicines Regime. Passed unanimously by all political parties, the goal of CAMR was simple: to get affordable generic medicines to people in the developing world by enabling Canadian manufacturers to acquire a licence from the patent holder for humanitarian purposes.

However, in each of the five years since the passing of the bill, over 4 million people have become newly infected with HIV/AIDS and 3 million have died, while two modest shipments of antiretroviral drugs have gone to Rwanda under only one licence. Although it serves as a historic event, it is worth repeating that all affiliated parties have indicated that in its present iteration, CAMR would not be used again. At the WTO intergovernmental working group on public health, innovation and intellectual property, our UAEM organization has been a key player in drafting a declaration that outlines the responsibility of universities and research institutions in addressing the global medicine access gap. The time is now that we, as a nation, honour the pledge that we made to the world by fixing legislation that, by any measure, is said to be critically broken. As my fellow witnesses have clarified, the proposed reforms in Bill S-232 would not change the fundamentals of the legislation but rather simplify the cumbersome, long and expensive process in three ways: by removing the disincentives for generic manufacturers to use CAMR, by increasing flexibility in the terms of compulsory licensing and by streamlining the process for issuing the compulsory licence.

To most of our fellow students and citizens across the country, these proposed amendments make perfect sense. However, in the spirit of critical scholarship, we have identified four arguments that can be made against CAMR reform. The first is a conflation of two ideas, namely, that innovation is important, and, thus, the proposed reforms would not comply with international intellectual property laws. While the former is a rhetorical argument that rarely warrants any disagreement, international law unequivocally recognizes and clarifies that the TRIPS Agreement should not prevent WTO member countries from taking measures to protect public health. The Doha Declaration further recognizes specifically the legitimacy of countries to determine need and to take measures to reduce the price of medicines by allowing generic equivalent of patented pharmaceuticals to be manufactured under a compulsory licence. The August 30 decision stipulated that they could be imported by countries with insufficient manufacturing capabilities.

Research at the University of Toronto has also deflated the argument that a lack of awareness of CAMR-type legislation among importing countries is the major hurdle. In 2006, the Access to Drug Initiative at the university's Faculty of Law, in partnership with the Government of Ghana, explored the possibility of procuring Canadian generic pharmaceuticals through CAMR. The conclusion of the collaborative study was that Ghana, despite the political will to issue a compulsory licence and the administrative infrastructure to do so, declared that it was unable to make use of the legislation. It cited its incompatibility with the realities of international drug procurement processes and the needs of the eligible importing countries. With 19 sections and more than 100 clauses and sub-clauses, simply understanding the legislation requires legal training or support. Without streamlining the process, neither time nor awareness campaigns would entice importing countries that lack technical and legal resources to engage this new system.

Critics of the proposed reform could point to the shipment of a three-in-one antiretroviral to Rwanda as a symbol of CAMR's success. However, we remind the committee that the only willing generic manufacturer, Apotex, has made it clear that without reforms, it would not use CAMR again, and legitimately so. Commercial objectives are critical to make the legislation work. The onerous requirements pursuant to the application process are a major hurdle in its effectiveness.

It can be argued that modifications to CAMR will only deliver limited value to patients in developing countries citing the WHO director's statement that ``all the donated drugs in the world won't do any good without an infrastructure for their delivery.'' We recognize the multi-faceted complexion of drug access and remind the committee that Bill S-232 is a proposal for CAMR reform, not a panacea to end the world's ills. One must simply ask the Government of Rwanda who will proudly admit that lower drug procurement costs have freed up funding for health infrastructure development, or the 22,000 Rwandans who, upon receiving the antiretrovirals, can attest to the life- saving impact that effective policy-making can have.

This number, however, remains miniscule compared to the 4 million patients requiring antiretrovirals, 40 per cent of which is supplied by India. As the last of the developing countries are being integrated into the WTO by 2016 and local generic manufacturing through compulsory licensing becomes restrictive, AIDS patients will be forced to either absorb higher drug prices or join the 20 million for whom access to life-saving treatment is beyond reach. With this looming public health catastrophe, we believe Canada is in a unique position to fill the void.

This is the reason we are here today, to contribute to continuing dialogue on improving Canada's commitment to the health and well-being of human lives beyond our borders. Failure to respond in a timely fashion to this monumental challenge will needlessly cause millions of deaths. At five years old, CAMR has far outlived millions of children who have died of HIV/AIDS; for without treatment, the progression of pediatric HIV infection is particularly aggressive and more than half do not live past their second birthday. A one-licence solution, as proposed in Bill S-232, would address the key bottleneck impeding use of CAMR by both developing countries and suppliers of generic medicines.

Speaking on behalf of concerned citizens and students across the country — including over 150 McGill students who have handed us more postcards yesterday, 50 of them directed specifically to this committee — I implore you, members of the Senate committee, make these vitally needed changes and restore Canada as a moral compass in matters of health and human rights.

