Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 5 - Evidence - October 26, 2011


OTTAWA, Wednesday, October 26, 2011

The Standing Senate Committee on Social Affairs, Science and Technology met this day at 4:16 p.m. to examine the progress in implementing the 2004 10-Year Plan to Strengthen Health Care.

Senator Kelvin Kenneth Ogilvie (Chair) in the chair.

[English]

The Chair: Honourable senators, we have a quorum, and I call the meeting to order.

[Translation]

I wish to welcome you to the Standing Senate Committee on Social Affairs, Science and Technology.

[English]

My name is Kelvin Ogilvie. I am a senator from Nova Scotia. I will ask my colleagues to introduce themselves, starting with the deputy chair.

Senator Eggleton: Art Eggleton, senator from Toronto and deputy chair of the committee.

Senator Merchant: Pana Merchant from Saskatchewan.

Senator Martin: Yonah Martin from Vancouver, B.C. Welcome.

Senator Braley: David Braley from Hamilton, Ontario.

[Translation]

Senator Champagne: Andrée Champagne from Quebec.

Senator Demers: Jacques Demers from Quebec.

Senator Seidman: Judith Seidman, from Montreal, Quebec.

[English]

The Chair: Thank you, colleagues. Senator Cordy from Nova Scotia is here as well.

To our witnesses, I want to welcome you to the committee on behalf of my colleagues. I very much appreciate your joining us today for meeting number six in our study of the health accord. This meeting is entitled, National Pharmaceuticals Strategy.

We have four witness groups today. I will introduce you as I invite you to speak. I will start with the Canadian Pharmacists Association, and Jeff Poston, Executive Director.

Jeff Poston, Executive Director, Canadian Pharmacists Association: Thank you very much. I am certainly pleased to be appearing before the committee today to present the views of Canadian pharmacists with respect to the 2004 accord. We were directly involved in the health accord, and we are very pleased to be here to discuss the progress that has been made.

As you know, the accord was far reaching, and there were 10 different areas for action. I will focus my remarks on the National Pharmaceuticals Strategy, but I want to touch on three other areas that are particularly important and that relate to some of the issues in the National Pharmaceuticals Strategy. They are: the overall funding model, health human resources and health.

We are pleased to see the commitment, in the 2004 accord, to the 6 per cent escalator over the 10-year life. I think that has given provinces some stability and predictable funding. I notice that the Prime Minister has talked, this year, about continuing the escalator for two or more years. I think it is important that that should, perhaps, be a longer commitment to 10 years, so that we can have some stability and predictability in funding for the system. I think jurisdictions should be held accountable for spending.

Moving on to the National Pharmaceuticals Strategy, I will not comment on all the key elements. I think the Health Council of Canada's report in 2009 described progress on the National Pharmaceuticals Strategy as being somewhat spotty. I think we have seen some progress in certain areas, but I think there is a lot of work to be done and a lot of improvement needed. I will comment on strategies relating to drug purchasing and pricing. I think we have seen some activity in that area.

We have seen provinces make reforms with respect to generic pricing. There has been a discussion around pricing agreements, and particularly bulk purchasing.

Currently in Canada, we are facing the most severe and prolonged period of drug shortages that many of us can remember. We have probably had a major drug shortage issue going on for two years. There are particular concerns around how bulk purchasing strategies can be a factor that contributes to shortages. Our advice to governments is to pursue developments in that area carefully. There is concern whether the economics of production of generic drugs has been one of the factors that contributed to the loss of low-volume, low-value drugs from the marketplace. That has contributed to shortages, which has been a major issue.

With respect to catastrophe pharmaceutical coverage, we still see many Canadians that do not have adequate access or coverage. We have done some work on catastrophic coverage ourselves. I think we see the variable income threshold model as the approach that needs to be developed. That is an area where we need to look at catastrophic coverage, but probably access to medication in general. Even when people have coverage, is it affordable and adequate?

With respect to evaluation of real world drug safety and effectiveness, we were pleased to see funding to create the Drug Safety and Effectiveness Network, the DSEN, but believe there is much work to be done. We have called for greater investment in the area of drug monitoring and safety — such as a national medication management centre to coordinate a lot of the work we have in these areas — in order to improve our knowledge around drug safety and effectiveness.

Something that is closely related is influencing prescribing behaviour. One of the big changes that has taken place in recent years is legislation that passed and has expanded the scope of practice of pharmacists. Pharmacists in most provinces have some form of prescriptive authority. That has helped to provide a basis for collaborative practice with physicians and other prescribers. We have been involved in the development. I think we need to look at how we can build on collaborative to practices in order to improve the outcomes from drug therapy on patients.

There was a commitment to better predict health human resource needs in the system. Again, this is an area we think there needs to be further work, particularly in the areas of developing team-based care and collaborative practice models. We support some of the recommendations from the House of Commons standing committee — with respect to inter-professional collaboration and the idea of a health human resources observatory — to help gather data and better predict health human resource requirements.

Finally with respect to e-health, our comments go directly to the need to support drug safety and effectiveness. We believe that investment in electronic health records, investment in e-prescribing, and drug information systems have the potential to contribute to improving effectiveness, safety and economics of drug prescribing and drug items. We would support further investment and support to develop our health IT strategy.

I would be pleased to answer any questions and I thank you for the opportunity to present.

Abby Hoffman, Assistant Deputy Minister, Health Canada: Thank you and good afternoon. It is a pleasure to join you again to talk about the status about the pharmaceuticals component under the 2004 health accord.

[Translation]

The National Pharmaceuticals Strategy, or NPS, laid out an ambitious nine-element agenda to better manage prescription drugs in the health care system. I would like to start with a little background to the NPS.

[English]

I should mention, Mr. Chair, that I was the co-chair on the federal side of the officials' level work that was conducted under the National Pharmaceuticals Strategy, the NPS. In the lead up to the first ministers' discussion on the 2004 health accord, the premiers at the Council of the Federation meeting in July 2004 concluded that, "There should be a significant shift in the delivery of pharmacare programs." They called on the federal government to assume full responsibility for these programs across the country. That was from their communiqué.

The federal government did not respond directly to this proposal. The general view at the time was that significant improvements in the management of pharmaceutical — in terms of both appropriate use and lower costs — were required before the possibility of extending drug coverage could be considered.

At the 2004 first ministers meeting, several premiers and the Prime Minister described the complementary responsibilities of the two levels of government with respect to pharmaceuticals. I will not dwell on those, other than to say that the federal government has the regulatory responsibility for determining which drugs will have access to the Canadian marketplace. We have responsibilities for oversight on safety. Through the Patented Medicine Prices Review Board, Canadians are protected from excessive prices.

On the provincial and territorial side, responsibilities include decisions on the extent, nature, and terms of publicly financed drug coverage and the authority for regulation of the pharmacy profession among many other responsibilities.

Having aligned those complementary responsibilities, first ministers concluded that they were natural allies in a campaign to better manage access to and costs of drugs in the health care system.

At the first ministers meeting the federal government elaborated a proposed strategy — including many which became the elements under the NPS — based on the premise that an integrated comprehensive proven was needed to achieve desired changes.

First ministers ultimately agreed that such a comprehensive strategy would constitute a worthwhile collaborative agenda.

The full NPS was ambitious. However, if pursued aggressively it held out the promise of gains and efficiency through improved prescribing, lower prices and more appropriate use. They were regarded at the time as essential pre- conditions for approved and affordable access.

It is fair to say that collaborative work on the nine elements was influenced by several factors. Not too long after the accord was agreed — and in conversations among officials and health ministers — provinces advocated for a more focused NPS agenda for the short to medium term. This was to increase the possibility of getting concrete results more rapidly.

In January 2005, it was agreed to narrow the initial focus and to focus specifically on five priority areas, which are: costing models for catastrophic drug coverage, so-called expensive drugs for rare diseases, a common national formulary, real world drug safety and effectiveness, and pricing and purchasing strategies. With the exception of expensive drugs for rare diseases, all of these areas were elements in the NPS.

There was a lot of concern at the time about the so-called expensive drugs for rare diseases. These pose particular challenges for drug plan managers across the country. They are faced with the difficult task of trying to evaluate which, if any, of these drugs should be covered and reimbursement provided. Apart from their high cost — as they are for rarely occurring diseases — the evidence about the drugs' efficacy and real world benefits is often unknown or limited.

With this somewhat narrowed agenda, Health Canada officials continue to underscore our belief — although we worked on the five elements with the provinces and territories — that ultimately all the elements of the NPS required attention.

Let me speak to these priority areas.

The first phase of the NPS was marked by collaboration on these five elements. One needs to think about progress under the NPS in two respects. There was the work we did together, which largely informed the ultimate report of the ministerial task force that was issued as called for under the NPS in 2006. That work in turn influenced a number of very positive changes that have occurred in the area of pharmaceuticals since the publication of the ministers' progress report in 2006.

