1968-02-12

[Stage Direction]
A message from His Excellency the Governor General transmitting estimates for the fiscal year ending March 31, 1969, was presented by Hon. E. J. Benson (President of the Treasury Board), read by Mr. Speaker to the house, and referred to the committee of supply.

[Stage Direction]
A message from His Excellency the Governor General transmitting supplementary estimates (C) for the financial year ending March 31, 1968, was presented by Hon. E. J. Benson (President of the Treasury Board), read by Mr. Speaker to the house, and referred to the committee of supply.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I should like to inform the house that the hon. member for Verdun (Mr. Mackasey) has been sworn as a member of the Privy Council and has joined the government as Minister without Portfolio. He will act as Minister of Labour during the absence of that minister in India as head of the Canadian delegation to the United Nations conference on trade and development, replacing the Minister of Trade and Commerce who has returned to Ottawa.



TABLING OF AGREEMENT ON NELSON RIVER AND ENGINEERING BOARD REPORT ON COLUMBIA

Hon. Jean Luc Pepin (Minister of Energy, Mines and Resources):: Mr. Speaker, I should like to table copies of the agreement reached between the Canadian government and the provincial government of Manitoba on the development of the Nelson river hydro-electric resources.

I should also like to table the third annual report to the governments of the United States and Canada of the permanent engineering board on the Columbia river treaty.


Mr. Speaker:: Has the minister leave to table these documents?


Some hon. Members:: Agreed.



HEALTH AND WELFARE


Lester Bowles Pearson: Mr. Speaker, I should like to make a statement on medicare, as I promised to do some days ago.
Early in 1965 the government announced its plan to discuss with the provinces "a way in which federal and provincial action can most effectively contribute to programs that will provide health services to Canadians on a comprehensive basis". At the federal-provincial conference held at Ottawa on July 19, and 20 of that year, 1965, I made it clear that medicare was a matter which required the closest co-operation between federal and provincial authorities. I said then that while the responsibilities of decision and of execution in this matter were essentially provincial, the scope and the nature of the problem was such as to create a national concern, and a measure of federal responsibility.
Today it remains the concern of the federal government to find the best way in which federal and provincial action can most effectively contribute, once the present legislation has come into effect, to achieve a practical medical care program available to as many Canadians as possible and as soon as possible.
[DOT] (2:40 p.m.)
To this end we have consulted the provinces fully at every stage of the development of the medical care program. At the federal-provincial conference to which I have referred, at subsequent federal-provincial meetings of ministers of health, and at a large number of meetings of federal and provincial officials, detailed proposals and arrangements were discussed. Therefore, because of the
February 12, 1968

Implementation of Medicare nature of the issue as well as this requirement of consultation, the government took seriously into account representations made to us recently by the provinces concerning the financial consequences for them in current conditions if they participated in the medicare plan provided for in the legislation passed almost unanimously by the house in December, 1966, and which comes into effect on July 1 of this year.
The situation is that while the benefits of this act are available to any province which wishes and is able to meet the requirements set out in it, only one or two provinces have indicated their intention to come into the program on the date the act comes into effect. The remaining provinces, including the two largest provinces, have indicated that either because of current financial pressures, or of objections to the plan itself, or both, they will not be participating in the national plan at least for the time being.
It is, of course, the responsibility of the provincial governments to decide on financial priorities within their own spheres of operation. Their decisions on medicare made by them in the light of their assessment of the financial situation should be respected and understood.
As a result, on July 1, 1968, when the act comes into effect there will not be anything approaching a universal medicare program in Canada provided jointly by federal-provincial action. A consequence of this is that there will be no significant increase in total financial outlays by the provinces and the federal government for medicare in the next financial year, and nothing to support alarmist and unwarranted statements about the massive and harmful impact of new outlays on financial conditions.
The federal government, while remaining committed to the policy of full medical care coverage for all Canadians, certainly has no wish to bring pressure to bear on provincial governments who, for their own reasons, have decided that full implementation of the medical care program as of July 1 of this year is not in accordance with their own financial priorities.
We shall continue to keep in close touch with the provinces on this subject, and it is our hope that as current financial conditions change, the benefits to Canadians of a full, national medicare program will be achieved through close co-operation between the federal and provincial governments. Indeed, once the act is in effect as of July 1, 1968, it will be


possible to discuss its operation with the provinces, not only in the light of changing economic conditions but also in the light of the experience of its operation in the one or two provinces which came in on the date provided for in the legislation.


Hon. Robert L. Stanfield (Leader of the Opposition):: Mr. Speaker, the announcement of the Prime Minister indicating no change with regard to the medicare program comes to me as a great disappointment because I think it represents a grave disservice to Canada.


Some hon. Members:: Hear, hear.


Robert Lorne Stanfield: The government has been urging restraint, has told everybody that it will set a good example and has been urging the provinces to be restrained. The reasons for this, of course, are unprecedented inflation in the country accompanied by a sharply rising cost of living, sharply rising interest rates and a deteriorating competitive position of Canadian producers and manufacturers in world markets as a result of this situation. In addition there has been concern for the Canadian dollar.
In view of the unsettled times in terms of international finance it is surely important that the government of Canada demonstrate to the country and to the world its readiness and the readiness of the Canadian people to make the decisions that are necessary to ensure a strong and growing Canadian economy. Instead of this we have an indication of the willingness of the government to embark upon a vast new spending program, and inviting the provinces to join it. Indeed, this program places a heavy pressure upon the provinces to join in, because the residents of all the provinces will be paying for the program in the provinces which participate in it.
Whatever may have seemed reasonable a couple of years ago when this program was considered by the house is unreasonable today in this regard. A program of this magnitude is obviously completely incompatible With and contrary to the policy of restraint preached by the Minister of Finance. It is bound to increase the difficulties of the government and of the people of Canada, will most probably bring about inappropriate and inflationary measures, and will be interpreted abroad as an act of weakness on the part of the Canadian government. What are we to think of a government which cannot find any money to deal with its own superannuated
February 12, 1968	COMMONS
pensioners, which finds it necessary to welch on commitments already made in connection with manpower training, and yet wishes to embark on this expensive program?
Furthermore, as the Prime Minister has indicated, the majority of the provinces do not want this program in its present form at this time. They may be pressured to join, with the sole result that it will interfere with programs which they consider more urgent, including the training of additional medical personnel so necessary in this country for an effective medical services program.
Despite what the Prime Minister has said, the government has never effectively consulted the provinces of this country on this program. The four basic conditions of the program were imposed and insisted upon by the federal government although the matter is clearly within the provincial jurisdiction. The provinces wanted a more flexible program. Indeed, most provinces questioned the universality of the program.
In nearly every instance the provinces are hard pressed financially to a degree which perhaps few Canadians realize. The government of this country should realize that programs such as the hospital plan and the provinces' own educational programs have a built in cost escalation which is difficult to control. The result is that the provinces are the financial prisoners of programs already adopted. What this program does is to further box them in.
It is folly to say that the provinces do not have to accept the program. The program has meaning as a national program only to the extent that the provinces accept it and proceed with it. Of course a number have already said they cannot join. I do not think they should be pressured to proceed with the program, but the government certainly does that.
[DOT] (2:50 p.m.)
Furthermore, this puts an additional strain on federal-provincial relations. Let us not kid ourselves, Mr. Speaker. We are in for tough days ahead in terms of federal-provincial negotiations. This pretence at consultation and then ignoring what the provinces recommend, going ahead in some provinces when the majority have clearly indicated they do not want the program in this form, is harmful to federal-provincial relations. It is a further strain upon our confederation.
There ought to have been genuine consultation with the provinces, Mr. Speaker. There
DEBATES	6601
Implementation of Medicare never has been, but there ought to be now. There ought to be consultation designed to ensure that medical services are available throughout the country to those who need
them.	There ought to be programs to meet the national need which the provinces would feel they could afford without interfering with other necessary programs with which the provinces must proceed.
This decision announced by the Prime Minister is wrong for the following reasons, amongst others.
1.	The program will not bring help where it is most urgently needed, in the provinces where the need is greatest. These provinces cannot afford to proceed with this program. What we need is a medical services program with which the provinces are able to proceed.
2.	This decision will badly strain federal-provincial relations because the views of the provinces have been ignored and because of the implied pressure on the provinces to increase their expenditures and participate in this program.
3.	This decision makes a farce of the policy of restraint announced by the government, and makes a joke of the policy of the Minister of Finance. Even more serious, it discredits Canada in the eyes of the world.
4.	This decision will increase the financial difficulties of Canada, causing a further loss of confidence, lead to a higher cost of living and to further unemployment. Let me quote what the Minister of Finance said, as recorded in Hansard for December 1, 1966, at page 10607, when he justified deferring this program:
Hon. members will see from what I have read from Hansard that In postponing the implementation of medicare the government had in view four considerations: First, the need for a stronger fiscal policy so that there would be less reliance on monetary policy; second, the need to keep future tax increases to a minimum; third, the containment of inflationary pressures; and fourth, the views and the financial problems of the provinces.
If the Minister of Finance felt these reasons were imperative a year ago, Mr. Speaker, they are even more imperative today. Every reason rings more strongly today than it did
then.	I say the government of this country should be prepared to put the country ahead of any party commitment. It should be prepared to practise restraint and not simply preach it. It should set an example itself. Conditions are serious. We are experiencing uncontrolled inflation, rapidly mounting unemployment and international instability.
February 12, 1968

Implementation of Medicare The government should be working toward flexibility.


Mr, Speaker:: Order, please. I hesitate to interrupt the Leader of the Opposition because I know how important this matter is. However, I feel it is my duty to remind the hon. gentleman, and all hon. members, of the terms of the standing order which provide for brief comments on ministerial statements.


Robert Lorne Stanfield: I shall be finished in just a minute, if I may have the indulgence of the house. I say the government should be working toward more room for manoeuvre instead of boxing itself in further. It should consult with the provinces to work out a program with which the provinces can proceed. As I say, the government should set an example. The government should try to increase confidence rather than destroy it. We now have a 7 per cent bank rate, prices are increasing, and I ask, what next? The government should not put party politics ahead of the national interest.
I urge the government to reconsider the situation and stop taking the country of Canada nearer and nearer the precipice over which it would tumble to disaster.


Mr. David Lewis (York South):: Mr. Speaker, after the words of doom with which the Leader of the Opposition finished his statement I suppose every member of this house and every Canadian ought now to put on sackcloth and ashes and go after the Prime Minister for having been so bold as to do something that a royal commission that was appointed by the hon. gentleman's predecessor stated Canada ought to have. The Leader of the Opposition has at last broken his silence, and the result has been an exposure of Toryism such as I have not heard in a long time.


Some hon. Members:: Hear, hear.


David Lewis: I am very glad to have the agreement of hon. gentlemen who are behind the Leader of the Opposition; it shows that he is expressing reactionary ideas that his followers support.
May I say to the Prime Minister, Mr. Speaker, that the difficulties in which Canada now finds itself with regard to medicare are the direct result of the hesitation, the shillyshallying and the lack of courage the government showed when it first introduced this bill. It presented insurance companies and the

medical associations with another year of lobbying all across the country, another year during which they could misrepresent the needs of the people and the facts as they are.
I suggest that nothing contributed so much to the reactions of provincial governments and their supporters than the unjustified and unfounded declaration by the Minister of Finance that what is involved in the medicare scheme is an expenditure of $1 billion. No calculation by any responsible person has gone much beyond $800 million, but the minister made it his business to go as high as he possibly could. I suggest, Mr. Speaker, that the Minister of Finance and perhaps other members of the government have done the best they could during the past year to discourage the provinces from adopting the medicare plan which is now on the statute books.
Some members on both sides of the house have for many years believed that one of the major social measures needed in any civilized community is a medicare plan that is made available as of right to every citizen. Some members of this house have believed that one of the marks of a civilized society is to make certain that no citizen in that society need fear financial disaster following ill health.
When the government brought in this measure, I will be corrected if I am wrong, Mr. Speaker, but as I remember it, with the exception of only very few, the members of Her Majesty's loyal opposition supported the legislation which was at last to give such a plan to Canada. But now, Mr. Speaker, we are told this is not to be the case.
[DOT] (3:00 p.m.)
The Leader of the Opposition talked about economic ruin flowing from medicare. I say that it is economic balderdash to talk of a medical plan, in the circumstances of today, adding to inflation. Most of the medical costs are already being paid by the people of Canada. The plan is essentially a transfer of payments from private plans to the public treasury, and the added costs probably would not be more than $80 million in a full fiscal year and considerably less than that in the fiscal period that would remain from July 1 of this year.
It is significant, Mr. Speaker, that outside the Atlantic provinces, which find it impossible to enter because the major provinces are not entering-


Mr. Maclnnis (Cape Breton South):: That is not so.
February 12, 1968


David Lewis: In the opinion of some hon. members that is not so, but it is so in my opinion.


Donald MacInnis: The
hon. member should get his mind straight. He should straighten his mind and that might help his tongue.


Some hon. Members:: Oh, oh.


David Lewis: I shall just wait for a little quiet in the chamber rather than trying to answer the hon. member's inanities.
The Atlantic provinces cannot enter the plan because, unless the two major provinces enter, the amount they would receive would not be 50 per cent of what the plan would in fact cost; and the Atlantic provinces, of course, can afford less than other provinces to pay a percentage of the cost that is larger than that offered to them by this act. The fact is that in the past year medical services have increased in cost by from 30 per cent to 40 per cent. This increase has been deliberately brought about, I suggest, by those responsible in order to make the public medical plan less palatable to some of the authorities across the country.
I am glad the government has not brought the bill back for any change. I am certain the people of Canada in all provinces will demand that the medical plan be implemented, and I am confident that the effect on the economy will be positive instead of negative, since production itself will be increased as the result of proper medical attention being provided for the people of Canada.


Mr. Real Caouelte (Villeneuve):: Mr. Speaker, the Prime Minister (Mr. Pearson), has just announced that medicare will be implemented on July 1, 1968, if the provinces desire so.
The Leader of the Opposition (Mr. Stanfield) is rightly concerned about that government statement on the implementation in 1968 of medicare, a plan laid down by the government.
I feel that is an interference in a provincial field, since several provinces have objected and are still objecting to such a scheme, especially Alberta which has a voluntary medical plan and which frowns on any interference of the federal government in a provincial field.
I was listening to the hon. member for York South (Mr. Lewis) who was blaming the leader of the Progressive Conservative party, claiming that they wanted to help and protect large corporations.
Implementation of Medicare
Mr. Speaker, I would point out that in Saskatchewan, when there was a socialist government in power they endeavoured to implement a medicare program on a compulsory basis, but because of the opposition from the medical profession of that province, they were forced to retreat. Such is the result gained by socialism in Saskatchewan. Moreover, it disappeared from that province since then.
Mr. Speaker, the Canadian people need medical insurance; I am convinced of that. But they do not want socialist measures which would impose on them a plan they do not want. That is why we have been suggesting for a long time to the government to consider a group insurance plan open to all Canadians, under which the government would merely guarantee the payment of an initial premium and would leave to the individual the initiative of paying his contribution to the company he chose, if it cost more, he would pay the difference between the government premium and that of the medical insurance of his choice.
Mr. Speaker, respect for the individual is essential in a medicare program and I say that at the present time through its attitude the Liberal government is interfering with individual freedom. The government should study programs which would guarantee to the individual the right to choose the program that suits him. If, until July 1, the government studied various programs, we would not have to follow in the footsteps of Sweden or other communist or socialist countries in Europe. We are able to have a program which can be used as a model by other countries later because we are convinced-and I am convinced-that state socialism is not the answer to our social and economic problems.
The solution, Mr. Speaker, lies in the setting up of a program which will enable each individual to develop freely according to his own aspirations. That is a plan which respects the individual and not a yoke such as the one advocated by the hon. member for York South. He blames those who make profits, but he makes profits in the practice of his profession, and he does not complain about it. Profits stimulate initiative, and in my opinion initiative should be encouraged as much as possible by a responsible government, whether the Ottawa government or that of any other province in Canada.


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, we have awaited with interest the

February 12, 1968
Questions
announcement the Prime Minister made this afternoon about the medical care plan. The Prime Minister said he had no desire to bring pressure to bear on the provinces. I suggest that this is an about face; neither the Prime Minister nor the government took that position when the bill was before the house. In fact the bill was presented with an attitude of "Take it or leave it". No changes to the legislation were contemplated and none were allowed. It was said that the provinces would have a perfect right not to come in; they could exercise their own judgment. Yet the big stick was held over them. If they had their own plans in operation they were told those plans would have to conform with the national plan in order to qualify for the 50 per cent contribution from the federal government.
Many of us supported the legislation although we had serious reservations. We took exception to the compulsory aspect of the medical care plan, to the degree of coverage it provided and to the fact that it was to be administered by a public agency. Despite all representations about these matters the government insisted on putting the legislation through as it stood then.
The Prime Minister, I think, should have discussed with the provincial premiers the possibility of phasing in the program gradually. In that way those in the low income brackets or on pensions would receive coverage and, if it were desirable later, other categories could be phased in as the situation warranted. I believe that this afternoon we might have had a wonderful opportunity to reconsider some of the major issues that were discussed when the bill was before the house. Above all, I think consideration should still be given to the possibility of allowing the existing provincial plans to qualify and be recognized under the national medical care plan.
[DOT] (3:10 p.m.)



PRIVILEGES AND ELECTIONS


[Stage Direction]
On the order:	Government notices of
motions:
February 12-The Secretary of State:
That the report of the committee on election expenses tabled on October 11, 1966, be referred to the standing committee on privileges and elections.
Mr. Speaker:: Pursuant to section 2 of standing order 21, this notice of motion is

transferred to and ordered for consideration under government orders at the next sitting of the house.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. Nielsen: 1.	For each of the years 1964 to 1967 inclusive, what was the cost of travel of the Solicitor General and his staff?
2.	What trips were undertaken and for what purposes?


Hon. L. T. Pennell (Solicitor General):: 1.
Fiscal Year	Amount
1964- 65	$ 570.00
1965-	66	791.411966-	67	3,002.34Note: The	increase in travel costs for the
fiscal year 1966-67 over those of the preceding two years resulted from the taking on by the Solicitor General of added responsibilities as the head of a department under the Transfer of Duties Act pending the passage of the Government Organization Bill, 1966 creating the Department of the Solicitor General. These added responsibilities necessitated extensive inspection and familiarization tours of various institutions throughout Canada to gain a knowledge at first hand of their functions and methods of operating.
2. Trips undertaken included the opening of Matsqui Institution and inspections of other institutions in British Columbia; visits to Saskatchewan penitentiary, Dorchester penitentiary, to Newfoundland, to institutions in Ontario and attendance at law conferences.


NATIONAL DEFENCE MILITARY PERSONNEL, OTTAWA
Mr. Ormiston: What were the total numbers of military personnel employed either temporarily or permanently in the Ottawa Area at National Defence Headquarters, Canadian Forces Headquarters, Materiel Command, Defence Research Board, Canadian Forces Base at Rockcliffe, Canadian Forces Communications System, Canadian Forces Base at Uplands, as of December 1, 1966, and as of December 1, 1967?
February 12, 1968

Hon. Leo Cadieux (Minister of National
Defence): 1	Dec.	1 Dec.
	1966	1967
National Defence Headquarters	70	72Canadian Forces Headquarters	2428	2549Materiel Command	1076	1054Defence Research Board	6	1CFB Rockcliffe	1055	1164Canadian Forces Communications System	38	72CFB Uplands	1767	1796


POST OFFICE CONSTRUCTION UNDER WINTER WORKS PROGRAM
Mr. Soulham: 1.	How many Post Offices will be constructed in Canada during the 1967-68 winter season under the federal Winter Works Program?
2.	What are the numbers and locations of the Post Offices to be built under the 1967-68 Winter Works Program in each of Canada's 10 Provinces?
Hon. G. J. Mcllraith (Minister of Public
Works): 1. It was found that 855 locations met the basic criteria of the program. From this total 210 locations were selected initially; however, there now are 117 locations in the program and all these may not be built.
2.	Figures showing for each province (a) the number of locations that met the basic criteria and (b) the number of locations where construction is now expected in 1967-68 are listed below.
Province	(a)	(b)Newfoundland	26	7Prince Edward Island	9	1Nova Scotia	49	4New Brunswick	35	5Quebec	426	72Ontario	105	17Manitoba	41	2Saskatchewan	69	4Alberta	17	2British Columbia	78	3Totals	855	117SALE OF GOLD	TO U.S.	
Question No. 895-Mr. Reid:
1.	What was the maturity of the "Short Term Bills" or "Treasuries" Canada took in return in the sale to the United States of the one hundred million dollars worth of gold announced December 21, 1967?
2.	Was there a "gold clause" attached?
Questions


Hon. Mitchell Sharp (Minister of Finance):: 1.	The term to maturity of the United States treasury bills which the exchange fund purchased with the proceeds of the sale of $100 million of gold to the United States announced by the Minister on December 21, 1967, ranged from 7 to 13 weeks.
2.	No.


FEDERAL OBSERVATORIES
Mr. Caouette: 1.	In what provinces are federal observatories located?
2.	Is there an observatory in the Province of Quebec, and, if not (a) for what reason (b) does the government intend to build one or more in the Province of Quebec?


Mr. Jack Davis (Parliamentary Secretary to Minister of Energy, Mines and Resources):: 1. Federal observatories for geophysical observations are located in the provinces of Newfoundland, Nova Scotia, Quebec, Ontario, Manitoba, Alberta and British Columbia and in the Northwest Territories.
Federal observatories making astronomical observations are located in the provinces of Ontario, Alberta and British Columbia. In addition, small observatories for a meteoritic observation and recovery program are being prepared in Saskatchewan.
2. In the province of Quebec, fully owned federal seismic observatories are located at Poste de la Baleine, St Fereol and Scheffer-ville. In addition, seismic observatories at Montreal and Sept-Iles are supported by the Department of Energy, Mines and Resources, and contribute to the federal network.
A federal magnetic observatory is located at Poste de la Baleine, and a federal earth tides observatory at Poltimore.
(b) There are no approved plans to build additional geophysical and/or astronomical observatories in the province of Quebec.


NAPPAN EXPERIMENTAL FARM
Mr. Coates: 1.	What was the size of the staff at the Nappan Experimental Farm on January 1, 1963, and of this number how many were permanent and how many seasonal?
2.	What was the payroll at Nappan Experimental Farm for the fiscal year 1962-63?
3.	What was the size of the staff at the Nappan Experimental Farm on January 1, 1968, and of this number how many were permanent and how many seasonal?
4.	What is the estimated payroll at the Nappan Experimental Farm for the fiscal year 1967-68?

February 12, 1968
Questions


Hon. J. J. Greene (Minister of Agriculture):: 1. Continuous: 58. Seasonal: 1. Total: 59.
2.	$265,610.
3.	Continuous: 40. Seasonal: 6. Total: 46.
4.	$310,000.


OXFORD. N.S., FEDERAL BUILDING
Mr. Coates: Is it the intention of the government to construct a new federal building at Oxford, N.S., in the fiscal year 1968-69 that will house the facilities of the Post Office Department and, if so, when does the government intend to call tenders for this new federal building?


Hon. G. J. Mcllrailh (Minister of Public Works):: No.


PARRSBORO, N.S., FEDERAL BUILDING
Mr. Coates: Is it the intention of the government to construct a new federal building at Parrsboro, N.S., in the fiscal year 1988-69 that will house the facilities of the Post Office Department and, if so, when does the government intend to call tenders for this new federal building?


George James McIlraith: Yes, but the date of the tender call cannot be stated at this time.


ARDA PROJECTS, CUMBERLAND COUNTY, N.S.
Mr. Coates: 1 How many projects are under way in Cumberland County under ARDA at the present time and how many projects are under consideration for Cumberland County at the present time?
2. Of the projects at present under way, where is the location of each, what is the estimated cost of each, and what proportion of the total cost in each instance will be borne by the federal government?


