Health Committee on May 16th, 2007

[The Chair, Conservative, Rob Merrifield]

Seeing as we have enough members around the table, we will call the meeting to order.

I want to thank the witnesses for coming forward. This is our last official day of witnesses before we bring in the department for one more look at it, so we're crowding very close to the end.

I'll just let the witnesses know that we want to leave a bit of time for the committee to be able to discuss the report in camera, right at the end of the meeting.

So with that, we will want to welcome our witnesses who are coming forward to present on this important issue. This is pursuant to Standing Order 108(2), the study on prescription drugs, the common drug review. I believe this is our eighth meeting.

Thank you for coming. We look forward to your presentation to the committee.

We have with us, from the University of British Columbia, Dr. Steve Morgan. Steve Morgan, it's good to have you with us. You're from the Centre for Health Services and Policy Research.

Also, from the University of Alberta, we have Dr. Devidas Menon. It's good to have you here from the School of Public Health.

And, as an individual, we have Jean-Claude St-Onge. It's good to have you here as well.

With that, we will open the floor in that order, with the University of British Columbia, starting with Dr. Morgan.

The floor is yours. You have 10 minutes. We look forward to your presentation.

[Dr. Steve Morgan, Assistant Professor, Centre for Health Services and Policy Research, University of British Columbia]

I'd like to begin by thanking the committee for the invitation to speak today.

I'd like to take a moment to particularly acknowledge the support of the Canadian Institutes of Health Research, the CIHR, both for my personnel support and for my program of research. Without the CIHR, frankly, academics like me would be unable to attend meetings like this.

As evidence of the international recognition of Canada's CDR, I would also like to acknowledge the U.S.-based Commonwealth Fund for providing us with a grant to study the common drug review in an international context, with an aim to providing lessons for Canada and for the United States.

Before turning to an international context, I want to quickly go over a few questions about why one would review medicines.

I'm an economist by training, and I perhaps look at markets in a slightly distinct way from other health policy analysts. I want to first reflect on an example that we would consider on the idea of market discipline.

It is the idea of using the market to find and reward value for money in a marketplace. This would occur if consumers were well informed about their needs and wants; if they could reliably judge a product's ability to meet those needs and wants; if they had a variety of options to meet their needs and wants, including the option of not consuming; and finally, if they faced the full costs of the purchases they make. Under such circumstances, as you would find in most shopping centres, consumers could in fact find and reward value for money in the marketplace.

However, the pharmaceutical sector is different. Pharmaceuticals are not consumption goods; they are inputs into care. We are not in the business of purchasing pills and tablets in this sector. Whether you are a patient or it's a drug plan, you're in the business of purchasing health outcomes.

If you are an individual who has a need for improved health incomes, it is likely that you are vulnerable in some circumstance. Therefore, as a consumer, you may not necessarily have the time or the ability to appraise and judge the options available for your needs.

In fact, to establish the effects of treatment options is very difficult. It is tough to decide whether nature, placebo, or the drug in question is responsible for changes in the health of a patient or the health of a population. Therefore, we require large clinical trials. In fact, because no one trial is typically definitive, we tend to require the meta-analysis of many trials involving thousands of patients, or what is referred to as health technology assessment.

Another unique characteristic of the pharmaceutical sector is that patients do not pay. This is not a condemnation of either private or public insurance, but it's an acknowledgment that when selecting treatment options for a given need, patients will not typically be as price sensitive as consumers in a regular marketplace. Similar to patients, physicians may not be price sensitive, even if well informed, given the fact that doctors seldom pay for the prescriptions they prescribe.

What are the implications of this? From an economic perspective, pharmaceuticals and their consumers are non-standard in economic terms. I would argue that imperfect information about value for money is the single greatest market failure in the pharmaceutical sector. The lack of a financial incentive to act on information about value for money would be the second.

I'm going to skip the topic of expenditure in Canada as classified by the PMPRB, but I'd be glad to take questions on this.

I'd like to turn to the fact that around the world we are seeing an increasing number of national drug review processes to help correct market imperfection about information concerning value for money. But why do they exist?

Well, as acknowledged, drugs are not ordinary goods. They are inputs into care. The licensing process required to bring a drug to market is designed for purposes that are different from the intent of drug coverage policy. Drug coverage policy requires comparative information and economic data. The science is extraordinarily complex. Therefore, it requires that expertise and capacity be built in a country to be able to handle the task of technology assessment.

I think these are some of the reasons that countries have what we would refer to as central drug review processes.

Turning to what the goal of these things is, I would argue that it is largely around economic efficiency and decision-making, in light of the fact that public and private budgets are limited. We do not have infinite resources. Therefore, we require some basic evidence and some simple economics to make better decisions around how we allocate those limited resources.

