Pharmac™ 2004
Tuesday, November 23rd, 2004
Metro Toronto Convention Centre

The User Fee Act:
Increasing User Fee Transparency and Accountability to Ensure Future Drug Development

Check Against Delivery

· Ladies and Gentlemen, I am very pleased to be with you here today to discuss how increasing user fee transparency and accountability can facilitate future drug development in a safe and efficient way.

· Some of you will be aware that on March 31st 2004, my Private Members' Bill C-212 was given Royal Assent. Bill C-212 is now in force and is the 'law of the land'. The Bill was developed so that it didn't need regulations. I raise this because some have asked me whether Bill C-212 has been implemented. I will come back later to the matter of government policy - but as far as the Bill is concerned it is a non-negotiable law of Canada.

· March 31st was of course a very proud day for me and the culmination of more than two years of effort and struggle by me and many of you who are here today.

· Merci de votre soutien tout au long du processus d'adoption de la Loi sur les frais d'utilisation. Votre appui inconditionnel et votre dévouement à la cause m'ont encouragé à aller jusqu'au bout.

Thank you for the support that you showed me during the long journey to getting the User Fee Act passed into law. Your constant support and unflinching dedication to the cause encouraged me to keep going to victory.

· Passing a Private Members Bill is never an easy task - and in order to pass this one, I was required to work closely with colleagues from the House of Commons and the Senate. Many people who were involved with this Bill - including myself - appreciate that we made a bit of history by passing it unanimously at all stages in the House and then receiving all party support in the senate before ultimately being passed again in the House!

· Before I get into a few of the highlights of this new law, I would like to give you some background on how I first became concerned and interested.

· Shortly after becoming the Member of Parliament for Etobicoke North, I began meeting with companies and organizations in the riding, and I was alarmed to hear the scope of the problems being encountered in the area of user fees - especially from companies in my riding like Bayer Canada and BASF Canada.

· The House of Commons Standing Committee on Finance, of which I was a member and subsequently chaired, some years ago recommended significant changes to the cost recovery/user fee policy; but progress was minimal. In fact there were concerns that the policy was moving in the opposite direction!

· Companies in my riding of Etobicoke North - companies like Bayer Canada and BASF Canada - who are exposed to 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, and I am sure you do as well, 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.

· As you know only too well, in Canada the average has been 750 days for a 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.

· With drugs, and chemical and agricultural products, competitive advantage often depends on being the first mover to the marketplace. It is easy to understand why our Canadian companies have seen their competitive position eroded.

· Des entreprises de ma circonscription m'ont dit qu'elles perdent de nombreuses batailles pour la production en exclusivité de produits mondiaux à cause du cadre réglementaire du Canada, en particulier la réglementation concernant les frais d'utilisation.

Companies in my riding tell me they are losing many of the corporate battles for world product mandates because of Canada's regulatory environment - especially as it relates to user fees.

· 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, prior to C-212, did not have any such linkage to performance. In Australia, 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 industry. The Medicines Control Agency in the United Kingdom sets targets for 'clearance times'.

· These facts along with testimonials from people in many fields of industry and private life led me to push for change and propose my Private Member's bill.

· The principles of my Bill are very clear. It was intended to address the following concerns:

1. User fees set by monopolies. You can't shop around if you want a new drug approval;
2. While not a tax akin to a tax;
3. The need for more parliamentary oversight when user fees are introduced or changed;
4. The need for greater stakeholder participation in the fee-setting process;
5. Improved linkages between user fees, and federal department and agency performance specifications and standards;
6. The requirement for more comprehensive stakeholder impact and competitiveness analysis when new user fees, or fee increases, are contemplated;
7. The goal of increased transparency with respect to why fees are applicable, what fees are charged, what costs are identified as recoverable, and whether performance standards are being met;
8. The need for an independent dispute resolution process to address the complaints or grievances of the payers of user fees; and
9. The need for an annual report outlining all user fees in effect that would be tabled in the House of Commons, and referred to the appropriate Committee of the House.

· Bill C-212 benefits Canadians from coast to coast to coast because it applies to federal government departments, agencies, boards, commissions or any other body that has the power to fix a user fee or a cost recovery charge under the authority of an Act of Parliament. Thus, individuals paying fees to visit a federal park, or those passengers paying the Air Travelers Security Charge, 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, are affected by this Bill.

· While not perfect - nothing ever is - I believe fundamentally, that the User Fee Act does live up to the parameters mentioned. Now that C-212 has become the 'law of the land', the process is not over. The day C-212 received Royal Assent a second journey began. A new process, dare I say a new struggle? Of course I am speaking of the process of compliance and implementation.

· I am anxious to begin a dialogue and hear from you the types of experiences you are having with this process. What are you seeing, hearing, experiencing? What types of problems are you encountering? Or are you having a positive experience? Are you finding Departments helpful or not? This type of discussion and feedback is important to legislators as we too often limit our involvement with laws after they are enacted.

· Enacting this legislation was a huge first step - but more needs to be done.

· The User Fee policy of the Government is still in a state of flux, however I was told recently by Reg Alcock, the President of the Treasury Board of Canada, that the User Fee Act is the policy of the government - but as we know the devil is too often in the details. (But that being said the last time I checked - the Parliament of Canada is supreme!)