Hon. Maurice Sauve (Minister of Forestry and Rural Development):: 1. Three ARDA projects are under way in Cumberland county at the present time and no project under consideration.
2. (a) Development of crown lands; Spring-hill junction area; total estimated cost of $153,000 of which 50 per cent or $76,500 is the federal share, (b) Community pasture; Minu-die; total estimated cost of $74,000 of which 50 per cent or $37,000 is the federal share, (c) Flood control; West Brook; total estimated cost of $40,000 of which 37.5 per cent or $15,000 is the federal share.
[Mr. Coates.l


REPORT ON BAY OF FUNDY POWER
Mr. Coates: On what date will the government receive the report on the power potential of the Bay of Fundy tides from the committee composed of representatives from the federal government and from the Governments of Nova Scotia and New Brunswick, and is it the intention of the government to make a summary of the findings of this Committee in the House when the report is received?


John (Jack) Davis: According to the federal-provincial agreement setting up the Atlantic Tidal Power Programming Board under whose direction the study of the power potential of the Bay of Fundy tides is being carried out, the final report on the study is not due until the end of 1968. With the concurrence of the other parties to this federal-provincial agreement a summary of the findings will be presented to parliament.


COST OF TAX REMINDER CALENDARS
Mr. Thompson: 1.	What was the cost involved in producing and mailing the "tax reminder" calendars with the dates circled?
2.	To whom was this calendar sent?
3.	How many of these calendars have been distributed?


Hon. Jean Chretien (Minister of National Revenue):: 1. $18,920.53.
2.	Self employed farmers.
3.	355,000.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Nielsen: 1.	(a) For each of the years 1964 to 1967 inclusive what individuals were employed from time to time in the information and/or public relations services of the Department of the Solicitor General (b) in each year what was the total amount of salaries paid for such services?
2.	(a) For each of the years 1964 to 1967 inclusive what other persons, firms or corporations have been employed and/or retained for the purpose of preparing, disseminating or in any manner dealing with the information and/or public relations services of the Department (b) what are the names of such persons, firms and corporations, if any; for what purpose and period was the employment and what was the cost in each instance?
February 12, 1968



3.	(a) For each of the years 1964 to 1967 inclusive how many press releases have been prepared for or on behalf of the Department and/or the Minister and at what cost (b) for each of the years 1964 to 1967 inclusive what radio and television time has been purchased by the Department; for what purpose and for what cost (c) for each of the years 1964 to 1967 inclusive, what advertising or other space was purchased in domestic and foreign newspapers, magazines and other publications; for what purpose and for what cost?
4.	For each of the years 1964 to 1967 inclusive what advertising or any other related contracts have been awarded by the Department; to whom were the same awarded, for what purpose and for what cost and were public tenders called in each instance and, if not, upon what basis and by whom was the contract awarded?
5.	Does the Department maintain and/or operate any office located elsewhere than in Ottawa for the purpose, in whole or in part, of promoting the public relations of the Department and/or the Minister and, if so, where are such offices located; what is the cost of the maintenance and operation of such offices; how many are employed in each such office and at what salary or remuneration in each case?
Return tabled.


CREDITS GRANTED TO ENGLAND
Mr. Gregoire: 1.	What credits have been granted to England under the Export Credits Insurance Act?
2.	What amounts have been loaned directly or indirectly to England by any Crown corporation since 1938?
Return tabled.


Hon. E. D. Fulton (Kamloops):: May I ask
the parliamentary secretary to the Secretary ot State whether he would have a look at question No. 727 about which I have spoken before. This question relates to the cost of the medicare program and asks for an authoritative statement with respect to one of the provinces. In the light of the statement made today and the discussion which is bound to be precipitated, this information is very important indeed. I submit that it is not beyond the present knowledge of the federal government and that it is capable of an answer at the present time I earnestly solicit a prompt reply.


Mr. Albert Bechard (Parliamentary Secretary to Secretary of State):: I will do that, Mr. Speaker.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Robert Lorne Stanfield: I should like to ask the Prime
Inquiries of the Ministry Minister, in view of the record increase in the cost of living recently announced by the Dominion Bureau of Statistics, when he proposes to announce new plans to provide effective measures to halt the mounting inflation occurring in Canada.


Lester Bowles Pearson: The supplementary estimates were tabled this afternoon. They will be called very shortly, I expect, and this would provide a very good occasion on which to discuss this subject in a more constructive way than by answering a question on the orders of the day.


Robert Lorne Stanfield: Does the Prime Minister propose at that time to announce to the house new plans to combat inflation in Canada?


Lester Bowles Pearson: We propose to discuss this whole matter if the opposition would be good enough to bring it up on the estimates.


Hon. George Hees (Northumberland):: Bearing in mind the Prime Minister's indication last week that he wished to have a debate on economic affairs as soon as possible and that the supplementary estimates would provide an opportunity for such a debate, would the right hon. gentleman advise the house when the supplementary estimates will be presented so we may go ahead with this debate as soon as possible?


Lester Bowles Pearson: Well, the house leaders can get together and arrange for a date as early as possible. I think we could finish the legislation now before the house-that should be possible today, perhaps-and then there is no reason I can see which would prevent our going ahead with the discussion of the estimates.


George Harris Hees: It is the Prime Minister's wish that if possible this debate should go forward this week?


Lester Bowles Pearson: I would hope so, provided we could dispose of the bill which is now before the house.


George Harris Hees: Will the President of the Treasury Board take that answer into consideration and make an announcement which would enable this debate to be held as soon as possible?


Mrs. Grace Maclnnis (Vancouver-Kingsway):: Mr. Speaker, I have a question for the Minister of Consumer and Corporate Affairs. In view of his most recent championship of
6608	COMMONS
Inquiries of the Ministry the rights of consumers, what does he propose to do to offset the 4J per cent rise in the cost of living since January, 1967?


Mr. Speaker:: Order, please. The hon. member is asking for a statement of policy, and I suggest the question cannot be asked at this time.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: I should like to address a question to the Prime Minister. In the light of grave warnings by the Prime Minister of the United Kingdom to the effect that there is a danger of the war in Viet Nam escalating through the use of tactical nuclear weapons, and similar concern expressed by a distinguished United States senator, will this government contemplate making a statement on the matter?


Lester Bowles Pearson: The hon. gentleman's question is based on rumours and I know of no evidence which would support those rumours. If there were to be that kind of escalation it would indeed be madness-I believe the Prime Minister of the United Kingdom called it lunacy-and I do not believe the United States government would go in for that kind of madness.


Edmund Davie Fulton: I take it from the Prime Minister's remarks that this subject was at least discussed between himself and Prime Minister Wilson during their recent meeting. I would ask the right hon. gentleman whether he can elaborate on what he has said with respect to the evidence, or lack of evidence. Have inquiries been made of the United States, and is the Prime Minister in a position to assure the house, one way or the other, that no official consideration is being given, as rumour has it, to the use of nuclear weapons in the war in Viet Nam?


Lester Bowles Pearson: I say there is no evidence to support the rumours which have been spread.


Mr. David MacDonald (Prince):: Can the
Prime Minister tell us whether any further consideration has been given to reconvening the Geneva conference of which Britain is one of the co-chairmen? Can he say whether this possibility was fully explored during Prime Minister Wilson's recent trip to Moscow?

DEBATES	February 12. 1968


Lester Bowles Pearson: Britain is, of course, one of the co-chairmen, but the other co-chairman is the government of the Soviet union, and from the talks I have had and the messages I have received lately, there does not seem any indication on the part of both co-chairmen that the conference will be reconvened.


Mr. L. R. Sherman (Winnipeg Soulh):: My
supplementary question should probably be directed to the Secretary of State for External Affairs. Does the minister have any word yet about Ambassador Ormond Dier and his attempts to get out of Hanoi?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Dier has returned to Saigon and I expect to hear from him very shortly. In the meantime I would call the attention of the hon. gentleman to the statement by the foreign minister of North Viet Nam over the week end reiterating willingness to talk if the bombing stops.


Mr. W. B. Nesbitt (Oxford):: A further supplementary to the Prime Minister. Is the government considering making special assistance available to the reported 300,000 Vietnamese who are presently dispossessed because of the recent violent warfare in that country?


Lester Bowles Pearson: This tragic addition to the misery of this country is now being looked into by the external aid office to determine whether there is any way in which these people can be helped. The best way they could be helped would be to stop the fighting.


Mr.  A. B. Pafterson@Fraser Valley: Could the Secretary of State for External Affairs tell us whether the government has received any reports on the recent discussions between the Secretary General of the United Nations and the Soviet leaders with respect to Viet Nam peace talks?


Paul Joseph James Martin: No, Mr. Speaker. The Secretary General has left Moscow and is on his way to London. Before the end of the day I expect to hear from our ambassador as to the nature of the discussions.


Hon. Gordon Churchill (Winnipeg South Centre):: I should like to ask the Prime Minister for an explanation of his remark to the effect that the best method of aiding South Viet Nam would be to stop the fighting. Is the right hon. gentleman advocating the complete cessation of United States activity in that country, giving in completely to the Viet Cong and the North Vietnamese?


Lester Bowles Pearson: No, Mr. Speaker.
February 12, 1968


NIGERIA-COMMONWEALTH EFFORTS TO END CIVIL WAR
[Stage Direction]
On the orders of the day:
Wallace Bickford (Wally) Nesbitt: A supplementary question to the Prime Minister. Did his discussions with the Prime Minister of the United Kingdom include the subject of the possible use of Canadian forces in Nigeria to form a kind of peace keeping corps there?


Lester Bowles Pearson: No, Mr. Speaker.


Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, this question is directed to the Secretary of State for External Affairs and relates to an answer given to my colleague the hon. member for Oxford. Is the Secretary General of the commonwealth group authorized in any way by the Canadian government to propose or suggest that there should be an international police force in Nigeria, and that there would be a Canadian component?


Paul Joseph James Martin: No, Mr. Speaker; there have been no instructions given to the Secretary General of the commonwealth. The Secretary General has been endeavouring, with full support of the commonwealth countries, to bring about an accommodation between the dissident elements in Nigeria. So far as I know there has been no proposal from this government or from any commonwealth government along the lines involved in the question.


PROPOSED U.S. RESTRICTIONS ON WOOD PRODUCTS IMPORTS
[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kooienay Wesi):: wish to address a question to the Minister of Trade and Commerce. As a member representing a constituency which produces more than 200 million board feet of forest products every year I wish to address the following question to the minister. In view of announcements in Washington that the United States treasury department intends to take action which could cost Canadians upward of $300 million per year in lumber exports, has the minister discussed this serious threat to Canadian exports with the United States treasury department?


Hon. Robert Winters (Minister of Trade and Commerce):: My colleagues from British Columbia have been discussing this subject with me. As the hon. member knows, I
Inquiries of the Ministry returned to Canada only a short time ago and I have not had an opportunity to look into all these matters. Representatives of the forest industries of British Columbia are here today to discuss this question with the Department of Trade and Commerce. I will look into it and report to the house at a later date.


George Harris Hees: have a supplementary question, Mr. Speaker. When the minister is bringing this matter to the attention of the United States government will he point out to them very strongly that this country has a $1 billion annual trade deficit with that country, and that any action of this kind would be very unfriendly-


Mr. Speaker:: Order.


ECONOMIC COUNCIL
[Stage Direction]
On the orders of the day;
Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I have a question for the right hon. the Prime Minister. It arises out of the statement by the Minister of Finance in this house on Thursday, February 8, as reported at page 6514 of Hansard. When answering a question asked by the hon. member for Carleton he commented on a statement made by the chairman of the Economic Council, and the Minister of Finance is reported as having said;
When Mr. Smith made his statement he made it without the knowledge and without the authorization of the government.
My question is this. The Economic Council of Canada was set up by this parliament to be an independent research body. Are we to assume from the minister's statement that this situation is now altered, and that the Economic Council of Canada is only a mouthpiece of the current government and the Minister of Finance?


Lester Bowles Pearson: Mr. Speaker, the minister never intended any such deduction to be drawn from his speech.


Colin Cameron: Mr. Speaker, I should like to ask the Prime Minister whether he can give me any other deduction from this frank statement. If so I would be very pleased to have it.
6610	COMMONS
Inquiries of the Ministry EXPO '67


REQUEST FOR STATEMENT ON FEDERAL INVOLVEMENT
[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, my question is for the Minister of Trade and Commerce. Can the minister inform the house when we might expect an accounting with regard to the extent of the involvement of the federal government in Expo '67.


Robert Henry Winters: Yes, Mr. Speaker; I can do that in the very near future.


INQUIRY AS TO FINAL PAYMENTS FOR 1966-1967 CROPS
[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosthern):: Mr. Speaker, this question is directed to the Minister of Trade and Commerce. When can we expect the announcement of the final accounting by the Canadian Wheat Board with regard to wheat, oats and barley for the past year?


Robert Henry Winters: Mr. Speaker, I expect to be conferring with members of the Canadian Wheat Board on Thursday of this week. Then I shall be able to give the hon. member an answer.


Mr. Reynold Rapp (Humboldt-Melfort-Tis-dale):: Mr. Speaker, I have a supplementary question. Would the minister also say when the final payments for the 1966-67 wheat crop will be paid to western farmers?


Robert Henry Winters: I shall be able to give an answer to that question at the same time, Mr. Speaker.


Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, I should like to direct to the Minister of Trade and Commerce a related question regarding wheat as a prelude to his Thursday morning meeting with Canadian Wheat Board officials. Will the minister discuss with board officials the suggestion from the Department of Agriculture that western farmers reduce their wheat acreage this year because of a surplus of wheat resulting from lower exports?


Robert Henry Winters: Mr. Speaker, I am not familiar with any such suggestion and am unable therefore to undertake to discuss it with the wheat board.

DEBATES	February 12, 1968


REPORTED RESIGNATION OF PARLIAMENTARY
[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington Soulh):: Mr. Speaker, this question is for the Prime Minister. Has the Prime Minister received a letter of resignation from the hon. member for Hamilton East (Mr. Munro) asking that he be relieved of his duties as parliamentary secretary to the Minister of Manpower and Immigration?


Mr. Speaker:: Order, please. A question involving a communication between the Prime Minister and a member cannot be asked in this way.


Alfred Dryden Hales: I was just asking for an
acknowledgement, Mr. Speaker.


Mr. Speaker:: This is precisely the information which cannot be given at this time.


Alfred Dryden Hales: May I ask a supplementary question?


Mr. Speaker:: The hon. member may ask another question; he may not ask a supplementary.


Alfred Dryden Hales: Mr. Speaker, could the Prime Minister advise the house whether the parliamentary secretary to the Minister of Manpower and Immigration has resigned?


Lester Bowles Pearson: When there are changes in the administration they are announced in the house.


REPORTED STATEMENT BY PRIVY COUNCIL PRESIDENT
[Stage Direction]
On the orders of the day:
George Harris Hees: Mr. Speaker, I should like to direct this question to the Prime Minister. On Friday I addressed the following question to him:
Was the President of the Privy Council expressing the view of the government when he said in Toronto recently "the fact remains that we have become an economic colony of the United States"?
The Prime Minister said he would have to consult with the President of the Privy Council. Is he in a position to answer the question today?


Lester Bowles Pearson: Mr. Speaker, the hon. gentleman must know that he is out of order in asking me to comment on a newspaper report of a statement
February 12, 1968

made by my colleague. If he keeps on asking this kind of question I will have to raise his rent.


An hon. Member:: More inflation.


George Harris Hees: Now that we have had considerable verbiage on the part of the Prime Minister might I have an answer to my question?


Mr. Speaker:: Order, please. The hon. member for Grenville-Dundas.


Edmund Davie Fulton: Mr. Speaker, may I ask the Prime Minister whether it is not a fact-


Mr. Speaker:: Order, please. The Chair has recognized the hon. member for Grenville-Dundas.


George Harris Hees: Mr. Speaker, I have a question for the Prime Minister arising out of my inability, because of noise in the house, to hear his answer to my last question which reflected on my personal lodging situation. Let me bring him up to date by stating that his wife has already raised the rent.


Some hon. Members:: Oh, oh.


George Harris Hees: As a result I must inform him, regretfully, that he has lost a very good tenant.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Mr. Speaker, I did that knowing it would not be acceptable and therefore there would be no increase of inflationary pressures.


FINANCE
[Stage Direction]
On the orders of the day:
Mrs. Jean Wadds (Grenville-Dundas):: Mr. Speaker, this question is for the Minister of Finance. Has the minister been advised of the present difficulties faced by those who are endeavouring to obtain loans under the Small Businesses Loans Act?


Mitchell William Sharp: No, Mr. Speaker; I have not been aware of this but will take the question as notice.


REFUSAL BY BANKS TO MAKE FARM IMPROVEMENT LOANS
[Stage Direction]
On the orders of the day:
Mr. R. R. Southam (Moose Mountain):: Mr. Speaker, I have a question for the Minister of
Inquiries of the Ministry Finance in relation to the one just posed by the hon. member for Grenville-Dundas regarding difficulties in obtaining loans for small businesses. This situation is also affecting farm credit and farm improvement loans in western Canada. When the minister replied that he would look into this matter did he mean he would look into it also in respect of farm loans?


Mitchell William Sharp: Mr. Speaker, I was asked a similar question last week, to which I replied that I recognized this difficulty and had urged the banks to continue to make farm improvement loans pending revision of the legislation.


REQUEST FOR STATEMENT ON AGREEMENT WITH U.S.
[Stage Direction]
On the orders of the day:
Mr. Barry Maiher (New Westminster):: Mr. Speaker, I wonder whether I might address this question to the Minister of Energy, Mines and Resources. I should like to ask him whether he would make an early, comprehensive statement to the house with regard to the new Canada-United States oil deal.


Jean-Luc Pepin: Mr. Speaker, I have already answered that question.


INDUSTRY
[Stage Direction]
On the orders of the day:
Mr. Howard Johnston (Okanagan-Revelstoke):: Mr. Speaker, this question is for the Minister of Trade and Commerce. In view of the recent proposal for an interdepartmental study on the problems of the sugar beet industry in Canada, could the minister tell the house whether his department will be working in conjunction with the Department of Agriculture to draw up a Canadian sugar policy that will permit the continued existence of the Canadian sugar beet industry and which will be of greater assistance to the commonwealth members in the West Indies than is the present pattern of sugar purchases?


Mr. Speaker:: Order. The hon. member is asking for a statement which should be made on motions.
6612	COMMONS
Inquiries of the Ministry AGRICULTURE


REQUEST FOR STEPS TO INCREASE RETURNS TO FARMERS
[Stage Direction]
On the orders of the day:
Mr. H. W. Danforlh (Kent (Onl.)):: Mr. Speaker, I had intended to direct this question to the Minister of Agriculture but perhaps in his absence I should direct it to the parliamentary secretary. This is supplementary to the question I asked in respect of the increase in the cost of living index. Could the parliamentary secretary indicate what steps the department is contemplating taking to rectify the situation in agriculture where we have this continued increase in food costs with no compensating increases in the prices paid to the farmers of the nation?


Mr. Speaker:: Order, please. I suggest again that this is a question which should not be asked at this time. The hon. member is asking for a general statement which should be made on motions.




[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: Mr. Speaker, this question is for the Secretary of State for External Affairs. What protest has the government of Canada sent to Hanoi in view of reports of the killing of some missionaries, women and children, by the forces supported by the government of North Viet Nam?


Paul Joseph James Martin: Mr. Speaker, as I indicated a while ago I expect to have a report from our commissioner who has been in the north on other matters. He was in a position, of course, to pass judgment on this situation. I would prefer to hear from him before giving an answer.


Gordon Minto Churchill: Mr. Speaker, I should like to ask the minister whether he waits for reports from our representative on this commission with regard to United States bombing of the north before he makes statements concerning that matter.


Paul Joseph James Martin: Mr. Speaker, there is of course no association between my hon. friend's observation and my answer.
fMr. Speaker.]
DEBATES	February 12, 1968


STEEL-REPORTED IMPORTATIONS AT LOW PRICES
[Stage Direction]
On the orders of the day:
Mr. P. V. Noble (Grey North):: Mr. Speaker, I should like to direct this question to the Minister of Trade and Commerce. Is the minister aware that steel is being imported into Canada at prices which are detrimental to our steel industry?


Robert Henry Winters: Mr. Speaker, that whole matter is being looked into.


Percy Verner Noble: I should like to ask a supplementary question, Mr. Speaker. Does the minister consider that anti-dumping legislation will be necessary to protect our steel industry?


Robert Henry Winters: We are looking into it under the provisions of the anti-dumping regulations.


Mr. Robert Muir (Cape Breton North and Victoria):: I have a supplementary question, Mr. Speaker. May I ask my colleague the Minister of Trade and Commerce, who is a good Nova Scotian, what steps his department is taking, apart from looking into the matter, to protect the steel industry, particularly at this time when Sydney is faced with annihilation?


Robert Henry Winters: Mr. Speaker, we are looking into this matter with officials of the Department of Finance and the Department of National Revenue. I understand that a report has been prepared. I am not familiar with the exact details of the report, but perhaps I could familiarize myself with it and answer a little later.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
David Samuel Horne MacDonald: Mr. Speaker, I intended to direct this question to the Minister of National Defence had he been here. In his absence perhaps I can put the question to the Prime Minister. On Friday, in reply to questions I put to the Minister of National Defence about the future of the Canadian Forces base at Summerside, he suggested that in respect of the phasing out of the Neptunes redeployment of the Arguses
February 12, 19G8	COMMONS DEBATES	6613
was being contemplated. Will the Prime Minister assure members of this house and the people of Prince Edward Island, in view of the disastrous economic effect of closing the base outside of Summerside, whether a special task force is being set up by the department to consider alternative use for this establishment?


Lester Bowles Pearson: Yes, Mr. Speaker, an investigation is being made into that very point.


Mr. Heath Macquarrie (Queens):: Mr. Speaker, I should like to ask the Prime Minister whether consideration is being given to moving the Downsview establishment to Summerside?


Lester Bowles Pearson: Yes, Mr. Speaker, that is one
possibility I mentioned myself.


Hon. J. A. MacLean (Queens):: Mr. Speaker, I should like to ask the Prime Minister whether any study is being made by the Department of National Defence regarding ways and means whereby a permanent unit, either of national defence or the Defence Research Board, could be stationed at Summerside in order to provide some hope of continuing permanency for this base?


Lester Bowles Pearson: I can assure my hon. friend that every aspect of this question is being considered exhaustively. We realize the importance of this matter to the island and we realize we should do everything possible. This is a very complicated problem and we are trying to find a solution.


LABOUR CONDITIONS
[Stage Direction]
On the orders of the day:
Heath Nelson Macquarrie: Mr. Speaker, I should like to direct a question to the Acting Minister of Labour and at the same time extend my congratulations and good wishes upon his appointment. Has he already undertaken to make a special effort to assault the high unemployment situation in the Atlantic provinces, which has now reached nearly 11 per cent?


Hon. B. S. Mackasey (Acting Minister of Labour):: Mr. Speaker, I thank the hon. member for Queens for his very kind remarks, which are very much appreciated. I can only point out to him the success we have had in reducing the high unemployment rate in the
Inquiries of the Ministry maritimes since we took office. I hope we will be as successful in the coming months.


Alfred Dryden Hales: Mr. Speaker, I should like to ask the new Minister without Portfolio whether he will be piloting the new labour bill, C-186, through the house.


Bryce Stuart Mackasey: Mr. Speaker, I will be fulfilling the functions normally carried on by the Minister of Labour. If he is back in time I am sure he will have this honour and privilege.


ROUTE TO BE FOLLOWED BY EXPORTS TO JAPAN -
[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I should like to ask the Minister of Transport whether his communications with Kaiser Mines Limited have progressed to the point that he can now report to the house on whether coal from British Columbia for Japan will be carried to the coast over an all-Canadian route?


Hon. Paul Hellyer (Minister of Transport):: I cannot make a specific report, Mr. Speaker. I did meet with them on Thursday, I believe, and underlined the government's position, which is that the coal should go via an allCanadian route. They were very sympathetic to our point of view. Negotiations are continuing and I hope it will be possible to make a clear announcement in the not too distant future.


Thomas Speakman Barnett: Mr. Speaker, I should like to ask the minister whether he can give any information to the house to the effect that all or part of this coal will be carried in bottoms owned by a subsidiary of the Canadian Pacific Railway, namely Canadian Pacific Steamship Lines?


Mr. Speaker:: Order, please. I do not
believe this question should be asked at this time.