The kind of information we need to know is this. For example, is a product less effective, equally effective, or more effective than comparators? Is it less expensive, as expensive, or more expensive than its comparators? With those three bits of information on each dimension of cost and effectiveness, decisions can be informed through central drug review processes.

Some of the decisions will be easy, such as that when a drug is less effective but more costly than alternatives, surely no one will consume it. Other decisions will be ones in which you will require deliberation with the public and the payers to decide whether a drug, for instance, that is more effective but more expensive is actually worth the additional cost to the public budget or to private budgets. Similarly, some decisions will require negotiation between purchasers and providers, such as in cases where drugs are about as effective and about as costly as alternatives.

In the study we conducted on behalf of the Commonwealth Fund in the U.S., we studied the Canadian common drug review process and the process for a centralized drug review in the United Kingdom, Australia, and New Zealand. We also studied one of the processes in the United States.

I'm going to quickly talk about the cases of Canada, the U.K., Australia, and New Zealand. Just note that the processes themselves are extraordinarily complex, there's no doubt. This is a tough business to be in, appraising products to help inform coverage decisions.

There are a few commonalities, and the first is that all of these processes are distinct from licensing. The goals of the licensing process are different from the goals of a process to inform coverage policy.

The second is that all of these processes involve some form of clinical assessment of evidence and some form of assessment of economic evidence.

Third, the commonality of these things is that there is a centralized appraisal; that is, a committee of experts that sits to determine the meaning of the scientific and economic evidence in the context of decisions for a given country or given region.

One of the differences between the countries we studied is in the decision-making context—or more to the point, the funding context—in which decisions are taken.

Turning to Australia, there is an organization called the Pharmaceutical Benefits Advisory Committee, or the PBAC, which makes centralized review guidance for the national formulary in Australia.

The context of Australia is one of a national pharmacare benefit, and it uses a national formulary. The centralized review is required, and in fact the minister cannot list a medicine on the national formulary without the PBAC making a recommendation to do so.

It's a pragmatic process that involves a 17-week cycle to review approximately 100 drugs per year, including generics. The rationale is published on the Internet and made available to the public through those mechanisms as well as through public input in various stages of the review.

Prices in the Australian context are in fact negotiated as part of their review process. Following a recommendation of the PBAC, price negotiation begins between government and supplier.

Turning to New Zealand, we have an environment there with universal pharmaceutical coverage and a national formulary managed by a centralized management agency, referred to as PHARMAC. Centralized review by the Pharmacology and Therapeutics Advisory Committee, the PTAC, is required under the process for coverage in New Zealand, but in fact PHARMAC may make listing decisions that differ from PTAC recommendations, in part because listing decisions are conditional on price negotiation.

The process in New Zealand is pragmatic, in that the organization reviews between 30 and 40 drugs per year. Selective information is available on the Internet. As mentioned, price negotiation is tied to the process.

Turning to England and Wales, the organization, the National Institute for Health and Clinical Excellence, otherwise known as NICE, is an organization that does some of these assessments in the context of universal coverage for pharmaceuticals, but uniquely in the U.K. they operate under what's called a negative formulary. Ostensibly, all products on the market in the United Kingdom are eligible for public coverage, and it is devolved to the regional decision-makers to make implicit rationing decisions about what will and what will not be prescribed in a given context.

It's under those sorts of contexts that the NICE has evolved a very selective process. Only drugs that are deemed to be controversial or of high impact to the health system are reviewed and centrally appraised through the NICE process. As a result, NICE reviews only approximately 11 drugs per year, and the reviews are exhaustive processes of consultation and negotiation with stakeholders that take up to one or more years per review.

The guidances recommended by NICE at a national level become mandated at the regional level. There is no price negotiation in the context of the English and Welsh system.

Turning to Canada, whose system you all are intimately familiar with, we are involved in a system that involves mixed coverage. We have a multiplicity of different formularies in Canada run by public, private, federal, and provincial drug plans. The common drug review is required by most public plans except Quebec's, yet decisions unique to the context of Canada remain centralized. “No” and “yes” both mean “maybe” in some sense in the context of the Canadian system.

The initial focus was on new chemicals and combinations of chemicals, probably for budgetary purposes, in my view, just to keep the process pragmatic as they got off the ground.

It is a pragmatic process involving a target of about 25 drug reviews per year. Summaries of rationales are posted on the Internet, and as you know, there are now public representatives on the expert advisory committee. Unique to Canada and the U.K. is that there is no price negotiation tied to the CDR process. It is simply an assessment of appraisals or evidence at the price listed by the manufacturer.