To cite some examples here, in catastrophic drug coverage, under phase one, the NPS partners developed fixed and variable threshold definitions of catastrophic exposure to drug expenses and costed various other drug coverage options based on different definitions. In 2006, none of the four Atlantic provinces had a formal catastrophic drug coverage program. New Brunswick and Prince Edward Island remain as the only two provinces with no such program.

Turning to pricing and purchasing strategies in terms of generic drugs, program changes by Ontario and British Columbia outlined in the Health Council of Canada's 2011 progress report are saving or are expected to save hundreds of millions of dollars annually. In Ontario alone, program changes are saving the province an estimated 20 per cent on generic drugs, and further reforms are expected to produce quite significant annual savings in the hundreds of millions of dollars. Similar generic purchasing and pricing reforms have been implemented or are emerging in Alberta, Quebec, Saskatchewan and Nova Scotia.

These reforms arguably have been informed by two pieces of federal action in support of NPS work. One is the pricing studies on non-patented drug price trends conducted by the Patented Medicine Prices Review Board. In addition, the federal Competition Bureau undertook an important two-part study examining the potential causes of the relatively high prices of generic drugs along with some ideas of how these markets might be made to work better with a view to reducing the cost and prices of generic drugs.

It was on a somewhat related front that in August 2010 the provinces and territories announced plans for a pan- Canadian purchasing alliance for common drugs, medical supplies and equipment. This promises further potential savings through harnessing of collective purchasing power.

Real world drug safety and effectiveness was one of the original five components. I will not speak to that in any detail at all because that is the subject of Dr. Peterson's remarks, which will follow shortly.

Let me move to another element: a common national formulary. This work focused on the expansion of the common drug review as a key step toward improving the efficiency and consistency of decision making on reimbursement for drugs across the country. It reflects a recommendation of the NPS in the NPS progress report.

In late 2007, one of those recommendations was specifically followed up. This was the addition of reviews for new indications for existing drugs as part of the mandate of the common drug review.

I want to point out, however, that the common drug review managed by the Canadian Agency for Drugs and Technologies in Health, a pan-Canadian initiative funded on a 70-30 basis by the provinces and territories and the federal government, makes recommendations on whether or not a drug should be listed on formularies of specific jurisdictions.

While I am happy to say there is a great deal of consistency in formularies as a result of the recommendations that are made by the common drug review, we do not have absolute uniformity, as each jurisdiction ultimately makes its own decision on whether or not to accept the recommendation of the common drug review.

Turning to expensive drugs for rare diseases, as reported in the 2006 NPS progress report, collaborative work in this area focused on understanding key EDRD issues. There were a number of background analytical papers and stakeholder working sessions produced, and federal, provincial and manufacturer collaboration on a time limited, post-market study for a particular disease, Fabry's disease, an inherited metabolic enzyme disorder, was pursued in the aftermath of the NPS report in 2006. As a result, there was a time-limited funding agreement through which Health Canada provided just under $35 million for a three-year study to look at therapies used to treat Fabry's disease. This is an example of a specific recommendation in the report of the ministerial task force on the NPS that was subsequently defined, financed and implemented.

If I may come to my conclusion, I want to make a last observation. While the bulk of the collaborative intergovernmental work occurred in the period leading up to the 2006 report, which seems like quite a long time ago and it is indeed the first two years after the accord of 2004 was signed, many of the resulting policy and program improvements have occurred in the years since then. These have occurred at the level of individual jurisdictions as well as at the federal level. The Drug Safety and Effectiveness Network is one such example at the federal level, but there were many initiatives at the provincial level and some joint initiatives such as further expansion of the common drug review.

While one might say that the NPS collaboration did not continue at the intensity some might have expected following the release of the 2006 report, there has nonetheless been significant progress in the sector supported by the substantial groundwork undertaken in the first phase of the NPS, and that progress continues today.

That concludes my formal remarks. I will be happy to answer questions.

The Chair: Thank you very much.

[Translation]

Dr. Robert Peterson, Executive Director, Drug Safety and Effectiveness Network: Good afternoon, Mr. Chair and thank you for having invited me to come and speak with you. My name is Robert Peterson and I am the Executive Director of the Drug Safety Effectiveness Network, or DSEN for short.

DSEN is a research and knowledge application network that was created in partnership by the Canadian Institutes of Health Research and Health Canada.

[English]

The RIEM, or DSEN, the English acronym for the Drug Safety and Effectiveness Network, is located within the Canadian Institutes of Health Research and has a dual mandate, first to provide authoritative, research-based answers to questions arising from health care decision makers regarding medicines approved for marketing in Canada, and second, to build capacity in Canada through training programs and methods development to strengthen Canada's competitive position in pharmaceutical research.

DSEN is focused on medicines that have been approved for the Canadian market. As you know, Health Canada licenses drugs based on the results of animal and clinical trial evidence submitted by drug manufacturers. The fact is this evidence is generated within a limited and highly controlled experimental environment. The licensing requirements, vested in legislation and federal regulations, address efficacy, safety and manufacturing quality. Drug manufacturers therefore must demonstrate evidence for these factors in their clinical trials.

However, it has been recognized for some time that the ability of such highly controlled clinical trials to predict the true benefit-to-harm profile of the medicine may be very limited, and that is because clinical trial evidence does not allow anyone to really see across the entire patient horizon — that is to say, to see the benefit or harm that may be observed in the total population of patients who will subsequently be exposed to the medicine outside the controlled clinical trial environment.

There have been a number of unfortunate experiences where the harm of a new medicine was not adequately predicted across the patient horizon, and the real world's use of the medicine was observed to cause greater harm than benefit.

DSEN addresses this challenge. It focuses on the real world of medicinal use in the Canadian health care system and, in particular, use in special populations that were not represented in the prior clinical trials.

There are also a number of unintended consequences of the current regulatory scheme in respect to those special populations. Allow me to digress from my comments on DSEN to mention one these. This is speaking personally as pediatrician. The Canadian regulatory scheme currently provides drug manufacturers with complete discretion as to market niche and treatment claims they wish to identify for a new drug. Useful data about that drug, in particular, its clinical use in children, is often not included in the regulatory filings in Canada, even though it is included in the United States and in European filings.

This leads to an unfortunate result where Canadian product monographs may contain false and misleading information with regard to the fact that the drug is simply not recommended for use in children when in fact there is clear evidence that it can be used successfully in other countries in the world.

Returning to DSEN, let me position its role in this regulatory context. The federal regulatory requirements for a new drug are strongly directed toward evidence that will support the initial licensing of the new medicine, as it is promoted by the manufacturer and when appropriately prescribed and used by patients.

There are two consequences of this environment that DSEN addresses. One is the real world benefit-to-harm profile in populations not included in the licensing application, and the second is the rising costs of treatment as new drugs come onto the market replacing existing ones.

Let me first explain the benefit-to-harm dilemma. There are frequently pressures for new drugs for conditions that may have unmet therapeutic needs, particularly in those conditions that a life-threatening. As a result, a number of medicines are authorized as soon as a limited benefit-to-harm profile has been demonstrated to be positive, thus meeting the regulatory threshold. Once it meets that threshold, Health Canada, under current regulations has little option but to licence it.

An outstanding question remains: How safe are these drugs across wider populations than those that were studied in the clinical trials? Hence the role of DSEN in addressing these broader safety concerns.

As for the second issue, price escalation resulting from new medicines is an especially pressing challenge for provincial and territorial drug payment programs. Consequently, provincial and territorial authorities are keen to see real world evidence that compares new medicines against older and less costly alternatives.

Therefore you can see that while DSEN was conceived in partnership with Health Canada as a program to support the needs of the federal regulator, it also must perform to meet the needs of provincial decision makers. Looking forward, DSEN ultimately should make a contribution to the knowledge translation needs of both doctors and patients.

To fulfill this ambitious expectation, the DSEN has been structured as a Canada wide network of researchers. Thanks to a rigorous peer review program at CIHR, I can assure you that DSEN researchers are highly qualified in the methods required to fulfill the mandate.

Referring to figure 1, which has been distributed, this is the pie chart. We have investigators under the CIHR DSEN umbrella with distinctive competencies in the following areas: Clinical trial design and appraisal, pharmaco- epidemiology, drug safety surveillance and methods such as network meta-analysis for the purpose of direct and indirect comparisons of new drugs and existing drugs. In each instance we have built a component for training and methods development to advance Canadian capacity.

At present, we accept requests for research evidence from Health Canada and from the provinces and territories. These queries, as we call them, come at present from high-level decision makers and are directed to gaps in knowledge that they see as impeding their decision making role.

