If the Canada-United States-Mexico trade agreement goes through it could have a significant impact on the cost of private drug plans.

Currently on hold until members of Parliament return to Ottawa after the summer break, the agreement as written would extend the data protection term for biologic drugs to 10 years from the current eight. If the changes go through, Canada would have to implement them within five years following the ratification of the deal.

Read: Addressing drug plan sustainability in the face of rising costs

The extension of those protections will grant drug manufacturers an additional two years of market exclusivity because it prevents biosimilar developers from seeking approval of their drug by comparing it directly or indirectly to the reference biologic using the original data.

Data protection is different from a patent, covering the results of trials conducted by the drug manufacturer to develop the biologic. It can only be granted once a drug manufacturer receives its notice of compliance from Health Canada and is only given to innovative drugs. And unlike patents, data protection can’t be challenged in court.

“It’s tricky, because a drug manufacturer needs to make revenue as well as make up for all the costs of development,” says Joanne Jung, director of health and group benefits and the pharmacy practice leader for Canada at Willis Towers Watson. “If it helps bring more drugs to the market in Canada, then that’s positive.”

Read: Rising biosimilar uptake touted amid ‘continuously evolving’ evidence for safety, efficacy

But the changes would reduce the savings opportunities for plan sponsors facing larger numbers of claims for biologic drugs, she adds. “If there’s no competition then [drug manufacturers] don’t really offer as deep a savings as they would if there was competition. For plan sponsors, it will mean paying more for their medications. They will have to pay higher prices for longer.”

According to a recent report from the Parliamentary Budget Office examining CUSMA’s impact on prescription drug prices, the additional costs are likely to be in the millions.

Though the CUSMA changes won’t take effect until a future date, the PBO estimated their average annual costs from 2015 to 2023. The report noted the data protection for 16 biologics worth $422.4 million of the $1.26 million in prescription sales in 2015 were set to expire in the eight-year time frame, or an average of $52.8 million per year, and would have benefitted from the two extra years.

The report also estimated consumers and drug plans would pay an additional $23.8 million per year in that time period because of the longer protections. To arrive at that number, the PBO factored in the 30 per cent average cost savings on biosimilars and their 75 per cent market share in European countries.

Read: Competition Bureau looking at protection strategies for biologics market

“Given the rapidly evolving technology for developing and manufacturing biologics and the industry’s concern regarding the weakness of patent protection, this longer-term estimate illustrates the cost exposure that the CUSMA has created,” the report said.

It added that if data protection becomes the main source of market exclusivity for innovative biologics, all biologics with data protection could cause additional costs to consumers and drug plans. It estimated those costs could amount to $169 million by 2029 and would continue to rise annually.

Canada’s usage rate for biosimilars is still low — according to an estimate by the British Columbia government, it sits at eight per cent in comparison to other countries with between 50 and 95 per cent usage rates — but the report speculated that will soon change based on Canada embracing generic drugs, as well as its likelihood to follow Europe’s lead in its use of biosimilars.

The CUSMA changes also come as some policy-makers express support for biosimilar substitution. The province of Quebec stopped reimbursing Remicade, a biologic that treats rheumatoid arthritis, for a majority of users in 2017, instead reimbursing the biosimilar equivalent. It did the same for Lantus, a treatment for both type 1 and 2 diabetes, as well as Enbrel, which treats multiple autoimmune diseases.

Read: Growing use of specialty drugs putting pressure on plan sponsors: report

British Columbia committed to expanding the use of biosimilars in May, requiring patients on Remicade, Lantus and Enbrel to switch to the biosimilar equivalent by November 2019. The province estimates it will save nearly $100 million in the first three years, which it will put toward funding other drugs that weren’t previously covered by the province’s pharmacare program, including Jardiance, which treats diabetes, and Taltz, which treats psoriatic arthritis.

“I think the B.C. experience might influence the other provinces if it goes through successfully, because B.C. will save so much money,” says Jung.

In its final report, the expert panel on national pharmacare also recommended that any potential system put policies in place to encourage biosimilar use.

Further, some biologics are beginning to lose their patent and data protections — among the 16 examined by the PBO report, six will see their data protection expire by this year — and more biosimilars are starting to come to market, including Humira, a biosimilar for rheumatoid arthritis. Some cancer biologics have recently lost their patents and biosimilars have been approved.

The PBO report noted that while Europe has seen a higher uptake of biosimilars than Canada to date, it also implemented a framework for biosimilars five years earlier.

“We’re moving in that direction, so I don’t think it’s going to slow down,” says Jung.

Read: Is nudging biologic patients towards biosimilars a good choice?

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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