1. Pharmaceutical Marketing Club of Quebec Russell Williams President Canada’s Research-Based Pharmaceutical Companies (Rx&D)

2. Rx&D - Who we are National association for Canada’s research-based pharmaceutical community A voice for the pharmaceutical industry in Quebec and accross Canada since 1914 Mission Advocate for policies that will bring the best innovative medicines and vaccines to Canadians in a timely and appropriate manner Improve Canada's global competitiveness Make Canada a world leader in attracting pharmaceutical and biotechnology investments, which are key components of the knowledge-based economy. 2

3. Industry Overview Rx&D represents 15,000 men and women in the innovative, knowledge-intensive, pharmaceutical industry. Our members contribute to the investment of over $1 billion annually in health R&D. Rx&D member companies are the leading funder and performer of therapeutic products research and are the largest single source of health R&D research in the Canadian business enterprise sector. 1 Every year, about one in 5 research dollars are invested in hospitals and universities. 2 2.PMPRB Annual Reports 1.Statistics Canada Science Statistics, Estimates of total spending on R&D in the health field in Canada, 1989 to 2006, March 30, 2007 3

4. Positive associations with the industry 4

5. Negative associations with the industry 5

6. Rx&D Members R&D-to-Sales Ratio averages 9.97% over 21 years (1988 to 2009) 6 Source: Patented Medicines Prices Review Board (1988 – 2009) Following changes to the patent laws in 1993, Rx&D member companies have consistently maintained a higher R&D-to-sales ratio than all patentees combined. Despite challenges in the domestic environment in recent years (CDR, PMPRB, price freezes), the innovative pharmaceutical industry has maintained an overall R&D- to-sales ratio of nearly 10% since the change of patent laws in 1987.

7. Total R&D Expenditures to Total Sales Revenue 1988 – 2009 in $M (PMPRB Reporting companies) Source: Patented Medicines Prices Review Board (1988 – 2009) 7

8. Challenges Access to medicines Patent Cliff Global competition IP Perception/understanding 8

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10. The Pharmaceutical Sector – Innovation Gap Getting Wider 10

11. Global competition Source: Thiers, Fabio, Anthony J. Sinskey, Ernst R Berndt. “Trends in the Globalization of Clinical Trials” in Nature Reviews Drug Discovery, 7: 13-14, January 2008. 11

12. 12 Drug Development Life Cycle 20 YEARS Molecule Development 1O YEARS Health Canada Review 1-1.5 YEARS CDR Review 0.5 YEARS Provincial Review 1 YEAR Market Exclusivity 7-9 YEARS* 54% Private 46% Public $ PMPRB $ PMPRB = Patented Medicine Prices Review Board CDR = Common Drug Review 5-7 YEARS* *If Listed Right Away

13. ACTORS IN THE DRUG DECISION-MAKING PROCESS AND THEIR QUESTIONS (not exhaustive) HEALTH CANADACOMMON DRUG REVIEW – CANADIAN EXPERT DRUG ADVISORY PANEL CADTH THERAPEUTIC REVIEW PANEL PATIENTS and HEALTH CARE PROFESSIONALS PAYORSDRUG SAFETY AND EFFECTIVENESS NETWORK CLINICAL EFFICACY and SAFETY Has the intervention proven to be effective in controlled clinical trials? Is the new drug, efficacious, safe and of high quality? How well does a drug relieve symptoms of a specific medical condition in relation to its associated risks? COST EFFECTIVENESS Is the intervention efficient? Is the incremental benefit gained from the new drug worth its incremental cost? COMPARATIVE CLINICAL EFFECTIVENESS How does ‘real world’ use of this therapy work in comparison to its clinical efficacy measured by controlled trials? OR How well do two or more drugs work in comparison to one another when treating the same condition? Is the intervention available, safe, affordable? What care would I like my loved one to receive? What represents value to me? Am I free to exercise my clinical judgment? Do I have access to appropriate resources/evidence to make the best clinical choice? Which one therapy works best for a specific medical condition? Is the care necessary, meaning is it necessary to ensure normal function or to protect life? Is it possible to leave the care up to individual responsibility? Will this make a difference? COMPARATIVE EFFECTIVENESS What treatment works best for which patient under which circumstances? This is not as simple as saying A is better than B. e.g. Are there more benefits with new drug compared to competing alternatives or standard care? MHPD take-up of HTA/CER research: Will HTA and/or CER influence life-cycle management or also influence pre-market considerations regarding drug candidates under review? Types of trials? What elements / factors other than QALYs be introduced into HTA? Is this feasible? In what % of recently approved drugs have randomized active- clinical trials (RaCTs) been conducted? Is this feasible? Population or Patient-Centred Care? How big of a role does government play in what is largely a decision made between a health care professional and a patient? HTAs are only one factor used by payors in their decision- making process. That said, HTAs and CDR recommendations are relatively more transparent than other factors public plans may consider – but improvements can be made. Payor take-up and understanding of CER / DSEN output: Which one works for the ‘most people’? Greatest good for greatest number? Best we can, with what we got? 13

14. Opportunities CETA Streamlining regulatory review process Broadening access to medicines Building trust 14

15. Comparison of Canadian and Non-Canadian Bio/pharmaceutical IP Regimes European Union (27 Member States) CanadaUnited StatesOther Countries Right of Appeal No “linkage” regimes like in Canada or in US. However, provisional measures (e.g. interlocutory relief ) also available in EU to prevent patent infringement. PM (NOC) Regulations that link market approval to patent validity. No provisional measures available. Inequities in “linkage regime” (e.g. no right of appeal for innovators) favor generic manufactures over innovators. Linkage regime similar to Canada’s (the “Hatch-Waxman” system) Absence of problematic inequities: e.g. innovators have a right of appeal. Provisional measures available. Canada and US are only major countries with “linkage” regimes. Data Exclusivity 10 years exclusivity + 1 Year extension for new indications 8 years exclusivity No extension for new indications Chemical Entities Biologics 5 years exclusivity + FDA approval time (1+ years) + 3 year extension for new indications Japan: 8 years equivalent + 4 year new indications South Korea: 5 year exclusivity + 3 year extension for new indications Switzerland: 10 years Patent Term Restoration Maximum 5 years additional market exclusivity. Maximum combined patent/ Supplemental Protection Certificates (SPC) post-approval market exclusivity of 15 years. None Maximum 5 years additional market exclusivity. Maximum combined post-approval market exclusivity 14 years. 15

16. Coalition for Action on Innovation Canada – Action Plan for Prosperity 6.Speed adoption of innovative products and services 7.Launch a National Learning and Innovation Initiative 8.Seek out the best and brightest 9.Nurture and strengthen innovation clusters 10.Ensure ongoing advocacy for innovation Source: Coalition for Action on Innovation in Canada, October 2010 Report 1. Reform tax support for research and development 2. Expand the pool of risk capital 3. Adopt the world’s strongest IP regime 4. Strengthen business-academic links 5. Tap private-sector expertise when spending public money Ten Steps Towards a More Innovative Canada: 16

17. Raising the bar Established in 1988 Sets the standard for corporate responsibility Based on 11 guiding principles Transparency Guidelines 17

18. Looking ahead- Our challenge DEMONSTRATING OUR VALUE Health care system sustainability Improving outcomes Fighting chronic disease 18

19. Looking ahead Collaboration is key. We can’t do it alone. Building partnerships with Government, stakeholders, public and private sectors 19

20. Looking ahead Be bold and innovative Build the knowledge-based economy. 20

21. Building the knowledge-based economy Attracting investments Attracting people 21

22. Questions? 22