RURAL DEVELOPMENT
[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Piciou):: Mr. Speaker, I should like to direct my question to the Minister of Forestry and Rural Development. It relates to an answer he gave in
6614	COMMONS
Inquiries of the Ministry the house on February 1. Can the minister now advise whether he would be willing to release to interested parties, including the department of agriculture of the province of Nova Scotia, the report of ARDA task force on the eastern counties?


Maurice Sauvé: Mr. Speaker, I have nothing to add to that answer. If at all possible the documents will be released.


Howard Russell MacEwan: Will the minister advise when?


Maurice Sauvé: I have no objection to releasing them but we are not the only party involved.


AIR TRANSPORT
[Stage Direction]
On the orders of the day:
Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a question for the Minister of Transport in relation to an inquiry I directed to the Prime Minister last Friday concerning the accident at Vancouver involving a Boeing 707. Will he inform the house whether the government intends to adopt a policy insisting upon dry leasing of aircraft by Canadian carriers when the need arises so that the crews flying them will be Canadian?


Paul Theodore Hellyer: Mr. Speaker, under existing conditions arrangements for the wet lease of foreign aircraft by Canadian commercial air carriers have been approved by the air transport committee, and by the Canadian Transport Commission in a very limited number of instances upon demonstration of an urgent short term requirement for aircraft necessitating such arrangements and upon the committee being satisfied in each case that suitable aircraft are unavailable from Canadian sources. The need fOT such leases will diminish on receipt of new aircraft now on order by Canadian air carriers.


Erik Nielsen: In view of the number of representations by the Canadian Airline Pilots' Association recommending dry leasing of such aircraft, is the government reconsidering its policy in this regard to give effect to these representations ?


Paul Theodore Hellyer: There have been no formal communications in this regard of which I am

DEBATES	February 12, 1968
aware, at least none in writing. I understand there have been some verbal communications. Naturally we would be willing to reconsider the policy but there are certain reciprocal rights with the United States going back many years, of which I am sure my hon. friend is aware. As I stated, however, the question becomes more and more academic as the requirements of Canadian carriers to lease either wet or dry are reduced by the availability of new aircraft.


THE SENATE
[Stage Direction]
On the orders of the day:
Mr. Robert McCleave (Halifax):: Mr. Speaker, I should like to ask the Prime Minister whether he will be filling vacancies in the other place before the end of this fiscal year.


Mr. Speaker:: Order, please.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Edmund Davie Fulton: Mr. Speaker, in the absence of the Minister of Justice I should like to ask the Solicitor General whether the government is making any examination of books or pamphlets published at the University of Toronto, as reported in a news broadcast this morning, purporting to outline methods by which United States draft dodgers can and should come to Canada. Will the government make such an examination in order to establish whether there is a publication in Canada which recommends the breaking of the laws of Canada or the United States?


Lawrence T. Pennell: Mr. Speaker, I can assure the hon. member that officials of the department keep themselves abreast of such developments, and I am sure they will look into this matter.



IMMIGRATION


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I should like to put a question to the Minister of Manpower and Immigration.
February 12, 1968

Has he received representations from Quebec provincial authorities with regard to the admission of immigrants to the province of Quebec?


Hon. Jean Marchand (Minister of Manpower and Immigration):: Mr. Speaker, I believe I have already informed the house that I shall meet with Quebec's secretary, Mr. Gabias, in order to discuss that problem.



INDUSTRIAL RELATIONS AND DISPUTES INVESTIGATION ACT


[Stage Direction]
On the orders of the day:
Edward Nasserden: Mr. Speaker, I have a question for the Prime Minister. In view of the Prime Minister's extensive fan mail regarding Bill C-186, would he be prepared to table all such correspondence and communications prior to consideration of that bill?


Lester Bowles Pearson: Mr. Speaker, there is a way of getting that correspondence, namely by putting a request on the order paper.


Winona Grace MacInnis: Mr. Speaker, I have a question I would like to address to the Minister of Manpower and Immigration. When I inquired this morning for copies of Bill C-186 I was informed that unless the minister gave authorization there would be no more printed. There have been two additional printings but there is not a single copy of the bill available. I would like to inquire whether and when further copies of Bill C-186 will be available?


Lester Bowles Pearson: I will look into this matter, Mr. Speaker. I am not sure whether the printing of the bill is the responsibility of the government, but I would certainly hate to think that my hon. friends cannot get a copy of it. Perhaps it is so popular it is out of print.


Mr. Bell (Saint John-Albert):: Someone has burned them.


Hon. W. G. Dinsdale (Brandon-Souris):: have a supplementary question, Mr. Speaker, along the same lines as previous questions. I believe there is a shortage of copies of Bill C-195. Would the Prime Minister investigate that matter also?


Mr. Speaker:: Order, please. I am sure the suggestions have all been noted by the appropriate authorities.
Patent Act-Trade Marks Act PUBLIC SERVICE



REPORTED RECRUITING OF SENIOR OFFICERS IN U.S.

[Stage Direction]
On the orders of the day:
Thomas Speakman Barnett: Mr. Speaker, I have a question for the Prime Minister. Is the federal government recruiting for the public service non-Canadians from outside the country and, if so, why?


Hon. E. J. Benson (President ot the Treasury Board):: Mr. Speaker, I believe this question was answered by the Secretary of State last week.



PATENT ACT-TRADE MARKS ACT AMENDMENTS RESPECTING IMPORTATION OF PRESCRIPTION DRUGS

Hon. John N. Turner (Minister of Consumer and Corporate Affairs) moved: the second reading of Bill No. C-190, to amend the Patent Act and the Trade Marks Act.


Mr. Speaker:: Is it the pleasure of the house to adopt the said motion?


Some hon. Members:: Carried.


Mr. Speaker:: The Minister of Consumer and Corporate Affairs.


Robert Muir: The minister of high prices.


John Napier Turner: Mr. Speaker, members of the house may recall that on June 16, 1967, during the debate on the estimates of the Department of the Registrar General, I indicated that it was my intention to introduce legislation in this session to implement some of the major recommendations of the special committee of the House of Commons on drug cost and prices.
Public concern about this subject has been intense and sustained. There are obvious reasons for this. During any given interval of time, the incidence of disease is far from uniform, and those who pay the largest drug bills are, because of their disability, likely to have incomes substantially below the average. Not only, however, is the incidence of illness in the population uneven, but it is quite unpredictable so that consumers cannot budget for a situation in which they may have to assume the burden of heavy drug costs. Beyond all this, health is naturally a value in
February 12, 1968

Patent Act-Trade Marks Act itself. It is also an important determinant of the productivity of human resources in the economy.
Evidence of the high level of public concern about the supply of drugs in Canada may be found in the number and character of official investigations dealing with the quality, cost and prices of drugs which have taken place.
In 1958, the combines branch began a general inquiry into the manufacture, distribution and sale of drugs following informal complaints about the high cost of drugs. In 1963, after public hearings from coast to coast, the restrictive trade practices commission published its report concerning the manufacture, distribution and sale of drugs.
In 1964, after extensive hearings, the royal commission on health services, commonly known as the Hall commission, published its report which included many recommendations to the government in connection with the drug industry. And finally, last April, after extensive hearings, the special committee of the House of Commons on drug costs and prices presented its final report.
As members are likely aware, similar concern has been demonstrated by government agencies in other countries like the United States and Great Britain.

Mr. Speaker, I want at this stage to extend my own congratulations to the chairman of the House of Commons committee on drug prices, the hon. member for Halton (Mr. Harley), who is sitting in the chamber this afternoon, and the members of his committee who spent many long days and hours reviewing this subject of prime importance to the Canadian people, who gave the situation a thorough review and contributed to public debate and public education on this subject. This committee has reported to the house with many constructive suggestions, some of which are being implemented in the present legislation.


Some hon. Members:: Hear, hear.


Gordon Minto Churchill: There is another vote for you.


John Napier Turner: I want to set forth the principles of this bill with some care because of the fundamental importance, I believe, of what I am laying before the house and because of the complicated nature of the legislation. Evidence was put before the Restrictive Trade
Practices Commission and the royal commission on health services, as well as the special committee of the House of Commons, which demonstrated that the price of drugs to consumers in Canada was much higher than comparable prices in most western countries other than the United States.
All three inquiries concluded that Canadian drug prices are unduly high. All agreed that no single measure by itself would bring about a significant reduction in the price that the consumer must pay for drugs, and that a number of co-ordinated steps must be taken.
To illustrate these conclusions I want, first of all, to deal with a number of international comparisons of drug prices. In its report published earlier this year, the special committee of the house indicated that it had decided to assure itself that the situation had remained more or less unchanged since the reports of the Restrictive Trade Practices Commission and the Hall commission. It therefore checked with reliable sources the cost of certain drugs at the retail level in Canada, in the United States and in six European countries. Twelve of the most commonly used and important drugs were selected.
I have in my hand a composite table showing the results of the comparison. If the house would allow me, I prefer not to take up the time of the house to read it but would ask to be allowed to table these figures as an appendix to Hansard.
[DOT] (3:50 p.m.)


Mr. Speaker:: Is it the wish of the house that the information to which the minister referred be printed as an appendix to Hansard or that it be part of the text?


Gordon Minto Churchill: Part of the text.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.
[Editor's note: The table referred to above is as follows:]
Table Showing Comparative Prices to the Retailer of Some of the Most Commonly Used Drugs in
Different Countries
(100's) Price to
Trade Name	Country	Retailer
Chloromycetin Boston, U.S.A.	33.04
Chicago, U.S.A.	33.04
Los Angeles, U.S.A.	33.04
Canada	23.64
Bonn, Germany	17.70
London, England	11.18
Rome, Italy	11.08
Berne, Switzerland	9.86
Paris, France	-

February 12, 1968

Patent Act-Trade Marks Act
Decadron
Librium
Equanil
Enovid
Butazolidin
		(100's)			(100's)
Trade Name	Country	Price to Retailer	Trade Name	Country	Price to RetailerAchromycin	Bonn, Germany	24.55	Premarin	Rome, Italy	9.85Berne, Switzerland	22.40	Berne, Switzerland	8.23Rome, Italy	19.50	Boston, U.S.A.	6.79Canada	17.62	Chicago, U.S.A.	6.79Boston, U.S.A.	16.15	Los Angeles, U.S.A.	6.79Chicago, U.S.A. Los Angeles, U.S.A.	16.15 16.15	Canada	6.36London, England	5.78London, England	9.83	Paris, France	-Paris, France	-	Bonn, Germany	-Gantrisin	Berne, Switzerland	4.34	[DOT]The special	committee noted that	the U.S.Canada	4.14	prices for Chloromycetin were reduced	almost 50Rome, Italy	3.75	per cent after	this price was quoted due to the	Boston, U.S.A.	3.17	expiration of the patent.	
Chicago, U.S.A.
Los Angeles, U.S.A. Paris, France Bonn, Germany London, England
Canada
Rome, Italy Boston, U.S.A. Chicago, U.S.A.
Los Angeles, U.S.A. London, England Paris, France Berne, Switzerland Bonn, Germany
Los Angeles, U.S.A. Boston, U.S.A. Canada
Chicago, U.S.A. Rome, Italy Paris, France Bonn, Germany London, England Berne, Switzerland
3.17
3.16
3.05
2.56
2.40
17.44
15.90
15.70
15.66
15.66 14.11
7.68
7.56
7.20
7.12
4.12 3.66
3.13 3.02 2.73


John Napier Turner: Thank you, Mr. Speaker. With this evidence, the special committee confirmed the previous findings on public record and said that it had come to the inescapable conclusion that drug prices in Canada are in effect high and that every fair and reasonable step should be taken to reduce them.
In the course of the proceedings before the special committee the Pharmaceutical Manufacturers Association of Canada also produced a table setting out an international comparison of drug prices. I will be grateful if the house would allow me to table these figures and make them part of the text in Hansard?


Mr, Speaker:: Is it agreed?


Some hon. Members:: Agreed.
[Editor's note: The table referred to above is as follows:]
International Drug Prices in Canadian Dollars [DOT] (Canadian Pharmaceutical Manufacturers
Los Angeles, U.S.A.	7.34	Association)	Canada	7.20	Country	Price toChicago, U.S.A.	7.02	Product	RetailerBoston, U.S.A.	6.26	Achromycin	Holland	4.71Berne, Switzerland	5.15	Germany	4.27Rome, Italy	4.25	Sweden	3.41London, England	2.85	Canada	3.24Paris, France	U.S.	3.11Bonn, Germany	-	Italy	2.89U.K.	2.31Rome, Italy	19.20	France	-Canada	11.70	Chloromycetin	U.S.	5.48Boston, U.S.A.	9.46	Germany	4.92Chicago, U.S.A.	9.46	Canada	3.96Los Angeles, U.S.A.	9.46	Holland	2.11Paris, France	8.80	U.K.	2.04Berne, Switzerland	8.47	France	1.99London, England	7.70	Italy	1.71Bonn, Germany	Sweden	1.56Terramycin	Germany	4.27Boston, U.S.A.	6.31	Canada	4.17Chicago, U.S.A.	6.31	U.S.	3.90Los Angeles, U.S.A. Canada	6.31 6.18	Italy Holland	3.83 3.74Berne, Switzerland	2.33	Sweden	3.42London, England	2.12	France	3.30Paris, France	1.84	U.K.	2.79Rome, Italy	Bonn, Germany	-	[DOT] Canadian prices	include sales tax.	
Patent Act-Trade Marks Act
Product	Country	Price to RetailerPenbritin	Germany	6.98France	6.11Holland	6.00Italy	5.47Canada	5.37
U.S.	4.73
	U.K.	3.87
	Sweden	-
Gantrisin	Holland	4.29
	Canada	4.14
	Italy	3.49
	U.S.	3.16
	France	3.11
	Sweden	2.75
	Germany	2.57
	U.K.	2.40
Decadron	Canada	11.94
	U.S.	10.93
	U.K.	9.56
	France	8.67
	Germany	7.92
	Sweden	6.66
	Holland	5.41
	Italy	-
Librium	U.S.	7.52
	Canada	7.20
	Holland	4.49
	Italy	3.82
	France	3.71
	Sweden	3.25
	Germany	3.13
	U.K.	3.00
Equanil	Canada	3.40
	U.S.	3.11
	Germany	1.88
	France	1.30
	Holland	1.22
	U.K.	.94
	Sweden	.90
	Italy	-
Stelazine	U.S.	4.22
	Canada	3.75
	U.K.	2.62
	Germany	2.50
	Italy	1.66
	France	-
	Holland	-
	Sweden	-
Ismelin	U.S.	7.30
	France	5.33
	Canada	4.33
	U.K.	4.14
	Sweden	2.57
	Italy	2.43
	Holland	2.36
	Germany	2.05
Hydrodiuril	U.K.	4.43
	U.S.	4.08
	Sweden	3.96
	Holland	3.79
	Germany	3.48
	Canada	3.12
	Italy	-
	France	-
DEBATES		February 12, 1968
		Price to
Product	Country	RetailerDiuril	Sweden	6.52U.S.	6.44Germany	6.20Holland	6.02U.K.	4.79Canada	4.38Italy	-France	-Peritrate	U.S.	2.69Canada	2,50Italy	2.06France	1.04Holland	.80U.K.	.77Germany	.76Sweden	-Doriden	U.S.	4.30Canada	3.97Italy	2.78Germany	2.75U.K.	-France	-Holland	-Sweden	-Seconal	Italy	4.11Germany	2.90Canada	2,85Holland	2.83U.S.	2.32Sweden	2.04U.K.	.90France	-Pyribenzamin	Germany	1.66Sweden	1.54Canada	1.53U.S.	1.50France	1.29Italy	1.01U.K.	.84Holland	-Banthine	Canada	5.76U.S.	4.64Holland	4.52Sweden	4.03Germany	2.21U.K.	-Italy	-France	-


John Napier Turner: A reasonably representative selection of 17 drugs for comparison was made by the Pharmaceutical Manufacturers Association. In its report the special committee said that on the face of the statistics it appeared again that Canadian drug prices were amongst the highest of the countries selected for comparison.
In the same proceedings the hon. member for Hamilton South (Mr. Howe) presented to the committee a list of 58 drugs the retail

February 12, 1968

price of which was from 3 to 20 times as high in Canada as in the United Kingdom. The accuracy of these prices was accepted by the Pharmaceutical Manufacturers Association.
The special committee thus confirmed the result of what it called a thorough and comprehensive comparison between Canadian drug prices and those in other countries from the survey that had been undertaken earlier by the combines branch of the then department of justice and which led the director of investigation and research to conclude that prices of drugs in Canada are among the highest in the world.
Patent Act-Trade Marks Act
One of the comparisons placed before the Restrictive Trade Practices Commission by the combines branch set out prices to retailers for a number of important drugs in anywhere from 7 to 14 countries. Again, if I may have the indulgence of the house I would like to table these figures and have them included as part of the text in Hansard.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.
[Editor's note: The table referred to above is as follows:]
Product
Prednisone
Chlorpromazine
Prochlorperazine
Meprobamate
Country
Japan
Australia
Panama
Italy
Canada
United States Austria Holland Brazil
Great Britain
Canada
United States
Japan
Brazil
Belgium
Holland
Italy
Germany
Australia
Great Britain
France
United States
Canada
Australia
Great Britain
Belgium
France
Germany
Venezuela
India
Iran
Canada
Holland
Australia
United States
Belgium
France
Japan
Brazil
Mexico
Italy
Austria
Great Britain
Germany
Argentina
Marketing Company
Merck
Merck
Merck
Merck
Merck
Merck
Merck
Merck
Merck
Merck
Price to Druggist 27.78 24.00 22.99 22.16 20.80
17.90
17.16
16.05
14.15
7.53
Rhone-Poulenc	3.75
Smith Kline & French	3.03
Banyu Pharmaceutical Co.	2.14
Rhodia	1.53
Specia	1.37
Specia	1.31
Farmitalia	1.22
Bayer	.97
May & Baker	.94
May & Baker	.77
Specia	.51
Smith Kline & French	3.93
Rhone-Poulenc	3.60
May & Baker	2.84
May & Baker	2.24
Specia	1.61
Specia	.80
Bayer	.80
Wyeth	5.44
Lederle	4.79
Cyanamid	4.68
Wyeth	3.60
Cynamid	3.56
Wyeth	3.47
Wyeth	3.25
Cyanamid	3.25
Byla	2.65
Banyu	2.56
Wyeth	2.20
Cyanamid	2.00
Wyeth	1.94
Cyanamid	1.56
Cyanamid	1.48
Asche (Wyeth)	1.36
Cyanamid	.75
6620
February 12, 1968

Patent	Act-Trade Marks Act	
Product	Country	Marketing CompanySparine	Canada	WyethUnited States	WyethVenezuela	WyethMexico	WyethHolland	WyethItaly	WyethBrazil	WyethAustralia	WyethGermany	BayerSerpasil	United States Canada Venezuela Janan Brazil India Italy Iran Australia Belgium Great Britain Germany Austria France	
Price to Druggist
3.15
3.00 2.70 1.66 1.59 1.32 1.26
.94
.83
12.00
9.87 7.85 5.56 5.53 5.29 4.90
4.87
4.41 4.24 3.94
3.42 2.78 1.21


John Napier Turner: I shall not refer to it further except to say that the prices in Canada range from two and a half to eight times the lowest prices available elsewhere.
In order to have the most up to date comparative prices at this time, I have obtained from the same sources as were used by the Harley committee the current prices of the same drugs to the retailer in Canada and the current prices in the United States and in the same five European countries. This will be the last table I intend to produce, and I would ask for the indulgence of the house to have the text printed in Hansard.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.
(100's) Price to
Trade Name Country	Retailer
Achromycin Bonn, Germany	24.55
Berne, Switzerland	22.40
Rome, Italy	19.50
Boston, U.S.A.	16.57
Chicago, U.S.A.	16.15
Canada	13.56
Los Angeles, U.S.A.	12.11
London, England	9.83
Paris, France	-
Gantrisin	Berne, Switzerland	4.34
Rome, Italy	3.75
Canada	3.64
Los Angeles, U.S.A.	3.20
Boston, U.S.A.	3.17
Chicago, U.S.A.	3.17
Paris, France	3.05
Bonn, Germany	2.56
London, England	2.40
[Editor's note: The table referred to above is as follows:]
February 9, 1968.
of Some of the	Most Commonly Used	Drugs
Different Countries		(100's) Price to
Trade Name	Country	RetailerChloromycetin	Canada	21.68Los Angeles, U.S.A.	20.41Chicago, U.S.A.	14.87Bonn, Germany	14.16Boston, U.S.A.	13.60London, England	11.18Rome, Italy	11.08Berne, Switzerland	9.86Paris, France	-
Decadron
Librium
Canada	16.10
Boston, U.S.A.	15.70
Chicago, U.S.A.	15.66
Los Angeles, U.S.A.	15.66
Rome, Italy	15.66
London, England	14.11
Paris, France	-
Berne, Switzerland	-
Bonn, Germany	-
Los Angeles, U.S.A.	7.68
Boston, U.S.A.	7.56
Chicago, U.S.A.	7.12
Canada	6.49
Rome, Italy	4.12
Paris, France	3.66
Bonn, Germany	3.13
London, England	3.02
Berne, Switzerland	2.73

February 12, 1968
Boston, U.S.A.
Chicago, U.S.A.
Los Angeles, U.S.A.
Canada
Berne, Switzerland London, England Paris, France Rome, Italy Bonn. Germanv Rome, Italy Berne, Switzerland Boston, U.S.A.
Chicago, U.S.A.
Los Angeles, U.S.A.
Canada
London, England Paris, France Bonn, Germany


John Napier Turner: This last table shows that while Canadian prices	have decreased
reflecting no doubt the abolition of the sales' tax following the budget of the Minister of Finance effective September 1 this year the situation remains basically the same. In 'general, the Canadian prices are substantially higher than the lowest prices available elsewhere.
I should now like to leave the subject of international comparisons of drug prices and turn to other evidence. There is one sector of the drug market in Canada where a greater degree of competition exists. I am speaking of the market provided by hospitals and other institutional buyers such as government agencies. As the special committee of the house pointed out, many hospitals use a type of drug formulary which allows them to buy on a tendering system. In these circumstances the hospital will call for tenders for a particular drug without specifying its brand name. As a result, where there are several companies producing different brands of the same
27053-417J
Patent Act-Trade Marks Act drug they are compelled to reduce their usual price to hospitals if they want to be sure of getting the business.
In its report the Restrictive Trade Practices Commission included evidence supplied by the province of Manitoba in connection with a tender call for drugs for use in mental hospitals in that province. The quotations for equal quantities of the same type of drug showed a variation between high and low bidders of 194 per cent, 221 per cent, 279 per cent and 491 per cent.
Although there is much more evidence, I shall only refer to one other piece of evidence on this subject. Evidence was given to the royal commission on health services that prodnisone, a cortisone preparation used in arthritic and asthmatic conditions, sold for $17 per 100 units to the retail pharmacists in Saskatchewan at the same time that it was being sold at $1.95 per 100 units to hospitals and government departments.
Now I wish to refer to some specific examples which illustrate that there is often little relation between the cost and the selling price of patented drugs. These examples were part of the evidence before the special committee. The first one relates to the drug stelazine. During the inquiry conducted by the combines branch in 1960 the Canadian company concerned was importing stelazine tablets from its parent company in the United States at a laid down cost of $1.32 per 1,000 tablets. The selling price to druggists, deducting the sales tax, was $67.60 cents per 1,000 tablets. Another example was the drug trancopal. The tablets were imported by the Canadian subsidiary at the laid down cost of $3.88 per 1,000. Packaging and other costs amounted to 24 cents, making the total factory cost $4.12. These tablets were sold to druggists at $70.50 and to hospitals at prices ranging from $47.16 to $63.51 depending on the quantity purchased. By the time they reached the consumer these tablets which cost $4.12 already packaged at the factory in final form were sold for $105.
The fact that prices of certain drugs particularly patent drugs, are high is further illustrated by the price declines which occur when a patent expires. There are not too many examples of this because the real drug explosion started with the discovery of the broad spectrum antibiotics in the late 1940's, so that not many patents have expired, the length of the patent being 17 years. The patent for the drug terramycin recently expired in England, and in April, 1966 Imperial

