Doubts rise over Ottawa’s ability to implement universal drug coverage if pharmacare bill passes

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The federal government is expected to table universal pharmacare legislation this fall, which, if passed, would represent one of the biggest changes to public health coverage in decades.

But a string of controversies and resignations in recent months at the Patented Medicine Prices Review Board, Canada’s drug price regulator, is sparking doubt among policy experts, health leaders and advocates about the government’s ability to implement universal drug coverage even if a bill passes.

The PMPRB has been involved in a years-long process to update the regulations used to rein in the soaring cost of some name-brand drugs – changes the pharmaceutical industry has strongly opposed. In 2019, the federal government touted the PMPRB reforms as a critical component in its plan to create a national pharmacare program. But four years later, the proposed reforms are all but dead. Last November, then-health minister Jean-Yves Duclos asked the PMPRB to pause its work on the file, an unusual move that led to the resignation of two board members as well as the regulator’s executive director.

Many experts point to a high-profile public campaign to bring a new cystic fibrosis drug to Canada as the pivotal event that led to the eventual unravelling of the price reforms.

In the summer of 2020, Cystic Fibrosis Canada, a national non-profit, issued a press release with a stark warning: The proposed PMPRB reforms were making Canada a less desirable place for drug companies to do business, restricting access to promising new medications like Trikafta.

“This drug is drastically improving and saving lives around the world, and yet in Canada, a country that prides itself on its medical care, people living with cystic fibrosis are on the sidelines waiting and paying grave consequences,” Kelly Grover, president of CF Canada, said in the release.

Trikafta, a highly effective – and expensive – medication, has been a life-changing drug for many CF patients. It had shown such strong results that U.S. officials fast-tracked it for approval in late 2019. But its manufacturer, Boston-based Vertex Pharmaceuticals, chose not to seek approval in Canada at the time, citing the proposed PMPRB reforms.

The changes “may delay or stop new innovative medicines from launching in Canada,” Michael Siauw, Vertex’s country manager in Canada, wrote in an August, 2020, submission to the PMPRB.

While Ms. Grover and Mr. Siauw said the proposed rules could threaten innovation and restrict access to new drugs, policy experts and critics of the pharmaceutical industry say it appeared Vertex’s delay was a calculated effort designed to rally opposition to the reforms and prevent the drug regulator from clamping down on the six-figure price tags being charged for Trikafta and other drugs.

The list price of the drug is about $300,000 per patient per year, making it one of the most expensive drugs on the market. But according to an analysis published last year in the Journal of Cystic Fibrosis, the cost to manufacture a year’s worth of the drug is less than US$6,000.

The proposed PMPRB reforms, designed to address the rapidly increasing cost of patented medicines, would have restricted how much companies could charge for certain drugs and would have forced the industry to be more transparent about those prices.

As Vertex raised the spectre of price controls and uncertainty, it was experiencing explosive growth in revenue, driven primarily by sales of its newest blockbuster drug. In 2020, Vertex reported revenue of nearly US$4-billion from Trikafta alone, an amount that has continued to rise every year since, reaching more than US$2-billion in just the first three months of 2023.

Vertex spokesperson Prabh Grewal wrote in an e-mailed statement in September that the company invests more than 70 per cent of its operating expenses in research and development for other drugs to treat a range of health conditions.

The intense pushback in the widespread campaign from CF Canada, advocacy group and patients opposing the PMPRB reforms appeared to work. In December, 2020, Health Canada announced the implementation date of the reforms would be delayed for a second time. That same month, Vertex formally asked Health Canada to approve Trikafta after learning the drug would be exempt from any of the new rules.

Trikafta was approved by Health Canada in June, 2021. But as of today, the proposed drug reforms have not been implemented and many drug policy experts and medical experts doubt they will ever see the light of day.

Gayle Pledger, co-founder of the Britain-based advocacy group Vertex Save Us, which does not take money from the pharmaceutical industry, said some patient groups are unwittingly doing lobby work on behalf of drug companies, taking what they say at face value because they are desperate to help their loved ones.

“I think drug companies really understand the power of patient voices,” she said. “I think the patients don’t even realize this is going on. All they hear is it’s the government’s fault.”

In a recent interview, Ms. Grover said that while CF Canada was critical of the federal government during the long wait for Trikafta, the group also lobbied Vertex to hurry up and bring the drug to Canada.

“I would argue all parties were playing chicken with peoples’ lives,” Ms. Grover said. “We called on all parties to negotiate and fast-track this drug.”

Trikafta is now approved in Canada for patients 6 and older, and for people with the most common mutations – although CF Canada has continued to advocate for approval for two- to five-year-olds (which Health Canada authorized this week) and for those with rare mutations.”

For its part, the federal government maintains it is committed to ensuring fair prices for drugs. But it also recently announced the appointment of two pharmaceutical veterans to the PMPRB, which some say is just the latest sign the board won’t hold the industry to account.

The new chair is Thomas Digby, an intellectual property lawyer with decades of experience working in the pharmaceutical industry. The vice-chair is Anie Perrault, who has held several positions in life sciences and biotechnology, including nearly a decade spent as executive director of BioQuébec, an industry association.

“The government is no longer in a strong position to confront the industry,” said Sharon Batt, a bioethics researcher based at Dalhousie University in Halifax. “There’s just all these subtle ways the industry point of view is taking precedence.”

Canada’s public drug plans spent $16.2-billion on prescription drugs in 2021, a 7.4-per-cent increase from the year before, according to the Canadian Institute for Health Information.

Expensive drugs for rare diseases, such as Trikafta, are one of the drivers of those increases. According to a PMPRB anaylsis published last year, sales of high-cost rare-disease drugs, or those that cost more than $100,000 a year, increased by nearly one-third every year from 2011 to 2020. Sales reached $3.1-billion in 2020, more than 10 per cent of Canada’s pharmaceutical market.

While public and private insurance plans typically don’t pay the listed sticker price for those expensive drugs – they negotiate confidential discounts with the manufacturer – the current system is tilted too far in favour of the industry, allowing it to set inflated initial prices before granting secret rebates, said Danyaal Raza, a family physician and assistant professor at the University of Toronto.

“Drug prices have everything to do with what the market will bear and very little to do with what is actually a fair and reasonable price,” Dr. Raza said. ”The costs of prescription drugs are rising and we’re doing nothing structurally to change it.”

The now-stalled PMPRB reforms took aim at the problematic secrecy around discounted drug prices. They would have forced companies to be more transparent about prices, possibly limiting the tried-and-true strategy of using inflated list prices before negotiating a secret discount.

The proposal received attention from many countries around the world that are all grappling with the same issue, said Steve Morgan, professor in the faculty of medicine at the University of British Columbia’s School of Population and Public Health.

“Theoretically, if it works in Canada, it would set a precedent around the world,” he said. “And frankly, I think that’s why those rules were so strongly fought here in Canada.”

Instead of pushing back on prices for expensive drugs, the federal government announced in March the creation of a new rare-disease strategy that involves giving provinces and territories $1.4-billion over three years to help them pay for very expensive medications.

Jane Philpott, the former federal health minister who announced in 2017 the intention to update Canada’s drug pricing rules, said in an interview earlier this year that the events of the past few years have left her gravely concerned about the future. She said she believes the PMPRB’s future may be in jeopardy and that any other attempts at drug reform, such as through a national pharmacare program, will meet the same fate.

“I’m worried that their days are numbered and I’m worried that this is irreversible,” said Dr. Philpott, who is now dean of the faculty of health sciences at Queen’s University. “We just haven’t held the industry to account.”