Turning to the international context, or at least international experience, I had the fortune of interviewing decision-makers from all the countries that we have studied, as well as meeting them personally at a meeting I hosted in Vancouver last year, and again in Wellington, New Zealand, just last March, to discuss the challenges that common drug review processes face around the world.

I could suggest—I think objectively, because I do not work for and have never worked actually with the common drug review—that it is rapidly becoming an internationally recognized and respected peer among the agencies internationally. I would argue that it's probably underfunded, but we could talk about that later.

The CDR and its peers face several common challenges, one of which is drugs that are approved for sale based on surrogate markers of their effectiveness; that is, they are effective at doing something to the biological structures or systems of the body, but we do not yet know whether that will in turn relate to health outcomes. This is problematic around the world.

Drug review processes suffer or deal with poorly designed trials. In particular, most trials involve drug-to-placebo rather than drug-to-drug comparisons, and in the context of making rational economic decisions, we need to know drug to drug: is this better than its alternatives?

There are serious challenges with respect to transparency and confidentiality in that drug review processes are limited to the extent to which they can report to the public about the data they use for decision-making processes, and this is true not just in Canada but around the world.

And finally, there is an issue with respect to real-world indication creep. Manufacturers often rightfully claim that their products are cost-effective in certain segments of the population. However, as is often the case, when products are on markets it's difficult to prevent the use of those products from creeping into areas where there may be better or alternative treatment options from the perspective of cost-effectiveness.

So my closing point really is that I think the CDR is well respected, and I think that processes like the CDR are indeed necessary so that we can provide incentive, or in fact obligation, for manufacturers to bring the kind of evidence that is necessary for a rational drug policy.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for your testimony.

We tried to get representatives from the United Kingdom and Australia through video conference but were not able to, so perhaps you'll be able to answer a significant number of questions that we might have been able to pose to them. So thank you very much.

From the University of Alberta, Dr. Menon, the floor is yours. You have ten minutes.

[Professor Devidas Menon, Professor, School of Public Health, University of Alberta]

Thank you, Mr. Chair, and thank you to the committee for this invitation to be here today.

In fact, I'm filling in for someone who I think you actually wanted, who happens to be a young colleague of mine with whom I have done most of this work. Her name is Tania Stafinski, and I do want to mention her. She is unable to be here.

[The Chair, Conservative, Rob Merrifield]

Just to clarify from the committee, she said you're the best.

[Prof. Devidas Menon]

It behooves her to say that since I'm actually her supervisor.

But I do want to give her credit and go on record as saying that most of this work was done with her, but she's unable to be here. So I hope I can contribute meaningfully to your deliberations and decisions as you come to a close.

I will give you a bit of background on the sorts of work we've been involved in, so you understand the context.

Over the last few years, we've done a number of research projects funded by organizations such as CIHR, which Dr. Morgan mentioned, on differences in provincial formularies across the country—on differences in access to cancer drugs, in particular—and we've looked at international models of catastrophic drug programs, as well as how economic information is, or could be, used in the decision-making on drugs.

What's interesting here, and I suppose the reason I'm here, is some work we did on what I call existing centralized drug review processes around the world. Dr. Morgan has given some details on three of the countries we looked at. I'll try to limit myself to reporting on that, because since it's an international panel, I thought we'd start with that.

Our objectives were to identify the centralized drug review models in existence in the world, which we did about two or three years ago. Like foolish academics, we thought that if we were to do this while people were trying to construct the common drug review in Canada, it might actually help. But it has taken some time before anyone has paid attention to it.

We were looking at things such as the management frameworks, the governance, and the review processes and appeal mechanisms, if any. And we compared, where possible, certain common aspects of the review process itself. We did not look at things such as the effective times to coverage, the times to approval, or the number of drugs per country. Other people have done that; Dr. Morgan has done some work in this area. So that wasn't the focus of what we wanted to do.

What we found at the time was that there were 16 countries with predominantly publicly funded systems, where there were what we would call centralized drug review systems. I'll quickly run through the countries: Australia, Austria, Belgium, Denmark, Finland, Greece, Ireland, Italy, the Netherlands, New Zealand, Portugal, South Africa, Sweden, and the U.K. There are many different approaches and different models, in particular, because of the different health care structures. Some are old and some are newer.

Let me quickly go over what we found.

As far as the structure, governance, and role are concerned, there are different organizational models in the different countries for managing this common drug process, ranging from a government body within the ministry to a free-standing organization. So there is a variety of these models.

