The lack of Canadian capacity to produce COVID-19 vaccines has raised new questions on how governments should approach the pharmaceutical industry. Amid calls for Canada to create a better investment environment for pharmaceutical companies, some are advising caution to avoid overcompensation and a culture that could foster over-prescription, instead suggesting a more results-based approach.
Walter Robinson, a consultant who has spent most of the past 15 years in leadership positions in and around the life sciences sector including at a pharmaceutical trade association, says the vaccine issue is only a symptom of a larger problem.
“If people are just saying, ‘Well, we need more manufacturing capacity,’ they’re not asking the right questions and they’re coming up with the wrong answer,” Robinson said in an interview.
He says the government’s view of the life sciences sector has been focused on managing and containing the cost. While that’s a legitimate public policy focus, he says, the government should also be paying attention to the “broader importance” of research and development in the sector.
“A robust life sciences sector is a critical piece of infrastructure, and it’s in our national interest economically, health-wise, and in our national security interest,” he said.
Federal Industry Minister Francois-Philippe Champagne recently announced a $415 million grant to Sanofi Pasteur Ltd. to build a new flu vaccine manufacturing facility by 2027. The Toronto facility, which also has support from the Ontario government, would be able to produce 76 million influenza vaccines within a six-month period.
Robinson says that while the minister is “sincere,” he has only implemented a “stopgap measure.”
“Health care is a shared national jurisdiction, and all levels of government need to rebuild the relationship with both the innovative and generic biopharma sectors, and have the patience to do this. … That’s the bigger picture, and that’s hard work.”
Ian Lee, associate professor of management at Carleton University, said pharmaceutical companies are careful where they set up operations because they carry large risks and expenditures in research and development.
“If you are a person investing billions, or a group of people, where are you going to go? Where do you want to locate your firm, your plants, your operations? You’re going to locate them in countries that are going to minimize that risk,” Lee told The Epoch Times.
“There’s a lot of competition for these companies because they invest gargantuan amounts of money in R&D. And everybody agrees R&D is a wonderful thing for the economy. … No serious person, scientist, economist policy analyst has said R&D is bad for our country—nobody says that.”
Lee says the pharmaceutical industry prefers the United States, Germany, and Switzerland because Canada has been less than welcoming.
“We said, ‘Oh, we don’t trust you. We think … you’re a bit of a shyster, you’re trying to exploit all of us who are Canadian.’ And so we set up price controls,” he says.
According to Statista, Americans pay about 3.5 times as much for patented drugs as Canadians do, based on 2019 figures, but Germans and Swiss pay only slightly more than Canadians. Other comparable countries pays less. Proposed changes by the Patented Medicine Prices Review Board designed to lower drug prices in Canada have been delayed twice and are now scheduled to take effect on July 1.
Marc-André Gagnon, professor of pharmaceutical policy at Carleton’s School of Public Policy and Administration, says Canada is quite friendly to pharmaceutical corporations already.
“I know that the drug industry likes to have this narrative that basically Canada is not doing enough for drug companies,” Gagnon said in an interview. “The issue is, what should be the additional benefits [offered] to drug companies in order to attract more research and development?”
Gagnon said Canada already offers pharmaceutical companies an attractive market on drug prices, intellectual property rights, tax credits for R&D, and subsidies, but the country gets little in return. He said pharmaceutical companies received greater intellectual property rights under the 1988 Canada–United States Free Trade Agreement on the assurance they would spend 10 percent of Canadian sales on R&D. But he said that has not been the case since 2000.
“More drugs does not mean better outcomes. In fact, it can mean worse outcomes,” he says. “But we have a system where the financial incentives are organized in favour of over-prescribing or even mis-prescribing. So the question is, what could be an alternative for this?”
Gagnon says regulations on drug safety have improved in recent years, but he also suggests an “outcomes-based risk-sharing agreement so we’ll pay for the drug only if we see there are big benefits.”