These gaps can involve real world safety experience, the comparative effectiveness of a class of medicines or evidence required for input into pharmaco-economic analyses that would support listing of a new medicine on a provincial or federal drug formulary.

We interface our researchers directly with the decision makers to refine the query, to verify timelines for producing the evidence and to identify the best method for addressing a query. Once satisfied at this stage, the queries are subjected to a multi-criteria decision analysis in order to help identify priorities for funding.

Finally, a CIHR-DSEN steering committee then sets the research agenda. This steering committee includes senior representatives from Health Canada, from three provinces in Canada, the Canadian Agency for Drugs and Technology in Health, the Canadian Institutes for Health Information, along with a patient representative and several senior clinician educators and scientists.

[Translation]

DSEN is still in its early stages, but it already funds more than 150 scientists involved in more than a dozen queries with regard to the use of drugs here in Canada, in Montreal. Canadian decision-makers should be able to access the first results of this research work between now and the end of 2011. I wish to thank you once again for having invited me to appear before you.

[English]

The Chair: Thank you very much. Now appearing as an individual is Dr. Steve Morgan, Associate Director, Center for Health Services and Policy Research, University of British Columbia.

Steve Morgan, Associate Director, Center for Health Services and Policy Research, University of British Columbia, as an individual: As someone who has studied pharmaceutical policy in Canada for nearly 20 years, it is my pleasure to share what is in fact my opinion about the National Pharmaceuticals Strategy. I have studied policies related to the strategy. I have hosted international symposiums on the National Pharmaceuticals Strategy, and most recently, in 2009, I facilitated a national consultation on priority issues in pharmaceutical policy in Canada. Drawing on those experiences, I will share with you my perspective on the NPS.

Because I have little time, I will focus my comments on why I feel the NPS was a partial failure. I say this not out of disrespect for the NPS. In fact I have been a strong champion of the concerted effort for coordination of pharmaceutical policy in Canada, but the fact is, as the Health Council of Canada pointed out in 2009, the NPS has not lived up to expectations. After diagnosing some of the problems with the 2004 NPS, I will talk about what I think might work in 2014, should there be a renewal.

Unfortunately for Canada, responsibilities for key aspects of pharmaceutical policy are divided in ways that are potentially inefficient and possibly adversarial. At the risk of oversimplifying, the federal government is responsible for deciding which products come to market, how they are promoted and whether they are protected by patents.

These decisions can have tremendous impacts on the cost of medicines and their impacts on patients and the health care system. This can be a source of tension because although the federal government is responsible for those important decisions, it does not bear the financial consequences of them — the provinces do.

I feel that that tension played itself out in the history of the NPS, as I think was well described by Ms. Hoffman today, and I will explain this as well and I am glad she went into some of the details that are relevant.

Leading up to the establishment of the NPS, major commissions of inquiry on health care in Canada had recommended that pharmaceuticals deserved more concerted policy attention — concerted in both intensity and coordination. The Romanow commission of 2002 is of notable importance in this regard. Romanow recommended better pharmaceutical policy coordination and many of us in the field applauded the 2004 NPS as a concrete policy effort to do so.

Romanow also recommended that national standards for financing drugs be established with federal cost sharing of new programs that were to cover non-seniors for catastrophic drug costs. In my view, this had two effects. The first is that it shifted emphasis toward catastrophic drug coverage as a policy goal, whereas in previous years more comprehensive options for pharmacare had been discussed.

The second, and perhaps most important to the NPS process or politics, was that it raised the prospect of there being meaningful federal cost sharing of pharmacare programs in Canada.

The 2004 health accord did include a budget line for drug coverage. For this reason, and others, I believe the NPS began with a reasonable amount of goodwill. However, I suspect that the provinces' enthusiasm for the NPS was fuelled by their hopes of a more sizeable, ongoing federal transfer.

Governments changed and as it became clear that the new federal government would not put more money on the table, I believe things began to fall apart. Soon the nine NPS priorities became five, and not long after that federal and provincial counterparts on this file would no longer be meeting regularly. That would be saying the least in regard to the politics of the NPS process.

To be clear, however, the NPS was an important attempt at cooperation, and some aspects of it have been successful. The CDR and the DSEN, for example, are notable accomplishments. I have studied the CDR and compared it against other systems around the world and I know that this has been a process that in Canada has served its purposes quite well.

There have also been other initiatives, and Ms. Hoffman raised them today, that have addressed a variety of the NPS priorities, but we would be remiss not to point out that many of these have been initiatives of individual provinces, not the result of multilateral policy development and cooperation envisioned with the original NPS.

Perhaps most importantly on the file with respect to drug financing, there has been fairly little progress. Provinces appear to be converging on income-based catastrophic drug benefit structures. However, there are significant and important disparities across catastrophic drug plans offered in Canada, and in my view there are important drawbacks to that fundamental model of drug benefits, regardless of where it is implemented.

Overall, I think the fixation and disagreement about the possibility of federal funding for pharmacare probably spoiled the progress on other NPS priorities. It is with that diagnosis that I put forward the following three options for 2014.

The first is to stay the course. We could put symbolic amounts of money on the table for some initiatives, have annual meetings to discuss policy and, in effect, let a thousand flowers bloom in the sense that provinces will go about their business, some of them being innovative with new policy approach, some of them feeling they have been left behind and many questioning whether we could not do something better.

The second option would be for the federal government to commit to major new funding in the pharmacare file. I would not go down the path that the Council of the Federation referred to in 2004, which is to create a federal pharmacare program; but it would be possible, at least, to really change the landscape of pharmacare for the federal government to put enough money on the table to have the provincial programs expand beyond where provinces would go on their own.

I know that radical option is not tenable with this government and in this fiscal climate. However, if any government were to adopt such a program, it would align the incentives that have historically been somewhat distorted by the division of responsibility for pharmaceutical regulation versus pharmaceutical funding in Canada.

The last option that I would put forward is to take pharmacare off the table when discussing renewal of the NPS — at least taking it off the table for a few years. The NPS could focus, in the short term, on areas where targeted investments can have transformational impacts. Unlike option one, this option would require that the federal government spend some real money on things like electronic records, prescription information systems and other types of platform or transformational investments to show that it is a real partner and not an adversary in pharmaceutical policy in Canada.

Also in this option, I would recommend that Canada consider holding a commission on pharmacare. It is important for governments of Canada to talk to Canadians, listen to experts, visit other countries and otherwise do the work required to develop a clear and compelling vision about what pharmacare in Canada should look like. Then, with that vision in mind, financing could be put back on the table for a possible renewal of the NPS.

Those are my rather brief comments. I look forward to answering questions that you might have.

Senator Eggleton: Welcome to all of you and thank you for your contribution. Dr. Morgan, let me pick up on your last comments. Do I understand, in the three options, you are showing some preference for the last option? Would you take it off the table? Do we not have enough people suffering in this country now from this problem of not getting the medication they need that we can afford to take this off the table?

Mr. Morgan: It is clear that there is evidence that many Canadians forego filling prescriptions they need because of the costs they bear. There is good evidence on that, for sure. Without a doubt, I am an advocate of advancing coverage for pharmaceuticals in Canada.

I am worried, however, that the model we are progressing toward — perhaps blindly or by accident — is the model of a catastrophic drug coverage program where people face high deductibles as a percentage of their household income. That model will not address access issues for day-to-day medicine needs.

It does address the financial burden of very high drug costs, but it is not necessarily the model I would recommend. It is not even necessarily the second or third model I would recommend Canada move toward.

The reason I am suggesting that we possibly take it off the table is that at least in terms of a federal-provincial agreement and cost-sharing idea, it has to be clear that Canada is not going down that path if it is not fiscally realistic. Otherwise, I think the politics of the provinces — and I respect the work they are doing — is that their eyes are on what is $10s of billions of possible cost sharing on that file rather than being on the $1 or $2 billion per year focused on other critically important initiatives like electronic health records, electronic prescribing systems and advancing the quality of use of medicine.

I am suggesting possibly taking it off the table, not because it is not critically important but because it becomes a political smokescreen.

Senator Eggleton: You mention other possible options. Let me ask you about a report that came out last year from the Canadian Centre for Policy Alternatives, entitled The Economic Case for Universal Pharmacare. They go a step further than you went. You said you thought it was a partial failure. They say Canada's pharmaceutical policies are a total failure; many Canadians do not have equitable access to medicines and a lack of coverage makes some treatments inefficient due to lack of compliance.

They came up with several scenarios, all of which suggest that a full pharmacare program, not just one for catastrophic drugs, would actually save money — not all government money, it would save private money as well and individual money in the country. They are suggesting that under different scenarios, we would be saving billions a year. Are you familiar with that report?

Mr. Morgan: I am familiar with that report and I am delighted that they cited much of my work in it. To an academic, that is a good thing.