I thank you for your time and attention and will be happy to answer any questions that you may have.

The Chair: Ms. Morrison, do you have a presentation?

Cailin Morrison, Legal Advisor, Trade and Intellectual Property Law, Canadian HIV/AIDS Legal Network: No, I do not.

I am here for points of clarification.

Senator Massicotte: No one here disagrees with the objective of the original bill. We all agree with the moral implications and the need to share resources with the world, especially the poor. That is not an issue for any of us.

We are trying to find out if this bill will correct the problems we face. I have also been told by the witnesses that the WTO made a resolution that allowed all countries to come to this purpose; but, unfortunately, no countries have done so, and the problem is probably worldwide. Then people speculate on why it is not happening. Tell me more about that.

My immediate reaction is that if this is a world problem, why is it just a Canadian legislation problem? Maybe we are not addressing the right problem? How do we find the solution, and why has this problem not been satisfied by other countries?

We are also being told that maybe it is not the problem that we think it is. Some countries, such as India, are doing well through the generic companies, at a much cheaper cost than Canadian producers. Maybe that is why Canada is not being very effective or relevant because it is being satisfied by someone else. Deal with that issue — the world environment; I am not sure if it is Ms. Kiddell-Monroe or someone on the world scene.

I understand your opinion that the proposed legislation contributes to resolve our existing problems — we take it for granted at this point. However, what is the world problem that inhibits satisfying the need for inexpensive medicines by the world's poor, and how do we identify the issue, and why is it not occurring? These poor countries care about their citizens; why do they not make an application for these inexpensive drugs?

Ms. Kiddell-Monroe: Compulsory licensing is one method to try to deal with the access to medicines' crisis. There are different methods and ways to do it.

As we were saying before, we do not have only one way to deal with this problem. However, this is one critical way that we can address the problem. When that decision was made, when the problem was noted in the Doha Declaration in paragraph 6, saying there is a problem for those countries that do not have their own manufacturing capacity and how can they get drugs in, the WTO was charged with trying to find a solution to that.

The solution they came up with was riddled with problems from the beginning. The problems we have seen through CAMR are reflective of what was happening at an international level. At the time of the discussion about the bill, we tried to address those flaws. Some of those discussions went off track with some strange introductions being brought into the bill; then some problems still remained with what was actually passed through.

However, we said that we would see if it works. It gets to that point of testing that system to see if it could work or not. If it does not, we have to go back and try harder.

That international decision is a real problem, and we need to revisit it and tell the WTO that it does not work. The irony is that the WTO has just made that decision a permanent amendment to the TRIPS Agreement, which I find bizarre — to make something permanent that clearly does not work.

Senator Massicotte: Is that the August 30 decision?

Ms. Kiddell-Monroe: Yes. It is now a permanent amendment to the TRIPS Agreement. That is very strange.

Canada has a unique position to be able to say that we have tried it; this is what we have been able to do; these are the problems that have been raised, and we think there should be a new solution to this. The way that new solution can be achieved is by using the flexibilities that are in the TRIPS Agreement. One thing that is important is that that August 30 decision was notwithstanding the other flexibilities available in the TRIPS Agreement. There are other flexibilities that Canada has every right to use, as do many other countries.

Why is Canada one of the only countries to do it? Canada took a leadership role from the beginning, and many countries have been looking at Canada to see what happens here. Many countries are waiting for Canada to tell them what is happening in Canada, whether it worked or not. Why has only one drug in the whole world come under this decision?

Now Canada needs to follow up on the commitment made in 2003, when it said that it will do this and take a leadership role. That is a bit of perspective.

Mr. Elliott: You specifically mentioned the question of whether Canadian generic suppliers will compete with generic suppliers in other countries, such as India. That issue has been raised repeatedly. It is important to note that the one piece of evidence we have is that when CAMR was, after four-plus years, successfully used, it was a Canadian generic company who successfully competed against a number of other Indian generic manufacturers in submitting a bid to the Rwandan government. Once the Rwandan government had issued a tender saying that they wanted to purchase the medicine, Apotex submitted a bid that actually matched the prices that developing countries' generic manufacturers, such as from India, were offering.

Therefore, we have seen the potential to compete. The potential to offer even more competitive prices would be even greater if the process of getting to the point of having a licence to supply multiple developing countries could be put in place. You would achieve economies of scale.

In fact, the WTO members, when they agreed on this August 30, 2003, decision, made explicit reference in that decision to the need to harness economies of scale. That is why there is a provision specifically in there — which Canada did not take advantage of, unfortunately — that allows for one licence to supply drugs to a country that is part of a regional trading agreement with other least-developed countries and allows re-exportation from that country to other least-developed countries in the bill because there is an economy of scale to be achieved.