(100's) Price to
Country	Retailer
Los Angeles, U.S.A.	7.34
Chicago, U.S.A.	7.02
Boston, U.S.A.	6.26
Canada	5.50
Berne,	Switzerland	5.15Rome,	Italy	4.25London, England	2.85Paris,	France	-Bonn,	Germany	-Rome,	Italy	19.20Canada	10.50Boston, U.S.A.	9.46Chicago, U.S.A.	9.46Los Angeles, U.S.A.	9.46Paris, France	8.80Berne, Switzerland	8.47London, England	7.70Bonn, Germany	__
6.31
6.31
6.31 5.57 2.33 2.12 1.84
9.85
8.23
6.79
6.79
6.79 5.84 5.78
Trade Name
Equanil
Enovid
Butazolidin
Premarin
February 12, 1968

Patent Act-Trade Marks Act Chemical Industries started producing and selling this drug under its own brand name at one-third the price charged by the manufacturer which held its patent. United States prices for Chloromycetin have recently been reduced almost 50 per cent with the expiry of the patent on that drug. These examples demonstrate dramatically the central importance of patents as a factor in the high cost of drugs.
I am not for one moment alleging that the high price of drugs is a result of sinister behaviour by the industry. The drug industry operates within a given economic framework and members of the drug industry, like rational businessmen anywhere, have responded to the profit opportunities provided by that framework. However, I am suggesting that where parliament is not satisfied with the result of operations within a given framework, it is surely up to parliament to alter the ground rules.
Let me take a moment to describe the framework in which the drug industry operates First, the demand for ethical drugs is determined largely by the incidence of sickness and the writing of prescriptions by doctors. Because he must follow the doctor's advice, the patient is unable to purchase any but the specified drug. Ordinarily the busy physician is not price conscious. Often he may not even know the prices of different brands of drugs and therefore he gives the factor of price little consideration when he prescribes a medicine. There is little opportunity for the consumer to switch to something else if he does not like the price. It is true that the consumer could make some savings by shopping around with his prescription, because prices do vary at the retail level. Often, however, quite understandably the worried patient does not do so. More important, as I have said, if the prescription calls for a basically expensive drug, there is nothing the consumer can do about that.
On the supply side of the market, the framework in which the industry operates is such that there are high barriers to the entry of newcomers who might inject new and more vigorous competition by importing the basic drugs for processing and packaging in Canada or by importing dosage forms. The most important of these barriers arise as a result of the interaction of the Patent Act, the Trade Marks Act, the customs tariff, the very intensive and costly program of marketing


and promotion undertaken by the established firms, and the requirements of the Food and Drugs Act.
[DOT] (4:00 p.m.)
It is not surprising in these circumstances that the major drug firms have not on the whole found price competition necessary. In many cases they have been able to use patents to prevent the entry by others into the production of individual drugs. They have substituted for price competition the development of minor differences in the product and vigorous sales promotion of these small differences. They have also used vigorous sales promotion to minimize the impact of such price competition as might be offered by smaller firms. The vast bulk of advertising done by the major firms tends by its sheer magnitude to obscure the very existence of small sellers. In the case of patented drugs, no price competition need ever develop during the life of the patent.
We are now in a position to explain why the level of Canadian drug prices is amongst the highest in the world. Because of the heavily protected position enjoyed by the producers, drug pricing is based chiefly on demand. The policy of charging what the traffic will bear can be followed. This means that drug prices will be the highest in those countries where the per capita income is the highest. This relationship was confirmed by an analysis presented by the Canadian Pharmaceutical Manufacturers Association of Canada to the special committee under the chairmanship of the hon. member for Halton (Mr. Harley). The higher the income, the higher the price that can be obtained.
The alternative explanation that drugs are sold at lower prices in foreign countries because production costs are lower there does not stand up to factual examination. It is quite common to see a drug that is manufactured in the United States and exported to a European country selling much more cheaply in that country than in the United States. Since the demand and supply characteristics of the market tend to rule out price competition in the Canadian drug industry, except in sales to institutions, rivalry between drug firms takes the form of concentration on the development of minor differences in products and of sales promotion. Competition is, therefore, cost increasing. The more intense the competition, the higher costs are driven. Since there are no downward pressures on
February 12, 1963	COMMONS DEBATES	6623
prices, there is no downward pressure on costs. Rivalry between the firms requires more detail men, more advertising and so on. The resulting higher costs are used to justify higher prices. The evidence submitted to the special committee of the house by the Canadian Pharmaceutical Manufacturers Association showed that virtually the same amount was spent by the industry on sales promotion as on manufacturing the product. There were 49 members of the association who employed 1,799 detail men, and the association estimated there was one detail man for every ten physicians in Canada.
It is understandable, therefore, that the special committee of the House of Commons, as well as the other inquiries to which I have referred, came to the conclusion that the funds spent on promotional activity by the industry are excessive. The government now has a program which it calculates will bring about a reduction in the price of drugs to the consumer. The objectives of the government's program are to bring about the reduction in the price of drugs to the consumer by a number of steps which are expected to have a cumulative effect. The steps must be consistent both with the supply to the Canadian market of quality, safe, efficacious drugs in which the medical profession has confidence and with the existence of a viable, competitive Canadian drug industry. The program, therefore, has three objectives: lower prices, safe drugs and a viable domestic drug industry.
The program may be summarized in this way: The first step is the one which the Minister of Finance (Mr. Sharp) has already taken in removing the sales tax from drugs and reducing the customs duty from 20 per cent to 15 per cent as well as substantially narrowing the application of the dumping duty to imports of drugs.
The second step is the one we are now bringing before the house. It is proposed to stimulate price competition among sellers of patented and trademarked drugs through reducing protection against imports which is provided by the Patent and Trade Marks Acts.
As a third step, it is proposed that a program be undertaken to provide objective information to the medical profession about the properties and prices of available drugs so that prescribing physicians will be aware of the price differences between competing drug products of demonstrated quality, safety and effectiveness.
Patent Act-Trade Marks Act
Fourth, it is proposed that steps be taken to strengthen the small sector of the industry that manufactures and sells lower price prescription drugs.
Fifth, consultation with the provinces is planned to tackle the problem of reducing the cost of retail distribution of drugs. This subject falls primarily within provincial jurisdiction.
While each element in the program will be effective on its own, Mr. Speaker, no single step by itself can be depended upon to have a substantial effect on prices. These measures are cumulative and we shall therefore be proceeding with the program as a package.
I want to make it clear to the house, sir, why the amendments to the Patent and Trade Marks Acts are in our opinion necessary. The tariff changes announced by the Minister of Finance should assist in stimulating price competition. However, as the law now stands patents may be used as an absolute barrier to imports and thus may frustrate the benefits of tariff reduction. The effect of removing the sales tax could also be frustrated. The special committee of the house concluded that without more effective operation of competitive forces than now exist in the drug industry in Canada, the only certain result of the removal of the sales tax would be a reduction in cost to the manufacturer. In actual fact, most drug producers appear to have passed on the bulk of the sales tax removed, and I am glad to acknowledge this. Unless more real competition can be introduced, we can have no guarantee prices will not move upward again and absorb the tax saving.
As hon. members know, the Patent Act creates a temporary monopoly in the patented product or process for the inventor with the object of encouraging invention, change and innovation and of making the fruits of that invention available in due course to the public at large. The granting of a patent to the inventor or his assignee gives him the power to prevent others from making, using or selling the patented product or process for a certain period of years. Under Canadian law, patents relating to food and drugs have been placed in a special category. In the first place, the act provides that in the case of an invention relating to a substance prepared or manufactured by a chemical process and intended for food or medicine, the patent does not include the product itself unless prepared by the patented process. This is the present law and it has been the law since
$624	COMMONS
Patent Act-Trade Marks Act 1923. Any person, therefore, is free to produce, import and sell the same product as long as it is not made by the patented process.
In the second place, under the present law provision is made for the granting of a compulsory licence of a patent for invention intended for or capable of being used for the production of food or medicine. When an application is made, the commissioner of patents must grant a licence, which is limited to the use of the invention for manufacturing a food or medicine, unless he sees good reason to the contrary. The commissioner, in so doing, fixes the amount of royalties payable by the licensee for the use of the patent, having regard to the desirability of making the food or medicine available to the public at the lowest possible price consistent with giving to the inventor due reward for the research leading to the invention. This is the present law.
The full privileges of patent protection, therefore, have not been granted to drugs. The Canadian Pharmaceutical Manufacturers Association has referred to this as discrimination. I think it is more accurate to suggest that parliament, for over 40 years, has recognized the important principles of public policy involved, has weighed them and has decided that in this particular case the immediate welfare and interest of the general public is paramount and private interests of the industry, as well as whatever inducement to research the patent would represent, are to be subordinated to the public interest.
I think it is worthy of note that less than 5 per cent of the patents granted by Canada on drug processes are issued to residents of this country. Thus the patent system is an expensive way of stimulating inventive activity in Canada. The government can and does provide more direct and effective inducements to research in the form of statutory grants made available through the Department of Industry. These grants are made available only to the firms which are actually willing to do research in Canada. Patents, on the other hand, are given equally to those who are prepared to do research in Canada and those who are not prepared to do such research.
Compulsory licences to manufacture under section 41, subsection 3, of the Patent Act have not been sought in substantial numbers. In many cases it is apparently uneconomic to manufacture in Canada the basic drug to which the patent relates. This is borne out by the fact that the existing firms, including the

DEBATES	February 12, 1968
major international firms, import most of their active ingredients. In fact, it is my information that 85 per cent of the manufacturing in Canada does not relate to the manufacture of the basic chemical or ingredient that goes into the drug but involves the conversion of the basic chemical that is imported into the final dosage form, whether it be a pill, tube, or whatever form it takes, e (4:10 p.m.)
The Pharmaceutical Manufacturers Association of Canada has stated that "it has not proved economically feasible to develop a pharmaceutical chemical industry itself, primarily because of the limited size of the Canadian market." Those words are the association's. I think there are other factors that probably bear on the situation. These include the high promotion costs which would subsequently be entailed, opposition to and appeals against licence applications which would have to be anticipated, and the live and let live attitudes on the part of the established international firms.
It is instructive that compulsory licences have been obtained and exploited chiefly by wholly Canadian firms. The Harley committee found that competition over a wide range of products has not developed through compulsory licences to manufacture. The alternative stimulus to competition, namely, the importation of drugs ranging from the basic chemical to the final dosage form, has not been given an opportunity to work in the Canadian market because the commissioner of patents has held that he is not authorized to issue a compulsory licence for import of a drug under section 41 (3) of the Patent Act. The fundamental purpose of this bill is to amend the Patent Act to provide beyond any doubt that the authority of the commissioner of patents to issue compulsory licences for patented drugs shall extend to the import of drugs in all forms.
I want to make it clear that this is not such a novel or unorthodox proposal as some industry spokesmen would have us believe. First, it is at least arguable in law that the commissioner now has authority to issue compulsory licences for the importation of the active ingredients. The amendment will eliminate any uncertainty in the present law. Second, one of the main recommendations of the royal commission on patents-the Ilsley commission-was that the Patent Act should be amended to prevent patents from being
February 12, 1968	COMMONS
used as a non-tariff barrier to trade. In other words, the Ilsley commission recommended the abolition of patents in so far as those patents acted as a substitute for a tariff. Third, as the special committee of the House of Commons pointed out, the section in the United Kingdom legislation of 1949 which corresponds to our section 41 (3) authorizes compulsory licences for imports, and this fact does not seem to have held back the growth of the British drug companies. Fourth, in the United States in circumstances in which a drug patent covers only the process and not the product made by the process, importation of the product does not constitute infringement.
The special committee of the House of Commons recommended that the commissioner of patents should grant a licence for import only when he considers it is in the public interest to do so. At present the commissioner is required to issue a compulsory licence, as the statute says, "unless he sees good reason to the contrary".
I want to deal with some of the recommendations made by the special committee of the house so as to show where, in certain details, we are departing from those recommendations.
This recommendation of the special committee introduces a new principle which would tend to restrict the issue of licences to import. It would place on the commissioner the difficult burden of determining the public interest. Accordingly, the existing principle of licensing, that is, the issue of a licence unless the commissioner sees good reason to the contrary, will be maintained by the amendment and extended to the compulsory licensing of imports.
Another recommendation of the special committee was that "the patent commissioner, in assessing royalities on the granting of a compulsory licence, shall consider that the patentee who discovers and initially develops the drug in Canada should have higher royalties than the drug manufacturer who discovers new drugs outside Canada". While I have a good deal of sympathy with the purpose of this recommendation, we are unable to adopt it, particularly because discriminatory royalties would be in breach of the Canadian government's obligations under the international patent convention.
Under the United Kingdom legislation the comptroller, in assessing the royalties for a compulsory license, takes into account the
DEBATES	6625
Patent Act-Trade Marks Act patentee's expenditures on research and development and on the promotion of the patented drug. It has been urged that this or a similar formula should be imported into the Canadian legislation. There are a number of compelling arguments against this but to save time I shall mention only three of them.
First, in the United Kingdom the patent is on the product as such, whereas in Canada the patent is on the process, or on the product when made by the patented process. Since the patent does not extend to the drug substance as such in Canada, the key factor being the process, the supreme court has held that the promotion and other costs associated with the finished drug are irrelevant in setting the royalty. It seems obvious that in principle the royalties should be related in some way to the invention, that is, to what is patented. Not only is this logical but it is the established practice in Canada with respect to other industries.
Second, the cost of research, or a contribution with respect thereto, may be recovered not only by royalty payments on the patents but also by the repatriation of profits earned by the Canadian subsidiary. While prices in Canada remain so much higher than they are in many other countries, the argument in favour of an increased research contribution by the Canadian consumer is not persuasive.
Third, the adoption of the principle followed in Britain could frustrate or at least impair the downward pressure on prices we seek to achieve.
The special committee of the House of Commons expressed the opinion that there is no doubt that the manufacturer who introduces a new drug should be allowed a certain time to promote the drug and establish his position in the market following appropriate clinical testing, so that for a period of time at least he retains his monopoly position. However, the new drug regulations of the food and drug directorate in effect provide a monopoly for five years. The committee felt this was an adequate period for recouping a reasonable return on research, and I agree with their view.
The special committee of the House of Commons also expressed the opinion in connection with compulsory licensing that difficulties can be anticipated from artificial delay that may be introduced by the patentee during the course of prosecution of the application which could lengthen enormously
6626	COMMONS
Patent Act-Trade Marks Act the period between the date of application and the date the patent issues. The monetary rewards to a patentee as a result of delay in the compulsory licensing application, the committee said, can be substantial. The special committee therefore recommended an amendment to provide that if the grant of a compulsory licence takes longer than 12 months the commissioner may issue the licence subject to revocation if any appeal against the issue of the licence is upheld. Subsections 5 to 11 inclusive are intended to give effect to the principle which the special committee recommended should be adopted.
The special committee also recommended that the grant of a licence should be subject to a report by the food and drug directorate to the effect that the applicant had satisfied the directorate that he met the regulations under the Food and Drugs Act. However, the food and drug directorate will enforce the regulations relating to safety and quality irrespective of the grant of a licence. The question of safety is therefore more properly left to the food and drug directorate than to the patent commissioner. It is, however, important that the directorate should have early notice of any application for a licence. The commissioner will, therefore, be required to give notice of the application to the food and drug directorate in order that it may take any necessary action. Moreover, the commissioner of patents will be concerned as in the past to screen out fly by night operators and to deal only with responsible applicants.
The special committee also recommended that the rules under the Patent Act be amended to permit the commissioner to seek and receive outside independent expert advice on the matter of the public interest. However, authority to obtain expert evidence already exists under section 4 (2) of the Patent Act. Thus no new provision is required.
The special committee recommended that the importer of drugs under compulsory licence should pay the cost of the food and drug directorate's services outside of Canada made necessary by the proposed import. It is our feeling that this would be discriminatory in that such costs are not borne by the resident manufacturers or by other importers of drugs, whether patented or not. Moreover, it is questionable whether this would be consistent with the GATT and other international trade agreements. It is not, therefore, proposed in this legislation.

DEBATES	February 12. 1968
[DOT] (4:20 p.m.)
The special committee pointed out that under present law the Canadian subsidiary of a foreign parent company can prevent the importation of drugs into Canada if these bear trade marks identical with those owned and used by it. This, of course, rules out imports of brand name drugs which may be selling at lower prices outside Canada and which, in fact, may in many instances be identical with those drugs manufactured by the subsidiary from bulk active ingredients imported from the parent corporation.
The special committee noted that prior to 1953 a trade mark could not be assigned or transferred to another corporation, even a subsidiary corporation, without at the same time transferring the good will of the business. Under the Trade Marks Act, 1953, this situation was reversed and subsidiaries or licensees became legally entitled to use the trade mark of their parent corporation under a "registered user" system. The subsidiary, for example, provided it operated strictly under a registered agreement with its parent corporation, obtained equal rights to the trade mark of the parent.
In representations made to the joint committee, the Patent and Trade Mark Institute of Canada expressed the opinion that if the Canadian company does not own a Canadian registration but merely uses the mark as a "registered user" thereof, the trade mark being actually owned by the foreign related company, sale of the trade marked wares imported from the foreign related company would not constitute an infringement of the registration. It appears, however, that a court decision of 1960, Remington Rand Limited v. Trans-World Metal Company Limited, clearly gives the owner of a Canadian trade mark the right to exclude trade marked goods manufactured by related companies outside Canada.
It is proposed, therefore, to amend the Trade Marks Act to provide that no infringement of a trade mark can be claimed where drugs, bearing the trade mark of and manufactured by a related company in a foreign country, are imported into Canada. This is a recommendation of the special committee of the House of Commons and of the Royal Commission on Health Services. The amendment will apply in the situation where a foreign parent and a Canadian subsidiary sell a particular drug product under the same trade mark both in Canada and in the foreign
February 12, 1988
country. The amendment will permit a third party to import the drug into Canada when it has been manufactured by the foreign parent. It will not allow the importer to abuse the trade mark or deceive customers. Such imports are likely to occur only when the price in Canada is substantially above the price in the foreign country.
At the present time patents may be invoked to prevent the import of patented drugs either in the form of the fine chemicals or in dosage forms. The proposed amendments to the Patent Act will facilitate the import of drugs in the form of fine chemicals. However, the sale of imported dosage forms could still be prevented under the provisions of the Trade Marks Act. In order to facilitate the import of dosage forms it is therefore necessary to adopt both the patent and trade mark proposals.
I want to talk now about the question of quality and safety. As I said earlier, this is of paramount importance to the Canadian public. Assurance of a high level of quality and safety of drugs is of prime importance to the public interest. A patent, however, has nothing whatever to do with quality. We should not confuse the purposes of the Patent Act with the purposes of the Food and Drugs Act. Some industry submissions would have us believe that only a patented or trade marked drug carries the assurance of high quality and safety. This is simply not the case. Assurance of quality depends, first, on the integrity of the particular manufacturer and, second, upon the controls exercised by the food and drug directorate. The patent itself confers no guarantee of quality, nor is it an essential condition of quality. There is no evidence whatever that drugs which have never been patented or on which patents have expired are any less safe than patented drugs.
Under the proposed amendment, where the preparation of the dosage form continues to be carried out in Canada, the situation presents no new elements and therefore no greater difficulties than exist at present. On the other hand, if the drug is imported in final dosage form as a pill, serum or in a tube, evidence must be available to indicate that all requirements of the Food and Drugs Act and regulations have been met. This may entail inspection of the foreign plants in which they are produced. In any instances where these requirements are not met, the product can of course be excluded from the Canadian market, regardless of whether a patent has been granted or license issued.
6627
Patent Act-Trade Marks Act
The food and drug directorate already has responsibility for all drugs on the Canadian market, including those imported from abroad. To the extent that the program increases the volume of imports, there will be an increase in the work load of the directorate. The problems will, however, differ only in degree, and the directorate believes that, with the additional resources that are being put into place, it can continue to discharge its responsibility in relation to quality and safety.
In its report the special committee said that unfortunately the large international drug manufacturers often give the impression that the products of small drug companies are not safe. This was challenged not only by the small drug manufacturers themselves but also by purchasing agents of some hospitals and government departments who have ordered and continue to order the products of the small companies.

It has to be recognized that no matter how much opportunity for price competition may be opened up, unless the physician has confidence in the manufacturer of the drug and in the measures taken to ensure the purity, safety and effectiveness of the product, he will not prescribe it for his patient. It is, therefore, important that full attention be given to the necessity of building up confidence on the part of physicians in the quality of available competing products. Lacking the time or resources to make a comparison between the properties and prices of competing products, the doctor prescribes those drugs he has heard of, has read of and has some knowledge of. Being a cautious man, he prescribes the drug manufactured by a company known to him. He may or may not know what the drug costs, and he may or may not realize that there are lower cost alternatives on the market.
It is, therefore, essential to the success of the whole program that the physician develop confidence in and prescribe lower-priced drugs when he is satisfied that they will adequately serve the needs of the patient. The special committee of the House of Commons accordingly recommended that the food and drug directorate should publish periodically an informative bulletin to the medical profession with detailed information on drug properties, action and prices. The directorate is making plans to carry out this recommendation.

