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Minister of Health Jean-Yves Duclos rises during Question Period in Ottawa on March 24.Adrian Wyld/The Canadian Press

The federal government withdrew some of its long-promised drug pricing reforms, which would have shaved billions off industry profits, in order to ensure a vibrant pharmaceutical industry in Canada, the Health Minister said.

On Thursday, Jean-Yves Duclos defended Ottawa’s decision to dramatically scale back pricing changes that the Liberals first promised five years ago, and had made a hallmark of their health care policy. The finalized reforms, announced late last week, will cut $2.9-billion from pharmaceutical industry profits over a decade, rather than the $8.8-billion originally promised in 2019.

Canada’s drug prices are by some estimates “either the second or the third highest” in the world, Mr. Duclos acknowledged at a news conference in Toronto on Thursday. Despite that, he said his government’s decision to only partly implement its 2019 reforms will still serve to drive a “longer-term fall in drug prices.”

He added that while the government wants to cut costs for consumers, “we are mindful that we need to have in Canada a strong pharmaceutical industry, especially given the lesson that we have seen through COVID-19.”

Ottawa scales back drug price reforms that would have cost big pharma billions

Mr. Duclos said the government’s decision was good news because it will reduce prices and also “support research, development and production capacity” of pharmaceutical companies.

The new regulations govern the Patented Medicine Prices Review Board. It was created more than three decades ago to prevent excessive pricing of patented medicines, but had not been meaningfully updated since its creation. In 2019, the government said the full suite of regulatory changes proposed at the time were needed to bolster outdated rules that left the board unable to do its job.

In its final decision, Ottawa chose to move ahead with one of the three elements of the regulatory reforms that it said would cut drug prices. As of July 1, the countries that Canada looks to to compare drug prices will be expanded and the countries with the highest prices in the world will no longer be used for comparisons.

Being shelved are plans to include more economic factors when setting prices and a requirement for companies to disclose net prices (including privately negotiated rebates), rather than the publicly listed price that the government previously said does not reflect the real cost being paid.

On Wednesday, Innovative Medicines Canada, the pharmaceutical industry lobby group, welcomed the cancellation of some of the regulations but challenged the decision to move ahead with the new list of comparison countries.

Mr. Duclos said other government promises to establish a National Strategy for Drugs for Rare Diseases and the Canadian Drug Agency will also help reduce costs. Those are not new initiatives but rather policies that the government also unveiled in 2019, which were in addition to the review-board regulatory overhaul.

Once it’s established, the new drug agency is supposed to develop a national formulary and negotiate drug prices nationally. Mr. Duclos said Thursday that the agency will be more efficient and help to lower drug costs across Canada.

The Official Opposition has previously warned against the regulatory reforms that the government finalized in 2019, saying the government should focus its efforts on bolstering the domestic life sciences sector.

Despite the partial Liberal climbdown, Conservative health critic Michael Barrett said the government can’t be trusted to deliver affordable drug costs because they are not adequately funding the existing health care system.

“Canadians continue to share grave concerns about access to life-saving drugs and there are no new assurances that access to specialty and innovative drugs is secure,” he said in a statement.

NDP health critic Don Davies said the government’s “lack of courage” to stand up to the pharmaceutical industry will hurt Canadians’ ability to pay for the medicines they need. He said the pharmacare act, negotiated by the NDP in its deal to give the minority Liberal government support, will help to ensure adequate access for Canadians.

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