Day 2 video - December 6, 2023

Day 2 - ENGLISH

Phil Asey: [00:00:03] The first part of this morning's session will be in French. The second part and this afternoon's session will continue the session in English, following on from yesterday's session. Phoenix has been engaged to facilitate the consultation by ensuring timely sessions and roles, and to write a report on what was said. Sessions are audio recorded visually and transcribed, promising to write up briefly how the session will unfold. The order of presentations has been established, and we will follow this order by inviting speakers to take the floor. The time allocated for each presentation, including questions from committee members, is fifteen minutes. It is crucial that presentations do not exceed the allocated time. I don't want to cut anyone off, but in fairness to everyone I will have to do so if the time limit is reached. Obviously, the time allocated for questions will depend on the duration of the presentations. So far, presentations average around ten minutes, and presenters have that in mind. At this point, I would like to invite Annie Perrot, Vice- Chairwoman of the Patented Medicine Prices Review Board, to say a few words.

Annie Perrot: [00:01:35] Thank you. Good morning everyone, and welcome to the second day of consultations on the PMPRB. As our facilitator explained, the first part will be in French. My name is Annie Perrot, I'm the Vice-President. So, I won't repeat the excellent introductory words that my colleague Thomas [inaudible] here on the Board delivered yesterday. However, I hope we are all here to have productive and effective, constructive exchanges on how we can ensure that Canadians can have access to innovative medicines and treatments at non-excessive prices, enabling them to treat and sometimes even cure the illnesses that affect them or their loved ones. And with a nod to my expertise over the past 25 years, sometimes these treatments and medications are the result of discoveries and years of research carried out here by our researchers in Canada. We, the members of the Board, have asked you to attend this round table to help prepare the new guidelines that we hope will be adopted in 2024. We are here to listen to your thoughts, your comments on the appropriate approach we should take. We want to do this before drafting the guidelines. We want to understand your concerns about our statutory mandate, which is, I remind you, to prevent excessive pricing in the words of Canada's drug lawmakers. To give shape to this round table, three weeks ago we published a scoping document covering six major themes that the Board members consider essential to the discussion. Your presentations are not limited to these topics. Of course, we have an open mind and are prepared to consider all points of view. But it is worth pointing out that we feel this system encompasses much of what we need to think about. So, for those of you who have come here, thank you; and for all the others who are online, over 40 people this morning, we would like to welcome you all from different parts of the country. So, although we all come from different backgrounds for different reasons, we all have in common a concern for the fair use of drugs and treatments in Canada. As my colleague pointed out yesterday, we are speaking today as unsolicited guests on the unceded territory of the Algonquin Ashinabee people, who have been custodians of this land since immemorial time. I invite you to discover their heritage, and that of all the other Aboriginal nations of Canada, and to find in it the path to life and reconciliation. Allow me now to introduce my colleagues of the Board who are with me at the front of the room. On my right, the Chairman of the Board, whom you know, Mr. Thomas Digby, an intellectual property lawyer based in Vancouver, and Ms. Caroline Kobernik, a Board member from Toronto with nine years' experience and decades of experience in the federal government.

Ms. Kobernik brought great continuity and perspective to the history and role of this Board. Online, we're joined by two new members. Some of you may not know this: the government has appointed two people to the Board in recent weeks. So, as they complete their integration process, we have invited them to observe today's proceedings, as we did yesterday, in preparation for their full commitment to the Board in January. I don't think they are online yet, but I will introduce them to you when they will be joining us. Emily Rhiannon from Kingston, who is a pharmacist and a doctor [inaudible]; so, I know it is pretty impressive to have those two backgrounds. She practices medicine at Quinte General hospital in Belleville. And Mr. Peter Moreland Giraldeau, who is a lawyer and works out of Canmore in Alberta. As for me, I am a lawyer by training. I would like to point out that I am no longer a member of the [inaudible] of Quebec. I have spent a good part of my career in the world of research, particularly with organizations like GENOM Canada and GENOM Québec, and with biotech start-ups. So, I am currently a strategic advisor in this ecosystem. Let me also introduce the head of the PMPRB team, Interim Executive Director Guillaume Couillard. Mr. Couillard led the preparations for today's meeting and is available with the management team. Some of them are in the room to answer the more technical questions you may have. So with that, I will hand over to our facilitator to introduce our first speaker. Thank you for your time.

Phil Asey: [00:06:28] So I invite our first speaker to make his presentation. Hugues Mousseau, General Manager of the Association québécoise des distributeurs en pharmacies et Association des bannières et des chaînes de pharmacies du Québec. The floor is yours.