In seven of the sixteen countries, the body that is equivalent to CEDAC—the Canadian Expert Drug Advisory Committee, which is the review committee for the CDR process—developed recommendations regarding reimbursement, coverage, and listing of a drug. In seven others, they have a regulatory role and actually make the decision determining the fate of a drug, as far as coverage is concerned. In Norway, the body does both, depending on the nature of the reimbursement request. Some actually set the level of reimbursement; so this gets into the pricing part of this, which is not something we have here. Some are involved in other things, such as decisions regarding maximum usage guidelines, prescribing indications, and the like.

The membership of these CEDAC-like bodies, if I could call them that, typically contain physicians, both general practitioners and specialists; health economists; pharmacists; clinical pharmacologists; and government representatives from ministries, agencies, as well as from insurance funds in some countries. In New Zealand it's entirely comprised of doctors and clinical pharmacologists. This is not an academic question, because a key to the entire process is the structure and the membership of the decision-making bodies, and whose voice is heard. So we wanted to take a look at that.

In Australia, Sweden, and the U.K.—the U.K. organization being called NICE, as has been mentioned—there are public members as well, either citizens or taxpayers or patient representatives.

The membership numbers range from a handful of, I think, six in Greece to 60 in the U.K. The U.K. also involves epidemiologists and other methodologists, and it can be said to be the broadest representation of sectors in this entire process.

The coverage criteria also vary, depending on the system. Typically--and Dr. Morgan has mentioned some of this--the criteria include the therapeutic value of a drug, which means things such as clinical usefulness, efficacy, and if there is actually a treatment available for the condition already. The severity of the condition, the community need, and the potential public health impact are also criteria as indicated by these bodies. It's not very clear from public documentation how these are weighted. That would be a key aspect of combining these criteria.

In recent years there's been a huge growth in the interest of the cost-effectiveness of drugs by most of these centralized reviews. Incidentally, Canada has been one of the leaders in this area of cost-effectiveness--the use of cost-effectiveness methods and the development of cost-effectiveness methods for decisions on programs and health care in general, not just on drugs. Some countries consider only costs. Some countries exclude costs completely in their discussion.

Some agencies in addition look at budget impact, which is somewhat different from cost-effectiveness. Cost-effectiveness typically compares two things to determine the cost-effectiveness benefit of one over the other. In some countries, or at least in two countries, one criterion is whether the drug is self-administered, because the priority for that organization is not hospital-based drugs, so that becomes a criterion. There are countries that look at the alignment with government priorities and also the potential rate of misuse.

These are the general sets of criteria. The information to assess against these criteria, typically the controlled trials that Dr. Morgan talked about, are comparative studies with other therapies, and this bears repeating. Dr. Morgan made this point.

The question is asked: if Health Canada has already done a review, why should anyone else do a second review? I think fundamentally the objectives of those reviews are different. Even the data requirements will be different. Whereas Health Canada typically looks at trials, and they may be big trials and more often than not they use a placebo as a comparator, when it comes to reimbursement of coverage decision-making, it's to look at what alternative it's being compared against, what practical alternative there is. The trial information that Health Canada might have may not be there. That's a challenge for the common drug review, in any case.

The disease pathology, the incidence, the burden of the disease on society, and the potential public health impact are all bits of information that are used. As I said, economic evaluations are now strongly recommended in 13 of the 16 countries. Also, manufacturers are often asked to provide estimates of expected volume so that there may be budget preparation done for that.

I believe Dr. Morgan talked about the assessment and appraisal stages of the process. Assessment means looking at the data, and the information appraisal means judging that, and there's a separate body that does that.

Again, who does this in these different countries? It varies. Who can submit requests? In most countries it's the manufacturer or the marketing approval agency, the agency that approves for the purposes of sales.

In Australia a medical body, a health professional, or even an individual can request the review, but I'm not exactly sure how the priorities work there.

They also differ in who puts the information together, when it's put together, and so on.

Finally, they also differ in whether there are formal consultations with other groups during the process.

With regard to appeal, which is a bone of contention among some sectors, when we looked at it we saw that mechanisms for appeals of decisions were reported only for France and the U.K. But this may have changed. In the last couple of years there's been huge pressure on these bodies to open up the process and engage more people.

I'd just like to conclude by making five points that I think are relevant to what we've done in the Canadian situation.

First of all, in most countries there isn't a Health Canada-like review process in addition to the coverage review. If you look at these 16 countries, except for the U.K., Australia, and New Zealand, in many of them it's the same body that deals with both aspects of it, whereas we have separated, in a sense, through PMPRB, Health Canada, and the provinces, certain functions that relate to certain aspects of drug therapy. In some of these countries, it has evolved together, in a sense, and so there isn't that division.