Senator Eggleton: So you agree with it.

Mr. Morgan: I agree with it in principle. I am on the record in a number of conversations, both formal and informal, in suggesting that Canada would be best off going toward a pharmacare model not unlike what we think of as our Medicare model — all patients, all coverage — not necessarily for every drug, but a fairly comprehensive model. I know that those kinds of systems can be used to promote both efficiency — cost-control goals as articulated by that report — and equity considerations to ensure that the financial burdens are not undue for anyone, regardless of their income or health status.

I am on the record in supporting that kind of model. However, if it is politically untenable, I think it can sometimes be a distraction from doing some of the other work that we really need to be doing.

Senator Eggleton: I hear you. I would like to file this with the committee. I think it is a significant report, unless we already have it — Canadian Centre for Policy Alternatives.

Let me go over to Ms. Hoffman. The report that you gave sounds like the federal government is just sitting back and listening to the provinces. It does not sound like there is a real partnership role in what you are doing.

On the catastrophic drug plan, for example, what is the government doing in terms of a pan-Canadian approach? What is it doing in addressing the issue of sharing the cost that the provinces have asked the federal government to do?

You have cited in here how there has been some progress. It is all at the provincial level. It does not sound like the federal government is a full partner in the development of a catastrophic pharmaceutical plan.

Ms. Hoffman: The first thing I will say is let us bear in mind what the commitment was that was made in the NPS in the 2004 accord. That was to develop costing models for catastrophic drug coverage.

I think there is a bit of a misperception — I am not suggesting that you are party to that, but among some — that there was a commitment, either explicit or implied, under the NPS in the 2004 accord that the intent was to move toward some sort of cost-shared catastrophic or other national pharmacare regime. That was not the case. The responsibility and the obligation under the accord, under the NPS, was to develop those costing models. That is what was done.

As Dr. Morgan has already mentioned, there was money in the transfer arrangements under the 2003 accord to provide provinces with some money that was notionally targeted to expanded drug coverage. How provinces chose to use that money was basically their decision, but there was no agreement among first ministers. This is not part of the accord that somehow or other the federal government was obligated to provide either a targeted amount within the transfers or additional money over time to support expansion in drug coverage in provincial and territorial drug programs.

You can characterize it as sitting back. In fact, a number of the initiatives that I mentioned were actually examples of things that the federal government did during the period of the more active NPS, and then subsequently after 2006, to support reforms in the management of pharmaceuticals. However, you are asking about whether or not the federal government did something that it actually did not undertake to do.

Senator Eggleton: The whole accord talks about cooperative efforts. In fact, money was put up by the federal government, and things like wait times and buying MRI machines and stuff like this, all to show that there needed to be some standardization, some pan-Canadian efforts, an attempt, as the Canada Health Act would suggest, for people to have similar levels of service in other parts of the country; yet here it is, we have not come to a pan-Canadian approach on this.

On patent drugs, comparing in the international area, our researcher said it is about 21 per cent to 50 per cent or some figures like that more costly in Canada than it is in some other jurisdictions. What are we going to do about that? I understand from what you said, and what I have heard before, that the agency that deals with the patent drugs, the Patented Medicine Prices Review Board — Is there a case to be made for something similar to be done in terms of the generic drugs, if in fact we are paying so much more than what the international level is? Why are we paying that much more money?

Ms. Hoffman: There may well be, but I will just say that the regulation of prices of non-patented drugs lies with provincial and territorial governments. The result of the studies done by the Competition Bureau, which validated what people who work in this area know very well, is that the largest portion of the difference in generic prices between Canada and other countries lies principally with the system of rebates that are paid to pharmacists and retail pharmacy. In fact, the developments that I think most of us would regard as extremely positive that have occurred over the last couple of years that have led to a drop in a number of jurisdictions in generic prices have to do with arrangements between provincial governments and the pharmacy community to eliminate the rebates and have other ways of supporting retail pharmacy activity.

Senator Eggleton: That is in Ontario.

Ms. Hoffman: That is right. This is absolutely moving in the right direction across the country.

Senator Merchant: I will just follow up with an observation and perhaps a question.

Over the past 10 years, the average increase in drug costs to Canadians is about 9 per cent per year. Is that a sustainable rate of growth? What are other countries doing? How can we keep drug costs down? You mentioned comparison with other jurisdictions. What other countries, what other places can we look to for a model?

Mr. Morgan: I have several comments in regard to that, in part because this is my area of expertise, which is analyzing drug spending trends and cost control, both domestically and internationally. It is true that drug costs in Canada and around the world have escalated at unprecedented rates in the 1990s through to the last few years. The latest statistics actually show that drug spending in Canada is going down for 2011 and it is projected to go down again for 2012. This is because of the fact that many of the blockbuster drugs of the 1990s have their patents expiring over the next few years, and over the last few years as well, and in combination with those expiring patents and the entry of generic drugs we have new provincial policy initiatives that were just described, such as Ontario's regulation of generic pricing, that basically accelerate the savings possible through generic substitution.

These are really important issues. I think we can drive further on them. We are also going to have to develop a strategy to deal with the emerging specialized medicines. These are both drugs for rare diseases but also specialized drugs for not-so-rare diseases like a variety of cancers that are coming on to the market at high costs both in Canada and around the world. In this regard, Canada not only desperately needs interprovincial cooperation in terms of policy frameworks and evaluation strategies like the CDR is doing, but we probably need international cooperation on evaluation, both before and, importantly, after these drugs come to market in terms of trying to figure out whether they are value for money.

Countries that I would look to for exemplary cost control in pharmaceuticals include New Zealand, for instance. It is probably one of the world's best expenditure managers, if you want to call it that, in the pharmaceutical component. New Zealand has a very explicit budget for pharmaceutical purchases every year, and having that budget allows them to negotiate with manufacturers and sit down and carve out deals that you would expect, actually, if you were working business-to-business around how to acquire medicines at the best possible prices.

Mr. Poston: The Patented Medicine Prices Review Board as a methodology to regulate brand prices to a certain extent has been successful. Common Drug Review has been successful as a tool to help provinces with their listing decisions.

I would also accept that generic prices in Canada are relatively high to other countries. The changes made, though, in Ontario and in the provinces had a devastating effect on pharmacy business models. We had had a situation, for example, in Ontario where there had been one increase in the professional fees paid for pharmacists over 20 years. That was all. Fees have not kept pace with the inflation rate. Governments and pharmacies, everyone was very happy with the model of increasing costs to pharmacy services being shared by the generic pharmaceutical industry in terms of the funding they were giving community pharmacies.

I am pleased to say in most of the provinces where there have been changing prices that have affected that business model, we have also seen governments begin to pay for new pharmacy services. It has not closed the gap that has been created and there is a funding gap between the cost of providing services and what most provincial governments are paying. Attention has to be made to how to close that funding gap.

In terms of other countries, I would certainly not support the New Zealand model. Pharmacists in New Zealand continually deal with drug shortages as a consequence of it. New Zealand has no pharmaceutical research base to speak of. There are some real concerns about the quality of products that get used in the New Zealand market.

You can improve purchasing strategies, but you have to be quite smart about how you do purchasing strategies. Some of the ones that we see at the moment are contributing to drug shortages.

The last point, we are going to have this sort of windfall with products reaching the so-called patent cliff. Many of them will come off patent, but right around the corner, as Dr. Morgan expressed, will be very high costs for significant new biological drugs that will be a huge issue. This is a bit hypothetical; if we discover the cure for cancer, will we be able to afford to pay for it? That will be a critical policy issue. I do not know when it is coming, but it is not that far down the road.

Dr. Peterson: Focusing on generic drugs is important, because we know there are dollars to be saved there. Even though generic medicines supply perhaps 45 per cent or more of the total prescriptions that are written, they only contribute about 20 per cent or less of the total expenditure on human prescription medicines in Canada. The "money" is in the new medicines, the brand products that are under patent and therefore have market exclusivity. That is where we are addressing our attention. Mr. Poston has made the comment already, if you look at rheumatoid arthritis in adults we have established medicines that have been on the market for a long period of time that many people respond to that cost hundreds of dollars per year per patient, and the newer biologics cost between $15,000 and $20,000 per year, per patient.

We are looking at, in our research environment, this concept that I believe Dr. Morgan has introduced, moving from proof of concept, which is what the regulator needs — you can support the claim that you are making for your new drug when it comes on to the market — into proof of value, which is what so many other health care decision-makers require, and that requires comparison of drug A to drug B, new drug to old drug. That is a very long and rather complicated process to follow, but nevertheless we have seen several instances where that has been done now. We have invested a good deal of our resources into developing that area of methodology research, in order to give decision-makers a far better understanding of which drug is going to be best value for money.