6628	COMMONS
Patent Act-Trade Marks Act [English]
Within the Canadian drug industry there exists a group of firms whose business consists chiefly of the manufacture of lower priced drugs. This sector comprises over 100 smaller manufacturers, mostly Canadian owned, which together account for only some 15 per cent by value of the market, about $30 million at factory prices.
The dissemination of information on comparative properties and prices, as I have just mentioned, is designed to stimulate the demand for lower priced drugs, including the products which the smaller firms manufacture or are capable of manufacturing. The changes in the anti-dumping regulations and in the Patent Act will also open up additional opportunities to them. However, before they can take full advantage of the new situation it will be necessary for some of them at least to regroup or reorganize into units of greater strength and capability if they are to compete effectively for a significant share of the retail market for their lower-priced drug products. Plans to strengthen the competitive position of this sector of the industry are now under consideration and will be announced in due course.
[DOT] (4:30 p.m.)
While attention in the various studies I have mentioned has been focused on the price of drugs at the manufacturing level, it is widely recognized that a further basic cause of the high price of drugs lies in the high cost of retail distribution. In the submission of the Canadian Pharmaceutical Association Incorporated to the special committee it was stated that in 1964 an average pharmacy dispensed some 30 prescriptions each day of the year, the sales from which represented only 27.4 per cent of the gross sales of the pharmacy. According to the special committee, these figures and others presented to it clearly indicated that the average pharmacist in an average community could not hope to survive unless he also operated his pharmacy as a small goods retail outlet. The special committee concluded there were indications that serious inefficiency existed as a result of too many drug stores serving too few people. It added that inefficiency leads to higher prices.
The special committee also noted that the provincial pharmaceutical associations appear to exercise great control over their pharmacist members through regulations and standards of ethics. In considering what might be

DEBATES	February 12, 1968
accomplished in reducing prices at the drug store level the special committee had to keep in mind the division of powers between the federal and provincial governments. As I have previously told the house, I am planning early visits to the provincial capitals to examine jointly with provincial leaders the problems of the consumer and methods of solving them on a broad base. These visits will, I hope, lead up to and prepare the ground for a federal-provincial conference on consumer affairs. In these discussions the retail distribution of drugs will have a high priority. The federal program which I have been outlining is designed to tackle high drug prices at their origin, that is, at the manufacturers' level. But it is essential, and this is our intention, to initiate action at the level of distribution through discussions with the provinces.
I should like to analyse briefly our reasons for feeling this program will be effective. I believe there are a number of reasons which justify confidence that, taken as a whole, the program I have outlined will be successful in reducing the price of drugs. In the first place, there is overwhelming evidence that there is scope for substantial reductions. I have earlier referred to the fact that many of the international companies operating in Canada sell drugs abroad at much lower prices, and since this is a persistent phenomenon it cannot be argued that this is unprofitable for them. I have referred to the tremendous spread between the manufactured cost of some drug products and the manufacturers' selling price. I have referred to the fact that the selling costs of this industry are as great as its manufacturing costs, and I am not aware of any other important industry where selling costs represent such a high proportion of the final price. I shall refer in a moment to the evidence that profits in the Canadian drug industry have continued year after year at a level twice as high as manufacturing generally.
In the second place, in the one sector of the market where competitive forces are sometimes able to operate, namely, in sales to hospitals and other institutions, some drugs are sold at half the price or less than that charged to the retail trade. In the third place, we know that in other jurisdictions, such as Britain and the United States, when important patents have expired there has been a dramatic fall in prices. In the fourth place, even under the present provisions for compulsory licensing, in the limited number of
February 12, 1968

cases where new producers have been able to enter the market, price reductions have occurred. In the fifth place, while the existing provisions for compulsory licensing have been taken advantage of primarily by small Canadian companies who have selected certain products which it was practicable to manufacture completely in Canada, the possibility of importing the active ingredients under compulsory licence should encourage the small companies to expand their activities substantially. In turn this may induce the large international companies to broaden -heir lines through compulsory licensing in order to preserve their shares of the market. There are indications that some international drug companies are likely to seek compulsory licences to import if these amendments are passed by parliament.
Finally, members must certainly be aware that the industry itself anticipates that these measures will put a substantial downward pressure on prices. For example, in its presentation before the special committee of the House of Commons Hoffmann-La Roche commented: "The mischief for Roche lies not so much in what business would actually be lost to copiers but what happens to the price level as a result of their entry".
Although, as I have indicated, the most important effect of the patent proposals may be to permit importation of the basic chemicals, there will be some products the demand for which will be too small to justify the preparation of dosage forms in Canada. Provision for the importation of drugs in dosage forms is, therefore, important. It is in connection with the possibility of importation of dosage forms that the proposed change in the Trade Marks Act is necessary. Taken together, the patent and trade mark proposals should have the effect of ensuring that prices in Canada are brought more into line with world prices. Importations will occur, however, only to the extent that high prices in Canada make such importations economically feasible. Faced with the likelihood of import competition the established industry can be expected to reduce its prices to avert it.
I should like to consider briefly the impact of these proposals upon the drug industry as we see it. The latest census of manufacturers by the Dominion Bureau of Statistics taken in 1965 lists 162 manufacturers of pharmaceuticals and medicines employing 11,137 persons. Total manufacturing and related operations by themselves accounted for the employment
Patent Act-Trade Marks Act of less than 4,400 persons. Administrative and office employees numbered slightly more than 3,800. There were over 2,800 persons engaged in sales and distribution. The submission by the Alberta government to the special committee pointed out that wages and salaries paid by drug firms represent only about 30 per cent of the value of output, while in most industries it is closer to 70 per cent.
Canadian drug manufacturers both manufacture and import. There is no substantial fine chemicals industry in Canada and the basic drugs are therefore mainly imported. I said the figure was roughly 85 per cent, that is, the percentage of the basic chemicals which is imported. In many cases final dosage forms are also imported by subsidiaries of the manufacturers. The manufacturing activity in Canada is largely a matter of converting bulk drugs into dosage forms and packaging and marketing them.
It is not possible to predict the magnitude of additional imports which may result from the extension of compulsory licensing to cover importation of drugs. Nor can reliable estimates be made of the proportions of these additional imports which will take the form of finished drugs on the one hand and of ingredients on the other.
There is no obvious reason why compulsory licensing of imports should significantly change the present relationship between imports of finished drugs and imports of ingredients. The same amount of manufacturing should continue to be done in Canada though it may be rearranged in terms of the competitive forces involved. At the present time it is more difficult for potential importers to obtain supplies of low-priced dosage forms than it is for them to obtain supplies of low-priced chemicals. The patent and trade mark proposals will not make the availability of low-priced dosage forms any easier. Where the potential importer has access to a supply of low-priced dosage forms, the patent and trade mark proposals will, of course, make it easier for him to sell them on the Canadian market. If importation takes the form of basic chemicals, this will have an effect on those few firms which manufacture such chemicals in Canada but this is a very small segment of the pharmaceutical industry. Such imports cannot substantially affect employment in the drug industry in Canada since at most they will simply result in other firms doing what is being done by the present patent holders. To the extent that this occurs, it will at most shift operations from one plant to another.
February 12, 1968

Patent Act-Trade Marks Act There is every reason to expect that Canadian branches or subsidiaries of large international firms will themselves seek compulsory lincences and begin producing dosage forms of drugs in Canada which they are now precluded from producing because of patent restrictions. This would mean an increase in competition among the large and well established firms. To the extent that some patent holders have in the past imported finished dosage forms rather than basic chemicals, the patent proposals may have a tendency to increase the amount of manufacture in Canada.
While the proposed steps are designed to inject real price competition into the drug field with the expectation that prices of drugs will fall, nevertheless the established firms in the Canadian drug industry will still be afforded substantial protection. This arises out of the 15 per cent m.f.n. tariff, the "new drug" regulations which I shall explain in a moment, the sales promotional activities of the established firms and the remaining patent and trade mark protection.
[DOT] (4:40 p.m.)
We are not abolishing the Trade Marks Act and we are not abolishing the Patent Act. Neither should it be forgotten that the average rate of return on investment over the past 12 years in the Canadian drug industry was 20 per cent for all drug manufacturers compared with about 10 per cent for all manufacturing. There is thus in our opinion a substantial cushion for the established drug firm in adjusting to the new conditions of the market. An appendix to the report of the special committee of the House of Commons points out that during this 12-year period the return on investment to the pharmaceutical industry tended to increase, while the return on investment for all manufacturing showed a substantial decline. Moreover, the committee concluded that contrary to what some have claimed, the financial experience of the Canadian pharmaceutical manufacturing industry does not indicate that business risks to it are greater than to manufacturing in general in this country. On the contrary, said the committee, the evidence indicates that it has been less risky.
I now wish to say a word about the significance of the new drug regulations under the Food and Drugs Act. Before the sale of a new drug is permitted the manufacturer must carry out extensive and very costly tests and
(Mr. Turner.]

submit the results to the food and drug directorate. If the directorate is satisfied as to the safety and efficacy of the drugs on the basis of the evidence submitted, it issues a notice of compliance on the basis of which the drug may be sold by the person or firm who submitted the evidence. The drug remains a new drug until it has been sold in Canada in sufficient quantity and for a sufficient time to ensure that any serious side effects will have shown up. As long as it remains a new drug no other person or firm may sell it unless he has submitted similar evidence to the directorate and received a notice of compliance. In general it is not economically feasible for a second person or firm to duplicate work of the first person or firm and this is not done in practice. A new drug-I emphasize this-usually remains classified as such for a minimum of five years. Hence, in practice the holder of a patent on a new drug enjoys absolute protection for five years. Only when the drug is removed from the new drug classification is the question of compulsory licensing likely to arise.
The special committee of the House of Commons expressed its opinion that the patentee has ample time to establish and consolidate his position in the market and thereby recoup his research costs by virtue of the fact that it takes some five years for the drug to lose its new drug status. It also concluded that it was most unlikely that a compulsory licence would be sought prior to the date that the drug lost its status as a new drug.
In summary, it is to be expected that the major effects of the proposed amendments will be to reduce the prices, selling outlays and profits of existing large drug firms, rather than to decrease greatly their share of the market. Output can be maintained to the extent that they are willing to cut prices to meet the challenge of imports, and this will maintain output and employment in existing plants.
There is one other important consideration relating to the impact on the industry of the proposed amendments to which I should like to devote some attention. In its report the special committee of the House of Commons noted that when the report of the royal commission on health services was written the 13 largest firms in the drug field in Canada, exclusive of Connaught Research Medical Laboratories in Toronto, were with one exception all branches or subsidiaries of foreign firms. Since then the Frosst company
February 12, 1S6E	COMMONS
has been taken over by a United States firm. Since the report was written the last large Canadian firm, in other words, was purchased by a United States corporation.
According to the submission of the Pharmaceutical Manufacturers Association of Canada to the special committee, 36 of its 57 members are based in the United States and many of the rest are based in Europe. As I have mentioned earlier, 95 per cent of all Canadian patents are owned by residents of foreign countries. If anything, the proportion of drug patents held abroad is probably higher than 95 per cent. Given the fact that most of the Canadian drug industry is foreign owned and the fact that most drug patents are foreign owned, the chance of any Canadian firm being able to break into the market on a substantial scale is very limited under present circumstances. The amendments to the Patent Act which have been proposed are likely to be of crucial importance in making entry easier for Canadian owned drug firms.
Spokesmen for the major drug firms often defend the height of their prices, or the gap between computed costs and market prices, by reference to the vast sum spent on research in the interest of advancing the cause of health and medical science. It is also asserted that in the absence of the patent incentive, research would disappear. I should like to say, Mr. Speaker, that 1 believe fundamentally in the importance of research in this country. I have said on many occasions that our research in Canada is less than 1 per cent of our gross national product, whereas in the United States it is 4 per cent or 5 per cent and in the United Kingdom 3 per cent or 4 per cent. But it applies to the international drug industry and the amount of research done in Canada, the statements I recited from the industry should be questioned.
In terms of the manufacturers' sales dollar, as reported by 41 members of the Canadian Pharmaceutical Manufacturers Association for the year 1964, only 7 per cent was spent for research and development of all kinds. This figure included sums charged to the Canadian companies by related companies outside of Canada. At the same time, sales promotion expenses accounted for 30 per cent of the manufacturers' sales dollar. Hence over four times as much was spent on sales promotion as on research. The proportions are not greatly different in the United States.
The 7 per cent research figure takes into account the fact that research spending by
DEBATES	6631
Patent Act-Trade Marks Act the drug companies has been increasing substantially in Canada in recent years. I should like to suggest to the house that this increase cannot, however, be attributed to the operations of the patent system. In its submission to the special committee the Pharmaceutical Manufacturers Association of Canada said that both in Canada and the United States the requirements of government for additional data before a new drug is allowed on the market have sharply increased companies' research and development expenditures. In support of this proposition the association quoted this statement about the United States drug industry:
Industry research people estimate that the cost of developing a new chemical entity has increased somewhere between 20 and 50 per cent in the past few years, with most of the increase due to meeting the requirements of the food and drug administration.
Elsewhere in its brief the Pharmaceutical Manufacturers Association of Canada referred to the increase in research spending between 1959 and 1964 and acknowledged that this expansion was due in part to the research tax incentive offered by the federal government and to the fact that a few companies had been given direct grants for specific projects. The special committee of the House of Commons reached the conclusion that Canada was a late starter in drug research and because of this the international aspect of the drug industry should be studied before any hasty recommendations were made about the promotion of further research in the Canadian branch of the industry. The special committee suggested that any further tax concessions that might be conferred on the Canadian drug industry should be considered in the light of what benefits are likely to be attained from the total package of research and development undertaken. If this examination is not carried out, the special committee suggested, it is conceivable that the taxpayer will be asked to pay for clinical research and testing which are normal expenditures of any industry, and the manufacturers will reap the benefit at the expense of the taxpayers and, I might say, at the expense of the consumer.
It has to be borne in mind that it may well be cheaper for Canadian firms to continue to acquire the result of research by purchasing it abroad, particularly through their parent organizations. The reason why Canadian subsidiaries of international drug companies do not do more research in Canada was explained to the special committee by
February 12, 1968

Patent Act-Trade Marks Act Canadian Cyanamid. It said that Cyanamid's drug research is carried out largely by the thousand scientists and technicians in its New York laboratory. Economic considerations have dictated the concentration of the principal pharmaceutical research effort at a single location because of the heavy investment required in specialist facilities and personnel. The Cyanamid submission argued that it must be obvious that fragmenting such an operation was not feasible. In its report the special committee came to the conclusion that the drug industry in Canada would continue in the foreseeable future to remain largely within the international framework, that the larger Canadian companies would remain subsidiaries of foreign corporations, and that any further noticeable increase in research in Canada by these subsidiaries would in all likelihood not take place unless stimulated by government policy, that is to say, by government grants, tax incentives and the like.
[DOT] (4:50 p.m.)
It is perhaps worth recalling that the Canadian market is of relatively minor importance to anyone wishing to market a new drug discovery. Drug research is predicated on the idea of supplying a new discovery to the world. In logic, therefore, there is no reason the proposed patent amendments should change the locus of any research undertaken which is contemplated, if there are otherwise good economic reasons for locating it in Canada. Of all Canadian subsidiaries of international drug firms only three have done any appreciable research in Canada and this for historical reasons, prior to their purchase by international concerns. Most of the research has been produced on the international scene. I think one should pay tribute to Frosst and Ayerst, McKenna. I do not want in any way to downgrade what they have done for Canadian technology and research. As a matter of fact, the director of research for Ayerst is now rector of the University of Montreal. He is a very distinguished Canadian, indeed.
I have heard much about the argument in respect of exports. The proposed amendment can have no important effect on exports because exports from the Canadian drug industry are not substantial now. The Department of Industry estimates that exports amount to something over 5 per cent of Canadian production. Owing to the structure of the industry and the fact that all important companies are owned abroad, so that potential export markets are served by affiliates


located there or by the parent companies, the likelihood of a substantial export business being developed by the companies most affected by the proposal is remote. This appears to be accepted by the Pharmaceutical Manufacturers' Association of Canada, which said that pharmaceutical companies in Canada have developed primarily to serve the domestic market and few of them export. Conceivably some export business might be developed by truly independent Canadian companies.
The special committee of the House of Commons reached similar conclusions. The Harley committee said that in so far as the export market is concerned, unless the patent owner is Canadian the international patent system can prevent and it does discourage development of the drug industry in Canada. With most foreign owned patents, subsidiary companies of the parent patentee control the market within their own jurisdictions. Export activity must therefore be confined to those areas of the world where patents are not taken out, areas which are relatively and commercially insignificant. The special committee of the house reported that on a question addressed to one Canadian subsidiary of a United States parent corporation the answer was succinctly put, "We have so many plants all over the world I just do not know where we would export to."
I have taken a great deal of the time of the house, and I thank hon. members for their indulgence in hearing me out. I feel this is a complicated and important piece of legislation and that I owed it to members of this house to explain it as fully as I could. In all that I have said I have had in the forefront of my thoughts the essential and important part which drugs play in the health care of the Canadian people. I want to be as categorical about this as it is possible for me to be. There is no issue between myself and spokesmen for the drug industry about the very great benefits that drugs have conferred on Canadians and the very great benefits that the Canadian industry has conferred upon Canadians. Indeed, it is the very importance of drug products which makes the performance of the drug industry so critical. What we do not wish to see is the great benefits flowing from the availability of modern drugs being persistently overshadowed by their high cost to the consumer.
Finally, I wish to refer briefly to what I said during the debate when the consumer
February 12, 1968

affairs bill was before the house last November, and specifically about the importance of having a federal presence in the consumer field. The drug program which I have just outlined is an example of how it may be possible in the future to co-ordinate government policy in the interest of the consumer in a more effective way than has been done in the past. The fact that there is now a minister responsible for this function should make it possible to seek out other ways by which the federal government can assist in reducing prices or restraining price increases in areas of vital concern to consumers in spite of the fact that we have no direct constitutional authority to impose control over prices or wages.
I shall conclude my remarks by reminding the house that it is now over four years since the report of the first major inquiry into the drug industry was published-not since it was begun, but since it was published. It may have been worth waiting for the findings of the Royal Commission on Health Services and of the special committee of the house on drug costs and prices in order to ensure that the most careful consideration was given to the issues involved. These amendments are a direct result of the review by the special committee of this house under the chairmanship of the hon. member for Halton. I believe the time has come when the public is looking to parliament for effective action.


Mr. P. B. Rynard (Simcoe Easi):: Mr. Speaker, I should like to congratulate the minister on his marathon speech and for recognizing that this is a complex piece of legislation, bad in respect of some points, which he did his best to dress up and gild. It has a great many loopholes and I intend to deal with some of them, particularly those in respect of patents and safety which he passed over so easily.
Bill C-190 is intended to increase price competition among pharmaceutical manufacturers in Canada by depriving them of the limited patent rights they own on certain processes for making drugs they have invented. Canadian patent rights on prescription drugs are already weak in comparison with those of other countries. Under existing Canadian legislation there is a legal procedure known as compulsory licensing. It works in this way. Company A, after long and expensive research, invents a drug and obtains a patent to process and manufacture it. Immediately it is granted a patent, Company B may apply for a compulsory licence enabling it to use the same process patented by company A.

Patent Act-Trade Marks Act This licence forcibly deprives company A of the full benefits of its own invention. Such a licence is granted to company B almost as a matter of right for a royalty which the commissioner of patents himself has described as a mere pittance. Company B must make the drug in Canada.
The patent amendments now proposed will remove this requirement in respect of manufacture in Canada. They would extend the grounds for granting a compulsory licence so that prescription medicines produced outside the controls provided by the Canadian Food and Drugs Act could be imported into Canada. The changes proposed to the Trade Marks Act would permit the importation into Canada of drug products manufactured by a company abroad under the same trade mark used by the related Canadian company. This would permit the false assumption that drug products bearing the same trade mark would be identical in all countries.
This bill virtually abolishes patent protection for drugs and amounts to discriminatory confiscation of property without any compensation whatsoever and without any guarantee of the intended public benefit. The public did not need this bureaucratic bill from the mushrooming department of the new minister.
Bill C-190 deals with patent rights which are perhaps moral and economic issues. Fundamentally, putting the matter in its most simple form, a man or a woman spends days, months or years working hard and long to develop an idea into something tangible. It matters not whether the idea relates to a drug, a food or an implement. Surely that person should not be cheated of the rewards of his labour either in part or in whole. This is the moral issue involved in removing or restricting patent rights. It goes beyond cheating a person out of his ingenuity; it discourages incentive and invention. It discourages research and destroys industry. People struggle and work in their own laboratories or in company or university laboratories, unseen, largely unhonoured and unsung, many of them reaping little in the way of monetary return. Out of 3,000 experiments, approximately only one comes through and produces a useful drug. Therefore a man could work in research all his life and never come up with a worth-while finding.
[DOT] (5:00 p.m.)
I think back to the early 1920's when Banting and Best worked in a small laboratory in
February 12, 1968

Patent Act-Trade Marks Act Toronto-coming from that area and knowing both of them I am very cognizant of this -under the direction of Professor MacLeod, a Scotsman, head of the department of physiology of the University of Toronto. There was at that time no drug treatment for diabetes; it was a hopeless condition. Juveniles, young adolescents and middle-aged people died long before their time. Juvenile diabetics died within a few years. It was a pitiful thing. I remember one young person 18 years old dying in something like a period of two months. The economic loss was measured in millions and millions of dollars. This, then, was the situation when Banting and Best undertook their experiment which had been tried in 1896, about 27 years earlier-I think this illustrates the whole problem that the minister did not grasp-by Claude Bernard and was unsuccessful. Research is a long, continuing process.
Why did Banting and Best go into this endeavour? Banting was a medical doctor, raised in Alliston, Ontario, a short distance from where I practise. I knew him very well. During his high school years he was very distressed by a young girl whom he saw daily becoming thinner and thinner and wasting away until she died. This had a profound impression on this young high school student and was the main reason Banting went into medicine and research.
There was here the dedication and incentive to produce a material that would cure or arrest this disease. Banting and Best were able to produce insulin which controled diabetes. I had just graduated from medical school when that happened. In 1926 we were just starting to use the fruits of their labour. Insulin has been improved over the years and has rescued millions of people from an early death. In dollars and cents, Mr. Speaker, insulin has rewarded the world economically by billions of dollars to say nothing about preventing untold suffering. Brilliant scientists, with their diabetes under control, have carried on their life's work and added to the storehouse of knowledge of the world. I know two from the University of Toronto who have done so. People of all vocations suffering from diabetes were able, generally speaking, to live out their life span and work at their calling.
The world rejoiced when insulin was discovered at the University of Toronto. The minister talked about this young country not being able to keep up in respect of research. May I remind him of the fact that at that time


there were only 10 million people in Canada. When the great discovery of insulin was made the world rejoiced. This demonstrates beyond peradventure the point that research can be carried out successfully in a small country.
The patent rights to insulin were turned over by Drs. Banting and Best to the governors of the University of Toronto. Over the years the returns from those patent rights, placed in a trust fund, have largely financed the Connaught Laboratories. Perhaps it would be in order to refer to Dr. J. K. W. Ferguson, one of the outstanding physiologists in the world today and director of Connaught Laboratories. Dr. Ferguson says on this subject:
.. .it has undoubtedly been drawn to the attention of the government that virtual abolition of patent protection for the drug industry in Canada would be disastrous for the prospects of developing a competent, research-oriented drug industry in Canada.
This information paper published by the University of Toronto goes on to state:
What does not seem to have been pointed out yet is that other countries may be pressed to take retaliatory action against Canadian exports, if the Canadian subsidiaries of their companies have been subject to confiscation of an important commercial asset.
The brief advances the opinion that all drugs in Canada are not overpriced and the number that are overpriced at the retail level may be very small. It proposes that, in the interest of obtaining well-informed and fair-minded opinions, data on retail drug prices be sent to the Canadian Medical Association with the request that they be studied by its committee on pharmacy and such other expert opinion as they consider desirable.
I noted that the minister referred to doctors being so busy that they did not know just what they were using in the way of drugs. I do not know whether that is what he meant but that is the impression he gave me. The minister can correct me if I am wrong. Doctors may write prescriptions for all the drugs used in Canada today, and I certainly hope they are not only conscious of the drug they are using and the job it will do but are also thinking of the patient and the price of the drug. I believe this is true of at least 90 per cent of the doctors in our hospitals. They certainly know the qualities of different drugs because they are using them by their generic names. Those drugs have been proven clinically, which is a different situation from the
February 12, 1968

one to which the minister was referring. I continue quoting from this paper:
Dr. Ferguson recalls that the Connaught Medical Research Laboratories were set up by the University of Toronto "for the purpose of research in hygiene and preventive medicine and the preparation of serum and vaccines or such other substances as may hereafter be found to be useful in the prevention of disease ..."
From the earliest days, the laboratories have been essentially self-supporting from the sale of products and earnings have been kept by the governors in a trust fund for the support of medical research and for the capital expansion of the laboratories from time to time. Over a period of 50 years, they have grown to the point-
This started with the humble beginnings of the discovery of insulin by Drs. Banting and Best in a very small and inadequate laboratory judged by today's standards.
-where they now employ 730 persons and total sales fluctuate between $6 million and $7.5 million per annum, of which between $1 million and $1.5 million have been in the export market. The laboratories spend $1.4 million to $1.7 million on research each year.
The minister knows as well as I do, and I am not going to embarrass him by saying it, how little money goes into medical research in this country. The minister knows this because he quoted the figures of one to five compared with the United States. The minister has the figures and knows this. I want to compliment him on dressing this bill up in the way he did, knowing the facts, the weak points and the holes in it.


Marcel Joseph Aimé Lambert: It is known as puffery.