Secondly, there isn't a provincial-type review in any of these countries, because the decision of the common drug review body there or the recommendation to a minister or ministerial committee is what's acted upon. So there isn't a second level of deciding whether to fund it or not. I think that does make a difference when people talk about length of time to listing.

Thirdly, the kinds of coverage decisions in these different bodies cover off a wide spectrum, and that is in part because of what I just said, which is the mixture of roles that these countries may have. In some cases the body actually sets the reimbursement level. It can say, we'll approve this drug at 65% of the prescribed level. Here, this is done by the provinces, and quite often by negotiating with manufacturers.

I think this is something I would like to leave the committee to think about. That is, there has been a lot of interested talk, at least, if not movement, to encourage broader involvement in this common drug review process. The U.K., for example, has a citizens jury that advises the entire work of NICE. I believe in New Zealand there's the Consumer Advisory Committee. The people are trying different ways of taking this process from what has been a technical, scientific, and clinical process to one that somehow incorporates values for people. It's a challenging situation and people are trying things, but I think the fact that the CDR now has public representatives is a great step. I'd say, go further and hold these meetings, just like your meetings, in public.

Finally, what may be touchy to some provincial governments is that when we looked at these CDR-type bodies, at least one of them is permitted to make delisting recommendations, which is that you go and look at drugs that are there, look at the basket of drugs, and if you are going to add a drug, is it possible to recommend removal of one?

I think part of the challenge is that when people get worried about the rise in expenditures for drugs, it's because hardly anything falls out at the bottom. The question has to be asked, not just of drugs but all health technologies: what do we have now that has been replaced and that we should de-invest in? I think it would be useful for the common drug review here to consider how that might be at least examined.

Thank you, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. I'm sure we'll have lots of questions as we get into that part of the meeting.

For now, we have a professor and author.

Mr. St-Onge, the floor is yours. You have 10 minutes.

[Jean-Claude St-Onge, Author and Professor at Lionel-Groulx College, As an Individual]

Thank you, Mr. Chair.

Good afternoon, ladies and gentlemen. I wish to thank the members of the committee for giving me this opportunity to address them.

You will find all the references at the end of my text. By way of introduction, I will say that drugs account for 17.5%—

[The Chair, Conservative, Rob Merrifield]

We don't have your text, because it wasn't translated. Nonetheless, if you go slowly, we'll follow.

[Jean-Claude St-Onge]

Drugs accounted for 17.5% of health expenditures in 2005, a substantially higher percentage than that paid to physicians. Drug expenditures have become the most inflationary component in our system and they are increasing twice as fast as the health budget as a whole. Furthermore, in Canada, almost twice as many prescription drugs are prescribed as in the Netherlands and Denmark – even though the major health indicators are practically identical in these three countries.

Canada is not the only large drug consumer, but these products are expensive, indeed unaffordable for certain segments of the population, and they weigh very heavily on the public purse. Recently, the Patented Medicine Prices Review Board showed that in 11 industrialized countries generic drugs are cheaper than in Canada–sometimes by a considerable margin. Also, patented drugs cost less everywhere else, except for the United States and Switzerland.

For example, generic drugs in New Zealand are sold for 77% less than in Canada, in Spain, 42%, in France, 29% and even in the U.S., 35%. For patented drugs, the figures are: 21% for New Zealand, 27% for Spain and 15% for France. There is no mention of the United States.

When the prices are adjusted to take into account buying power, patented drugs are 37% less expensive in Spain than in Canada.

In 2005, a group of researchers led by Dr. Morgan published a study in the British Medical Journal showing that 80% of the increase in the price—

[The Chair, Conservative, Rob Merrifield]

Slow it down just a little and we'll be okay.

[Jean-Claude St-Onge]

—of drugs in British Columbia was attributable to the introduction of new products or new indications that contribute nothing or little in therapeutic terms. These products, which are called me-too products, are equivalent molecules to those already found on the market. The efficacy of these new indications is often not tested in the field. Consumption of new products that have replaced old ones doubled drug expenditures in British Columbia between 1996 and 2003.

According to the Patented Medicine Prices Review Board, between 1990 and 2003, only 5.9% of these new products were breakthroughs in therapeutic terms. That is the worst of it. Likewise, the FDA reported that three-quarters of the drugs put on the market in the 1990s had nothing new to offer over old treatments.

The foregoing shows the importance of a rigorous review of the drugs appearing in provincial formularies, that is, a probing and pertinent review conducted by independent experts. A study published in the Journal of the American Medical Association, involving 1,140 clinical trials, indicated that trials funded by the industry were 3.6 times more likely to result in conclusions favourable to the sponsor’s product. These are the studies that are submitted to the control agencies for approval.

