The Ontario government says Ottawa’s overhaul of drug-pricing regulations will damage the province’s pharmaceutical industry, as the head of an association of drug companies warns that the new framework could have dire consequences for patients.
However, several drug-policy experts say the federal changes will lead to meaningful savings for Canadians and will make the country a world leader in setting drug prices.
On Friday, the federal government revealed its long-awaited changes to the country’s patented medicines regulations, which are designed to help reduce the high cost of prescription drugs in Canada. Under the new framework, the Patented Medicine Prices Review Board (PMPRB) will no longer consider drug prices in the United States or Switzerland, which have some of the world’s highest drug prices, when trying to set the maximum prices companies are allowed to charge for prescription medications.
Drug manufacturers will also have to provide the price-setting regulator with the actual cost it charges for drugs in Canada, including any discounts or rebates. Currently, most manufacturers only disclose the list or “sticker” price, which is typically higher than what large insurance plans, such as provinces or private companies, pay. The new requirement on companies to disclose confidential market prices that include all deductions will help the PMPRB set maximum prices based on the actual amounts those companies are charging.
The PMPRB will also have the authority to consider whether a drug’s price matches its value to patients. For instance, some drugs may represent a major advance in the treatment of a disease and may have been costly to develop, which could lead the PMPRB to set a higher maximum price.
The changes are scheduled to take effect July 1, 2020, and will apply to all new drugs that come on the market after that date. The regulations will also apply to existing drugs, with a caveat. Drugs that are already on the market won’t have to complete the value-for-money equation, but they will have to meet the other new drug-pricing rules.
In a statement, a spokesman for Ontario Health Minister Christine Elliott said the government is “disappointed” Ottawa moved ahead with changes without further stakeholder consultation.
Earlier this year, Ms. Elliott sent a letter to federal Health Minister Ginette Petitpas Taylor and Innovation Minister Navdeep Bains saying the proposed drug-pricing regulations would harm the province’s pharmaceutical industry. The letter urged the federal government to do more consultation with the industry before making any regulatory changes.
In an interview on Friday, Pamela Fralick, president of Innovative Medicines Canada, which represents the pharmaceutical industry, said the new framework is a major concern because price limits could discourage companies from launching drugs here.
“We are concerned about what impact these changes will have on the quality of life for patients in this country,” Ms. Fralick said.
But several drug-policy experts said the new framework is a long-overdue step toward reducing drug prices in Canada, which are among the highest in the world. Marc-André Gagnon, an associate professor at the School of Public Policy and Administration at Carleton University, said the changes are particularly important, given the growth in the number of biologics and other expensive drugs entering the market.
“If the sticker price on the drug is completely excessive right now, there is nothing we can do against that,” he said. “We need to cover this, but drugs also need affordable prices.”
Steve Morgan, a professor at the School of Population and Public Health at the University of British Columbia, said the changes will prevent Canadians from being “held hostage” by excessive drug prices and that other countries could use this new framework as a model.
In a statement, B.C. Health Minister Adrian Dix praised the new PMPRB framework.
“I am pleased that the federal government is now doing what they can to protect Canadians against excessive drug costs,” he said in the statement.
Stephen Frank, president and CEO of the Canadian Life and Health Insurance Association, said the new system will benefit all patients, whether drugs are paid for out of pocket or through private insurance.
“We think it’s critical that we look for reforms that benefit all Canadians equally,” he said.
But John Adams, chair of the Best Medicines Coalition, a patient advocacy group that receives pharmaceutical funding, said he’s concerned the new system will delay or deny patients access to better drugs.
“To me, the key question on any government initiative is – is this going to help or hurt patients get access to better therapies,” he said.
Mr. Adams said that there are already significant drug shortages in Canada.
Mr. Gagnon said that he doesn’t believe the new framework will lead to problems with drug availability here. While drug manufacturers will be required to report the true market price of drugs, including any discounts, to PMPRB, those amounts will remain confidential.
“For me, there’s no foundation to this critique,” he said.
The changes were announced weeks before the start of a federal election, during which a national pharmacare program is expected to be a hot topic. In June, a national advisory council headed by former Ontario health minister Eric Hoskins called for the establishment of a universal single-payer pharmacare program to cover the cost of prescription drugs in Canada.