Hugues Mousseau: [00:06:44] Thank you very much. Good morning, Mr. Chairman, Madam Vice-Chairwoman, members of the Board, Mr. Executive Director. My name is Hugues Mousseau. I am the General Manager of the Association québécoise des distributeurs en pharmacie and of the Association des bannières et des chaînes de pharmacies du Québec. Our associations represent two of the key links and players in the drug and pharmacy chain in Quebec. Names you know like Pharmaprix, Brunet, McKesson, Familiprix, Pharma plus Uniprix, Proxime, [00:07:09] [inaudible] pharmacy at Walmart and Jean-Coutu. Before getting to the heart of the matter, I'd like to sincerely thank you for holding these consultations which have been testifying since yesterday to the concerns expressed and the solutions shared by the participants. It is noticed and appreciated, and it is this spirit that leads me to speak to you today, to question you more specifically about the part of the Board's mandate that deals with trends in drug prices, utilization, and costs. Paying the right price for medications is an important objective that we support as associations, organizations, and taxpayers. We are not here to dispute the objective behind the modernization of the guidelines and the PMPRB, but rather to speak out about the mechanisms by which this is being done, and to draw your attention to the significant and potentially unintended consequences of the guidelines on other links in the drug chain. My objective this morning is twofold. Firstly, to convince you to accept an invitation to work together constructively, to document the dynamics of drug pricing, utilization, and cost rigorously and fully throughout the chain, right up to the patient. And secondly, to make you aware that further reductions in drug prices will not necessarily lead to increased access to medication for patients; rather, the opposite is likely to occur, even if I agree that this is a counter-intuitive dynamic. Intervening in pricing requires a very detailed understanding of the various links in the drug chain: the producer, the active ingredient, the manufacturer, the wholesaler, the pharmacist-owner, the chain of pharmacy banners with which he or she is affiliated, and finally the patient. I began my career in drug distribution 19 years ago. At that time, the drug chain enjoyed a certain degree of financial and operational leeway. Think of the chain link as a series of dominoes. Back then, the dominoes were placed far apart, so that a change to the regulatory environment or even a cyclical phenomenon, such as a surge in inflation, could be absorbed by the other links in the chain without too many consequences. Over the past two decades, reforms, new regulatory constraints, guidelines, legislative amendments, and other instruments from both levels of government have purged all the room for manoeuvre that once existed. Today, the same dominoes are all stacked up against each other. Allow me to share two concrete examples of what this means. A few years ago, in Quebec, drug wholesalers used to hold for a dozen weeks' worth of drug inventory in distribution centers. This would allow wholesalers to intervene and act effectively as a buffer in the event of a drug shortage by continuing to supply pharmacies, even when a manufacturer's deliveries came to a temporary halt. Today, these inventories average only around four weeks, down by two-thirds. This reality is no stranger to the increase in the number, frequency, and duration of drug shortages across the country. The other example is drug deliveries to pharmacies in more remote rural areas, with the constant deflation of drug prices over the years and the unfavorable evolution of the drug mix. Today, Quebec wholesalers keep an inventory of 1,400 products for which the distribution fees agreed by regulation are lower than the price of a unit stamp in Canada, i.e. $1.7. In concrete terms, this means that for 1,400 drugs, a wholesaler must purchase a drug from the manufacturer, store it in compliance with Health Canada's lot specifications, make it available through a pharmacist order system, prepare orders in packaging that takes into account the temperature and stability of the molecules, and then deliver the drug to Montreal, Quebec City, Blanc-Sablon or the Magdalen Islands, all for a distribution fee of less than $1.7. When you consider that distribution and pharmacy funding are directly related to the list price of drugs, the concern about revising the guidelines is obviously immense. The dominoes we embody are trembling and threatened, even if the PMPRB's focus is on the previous domino in the chain. What is even more worrying is that, looking at the structure of Quebec's distribution model and current regulations, we calculate that around 50% of distribution funding losses resulting from changes to the guidelines will affect Quebec wholesalers, compared with a demographic weighting of around 22%. In light of this reality, the BCPQ and QDP would like to formulate six recommendations and wishes in French. Firstly, that the PMPRB remain focused and does not interfere with its mandate to intervene with regard to overpriced drugs. Secondly, that the PMPRB withdraw from its guidelines price changes for patented and grandfathered drugs already on the market and focus solely on new drugs. Third, that the highest international price method be maintained as the benchmark for new drugs received. Fourth, that a complete analysis of drug prices, utilization and costs be carried out, so that compensation mechanisms can ultimately be recommended by the Board to governments, to spare those links in the drug chain that are not covered by the changes to the guidelines. Fifth, that the coming into force of the guidelines provides for a price transition period to ensure smooth inventory management and avoid, for both wholesalers and pharmacies, a sudden devaluation of products in inventory and reimbursement by the payer at a price lower than that paid to acquire the drug [inaudible]. And finally, we would like the PMPRB to commit to a very precise understanding and measurement of who in Canada will benefit from a reduction in patented drug prices, and to what extent, and who will be affected by these reductions, and to what extent. Dear Board members, the last few years have shown just how fragile the drug supply chain can be. We need only think of shipping issues, drug shortages, precarious geopolitical situations, and armed conflicts, or the political instrumentalization of the manufacture of active pharmaceutical ingredients by certain governments. In the face of these past, present, and future challenges, protecting Canadians' and Quebecers' access to the medicines they need must remain a priority. And, as I mentioned earlier, lower drug prices will reduce access to these drugs and treatments. The equation is simple: lower funding for distribution will lead to lower inventory levels and lower service levels in the regions, which in turn will lead to higher prices. In pharmacy, the loss of funding caused by lower prices for patented and, in the longer term, generic drugs, will consequently affect the financing of patient services offered in pharmacies, including technological investments, and will deprive pharmacists of their full role as the most accessible front-line healthcare professionals. Finally, the PMPRB is pursuing a laudable and important objective, but achieving it absolutely cannot be done in a vacuum from the rest of research. We will therefore respond to any initiative by the Board that promotes a broader appreciation of the dynamic realities of the entire chain, since for all payers the cost of a drug is rightly inseparable from the cost of distribution. Canada and Quebec boast one of the safest and most efficient drug supply chains in the world - no mean feat for a country with one of the lowest population densities in the world. We owe it to ourselves to preserve and protect this asset in the interests of Canadians, to ensure that we compare favourably with countries of similar population density. Faced with this objective, if there is one thing our industry sorely needs, it is predictability, and today more than ever. Thank you for your attention. I look forward to answering any questions you may have, in English or in French.   

Annie Perrot: [00:14:56] Thank you Mr. Mousseau. Indeed, my colleagues understand French; it is very kind of you to offer my colleagues the opportunity to ask their questions in English, but you can of course answer them in French. Thank you very much for this presentation, because, by creating an ecosystem that is quite complex and this downstream part of the chain is not a part that I personally know very well. So I am learning a lot from your presentation and that of your colleagues, since yesterday.  So I understand that the list price is the price with which you operate, but which you do not decide. Why did you choose the list price as your base price? Could you be making another choice, or are you forced to make this choice?

Hugues Mousseau: [00:15:40] In Quebec's regulatory environment, the list price is set by regulation of the Quebec government. The list price is therefore the indicator used to establish the wholesale distribution fee. In Quebec, this is 6.5% of the list price of the drug. So when there is a reform that will, for example, provide for listing agreements [inaudible], at that point, wholesalers are isolated in terms of impact because the list price is not revised downward. When the list price decreases by 5% or 12%, as in the scenarios right here, we have an automatic loss of funding of the same percentage. It is regulated.

Annie Perrot: [00:16:20] Do you know if it is only in Quebec?

Hugues Mousseau: [00:16:21] There are regulations elsewhere in the country. But in Quebec, it's 6.5% up to a maximum of $49, which corresponds to a molecule price of $754. It's a system that is been ….

Annie Perrot: [00:16:34] Now I understand the domino comparison. However, the volume of drug sales increases year on year. We're talking four, five, six percent. Doesn't that have a positive impact on….?