For example, let us highlight the new antihypertensives proposed as first-line treatment, which are no more useful for the vast majority of people than the old drugs, but which cost infinitely more. Dr. Furberg, a senior researcher in a huge study done on antihypertensives, has calculated that American consumers have spent from $8 to 10 billion unnecessarily on these new products.

Mr. Robert Goyer, former head of the Conseil du médicament du Québec, estimated that the most popular and most expensive antiulcerant cost $60 million too much, since less expensive alternatives were available and were just as effective in most cases.

The Green Cross has also reported the existence of major differences in the prices of drugs paid by various government agencies. The cost of one drug in the Ontario formulary was entered as $1.90 and the same product was sold to the Department of Defence for 45¢. Four times as much.

New Zealand is showing us the way for optimum drug use. In 1973, this country set up a Crown entity, Pharmac, made up of independent scientists and groups of patients. Pharmac is a group pharmaceutical buying centre that can negotiate prices. Through competitive bidding among manufacturers, it causes them to compete with one another.

Pharmac prepares a list of the best drugs on the basis of scientific criteria. It chooses the one that that will become the reference product and selects a number of alternatives, which are reimbursed at the price of the cheapest reference product, except in cases of intolerance or contraindications. Agreements called cross-deals are negotiated with manufacturers. When a new effective and safe drug arrives on the market, it is entered in the formulary, provided the manufacturer agrees to a discount on a product already on the list. Pharmac also practises the system of maximum expenditure. A contract is concluded with a manufacturer with a view to the sale and reimbursement of a certain quantity of drugs based on a needs analysis. If expenditures surpass this maximum, the firm reimburses the difference to Pharmac. Finally, any products that have not demonstrated their superiority over existing treatments are not reimbursed. Such was the case of Celebrex and Vioxx before they were taken off the market on account of their cardiovascular toxicity. Incidentally, Vioxx won the Galien Prize in 1999, I believe, which is really the Oscar of drugs. Thus the New Zealand formulary contains 2,600 products, compared to 5,000 in Quebec.

Allow me to broach a related topic, though one in keeping with the foregoing. The review of drugs begins long before the authorities ask questions about the appropriateness of entering them in the formularies, that is, as soon as they are submitted to the Therapeutic Products Directorate. In this regard, we should hope that improvements are made in the assessment of the effectiveness and safety of drugs.

Are Health Canada’s licensing criteria rigorous enough? For a drug to be approved, it must as a rule show that it is more effective than a placebo. Should it not be required that a product be tested against a drug that is already on the market, whose toxicity profile is already known and that is much less expensive? Furthermore, clinical trials are generally short-lived. They are designed to assess the effectiveness of the drug and not its toxicity, and the patients recruited are ideal patients. The consequences may be dramatic. This is how much later the undesirable effects of numerous products are discovered. Over a 25-year period, 10% of the drugs received the most severe warning from the FDA, the black box warning, and 2.9% were withdrawn from the market, while the monograph for 51% of them was changed on account of the safety problems discovered after they were marketed. The research by Dr. Joel Lexchin, of York University, shows that, over a 40-year period, 39% of the drugs taken out of circulation were removed between 1993 and 2004, a much larger proportion than in previous decades. Were some of them approved too quickly?

Many experts have sounded the alarm about the problem. In the U.S., a lot of literature talks about the credibility gap concerning the drug licensing process, and since the regulatory process is practically identical in both countries, we have cause for concern.

This credibility gap motivated the United States Institute of Medicine to make a whole series of recommendations on the regulatory process. Among these recommendations, the Institute proposed that a black triangle be placed on new drugs for a two-year period in order to indicate that not all the undesirable effects of the product are known; it suggested increasing the FDA budget; it suggested getting rid of what are called user fees, which are the charges manufacturers pay to have new drugs approved. These fees have existed in the United States since 1992 and in Canada since 1994. In exchange, manufacturers obtained a reduction in the approval time for new products. Numerous observers think that, since it was implemented, this practice has been responsible for the increase in the number of drugs withdrawn for safety reasons. One internal FDA survey conducted at the turn of the century stressed that 36% of the Agency’s scientists—they had four answers to choose from—had no confidence or had moderate confidence in the safety and effectiveness of the drugs they approve and 18% said they had been pressured to approve drugs, in spite of the reservations they had concerning their toxicity.

