While Americans Laud “Low” Canadian Drug Prices, Canadian Innovative Pharma Waits to see if the Pricing Axe Will Fall on “Excessive” Canadian Drug Prices
August 7, 2019
By Noel Courage and Nyrie Israelian
Whether a Canadian drug price is a bargain or excessive may depend on which side of the border you view it from. In the U.S. there has been a lot of discussion about how inexpensive Canadian drug prices are compared to the U.S. The U.S. federal government has recently gone so far as to propose a federal framework that may permit exportation of certain drugs from Canada into the US.
However, in Canada, the view of the federal drug price regulator, the Patented Medicines Price Review Board (PMPRB), is that Canadian patented drug prices are generally too high. The same regulator also believes that generic drug prices are too high, but generic drugs are not the subject of this article1.
The PMPRB is an independent, quasi-judicial body with the mandate of ensuring that prices charged by patentees for patented medicines sold in Canada are not excessive. It also reports on pharmaceutical price trends of medicines, and on R&D spending by pharmaceutical patentees. The Regulations have not been overhauled in the past 20 years.
In May 2017, Health Canada (Canada’s equivalent of the U.S. FDA or the European Medicines Agency) published a regulatory proposal called “Protecting Canada from Excessive Drug Prices” containing a series of amendments to the Regulations2. The bottom line of these amendments was that they were expected to substantially lower patented drug prices. After two years of intense opposition from the Canadian pharmaceutical industry and certain patient organizations, no amendments have come into effect. The government has provided recent assurances that the much anticipated revised draft amendments are still on track for publication soon.
Proposed amendments to the Regulations
In May 2017, the government outlined its comprehensive plan revising the patented drug price review system in Canada. Its stated goal was to enable the PMPRB to better protect Canadians from paying excessive prices for patented drugs3. Proposed amendments to the Regulations were pre-published in December 20174. The PMPRB also released a Guidelines Scoping paper intended to be read in conjunction with the proposed amendments5. The proposed amendments included new price regulation factors to be considered. It also updated the schedule of price comparator countries, and provided new reporting requirements. It also contained a cost-benefit statement that estimated that the proposed amendments would produce a net benefit to Canadians of $12.6 billion over 10 years due to reduced prices for patented medicines.
Backlash and stakeholder consultations
The government’s cost savings was quickly recognized as innovative pharma’s profit loss. The PMPRB’s faced swift backlash from the pharmaceutical industry and certain patient groups6. Chief among their criticisms were that the proposed amendments and price reductions would reduce the availability of new therapies for Canadian patients. There were also warnings that price reductions might result in reduced R&D in Canada and employment losses.
In response to this uproar, the PMPRB decided to engage in further consultations. It established a steering committee with the mandate to assist the PMPRB in “synthesizing stakeholder views on key technical and operational modalities of the PMPRB’s new draft Guidelines.” Starting in June 2018, PMPRB began holding targeted consultations with its stakeholders on key aspects of a new Guidelines framework which would implement the proposed amendments. There were two main camps in these consultations. In the first were industry representatives such as Innovative Medicines Canada, representing more than 45 pharmaceutical companies, as well as patient organizations. In the second, the payers, who were representatives from provincial agencies and the private insurance industry.
The PMPRB then created a Working Group of experts7 that met in July 2018. The Working Group had the mandate to ‘inform the Steering Committee on certain issues that the Steering Committee believed would benefit from the review of experts in health technology assessment and other economic and scientific matters’. The Working Group was intended to include leading experts in pharmacoeconomics and clinical evaluation of pharmaceuticals.
The January 2019 implementation date for the Regulations was abandoned. The consultation process was planned to conclude in the fall of 2018, but as reported in the October 2018 PMPRB newsletter: “progress on the issues under discussion has been slower than anticipated, owing to the complexity of the subject matter and conflicting views of participants on the merits of the underlying policy”8.
Minister of Health: “Stay tuned”
The Working Group’s report was completed in March 2019 and is available on the PMPRB’s website9. The Steering Committee held what was expected to be its final meeting on May 13, 2019, to discuss a draft report of its own deliberations10. The PMPRB newsletter indicated that once the Steering Committee finalized its report and the revised Regulations had been published, the PMPRB would release new draft Guidelines for public consultation.
There is an expectation that the revised regulations will be released in the near future based on recent comments by Federal Minister of Health Ginette Petitpas Taylor. On May 28, 2019, at a meeting of the House of Commons Standing Committee on Health (HESA), the Minister stated that “…we’re still in the process of modernizing the [PMPRB]. That work is well under way, and there will be some announcements to be made” and that “there’s going to be an announcement in the very near future. Stay tuned.”11 It is not clear if the coming Federal election in October 2019 will affect that timetable. We will provide an update once the revised Regulations are published.
UPDATE: The federal government has released its updated rules. Please click here for a media summary. We will provide our firm’s summary shortly.
1 The PMPRB stated in its report, “Generics360 – Generic Drugs in Canada, 2016” that, “the implementation of pricing policies in Canada has markedly reduced the price of generic drugs, reining in the growth in sales, international generic prices are still significantly lower.”
2 Health Canada, Protecting Canadians from Excessive Drug Prices: Consulting on Proposed Amendments to the Patented Medicines Regulations (Consultation) (Ottawa: Health Canada, 2017).
4 Regulations Amending the Patented Medicines Regulations, (2017) C Gaz I, 4497.
5 Canada, Patented Medicine Price Review Board, PMPRB Guidelines Scoping Paper—High Level Overview of Potential New Framework (Ottawa: PMPRB, 2018).
6 Kelly Crowe, “Canada has found the key to lowering drug prices, but it won’t be used any time soon”, CBC News (26 November 2018), online: <https://www.cbc.ca/news/health/canada-drug-price-patented-medicine-pharmaceutical-industry-pmprb-1.4919200>.
7 Working Group to Inform the Patented Medicine Prices Review Board (PMPRB) Steering Committee on Modernization of Price Review Process Guidelines.
8 Canada, Patented Medicine Price Review Board, PMPRB NEWSletter, vol 22 issue 4 (Ottawa: PMPRB, 2018), online: < http://www.pmprb-cepmb.gc.ca/view.asp?ccid=1412&lang=en#a1>.
9 Canada, Patented Medicine Price Review Board, Working Group to Inform the Patented Medicine Prices Review Board (PMPRB) Steering Committee on Modernization of Price Review Process Guidelines: Final Report – March 2019 (Ottawa: PMPRB, 2018), online: <http://www.pmprb-cepmb.gc.ca/view.asp?ccid=1449&lang=en>.
11 House of Commons, Standing Committee on Health, Evidence, 42-1, No 148 (May 2019), online: <https://www.ourcommons.ca/DocumentViewer/en/42-1/HESA/meeting-148/evidence>.
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