Ottawa

Trudeau and Big Pharma: Not a love story

Paul Wells: Why doesn't Canada have a robust pharmaceutical industry? Until the COVID crisis hit, Ottawa spent years putting up 'don't bother' signs.

On the bright side, when it comes to vaccines, so far Canada is actually doing better than Australia.

That country bet big on a thriving domestic bio-sciences sector. It was making good progress on a made-in-Australia vaccine until December, when it had to scrap its vaccine program because while the candidate vaccine did well against COVID-19, it also produced weirdly high levels of false positives on HIV tests.

Australia didn’t approve Pfizer’s vaccine until January. The country’s prime minister became the first Australian to receive a vaccine doseyesterday.

So a domestic pharma industry is no guarantee of success against any given specific bug. Indeed, global dominance isn’t even a guarantee. Three of the biggest vaccine makers in the world, GlaxoSmithKline, Merck and Sanofi, have seen their COVID-19 programs scrapped or badly delayed. There are no guarantees in pharma. The work is too complex, too close to the cutting edge of science and manufacturing. It’s one reason winning pays so well: because losing costs a lot.

So it may be that even if Canada had a thriving pharma sector, it would still be scrambling to line up vaccine doses today amid a hotly competitive international feeding frenzy. And some of the attempts to explain the weakness of pharma in Canada approach Avro Arrow levels of quaint nostalgia, such as the notion that Brian Mulroney locked Canada into a generation of serfdom by privatizing a government lab the year Patrick Swayze starred in Ghost. As though subsequent governments had no ability to act.

READ: Is it possible to mix-and-match COVID-19 vaccines?

What I do know is that late last summer, as the Trudeau government scrambled to lock down agreements with manufacturers of several vaccine candidates, people in the Canadian pharmaceuticals industry were amazed, and grimly bemused, to find their phones ringing off the hook. Because for years before COVID-19, their attempts to interest Justin Trudeau’s government and Stephen Harper’s government before it, in building a robust pharmaceuticals sector for Canada had met consistent bland indifference.

In the early days of the Trudeau government, it seemed that things might go better. If only for a while.

In his 2017 budget, then-finance minister Bill Morneau introduced an Innovation and Skills Plan, “an ambitious effort to make Canada a world-leading centre for innovation.” Morneau was following the advice of an Advisory Council on Economic Growth led by one of the Trudeau Liberals’ favourite people, McKinsey managing director Dominic Barton. Barton’s final report told the feds to “unleash growth in six to eight high potential sectors” like renewable energy, advanced manufacturing, and health care and life sciences. The approach in each sector should be “aspirational” and “collaborative.”

The aspirational part came easily enough. Morneau said Canada should “double the number of high-growth companies in Canada, particularly in the digital, clean technology and health technology sectors, from 14,000 to 28,000 by 2025.” Collaboration seemed, at first, to get off on the right foot as well. The government created a half-dozen Economic Strategy Tables, including one in the health and biosciences sector. That group of 16 industry leaders tabled its final report in the fall of 2018.

Canada’s health and biosciences sector was on track to reach $17 billion in exports by 2025, the report said. But they said that wasn’t good enough. By more than doubling growth in the sector, Canada could reach $26 billion in exports, from twice as many fast-growing firms, by 2025—by adopting “bold measures that eliminate barriers and drive growth.”

What did Canada need to overcome to reach this goal? The report included a handy “What We Need To Overcome” section. Among the obstacles: “Complex regulatory, reimbursement and procurement processes impede the adoption of innovations”—which meant that the makers of new drugs, processes and technologies had a hard time getting their solutions approved, a long wait to get paid, and a long line to stand in if they wanted public health-care systems to buy their stuff. Canada’s federal system added its own complexities: a product accepted for use in one province might not be available in the rest. That made it hard enough to sell new products into the Canadian market from outside. But it also made Canada a shaky base for anyone who might want to launch a new product into the global market, because the first question any country’s regulators ask is, “Is this new product approved in its country of origin?”

READ: The tragic story of a Canadian vaccine trailblazer

The panel also noted the feds’ plan to reform the Patented Medicines Price Review Board (PMPRB), which was founded 35 years ago with a mandate to cap the prices on new drugs. Great, the panel said, but make sure that “proposed drug pricing changes are not a barrier to growth.” Setting prices low would save the government—and taxpayers—money. But it could be a false economy. At some point, manufacturers would become less interested in selling to Canada. And they sure wouldn’t want Canada setting prices for the global market.

So the Trudeau government’s handpicked growth guy told them to work with industry on reaching ambitious goals. Morneau set the goals. The handpicked industry panel told him to reform procurement and be careful about pricing. Progress on both those fronts has been shaky at best. Last April, after the COVID-19 pandemic had shut down much of the world economy, Health Canada said it was working on speeding up drug approvals—and hoped to see results in 2021. That’s halfway through the timeline Morneau laid out when he called in 2017 for reforms that would bear fruit by 2025.

One report—commissioned by Innovative Medicines Canada and using data from 2018—said Canada takes a lot longer than peer countries to reimburse companies launching new medicines. From first global approval to reimbursement takes 252 days in the United States, 317 days in the United Kingdom, and 926 days in Canada.

“That doesn’t create an environment that attracts business,” says Pamela Fralick, CEO of Innovative Medicines Canada, the industry association for pharmaceuticals companies in Canada. (Some full disclosure is in order: I sometimes deliver paid speeches to various organizations. In 2018 I gave one speech to Fralick’s group.)

