Canadian Animal Health Institute
Panel Discussion - Effective & Efficient Delivery of Canada's Animal Drug
Review Program
Wednesday, February 4th, 2004
Lord Elgin Hotel, Ottawa, Ontario
Ontario Room, 2:30 - 5 p.m.
Ladies and Gentlemen, I am very pleased to be with you here today to discuss my private member's Bill C-212, and how it can be a catalyst in the quest for enhanced innovation and productivity in Canada. I believe my Bill will enhance the effectiveness and efficiency of our government's Animal Drug Review Program, and I will be discussing this also.
My private member's bill - Bill C-212, An Act respecting user
fees, is designed to bring greater transparency and accountability to federal
government departments and agencies when they attempt to recover costs through
user
fees. I believe the passage of my bill will result in a fairer deal for users,
both industrial users and Canadian consumers; it will make us more competitive
as a nation; and, it will encourage more innovation in this country.
First, a brief word on the progress on Bill C-212 in the Parliament of Canada.
Avant la prorogation du Parlement, mon projet de loi avait franchi les trois etapes de la Chambre des communes, et se trouvait au Comite senatorial des finances nationales. A la reprise des travaux, cette semaine, il n'aura pas a repasser par la Chambre des communes et son etude sera remise en marche au Senat. Je prevois que nous aurons environ deux mois et demi pour faire adopter le projet de loi au Senat avant le declenchement des prochaines elections federales. La sanction royale et la proclamation du texte de loi, qui permettraient d'en faire une loi du pays, suivraient l'etape du Senat!
Before Parliament prorogued, my Bill had cleared the House of Commons, where it was approved unanimously at all three stages, and was at the Senate National Finance Committee. With the resumption of Parliament this week, Bill C-212 will be deemed to have cleared the House of Commons and will be restarted in the Senate. I suspect we will have about 2 ? months to pass the bill in the Senate before the writ is dropped for the next federal election. Royal Assent, and Proclamation of the Legislation, at which point it becomes the law of the land, would follow passage in the Senate!
Two additional facts are worth noting. First, the fact that my Bill passed the House of Commons unanimously at all three stages is almost unprecedented. In fact, staff in our Whip's office was unable to remember anything similar. Bill C-212 is a substantive Bill and one that has been attacked at various times in the past by our government through the Treasury Board. This demonstrates the level of support for this Bill by Members of Parliament. I wish to take this opportunity to thank all of you for your voice in support of this initiative, and a special thanks to Jean Szkotnicki who has been there supporting me and encouraging me at all stages. The encouragement and support of all of you has made a real difference.
So, where do we go from here? My focus, and I would suggest to
you that it should be your focus as well, is on the Senate and on the Treasury
Board. Why Treasury Board? Well we have a new President of the Treasury Board,
Hon. Reg Alcock. Senators, I suspect, will look to Treasury Board for advice
on the Bill. I am very pleased to report that I have had discussions with Mr.
Alcock and he has been very positive about my Bill. I am working as we speak
with himself
And his staff on ways we might improve the Bill and ensure its speedy passage.
I myself will support amendments to the Bill only if the amended Bill will be
expedited through Parliament and supported by the Government. We are currently
having those discussions and making progress. Senators will ultimately decide
in this next phase.
By way of example, now that Bill C-212 has passed the House of
Commons it is attracting much more attention. I suppose that there were many
skeptics who assumed that the Bill would get killed in the House of Commons,
especially
Since the Treasury Board was not supporting it. This didn't happen. A number
of crown corporations have expressed concern that they might fall within the
ambit of the Bill. This is clearly not my intent, and this is very clear if
one follows the progress of the Bill through the House of Commons; however,
there might be language in the Bill that would make this abundantly clear. Likewise
it may be possible to clarify how the Independent Dispute Mechanism - the one
that would come into play with the passage of Bill C-212 - will work. In other
words, amendments could be considered that would spell out this process in more
detail. Fair enough, but amendments such as these, if introduced in the Senate,
will require that the Bill return to the House of Commons for debate and voting.
This is why I am insisting that with only 2 ? months before a possible election
call, any amendments must be accompanied with a commitment by the Government
to assist with the speedy passage of an amended Bill. Ultimately however, only
Senators can decide whether the Bill should pass as is, or with amendments.
You should know that if the Bill is not passed by both Houses before the writ is dropped for the general election, I (assuming I am re-elected!) would have to start all over again in the House of Commons at first reading following the next election, and following the start of the next Parliament (expected in the fall of this year).
So, as you can see there are many trade-offs and careful assessments to be made in the next few weeks. I am confident, however, that this Bill will be enacted in this session of Parliament. There appears to be a good level of support for the Bill in the Senate, and as I indicated earlier, the new President of the Treasury Board, and indeed our Prime Minister, are generally supportive of this initiative. What better way to provide proof positive that the democratic deficit is being attacked than supporting a private member's Bill like this one - and having it passed by the Parliament of Canada?
