Lexpert Magazine

52 LEXPERT MAGAZINE | SEPTEMBER 2016 | HEALTH LAW | that apply to the health-care system and, in order to get funding for health care, you must comply with it. "e other legislation you have licenses facilities, retirement homes, pharmacies, labs and independent health facilities," he says. "In all these institutions, if you oper- ate one that is licensed, you must be aware of the regulatory framework that governs these institutions. All of these, except for hospitals, can be privately operated and publicly funded." ere are also layers upon layers of regu- lation to contend with, having to do with everything from drugs and medical devices to doctors and nurses. en there are the policies that govern health-care providers and the institutions in which they work, including policies around how business is conducted with the public sector, and the overlay of procurement requirements. "Clients looking to do business in Canada must understand how limited the Canada Health Act and related provincial legislation is," says Watts. "ere are many opportunities and complexities involved in the definition of what's medically necessary but not insured. A change in regulation or policy can ruin the metrics of the business the client would be investing in." With only 14 major purchasers of health care in Canada – 10 provinces, three terri- tories and the federal government – the cli- mate makes it hard for innovators to be suc- cessful, says Golding. "ere simply aren't enough people who can be nimble enough to purchase their innovations. ose inno- vators are instead finding success in the US, England and other places that are nimble enough to take the risks to purchase. "It's a shame how many Canadians can't find success here. But if you Google 'Cana- dian health-care innovation' you'll come up with 399 million hits. Everybody is talking about it, but if we truly want to in- novate there are a number of legal obstacles that need to be overcome." ership, have built the necessary governance at the board level and invested in building the administrative infrastructure needed to embrace the service scope for which they are responsible. Organizations need to be discussing where they fit in the continuum and how they can engage and collaborate with their partners, says Kanani. For smaller organizations, the health sector's increasing focus on integration and efficiency can present an opportunity for discussion around sustainability. "How can a smaller social-services organization survive within a larger integration of ser- vices? ey will need to determine how to step into those regional leadership roles or run the risk of being swallowed up as an entity," says Kanani. Governance is also an important con- sideration for research and innovation, Kanani adds. "When there's a new idea, the first question that usually gets asked is, 'Can we do this?' Once the regulatory re- view is done, the second question is, 'How?' How can they structure these initiatives in the current legislative environment and under the funding restrictions to which they're subject?" POLITICAL INTERFERENCE A growing point of frustration is that some of those legal, legislative and funding re- strictions are getting in the way of health- care innovation, says Michael Watts in To- ronto, chair of the health industry group at Osler, Hoskin & Harcourt LLP. "Investing in the health-care business is highly politically charged and highly regu- lated in Canada. ere are so many layers of complexity from statutory, regulatory, policy and political perspectives. e Can- ada Health Act sets out the basic principles Other obstacles to innovation cited by Golding include the fact that most physicians have a single source of payment for the medically necessary services they perform, and that our hospitals and health systems receive nearly all of their operating revenue from increasingly constrained government resources of the gov- ernment. "We need more inno- vation in terms of how we struc- ture health-care delivery and the payment process," says Golding. "ere are labour and HR issues that may have to be considered — going back to a system of performance bonuses and other incentives to be successful — and some innovation will require outsourcing, which unions may frown upon. "Our procurement laws are mostly about getting the right price, which is good in the short term but may not be what we need to be truly innovative." A low risk tolerance, especially among government-funded organizations, is get- ting in the way of attempts to be innovative. "You can only innovate if you take risks, says Golding. "We have to start developing policies where we identify how much risk we're willing to take and how we can moni- tor the process before too much is taken." Overregulation is another hindrance to innovation, says Golding, who says Canada should be doing more to eliminate the red tape: increasing regulatory harmonization, for instance, with the US Food and Drug Administration and the European Medi- cines Agency; harmonizing privacy legis- lation among the federal government and the provinces; changing physician payment regimes; changing patent laws, procure- ment directives and health insurance laws to move away from the single-payer system; and eliminating trade barriers. Perhaps most significantly, Canadian law prohibits doctors who are perform- MICHAEL WATTS > OSLER, HOSKIN & HARCOURT LLP "A product called synthetic bone marrow, which eliminates the need to harvest bone marrow from your hip and the subsequent high risk of infection, is not insured. Why can't you pay for it? Hospitals won't allow you to — culturally, it's the Antichrist."

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