Philip Bernard Rynard: I continue quoting:
One of the financial mainstays of the laboratories in the past, according to the brief, has been the steady revenues from the sale of insulin_
Under patent rights. Now the minister proposes to cancel patent rights in five years, and I have even heard two years mentioned. What goes on in this country? Is that the way to build up a country? It is not. I suggest that the minister go to the University of Toronto, look over the complex there and see what has been done over the years.
[DOT] (5:10 p.m.)
"Without the steady revenues from the sale of insulin", states the brief, "it is hard to see how the laboratories could have attracted and maintained a staff of competent scientists who over the years have contributed not only important new forms of insulin but many new vaccines, antitoxins, hormones and other drags."
Without the legal protection provided by the insulin patents, it continues, "there is no doubt that the whole Canadian market would have been taken
Patent Act-Trade Marks Act over by foreign producers. The qualities and forms of the product would certainly have been chaotically confused and probably debased."
The Connaught Medical Research Laboratories have made many important contributions, in addition to the mass production of insulin. The first introduction of this continent of toxoid for protection against diptheria was achieved by the laboratories during the late 1920's and early 1930's. The introduction of combined immunizing agents against diptheria, tetanus and whooping cough followed during world war II. The first full-scale production of heparin, a widely used anti-clotting agent, was developed during the mid-1930's. About that time, the first large scale production of crystalline insulin was also accomplished. The formula for tissue culture medium 199, which made the development of Salk vaccine possible, was published by the laboratories in 1949 and methods for large scale production of polio virus were pioneered. It is likely, in fact, that this very important development innovation would have been an ignominious failure without C.M.R.L.'s contribution.
The contributions of the Connaught Medical Research Laboratories to preventive medicine are by no means at an end. Several expensive projects currently under development include a new and safer vaccine for the prevention of rabies, a vaccine to prevent german measles, and an enzyme to dissolve blood clots.
Anyone with friends or relatives who have had rabies vaccine administered to them knows that its effects are severe and that it is not without fatal dangers. At the present time the laboratory is working on a vaccine which may restore life to some Canadians.
The brief continues:
Each of these absorbs some hundreds of thousands of dollars over many years before it can earn any return, the brief points out. A long period of substantial profit is therefore essential if expenditures of this magnitude are to be amortized.
"It is a real question whether such profits could be achieved without patent protection in Canada", asserts the brief. "They certainly could not, without patent protection in other countries."
What I shall read now will demonstrate how far the minister has strayed from the Harley report. The brief continues:
Commenting on the possible effects of the 23 recommendations of the special committee on drug prices, the C.M.R.L. brief states that none of them would affect the financial interests of the laboratories to any significant extent. It goes on to say, however, that "in recent weeks, newspapers have quoted cabinet ministers as forecasting drastic action to reduce the duration of patents on drugs to two years. In addition, there have been less definite forecasts of changes in the law of trade marks as they apply to drugs.
This illustrates and demonstrates the necessity for patent rights if research is to be carried on and if the benefits of that research are to be passed on to mankind.
February 12, 1968

Patent Act-Trade Marks Act Mr. David Henry, Q.C., an honoured member of the civil service patent branch, has stated that the reasons for the high prices of drugs are not singular but multiple. I do not think the minister grasped the significance of that statement. They are multiple and they relate not just to the pharmaceutical manufacturing industry but to retail pharmacies as well and, indeed, to the taxation policies of the government, to the food and drug directorate through the regulations it imposes on industry, to the drug wholesaler, to the physician who prescribes the drugs, and to the consumer himself who demands the very best care for himself and his family. How many aspects of this matter were touched upon by the minister? Only one, perhaps.
Let us now consider the economics of the situation. If Mr. Henry is able to say that the bill before us could destroy the drug industry, and he indicated it might, is it not peculiar that the Department of Industry has not looked into or given any advice on this matter? Has the minister consulted the Department of Industry on it? Here we have an industry that, according to my figures which vary from those of the minister who said a lot without substance and said it well, employs 10,000 people in Canada, 2,500 of whom are highly trained individuals. The minister and I will have to get together and compare our sources of information. The associated drug services encompass another 25,000 people. This bill means that we would lose 2,500 scientists and then the others would follow them.
Pharmaceutical research costs approximately $12 million annually. The minister said we need more research in this field and he quoted figures to back his statement. I agree with him. The federal government has done nothing to increase this sum except to allocate certain amounts to medical research. I want to compliment the government for allocating some money for this purpose.
The policy of the government seems to offer no protection to an industry which could well become a major industry in this country and which started as did Banting and Best who began research on dogs in a little room and whose association developed into the large industry of which I spoke. The government has adopted the same policy with regard to the drug industry as it does with regard to other industry by allowing imports to come into Canada from countries where labour costs are half what they are in Canada or less and whose productivity is just about
[Mr. Eynard.l
as good as ours. I might also mention the textile industry. No provision has been made to protect that industry when the Kennedy round tariffs come into effect on July 1. The United States textile industry could dump a sufficient amount of its products in Canada in one lot to ruin our small textile industries. I do not know whether the government has taken or contemplates any measures to protect this industry. If they have they should let us know because questions have been asked on this matter. The same situation exists with respect to the boot and shoe industry. I am referring to these industries because they are affected by economic factors and they are in the same situation as the drug industry.
[DOT] (5:20 p.m.)
What has the government done? Unemployment has risen sharply. The boot and shoe industry is the biggest labour employer in Canada; yet the government has done nothing to protect it from increasing foreign imports. All one has to do is take a good look at the record. I am disturbed about these conditions because I have a shoe industry in my riding as well as a textile industry. They are both seriously disturbed about the attitude of the government. Now the drug industry will be in the same position, but I hope we will be able to convince the government they are on the wrong course. The minister has hopes in so far as April is concerned. Perhaps he can be the young Lochinvar who can change this picture and start the government off on the right path.
The other day the Minister of Trade and Commerce (Mr. Winters) indicated he was not going to protect the fruit and vegetable growers of western Ontario. He said they would have to be competitive with producers who are paying less than one-third the wages our people are paying. What does he want to do to our standard of living? What does he want to do to the Canadian people? It is time we took a good look at some of the things this government is doing. There are 77,000 more unemployed, the government is hurting the footwear industry, the textile industry, the drug industry and the farmers. What will be next?
I have mentioned these points in relation to our economy because they are of concern to every man and woman across Canada. If we achieve cheaper drugs of poor quality we could destroy the industry in this country. I want the minister to pay attention to this. Bill No. C-190 fails to reflect the urgent safety
February 12, 1968

requirements recommended by the Harley committee. Safety must be paramount. A compulsory licence to import drugs must not be granted until the food and drug directorate has inspected the manufacturing facilities in the country of origin. How is the minister going to accomplish that, Mr. Speaker? These manufacturers should meet the same standards as are set for Canadian drug manufacturers. How are you going to get permission to do that? One could conclude from the minister's remarks that everything was all right if one did not know that is not the case. He put a very good face on it and said everything would be inspected. How much money has he provided for new inspectors or other officials who are going to be needed in the food and drug directorate? I should like the minister to tell me that. If money has been set aside, it must be hidden. Of course, this government has hidden many things, but so far as the house is aware not a solitary thing has been done about it.
The minister stood up and presented a bad case very well. He told us he was going to send inspectors all over the country. He had lots of them. The Canadian people could be sure of the safety and quality of the drugs used. I am hoping that after some consideration the minister will come back tomorrow and tell us he does not have these men and did not mean his remarks to be interpreted that way. After all, he is a nice fellow. The minister put on the record some of the things that have been accomplished in so far as cutting the cost of drugs is concerned. I believe he would like to give everybody credit for what is being done, so I am bringing this to the minister's attention. I do not want what he said here today to be the cause of any ill will by not recognizing what has been done.
The druggists across Canada have tackled this situation. In my own town druggists have started charging a prescription fee in order to reduce the price of drugs. Prices have been reduced to such an extent that the other day I calculated that a drug which would have cost $15 under the old system now costs $8. The druggists have helped to put their house in order. The pharmaceutical firms have been putting their house in order. They have been cutting down on their commission men and putting them on salary in order to cut costs. This is one good thing the Harley committee has accomplished. It has made people think about what we can do.
Patent Act-Trade Marks Act
Above all, we must be Canadian. We must keep things Canadian. We must support research. We must do things that will develop Canadian industry and enable it to compete anywhere in the world. I could refer to Toronto University, Connaught laboratories, Best, Banting, and so on. I could put other names on the record. What has the government done? I do not want to embarrass the minister, but what has he done to provide these inspectors who are to do all this checking? Dr. Chapman gave evidence to the committee that the department was busy now and he did not think they could do more than they are doing. I am sure he is right. What has the government done? Industry has done something and the druggists have made a contribution.
The minister drew attention to the hospitals, and I am glad he did. Le me tell him something about hospitals. They do use these drugs, but they only use drugs that have been clinically tested and which they know are going to produce results. The hospitals have a pharmaceutical committee to protect them but there is no such protection for the public outside. The sad thing is that the hospitals under the jurisdiction of the Department of National Health and Welfare buy drugs and the people prescribing them do not even know where those drugs come from. Did the minister know that? If he checks the evidence he will find this is so. However, all the witnesses were asked if the drug were to be used on their wives or families which one would they prefer and they all answered, a brand name drug or a proven clinically tested drug.
I am putting these facts on the record because the most important factor is quality.
There is one other thing I want to say to the minister because he is not in this business and probably does not know about drugs and how they act. The minister talked about the quality and safety of drugs or I would not have mentioned this. The minister referred to Chloromycetin from which patent protection was removed and the price went down. Does the minister know that the United States has had to give Parke Davis exclusive patents rights again? If I remember correctly, a few weeks ago I was told in the United States that five drug firms had obtained the right to manufacture Chloromycetin or chlorman-phenical. This drug went into hospitals in the United States. Hospital after hospital reported they were not getting results with the Chloromycetin made by the other five drug firms.
6$38	COMMONS
Patent Act-Trade Marks Act They discovered that the blood levels were down and that the drug was not having the desired therapeutic effect. It was not doing what the doctors expected it to do. So bad was the situation, Mr. Speaker, that the licences of the other five firms producing the drug were cancelled. So I draw to the attention of the minister that the situation is not quite as simple as he pretends it is.
[DOT] (5:30 p.m.)
If I may go back to the recommendations of the Harley committee, Mr. Speaker, they recommended as a statutory requirement that the granting of a forced licence be subject to a report by the food and drug directorate of the Department of National Health and Welfare to the effect that the applicant for the compulsory licence has satisfied the directorate that he has met the regulations under the Food and Drugs Act. I did not hear the minister state that even this nominal safety provision had been included. I should like him to tell the members of the house when he replies whether it has been included.
In similar circumstances, where the product in question is no longer a new drug the directorate has simply certified that the firm has adequate manufacturing facilities and controls and complies with section C.01.052 of the regulations. This relates only to the manufacturing facilities and has nothing to do with purity or equivalency of the product in question. Under present regulations there is no way that the safety recommendations of the Hilliard committee can be implemented with regard to drug licensing. As I understand it, Mr. Speaker, this point was paramount in the consideration of the commitee. Perhaps it is why the Minister of Consumer and Corporate Affairs does not want to interfere with the statutory prerogative of the patent commissioner. The special committee considered this matter as well but stated that the safety factor is of such importance that the food and drug directorate should participate in the disposition of applications relating to compulsory licences.
With regard to imports, the parliamentary committee felt that safety must be paramount. A compulsory licence to import must not be granted except where the food and drug directorate has inspected to its satisfaction the manufacturing facilities in the country of origin, and in accordance with the same regulations that pertain to Canadian drug manufacturers. None of this has been
[Mr. Rynard.l
DEBATES	February 12, 1988
provided in the present legislation. The minister will undoubtedly state that safety provisions are not a proper requirement for the Patent Act. I should like the minister to give some explanation of this. Be that as it may, Bill C-190 clearly directs the commissioner as to when and under what circumstances he shall grant a licence, and it should, therefore, provide the commissioner with proper guidance in the determination of the drug safety provisions for such licensing.
Bill C-190 does not discriminate between the two types of compulsory licensing as clearly recommended by the parliamentary committee. In the case of compulsory licences to import the commissioner should only grant the licence if in his discretion it is in the public interest to do so. The public interest would be, the committee feels, the need to bring lower drug prices to the consumer weighed against the effect of such import licence on the Canadian producers of the drug in question. The differentiation between the two types of compulsory licensing should be carefully observed. It must be obvious that one of the effects that such importation would have on the Canadian producer would be to weaken his control of quality of the drug product in distribution-the minister spoke about this this afternoon-and economically limit the extent and type of medical and technical support services provided the medical profession.
Perhaps the more basic intent of the minister's department is illustrated best in the legislative interpretation of Harley committee recommendation No. 20, which is as follows:
__if the granting of a compulsory licence takes
longer than 12 months, the commissioner, if in his opinion the delay is unwarranted, may toe empowered to issue the licence subject to revocation if any appeal against such a compulsory licence is upheld, providing however that such licensee provide sufficient evidence to satisfy standards of the food and drug directorate.
Bill C-190 essentially instructs the commissioner to issue interim licences only after six months and ignores reference to the food and drug directorate or any consideration of needless delay. Certainly that is my interpretation.
It should hardly need repeating that safety must be paramount. It is dangerous to implement only the licensing recommendations of the parliamentary committee without also enforcing the urgent safety and equivalency requirements of this same committee and those of the Hilliard and Boyd expert committees.
February 12, 1968

The second recommendation made by the special committee reads as follows:
That the personnel and facilities of the food and drug directorate be expanded to make possible the implementation of the recommendations of the Boyd committee, the Hilliard committee and this committee.
Needless to say, Mr. Speaker, we are fully sympathetic with the intent of the legislation but, as noted before, we cannot support a bill that does not provide the essential safety and equivalency requirements recommended by the special committee of the House of Commons on drug costs and prices.
If the question is one of quality drugs at a fair and reasonable price versus unknown or inadequate drug products at the cheapest possible price, then our answer must be "no" to Bill C-190. If the consensus is that quality drugs cost more than necessary, then we should be exploring means to negotiate an equitable price without destroying the technical-medical base of the Canadian drug industry.
A Canadian manufacturer cannot meet the prices of Italian or similar competition as long as he continues to conduct essential and expensive research in this country, as long as he manufactures to Canadian standards in Canadian factories, employing Canadian labour at Canadian wage rates, as long as substantial costs are required to service medically Canadian and export markets in a technically competitive industry, and as long as he is paying over 50 per cent of his profits to the government in the form of income taxes alone. Perhaps the minister has forgotten that.
It is in this spirit, Mr. Speaker, that we intend to move a number of amendments to the bill. This bill is both complex and complicated. The minister himself spoke for almost two hours and I have spoken for far too long. I was glad to listen to what the minister had to say and I think he did a terrific job on an impossible bill. He put many things on the record with which I did not agree and which when subjected to the cold glare of examination just do not stand up. Nevertheless this is an important bill, and I would suggest to the minister that it be sent to a committee so it can go over some of the points that are giving us trouble.
I should like to sum up, Mr. Speaker, by saying that quality and safety must be the overriding factors when considering price. Patent protection for inventors is a basic
Patent Act-Trade Marks Act principle of justice that is recognized by civilized nations and is the most important incentive for industrial research today in this country. Compulsory licensing can only be based safely on yet to be established criteria for the therapeutic equivalency of generic counterparts. Forced licensing of imports without such safety and clinical assurances will dangerously debase the quality of presently available drugs, destroy drug research and manufacturing in Canada and undermine Canada's international reputation with respect to the recognition of scientific and industrial property rights. And I do not think the minister wants to do that.
[DOT] (5:40 p.m.)
The proposed Patent Act changes must be urgently reviewed with relation to the yet to be implemented safety and equivalency recommendations of the Hilliard and Boyd reports of 1955 and 1956. Also, the Economic Council of Canada's present over-all review of industrial patents must be considered. The minister did not even wait for that review. I do not know why because he has a high regard for the Economic Council of Canada.
I had hoped that this matter might be referred to a committee. I submit that drug prices can be equitably negotiated without destroying the technical and medical base of Canadian industry. Neither society's demand for new drugs nor Canada's need for an international competitive research capability will be satisfied by those who would inadequately copy the discoveries of others and market them solely on the basis of price under the protection of forced licences. I submit that ultimate economies and increased benefits to Canada's society will be obtained through the discovery of new and more effective drug products.
In conclusion, may I again urge the minister to send this matter to a committee so that we may consider it once more. This is a most important bill. If I have been critical it is only because I want to be helpful and to bring out all factors. I hope the bill will be referred to a committee so that essential points may be discussed in order that we may build a bigger and better Canada.


Mr. William Dean Howe (Hamilton South):: Mr. Speaker, I shall begin my remarks by reading a few words:
The manufacture and distribution of medicines, because of their intimate relation to the health
February 12, 1968

Patent Act

Trade Marks Act and welfare of a community or nation, partake of the nature of public utilities. In view of the shifting of control from professional to financial hands, manifested by recent developments in the drug industry, the public interest may require "regulation" of the industry, through the guarantee of a fair return to investors and the limitation of prices to be charged to consumers.
That was a quotation, Mr. Speaker, from a book entitled "The Costs of Medicines" by C. Rufus Rorem and R. P. Fischelis, written in 1932. It goes to show that in those days, 36 years ago, someone foresaw what would happen today. Now we have a monopoly. There is no price competition and there is a Pharmaceutical Manufacturers Association of Canada. Fifty-seven companies were members of it but the number has been reduced to 56. They manufacture 85 per cent of the drugs sold by prescription across Canada today. This bill makes an excellent start, may I say, in the direction of ridding the country of this monopoly. Drugs, to my way of thinking, are to make people well, not to make purses full.
I have in my hand a book written by Mr. Bill Stevenson. He discusses and exposes some of the unusual drug costs and prices in Canada today. He says that drug profits run as high as 26,000 to 28,000 per cent. Personally, in my investigations I have not come across drugs which carry such high profits, though I have come across drugs that have been marked up 9,700 per cent. I wish to indicate how this matter was referred to by Dr. William M. Wigle of Ottawa, President of the Pharmaceutical Manufacturers Association of Canada. Addressing a meeting he said:
I do not believe that the Canadian people are willing to jeopardize the future of the drug industry in Canada and that of its 10,000 employees for a will-o'-the-wisp profit which would put Canada at the mercy of foreign nations in the event of world-wide epidemics.
Is a 28,000 per cent profit a will-o'-the-wisp? I should hate to see a large profit in the drug industry.
The P.M.A.C. has been constantly present at committee meetings in one way or another since June, 1966. They appeared before the committee four times. They attended all committee meetings because they were afraid of what might be said. They fed questions to members of the committee and since then have been pressuring us with submissions and briefs, being afraid that some of their monstrous profits might be lost.
These members of the P.M.A.C. are the high profit boys. They are the monopolistic

members of, if you will forgive the expression, a smug minority which uses the word "freedom" in the sense that they are free to fleece the sick out of every last cent they can wring from them. The fact that a man is sick does not matter except that he is then a more vulnerable target for the industry's high pressure methods. To the members of the P.M.A.C., illness is their most valuable asset and they are capable, 85 per cent of the time, of conning the doctor to act as an agent to sell their products for them. So naturally they do not take kindly to a bill that is going to incapacitate this golden egg layer.
One brief that we received, Mr. Speaker, contained a comparison of generic and patent drugs. Ostensibly the brief did not come from the P.M.A.C., though you could smell where it came from as it came into the office. The independent survey we received claimed that basically there was no difference in cost between drugs prescribed under their generic names and those described by brand names. The people doing the survey selected their own group of drugs; there were 11 comparisons, I believe. Of those, two involved drugs that were brand name drugs which were cheaper than generic drugs. Actually, these so-called brand name drugs originally had been generic drugs but had been labelled with the manufacturer's label. The drugs that were selected for the comparison were, as I said, carefully selected. The intention was to show that certain generic drugs were more expensive than brand name drugs.
Those presenting the brief also misrepresented the situation by forgetting to refer to how drugs are sold. When a prescription is presented to a druggist, since he operates by charging a percentage profit, naturally the more expensive the original drug is the higher his profit will be. The way drugs are sold is interesting. The best prices at which drugs are obtained are when they are bought by stock lots which, for instance, may involve 100 bottles or 50 tablets and so on. If smaller amounts are bought, if 24, 20, or odd numbers of capsules or tablets are prescribed, the price charged is known as the breakdown price which may be higher than the stock lot price. The brief made unfair comparisons by attempting to compare stock lot prices with breakdown prices.
The suggestion was also made in the brief that the difference in cost between drugs prescribed under generic names compared with
February 12, 1968	COMMONS
brand names was of no important consequence. That is very interesting because I want to know to whom it is of no consequence. Did the brief mean it was of no consequence to the people of this country or to the P.M.A.C. boys?
I did some research into the cost of generic and brand name drugs in Ottawa. I investigated the drugs that had been mentioned and I found that in stock lots the generic drugs came to $52.30 and the brand name drugs came to $143.10. These prices were being charged for large quantities of drugs. Making inquiries about smaller quantities from the same druggist, I discovered that the generic drugs would have been sold at $28.50 and the brand names would have come to $51.15. Even allowing for any unfairness, if they say this is an inconsequential difference when in fact, according to their own selection of figures, it is almost double I maintain they were trying to misrepresent things when they brought this brief to the committee.
[DOT] (5:50 p.m.)
Possibly they were not satisfied with that brief as a demonstration of what they could do because they submitted a brief in their own name. This brief, like all the others, complained that they were even now being deprived of profits which they might have gained had they been given proper protection. The hon. member who spoke earlier quoted from the same paragraph as one I have marked here, containing a reference to companies A and B and to compulsory licensing.
I was interested in the statement it contains to the effect that the royalty the commissioner of patents gives to company A which initiates an invention is only a pittance. The hon. member did not explain why it is a pittance. It is a pittance because the royalty paid is based upon the cost of the manufacture of drugs, and the cost of manufacture bears no relation whatsoever to the selling price. This is why companies do not want compulsory licensing. Most companies, having made a fabulous profit on these drugs, then concede a voluntary licence after which they receive a royalty which they themselves designate. The company which receives it sells the product at a slightly lower cost. It does not have the advantage of the original patent name, but it pays a royalty to the mother company, the discovering company.
These are the people who are twisting these figures and making themselves appear as though they were the friends of the sick and
DEBATES	6641
Patent Act-Trade Marks Act the elderly. Sometimes their protestations would bring tears to our eyes if we did not trouble to look at the facts of the situation. They complain about the importation of drugs under compulsory licence. Yet they themselves do this all the time in the case of patent drugs manufactured by United States parent companies. Most of the patent drugs manufactured in Canada are in actual fact manufactured by parent companies in the United States and shipped to Canada in dosage form. Here in Canada the subsidiaries bottle and label them and then have the dignity of being called drug manufacturers. So this patent arrangement amounts to another magic formula in favour of those who are capitalizing on illness and establishing a market for themselves by convincing others that not only do they need drugs but they need drugs with brand names only. They set out to brainwash doctors not only into prescribing their patented drugs but into prescribing drugs which in many cases patients do not really need-and drugs of a brand in whose selection doctors have no choice.
This establishes a pretty good market. Who has built up this market and built up these excess profits if it is not the P.M.A.C. itself? Even the Canadian Medical Association has been partly convinced, though I think this has been done with a certain amount of reticence. I believe the manufacturers have brought enough pressure to bear on the C.M.A. to convince many of its members that the present system is the only way in which drugs can be prescribed.
One of the well established habits of the P.M.A.C. is to disparage generic drugs both in the press and in doctors' offices, hoping to influence not only the doctors but the patients receiving care. In the brief to which I have just referred they speak of reputation as though it were holy ground and as though they have an exclusive claim on it. But there are many reputable firms which manufacture drugs under generic names.
The sales tax was recently removed and this should, of course, have caused the price of drugs to fall. This actually happened temporarily, at least, as the minister said. However, I am reliably informed that Parke, Davis are raising their prices and I am afraid this will undo all the good that the removal of the sales tax achieved.
I should like now to read into the record part of a column by Mr. D. H. Fullerton which appeared in the Calgary Albertan. This
February 12, 1968

Patent Act-Trade Marks Act article brings to light some of the lobbying and the pressures to which we have all been subject. The writer says:
In a society where the high cost of drugs is borne by those least able to afford it-the old, the sick and the poor-one may be pardoned for asking why action on drugs has not had a higher priority. One answer is being observed in Ottawa today where the well-heeled, monopolistic, and internally powerful drug industry has been recently mounting the most intensive lobby ever seen in the capital.
The effectiveness of the drug lobby was plainly demonstrated at hearings of the commons committee on drug costs and prices. One M.P. was openly fed information and questions by representatives of the companies and of their organization, the P.M.A.C., in order that he could better interrogate witnesses hostile to the drug manufacturers!
Later the article states:
Yet the shocking fact that even these mild measures to introduce some competition into the industry are assailed by the manufacturers suggests there is not much point in trying to apply a cosmetic approach to an industry with so little awareness of its public responsibility.
As to pressure, one might say that never has so much been applied by so few to so many.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS
Mr. Deputy Speaker:: Order. The hon. member for Hamilton South.


William Dean Howe: Mr. Speaker, I should like to continue what I was saying before the supper break. Last November I had the privilege of visiting Washington, where I sat in on the hearings of the subcommittee on drug prices, chaired by Senator Gaylord Nelson. In the United States they have the same problem we have here. Appearing before them was a doctor who I believe was a past president of the American Medical Association and president of the P.M.A. in the United States, which corresponds to our P.M.A.C. During this time they were discussing the basis of prednisone, which is one of the steroids or cortisone derivatives.
The Parke, Davis Company in the United States sold its product to the druggists for $17.88. I believe that price must be per hundred. The prices of other brands range from 44 cents to $2.09. It is interesting to note that it is Parke, Davis in Canada which is raising its prices.