I can only conclude by commenting that we have looked at Australia and New Zealand and other markets as well. Their formularies become extremely restricted when you begin to ask the questions in such a stringent fashion. Australia is a long way from the North American geography that we exist in, and we recognize — and I am speaking as a clinician — that patients have an expectation that they will get medicines that are right, that are new and have the potential for benefit. Our purpose is to define in evidence what the actual validity of those claims are.

Ms. Hoffman: When we talk about the sustainability of the year-over-year increases in spending on pharmaceuticals, we tend to focus on price. I would just say that I think the utilization of pharmaceuticals, the decisions that are taken about what drug to use, when, under what circumstances and with which patients is probably a more important consideration over the long haul. While the amount of money seems modest, the funding for the Drug Safety and Effectiveness Network that Dr. Peterson is talking about, which is $32 million over five years which seems almost negligible — $10 million a year ongoing — can produce real value if what it leads to, as we expect it will, are better prescribing decisions, so that we have patients who are being prescribed therapies where their value for that patient has actually been demonstrated.

I think that argues for considerably more investment in work of that nature, but I do not want to understate the value that that can have, not only for better outcomes for individual patients but also for information for prescribers and for a lot more efficiency in terms of value for money for both public and private drug plans across the country.

The Chair: I will now go to Senator Champagne.

[Translation]

Senator Champagne: Thank you very much, Mr. Chair. Thank you to our guests for being here with us this afternoon. You have delved into the issue of drug shortages, but not sufficiently. I am surprised that even after having obtained a patent, after having done all of the promotion work targeting doctors and hospitals, a laboratory would be unable to fill demand. Is it the fault of laboratories that make promises that they cannot keep? Is it that they are unable to produce the drugs in time? Is the issue the purchasing strategy? How is it that, once the entire medical community realizes that a given drug will produce very good results in such and such a region, all of a sudden, there is none left? This worries me. Where does the problem lie?

With the new health accord, should it not be automatic, when a patent is granted for a new drug, that the manufacturer commit to filling the demand? In the absence of such commitments, things will go nowhere.

[English]

Mr. Poston: The drug shortages that we are experiencing in Canada at the moment are predominantly associated with generic drugs. These are drugs where patents have expired. We have had one or two cases of brand drugs being short. It is very difficult to get to the actual cause. It seems to be a mixture of things. In some cases, it has been manufacturing problems; in other cases, it has been shortage of raw materials.

The other thing I should add is that drug shortages are a global issue. I was at an international conference recently, and virtually every country in the OECD is facing drug shortages problems.

[Translation]

Senator Champagne: There are too many sick people.

[English]

Mr. Poston: It is linked to globalization of pharmaceuticals, consolidation that we have seen in the pharmaceutical industry. There seems to be a host of factors. We have been working very closely with Health Canada and with the manufacturers' associations, both brand, generic and biological. One of the things we want to see put in place is a national monitoring centre, so we can at least be in a position to have some warnings about what will be short, so we can actually advise physicians, pharmacists and other health care providers that there are issues, and also supply some information to enable prescribers to understand what alternatives are available.

The Chair: Dr. Morgan, do you have a comment?

Mr. Morgan: Yes. I want to reinforce the fact that when we experience drug shortages, they are almost invariably global phenomena. Therefore, it is important that we not lay the blame with Canadian policy for drug shortages that are in fact happening the world over. It is far too simple to point at one province's or another's generic substitution policies as the source of what is a temporary but important shortage of a generic drug, when, in fact, that shortage is likely happening south of the border and around the world. It is important to recognize that this is a global phenomenon. I agree with the idea of creating some sort of monitoring agency. I would recommend that Canada partner with other major countries and create just a global network of funders that are monitoring the availability of medicines in their jurisdictions. It is not just happening in Canada.

[Translation]

Senator Champagne: The other aspect that greatly bothers me is the issue of the price of drugs that we were discussing earlier. Take the case of an individual who, after spending some time in the hospital, goes back home. Upon leaving, the patient is told: "Oh, by the way, during your hospital stay, you contracted MRSA. You are therefore going to have to take Vancomycin intravenously for seven weeks. Go to the pharmacy, you are ambulatory, so get yourself to the pharmacy and it will cost $1,500 a week for seven weeks." That is an enormous amount of money for those who do not have insurance. We are starting to see some public insurance, but these are nevertheless unbelievable sums of money. We are talking about $1,500 a week for seven weeks for an infection acquired in the hospital, of all things.

Are these prices that our society is able to afford? Unless we empty all of our hospitals to clean them from stem to stern, this bacteria will remain present. And so more patients will become infected. It must be said that these are unbelievable amounts of money: over a seven-week period, you are talking more than $10,000 for a person who has not worked for several weeks, perhaps several months, because of his or her illness. Does this cost seem normal to you?

[English]

Dr. Peterson: I must apologize that I cannot answer you effectively.

Senator Champagne: That is all right.

Dr. Peterson: As a clinician, I can tell you it has become routine. My first question with patients when I begin to talk about treatment options is, "Do you have a drug insurance plan?" That is critical in terms of the decision-making that you will go forward in regard to that patient.

Senator Champagne: If that person with MRSA says, "No, I do not have one," what do you do?

Dr. Peterson: One can follow many options. Again, I am not sure that I can absolutely solve your problem for you, although I can tell you from a pediatric perspective, in a hospital-based practice, it is always possible to find solutions for such patients in terms of recruiting resources for that. It is not the way it should be. It expends a great deal of health care provider time in attempting to look for those solutions.

I was going to comment further on your concerns about the issues associated with what you may acquire in hospitals to point out that you must be very, very sick in order to be eligible to be admitted to a hospital today. This is quite different than it was ten or 20 years ago in Canada. The infections that we are dealing with are different. The issues we deal with on an outpatient basis, I can tell you, having practiced medicine for a very long period, would easily have been hospital admissions in former years, and we manage them on an outpatient basis now.

The reality is we can manage them on an outpatient basis because of effective new medicines that have come to us. However, there is no question there has been escalation of prices in recent times that have become extraordinarily challenging to everyone.

I believe what you are talking about relates to an area of catastrophic drug coverage. It does not matter whether we are talking about a threshold that is $20,000 or $10,000 per month for insurance. It relates to what the ability of the individual is to pay. This is the foundation we have built our Canadian health care system on.

I firmly hope that we will be able to provide sensible choices of the right medicines to choose so that we are not facing a dilemma of medicines at any price for any number of patients in Canada. There clearly is no health care system that can afford that.

[Translation]

Senator Verner: Thank you for having accepted our invitation to appear this afternoon. Most provinces and territories have public drug plans. Some provinces and some territories do not, but provide insurance plans for the elderly, for example. In your view, what would the best incentive be in order for these provinces and territories to also offer a public plan?

[English]

Mr. Morgan: It is a question that Canada has grappled with since the 1960s. Justice Emmett Hall in the royal commission on health care in the 1960s recommended that Canada at least consider a national pharmacare program after putting in place national standards for insurance on hospitals and medical care. Pharmacare and home care were supposed to be the next essential services for federal-provincial cost-shared programs for insurance.

If you want to get provinces to move beyond where they will go on their own, it is going to require money. It will require the exercise of spending power, which we know right now is not an option. However, it is the way that we built the Medicare system and it is likely the way we are going to build a national standard for pharmacare as well, if we have one.

Mr. Poston: An important issue that often gets missed entirely in these discussions around pharmaceutical strategy is that 60 per cent of drug costs in this country are met by the private sector, either private insurance plans or self- insurance plans by companies.

Pharmaceutical strategy has a direct impact on industry competitiveness; that is one thing. We pay a lot of attention to policies around pharmaceuticals that relate to provincial plans. Dr. Morgan will have the statistics, but I think the coverage from provincial plans in Canada varies from 35 per cent to about 60 per cent. That is one of the other factors.

One of the consequences of the changes that Ms. Hoffman talked about is that we have seen increasing diversity in provincial drug plans, rather than harmonization. It has gone that way. One of the things that we need to pay some attention to as we go forward is how to develop pharmaceutical strategy and pharmaceutical policy that addresses some of the issues that the private sector faces.

We have recently struck a national committee to work with what are called third party payers or third party drug plans to begin to tackle some of their issues. There are similar issues in provincial plans. One issue is there is this huge focus on costs, but it is appropriateness of utilization that is critically important. There is nothing more expensive than the drug that does not work or the drug that causes harm. The appropriateness of decision-making in the clinical setting is also really important to cost-effectiveness.

Dr. Peterson: I can add to that only that the reliance that we have on the private insurance sector today may be something that we need to be very cautious about. We recognize that the prices of medicines are going up, and that the private sector is paying higher amounts than the public sectors are.