Hugues Mousseau: [00:16:49] So the compound annual growth rate in income growth, among other things, is fueled by population growth, the aging of the population in Quebec is of the order of 5% year on year. The cost of running pharmacy dispensers is 2.5 to 3 times higher. So we're talking about a basic increase in costs of the order of two and a half to three times more than the increase I have just described in revenues.

Annie Perrot: [00:17:11] Are you talking about labor, transportation, gas, anything?

Hugues Mousseau: [00:17:16] Exactly. Losses too, effectively, so all our structures, but mainly labor, and then transport and logistics costs. So growth is [inaudible], on the one hand, and on the other hand, the increase in drug prices we are seeing is mainly for biologics or specialty drugs, which are at the top of the range anyway, so it is not generating new income for wholesalers.. At the same time, agreements in Quebec, such as those signed in 2018 with generic drug manufacturers, resulted in an annual recurring loss of $19.5 million. Because prices are falling. It's a direct mechanism.

Annie Perrot: [00:17:54] In your presentation, you talked about weight analysis, and I couldn't take notes because it goes fast...for recommendations... so I'm going to read your presentation carefully. But the analysis of what exactly?  Was it the third point?

Hugues Mousseau: [00:18:15] Yes, the fourth. A comprehensive analysis of drug prices, utilization, and costs, focusing exclusively on the impact of the new guidelines on patentees. We would like to work with you to be able to specifically document the impact that HP could have, for example as a method and in the higher one on the downstream links of the drug chain, able to work together so that you can have a full appreciation of the impact of the policy on [inaudible]

Thomas Digby [?] or Peter Moreland Giraldeau [?]: [00:18:50] Last question from me. Does the Quebec government give any subsidies toward supporting remote delivery to remote or indigenous communities?

Hugues Mousseau: [00:19:02] No, not at the federal nor provincial level, so it is all through this mechanism of 6.5% unlike in countries like in Australia where they have established an envelope that is supporting distribution to remote communities. And that is something we have been advocating for but unfortunately not successfully. Thank you.

Phil Asey: [00:19:30] So the next presentation will be made by Karine Grandmaison, Vice-President, Access to Government Relations Canada. The floor is yours.

Karine Grandmaison: [00:19:47] Hello everyone. Thank you for joining us. My name is Karine Grandmaison, and I am Vice President, Market Access at Pfizer Canada. Thank you for your time today, for your openness, and it is a real pleasure to share another perspective as you're considering the next pricing guidelines for drugs in Canada. Pfizer Canada is a subsidiary of Pfizer Inc. and one of the world's leading pharmaceutical companies, and at Pfizer, we put science and our global resources to work for patients who need them. We strive for quality, excellence and safety in the discovery, development and marketing of health and human medicines. We have a diverse portfolio, and in our last report to the PMPRB, we submitted information for 80 drug identification numbers, DINs which is considerable. The patient is at the heart of everything we do: to meet the public health challenges we face, and we draw on the best scientific knowledge in the world, collaboration with the various players in the healthcare ecosystem and digital technologies to really speed up research into vaccine treatments, to innovate for and with patients, to meet their needs. That is really why I am here today. In 2023, more than 12.8 million Canadians benefited from our vaccines and medications. And that, in turn, allows people to stay healthier longer, live more productive lives and, hopefully, with appropriate treatment, lessen or reduce the burden on our healthcare system. To give you a recent example, we are particularly proud of the work we have done and accomplished in collaboration with the Government of Canada since 2020 to bring our COVID-19 vaccine and antiviral support to Canadians. We are really proud of the benefits our vaccine has brought to the Canadian healthcare system and economy. This collaboration to ensure rapid access to vaccines has had a significant impact. There is a study by Institute CDEO that suggested that if access to vaccines had been delayed by just six months, it would have resulted in economic losses equivalent to 12.5% of Canadian GDP. About $156 billion in 2021. Six months' delay. I'm not only a Pfizer employee, but I am also a mother, a sister, a daughter, and when my family needs it, we are very grateful if there is a treatment available in Canada. That is why we are so encouraged by the federal government's priorities, for example, the bio-manufacturing and life sciences strategy, or the sure national strategy on drugs for rare diseases, because these will help restore Canada's attractiveness for future investment. What I have learned working at Pfizer over the last fifteen years, and what I would like to share today, which is perhaps less well known, is how early some decisions about which drugs will be launched in Canada are made in the development and marketing process. Because let us not forget that less than half the drugs launched worldwide are available in Canada in the last decade. It is a study of innovative drugs in Canada…less than 50%. And these decisions are made very early on. The development process, of course, varies from drug to drug, but it is fairly regular when the drug is still in phase two, maybe three years before launch in Canada, a global company like Pfizer will look at which markets it is going to allocate commercial, clinical, access, regulatory resources to, and in what sequence. So we look at market potential, obviously, including price, patient needs. Part of my job is to advocate on behalf of Canadian patients and my family members to give access to the latest drugs, which is what we want. We are smaller than the European markets here, but we have a diverse population; we have a strong public health system, and we have a world-class collection of scientific talent and medical expertise. From 2019 to 2021, Pfizer has spent $160 million on clinical trials here in Canada. And for ethical reasons, we do clinical trials here, if we know we are going to launch the drug in Canada, here. So all this to say that several years before a product can be approved here by Health Canada, we need to have substantial information on all aspects of Canada's pharmaceutical policy. And on prices, both at launch and during the patent period. So what we would like to see in the next guidelines for the PMPRB are four main things. Firstly, a price review system that is predictable and clear, so that pharmaceutical companies like mine can make good decisions about launching investment, sequences, very early in the process. So, a predictable and very clear system. Secondly, guidelines that enable companies like mine to comply with patent law. So we, at Pfizer, really do guarantee absolute ethics in everything we do, because it is that integrity that earns us the trust and respect of the people we serve. So for me, the aim of the guidelines is really to help patent holders comply. They should encourage, in other words, voluntary compliance. It is a goal. A goal is not to catch. The third point is to have guidelines, obviously, that are aligned with the PMPRB's legislative mandate. We have lived through a period of uncertainty over the past seven years, but now we need to return to a much higher level of predictability and understanding regarding the definition of excessive pricing. This includes being able to consider all the factors listed in section 85, because they are all listed and important. And the PMPRB, when you look around the world, has a unique and very specific mandate. And that is what needs to be met in order to make the best decisions. And the fourth principle I would like to suggest is to have guidelines that do not run counter to the political will of the federal government, including the adoption of modern, agile regulatory frameworks, and to foster a world-class bio-manufacturing and life science system and bring Canada back to that level. What follows from these four principles is that, for us, under an excessive pricing mandate, any price within the range of the new set of cooperating countries should be considered non-excessive, permissible and in compliance. So, the highest international price should be the criterion for the launch price. Predictability and stability are also necessary throughout the life cycle, and this is something that is key, because when we make our assessment of market potential, we are not just looking at the launch price, we are looking more at the whole life of the patent, potentially. So we need to see, to understand in advance what is going to happen at that level. When there are price changes, and my previous colleague noted this, they are really causing disruption throughout the distribution chain; he gave several examples, on generic drugs throughout the supply chain. So, we sell a drug and two years later, it is returned by pharmacies for reason X, the price has changed, so in our financial systems, we have to make these adjustments when we have eighty DINs to manage in compliance in Canada, we have to make sure that there are as few...  The changes have to be really justified by the mandate. So those are the four wishes we would like to express. I would be happy to answer any questions you may have. And also we will be giving additional information during our consultation and written submissions between now and the end of the year. I would also be happy to provide additional information in English if required or desired in relation to the elements I have discussed today. Thank you again for this openness and dialogue about the guidelines, and we look forward to the Board's continued engagement with stakeholders in the life-care ecosystem throughout the development and finalization of the guidelines. Thank you.

