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Bill C-261

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2nd Session, 37th Parliament,
51 Elizabeth II, 2002

House of Commons of Canada

BILL C-261

An Act to ensure the necessary supply of patented drugs in cases of domestic emergency or to deal with crises in countries that receive assistance from Canada

Preamble

Whereas terrorist threats and the possibility of biological warfare make it prudent for the Government to ensure the immediate availability of drugs to protect persons in Canada or representing Canada overseas;

Whereas the rate of spread of disease, including HIV, AIDS and tuberculosis, is serious and tragic in many countries and threatens a substantial proportion of the population in some of those countries;

Whereas the spread of disease threatens to create an international crisis of a scale that is unprecedented and likely to bring human devastation and economic disaster to many of the poorest nations of the world, a situation which is made even worse by the fact that it is selective on the basis of poverty;

Whereas drugs are available to provide protection from, cure or mitigate the effects of many diseases and biological or biochemical hazards, but the production of many such drugs is protected by patents;

Whereas Canada, having international credibility and influence, should take a lead in initiating international co-operation among industrialized nations to make drugs available at a reasonable price to nations suffering medical crises;

And Whereas drug manufacturers have little real expectation of significant profit from the sale of expensive drugs in nations that cannot afford them;

Now, Therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Short title

1. This Act may be cited as the Drug Supply Act.

INTERPRETATION

Definitions

2. The definitions in this section apply in this Act.

``biochemical aggression''
« attaque biochimique »

``biochemical aggression'' means an attack by means of biological or biochemical terrorism or warfare.

``biochemical protection drug''
« médicament contre une attaque biochimique »

``biochemical protection drug'' means a drug determined by the Governor in Council to be necessary or useful in protecting persons in Canada or representing Canada overseas from actual or apprehended biological or biochemical aggression, or in curing or mitigating the effects of biochemical aggression.

``epidemic disease''
« maladie épidémique »

``epidemic disease'' means AIDS, HIV, tuberculosis or any other disease determined by the Governor in Council to be a disease that is or threatens to be an epidemic.

``epidemic disease drug''
« médicament contre une maladie épidémique »

``epidemic disease drug'' means a drug determined by the Governor in Council to be necessary or useful in protecting persons from, or in curing or mitigating the effects of, an epidemic disease.

``incremental cost''
« coût marginal »

``incremental cost'' means the cost of a product based on the cost of materials, manufacturing, labour, packaging, royalty and distribution directly incurred to produce an additional quantity of a product, but does not include the cost of research, development or advertising, interest on working capital, capital invested in facilities used for manufacturing, research, marketing, administration or any other activity, the depreciation and maintenance costs of those facilities, or any element of profit.

``Minister''
« ministre »

``Minister'' means the Minister of Industry.

``patentee''
« titulaire du brevet »

``patentee'' includes the person to whom the patent is granted or a person licensed by that person under the patent.

PROTECTION FROM BIOCHEMICAL AGGRESSION

Protection plan

3. (1) The Minister, in co-operation with the Minister of Health, must develop a protection plan to ensure access to sufficient biochemical protection drugs to protect the public from a potential biochemical threat or to deal with biochemical aggression.

Elements of plan

(2) The protection plan referred to in subsection (1) must include at least the following elements:

    (a) provision for action to be initiated by order of the Governor in Council;

    (b) provision for the action initiated by order of the Governor in Council to be administered by the Minister of Health;

    (c) authority for the Governor in Council to order that one or more manufacturers, other than the patentee of any patent covering a biochemical protection drug, may be authorized by the Minister of Health to manufacture the drug if the patentee is unable or unwilling to supply the drug in the quantity, quality and time specified by the Minister of Health;

    (d) a mechanism for determining the payment to a person who manufactures a biochemical protection drug at the request of the Minister of Health, which payment shall provide for a reasonable return on the incremental cost of the drug, and for determining the payment to the patentee of a patent covering the manufacture or use of the drug; and

    (e) provision for an extension of the life of a patent covering the manufacture or use of a biochemical protection drug, in cases where

      (i) the supply of the drug under the plan is likely to severely impair the ability of the patentee to obtain a reasonable return on the cost of developing the drug, and

      (ii) no other reasonable remedy may be found.