It has been brought to our attention that the private insurers who can pass on premium increases to their subscribers are able to manage price escalation, but only up to a certain point in time when subscribers look at the price and they begin to drop out. This is the reality of the United States, where there are so many people without health insurance because they have chosen to self-insure because the cost of purchasing health insurance has gone above this threshold.

I do know the private insurance companies are beginning to look very carefully at the type of work we produce on comparative effectiveness. They are looking at the recommendations that come out of the Common Drug Review, which are intended for the public payment programs, and beginning to provide or deny coverage based upon the evaluation of the value of one drug versus another, or the value of a new drug coming on to the market, in order to begin to curtail those costs.

We want to be very cautious that we do not succumb to the idea that private insurance may be a safety net for us. I am very concerned, first, that we do not have control over it; and second, we are rapidly approaching, with the price escalations we are seeing in new drugs, a point in time when premiums are going to become such that small businesses and individuals are not going to be able to find them attractive.

Ms. Hoffman: Following on from the points that have been made, some observers will argue that in Canada we spend enough, if you look at the bottom line, to provide adequate coverage for all Canadians. I do not mean coverage for every single drug, but for reasons Dr. Peterson mentioned, by and large drug plans that are financed by employers through private insurers are extremely inefficient. They do not have formularies; they have no controls over utilization or any assessment of whether or not a drug that is prescribed is an appropriate therapy.

There is very little attempt to influence the price that is actually paid, so as has been noted, the prices normally paid for privately insured pharmaceuticals are considerably more than what public plans pay, and so on. Private insurers, as Dr. Peterson said, when they feel it is no longer a profitable regime for them — because they are in the insurance business, not in the health business — simply introduce caps, increase the deductibles or withdraw altogether from the field.

I am not proposing this as the solution, but it is a question of who is spending the money and under what regimes. I think many people feel we could probably be doing a lot better, even if there could be more encouragement to the private insurers to follow some of the best practices that the publicly financed drug plans are using, in which case they then could provide better coverage for those employees in larger enterprises who are covered through private insurance.

[Translation]

Senator Verner: You have brought up the theme of my next question. Given that the plans in place vary from one province or territory to the next, in your opinion, which jurisdiction in the country has the best plan, the best practices?

[English]

Mr. Poston: I will have a go at that. One of the beauties of Canada is we have this big experiment going on all the time. Dr. Morgan is perhaps the expert on this in terms of models of funding.

I think we have to look very closely at the Quebec model, and I would like to see more evaluation and research. In Quebec, there was an explicit attempt to create a drug plan that was very interesting in that there was an attempt to create universal coverage with public-private mixed financing of it.

In terms of moving forward, I do not know whether we will ever get a totally publicly funded system. I think, as Dr. Peterson pointed out, there are lots of dangers in going into a totally privately funded model.

We have to look at some of the experiences in Canada. There needs to be more work done looking at the impact of the changes that were probably at least 10 or 12 years ago in Quebec with respect to the attempts to create a universal drug plan, with a mixed public private funding model. There may be some valuable learnings there to help guide us in the future.

Mr. Morgan: Thank you for that question. It is an important one.

Looking within the Canadian context, no province stands out as being excellent on all aspects of pharmaceutical policy. Drug financing is not just having an open formulary and insuring everyone for it. In fact, that is exactly what the private sector does.

I was a meeting this morning with experts in pharmaceutical policy in Canada. They mentioned there are basically 42 private sector formularies in Canada and one of the leading experts in the domain referred to that as 42 shades of white. They all basically cover everything, more or less. That is a form of coverage.

Quebec, for instance, uses the private insurance industry to in effect have universal coverage for medicines through a compulsory private insurance model. If you are unable to qualify for private insurance, you then insure through RAMQ, which is the publicly-run, premium-based insurance program for medicines. Without a doubt, that is achieving goals of coverage. Everyone is covered for medicines and Quebec has a very open formulary relative to other jurisdictions so they get coverage for many different drugs. It is also, however, by far the most expensive drug system you could design.

I would like at elements of the Quebec model, if you wanted universality without having a universal public program, but would go beyond Quebec and begin to look to Europe as to how to instigate in the Canadian context perhaps a more regulated but nevertheless social insurance model that is akin to what happens in Quebec.

Again, this is debate that requires a conversation with Canadians. We have never really put pharmacare on the front end so we need to have that conversation about what model would be right.

Dr. Peterson: I believe that it is very important to define what the best model means. If this is the most universal coverage at the lowest price, that may have a tremendous number of dissatisfied patients, particularly patients with unmet medical needs on existing medicine. I do not believe we have achieved that balance anywhere. This is despite the very close association that we have developed with a Common Drug Review, looking at the variances across the provinces. Dr. Morgan has suggested Europe. I find the Australian system attractive, and the way in which they are able to have a national pharmacare program where they assess the value of drugs as they are presented to them by manufacturers and then they negotiate a national price for those.

Senator Seidman: One of the commitments in the national pharmaceutical strategy is to enhance action to influence prescribing behaviour of health care professionals so that drugs are used only when needed and the right drug is used for the right problem.

In fact, when the initial focus of nine was narrowed down to the five priority areas, as you told us today, real world drug safety and effectiveness was one of the five.

With the mandate of DSEN, it is very well defined. It is evident that you have a major challenge to identify and produce relevant research that will help decision-makers, drug plan managers, clinicians and patients make good choices.

Could you please tell us something about the progress that has been made on this? Would you also perhaps tell us something about the challenges that we face in the future? It would be helpful in terms of the kind of recommendations that we might be able to make.

Dr. Peterson: That is a very challenging series of questions.

First, let me say that there are about 18,000 randomized clinical trials done every year across the world. Every time experts sit down to write a clinical practice guideline for general practice physicians, for prescribers, on what is the best use, the optimal use of medicines, these clinical practice guidelines always start with a statement that they have found insufficient evidence to draw firm conclusions.

Part of what I have alluded to is the somewhat artificial environment that the clinical trials that are designed to meet regulatory requirements create, so moving into this broader aspect of examining the products after they come on the market as they are being used is certainly one of the ways in which we intend to move forward with that.

We have recruited, as you can see, with the materials that I have left you an entire portfolio of methodologies. We have not included in that standard, randomized control clinical trials that the manufacturers already must do for the purposes of drug regulation.

We have a strong initiative at the present time and we have let catalyst grants and career development awards in the area of innovative clinical trial design, the ability to create trials that are far more flexible than these very rigid trials that are currently conducted.

Having said that, in order to address your second question, which relates to the deliverables of this program, I must beg your indulgence. This is very early years of the DSEN. It was announced in 2009 by our current Minister of Health. It has been built aggressively during that time period.

We have produced in stages a series of collaborating centres that are able to do things that have never been done in Canada before.

The collaborating centre that deals with observational studies, that accesses existing linked administrative health records that largely reside in each of the individual provinces has come into existence only last January. That was the very first of our collaborating centres that came on stream.

They have been able to, once again, within this several months of development, query the databases in eight provinces in Canada simultaneously, in order to pose a specific question regarding the potential safety issues associated with a class of medicines.

We have never been able to address a centrally developed, very sophisticated statistical query package across all of the administrative health records that exist in the country. We are able to do eight out of the ten at this point in time only because of the organizational status of that, and it is part of our developmental work to help with the other two provinces to be certain we can accrue information in that sense.

The other collaborating centres that we will rely upon in terms of method development were only approved for funding at the end of August of this year.

This is a competitive process that we follow at the Canadian Institutes of Health Research, so that there will be funding announcements that go up. There is time for researchers to prepare applications. They must prepare a competitive application in order to demonstrate why they should be funded for this. At the end of what is a somewhat tedious process I can sit before you and tell you that we have very competent researchers who are engaging in this research.

Because we feel very compelled that this is something that we would have loved to have had on stream 10 or 15 years ago, in each of those grant applications not only have we had the research teams create the case for why they are capable of responding to these queries from high-level decision-makers, but they have had to develop a demonstration project that has already been picked from the panel of queries that we have available to us.

They are on the ground running now, so that we now have as of the beginning September an additional seven teams to complement the observational study teams that have come on stream.

I apologize for a long answer to tell you that we are in very early days of the development of this program, but it has been a very comprehensive program that has been developed. At this point, we have 13 or 14 active queries before the researchers and the timelines on those are developing those research questions into formative evidence-based answers over the next 12 to 19 months.

The larger challenge, I think, and what we have to recognize is that this is not just evidence development. This is knowledge translation to the level that allows for appropriate utilization, guideline development, informed choices to be made based upon the evidence that has been produced for that.

We have our first query against the eight administrative databases that has come on stream now. We have the results of that. We are being very careful to take that into a knowledge translation process that will make it truly useful to individuals.