Annie Perrot: [00:31:07] Thank you very much, Ms. Grandmaison. I am glad you mentioned the Pfizer vaccine, because there is a lot of Canada in it. If I may offer a small opinion, you could have talk about Acuitas and Peter [inaudible] without whom, to my knowledge, this vaccine would not have been possible, so it would be to Canadians' advantage to know a little more about it. There you go, it rubs off on me every time, you see, you cannot miss it. So I understand, and I heard what your colleagues said yesterday, the big pharmaceutical companies, and then what you said this morning, because what you are really saying is that PI [?] in French, the highest international price -I prefer HIP in English- is the bar you are setting. What I would like to hear a little more from you is how would we, if you were in our shoes, you would treat afterwards? Because our mandate is to evaluate the price of drugs, not just at one point in time, but along a continuum called the life of the patent you hold. So how would you like us to do this part of the job? At what point should we reassess, what should be the trigger? I would like to hear a little more about that.

Karine Grandmaison: [00:32:49] This is a good point. I could have underlined Acuitas [?] and it is one of the elements that the big pharmaceutical companies bring to the table: collaboration. Today, I believe that nearly 50% of new drugs launched are in fact developed in partnership, in collaboration with biotechs; that is how it works, and that is all part of the evaluation we do very, very well. It is difficult to propose an isolated mechanism because, obviously, it depends on the other aspects you decide on for the guidelines. I would say that frequent re-evaluation is not desirable, firstly, because with frequent re-evaluation, the principle of predictability is not achieved. How will we know, three years in advance, how things will evolve in the Canadian market? So, it is going to be hard to make our business case, if you will pardon the expression, not only at launch, but for the duration. And that is more important. So, predictability. Secondly, I know that the Board wishes to adopt the principles of modernity and simplicity in the adoption of guidelines, and I would ask how frequent re-evaluations will help the principle of simplicity. My colleague and I talked about it this morning; every impact on price change has to be reflected across Canada, has to be reflected across the entire distribution chain and continues to have impacts every time for 80 DINs. So, that would be the question. And that is the conceptual point of view. Now, the point of view on the basis: we should make sure we stay very aligned with the mandate, which is to make sure we do not overprice. So, you know, there is often some leeway we can have, for example with the CPI, the Consumer Price Index… we can find ways to ensure that the mandate is respected while still being compliant, but without the need for a strict process, and on what basis. We must not go for factors that have to do with the pharmacoeconomic.

Annie Perrot: [00:35:32] So, what you say is if the rules are known, it becomes predictability. Is that what you are telling me?

Karine Grandmaison: [00:35:37] If the rules are known, it helps with predictability.

Annie Perrot: [00:35:42] Thank you very much.

Phil Asey: [00:35:50] I now invite Julie Desrosiers, [inaudible] partner, to make her presentation. The floor is yours.