Time limit

(3) The Minister must complete the protection plan not later than 180 days after this Act comes into force.

Plan laid before Parliament

4. (1) The Minister must cause the protection plan referred to in section 3 to be laid before each House of Parliament on any of the first five days on which the House sits after the plan is completed and must, at the same time, provide an outline of any amendment to the Patent Act or of any other legislation that would be necessary to put the plan into effect.

Committee study of plan

(2) On the laying of the protection plan and outline of legislation before the House of Commons, the Minister is deemed to have moved a resolution that the plan and outline be referred to such standing committee of the House as the House may order for consideration and report within 90 days or such longer time as the House may order.

INTERIM POWERS

Order in first year

5. (1) During the year commencing on the day on which this Act comes into force, the Governor in Council, on the recommendation of the Minister of Health, may

    (a) order that the patentee of a patent covering the manufacture or use of a biochemical protection drug supply the drug to the Minister of Health in the quantity, quality and time specified, for a payment determined by the Minister, which shall provide for a reasonable return on the incremental cost of the drug; or

    (b) if the patentee is unable or unwilling to supply the drug in the quantity, quality and time specified and for the payment determined by the Minister, order a manufacturer other that the patentee to manufacture the drug for the Minister of Health in the quantity, quality and time specified, for the payment determined by the Minister, which shall provide for a reasonable return on the incremental cost of the drug, and authorize the Minister to provide the patentee with such compensation as the Minister determines, in lieu of a royalty.

Order operates notwithstandi ng the Patent Act

(2) An order under subsection (1) operates notwithstanding the Patent Act, and the patentee of a patent covering the manufacture or use of a drug supplied under such an order has no claim to further compensation in respect of a right arising under the Patent Act, except under subsection (3).

Application to Federal Court

(3) A person who is the patentee of a patent referred to in subsection (2), and who believes that the compensation received under subsection (1) is not a reasonable compensation in the circumstances, may apply to the Federal Court for an order varying the terms of the order of the Governor in Council.

Interim orders laid before Parliament

(4) The Minister must cause a copy of every order made under subsection (1) to be laid before both Houses of Parliament on any of the first five days on which the House sits after the order is made.

INTERNATIONAL ASSISTANCE

International conference

6. The Minister must, in co-operation with the Minister of Foreign Affairs and the Minister of Health, within 180 days after the coming into force of this Act, convene a conference of

    (a) representatives of nations that are capable of assisting those nations threatened by an epidemic disease;

    (b) representatives of nations threatened by an epidemic disease;

    (c) experts on the spread, prevention and treatment of epidemic diseases; and

    (d) representatives of the manufacturers of epidemic disease drugs.

Objectives

7. The objectives of the conference are to

    (a) consider and propose a program of international co-operation to supply drugs at not more than their incremental cost to nations threatened by an epidemic disease;

    (b) consider and propose means to secure the co-operation of manufacturers of epidemic disease drugs in the program, including, without limiting the generality of the foregoing, securing their agreement to supply drugs at incremental cost, plus a moderate profit as compensation for loss of legitimate expectation of profits from sales to the affected countries that might occur in the absence of initiatives under this Act;

    (c) consider and propose means of compelling the manufacturers of epidemic disease drugs to supply them at incremental cost plus a moderate profit if reasonable offers to secure co-operation in the program fail;

    (d) propose assistance with education on disease control and reduction for the populations of nations threatened by an epidemic disease;

    (e) propose in general terms any amendments to patent legislation that may be needed to facilitate the program; and

    (f) urge delegates to attempt to secure the commitment of the governments of the nations they represent to participate in and fund the program for drug supply and education assistance proposed by the conference.

Report

8. (1) The Minister must, within 60 days after the end of the conference, prepare a report on the conference, including a summary of its deliberations and conclusions and an outline of any legislative proposals, including proposals for funding, that may be presented to Parliament to carry out the program considered and proposed at the conference.

Laid before Parliament

(2) The Minister must cause the report to be laid before each House of Parliament on any of the first five days on which the House sits after the report is completed.

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