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Ottawa unveils new draft regulations for drug-pricing

Spending on drugs has grown rapidly and many Canadians are unable to obtain necessary drugs because of their cost.

Andrey Popov/Getty Images/iStockphoto

The Trudeau government is plowing ahead with an overhaul of the country's drug-pricing rules, unveiling draft regulations on Friday that are expected to save Canadians about $13-billion over 10 years.

One of the biggest changes would be the removal of the United States – which has the highest drug prices in the world – from the list of countries Canada uses to determine price ceilings.

But the reforms would put less emphasis on international price comparisons than the current system and add an emphasis on a drug's value for the money.

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The regulatory amendments would also force pharmaceutical companies to reveal the real prices they charge to big payers, such as governments and large private insurers, that benefit from increasingly common secret discounts.

"I think this is very encouraging," said Matthew Herder, director of the health law institute at Dalhousie University in Halifax. "I think what we're seeing with the introduction of these regulations, if you read between the lines, is the slow unsexy process of meaningful, but incremental policy reform."

The draft regulations are essentially unchanged from the broad strokes of a plan that former health minister Jane Philpott announced in May, despite push-back from Big Pharma in the meantime.

Dr. Philpott said her government intended to modernize the Patented Medicine Prices Review Board, a quasi-judicial body that is supposed to keep a lid on brand-name drug prices.

In a briefing for reporters on Friday, Karen Reynolds, executive director of Health Canada's office of pharmaceutical management strategies, said the plan is expected to save $13.2-billion.

The board has struggled to fulfill its mandate using regulatory tools that are more than two decades old, especially as more astonishingly expensive drugs for rare diseases hit the market.

In 2016, Canada had 135 drugs available that cost more than $10,000 a year, up from 20 in 2005.

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Over all, Canada now pays the third-highest prices for patented drugs among the 31 countries of the Organization for Economic Co-operation and Development.

Right now, Canada benchmarks the prices of brand-name drugs against prices in seven other countries: the United Kingdom, France, Italy, Sweden, Germany, Switzerland and the United States.

The draft regulations would delete the United States and Switzerland and add Australia, Belgium, Japan, Netherlands, Norway, South Korea and Spain, which tend to have lower prices.

The president of Innovative Medicines Canada (IMC,) which represents more than 45 brand-name drug makers, said she was disappointed that the Liberal government declined the industry's offer to co-operate on reducing prices without wounding the pharmaceutical business or jeopardizing Canadians' access to new drugs.

"Our concern is that there's so much focus on the price containment – and we understand that there needs to be a focus there – but if it's excessive, then it does upset the balance in terms of access," Pamela Fralick said. "Ultimately, we're concerned about the ability of [the pharmaceutical] industry to continue investing [in Canada]."

But Ms. Reynolds said the evidence shows that other factors, such as head-office location, play a more significant role than drug prices in determining where companies conduct their research and development.s

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The proposed amendments are expected to cost the industry $8.6-billion in lost revenue over a decade.

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