I was very pleased to see a reference to User Charging and Cost Recovery referred to in our government's February 18th, 2003 Budget - in the budget speech and in the budget documents. In the Budget Plan, the government reaffirmed its commitment to bring in a revised policy on external charging focused in improved management practices. Treasury Board has come out with its revised policy, and while the policy is much improved in many respects, it does not go far enough, in my opinion. That is why I am still proceeding with my Bill.
Now, to the substance of my Bill C-212.
User fees take many different forms and are meant to defray some or all of the costs of a service provided by government presumably in the public interest, but which also provides a specific service to the client (for example license fees, registrations, etc.)
At the outset I should say that I support the government's objective to recover costs through user fees for private goods or proprietary services. What my Bill addresses, are the following concerns -
Our government has embarked on a very ambitious innovation agenda. We need to ensure that our regulatory environment supports and encourages this very important objective. The government recognized this connection when it launched the Smart Regulation initiative in the last Throne Speech. The government announced that it will move forward with a smart regulation strategy to accelerate reforms in key areas to promote health and sustainability, to contribute to innovation and economic growth, and to reduce the administrative burden on business." Prime Minister Paul Martin has reaffirmed the government's commitment to innovation and regulatory reform.
I would suggest to you that the government's current cost recovery user fee policy runs counter to the innovation agenda and should be a major part of the smart regulation initiative. Bill C-212 does just that, in my view.
It is time for the Parliament of Canada to take greater ownership
of user fees. What began as a legitimate attempt to more fully recover costs
for proprietary services has developed into something that is beyond that which
was
contemplated. User fees currently bring in $4 billion annually in revenues for
the federal government. Departments and Agencies of the federal government have,
in many cases, expanded the concept and introduced user fees, and increased
user fees, beyond what is reasonable, and, more often than not, without any
reference to service or performance standards. Let us keep in mind - these are
monopolies increasing their prices! I don't need to remind this audience that
if a company wishes to have a human or veterinary drug product approved, for
example, they cannot shop around if the price charged by the Pest Management
Regulatory Agency or the Veterinary Drugs Directorate is excessive!
It is time to introduce more transparency and accountability into the user fee
process.
Companies in my riding of Etobicoke North - companies like Bayer Canada and BASF Canada - who are exposed to such fees for drug approvals, or approvals of chemical products, do not argue about the appropriateness of user fees for proprietary services. They understand that this is required. What they believe is seriously eroding their competitiveness, however, are increasing fees with no corresponding increase in service or performance. Since fees have been on the rise, in most cases there has been no corresponding improved service or response times.
Your industry is acutely aware of this.
In 1996 the Veterinary Drugs Directorate instituted user fees to review new veterinary drug submissions. At the time, the Bureau identified a performance standard of 180 days for reviewing new submissions. Today, eight years later, it takes 808 days to review new veterinary drug submissions and there is less predictability across all submission types. Hence the reason for my Bill.
Other examples abound. In Canada it takes on average 750 days for a human drug to be approved. In the United States, the corresponding time is 500-550 days. In Europe, the time frame is less. User fees charges, however, are as high or higher in Canada when compared with these jurisdictions.
In the U.S., where there are no fees for the approval of veterinary drug products, approvals take 420 days - just about half the time it takes in Canada.
With drugs, both human and veterinary, competitive advantage often depends on being the first mover to the marketplace. It is easy to understand why our Canadian companies are seeing their competitive position eroded.
In the U.S.A., the United Kingdom, and Australia user fees are tied in some way to service and performance. The Government of Canada does not at present have any such linkage to performance. In Australia, human drug reviews must be completed within legislated time frames or the relevant authority loses up to 25% of the user fee.
In the U.S.A., written performance goals tied to the fee collecting authority were negotiated with the human drug industry. The Medicines Control Agency in the United Kingdom sets targets for 'clearance times'.
Not surprisingly, in those jurisdictions where there is a strong
linkage between user fees and performance standards, the performance standards
are almost always met. Departments and Agencies find the ways to get the results
they need. In
the business world you are used to this type of discipline. It's time for government
to follow suit.
My private member's Bill C-212 contains provisions that result in a reduction in user fees if performance standards are not met.
Bill C-212 potentially affects Canadians from coast to coast to coast because it applies to federal government departments, agencies, boards, commissions or any other body, with the exception of crown corporations, that has the power to fix a user fee or a cost recovery charge under the authority of an Act of Parliament. Thus, in addition to fees to have an animal drug approved, individuals paying fees to visit a federal park, or those passengers paying the Air Travelers Security Charge, or businesses paying a fee to access the MERX government procurement system, or individuals paying a fee to the Passport Office for a passport, or provincial or territorial authorities paying fees to the Canadian Coast Guard for ice-breaking services, would be also be affected by this Bill.
I introduced this Bill because of a certain level of frustration with the lack of progress on this issue. The House of Commons Standing Committee on Finance some three years ago recommended significant changes to the cost recovery/user fee policy; but progress to date has been minimal. In fact there are concerns that the policy may be moving in the opposite direction!