· I have offered to Minister Alcock, and he has accepted my offer, to work with him and his department in the Implementation process for the User fee Act.

· The Minister is also involving me in the Smart Regulation initiative because he sees the linkage between a better user fee regime and smarter regulation.

· I recently met with the Minister and some of his senior policy people and took away some positive thoughts - so we'll see.

· I am aware that the Business Coalition on Cost-Recovery has remained intact. This, I believe, is a positive thing. The Coalition has been very supportive and helped me greatly during the debate on the Bill, and I am sure that they will be very active and useful in ensuring that the letter and spirit of the Bill is respected.

· Le dévouement et la participation active des parlementaires ne sont certainement pas étrangers au succès du processus d'adoption de cette loi.

Also key to the successful implementation of the Act is the engagement and active participation of Parliamentarians.

· For example, Parliamentarians need to understand how departments and agencies define what 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. Parliamentarians need to be involved in these debates. Bill C-212 allows for that to happen.

· Every user fee proposal under the User Fee Act must be tabled in the House of Commons, and referred to a committee of the House, by the relevant Minister. This proposal will -

1. Explain in respect of what service, facility, authorization, permit or license the user fee is being proposed;
2. State the reason for any proposed change in the user fee rate;
3. Outline what performance standard is being proposed, as well as the actual performance level that has been reached; and,
4. Provide an estimate of the total amount that the regulating authority will collect in the first three years after the introduction of the user fee, and identify the costs that the user fee will recover.

· Bill C-212 calls some user fees to be reduced if performance standards are not met.

· The User fee Act is the new standard and benchmark for federal user fees - of this we are certain.

· I believe that there is a need for policy guidance from Treasury Board to the departments and Agencies - certainly in my discussions with officials within Public safety and Emergency preparedness (as part of my new responsibilities as Parliamentary Secretary to Anne McLellan) - they have expressed an interest in and are expecting some policy guidance.

· In May of this year Justice Department lawyer, Yvon Besner, Senior Legal Counsel to the Treasury Board, released a draft paper entitled, Guide on User fees.

· I view this document as a legal document - not a policy document. I encourage you to ask Reg Alcock how he views this paper and tell him that what is needed is an updated Treasury Board policy on cost recovery and user fees - policy that complies with the spirit and letter of the law.

· I believe more guidance is needed on:

1. The process for establishing and increasing user fees.

2. How the Act applies to existing user fees. (No increase or change contemplated -at this time)

· The draft guide by Besner takes the view that the User fees Act applies to new fees or fee increases only.

· I disagree with this interpretation and have communicated these views to the President of the Treasury Board.

· Reg Alcock and I have agreed all along that we do not want user fees to become a 'playground' for litigation.

· J'aimerais savoir ce que vos avocats pensent de l'application de cette loi aux frais d'utilisation actuels (statu quo ou augmentation).

I would be interested in hearing what your lawyers are saying about the application of this act to existing user fees. (No change or increase)

· Lawyers I am sure could offer their opinion on these matters. I would like to draw your attention, however, to the following sections of Bill C-212 -

a) Application of the Act (Section 3, subsection 1). This states that "This Act applies to all user fees fixed by a regulating authority". The term 'regulating authority' is defined in the Act and is basically all government departments and agencies listed in Schedule I. I.1 and II of the Financial Administration Act.

b) Performance standards (Section 5, subsection 1). This section sets out the sanctions (penalties) for non-compliance with performance standards. This section does not differentiate between existing user fees and new fees.

· Another matter is the annual reporting to Parliament by Ministers on all aspects of their user fees (as required by Sec 7 of Bill C-212). Here we have some more work to do - witness the 2004 Departmental Report recently released by Health Canada!

· What I would like to see is dialogue between users and departments and agencies - beginning with the premise that the User Fees Act is the benchmark for federal user fees - and developing a plan on how to meet performance standards.

· I know that Reg Alcock, the President of the Treasury Board and the Prime Minister, are totally committed to transparency and accountability. They want to see Bill C-212 work effectively and for Departments and Agencies to act in a fiscally responsible way.

· It may be that government departments and agencies will need some short period of time to fully implement the standards set out in C-212 for existing fees. But for new fees and fee increases there is no doubt that departments and agencies will need to follow the process in C-212.

· You should ask the House of Commons Standing Committee on Health to review how Health Canada is complying with the spirit, intent and letter of Bill C-212. Ask the Committee to conduct hearings and hold the Department to account for their actions.

· It is also worth noting that the newly formed Canadian Border Services Agency or CBSA, part of the Department of Public Safety and Emergency Preparedness, is also going through a process right now in which they are re-examining their own cost recovery policy. I am seeing the implementation of the Act from the other side of the table!

· Recently during this process while reviewing a note from the department I noted their observation that the User Fee Act would cause 'significant challenges'. I could not help but chuckle when I read this.

· As these issues are resolved, and we move forward with the implementation of this new act, the atmosphere for introduction of new drugs to the market will be greatly improved.

· Je suis toujours déterminé à travailler avec l'industrie et les autres intervenants pour faciliter un accès équitable aux marchés.

I remain committed to working with your industry and others to facilitate fair access to markets.

· Thank you for allowing me this opportunity to speak to you today, and I wish you well with the rest of your conference!