Senator Massicotte: My concern is whether we are repairing the right problem. We can talk about our legislation, but I find it odd that the world has not responded. At least 50 countries produce generic drugs in our 200-plus countries. It is odd no one else has produced it, and it is odd that it is only because our legislation is wrong.

You say that Canada must provide leadership; you make reference to the WTO. Is it a WTO problem? Thus, the issue is not patent laws, it is a world leadership issue, and we should contribute to the solution. Which one is it?

Ms. Kiddell-Monroe: The August 30 decision is fundamentally flawed. This is the root of the problem.

Senator Massicotte: What is so wrong with it?

Ms. Kiddell-Monroe: The problems lie with the flaws that I outlined. It requires many hurdles that we have to go through — Mr. Elliott can go into more detail on this. It requires the prior negotiation before the compulsory licence is granted; it requires the anti-diversion measures that kill incentives for generic production; it requires the notification of the intention to use the August 30 decision.

Senator Massicotte: Which this bill tries to correct; but if it corrects it, will it not be offending those permanent decisions?

Ms. Kiddell-Monroe: No, because it was notwithstanding the use of other flexibilities in the TRIPS Agreement.

August 30 decision was attempting to give a solution. It said that this is the way that they thought it could be done. However, it does not stop countries using other flexibilities that are in the TRIPS Agreement to do the same thing.

You mentioned India, and if the drugs are coming from other countries, why we need to worry about them coming from Canada. The window of possibility is closing for Indian companies to deliver the generic drugs, and they have been the main providers of generic drugs to developing countries.

When the TRIPS Agreement was implemented, India became TRIPS-compliant in 2005, and the drugs it has been able to keep producing generically are ones that were prior to 2005. Any new drugs — any of the second-line treatments that I was mentioning, which are now so expensive — are post-2005. Generic manufacturers cannot simply produce them. Now, many issues exist around patent opposition in India; but that window is closing fast.

Senator Massicotte: Are the poor countries screaming or yelling? Why are they not making an application? It is not very costly to make an application. Is the Bill & Melinda Gates Foundation yelling loudly? Give me information.

Ms. Kiddell-Monroe: A few things are happening. Developing countries are yelling loudly about this problem. At the moment, they still find they can get the first-line treatments they need for AIDS, for example. However, as they start to move over to the second line, they face major issues about getting them. They are not able to find the drugs they need. That voice will become louder.

Senator Massicotte: They are getting adequate drugs on the first line, did you say?

Ms. Kiddell-Monroe: Some of the countries that are just using the first-line treatments, which are the ones that are still in their health protocol. They can get many of those.

Senator Massicotte: Where are they getting them from?

Ms. Kiddell-Monroe: They are getting them mainly from India.

Senator Massicotte: Therefore, drugs for first-line treatments are not an issue. Is it not a world problem?

Ms. Kiddell-Monroe: It was in the past, but it has been hugely reduced by the use of compulsory licensing, domestically, by countries such as Thailand.

Senator Massicotte: Therefore, they did find a solution for that problem.

Ms. Kiddell-Monroe: The countries that had a drug-production capacity, such as Thailand or Brazil, managed. Brazil has done an incredible thing, being able to grant its own compulsory licensing to be able to get first-line drugs and is now able to treat their own population. They have dramatically reduced the AIDS rates.

Senator Massicotte: You are doing a pretty good job of mixing me up, but I will try to clarify. I do not care whether they come from Canada or from somewhere else. We care about the poor and those who are suffering. It looks as though the problem of access to first-line drugs was resolved. It never reaches perfection. However, it appears that we have largely resolved the issue.

The issue is now the second-line drugs, which are expensive and are not getting through to the poor. However, our existing legislation was to resolve this, but it has not. That is where the problem lies, is that correct?

Ms. Kiddell-Monroe: No.

Senator Massicotte: No? Okay.

Also, when you said that the first line has been largely satisfied, you made reference to Thailand: They were being penalized by the drug companies of the imported generic products. Therefore, some leverage or blackmail — call it what you wish — is occurring to discourage those countries from doing so. However, if accessing drugs for first-line treatments is working and many countries are receiving those drugs, where does that leverage or blackmail come in? Why is it not affecting the first-line drugs?

Ms. Morrison: First and foremost, we have not solved the issue of first-line treatments. If you look at our pamphlet, one of the things we are looking for is a fixed- dose combination, a pediatric formulation of AZT-3TC-Nevirapine for children; a practical, affordable, dispersible tablet made for children.

As Ms. Kiddell-Monroe mentioned, 50 per cent of children are dead by the age of 2 and 80 per cent by the age of 5 when they do not have access to medicines. Children in developing countries are being treated on old medicines and syrups. They are not sustainable.

Senator Massicotte: Is that second-line or first-line drugs?

Ms. Morrison: That is first-line drugs.

The brand name drug companies are shipping syrups to developing countries. We are looking for a practical, affordable kid-friendly pill that a child can take.