Julie Desrosiers: [00:35:56] Thank you. Hello. A pleasure to be here before you this morning. I represent the coalition that brought the constitutional action on the validity of the amendments to the Patented Medicines Regulations, and the reason why my clients, seven different-sized pharmaceutical company, decided to bring an action in 2019 is because, in Canada, when it comes to drug price controls, the levels of government do not have the same responsibilities. It is the provinces that have the constitutional responsibility to control drugs. The federal government, through the PMPRB, which is enacted under the Patent Act, can only control a form of patent abuse that may represent excessive pricing. If a regulation or guidelines are used to control the price of drugs, rather than to control excessive pricing, which would be a form of patent abuse, this is an overreach of the Board's constitutional power. The coalition didn't bring this action to try to obtain high drug prices. But when the federal government oversteps its jurisdiction and controls drug prices, it creates a whole ecosystem of problems. It creates confusion and reduces predictability. It can even have an impact on rapid access to cutting-edge drugs needed by Canadians. Why? Because the provinces already occupy this field and intervene at the level of the control and this is so true that the Quebec government, which reimburses drugs for 50% of Quebecers, intervened in this case to support the position of the pharmaceutical companies. What did the Court of Appeal decide? I think I will mention this to you, because I think these elements should serve as a guide in your thinking on the development of guidelines. The Court of Appeal declared unconstitutional two of the three planned amendments. This decision is binding on the Board. I am telling you that these reasons must serve as a guide in drawing up the new guidelines. And why in terms of guidelines? Because if the Court decided that, even if the guidelines are not binding, it is through the guidelines that the Board operationalizes its responsibility and functioning. So, the guidelines themselves must embody the constitutional limits of the Board's competence, which is a control body for patent abuse in the form of excessive pricing, not a price control body. So, when we think of excessive prices, these excessive prices that constitute a form of patent abuse:  it is not patent abuse if the price is excessive and less than abuse. But there are some very pertinent comments in the Court of Appeal's decision that reflect this, for example, -I will give you the relevant paragraphs- paragraph 48, where the Court says that sections 79 and 103, which govern your operation of patent law, set up a specific regime to control patent abuse for medicines. This is the regime that constitutes the Board. In paragraph 199, the Court adds: "The Board exercises its mandate in matters of price control only when it considers that the patentee has abused his/her patent and imposed an excessive price. You must understand excessive price in this context. Then what are the more specific principles that should inspire you? I think this can be inferred from the findings of the Court of Appeal. The Court of Appeal declared that the pharmacoeconomic criteria were unconstitutional because they led to price controls. Why? Because the Court said that you start with a maximum price that is not excessive, and then you use pharmacoeconomic criteria to lower that price. Now, when we talk about a non-excessive maximum price, it is non-excessive, it doesn't constitute patent abuse, and we cannot then use other criteria to bring that price down, because if we do, which we do, we fall into price control, we leave the jurisdiction of abuse control and we fall into price control, which is the jurisdiction of the provinces. Why did the Court decide that the new group of countries, PMPRB 11 as it is called, was constitutional? Because it is not unreasonable to compare a price in Canada to the price of the same drug in this group of countries, which are comparable to Canada, and which all have price control measures. So, we control the price, we check or compare the price in Canada to prices in countries that all control drug prices, and then, if the prices in Canada were higher than prices in those countries, that could be an indication that the price in Canada is excessive if there are no other jurisdictions, other explanations. And it was clearly on this basis that the Court of Appeal concluded that the new group of countries was constitutional. So I urge you to keep this in mind: a price higher in Canada than the price in these countries for the same drug may mean an excessive price. The Court also indicated that once an introductory price is deemed not excessive according to the criteria established at the time, at that time, that price can be indexed according to the consumer price index. And with these elements in mind, I am going to try to address some of the elements you have indicated in your consultation document. What weight is given to the 85 factor and how are they assessed? I submit to you that in the context of an investigation and a hearing, the Board must evaluate each of the recognition criteria. Except that, at the guideline level, where it is a bit like a triage measure, you do not have to evaluate each of the 85 criteria; you could choose, for example, a criterion related to the group of countries. But I submit to you that if you choose a criterion that is related to the group of countries, the only constitutionally valid criterion is the HIP. Why is that? Because in all the reference countries, there are price control measures. If there are price control measures, there can be no patent abuse in Canada, if the price in Canada is not higher than the prices of the same drug in these countries. I would also like to point out that the HIP is simple, predictable, and easy to apply, and that it also gives you the comfort of knowing that you are carrying out your mandate properly, because all the countries you will be looking at already control drug prices. So there are no excessive prices in those countries. So, there is no excessive pricing in Canada if the Canadian price is below or not higher than the highest price in the group of countries. In no case, however, can you, in my opinion, based on the conclusions of the Court of Appeal's decision, start from a criterion that allows you to identify a maximum non-excessive price and use the other 85 criteria to lower that price. Because if you do that, you are back where you were with the pharmacoeconomic factors, and you use the criteria to lower a price, which is a price control measure. And so we no longer have a mandate to prevent the patentee from selling the drug at an excessive price. As I mentioned, if you use the group of countries as a reference factor, it is the highest price that would be constitutionally valid. The MIP is inadequate. Why is that? Because once you have established that a non-excessive price cannot vary over time... you cannot have a non-excessive price that would be dragged down, for example because the drug is launched in one of the PMPRB 11 countries at a lower price. Nor can we have a drug whose price would become excessive because of a change in the exchange rate or because the drug becomes generic in a PMPRB 11 country. This cannot have the effect of causing the patentee in Canada to abuse this.  When is the analysis done? At launch. If you have sufficient information on the price in the reference countries. But if you do not, there is nothing to stop you waiting a year, two years, three years before analyzing the maximum price of an excess in Canada. Why would that be? Because, in any case, under the regulations, if it turns out that a patentee had launched a product in Canada at a price higher than the maximum excessive price, he/she will be obliged to reduce his/her price, and then reimburse all excess revenues. So even if you do the analysis three years later, it is in nobody's interest to launch their drug at a price higher than the HIP in Canada, because they are going to have to pay back all those excess revenues anyway. So wait until you have enough information about prices in the comparator countries; then do the analysis. If the price is excessive in Canada, sanctions will follow, and I submit to you that once again, it is simple, effective, practical, and predictable. What about new versus existing drugs? Existing drugs, i.e. those that were evaluated before July 2020, were, according to the regime in effect at the time and the applicable criteria, evaluated as being sold at a non-excessive price. The Court of Appeal tells us: you cannot start with criteria that allow us to determine a price is not excessive and then use other criteria that will have the effect of lowering the price. So let us leave existing drugs at the maximum non-excessive price that the regulations and guidelines in force at the time had determined, and focus on new drugs, because it would be totally illogical and unthinkable for a patentee who had not abused his/her patent by selling his/her drug at an excessive price before July 2020 to suddenly abuse it because the reference rules or reference criteria have changed. And one last point. How often should you review drug prices? Once you have set a maximum price that is not excessive, you cannot then use different criteria to bring the price down, because that is price control. It was on this basis that the Court of Appeal concluded that the pharmacoeconomic criteria were exceptional. So, I am open to your questions. You can ask them either in English or French.

Annie Perrot: [00:49:37] Thank you very much, Maître Desrosiers.  I was just going to say that I felt like I was in law school at the University of Ottawa 30 years ago. So thanks for the legal opinion, I will read it. I think you provided the documentation this morning and I will need a little more time. I do not feel empowered to have such an in-depth discussion legally; there are still a few questions I would have, but I will save them for later.

Ms. Kobernik: [00:50:30] Just a quick question, just a clarification please. Did you say that the drugs in the PMPRB 11 are always unavailable? That can never change? I just want to know if that is what you said about that. I just want to know.

Julie Desrosiers: [00:50:58] My logic is that these countries were chosen because they are similar to Canada, and they all have price control measures. If the government controls drug prices, the price of the drug will not be excessive. So, as a benchmark, this is a group of countries that all have price-control laws and regulations, then the price of the drug in this reference group will not be excessive, excessive in the sense that these countries….

Annie Perrot: [00:51:35] These countries themselves are revising.

Julie Desrosiers: [00:51:37] Because they do price control like we do in Quebec.

Annie Perrot: [00:51:41] This is the jurisdictional distinction.

Julie Desrosiers: [00:51:42] But they do price control like we do in Quebec. They do not look at excessive prices, they only look at accessibility….