But if the process of bringing new medicines to market in Canada is glacial, at least the money promises to be bad. The government released its proposed changes to the PRPMB pricing regime, which determines how much pharma firms get paid for their products, last year. The answer was, they’d be paid less than before. For starters, the U.S. and Switzerland would be removed from an international basket of comparator countries that are used to determine prices for Canada, because both countries tend to pay drug manufacturers a lot of money. Since there’s a global health crisis on, Health Canada has delayed implementation of the regulations twice; they’re now due to come into force on July 1 of this year.

But if the process is slow and the money isn’t great, at least the spirit of collaboration Dominic Barton called for was, until COVID-19 hit, in tatters.

READ: More COVID vaccines are coming to Canada. Who will get them first?

“It’s definitely been an arms-length interaction with the government,” Cole Pinnow, the CEO of Pfizer Canada, said in an interview. “I would say that we’ve always had a solid relationship with the regulatory part of Health Canada. But we certainly have not had a genuine engagement with the rest of Health Canada, despite several outreach attempts. And we’ve had what I would call cursory engagement with Minister Bains [Trudeau’s minister of industry, who resigned from cabinet in January], who seemed to be the most open to discussing a meaningful solution. But even that fell off his agenda late in 2019. There has been nothing but, frankly, draconian policy coming out of this government until the pandemic hit.”

Draconian’s a big word. What does Pinnow mean by it? “There’s not a willingness to collaborate or compromise or find a new path forward. It’s really, ‘This is our problem, this is how we want to solve this problem.’ They welcome feedback, but that feedback is never iterated upon. It’s merely, ‘Thank you for your feedback, we will now proceed.'”

The chilly relationship doesn’t date from Trudeau’s election, Pinnow said. Stephen Harper’s Conservative government was also reluctant to seem too close to an industry whose products are produced by multinational firms and sell for high prices. The political benefit of siding with generic drug manufacturers, whose products are usually cheap and easily available but which aren’t renowned for developing new products for new circumstances, is obvious.

“We’re in a situation in Canada that is a result of decades of a poor relationship between government and this industry,” Fralick of Innovative Medicines Canada said. “And we’re kind of paying the price for that now.”

It’s not as though there were no consultations on the patent-drug price regulations. The review board held hearings across the country and accepted written submissions; a summary report says they received 123 of those. But Fralick and Pinnow described a sensation familiar to many people who’ve shown up to government consultations in recent years: it was clear that they were free to speak, but less clear that anyone was listening.

Fralick said an international group of more than two dozen CEOs from big pharma wrote to Trudeau four times asking for a meeting. The first letter was sent in February 2018, the second in May 2018, the third in April 2019, and the fourth in February 2020. The letters “were very high level in nature, respectful in tone, expressing an interest in working more collaboratively with Canada, and referencing concerns with the changes being considered for the regulatory regime,” Fralick said. The first letter received an unsigned response from Health Canada’s strategic policy branch. The others received no answer. Pharma bosses do occasionally meet leaders in other countries, she said, including French president Emmanuel Macron and British prime minister Boris Johnson. And Trudeau’s dance card does include the occasional CEO in other sectors, such as Mary Barra from General Motors, Satyah Nadella from Microsoft, and former GE Canada CEO Elyse Allan. Global pharma had much less luck getting a look-in.

Pinnow insists that long-term chilly relationship hasn’t affected the COVID-19 vaccine emergency procurement effort. “A government that has not wanted to interact in a sincere and meaningful way” has “quickly realized that we now have a common desire to work together on a hot topic,” he said. “I want to make it perfectly clear: we have never talked about the policies and the vaccines at the same time.” In fact, he said Canada’s procurement effort will soon be seen as “world-class compared to everyone else out there.” By late summer, when the Belgian factory retooling effort that slowed Pfizer’s deliveries is well in the past, and vaccine candidates that weren’t yet approved in February join Pfizer and Moderna, “Canada’s going to be swimming in vaccine.”

Fralick agrees. “No company that I’ve spoken with, no member company of IMC, is in any way connecting the dots between the regulatory environment and the supply of vaccine,” she said. “But the bottom line is, where you have more anchor companies, where you have more activity, where you have a relationship with industry, it’s probably going to have an impact on where you sit in the pecking order.”

(I should also note that the weary note sounded by Pinnow and Fralick isn’t the only one I heard. Patricia Gauthier, CEO of Moderna for Canada, was more upbeat in an interview. “My experience has been extremely positive,” she said. It’s also brief: she became Moderna’s first employee in Canada at the end of 2020. “It’s hard for me to comment on the past,” she said when I asked about pharma policy before the current crisis.)

For Gauthier’s colleagues, complaining about long-term trends during a pandemic is a delicate rhetorical path to tread: the Harper and Trudeau governments put up successively larger DON’T BOTHER signs to the local representatives of a fabulously lucrative global industry, but bygones became bygones just as soon as everyone found themselves in a global crisis where big pharma was suddenly needed. If that’s so, what lasting harm was done?

Maybe only this. Canada remains, for this sector as for others, a place where the status quo is timidity, snail’s-pace progress and a weird disconnect from the action in the rest of the world. Canada has no effect on moderating global drug prices, but is usually pretty good at ensuring new medicines don’t get here first. It brags about its intentions to change all of the above, then doesn’t follow through. The crises aren’t the main problem. It’s what happens between crises: not much.