I was the legal adviser for MSF's Access to Essential Medicines Campaign during the test case. At that time with the Apotex drug, our doctors in the field picked AZT-3TC-Nevirapine adult formulation because we could not get a good source of the product to our projects. Apotex agreed to make the product. It is interesting to note that there were Indian generic manufacturers making the same product, but none of these products were WHO pre-qualified. Countries whose drug budgets are funded by the global fund must use WHO pre-qualified drugs; they must use global- fund money to purchase those products.

It is also interesting to note that, during the Apotex process of getting the drug through Health Canada, it happened at the same time that three Indian generic drug companies making those fixed-dose combination — AZT-3TC- Nevirapine — submitted their dossiers to WHO for pre-qualification. By the time the Canadian drug went through, we had four generic good-quality, affordable products from good sources.

The result was the reduction of the cost of the drug. We were looking at about 34.5 cents per pill, per patient. By the time the tendering process went through with Rwanda, the drug was shipped out at 19.5 cents per patient.

Senator Massicotte: They were not interested in doing it again?

Mr. Elliott: We met with Apotex, and we have asked them for this public commitment to make the child-friendly version of this drug. They have made it. We discussed with them at length what the process involves of actually getting this compulsory license. It is not that they do not want to supply the product. It is that having to go through this entire negotiation and application process for every single country and every drug order is far too complex and cumbersome. We met with a number of developing countries, including the Ghanaian delegation that came to Canada. When we go through what would be involved for them to get the product from a generic manufacturer in Canada, they say that it will not work.

For the moment, many developing countries — as you have heard — are relying on generic drugs coming from India. Those tend to be the first-line AIDS treatments. That window is closing. As new treatments come along, it will not be as easy to get generic versions of those from India. That is all the more reason why the Canadian legislation should be made to work.

Most people with HIV, for example, are still on first-line treatment in the developing world. We have only started to scale up access to treatment in the last few years. The immediate need for most people for AIDS medicines at an affordable price is being met, at the moment, from Indian generic manufacturers. The bulk of the medicines that MSF uses, for example, to treat patients with first-line AIDS treatments come from Indian generic manufacturers because they were grandfathered when the patent laws changed in India.

As more and more people need those second-line treatments, where will they get them from? If the Indian regime will soon be as complicated as the Canadian regime — and it has not yet been tested — then we have a problem, because the flow from the tap will slow to a trickle.

The Chair: This is a complex subject. I am sure even our witnesses would agree with that. I would like to sort something out. Please tell me if I am totally wrong. I realize I am over-generalizing, but CAMR was set up as a reflection or a consequence of the August 30 decision in endeavouring to respect whatever the elements of that decision were.

I hear you are saying, ``It did not work. We need to get a new regime, other than CAMR in Canada, and Bill S-232 — in Mr. Elliott's view — does not contravene WTO regulations, so let us go.'' If that analysis is right, the only outstanding argument is if it is WTO-compliant or not. Given the number of lawyers we can get here, we will get the same number of different opinions.

Mr. Elliott: That is what we do.

Let me clarify something. We — and MSF — do not think that the August 30, 2003, decision that was negotiated at the WTO is what it should be. It is flawed. However, Canada's implementation of that decision is even more flawed. We can address the key flaws in the Canadian legislation and actually circumvent some of what is in the August 30, 2003, decision in a way that still complies with it.

That is why I was at some pains to say to you earlier that we do not have to, for example, under the August 30 decision, require that an individual country be named before you can apply for a compulsory licence. We can switch the process around, which makes more sense, and that does not conflict with the August 30 decision.

We still think the August 30 decision is problematic, but let us at least take as much advantage of the flexibility it offers us to get the regime as good as we can get it.

The Chair: Is that not a halfway house between Bill S-232 and doing nothing? I hear you saying that there are some things we did not take advantage of when we drafted our CAMR legislation. We should have. You are saying that we should do that. That does not go as far as Bill S-232, does it?

Mr. Elliott: I am saying Bill S-232 can be done without violating the August 30 decision. The August 30 decision is still a problem, and we entirely support the idea that we should be revisiting that at the global level. For now, it is what has been agreed at the WTO. Within the parameters of that, let us implement it in a better and more flexible way than we have done to date, and we can get some drugs flowing.

The Chair: Thank you. I understand your evidence now.

Senator Greene: The questions that were just on the table from the chair get to heart of where I want to go.

First, I agree with Senator Massicotte that everyone around the table — and, in fact, I would suggest 30 million Canadians — is on your side. Although, I am not suggesting that you have all those people send in those cards.

Currently, we have legislation consistent with the WTO. We have had two shipments under that legislation. No litigation has followed the shipments because our legislation is consistent with the WTO.