Annie Perrot: [00:51:51] That is where you make the distinction between [00:51:52] [inaudible]. [00:51:52]

Julie Desrosiers: [00:51:53] Because you have the power to do so. So they act like the provinces, controlling drug prices. The prices in those countries are controlled, as the States have the right to do. But you, your jurisdiction, since it is a control of excessive prices, which is something else, I submit to you that when we look at the prices controlled by the state that reimburses them, these prices are not excessive, and they are the reference prices adjusted in your mandate, which is a mandate to control excessive prices. Thank you.

Guillaume Couillard [?]: [00:52:35] Due to the legal nature of the command we just heard, as you are familiar, the panels here today are sometimes tribunals, and these legal arguments may come to us again. So we are restricted in these kinds of questions we can ask. Thank you.

Julie Desrosiers: [00:52:58] I understand. It is interesting though.

Phil Asey: [00:53:04] The next presentation will be given by Kevin Sauvé, National Public Health Manager, GSK Canada.   

Kevin Sauvé: [00:53:13] Good morning. As it was said in the introduction, I am Kevin Sauvé, GSK's National Head of Public Health, a title that essentially boils down to the management of vaccine contracts with governments and then with some scope on the private market side. On behalf of GSK, I would like to thank the Board for the consultation, the whole consultation process, and the collaboration, and we hope it will continue. By the way, I forgot to mention that I also sit as President of the Vaccine Industry Committee Association, the VIC. I am representing GSK today, but if I am referring to industry issues or talking about the industry, know that it comes from a place of experience through the VIC. But I am really here to represent GSK. At this point, in the absence of the proposed guidelines, of course, my approach will focus on the principles that we believe are fundamental to building an important foundation for future versions of the guidelines. First, I want to stress the importance of future versions of the guidelines reflecting the Board's mandate to prevent and protect Canadian consumers from patent abuse and excessive pricing, as confirmed by the Courts in recent years. Secondly, it is critical that the guidelines lead to predictability for patent holders for the full term of the patent. This is important because changes and potential changes over time are sometimes foreseeable, but for patent holders, it is important to be able to predict what is to come, not just in a year or two, but for the duration of the patent. In the first newsletter… I will have to read it because I don't know it by heart… In the Board's first newsletter in 98, the principals stated that the most effective way to protect the public from excessive pricing and to rely on the voluntary actions of patent holders is for the Board to believe that voluntary compliance is based on, and I quote, "clear and understandable guidelines that provide certainty and predictability of the definition of excessive for patent holders to the maximum extent possible”. End of quote. In carrying out its mandate, GSK believes that the guidelines should focus more on products with a higher risk of excessive pricing. Since the risk of excessive pricing for vaccines is already very low because of the numerous supply stages, we are also going to talk now, if you like, about the private market, understanding that there are mechanisms in place for public vaccines, but there are also price-controlling factors on the private market side. If you like, we can talk about that later. So, for vaccines, we are recommending a complaints-only approach, as was the case in the past. I don't have the data, and we don't have… I'm not sure we have visibility on the history, but collectively, the industry, the committee, did not recall any price complaints on vaccines in the past. So I think the past could be an indicator of what we can expect if there is different data, I would certainly correct it, but collectively, we did not remember having a complaint about that.

Annie Perrot: [00:57:29] Guillaume?

Guillaume Couillard: [00:57:30] At the same time, the process is confidential, so you have to be careful with that.

Kevin Sauvé: [00:57:34] I totally understand. If we look at vaccines from the public's point of view, we know that there are already several steps in place to control… We cannot say a control… but which limits excessive prices. There are pharmacoeconomic analyses carried out by the Canadian advisory committees, i.e. NACI, and also several of the provinces, which have their own advisory committees and can carry out their own analysis. In fact, most of the provinces carry out pharmacoeconomic analysis before making a recommendation to their Ministry of Health. So, there are already steps that can be taken to assess the fair price of a vaccine. And the most important step is when a vaccine goes on the public market. So it is funded by a provincial government. At that point PSPC, for the majority of vaccines in Canada, issues call for tender that are strictly based on the lowest price. So there are already very concrete measures in place to legislate or regulate public vaccine prices in Canada. So, for these reasons, we recommend that we continue with a complaints-only approach, that we call the light touch; we do not think that vaccines, with the prices of vaccines too, if we compare them to the rest of the drugs that are available in Canada, vaccines are relatively accessible for the majority of payers, whether it is an individual, private insurers or governments. So we do not think this is a sector with a very high risk of price gouging. I will stop there, there are certainly questions and comments, and I am prepared to answer them. I would like to tell you, however, that I am not a technical expert. So the nomenclature of all the work, it is not my expertise. Moreover, I invite the Board to invite the manufacturers, to invite the industry, to invite the industry committees to work with your teams if there are more technical questions. We are ready and willing to do that.

Annie Perrot: [00:59:53] Thank you very much Mr. Sauvé. I understand that you are making a distinction between public vaccines like I imagine [inaudible] COVID, and things like…there are plenty. I would say several, versus vaccines that are… what do you call them…private? Personal? Do you have suggestions on how these should be handled by the Board?

Kevin Sauvé: [01:00:19] Yes. Well, we have talked a lot about the public side because the processes are clear. However, there are processes on the private side that are just as important. Here, I am going to talk about GSK specifically. At GSK, 80% of the volume of vaccines distributed in Canada are made in the public market, i.e. by the government. So here, only 20% of GSK vaccines are distributed through the private market. In the private market, it boils down to two things: a private insurer who pays or an individual who pays out of pocket and is not reimbursed. I do not have the data myself, but the Canadian who pays out of pocket is a very small portion of the market of Canadians. Because there are excellent public immunization programs in Canada, especially for children. A lot of work is being done to improve vaccination coverage among adults, and private insurers have made progress in terms of their ability to offer programs that include vaccination. And we can see and measure this progress in terms of the number of heads insured in Canada for vaccines, and this figure has soared in recent years. So we can see that private insurers have an interest. They are working with the industry to put in place mechanisms that will enable more Canadians to have access to a vaccine without payment. Let me answer your next question. If we look at the rest, if the out-of-pocket payer is a small part, it means that private insurers have the bulk of the private market. I can tell you that some private insurers have all the tools, all the will and all the motivation to negotiate their prices with manufacturers. So it is not something new for them, they have the means to do it. The table is open also for GSK, I assume for the majority of vaccine manufacturers here in Canada. So this mechanism is already in place, and I can assure you that the insurer has every incentive to pay the lowest price for the vaccines it will reimburse.