Dr. Robert Peterson, the former Director General of Health Canada, confided to the Canadian Medical Association Journal that international safety regulation is adequate in 75% of cases and that Health Canada does not have any legal powers, notably that of requiring follow-up studies after marketing to check the toxicity of drugs. Most of the phase IV trials requested by Health Canada are simply not carried out. Furthermore, Health Canada is studying proposals to modify the licensing process to emphasize risk management. This raises concerns on the part of numerous observers, fears that were stated in a very recent article in the Canadian Medical Association Journal.

In view of the foregoing, should the principle of precaution not prevail over risk management, particularly since the reviews indicate that 10,000 Canadians die each year from the undesirable effects of drugs, even though they have followed the instructions to the letter?

By way of conclusion, Health Canada should have extended powers and adequate funding to review drugs. Would it not be a good idea to use a few of the millions in our huge surpluses to guarantee a better quality of life and greater safety for Canadian citizens who deserve it? And why not restore the Bureau of Drug Research, which was closed in 1997?

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for all three of your presentations.

We'll now move into the question and answer part of the meeting.

We'll start with Ms. Brown. The floor is yours.

[Bonnie Brown, Liberal, Oakville, ON]

Thank you, Mr. Chair.

Welcome to all our presenters.

Dr. Morgan, on one page of your easy-to-read presentation, one of the points is a list of common challenges faced by the CDR and its peers, and it says, “surrogate makers with no validation”, but I think when you said it out loud you said “surrogate markers with no validation”. I still don't understand what it means, whether it's “makers” or “markers”. Can you explain it?

[Dr. Steve Morgan]

Yes, thank you, and thanks for pointing out that typo. It's always good to be on the record when you're doing that.

It is “surrogate markers”, and what we mean by that is that drugs are often approved for licensing and are submitted to drug plans for coverage on the basis that they affect a biologic organism within the body. They have some effect on sensitive process. So for instance, a drug might be approved because it lowers your cholesterol level or lowers your blood pressure.

We have reason to believe that the surrogate marker—that is, the lowering of cholesterol or blood pressure—will in fact result in the desired health outcome, which is the lowering of the risk of cardiovascular disease, heart attack or stroke. In many cases, we receive drugs that are approved on the basis of surrogate markers—or what sometimes are called “subclinical markers”—that have not been validated.

For instance, we just heard about the COX-2 inhibitors. When they first came to market, the safety profile of those drugs was much touted with respect to gastrointestinal bleeds and ulcerations. That risk profile was actually based on subclinical bleeds or subclinical risks; that is, ones that had to be inspected by a physician using a scope, not ones that were reported by patients. Later on, it was discovered that in fact some of those medicines don't have the benefits that were touted with respect to the gastrointestinal risks, and of course we later discovered the cardiovascular risk as well.

[Bonnie Brown, Liberal, Oakville, ON]

This whole presentation from the three of you is not giving me a lot of confidence in the fact that we use so many medications and prescription drugs.

I think a couple of you mentioned this whole idea about clinical trials being done against placebos. Do you think it's time that Health Canada and other regulators or approval bodies insist that these clinical trials be done in a comparison against drugs already suggested or approved for the condition?

[Prof. Devidas Menon]

The short answer would be yes. It's how to do it that would be the challenge.

There are some real challenges, in that these trials, which are typically called phase three trials, which are the human, reasonably large-population trials on the basis of which an application for licensing is submitted, take time. I know one worry might be that it may take enough time that what was a comparator when the study was designed may not be a comparator anymore when it's completed, and how does it affect the marketability of the product if that was the comparator used? That's one question that does get asked when that question comes up.

However, as far as I know, there are companies who do earlier trials using existing treatments instead of placebo. So I think somehow we should encourage, if nothing else, a move to that. But that requires some agreement on what a comparator will be.

Australia was one of the first countries to develop guidelines for what a submission should contain for reimbursement purposes, particularly the economic part of it. Canada followed soon after. These were the two leading countries in the early 1990s. At the time, in Australia the industry would ask that question: tell us what comparator you want. Typically, what the companies are told is to provide all the information they have, and then we will judge it.

So I think that if a comparator is to be used instead of a placebo, there should be some agreement beforehand by all parties that it would be accepted as a comparator in a reasonable amount of time. It just can't be rejected because a new, more effective technology in the meanwhile has come in and has taken over the bulk of the practice.

[Bonnie Brown, Liberal, Oakville, ON]

On some of these facts that Dr. St-Onge put forward, such as Quebec having 5,000 drugs on its formulary but New Zealand only having 2,600, I'd like all three of you to answer this: do you think we've been too easy on the drug companies with respect to the licensing of drugs, particularly considering some of the problems you have raised--the comparator being a placebo or this business of surrogate markers with no validation? Is that why we have 5,000 and New Zealand only has 2,600? Are they approving fewer drugs for licensing, and that ends up with their having fewer to put on their formulary?

