The federal government has unveiled its long-awaited overhaul of the country’s drug-pricing regulations with a new framework that the Liberals say will save Canadians billions over the next decade.
Under the new system, 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 PMPRB will also have the authority to consider whether a drug’s price matches its value to patients.
Federal Health Minister Ginette Petitpas Taylor said the changes will allow the review board to set a proper ceiling on drug prices.
“We’ll have a better idea of how reasonable our price list is comparative to what [drug manufacturers] are selling their drugs for,” she said.
Ms. Petitpas Taylor also said the changes will have drug prices compared to those in countries with similar economies and health-care systems to Canada.
In a statement, Innovative Medicines Canada, an industry association, said it has not seen the final regulations, but the proposed measures could limit Canadians’ access to new medicines by delaying or even discouraging the launch of new drugs. And the group warned that the changes could discourage investment in health research.
Under the new system, Canada will compare itself to 11 other countries when it comes to setting maximum drug prices for patented drugs, including France, Germany, Italy and the new additions of Japan, Spain, Norway, Australia, Belgium and the Netherlands.
Ms. Petitpas Taylor said the government needs to focus on reducing prices of prescription drug medication before it can commit to moving forward with a national pharmacare program.
“By the announcements that we’re making today with the changes to regulations, we are absolutely going to be able to [lower drug costs],” Ms. Petitpas Taylor said.
The changes come 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, similar to the system in place for medicare in Canada.
The PMPRB was created in 1987 to prevent drug companies from charging excessive prices. But experts have long complained that the agency didn’t have the proper teeth to fulfill its mandate, which meant Canadians pay some of the highest prices in the world for patented medications.
During the three-year regulatory overhaul, many drug makers expressed opposition to the proposed changes, saying it would delay new drugs from coming on the market and stifle innovation.
Steve Morgan, a professor at the School of Population and Public Health at the University of British Columbia, said the new framework could help make Canada a world leader in lower drug pricing.
“This looks like it is a truly bold step,” Dr. Morgan said Thursday. “It looks like this could become a model that other countries around the world will watch, but the devil is still in those details.”
He said the effectiveness of the new regime will depend greatly on how the PMPRB uses its new authority and how the courts rule on the inevitable challenges to the new rules.