Annie Perrot: [01:02:39] So I understand that the "on complaint only" recommendation could apply to all previous vaccines.

Kevin Sauvé: [01:02:48] I would like to end with one final point which is related to that. There is a dynamic between the private and public. And this dynamic is international.

Let me explain: there are decisions that are made on the side of regulated prices or a list price, without consideration for the private and public market. If I want to go into more detail, it doesn't do anything for a manufacturer... I am going to speak for GSK... it doesn't do anything for GSK to have a very high list price, this private side is what is going to have an impact on the private market after that, to have a big percentage discount to meet government expectations for negotiations. It is not to our advantage because we have to in a company... we have important international dynamics or can I… my price in Canada may not significantly differ from the pricing structure or strategy in Japan, in Europe, in the United States... we cannot have discounts that vary enormously because that creates a dialogue with other countries that no manufacturer [01:03:57] [inaudible] why [0. 3s] Canada is given X percentage, then I don't know, Japan or France, a big percentage that is much lower. It is not something we are going to maintain. We prefer to have a price that is tighter [inaudible] is international, that is tighter. It is more standardized in our approach; it creates fewer conversations with payers, especially governments, who wonder why so-and-so is at such-and-such a price and I do not. It is just to explain that there are important dynamics between the private and public markets. And there are international dynamics within a company which means there is already pressure to have a clear, transparent strategy and not have to constantly re-explain why we are giving X percentage when Canada may have paid more.

Guillaume Couillard [?]: [01:04:54] I May I add one thing? Regarding complaints or internal investigations. We never disclose who is [inaudible]; we either receive a complaint or we investigate. And the only time we can have a public inquiry is if the MBCO, the voluntary argument is published at the hearings. Just to make you understand that our internal process, when we launch an investigation or if we receive a complaint about a drug, it is not something we disclose to the public.

Kevin Sauvé: [01:05:24] Thank you. That would explain why we weren't able to establish the list of complaints in the past. But collectively, my industry colleagues and I, including many, many experts, had no complaint memory beyond that.

Annie Perrot: [01:05:39] Thank you very much.

Kevin Sauvé: [01:05:41] Thank you.

Phil Asey [01:05:49] The next presentation is by François Villeneuve, Swift Canada pricing access manager.

François Villeneuve: [01:05:57] Hello! Good day to the Board's members. I will start by introducing myself, François Villeneuve, President of Market Access, and Pricing at [01:06:12] [inaudible]. [0.0s] I have been working in the biopharmaceutical sector for almost 30 years, mainly in Canada. So I have witnessed and even participated in, I would say, several consultation exercises like this one. And then mainly those who have been led by your group over the last few years, a few as you know. I would first like to thank you for the opportunity to share our perspective as an innovative company bringing new treatments to Canadians. At BMS, we firmly believe that collaboration between stakeholders in the Canadian healthcare system is the way to deliver the best results for Canadians. So, we are very pleased to be here this morning to participate. By inviting our sector to participate in this phase of consultations on the new guidelines, we believe the PMPRB has also taken a positive step forward for the development of guidelines that are fair and sustainable. As a patent holder, you will understand that we are obviously particularly invested in this process, because we are going to be directly impacted, affected by the results of these conversations, this discussion we are having today. So, in our view, the development of the new guidelines must reflect the Board's mandate to ensure that the prices of patented medicines are not excessive; a mandate which has been reconfirmed before the Courts on a number of occasions recently, and which has been well explained, I believe, by [inaudible] persons, earlier. We believe it is vital to ensure transparency and predictability for patent holders in the process of both screening and evaluating available treatments. Over the next few minutes, what I would like to simply outline are three fundamental principles that BMS believes are absolutely necessary to create an environment in which innovative global companies like ours can both bring their research and their essential medicines to Canada. The first principle - I do not think you will be surprised; you have probably heard it many times. It is the one of credibility; what remains important to us is that the Canadian healthcare system enjoys a fine reputation worldwide. On the other hand, this was mentioned, I think, by previous speakers too... In 2021, less than half the drugs launched in OECD countries will be available in Canada. For us, that seems a long way off our actions. So what Canada needs is a predictable pricing framework that provides a fair and consistent framework for restoring and protecting the value of drugs. A predictable pricing framework means that price stability is guaranteed throughout the commercial life of the patented drug, so that medium- and long-term commercial decisions can be made by the patent owners, like us. We therefore believe that, in practical and concrete terms, drugs that have been launched under the previous guidelines should be able to retain their prices and be grandfathered until the end of PMPRB jurisdiction, i.e. patent expiry. And the assessment of global drug prices and how they should reflect the competence of the PMPRB, with regard to excessive prices attributable to the abuse of patent rights. Consequently, the highest international price, not the median, the only standard consistent with the legal mandate of PMPRB is to ensure that prices are not excessive. In addition, this valuation should apply, again in our view, for the entire duration of the patent, without being subject to re-evaluation, the new benchmark in future reporting periods or under potential new guidelines. Implementing these principles will provide reasonable assurance of a stable price for the entire life of the drug. The second principle is that of sustainability. The concept of sustainability for patent-holders has two important components: it involves pricing policies that are tolerable and must be maintained at a certain level. As a patent holder, the new pricing framework must consider the value of drugs in today's healthcare system, while enabling these multiple stakeholders to invest for the long term. These may include research institutions, clinical researchers and innovative biopharmaceutical companies bringing new medicines to the public. Innovative companies like BMS invest in Canada in many ways, including research and development, initiating clinical trials with local research institutes, and ensuring sometimes compassionate access to drugs before they are even reimbursed by the system. We are proud to support a supportive environment for education at the cutting edge of science, to make Canada a nation where more patients benefit from lifesaving, innovative medicines. So, how would a sustainable pricing framework in the PMPRB encourage global companies to continue to exist in Canada? Not only by completing the regulatory or reimbursement process to import our drugs to market in Canada, but also by investing in early-stage clinical research trials for Canadians who urgently need new treatment options now and in the future for severe illnesses. The third principle I would like to bring to your attention this morning is the value of innovation. Investing time and resources in medical research is a highly complex and time-consuming business. Breakthrough innovations are often the result of decades of clinical laboratory trials, long before they are prescribed by a doctor. The recent pandemic is a perfect example - we heard our Pfizer colleague illustrate some of these points - and much of the research that led to the rapid development of COVID-19 vaccines had already been underway for decades in an innovative biopharmaceutical sector. It is therefore essential that the CMPMB guidelines support prices that reflect research and development investment in Canada which are attractive enough to support innovation. Global companies assess the viability of commercializing new products in every country in which they operate, and do so, of course, according to a variety of criteria. That said, when the value of innovation is recognized, the country is supported, even prioritized, as an early launch market for offering innovations to its still plural population. As I mentioned earlier, in the decade to 2021, only 44% of all new innovative drugs launched in OECD countries were available here in Canada. This compares with 85% in the US and close to 60% in the UK. Canadian pricing guidelines must therefore consider the value that medicines bring to Canadians and to our healthcare system, yesterday, today, and tomorrow. It is only when a loved one receives a devastating and sometimes life-threatening diagnosis that they truly appreciate the availability of the innovative medicines that have been discovered and developed over the coming centuries. In closing, collaboration is in the nature of biopharmaceutical companies. It takes hundreds of collaborators to discover and develop a drug. And we believe that the CMPMB as a government stakeholder must also collaborate and commit to a predictable and sustainable framework and inclusive process in which patent holders can provide relevant information regarding the establishment of guidelines, as they will have a direct impact on our future activities. In conclusion, we ask the CMPMB to consider the comments of all stakeholders having participated in the roundtables, to ensure a fair and iterative development process, even before finalizing the new guidelines. What we want is to learn from the last few years and work together so that we can quickly reach and implement new guidelines. At BMS, we are grateful for the opportunity to provide feedback. We would like to continue the dialogue to provide additional perspectives and expertise, perhaps by participating in technical groups, which would allow us to go into greater detail and have a truly collaborative process to reformulate the guidelines. In closing, we believe that our collective goal can be to continue to ensure that Canadian patients have timely access to all the innovative medicines they need, when they need them. Thank you.