[Jean-Claude St-Onge]

It is true, for instance, that New Zealand has two cholesterol lowering drugs, while Quebec now has six. New Zealand has always refused to approve Celebrex and Vioxx, because their superiority over traditional anti-inflammatories has never been demonstrated, and also because, right from the beginning, it was suspected that Vioxx could cause cardiovascular problems. The data were there.

Study 090, for example, before the approval of Vioxx, showed that the people who took Vioxx had had three times as many heart attacks as those that took Naproxen or a placebo. Already the data indicated to New Zealand that these products should not be reimbursed and should not figure in the formulary.

A study conducted by Zhou and his colleagues at McMaster University showed that all the anticholesterols were equivalent with respect to secondary prevention. When there are already two or three drugs on the market, why approve a fourth, a fifth or a sixth, whose toxicity profile is unknown? That poses a number of problems.

Obviously we do not always have the data necessary for us to say that we have enough drugs of this type and that it has not been demonstrated that such and such a new drug is more effective than its competitor. Certainly some efforts need to be made in this regard.

[The Chair, Conservative, Rob Merrifield]

Did you want all three to answer?

[Bonnie Brown, Liberal, Oakville, ON]

Yes.

[The Chair, Conservative, Rob Merrifield]

Okay. Go ahead.

[Prof. Devidas Menon]

I have a couple of points. One is that the difference in numbers typically comes from having many more of a certain class of drug in a formulary in one place than in another. New Zealand is a case in point, where there are fewer of a certain type of drug on the formulary.

The advantage of having choice is that one could use that to differentiate in prices among products in a class, and I think that's done now in places in Canada. I'm not totally familiar with it, but generics only go onto formularies at a certain percentage of the price of the original patented medicine of which it is a generic. So there may be an advantage in that choice.

One has to be careful about simply comparing numbers of drugs on formularies. That is quite often equated, particularly by the industry, as access. However, these formularies all have different formulary coverage policies. A jurisdiction could quite easily list a larger number of drugs than another, but include a high co-payment, so that there is a shift.

On that question of access, I think one has to include affordability as well because there is a cost-shifting from the public to the individual. And is that desirable in order to have more access, or is that discriminatory against those who can't afford it?

[Bonnie Brown, Liberal, Oakville, ON]

I know we're here talking about drugs reviewed and then placed on formularies, but I'm trying to get back to the earlier stage that talks about how easily and how quickly we approve drugs in the first place, particularly with this whole thing about not all side effects being known. For example, we might have a clinical trial that goes for two years and the negative side effects might not show up for seven years. In other words, before we worry about what we're going to pay for and what we're going to put on the formulary, shouldn't we be absolutely sure that we're only licensing drugs in a very rigorous manner?

Dr. Morgan, would you respond to that?

[Dr. Steve Morgan]

I'll address that and then get back to the question around New Zealand.

First of all, I think you raised an important point. We want to make sure that the drugs that are coming to market are in fact safe and effective. One of the most concerning trends is the trend towards notice of compliance with conditions, an NOC/c, which is basically a conditional licensing. So early trials are promising but not good enough, or there's not enough data collected to establish the actual safety and effectiveness, but we'll license it anyhow and hope that the risks are minor in the real world.

I'm an economist. I study industrial organization and innovation policy. I think the mechanism to promote competition that we would want, and innovation that we would want, is to continue to maintain high standards at the regulatory level and in fact perhaps raise the bar. I think the bar has been lowered slightly through processes that we've heard about today. In exchange for that, I would argue that we need to reconsider our patent laws and reconsider or reopen the debate around patent term restoration. That's a debate that's well beyond the subject of this discussion today, but I think it's something we need to discuss. It's certainly going on internationally.

The Office of Fair Trading in the U.K. has put out a number of interesting recommendations to that effect, and the U.S. is constantly debating what's referred to as patent term restoration, which is basically giving a longer patent in exchange for longer clinical trials, because effectively the patent is useless in some sense until the product is on the market. But we can talk about that later.

I want to touch on the issue with respect to New Zealand. The New Zealand formulary has fewer “drugs” on the market. They also have fewer different dosage sizes, packaging, and what not than Canada does. We actually have a proliferation, if you will, of different packages, strengths, and dosages of roughly speaking the same chemicals. If you were to take the formularies and look at them at a therapeutic or chemical level, you'd find they're actually quite comparable.

New Zealand has made no decisions around very controversial drugs, like the COX-2 inhibitors such as Vioxx. On the whole, it actually has a fairly comprehensive formulary.