Mr. Poston: Briefly, I think your question also points to the need for the ongoing investment and development of integrated electronic health records and the provincial DIS systems, so that evidence that Dr. Peterson and his team creates gets disseminated to point of care and also people can have access to a complete patient's drug records, so the prescriber actually knows what the patient is on.

Senator Seidman: I was going to get to the knowledge-translation aspect of it, and I really appreciate that you have already touched on it. Perhaps you could expound on that just a bit.

Dr. Peterson, I would also like to exploit your pediatric background and ask you about the off-label use and the issues that you referred to about the use of drugs in children. I would appreciate that.

Dr. Peterson: Let me address off-label use as a more general issue. With the limited information that comes from clinical trials, a new product on the market often will be prescribed outside of what its official label is.

There has always been a concern that if there was firm regulatory action to close the door on that, it would be quite an intrusion between a physician, a pharmacist and the patient in attempting to find the best therapeutic solution for that patient.

There has also been this undercurrent that so many drugs are prescribed off-label to children. As a pediatrician, I began my professional life working in neonatal intensive care. I did not write any prescriptions for medicines that were on-label. There were not any. This was the state of affairs at that time.

We have seen a good deal of activity to allow for the evidence to be developed, supplied, and submitted to regulatory agencies in the United States and elsewhere.

Part of the concern with shutting down off-label use in the past has been that you would, as an unfortunate consequence, close off prescribing in pediatrics.

That is no longer a concern on my part. The United States passed the Paediatric Research Equity Act in 2003, which had the purpose of compelling manufacturers to submit evidence to the United States FDA if that medicine would be used on children.

At the same time, the act provides six months of market extension beyond the medicine's patent time in order for the product to continue as a monopoly. They prevent a generic product from coming on to the market. There is both a carrot and a stick, the stick being producing the evidence and the carrot being reaping some fairly substantive revenues as a consequence of this.

The United States passed that as an act. The European Parliament passed it in regulation.

We have come very close to that. We have already created the carrot because, in 2006, Canadian drug regulations were amended to provide an additional six months of data protection, the other intellectual property scheme that allows for generic products to come on to, or not come on to, the market. In 2006, Canada provided that benefit to pharmaceutical manufacturers. If you supply the information required to extend the label of your new medicine to the pediatric population, where it can effectively be used, you will achieve an additional six months in which the generic companies cannot come on to the market.

We have seen very little action in response to that on a voluntary basis. We can address off-label use in pediatrics, to a very large extent, by looking at having an equivalent either in regulation or in an act analogous to the Pediatric Research Equity Act in the U.S.

Off-label use beyond that still becomes burdensome because there are many special populations that we are addressing. We are addressing Aboriginal peoples, seniors, and women, who are frequently under-represented in clinical trials. It depends upon how narrowly you define off-label use, but I believe that when it is inappropriate utilization it does not matter whether it is on or off-label. The primary goal is appropriate utilization.

If it is appropriate off-label use, as has been the case in paediatrics for a very long period of time, that may be the reality of what you have to deal with. It is not necessary today, in Canada, to have that be the reality, and we can remedy that.

Senator Braley: I enjoyed listening to the presentations. I am a little bit confused and I am probably going to confuse you a little bit.

As part of the 10-year plan, this National Pharmaceuticals Strategy was put in place to improve drug approval, evaluate the real-world effectiveness of drug safety, catastrophic drugs, et cetera.

I read all of your reports. I have gone over them carefully. I went to the marketplace and got other reports, like the Fraser Institute, which says access denied. It says delayed and denied, and it refers to Health Canada's performance as "worse than." We have to do an evaluation of the health accord at this point. It says that our health performance was worse than in Europe for all four years. Canada's health performance was worse than that of America's FDA for five of the last six years. I do not know whether these numbers are right or not, but every report I read gives me different pieces of information to deal with. We have to do an evaluation. Maybe you all have to write a report to us on the evaluating, and various things, that have to happen.

I read the Health Council of Canada's report. It says, "Although some provinces have enhanced coverage for those unable to afford medications due to low incomes or high drug costs, the creation of a national coordination plan is stalled. This has left a patchwork of public plans." They are saying that we have started and we are not going anywhere.

The evaluation of where we have got to, as compared to where we might have been, ties together with the customer's need to be serviced. The person who is sick needs to have the right thing recommended.

Where is the change made? Who is in charge? Is there someone in charge with regard to the national strategy? I am asking very stupid questions because I do not know.

I want to make a comment about insurance companies. Insurance companies pay claims, even though the claim is not justified, because they want to sell their life insurance here. At our company, reserves were 40 to 50 per cent on top of the amount paid out, plus the 20 per cent for doing this. We self insured and saved 50 per cent, with millions of dollars of saving to the company, by paying the claims ourselves and putting on a high cap. Insurance companies have a different agenda besides coverage. They also have the agenda of making sure they sell their other products. That sometimes interferes, but that is a minor issue. How do we evaluate this as to what has been done and what was supposed to have been done how far along in the process? Are we doing it slower and worse than the other countries, or are we competitive? They could have a weak system where the drug is no good, and, at the same time, they could be doing something better than us.

The Chair: You could spend a lot of time on this answer. I will urge you to focus your answers and, if not, I will have to terminate the total reply before we get the full answer.

Ms. Hoffman: I am happy to start, and I will be brief. It is a question of evaluating what happened on each of the nine elements in the strategy. I think there has been some evidence today that there was quite a bit of progress on many of them but not on all.

However, the other way of evaluating is to assess against what many people anticipated might happen as a result of the National Pharmaceuticals Strategy, which is that there would be tremendous improvements in both the efficiency of drug plans and the coverage for virtually all Canadians.

That was not what the strategy actually committed to, but if that is the aspiration assumed then you come to a different conclusion. You have to decide what it is that you want to evaluate — the individual elements or the state of pharmaceutical coverage and affordability in the country.

Bear in mind that that was the overall provision of access for all Canadians. Of course, it is a general aspiration for health system managers, but it was not actually the outcome that was associated with the strategy in a direct way.

Mr. Poston: Your question points to the complexity of the issue. Correct me if I am wrong, but I think the OECD data shows that we are third or fourth in the world in terms of per capita expenditure of pharmaceuticals. I certainly think that we could be getting better value for money for that.

Part of what we need to do is shift the focus away from price and cost to utilization and make it more appropriate. To do that we have to promote collaboration between provincial and federal governments and leverage what comes out of agencies like CADATH, DSEN and CIHR. The investments that we make in those sorts of agencies are perhaps one of the solutions to building a better system.

Senator Braley: Everything is being done in pieces. Who is in charge?

Mr. Morgan: The answer to that question is the same as my answer to the question before about how we compare to the rest of the world on pharmaceuticals.

The Canadian regime and the jurisdictional divide in this country on health and regulation is one of the unique challenges that we face. It is not easily overcome. As per my introductory comments today, it takes real skin in the game by the federal government. The NPS was an ambitious idea and the right direction, but it required more investment in terms of the secretariat and in real money to help coordinate and drive certain policies forward.

You cannot buy a lot of change with goodwill alone. We need a significant concerted investment.

The Chair: I have two more senators on the list, and I will try to give them an opportunity to ask their questions. I will ask those on the second round to put their questions on the record and the witnesses to respond in writing subsequently.

Furthermore, if anything has arisen today on which you can supply additional information or if you would like to elaborate on any answers you gave, we urge you to do so. The clerk will be in touch with you in that regard.

Senator Demers: We talked about shortage of medication earlier. The population is aging very quickly. More and more people are struggling financially due to the poor economy.

Do we have a plan for the aging of the population? We will need more and more. There is more stress than ever. Some baby boomers have lived a very stressful life. If we are short now, what will happen in five or ten years?

Mr. Poston: We are hoping that the shortages will be relatively short term. We have had cycles of shortages before. The current situation is due to a range of global and environmental factors, and I think it will resolve itself. However, ensuring access for the elderly and also appropriate use of drugs by the elderly is a major issue. Just as the pediatric population that Dr. Peterson spoke about is critically important, improving care for the senior population is also critical. They are also at high risk from drug therapy. As policies develop, there needs to be focus on the elderly population.

Dr. Peterson: I believe that the solution is in the area of appropriate informed choices. We need to have the comparisons that allow for those informed choices to be made. Then again, there needs to be a public acceptance of more difficult choices than have been made in the past.

I can give a brief example. There was recently a review of the use of blood glucose test strips in Type 2 diabetes in adults, the most common form of diabetes in adults. The evidence that has come from the Canadian Agency for Drugs and Technologies in Health has demonstrated that we could save at least $500 million a year by reducing the current utilization of glucose blood test strips in Type 2 diabetes without any change whatsoever in the outcome of that condition.

That was published and the provinces knew about it. To my knowledge and understanding, one province implemented a reduction of the use of those, and they were able to maintain that policy for about 48 hours before it was withdrawn. There was too much pressure because of the way these strips had been used in the past and the fact that people thought they needed to use them.