The following are my lingering concerns about the newly adopted government policy -
Many of the above concerns would be addressed if more parliamentary oversight was in place. This would provide greater transparency and public debate.
To enhance the bill I introduced a number of amendments, and the House of Commons Standing Committee on Finance adopted them, in response to feedback and comments from users, M.P.'s, and the government. Some of these changes were more minor in nature but others were more significant. Allow me to comment on the latter.
Some individuals were concerned that Bill C-212 as it was originally written would compromise the ability of the executive branch of government to implement policies because the House of Commons had a veto power over any new user fees or any increase in user fees.
The amended Bill C-212 removes the veto power of the House of
Commons and replaces it with a recommending authority. In lieu of this however,
penalties for non-compliance by departments and agencies for the failure to
meet stated performance standards have been written into the Bill. Some were
concerned that committees of the House of Commons would be inundated with user
fee requests. Although a variety of evidence presented at the finance committee
hearings seemed to refute this, an amendment was passed at committee stating
that if a standing committee of the House of Commons does not report back to
the House within a certain number of sitting days of receiving such a user fee
proposal, the committee will be deemed to have approved the proposal. This provides
the committees with the latitude they need to manage their workload and priorities.
Crown Corporations were removed from the scope of the Bill on the basis that
they already have a commercial orientation. There were other amendments that
were adopted by the House of Commons finance committee, and Bill C-212 is a
better bill as a result of those
changes.
Bill C-212 will require that before a federal regulating authority introduces, increases, or expands the application of, or increases the duration of, a user fee, it must consult meaningfully with affected stakeholder and client groups -
On this last point, my Bill is currently silent as to the operation of the independent dispute resolution process; however, my intent is that the recommendations of an independent party who investigate any complaint or grievance would not be binding on the government; but the report would be available to the parliamentary committee who was reviewing the fee.
Nous aurions egalement besoin d'un mecanisme pour ne pas donner libre cours aux plaintes frivoles qui servent seulement a retarder l'application d'un tarif ou d'une majoration de tarif. Il y a fort a parier que cela n'arrivera pas et il se peut que nous ne puissions evaluer cela correctement que lorsque nous aurons acquis une certaine experience du processus.
We would need also to have a mechanism to ensure that complaints that are frivolous, and designed only to delay the implementation of a fee or fee increase, would not be entertained. Hopefully this won't happen, and we may only be able to assess this properly once we have some experience with the process.
To some, the provisions that I just described may appear completely reasonable - to others they may appear to be onerous. I will acknowledge that these measures will not simplify life for these regulating authorities. I make no apology for that. I believe that all these steps are necessary because these fees can have an enormous impact on companies and individuals in Canada. Groups like you will have some constructive ideas about how the service could be improved - especially if they are paying more for the service.
It is also important to understand what costs are proposed to be recovered with the proposed user fee or fee increase. How expansive or limited is this definition? To what extent are direct and indirect costs, like departmental or agency overheads, included in the cost recovery formula? How costs are defined can make a major difference in the level of the user fee. We need more transparency and accountability in this area as well. Bill C-212 provides that transparency and accountability.
Parliamentarians need to understand also how departments and agencies define that is a public good, and what is a private good. These definitions are usually not easy, to be sure. They are typically not black & white, and some are easier than others. But these are important considerations, because user fees should only be charged for proprietary goods and services. There are examples where the government has moved away from this concept, for example, the New Substance Notification Program and its related fees - where proprietary benefits may not be conferred.
Parliamentarians need to be involved in these debates. Bill C-212 allows for that to happen.
Every user fee proposal under C-212 must be tabled in the House of Commons, and referred to a committee of the House, by the relevant Minister. That proposal would -
Should the amount of the user fee being proposed be higher than that existing in those countries that are our major trading partners, the Minister would be required by Bill C-212 to give reasons for the difference. These questions are very important for the competitiveness of Canadian business. A case in point is the New Substance Notification Program. Chemical companies, and those in your industry, when introducing a new product into the domestic market, must appropriately obtain approval from the federal government prior to launching the product. The federal government reviews the application and makes a determination as to whether or not the product is safe and effective. To cover the costs of this approval process, companies must pay a user fee. Companies that I have approached have no difficulty with this, as I said earlier. Companies like those in this association do question, however, why our government will not recognize assessments and approvals from our major trading partners, particularly the U.S.A. In addition, once approval has been given, shouldn't the company that requested the review of the new substance, and paid the fee, be permitted some initial competitive advantage in the marketplace? In other words, if you pay the fee you are entitled to a private advantage; otherwise it is a public good and should be paid for by all taxpayers. Questions such as this should attract more scrutiny from the House of Commons and the relevant committees.
In conclusion, I am confident my Bill will become law before the next election.
Thank you for your support.
Some work remains, however, to ensure that Bill C-212 is passed. If you support my Bill, you should write to the Senators in your area and ask them to support my Bill.
Also, please feel free to contact me if you have any questions or concerns.
Again, thank you very much for the opportunity to be here today. I would be happy to take any questions that you may have.