What you are proposing may or may not be consistent with the WTO. You say that it is; other lawyers say that it is not. The fact is that there is a dispute about it means that if we were to make changes or pass legislation to change what we are doing, it would leave open the possibility of a dispute about whether we were consistent with the WTO. It would open a can of worms. Patent holders would have a mechanism to challenge, and then you would have litigation, and the whole thing would explode.

I ask you to comment on that.

Mr. Elliott: That was why I was at some pains to point out, for example, that the European Union, in its regulation, has adopted a regulation that is EU-wide that does not limit a compulsory licence to authorizing supply to only one country. No one has litigated or filed a complaint at the WTO over the EU regulation.

The Chair: However, no one has delivered yet.

Mr. Elliott: No one has delivered yet, but if the law on the books in the EU exists, anyone can bring a complaint to the WTO about it. Maybe they would be more inclined to do it if medicines are actually going out the door because they do not like compulsory licensing. The point is that the European Union has not included this limitation on a compulsory licence. No one has filed a complaint at the WTO. No one has even suggested that the EU regulation is somehow inconsistent with the EU's obligations or the EC's obligations under WTO.

India has adopted a provision on compulsory licensing for export that is also drawn from the August 30, 2003 decision. It is much simpler than the Canadian legislation. In some respects, it has its own flaws, which I think is partly why it has not yet been used. However, it shows that you do not need to have something as cumbersome as the Canadian legislation. No one has suggested that the Indian legislation is non-compliant with the WTO.

We have flexibility here. We have other examples that show countries can implement August 30 decision in different ways. We do not have to settle for some of the limitations currently in the Canadian legislation.

Senator Greene: I am a little confused by that. Canada is the only country — at least in my understanding — that has made a shipment under these new rules, not India or anyone else. Is that not correct?

Mr. Elliott: That is correct. Part of the reason for that, as I was saying before, is that many of the people living with HIV in the developing world who are receiving medicines are getting them from the first-generation generics being made in developing countries, such as India, where no patents on pharmaceutical products existed until 2005.

Therefore, there was not a barrier to overcome on the Indian end to supply those countries. That will change. We will certainly see attempts to use the Indian legislation in the years to come because AIDS and other drugs will now be under patent in India. You will need to overcome that hurdle if you want to export those drugs. We will see how the Indian legislation works at that point. I think it is very much an open question.

No one has suggested that other regimes that do not have some of the Canadian limitations are contravening WTO obligations.

Senator Greene: I can only speak for myself, but I want our law to be completely consistent with the WTO, whether it is the one we have now or the one with which we end up. I want to have everyone around the table and elsewhere secure in the fact that it is consistent so that the chance of litigation would be minimized.

Your proposal, it seems to me, puts that in doubt. Why do you not try to lobby Foreign Affairs and International Trade Canada, Industry Canada and the relevant departments in other countries to get the WTO to change its position to fix flaws that you say are in that particular ruling to enable Canada to change its laws to make it consistent with the WTO ruling?

Mr. Elliott: Yes, changes should be made at the WTO level. That is clear. Do you know what it takes to get something negotiated between 150-plus members of the WTO on something as contentious as patent issues?

If we are to wait for years for that to happen, millions of people will die. We could help prevent the deaths if we use the flexibility available to us already under WTO rules to get the Canadian legislation right. I do not think it is an either-or question, but one option is much more in the grasp of Parliament in the short term. The other is a much longer-term effort.

Ms. Morrison: Prior to the Doha Declaration on the TRIPS Agreement and Public Health in November 2001, member state countries were disputing and arguing between themselves on whether or not countries could issue a compulsory licence. That is why the Doha Declaration was historic. It made clear that countries have the right to determine when and how they issue a compulsory licence to meet their needs for public health.

Senator Raine: Could you explain the difference between a compulsory licence and a voluntary licence?

Mr. Elliott: A voluntary licence is a licence issued from the company that holds the patent on a drug to a generic manufacturer, voluntarily. They negotiate the terms of the licence. It is an agreement, for example, that I authorized to produce a generic version of your patented drug, and in exchange, I will pay you X royalty or subject to such-and-such conditions. It is voluntarily negotiated between them.

Under the current legislation in Canada, you need to go through that process every single time for every drug order for each individual country. If that does not succeed eventually, you can apply for a compulsory licence from the Commissioner of Patents. The commissioner is given authority under the legislation to issue a licence without the consent of the patent holder to the generic manufacturer. It comes with conditions attached, including obviously, the condition that royalties be paid to the patent holder in exchange for the permission to use the patented product.

A formula in the current legislation, which is a good feature of the legislation preserved by Bill S-232, says that the royalty you must pay to the brand name company that holds the patent is based on how poor or how underdeveloped the recipient country is according to the UN's human development index. The higher you are on that scale, the higher the royalty you have to pay on any contracts to that developing country. The lower the level of development, the lower the percentage of royalty you must pay on any contracts.

That is the difference between a compulsory licence and a voluntary licence and how the current system works.