Dissemination of what is appropriate utilization is critical for us. Health care will cost more in the future. However, we have a rich resource right now that we are expending in our health care system, and we can make better choices in the future.

Senator Martin: Ms. Hoffman continues to refer to the original nine elements in the NPS. It is important for everyone to remember that. Over 10 years it is easy to include more and more elements because it is so interconnected. Focus is important.

In this study we are reviewing the health accord with a view to making recommendations to the minister, so it would be helpful if you could continue to focus on that in your responses to our questions.

Number 6 in the NPS is enhanced action to influence the prescribing behaviour of health care professionals so that drugs are used only when needed and the right drug is used for the right problem. That is one of the key issues. I have seen over-prescription rather than a lack of prescription.

Pharmacists play a central role in prescribing medication. We have heard other health professionals talk about the importance of integration and using that profession to improve access to drugs and services as well as to have more contact with the public they are serving.

Mr. Poston, could you speak to how we can better integrate pharmacists and what we can do to improve their contribution to the overall system?

Mr. Poston: We have seen some important changes. Provincial governments have passed legislation that has dramatically expanded the scope of practice of pharmacists. That has been an important first step. As I said, in a number of provinces pharmacists have some degree of prescriptive authority. They can actually prescribe drugs and make changes to drug therapy. That has enabled them to play an important role in making prescriptions much more appropriate for the patient, because therapy has to be tailored to the individual. There is often a requirement that it be done within a collaborative practice model with information sharing between the pharmacist and prescriber. The legislation is there.

However, payment for some of these new practice models has not necessarily followed the legislation. The finances are not in place to support their development. A number of provinces have done that. In fact, British Columbia has made some important progress in the area of funding new services by pharmacists to improve drug therapy, and it is currently being looked at.

I think there is potential. I think we will see hopefully continued development in that. Certainly there is growing evidence in the published literature that supports the development of the role of the community pharmacist in particular. I think the role is well established in hospital, but we are looking to development in the community. We have a national strategic action plan for the profession called the Blueprint for Pharmacy that is supporting change within the profession. Together with the legislative change, funding of new practice models and the support that we are providing to pharmacists, we hope we will see that realization.

Mr. Morgan: One of the best ways to utilize pharmacists in improving the quality of prescribing in the country is to move them out of the dispensary area and into the primary care centres. Multidisciplinary primary health care teams would go a long way if the pharmacists were included in that because what you want to do is make sure that the original prescription is right in the first instance. Often, almost exclusively, is the prescription written by a physician these days, but it would be a real advantage if it was written by a practitioner in a multidisciplinary team.

The other thing that goes a long way towards advancing and improving the quality of prescribing in this country is information both for patients — I do not think we have enough dialogue and enough sources of unbiased information about medicines and their appropriate use for patients — and information for practitioners and physicians, in particular, at the point of clinical encounter. This comes down to simple innovations such as the work being done in Montreal with McGill University's Moxxi Project, which is the medical office for the 21st century, where physicians are given tablet-based prescribing assistance devices that provide evidence and patient records that allow them to make better choices. That kind of thing would go a long way in Canada.

Senator Martin: Can I ask one question regarding moving pharmacists from the dispensary role to the primary care delivery realm? Is that something that could be done easily with an agreement? The pharmacies are there right by the hospitals. I know they are there in proximity. How would we move towards that? Is it very complex? Have the stakeholders come to the table to look at such models?

Mr. Morgan: There are models, interdisciplinary primary health care teams that include pharmacists, in Canadian provinces, including Ontario, and there are models around the world. There will always be a role for professional interaction at the point of the dispensary. If you want to get prescribing right, you need to think about pharmacists who are very well educated in medicines being more a part of the team at the primary health care clinic before the patient ends up at the dispensary to fill the prescription.

Mr. Poston: We have seen a number in Alberta, British Columbia and Ontario. It is where we have seen innovative funding in relation to primary care — family health teams in Ontario, for example. In many of those situations, pharmacists have been funded to be part of primary health care teams, and that has been successful. In the absence of those models, I come back to the integrated electronic health record. The sharing of information across the continuum of care will be a critical factor in the future.

The Chair: I have a question, but I will ask my colleagues who wanted on a second round to get their questions on the record so they can be responded to. Starting with Senator Eggleton and Senator Merchant, if you can focus your questions directly, we will ask the witnesses to follow up, and the clerk will follow up with you in writing so you do not have to get it all down.

Senator Eggleton: Ms. Hoffman, about two of the elements of the nine elements, on the purchasing strategy, you talked about the provinces getting together a pan-Canadian purchasing alliance, province and territories. What about the federal government? Will we be part of that? Aside from the fact that we transfer money to the provinces, we are also a provider for Aboriginals and others, et cetera. I would like to know that we will be a part of that and helping to keep the costs down by doing that. On the question of e-prescribing, we put money into the Health Infoway for electronic medical records. Are we using any of that to, in fact, advance e-prescribing? I think that would be a major — I will get rid of the editorial comments.

To the other three, a lot of money was put on the table when the health accord was created in 2004. Most of it was transfers to the provinces, but some of it was earmarked for specific things. I just mentioned one of them — Health Infoway. There were wait times and other things as well. If there is another accord, presumably money will be put on the table. In fact, the federal government announced that it will keep on the 6 per cent escalator. I am not clear how long that will be. If there is going to be an accord in 2014, they will presumably put money on the table. Some of that again could be specifically earmarked. If that is the case, what do you think earmarked money should go for in terms of further developing this national pharmaceutical strategy?

Senator Merchant: Thank you for your presentations. If there is a clear vision as to what a pan-Canadian model for pharmacare should be, and in view of the fact that the pharmaceutical policies are rooted in both federal and provincial jurisdictions, I wondered if you might be able to tell us what is the single most important and viable tool at the disposal of the national government to promote, achieve and enforce a pan-Canadian regime in pharmaceutical services.

The Chair: I am just going to ask my question as well. I will take a minute or two to preface it. Dr. Peterson, you covered a number of really important areas in your presentation that are fundamental in terms of ultimately giving better care to the patient, but also, without finding better strategies, they are currently responsible for huge costs to health care — the issue of adverse drug reactions, the multiple prescription issues, the off-label issues, the impact on a non-representative population or the subsets of the population, shall we say, with regard to adverse reactions. Obviously, information is a very important part of that, including electronic records and so on.

Could you follow up this meeting with a little bit of your thoughts on the issues around electronic prescriptions? We know it is not as simple as just having doctors write prescriptions electronically as opposed to by hand. The evidence does not suggest that makes a lot of difference. The more important thing is the record itself and what are the drugs that are in the patient's mix and the number of those drugs.

Dr. Poston, I would like to come to you with regard to the same issue of information and records. During the H1N1 pandemic review that we held, we heard from the pharmacists' association that there was a feeling that you could be of much greater help to us in alerting us to trends in disease and so on. To be specific with H1N1, perhaps you knew quite early that there was a flu pandemic or flu situation emerging because of the number of prescriptions that you were seeing in certain areas, for example.

Could you give some thought to the kinds of things we have been talking about here today of how important electronic information is, and how the pharmacists, who are fairly well interconnected at least in some areas with regard to electronic records, might be able to play an even greater role with regard to moving this issue of electronic records forward? We know it is not because there has not been enough money spent on it. There has been way more than enough money to solve several electronic issues. There is also the problem of multiple systems that do not communicate with one another and all that kind of situation. Do not focus so much on what the problem is, but how could possibly the pharmacists, with the network they currently have and could have, contribute to getting us information on many of the issues that have arisen here that particularly Dr. Peterson spoke about, and Dr Morgan summarized them in different ways. Give us some innovative idea as to how you might be able to help in that regard.

Once again, today we have heard a tremendous amount of important insights into issues in response to my colleagues' questions to you following your initial presentations in an area that will be extremely important to us as we move forward. You have mentioned aspects of medical treatment already. If the patient psychology were different, if the public psychology were different, we could change things and save huge amounts of money already. We know where many of those are, such as the overmedication and the over-medical conception of us as citizens, that contribute significantly to the costs. On the other hand, there is the very real issue of treating patients appropriately with the appropriate medications. Dr. Peterson, you talked about the fact that there are, in fact, a number of different ways to deal with many situations.

You have been enormously helpful to us in following up on the issues that Ms. Hoffman has outlined to us that are the issues we have to deal with. Again, if thoughts strike you, those thoughts that occur to you after leaving here that you would like to get to us, we would most welcome them. Unless the issue is placed before us, we cannot deal with it. We are looking for innovative thoughts that might come forward to us.

I would like to thank you on behalf of my colleagues, and I thank my colleagues for their insightful questions.

(The committee adjourned.)