Annie Perrot: [01:15:10] Thank you very much, Mr. Villeneuve. In your presentation... you didn't surprise me. You talked about HIP. Where I was perhaps a little surprised compared to other presentations, and I will give you time to elaborate on this, is that you said: our second principle is sustainability. And then you talked about the importance of considering the value of the drug in the healthcare system. We have an independent group that looks at this; it's really experts, doctors, pharmacists who determine whether it's a substantial break through, a medium one or not what we call [01:16:01] [inaudible] light. [1.2s] There are many in this category. So you are saying, basically, you have to look at the HIP, but you also have to look at the market where we are at right now.

François Villeneuve: [01:16:19] Not quite. I will try to be more precise. What I am trying to communicate is that we operate and act in a specific sector, the biopharmaceutical research and commercialization sector. As you know, we have to deal with several players, each with their own roles and responsibilities. You each have your own jurisdiction, whether at federal, provincial, or even local level. And we have to navigate in this environment. I believe that over time, although this system is far from perfect, there is a certain balance. Our hope is that, in the context of what interests us here today, which is the role of CMPMB, our hope is to insure that CMPMB acts in accordance with its mandate, which is to ensure that patented drugs in Canada are not overpriced. We would like to be able to continue to bring our innovative products to the market and make them available to as many Canadians as possible. On the other hand, we want to make sure - and this is part of the process of establishing new guidelines - that there are no unreasonable measures that could upset this fragile balance here in Canada. Because we want to be able to continue investing in Canada. And, as you know, investment and research are an extremely complex business. It is a job that requires collaboration with a multitude of partners. It requires significant investment, not just from innovative companies or research centers, but from the various levels of government that also contribute. And that is over a very long life cycle. It often takes 10 to 20 years to develop these new technologies and make them available to Canadians. What we hope is that there will be no unreasonable measures within the framework of your mandate, which is defined as you mentioned earlier, to enable us to continue to support this investment and ensure that not only can we commercialize, but we can also carry out research and ensure that in the future, we will also have innovative products for Canadian patients, who need them. We believe that there are other players in the Canadian system who are there to assess therapeutic value, etc. But in our view, it is not enough. But in our opinion, this is not part of the CMPMB's mandate. So, that is why we have chosen to suggest that you anchor yourselves mainly [inaudible].

[Declan Hamil] Peter Moreland Giraldeau [?]: [01:19:18] We have I think, perhaps a different understanding about the number of new medicines that are not launched in Canada. We have different numbers… I have seen them before, but we have a different mathematics on that. We discussed this somewhat yesterday, and you have written comments to us and if there is any way you can help us understand… The document we have Meds Entry Watch; there is figure 8.4 which describes a number of where there is a difference, and if you can compare your numbers to ours it would be very helpful for Canada to understand which drugs are actually not coming to Canada. There is a very small.. you describe a much larger number…

François Villeneuve: [01:20:10] Yes, of course, we will be happy to do it. Basically, I don't have the reference in front of me, but we are using the same reference as Innovative Medications Canada. I think they used similar references yesterday, but I will be happy to add this reference to our written submission.

[Declan Hamil] Peter Moreland Giraldeau [?]: [01:20:27] And one more question. It is not our role to consider the full scope of your investment, your research investment in Canada. We do not have authority to go too far on that. We have a limited authority to ask about R&D, but you are requesting durability to allow for a long-term investment in research and development in Canada. But as a Canadian I cannot help but observe that the actual investments in Canada, even if we take the highest numbers proposed by IMC as what the investment in Canada are, it is still far below the international standards of 16-19% of revenues, which is common in other countries in the world, and certainly on average for all the big companies. Can you explain why Canada, even though we have had durable regulations in the past still has never given us the investment that would be comparable to international levels. It is a hard question and BMS does not have to….

François Villeneuve: [01:21:41] I can only answer on behalf of BMS, and from what I can confirm or on behalf of BMS, that we have always met our research and development investment obligations as defined by the CMPMB, and even well beyond that. So for us, Canada remains an extremely important pole for our investments in clinical research, and we hope to be able to continue along this path.

Phil Asey: [01:22:22] The French presentations are over. We are actually a little early, but we are going to take a break anyway. It is going to take a little longer, so we will resume at 11:00. So a 45-minute break. Thank you to everyone who presented. You will of course be coming back if you wish to take part in the presentation in English, which will resume at 11 a.m. and continue all afternoon. So we are ready for a break.