Canada. Commission of Inquiry on the Pharmaceutical Industry : The Commission of Inquiry on the Pharmaceutical Industry was established under Order in Council, P.C. 1298, dated 17 April 1984 under Part I of the Inquiries Act (R.S.C., 1970, c.I-13) and on the recommendation of the Prime Minister. The date on which the Commissioner was to report to the Governor in Council was amended by Order in Council P.C. 4094, 20 December 1984. The Commission was mandated to inquire into and report upon the current situation in the pharmaceutical industry in Canada, the prospects for a significant expansion of this industry in Canada and the policy framework for the development of the pharmaceutical industry and, within that framework, to identify proposals that might form the basis for reaching a consensus on licensing policy.
The Commissioner was to give particular attention to: (a) an analysis of companies in the pharmaceutical industry in Canada that will include economic and financial data in respect of the industry and will identify differences in operation and growth patterns among generic and patent-holding firms including firms engaged in biotechnology; (b) the identification of prospects for growth of the Canadian pharmaceutical industry in the following areas: (i) growth in pharmaceutical research and development expenditures together with the composition of those expenditures, and any plans of the pharmaceutical industry to link such expenditures to Canadian research institutes and medical school programs; (ii) growth in pharmaceutical manufacturing of bulk active ingredients; (iii) an identification of regional factors affecting this growth; (iv) exports; (v) growth and composition of pharmaceutical employment; (vi) agricultural applications, and (vii) biotechnological pharmaceutical investment; and (c) the review of programs used in other countries, including the functioning and effect of incentives and regulations and barriers to trade in those countries that would help in identifying market conditions and socio-economic environments that parallel or differ from the Canadian situation.
And, further, the Commissioner was to make recommendations directed toward the development of a policy framework for the pharmaceutical industry in Canada, including, where he considered it appropriate, proposals for patent protection, tax and tariff changes, incentives, availability of capital, modification of the health care delivery system and clearance procedures, and other policies and programs under provincial and federal control. The commissioner was Harry C. Eastman. The secretary was Wendy A. Kennedy.
A 1969 amendment to the Patent Act (R.S.C., c.P-4, s.41) introduced a system of compulsory licences (the granting of a license to allow a party not holding the patent to use the patent holder's processes prior to the expiry of the full patent term of 17 years) for the manufacture, import, use or sale of patented inventions, capable of being used in the preparation or production of medicine. This resulted in the manufacture of inexpensive versions of brand-name drugs by generic drug companies which paid a royalty of 4 percent to the patent holder.
On the one hand, multi-national drug companies, the major holders of pharmaceutical patents, opposed the compulsory licencing law and lobbied against it. They charged that it unfairly reduced their profits and discouraged research. They also pointed out that pharmaceutical companies, which manufactured generic drugs, benefited from rights to market their own versions of brand name drugs which the multi-nationals had spent time and money to develop. Moreover, provincial governments, which made reimbursements under various health care programs, reduced their costs by allowing pharmacists to dispense cheaper generic drugs in place of more expensive brand name ones. The multi-nationals demanded, therefore, that the government restrict the sale of generic drugs by repealing the appropriate clauses of the Patent Act.
On the other hand, consumer groups and manufacturers of generic drugs did not want changes to the Patent Act that might interfere with the production of low-cost generic drugs. Such changes, it was feared, might result in an increase in the cost of prescription drugs and a decrease in the share of the pharmaceutical market by the generic firms.
Faced with growing controversy over proposed restrictions to the manufacture and sale of generic drugs, the Government of Canada appointed a royal commission to study the pharmaceutical industry (see Report of the Commission of Inquiry on the Pharmaceutical Industry, Ottawa, Supply and Services Canada, 1985, xxxiii-xxxvi; the Canadian Encyclopedia, Second Edition, Vol. III, pp. 1655-1656; and the Ottawa Citizen, 19 April 1984).
In 1987, the Government of Canada established the Patented Medicine Prices Review Board to act as a safeguard against excessive prices for patented drugs. Patent protection for brand-name drugs was set at from seven to ten years. In 1993, the Government of Canada further extended patent protection for brand-name drugs for 20 years. Moreover, the legislation was made retroactive to December 1991.
Hearings of the commission were held in Ottawa from 17 October to 2 November 1984. The commission filed 146 submissions. RG33-135 General Inventory