Senator Ringuette: I must say that you made an excellent presentation.

At our previous meeting, we received a presentation from Industry Canada about the legislation. It says how this bill collapses Schedules 2 and 4. It significantly broadens the scope of eligible products for export. It significantly reduces information in the generic manufacturer's application to the commissioner. It eliminates special marking, colouring, shaping, et cetera.

They mentioned that they have received legal opinion that this bill does not comply with the WTO.

The Chair: Do you remember Senator Oliver clarified that at the end and the witness finally said: No, there is no formal legal opinion. That was my recollection. Is that the recollection of my colleagues?

Senator Ringuette: Industry Canada does not have a formal opinion.

The Chair: They seem to have indications, but no formal opinion.

Senator Ringuette: That is similar to the Weather Network.

Do you have a copy of this document from Industry Canada? I will make sure that you receive a copy before you leave.

I would like to clarify something. The current CAMR went through a review process. They indicate that there was a white paper, a consultation paper: input from the House of Commons Standing Committee on Industry, Science and Technology and from developing countries. From that statement from Industry Canada, I want to know whether you were consulted during the review period. Did you appear before the House of Commons committee to make your comments known on how the legislation was flawed, and so on? Do you know which developing countries provided input to that review?

In the third paragraph of their presentation, they say that: ``In December 2007, the Minister of Industry tabled a report on the results of the statutory review in Parliament, concluding that changes to CAMR were not warranted at that juncture. This conclusion still applies today.'' That was presented to us.

I appreciate all the effort, energy and devotion that you are giving to this issue and to the people at the end of this issue, who, unfortunately, cannot come before us to talk about their individual situations. However, were you consulted, and, if so, in what manner?

Mr. Elliott: Yes, we were consulted. We made a submission to the government's review process, as did a much broader coalition of organizations, for example, church groups, student groups, labour groups, humanitarian organizations, development groups, and so on. You will find that submission in the additional material that I provided to Ms. Gravel. That will be circulated to you later.

We appeared before the House of Commons standing committee in April of 2007 and made submissions at that time. In the copy you have before you today, I make reference to it in the footnotes. In this submission, I focus on the legal opinion about WTO compliance, but many other issues were raised in our earlier brief, and I would be happy to supply you with a copy of that.

As for the developing countries that were consulted, I do not know whether Industry Canada or other government officials made any individual phone calls to other developing countries and their representatives. They may be referring to a meeting that we co-organized here in Ottawa in April 2007. It was our initiative that brought together international trade and intellectual property experts, including a lawyer from the WTO. It brought together representatives of about half a dozen developing countries — people who work specifically in the area of purchasing pharmaceutical products and distributing them in the developing countries, including Kenya, South Africa, Costa Rica and Thailand. We had representatives from the various government departments in Canada that are involved. We had a number of different non-governmental organizations that work in the field, including organizations such as MSF and others. The full report of that is also mentioned in one of our footnotes. Again, I would be happy to provide you with the full report.

One of the purposes of that meeting was to discuss what the problems are with the current Canadian legislation and whether some of these solutions that are proposed are striking the right target. I will not say that it was a consensus because getting over 60 people together in a room from different perspectives is unlikely to yield a consensus. However, the strong feeling of the majority in the room, including the experts I mentioned, was that the proposed reforms to simplify CAMR are hitting the mark. They are addressing some of the concerns with the legislation, and they are well- founded. No one, other than Government of Canada representatives, took issue with the WTO compliance of the proposed reforms, including the other international trade and intellectual property lawyers who were in the room.

At the beginning of your remarks, you mentioned some questions about the objections that you heard from the government witnesses about expanding the scope of the products, the change to the schedule of countries, and also the question of removing special markings and distinguishing features. Let me address each of those.

First, on the question of the products, as you know, the current legislation includes Schedule 1, a list of pharmaceutical products for which an application can be made for a compulsory licence to export. In theory, that list is open-ended already. In order to add one drug to that list — and, I know because we were involved in trying to get the drug that Apotex eventually exported to Rwanda on the list — you need to get approval from two ministers and then a cabinet decision. The list itself was never required and is not required under WTO law. In fact, the August 30, 2003 agreement from the WTO is much broader than what the Canadian legislation covers. It specifically says that that mechanism applies to any pharmaceutical product, end of story. Canada chose to introduce a limitative list of products, unnecessarily so, and we have seen the consequences of that. Bill S-232 would actually expand it to what the WTO members had originally agreed, which was any pharmaceutical product. There can be no question of WTO compliance with that. It is clear on its face.