6644	COMMONS
Patent Act-Trade Marks Act
Exports in the United States have been dealt with in this publication, and I should like to read this paragraph:
As previously stated, interest in foreign expansion has been encouraged by the disruptive government investigations and subsequent legislation here at home. Obviously, mergers or agreements with foreign countries possessing ethical drug-making facilities offered a two-way benefit to the U.S. manufacturer. First, the values and the sales potential of these new products could be evaluated in an atmosphere relatively free of what were harsh regulatory restraints. Second, these foreign manufacturing facilities could be used as a base for exports to other countries.
At this point it seems clear that continued government pressure against the drug industry will increase the role of foreign operations.
We now come to medicare which has a definite relationship to the tax sector of our economy. In the United States, as you well know, they have a medicare plan which begins at age 65. I should like to quote from this same publication which states:
It is to be noted that in every country which has adopted some form of "medicare", a sharp increase in the use of drugs has followed almost immediately.
My question is, at whose price? Are we going to allow these increases at the prices of the drug industry or are we going to put this into the private area so the tax sector of our economy will not have to pay for the great use of drugs at an unreasonable rate?
Let me quote another statement from this same publication:
The government is now price conscious and this could lead to more generic selling, especially at the hospital level.
It is suggested that we may expect a continued increase in volume and a reduction at the hospital level in antibiotic, tranquilizer and oral antidiabetic prices. This publication then states:
Although the monopoly sub-committee of the Senate small business committee will carry the ball, three other committees are very much interested-Senate finance committee, house ways and means committee, a senate group studying consumer problems of the elderly.
One can see from this that they are dealing with approximately the same problem here, only on a larger scale. This certainly does not relate to a larger profit mark-up because experience has shown that our drug prices are higher than those in the United States, although possibly the minister will disagree.
There is another paragraph in this publication at page 70 under the heading "Generic

DEBATES	February 12. 1968
V. Brand-name Prescribing" I should like to read and which states:
Probably, the pharmaceutical industry's less than unanimously enthusiastic outlook on medicare stems from the fear that generic prescribing, which has become an important factor in several therapeutic categories since the Kefauver hearings will become even more of an issue under the new federal legislation. Perhaps, even more important to pharmaceutical companies will be further pressures for lower drug prices.
It then states:
While Part A (hospital insurance) benefits of medicare provided for drugs administered in hospitals and nursing homes, purchasing agents for these institutions-already supported by "formulary" systems-will force further competitive bidding on a price basis.
I should like to read one more paragraph from this publication, as I find this very revealing regarding various situations. This paragraph appears at page 75 and states:
In New York, assemblyman Steingut introduced A.B. 2745 which would require the commission of public health to maintain an official list of drugs generically equivalent to trade name drugs where he believes a substantial disparity exists between the sale price of the trade name drug and the generically equivalent drug.
[DOT] (8:20 p.m./
The bill would further compel pharmacists to dispense the lowest priced generic drug on the list regardless of what the prescribing physician indicates in his prescription. This bill was killed, but not without a great deal of effort.
I was in Washington at the time Reader's Digest published a magazine containing an eight-page insert that was misrepresented as not being advertising. This insert was put out through P.M.A. in the United States. I shall read part of the statement of Senator Nelson of the United States select committee inquiring into this matter, because it deals with the subject better than I can explain it. This statement reads in part as follows:
An advertisement by the Pharmaceutical Manufacturers' Association in the form of an eight-page pull-out pamphlet has appeared in the November, 1967, issue of the Reader's Digest. The format of the section is designed to look like part of the ordinary editorial content of the magazine. The only indication that this section is paid advertising is the words "Special Advertising Section" which appear in small print on only the first page of the eight-page section.
On the next page, the first of four articles which comprise the section begin without any further indication that these articles are, in fact, the advertising matter to which reference has been made. To further confuse the reader, ads clearly identifiable as product advertisements have been interspersed among regular Reader's Digest articles which immediately follow the P.M.A. section. Thus, the reader may be led to believe that it is these latter ads which actually make up the "Special Advertising Section".
February 12, 1968

Patent Act-Trade Marks Act of the internal procedures of pharmaceutical firms in a variety of ways is perhaps the most significant approach to the situation at present.
This method probably results in more damage to the public image of the pharmaceutical industry than any other, although to date it seems to have had little effect on the actual operations of individual companies.
I should like to bear that out, in conclusion, by saying that it does not seem to matter what we say in the House of Commons, what we do and what work we carry out in our committee; it does not seem to matter how many drug companies we meet up with and how many truths we find out which illustrate that people who are ill are perfect targets for the monopoly that has existed for years. It is only by means of this bill that we will put the foot in the door and possibly reduce some of the excessive profit that the drug companies are deriving from the high prices people are paying, and are seemingly willing to pay, because they are ill.
[DOT] (8:30 p.m.)
The drug companies are in a different position than possibly any other advertising source. This is because they send advertisements to doctors who prescribe the drugs for patients, who are the consumers. The consumers do not receive the benefit of the advertising of the drug companies, if it is a benefit, as is evidenced by the letter sent out by the Frank W. Horner Company Limited to a drug company in New Brunswick, a letter which I received in the mail today, and which reads as follows:
Dear Sir,
Here is your automatic shipment of two tranquilizers Horner launches this week at 25 per cent less. And you're going to gain substantially with this launch. I'll explain in a moment.
But first-let me introduce these two top-rated tranquilizers. They are among the most widely-prescribed in Canada, made available under licence-


Mr. Deputy Speaker:: Order, please. I regret to inform the hon. member that the time allotted to him has expired.


Some hon. Members:: Carry on.


William Dean Howe: I will try not to make this too tranquil, Mr. Speaker, and I thank the house for its indulgence.


Mr. Deputy Speaker:: Order, please. Does the hon. member wish me to ask for the unanimous consent of the house for him to continue? Does the house give unanimous consent?


William Dean Howe: Thank you, Mr. Speaker. I will continue reading this letter, which goes on as follows:
__and the originators receive a royalty. They are:
Solium 2-Horner's brand of chlordiazepoxide Solazine 3-Horner's brand of trifluoperazine.
I think part of the problem consists of the fact that there are not many doctors who know these words, who can spell them or who know how to pronounce them. I think the drug companies capitalize on this.
Chlordiazepoxide is more commonly known as librium, which is certainly easier to remember and identify than the high cost, high profit product. Trifluoperazine is known as stelazine, and this is the one I referred to earlier which had the high profit mark-up of 9700 per cent. The letter continues to read:
Solium and Solazine will be available to your customers at 25 per cent less than the current net prices for competitive chlordiazepoxide and trifluoperazine. At the same time we have reduced our suggested list prices on miltown 4 and solacen 4 by 25 per cent. You may wish to dispense your current shelf stock at current prices and institute these lower prices with future shipments.
Now-what's in this for you!
We will not sample solium, solazine, miltown, and solacen to the Canadian physician! You will participate in the promotion of all four of these tranquilizers. Our entire field force will be leaving courtesy prescriptions with a vast number of Canadian doctors for trial quantities of these four tranquilizers. Not only will you not lose business because of sampling but when these courtesy prescriptions are filled you will make more than your full profit.
When you see a courtesy script (which will be easily identified) for 50 solium, solazine, solacen or miltown, please fill it and charge half the regular price. Initial and remove the tab from the script and save it for your Horner representative. He will not only reimburse you for the 25 tablets or capsules but will give you an additional 25 free!
You gain two ways-by reimbursement of double the quantity of our tranquilizers you provide free to patients, and by participating directly in our courtesy prescription program.
You then become a pusher, I suppose.
A complete description of solium and solazine, a revised price list, and a medical journal advertising reprint is enclosed. This advertisement explains further our position.
The success of this program depends on your co-operation. Your support will show that top quality drugs can be made available at reasonable prices.
Signed, Howden Horner, President.


Some hon. Members:: Agreed.
(Mr. Howe (Hamilton South).)
February 12, 1968	COMMONS
With this letter I received a note from Pepper's Drug Store Limited in Bathurst, New Brunswick which reads as follows:
The enclosed letter was received with an "automatic shipment" of drugs today.
The letter speaks for itself.
1)	Drug prices are too high.
2)	Contrary to the cost plus pricing concept adopted by most retail pharmacies.
3)	Forcing the retail pharmacist to be part of the distribution set up.
We returned the shipment!
Yours truly,
Signed, K. J. Mann.
Mr. Speaker, I think that all that I have read speaks for itself. It is very easy to see what is going on in Canada today. I think there should be no hesitancy about the bill before us. I know that the P.M.A.C. have been lobbying to get it back to the committee, as the hon. member for Simcoe East (Mr. Rynard) has requested. I am sure he repeated some things they told him to say.
I say that if this bill goes back to committee, it will be at the wish of the P.M.A.C., and an attempt will be made to kill the bill in committee. It has been to the committee before it came here. It does not need further examination by the committee. All it needs is to be passed in the house.


Mr. H. C. Harley (Halion):: Mr. Speaker, it is my honour to participate in the debate. Tonight I wish to do so as the ex-chairman of the special committee on drug costs and prices, to which reference has been made during this debate. I would like to put on the record the terms of reference of the committee, which were as follows:
That the committee be empowered to consider and recommend, as it may deem expedient, respecting a comprehensive and effective program to reduce the price of drugs.
As the house is aware, the committee reported on April 3, 1967 after over one year of intensive and detailed study. I think the basic feeling of the majority of the committee was that if we were to make recommendations which were to be taken seriously by the government, these recommendations had to be based on fact, and I believe we accomplished that. While many people have disagreed with our conclusions and recommendations, to my knowledge no one has challenged the material in the report on which these conclusions were based. I should like to remind the house that this was the unanimous report of a committee of the House of Commons composed of members from every political party in the house.
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Patent Act-Trade Marks Act
I would remind the house that there was no mention in the terms of reference to the matter of safety or quality of drugs. I am sure hon. members are aware that two years previous to that time a committee of the house had dealt in considerable detail with drug safety. The present committee realized that the question of costs could not be completely separated from that of safety. The actual cost of safety or quality control cannot be segregated from ordinary manufacturing costs, as they are often an integral part of the manufacturing process in any industry, whether it be a pharmaceutical or any other product. In any event, the committee found the actual cost of safety or quality control to be small but very essential. I would emphasize to the house that no recommendations of this committee would reduce the money spent on safety. As a matter of fact, the matter of safety must come before that of cost. After all, life is more important than money, and no recommendation of our committee should be carried out unless safety can be assured as much as possible.
We all know that the complete safety of any drug cannot be guaranteed, no matter how minor the drug or how major the government's caution and concern. As a matter of fact, if I were to summarize the report of the committee, I would say that the majority of the recommendations, by actual count 20 out of 23, fell into two major categories: first, those that were intended to make lower cost drugs available in Canada and, second, those that would ensure as much as practicable that these lower cost drugs would be safe for the use of the consumer.
[DOT] (8:40 p.m.)
I should like to review a few of the conclusions of the report and make a few comments on them. The first one I should like to comment upon is that no significant change has taken place in the drug cost structure since the recommendations of the Hall commission, which were primarily based upon the recommendations of the Restrictive Trade Practices Commission. So far as the committee could see, the drug industry had made no attempt to reduce drug costs, despite those reports which were very critical of the drug industry. The drug industry had not taken the report seriously and apparently had never expected the government to take any further action on that report, or on our report.
As has been mentioned before, there exists no single method or simple approach which
February 12, 1968

Patent Act-Trade Marks Act can be taken to reduce the price of drugs to the consumer. It was therefore necessary to present a series of recommendations to effect this purpose. As hon. members are aware, and as the minister said, the federal sales tax has been removed and some changes have been made in tariffs. This bill No. C-190 deals with another series of recommendations our committee made.
The medical profession, of course, is responsible for prescribing most drugs. If these committee recommendations are to be fully effective, the medical profession must be completely assured by the food and drug directorate of the safety of all drugs. If the medical practitioners in Canada cannot be assured that drugs in Canada are as safe, and I mean "safe" in a reasonable manner as human effort can reasonably make them, and are, therefore, prepared to use the lower priced drugs, then the report we submitted and the minister's proposed legislation is not worth the paper it is printed on. This legislation will be of no benefit to anyone unless the medical practitioners in Canada can be assured that the drugs that would be available under the minister's legislation would be safe for them to use.
The next conclusion concerns the implementation of the recommendation in connection with marketing and promotional expenses, and the reduction of excessive profits. As an example, the committee was greatly concerned with the average expenditure of 30 per cent of the manufacturer's dollar on promotion and marketing as opposed to 7 per cent being spent on research. In other words, more than four times as much money was being spent on marketing and advertising a drug as was being spent on research into medicinal products. As the hon. member for Hamilton South (Mr. Howe) said, it is important to know also that a good deal of the 7 per cent spent on research was spent on applied research, applying the benefits of other forms of research. Only a very small proportion of that was spent on basic medical research. The committee realized that the implementation of our recommendations could alter, in some respects, the form of the drug industry as it exists in Canada today, removing inefficiency and increasing competition. What the committee felt must be done is to introduce competition into the drug industry, not product competition such as duplication of another successful product which increases cost, but competition on prices, which is the kind that is needed in the drug industry.

I should like to say in passing that many countries, including the United States and the United Kingdom, are having a series of studies made of this problem. It is interesting to note in passing that the Sainsbury report in the United Kingdom recently recommended abolishing trade names and using only generic names for drugs.
I should like to talk for a few minutes about one of the major recommendations of the committee, namely that the food and drug directorate publish not less than once a month an informative bulletin to the medical profession giving complete details on drugs and their actions, and reviewing major drug usage in Canada. This would of course go not only to the medical profession but also to the related professions including pharmacy. The committee realizes that to ask a doctor to change his prescribing habits is a very serious responsibility. It should be done only if the doctor can be assured that the drugs he has the option of prescribing are as safe as possible. To do this the doctor should, and indeed must, have free access to a non-biased current report on drugs which would include certain data-and I should like to emphasize the words "non-biased". In other words, the bulletin would not be put out by a drug company and would be available free to the medical profession. The committee felt the following should be included in that bulletin:
1.	The generic name of the drug.
2.	Names of all manufacturers of the drug, and brand names of the drug.
3.	Comparative costs and clinical effectiveness of the drug.
4.	How the drug works; side effects, contraindications and toxicity.
5.	The last assay for each company's prod-duct, of content and availability of active ingredient, solubility and disintegration.
6.	Any problems with any company's product such as toxicity, impurity, seizures, court actions failure to meet food and drug directorate standards.
The committee feels that the food and drug directorate has been keeping some of its activities from the medical profession. The findings on drugs should be openly reported to the medical profession in public documents. If there are poor quality drugs on the market, then the medical and pharmaceutical professions should be told. The medical and related professions have to be convinced that
February 12, 1968

the food and drug directorate has full and accurate knowledge of the drug industry. To do this, they have to report fully and I believe, in a public bulletin. If the medical profession cannot be assured by giving them freely full and unbiased evidence of all the factors concerning drugs, then it is obvious we cannot expect the medical profession to change their prescribing habits in favour of the lower cost drugs.
I have been asked in what way this might tend to lower the price of drugs. Certainly, the staff that would be required by the food and drug directorate to publish such a bulletin would be expensive and would probably take up to two years to set into motion. I believe, however, that the savings that could be made if the medical profession used this bulletin to their own advantage, and more particularly to their patients' advantage, would be very substantial. The consumer would benefit greatly from this saving, enough to more than justify the expense.
Many hon. members here are aware of the large savings that can be made, many of which have been referred to today, when drugs are purchased under a tendering system. Most of these drugs do come from generic manufacturing houses. Many generic drugs are used by the staffs of various hospitals. These same staff doctors may not use generic drugs outside their hospital practice, but many are often doing so inside the hospital without being fully aware of the source of the medication they are prescribing.
I am convinced more doctors would prescribe the lower cost drugs of generic manufacturers if they were convinced that they were safe to use and equally effective. I hope therefore that the government will see fit, in the very near future, following these recommendations, to introduce the type of bulletin to which the committee made reference. Obviously the federal government has no power to implement some of the recommendations of our committee. Some of the recommendations come under the jurisdiction of provincial governments and some come under the heads of pharmaceutical bodies and other public bodies. I hope all those interested bodies will see to it that the recommendations are given serious consideration. Obviously the government cannot implement in a field in which it has no jurisdiction; we can only bring in recommendations. For instance, we have no control over the field of retail pharmacy, and therefore the government can make no recommendations in that area.
Patent Act-Trade Marks Act [DOT] (8:50 p.m.)
The unanimous conclusion-I emphasize the word "unanimous"-not only of the special committee on drug costs and prices but of the various other inquiries in Canada is that drug prices are higher than they need be and certainly higher than the public is prepared to pay without question. One of the major causes of drug costs has been attributed to the degree of protection accorded to the drug manufacturing industry by such laws as the Patent Act and the Trade Marks Act. This has resulted in a lack of competition. What the committee hopes the recommendation will accomplish is the injection of a greater degree of competition in the pharmaceutical industry at all levels. Despite the many studies that have taken place over the past ten years the industry has not, as far as I am aware, made any attempt to produce solutions to the problems. As I have said, Mr. Speaker, the government has removed the federal sales tax and has made changes in some of the various laws. Today's move is to bring in recommendations that change the patent and trade marks laws in such a way as to provide Canadians with less expensive but equally safe drugs.
There has been a great deal of discussion about patents and patent protection. I should like to point out to the house that patent protection at the present time in Canada is for 17 years and that the present legislation will not change it. The system of compulsory licensing that we are talking about has actually been in effect since 1923. The principle that food and drugs are different from other inventions was actually established in 1923, and is not being established now.
As far as compulsory licences are concerned, Mr. Speaker, I should like to quote the report of the special committee of the House of Commons on drug costs and prices. At page 38 appears this paragraph:
The committee found that up to 1949 no applications for compulsory licences had been made in Canada.
As I have said, Mr. Speaker, this was included in the legislation in 1923.
-Since 1949 the commissioner of patents has had to deal with thirty-four applications for licences upon medicinal products. Fourteen were granted, thirteen were abandoned or withdrawn, one was refused and six are pending.
Those figures were as of September, 1966. The system of compulsory licensing has been
6650	COMMONS
Patent Act-Trade Marks Act in existence in Canada since 1923, and up to the present time has not been put to any great use.
As the minister mentioned previously, patents in Canada-at least those relating to drugs-are now over 95 per cent foreign owned. Patent rights, despite this legislation, will be retained; and I do not believe that there will be any international implications of the kind several hon. members of the house alluded to during the debate.
As I have said, compulsory licensing has been the practice in Canada since 1923. It is also a system that is used in the United Kingdom under very similar legislation. To my knowledge, no one in the United Kingdom or in Canada has ever complained on an international level that the compulsory licensing system interfered with their patent rights, to their great detriment.
Some reference has been made to some literature that all of us have received during the last few days, particularly to a letter and a brief forwarded to various members of the house by P.M.A.C., the Pharmaceutical Manufacturers Association of Canada. The second paragraph of the letter reads:
Bill C-190 essentially would abolish normal patent and some trade mark rights as they relate to prescription medicines made in Canada.
Then it goes on:
We believe it might set an unfortunate precedent.
I have just pointed out to the house, Mr. Speaker, that this is not so. First of all, it would not abolish normal patent protection; nor would it set a precedent. The precedent was actually set in 1923.
In the third paragraph of their letter the association say that they had hoped there might be consultation on this legislation prior to its introduction. This legislation was introduced almost a year after the recommendations of our committee. The Pharmaceutical Manufacturers Association of Canada had the advantage of making many representations to the committee. Since that time the minister's office has been open to them for representations, and the minister has seen representatives of the association as a body on at least two occasions. He has also seen representatives of any drug company that wished to see him regarding the legislation, and has seen them, as far as I am aware, to the fullest of their wishes. Certainly it is my understanding that no one has been denied an interview with the minister or the department on this matter.

DEBATES	February 12, 1968
While I am talking about the Pharmaceutical Manufacturers Association of Canada, Mr. Speaker, I should also like to disagree with a statement that was made in Florida by the president of the association. He stated that the Canadian parliamentary committee was willing to put Canada at the mercy of foreign nations in the event of world wide epidemics.
I am not sure how I should qualify this statement. Whether the changes in the legislation with regard to compulsory licensing go through or not, this statement could perhaps be said basically to be true. As was pointed out this afternoon, Canada does not have a significant, basic fine chemical industry. I might point out that the basic chemicals used by the drug industry in Canada today do not originate in Canada, but come mainly from the United States. Therefore, Mr. Speaker, if the statement to which I have referred is true after the legislation passes, then it is equally true before the legislation passes.
I also think the house should understand that under the laws and regulations of the food and drug directorate at least a five-year monopoly is given to any company that introduces a new drug into Canada under the principle of patent protection. This is because a drug that comes into Canada under a patent protection is classified as a new drug until it satisfies the directorate that the company has met their requirements concerning research on the particular drug in question.
The minimum period of time that elapses before a drug loses its new drug status is five years, and usually is a great deal longer than that. In other words, the company that produces the drug does indeed have a five-year monopoly, during which time it may regain its research costs and can actually go out and try to corner the market for that particular product. The company has five years' access to a completely monopolized market; and as I have said, Mr. Speaker, usually the period is more than five years.
No company, Mr. Speaker, has asked or is likely to ask for a compulsory licence before new drug status is lost. If it does this, it means that it has to reduplicate all the investigational work on the particular drug. No compulsory licence has ever been applied for by a company while that stipulation was there. It is a very expensive procedure to introduce a new drug. Therefore I think it very unlikely that a compulsory licence would be asked for during that time. So there is no question, Mr. Speaker, that the major
February 12, 1968
patent rights are retained, and certainly a complete monopoly without any risk of compulsory licence is available to the company for at least five, and perhaps many more years.
There is no question that patents do influence the price of drugs. I think reference was made to the fact that the United States, does not have a compulsory licensing system, as we have in Canada. Chloromycetin was much cheaper in Canada under our compulsory licensing system than it was in the United States. Recently the patent in the United States ran out, and practically overnight the price of Chloromycetin in the United States fell almost 50 per cent. So indeed, Mr. Speaker, patent protection does influence greatly the price of drugs.
The hon. member for Simcoe East (Mr. Ry-nard) made reference this afternoon to Appendix A of the brief submitted by the Pharmaceutical Manufacturers Association of Canada. This appendix refers to nine drug companies which were told to stop marketing chloramphenicol. It is my understanding the chloramphenicol has been rechecked by the food and drug directorate and is now free to come on the market.
[DOT] (9:00 p.m.)
I point out to the house that if drugs are imported into Canada in final dosage forms under compulsory licences, which is what the legislation recommends, those drugs must pass the food and drug regulations as they concern quality and safety, in the same way as the drugs of Canadian manufacturers must pass those regulations. Those drugs will not be exempt from any tests that are applied to other drugs.
Mention has been made of inspection services. How are we to maintain inspection services, particularly in foreign countries, some hon. members have asked. So far as food and drug inspectors are concerned I point out that inspectors at present work in foreign countries, and particularly in European countries. These inspectors are Canadian members of the food and drug staff who act as inspectors in connection with the purchase of drugs. Certain classes of drugs, namely biological products, require inspection at source before they are allowed into Canada. As I say, at present we have inspectors in Europe.
Sending inspectors of the food and drug directorate to other countries, including European countries, cannot be considered a precedent. They inspect manufacturing facilities
! DEBATES
Patent Act-Trade Marks Act and make sure that proper quality control and safety standards are being met, and in this regard their service is an extension of the service that is presently performed in Canada.
Another point I wish to mention is that if drugs are brought in under compulsory licence, the originating company will receive royalties which are based on the cost of production and not on the selling price of the product. Because, as has been mentioned and admitted in evidence before the committee, the selling price of a product bears no relation to the cost of producing that product.
This afternoon the hon. member for Simcoe East (Mr. Rynard) quite justifiably mentioned that great Canadian discovery, insulin, and he paid compliments to the Canadian discoverers, Drs. Banting and Best. He knows that insulin was discovered, not in the laboratory of any drug company, but at the University of Toronto. He mentioned that the University of Toronto now spends a great deal of money on medical research because Drs. Banting and Best turned over the royalties to the university in order that the royalties might be used in medical research. Exactly the same situation might prevail if a compulsory licence were granted. Royalties are still paid and there is no reason for the type of activity I have just mentioned not to continue under the proposed legislation.
The committee was greatly concerned with the fact that the manufacturing companies spend 30 per cent of their dollar on promotion and marketing and only 7 per cent of their dollar on research. The committee believed that the 30 per cent that was spent on promotion and marketing was unnecessary. Almost every doctor in Canada will tell you that most of the material that crosses his desk is never read but thrown into the waste-paper basket, at great expense to the drug companies.
We believe that if drug companies in Canada are forced to cut back, because of drugs at more competitive prices being brought into the country, they can do so by cutting down on some of the frills, particularly the 30 per cent they spend for promotion and marketing. They can still make a profit within the Canadian economy. As everyone knows, the drug companies must make some profit in order that investors may invest their money in such companies.
February 12, 1368

