Ottawa’s inertia on drug-price regulations is tantamount to malpractice

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In what has become a running joke in pharmaceutical circles, the federal government has once again postponed the implementation of new patented-drug price regulations that were first tabled in 2019, citing the two-year-old pandemic as an excuse for its inertia.

Federal Health Minister Jean-Yves Duclos announced the latest postponement – the fourth since mid-2020 – on Dec. 23, barely a week before the new rules were set to take effect on Jan. 1. In almost any other sphere of activity, the casual deferral of a decision that affects the health and livelihoods of millions of Canadians would be tantamount to malpractice. But in Ottawa, such unseriousness has become business as usual.

Instead of just withdrawing its flawed proposals, the government continues to perpetuate the notion that it intends to crack down on “excessive” prescription medicine prices, even though it has become abundantly clear that its proposed cure for high drug costs would be worse than the disease. At the very least, its proposals are at odds with its priority to rebuild Canada’s biomanufacturing capacity to prepare for future pandemics.

Mr. Duclos should perhaps be cut some slack, having taken over the health portfolio just two months ago. His predecessor in the job, Patty Hajdu, repeatedly turned a deaf ear to concerns from industry and patient advocacy groups that the proposed price regulations would deprive Canadians of access to innovative drugs and disincentivize pharmaceutical research here. She also refused to tame the anti-industry bias exhibited by the Patented Medicine Prices Review Board (PMPRB), which drafted new rules to vastly expand its mandate, a move that smacked of a power grab.

In 2019, the idea of taking on Big Pharma held broad political appeal for Justin Trudeau’s Liberals. The party’s election platform that year included the promise of a national pharmacare program, a long-standing New Democratic Party demand. The pre-election release of a report by an advisory committee led by former Ontario health minister Eric Hoskins had pegged the cost of national pharmacare at $15-billion a year. But that price tag, and the sustainability of the program, hinged on reducing the costs of brand-name drugs in Canada, which are among the highest in the world.

The PMPRB’s proposals would remove the United States and Switzerland – where list prices for prescription drugs are the highest – from the basket of comparator countries the agency uses to set maximum permissible prices in Canada. That, and the addition of several lower-cost countries, would have the effect of lowering the PMPRB’s threshold for what qualifies as excessive pricing – depriving the brand-name drug industry billions of dollars in potential revenue.

The new rules, which are hopelessly complex, would not stop there. They would force pharmaceutical companies to disclose confidential third-party rebates paid to bulk purchasers of prescription drugs and empower the PMPRB to make determinations about the therapeutic value of new drugs that the industry argues it is ill-equipped to make. Innovative Medicines Canada (IMC), the lobby group for Big Pharma, says the new rules would lead to “frequent disputes” that would delay the introduction of new drugs in Canada – or halt their introduction altogether.

The government gave little thought to the unintended consequences of the new rules – until the pandemic hit. Suddenly, working with Big Pharma to procure vaccines and rebuild Canada’s dilapidated biomanufacturing capacity took precedence over the politics of pharmacare. Recent court decisions overturning PMPRB decisions, and criticizing its heavy-handedness, also served to cast the agency in a negative light and underscore the need for its overhaul. And the new rules risked attracting the ire of Washington, after the United States Trade Representative put Canada on its “watch list” for the threat PMPRB regulations posed to intellectual property protections under the United States-Mexico-Canada trade agreement.

While no one is shedding a tear for Big Pharma, whose goal of profit maximization remains all-encompassing, Ottawa has much to gain from building a constructive relationship with the industry. Innovation Minister François-Philippe Champagne is seeking to roll out a new biomanufacturing and life sciences strategy to attract new investment in that sector. Moderna’s August undertaking to begin manufacturing vaccines in Canada and Merck’s recent announcement that it has granted Thermo Fisher Scientific a mandate to make its new COVID-19 drug molnupiravir at a facility in Whitby, Ont., for distribution in most global markets outside the U.S. are early signs that Mr. Champagne’s strategy has legs.

Mr. Duclos, who met with Pfizer Canada president and IMC chairman Cole Pinnow this month to discuss the new regulations, must be careful not to interfere with the momentum his cabinet colleague has initiated. He should pull the plug on the PMPRB’s badly conceived plan and reform an agency in dire need of it. A balanced approach is in Canada’s best interests.

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