The second question was about the country schedules. At the moment, the current Canadian legislation discriminates between developing countries that belong to the WTO and developing countries that do not. Those who do not belong to the WTO face additional hurdles under the Canadian legislation to become eligible to import Canadian-made generics. I find that particularly troubling because, if you are dying of AIDS or tuberculosis or malaria or cancer, or what have you, then your access to a low-cost medicine will be determined by whether or not your country belongs to WTO. It is indefensible. Bill S-232 would get rid of that indefensible double standard. That is why only one schedule of countries would be attached to the Patent Act as a result of Bill S-232, rather than these different categories.

Finally, on the question of the distinguishing features of the generic product, it has been said that the legislation gets rid of the requirement that the generic drug produced for export be distinguished in some way from the brand name product sold in Canada. That is not correct. Bill S-232 preserves the requirement that there be distinguishing features. I can steer you to the specific sections in the act. Maybe I will give you some notes that go along with our submission.

If you look at the annex to the brief that we have given you, the proposed new section 21.051 of the bill says that the generic manufacturer that holds the compulsory licence shall ensure that the products manufactured under the licence ``are labelled in accordance with the prescribed requirements.'' Those prescribed requirements are to be found already in the regulations under the Food and Drugs Act. It also includes various other measures about having to disclose the contracts that are negotiated with the developing countries to supply them the product, what quantity is being sent to them and at what price. However, all of this happens after the generic manufacturer already has the compulsory licence in hand and has been able to negotiate those contracts with multiple countries. Before any drugs can leave Canada, that information must be shared with the brand name companies that hold the patents; it must be posted on a website. All of those features remain under Bill S-232. When we hear those objections to the bill, they are not well-founded.

Senator Ringuette: Basically, you put forward comments and flaws about the original bill in 2007, over two years ago, but nothing was done. We are already two years behind what your group has been saying must be done.

Mr. Elliott: Two years of costs in terms of lives lost.

Senator Frum: Thank you very much for the presentation. I want to ask a question that is similar in spirit to Senator Massicotte's question.

While everyone wants to see this problem fixed, is this the best approach? Mr. Elliott, you made the point that there is no a line-up of other generic manufacturers behind Apotex wanting to do this. I would like clarification on the tendering process. It is my understanding that the shipment that went out by Apotex was done at cost. Apotex did not profit in doing this. If there a tendering process, we are competing with India. Perhaps the generic manufacturers are not interested in this, regardless of the amendments to CAMR, because for the Canadians to be up against competing Indian companies, there is no incentive for them to be part of this program.

Ms. Morrison: Senator Massicotte's question was why Rwanda came forward and made notification in writing to the TRIPS council. I was fortunate enough to be in Kigali, Rwanda, two days after the notification took place. I asked the doctor who did the notification the same question. Why did Rwanda come forward and notify that they will purchase a Canadian generic drug? Her answer was simple: She said that she is a doctor, and someone told her that there is another way to get medicines to her people so that she can treat her patients, so she sent a letter.

She had no idea about the complexities of the WTO or the Doha Declaration. To her, it was simply another way to get the drugs into the bodies of her patients, and that was the only thing she cared about. It can be as simple as that. That is why simplifying the process makes it easier for procurers. In developing countries it is not lawyers who procure medicines but rather the medics.

Senator Frum: My question was about tendering. Did this doctor go through a tendering process?

Ms. Morrison: People ask why Rwanda got involved in this process. That is how easy and simple it was. As I mentioned earlier, when Apotex decided to use CAMR and made the fixed-dose combination and get the drug WHO pre-qualified, we also had Indian generics come on the market that were WHO pre-qualified at the same time. When the tendering process took place, four good-quality drugs were available for purchase. Tendering is the standard procedure for procuring medicines in developing countries. They all go through the process; it cannot be sidestepped. You cannot ask them to sidestep it and buy directly from Canada. Canada and Apotex had to compete, along with any other country that was willing to fill the order.

During the process Canada, or Apotex, was able to offer the drug at 19.5 cents per pill. The William J. Clinton Foundation became involved in the process and sourced the active pharmaceutical ingredient at a lower rate, which allowed Apotex to produce the product at 19.5 cents per pill.

Senator Frum: Is the expectation that it is humanitarian and philanthropic?

Ms. Morrison: When we met with Apotex and asked why they were getting involved in this process; they made it clear that it was on humanitarian grounds. They believe, as we do, that patients should have access to medicines.

Mr. Elliott: The original commitment made by Apotex was that MSF asked them to do it because patients needed the medicines. Obviously, that is not sustainable over time. The purpose of this type of proposed legislation is to make market forces work by allowing competition to drive down prices. That has happened globally when there is competition from generic manufacturers with brand name companies. If you expect a generic industry, wherever it is in the world, to engage consistently in the process, obviously an appeal to their humanitarian concern will only get you so far.

They are for-profit enterprises just the same as the brand name companies. There has to be enough of a commercial incentive for them to want to engage in the system. Part of that means making it simpler and less costly for them to get through the system by, for example, eliminating the repetitive year-long negotiations without identifying a country. Now that Apotex has done this one product, they have every incentive to try to sell it to more than one developing country because they have incurred quite an effort to get to this stage. Obviously, they would like to supply it to more clients. Who would not want that? They have already made the commitment to do the pediatric formulation of this drug because we have requested it of them as a humanitarian gesture.