Patent Act-Trade Marks Act
I point out that though generic drug companies sell their drugs at prices that are different from the prices charged for brand name drugs, the companies still make a profit. No one suggests that they are doing this at a lower profit than is available to companies selling brand name drugs.
As I have already mentioned, the committee heard a great deal of evidence about the safety aspect of drugs. We have been very fortunate in Canada because we have had few problems with drugs that have been manufactured in Canada. Few serious problems have arisen in connection with trade mark or generic brands, yet the Question of safety has been talked about and worried about in Canada and in the United States, much more than the evidence of unsafe drugs would warrant.
I expect that members of the house are aware that the government of Canada purchases great quantities of drugs to be used in the Department of National Health and Welfare and the Department of Veterans Affairs, as well as in the Canadian Armed Forces. The committee called members of the government purchasing service before it, as shown in volume 2, page 1509 of the testimony before the special committee on drug costs and prices, 1966-67. The questioning was about the safety aspect of drugs and on that page Mr. Ellis, a witness before the committee, says this:
Mr Chairman, as far as the Department of National Health and Welfare is concerned, we depend on our two suppliers, as I pointed out in my statement. We get all our drugs from either Department of Veterans Affairs or through the surgeon general's branch of the Department of National Defence. We depend on the testing procedures of those two departments.
I can make an unequivocal statement, though, that we have had not a single complaint of lack of efficacy in our drugs. This was borne out this past week by phone calls to four senior pharmacists across the country.
of dosage forms of drugs of all types. At present you can import drugs into Canada in their chemical form. The changes in the act would allow the importation of drugs in all forms. The second matter, the doctors' bulletin, I have already referred to.
I wish to refer briefly to one statement that the hon. member for Simcoe East made. Toward the end of his remarks he asked for this matter to be sent to committee for further study. Originally, the special committee on drug costs and prices was set up in 1963 as a result of the thalidomide tragedy, and originally it was to consider only the safety aspect of drugs in Canada. The question of costs was added about one year later, in the new terms of reference which were established by the minister of national health and welfare of that day. As I said, the committee which brought in its report on April 3, 1967, sat extensively. It lasted for well over one year. The entire idea behind the setting up of the committee is several years old. Anyone reading the evidence will find that of the 2,700 pages of evidence which are concerned with the cost of drugs and the price of drugs, at least half have to do with the aspect of safety.
[DOT] (9:10 p.m.)
I believe it would be nothing but repetition to send a matter like this back to a committee of this House of Commons. I believe nothing is to be gained by it. The legislation which the minister has introduced is the product of the recommendations of a committee of this house, and to send the same legislation back for further committee study would be repetitious, ridiculous and a great waste of time of the house. I hope the house will see fit to pass this legislation quickly because I believe the need in Canada is to provide safe and effective drugs at reasonable and competitive prices.
I expect members of the house know that the government buys under a tendering system and most drug supplies are bought from companies that are classified as manufacturers of generic drugs.
I believe that the questions of safety and quality are not debatable. They are factual. For the reasons I have already given, the first consideration with respect to drugs must be safety and quality. Two things must be done if safe drugs at lower costs are to be made available to all Canadians. As the committee recommended, the first of these would be to grant compulsory licences for the importation


Mr. J. M. Forresiall (Halifax):: Mr. Speaker, we listened at great length this afternoon to the minister, and this evening to the chairman of the special committee on drug costs in Canada, and other related matters. It has been enlightening and informative I am sure to those members of the house who were not on the committee, but I must say frankly that sitting here this afternoon I was not at all sure I was a member of that committee.
My remarks will centre largely on what I consider to be a serious misreading of the intentions of the bulk of the recommendations of the special committee. The purpose of the

February 12, 19S8
study and, I suppose, the intent of the bill- the two may be compatible at this early point- was to allow compulsory licences for the importation of prescription drugs in finished dosage form. The spin-off was intended to encourage competition at the manufacturers level, and thereby reduce the cost of drugs. As a proposition, this seems valid on the surface, but it must be considered in the light of an imporan word which has been loosely used by some hon. members m this debate so far. That word is "safety". We on this side agree with the intent of any measure which will lower the prices of prescription drugs to consumers. This is a philosophy to which I think everyone in this house adheres. In saying this we do not mean to imply either directly or otherwise that the cost of drugs in Canada is necessarily too high. Indeed I directed questions to a large number of witnesses who appeared before the committee on that specific point-as to whether in their opinion the cost of drugs in Canada was too high. The generality of opinion was that they might be high, but that they were not necessarily too high.
We started this inquiry on February 15, 1966 when a special committee was set up. It is not necessary to review the terms of reference in detail, but I will emphasize one point because it is an essential part of the background to the remarks I intend to make. We were not asked to say whether prices were too low or too high. Rather we were directed to find a comprehensive and effective program to reduce the price of drugs in Canada, the inference being that the price of drugs was, in fact, too high. As the chairman of the special committee has correctly pointed out, we were not necessarily to concern ourselves about safety. To tackle these terms of reference realistically we had to make some basic decisions at the outset. Most of these are clearly set out, and they are to be found at page 6 of the committee's final report to the house. They are, in essence, that the committee's conclusions should be such that any of its recommendations, if adopted, should continue to maintain a proper balance between industry and consumer, and take into consideration the importance of continued and increased scientific research in Canada.
This was the fundamental premise from which we started. No recommendation could be considered which, although designed to lower drug prices in Canada, might produce

Patent Act-Trade Marks Act drugs of questionable safety or have a detrimental effect on other aspects of the Canadian economy. We were given our terms of reference and we set our guide lines. The committee met some 63 times. We heard evidence from firms, associations, private individuals, government agencies and governments. In addition we had before us the research studies which have been mentioned -the findings of three previous Canadian commissions, those of the royal commission on health services, the patents, copyright and industrial designs commission, which was the Ilsley commission of 1960 and the Restrictive Trade Practices Commission. We also had access to many other reports and texts in this field such as the Kefauver report, which has been mentioned today, the Hinch-cliffe report from the United Kingdom, published in 1959, and the reports of several Canadian provinces-Manitoba, British Columbia and Ontario. Not least, I suggest, we had before us the reports of the Boyd and Hilliard committees, both appointed under the aegis of the present government. These I suggest are the ones most pertinent to what we are about to do here some time during the next day or so.
I mention this background to illustrate the concern which has existed for some time not only in Canada but in other countries in connection with the drug industry, and to show that the Harley committee approached the task assigned to it with a full awareness of its responsibility to fellow members in the house and to all Canadians.
We on this side believe that the report generally represented an adequate and proper discharge of that responsibility. Before we look closely at the bill before us I believe we should refresh our collective memories as to the recommendations of the special committee on drug prices and costs and the implications of the implementation of those recommendations. I should like to read at least three of the committee's conclusions, because I think they are germane to the conclusions at whicn we on this side believe the house should arrive. The first is:
That the food and drug directorate publish not less than once a month an informative bulletin to the medical profession giving complete details on drugs and their actions and reviewing major drug uses in Canada.
Notwithstanding the comments of the previous speaker, I would ask the minister whether this has been done. Has it been done
February 12, 1988

Patent Act-Trade Marks Act yet? Has any action been taken to lead to the implementation of this particular recommendation? The minister admitted earlier today that it had not.
p fourth recommendation of the committee was:
That present ministerial authority as provided in Section 38 of the Customs Act be amended in so far as the importation of drugs into Canada is concerned, and that future value for duty be set in all cases at the cost of production of the imported drug plus an allowance for gross profit (ie. an allowance to cover the actual manufacturer's administrative overhead, selling costs and net profit, etc.)
[DOT] (9:20 p.m.)
Here again I should like to ask the minister what has been done about this. It has been indicated that there has been a narrowing of the area in respect of the fifth conclusion, which states that the Customs Act should be amended to make clear that dumping duties with respect to drugs be limited only to affect those drugs of a kind made in Canada. I should like to ask the minister to tell us what the narrowing has been, or where the protection is. So far as I have been able to determine, this information is not available to us in print. I do not particularly wish to discuss all the recommendations, but I mention these three because they are indicative of the situation.
Some considerable time has elapsed since the publication of this report. The government has acted on one or two of the ideas set out here and has embodied them in at least one clause of the bill. However, the lack of action on the part of the government is indicative of the fact that there has been a rejection by government officials of the report of the special committee. Indeed, most of the provisos attached to the recommendations of the special committee have been dropped. Of the seven recommendations of the committee which are pertinent to Bill No. C-190-recommendations 2, 11, 17, 18, 19, 20 and 21 we find that only one, recommendation 21, was actually implemented, and that only two additional ideas were picked up and used in another form. This is the situation, in our opinion and I believe in the opinion of most members who were members of the special committee-in spite of the fact that the recommendations in the report are spelled out clearly, and in spite of the fact that drug prices in Canada are indeed higher than they need be.


According to Mr. David Henry, the reasons for these prices are not single but are multiple and relate not only to the pharmaceutical manufacturing companies but also to the retail pharmacies and indeed, as we all know, the taxation policies of the government. They are due, as well, to the food and drug directorate, because of the regulations it imposes on the industry, the drug wholesalers, the physician who prescribes the drug and indeed the person who must have recourse to the drug and demands the very best. If I were a doctor I suppose it would be simple for me to say, "How often do we in this discipline hear workers say that they cannot afford to stay off work, and ask whether there is some pill or shot that will fix them up so that they may be able to stay on the job."
The recommendations of the committee also pointed out very clearly the importance that should attach to the matter of safety and the vital role of the food and drug directorate in this regard. They also point out the need for more research in Canada, both in the pharmaceutical and medical fields. As a member of the committee I am very gratified at the manner in which the pharmaceutical manufacturing industry and the retail pharmacists have responded to and have implemented certain committee recommendations. We see that the pharmaceutical associations across Canada are considering, and I think perhaps one province, if not more, has already instituted, recommendation No. 15 of the committee which deals with the ethics of the profession or the discipline of pharmacy. This has to do with the method of determining drug prices to the consumer.
The method of pricing drugs and some of the other recommendations have at least been given active consideration by the retail pharmacists and pharmaceutical associations. Members on this side of the house find encouraging the co-operation which has already begun to evolve between the manufacturers and the wholesalers in respect of the abolition of the recommended price lists. I believe stringent steps have been taken to revise their promotional practices. This was another of our recommendations.
This afternoon and evening we have had discussions about this being the reason for one of the highest costs in the manufacturing dollar. Something must be done in this regard. It is not a matter of a recommendation having been made, and ignored by the industry.
February 12, 1968	COMMONS DEBATES	6655
o (9:30 p.m.)
I should like to ask again what the government has done in this regard. Let us take a look at what has been done. The government has removed the inequitable sales tax on drugs. Indeed I wonder why it ever should have been increased to the level of 12 per cent. The grants to the Medical Research Council have been increased. This was mentioned earlier, and I believe everyone is gratified that this has been done. But what about the food and drug directorate itself? There was a good deal of evidence which pointed out the need for increased staff and the inability of the food and drug directorate to actively meet its commitments with its present staff. I suppose I should ask whether the personnel and facilities have been expanded, or indeed whether the recommendations of the Hilliard committee have been implemented.
The report of the Hilliard committee and the report of the Boyd committee were considered to be very important reports. They deal with the matter of the safety of drugs. I suggest that the government in this regard has procrastinated and delayed, and I believe this has been done deliberately. I ask again whether the Tariff Board has reviewed the drug tariff structure pursuant to recommendation No. 6 in the committee report. This is the recommendation which asks that the federal government instruct the Tariff Board to review the drug tariff structure. Has this been done and, if not, why not? Has the Customs Act been amended in line with recommendation No. 5 which I read into the record a while ago? Again we have the vague assurance that there has been a narrowing in this particular regard. We have had nothing specific. I suggest that the answer by the government in respect of these questions is Bill No. C-190, despite the warnings and recommendations contained in the committee report and despite conclusion No. 3, which deals with the matter of the issuance of a bulletin by the government.
The government has wilfully ignored the recommendations of the special committee. The result is that we have Bill C-190. We know it proposes simply to grant the commissioner of patents the full power to grant licences under patents relating to medicines, and to grant licences for the importation of medicines in any form. No reference to safety is made in the bill. There is absolutely nothing in respect of guarantees. Apparently the minister and his government are so intent on
Patent Act-Trade Marks Act reducing the prices of drugs they do not care what kind of drugs are imported, so long as they are cheaper. It is not good enough for us on this side of the house or for the Canadian people to save a few pennies, without measuring value and the safety of the users of the drug. Surely that is poor business sense.
Hon. members of this house should be aware of the incalculable harm and danger we would do if we did not bring to the attention of all members and the Canadian people the dangers implicit in this bill. We would be abdicating our responsibility to all Canadians if we did not object to it as vigourously as possible. We would be failing in our duty if we accepted any bill that puts price ahead of the well-being of the people of the country, and we know instinctively that this is a bad bill.
This whole question of safety was raised and dealt with repeatedly throughout the hearings of the committee.


Mr. Orlikow:: Would the hon. member permit a question?


J. Michael Forrestall: A very short one.


David Orlikow: I should like to ask the hon. member if it is not true that the director of the food and drug administration gave evidence to the committee that there were really no differences in quality and safety factors between generic and brand name drugs used for prescriptions in this country.


J. Michael Forrestall: He may very well have said that, but he said a lot of things that were contradictory. I do not recall that specific reference.
I should like to read one or two things that members of that august body had to say on this point, having to do with safety. Let me quote what Mr. David Henry had to say as recorded in the proceedings of the special committee on drug costs and prices at page 2182 of that evidence on Tuesday, February 7, 1967. He was talking here about safety of drugs, and this is what he said:
I am also making another assumption, and that Is, that I regard as completely paramount the necessity of making sure that Canadians receive drugs of high quality, drugs which are safe, and drugs which are effective. Anything I say has home that in mind, and as I say, to me that is paramount; it is not even an issue in this debate; I do not think anybody would quarrel with this point.
Mr. Henry is an acknowledged expert. Indeed I understand he at least had something
February 12, 1368

Patent Act-Trade Marks Act to do with drafting this bill; but I see nothing in the bill dealing with the safety of drugs that we are going to allow into the country.
Again, at page 2188 Mr. Henry had this to say:
It should also be recognized that any proposal to inject price competition calls for action at three major levels-the manufacturer's level, the retail level, and the patient's level (which effectively means the level of the physician). I mention the physician merely so that it will be borne in mind that no matter how much opportunity for price competition may be made available, unless a physician has confidence in the source of the drug and in the measures taken to ensure the purity, safety and effectiveness of the product he would not prescribe it for his patient. It is therefore important that along with any package of measures adopted, full attention be given to the necessity of building up confidence on the part of the physician in competing products available so far as safety, quality and effectiveness are concerned. In the absence of such confidence, a downward pressure on drug prices cannot, in my view, be achieved.
We heard evidence before the committee as well on the question of drugs coming into the country, and we heard evidence of the inability of the food and drug directorate to check effectively on the various factors involved in ensuring absolute safety of drugs. Indeed, if my general understanding is accurate, the concern of the food and drug directorate is that a particular drug should measure up to what it is represented to be. We have all read very recently about the sale of water to Viet Nam under the guise of its being a drug. If it can happen in one country it can happen in another. I suppose as long as it was listed as water the food and drug directorate would not object.
Let me again quote from page 2167 of this evidence taken before the committee. Perhaps I should not quote this, as it is quite lengthy, but it has reference to what Dr. Hilliard had to say.
In spite of all these facts the minister continues to ignore the advice of a series of dedicated Canadians, both from the public service and the industrial level. I wonder sometimes whether the minister's common sense has been affected by more heady prospects which might lie ahead. I am wondering if he is not more concerned about his stance before the conference to be held in this city in a few weeks. He has continued to ignore these remarks and recommendations, contained not only in the conclusions of the special committee but in other evidence available to us and available to the government.
[Mr. Forrestall.l

the committee, in the remarks of Mr. Allmark, deputy director of the food and drug directorate, at pages 1530 and 1531, and in the remarks of Mr. Showalter at page 1539.
This is a very serious matter. The government suggests that there is adequate protection in respect of drugs coming into the country. Here is an example of where the purchasing agent did not even know the origins of the drugs he was ordering. They could indeed have come from the same source which supplied the salt water to Viet Nam. I suggest that the issue is quite apparent. It does not seem to us that the government is at all concerned with safety.
I do not know whether deliberately or due to a lack of knowledge they have left this matter out of Bill C-190 entirely. There has been ample persuasion to suggest to the minister and his departmental officials that indeed you cannot separate them. As I say, Mr. Speaker, I am not sure what has been the motivation of the government.
Many areas should have been touched on and I hope will be touched on arising out of the effects of the implementation of the plan as outlined by the minister before the committee. For example, we had a great deal of evidence which indicated that the importation of drugs in the manner suggested would lead to the destruction of the pharmaceutical industry in Canada. That was not simply the pleading of a special interest.
We heard earlier in the day that there was nothing that would encourage expansion by the small manufacturer. I fail to see anything so far in what the minister or anybody else has said that would justify the industry remaining in this country at all. Why should it stay here and operate at the high cost levels of the economic structures in Canada today, when there are many areas where the economic structures are much more compatible with this type of industry? This is the type of industry where transportation is not a major factor.
In this connection, Mr. Speaker, Mr. Henry stated in the committee that there were grave doubts held by his department whether it is a good idea to have a pharmaceutical industry in Canada at all. I think he perhaps phrased it in a way to suggest that, as far as the industry is concerned, we must look at the situation very carefully to see whether it would be advisable to continue the industry in this country. I cannot in any way see anything to reject that statement as a premise.

Patent Act-Trade Marks Act In saying that, Mr. Speaker, I again suggest to you that this philosophy and principle is rather apparent in the bill that is before us.


John Napier Turner: Mr. Speaker, may I rise on a point of order? I think the statement, if read carefully, by the Director of Research was to the effect that the industry might not exist in its present form, not that it would not exist at all. I think if the hon. member reads the statement carefully he will come to that conclusion.


J. Michael Forrestall: I am sorry, Mr. Speaker, but that is not the conclusion that I came to at all. I came to another conclusion. If this situation were to come about because of this biR passing, in spite of the very valid objections that we have made in regard to the very obvious absence of anything in it to adequately protect Canadian consumers-and we have suggested what those protections should be-I do not think we could in good conscience do anything but oppose the bill.
I conclude by asking the minister again to reconsider, if for no other reason than to satisfy the Canadian people on the question of safety, the reference of the bill back to a standing committee. I suggest that this need not necessarily be the standing committee which dealt with it at the outset; but because of the implications to the industry, because of the very obvious conflicts that will arise, perhaps the bill could be referred to the finance and industry committee, where it could be dealt with not only in the light of the safety factor involved but in the light of its consequences upon some rather basic industrial philosophies that some have in this country.
The impact of the loss of 2,500 trained university men has been pointed out. If there were not a complete loss, the serious impairment caused by the loss of these trained people would be enough in itself to warrant this one further step on the part of the government. We wonder at times whether we can be a viable nation if we are not producing, and this measure would seem to me to be one step toward the curtailment of a viable and lively industry, one that is developing and growing, one that indeed is not nearly as guilty of most of the sins that have been ascribed to it, as has been pointed out so forcibly by the minister and other speakers today.
We have had a great deal of misrepresentation placed upon certain facts, or at least conclusions drawn and inferences left that are not correct. The question of royalties has been raised, that is, the difference in royalties
February 12, 1968

Patent Act-Trade Marks Act paid in this country and in the United Kingdom. Entirely different methods are used. It is a small point but it is symptomatic of what we are dealing with. You cannot relate one system to another and come up with an entirely different system: It just does not work.
[DOT] (9:50 p.m.|
I hope again that the minister will reconsider this bill, if on no other grounds, then on the grounds of satisfying the users of drugs in Canada that the drugs which come into this country under such a broadened and widened form of legislation would indeed be safe drugs.


Mr. Richard Cashin (Parliamentary Secretary to Minister of Fisheries):: Mr. Speaker, I listened with interest to the remarks of the previous speaker, and in the time at my disposal I would like to deal with some of the objections to the bill that have been raised by the vested interests and by hon. gentleman opposite, which seemed to have some similarities.
It would seem that the main thesis propounded by the hon. member for Halifax (Mr. Forrestall) in opposition to this bill was not based on the fact that he feels the cost of drugs is unreasonable. I think he raised two points in objection to the bill. It would appear that in his mind the objections were so great as to permit what is an intolerable situation to exist for some time. Therefore if we are to decide on the merits of the hon. member's speech, we must reflect on the objections he has raised. His major objection had to do with safety. The drug industry itself has made reference to safety and quality control, and there is no question that this is a matter which can arouse a considerable amount of emotional support. It is entirely consistent in the art of politics, when advocating a course of action which in all other respects may be undesirable and unpopular, to try to And one aspect of your case which arouses public sympathy, and by doing that perhaps to obscure the major merits of your opponent's argument, thus helping to win the day on fallacious grounds. I believe that if the arguments of the hon. member opposite and the drug industry were to carry the day, the Canadian people would be done a considerable disservice.
I do not want to spend a great deal of time on the matter of the safety of drugs, because it has already been dealt with eloquently by previous speakers and by the interjection of

the hon. member for Winnipeg North (Mr. Orlikow). The hon. member for Halifax said he saw no mention of this in the bill. May I refer him to subclause 13 which requires that notice be given to the Department of National Health and Welfare; and it is surely the function of the food and drug directorate to determine the safety and quality of drugs. There is nothing in the training of a patent officer and nothing to qualify that branch of government permitting it to set the criteria for safety.
The suggestion has been made by the drug industry and by the hon. member for Halifax that there is a relationship between patents and safety, and patents and quality control, and that any change in the patent law goes to the root of the problem of safety and quality control, when in fact the large body of evidence collected by the Hall commission and by the committee of the house shows the contrary. Notwithstanding that evidence and the provisions in this legislation, both the drug industry and the hon. member for Halifax have placed emphasis on the safety issue. Were I one who wanted to oppose the bill, were I not greatly concerned about the cost of drugs, and were I looking for arguments which might have some popular appeal for the general public which might not have the opportunity to examine the matter closely, quite obviously the issue to choose would be safety and quality control. It is an excellent technique which is as old as the art of politics itself.
In this case, however, the arguments of the hon. member opposite have little or no resemblance to the facts, which is what this chamber is concerned about. Naturally we are all concerned about the matter of safety and quality control. I think it would be ridiculous to assume that the royal commission on health services, the standing committee of the house, and the two doctors, members of the house, who spoke in this debate could, on the one hand be concerned about the price of drugs and on the other not be concerned about safety and quality control. Quite obviously they are concerned about both. I think that if you can get away with it, it is a quite admirable technique to try to confuse the issue. I hope that all hon. members have seen through this technique of the drug industry and of the hon. member for Halifax, who would appear to have presented the same arguments to the house that many of us have heard from the drug industry.
February 12, 1968	COMMONS
I do not fault the drug industry for raising objections to this bill. After all, I do not think any industry is altruistic. I recognize our system is based on the profit motive, and surely various industries are bound to be concerned about a change from a known to an unknown procedure. It could have some unsettling effects on the balance sheet. This is a natural and understandable preoccupation of drug companies, so I understand their use of the
DEBATES	$659
Patent Act-Trade Marks Act argument of safety. However, I cannot understand the reasons why the hon. member for Halifax has rested so much of his long effort on that particular point. I hope that all hon. members who have had an opportunity to study this matter will see-
May I call it ten o'clock, Mr. Speaker.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
6661
[Stage Direction]
Tuesday, February 13, 1968