However, if they could get licences to supply multiple countries at once, that would achieve economies of scale, and they would be able to get their ingredients at a lower cost because they would buy them in bulk. Their per-unit cost of a production run of 5 million tablets would be lower than a production run of 1 million tablets. The more efficient and cost-effective we can make the system, the easier it will be for them to see a commercial incentive. We are not talking about rich countries, and, therefore, we are talking about relatively small profit margins. Likely they will engage in it not only because of the humanitarian concern but also because they will see the potential for a modest profit and will pay the royalties to the brand name companies as a result.

This should be seen as a win-win situation if we can get it right. It is a win for patients in the developing world because they would get cheaper medicines; for generic manufacturers in Canada because they could supply those medicines; for the brand name companies because they will receive royalties from sales they would not make otherwise in those countries; and for Canada because we make it right and burnish Canada's somewhat tarnished international reputation on the matter, while not costing Canadian taxpayers one cent.

Senator Moore: Was the Apotex drug a first-line medication?

Mr. Elliott: Yes.

Senator Moore: Ms. Kiddell-Monroe, you said that yesterday you were advised by the three patent holders of the Apotex medication that they would give Apotex permission to manufacture and distribute again if they had an order. Is that correct?

Ms. Kiddell-Monroe: They would do it under the same conditions as they did before, which could mean right back to the beginning with the voluntary licence negotiations, et cetera.

Senator Moore: I understand. The second paragraph at page 3 of your brief talks about four years of legal wrangling and expenses. What was involved in terms of dollars and cents?

Ms. Kiddell-Monroe: Apotex representatives will appear before the committee tomorrow, I believe, and will be able to provide the details of their costs.

Senator Moore: Was it their expense?

Ms. Kiddell-Monroe: It was also our expense. I worked for four years on this, as did Ms. Morrison. Mr. Elliott has been working on this since well before then. The expenses of our organizations are largely funded by Canadian taxpayers. It is a huge amount of energy and work. As was noted earlier by Senator Ringuette, we often repeat the same things year after year. In 2007, it was not the first time we raised these issues; we raised them in 2004, the first time we appeared before the Senate committee. A doctor came up from Guatemala to talk about her experience and the change that happened when she was able to start treating her patients because she had affordable medicines. This is a long story, and it has been extremely expensive for NGOs.

Senator Moore: In the next paragraph, you talk about negotiations with regard to the compulsory licence application that chewed up a year. Is that correct?

Ms. Kiddell-Monroe: No. That was the voluntary licence negotiations.

Senator Moore: If the patent holder says that they will do it and the manufacturer agrees to pay an amount, how can it take a full year?

Ms. Kiddell-Monroe: That did not happen. That was a possibility right at the beginning when Apotex went to the three companies and said that they would like to produce a generic under the legislation. However, the discussions were very drawn out. No one actually said, no. Long legal letters full of different points were received by Apotex and negotiations back and forth between the lawyers for the three patent holders and Apotex took place. It dragged on and on.

Senator Moore: Did that then not morph into the compulsory application process? When did you decide that it was not working and move to the compulsory stage?

Mr. Elliott: After you cannot succeed in agreeing on the terms of a voluntary licence, then you can apply for the compulsory licence. Apotex and the three brand name companies were not able to agree on the terms of a voluntary licence. However, they could not make the application for a compulsory licence until they could say that it was a licence to supply Rwanda with this quantity of the drug. If they had got the licence before, they could be out there already offering this drug to many countries and paying royalties.

Senator Moore: Ms. Kiddell-Monroe, you mentioned in your brief that it is not an empty fear, that you have seen how the U.S., the EU and Abbott Laboratories have retaliated against Thailand for using legitimate compulsory licensing to meet the health needs of its own people. What was that retaliation?

Ms. Kiddell-Monroe: Abbott Laboratories threatened to remove its drugs from the market, essential life-saving drugs. The U.S. put Thailand on its 301 list, which is the less-favoured countries, or the most-favoured countries, for example, that they feel they are in violation of the intellectual property rules and therefore should be put in a warning.

Senator Moore: Is Abbott Laboratories an American company? Could we get something in writing on that? That is awful.

Ms. Kiddell-Monroe: Yes. I can give you more information on that; there is plenty.

Actually, I presented at the WTO very recently about Canada's Access to Medicines Regime. A representative from Thailand was there and spoke to exactly all the real issues that the Thai government faced as a result of using legitimate compulsory licensing.

The Chair: I apologize, Senator Moore and witnesses, but people are waiting for the room. If you have additional information, could you send it in writing to us? That applies to any of the witnesses.

(The committee adjourned.)