The federal government has proposed amendments to the patented medicines regulations to reduce the costs of prescription drugs in Canada.
“This is a consultation process, so what comes out at the other end remains to be seen, but it could significantly change drug pricing in Canada if [the amendments] were all implemented,” says Suzanne Lepage, a private health plan strategist in Kitchener, Ont.
One of the proposed amendments would change the countries used for price comparison. Currently, the Patented Medicine Prices Review Board aims for Canadian drug prices to be in the middle of those in Britain, France, Germany, Italy, Sweden, Switzerland and the United States. According to a 2015 report from the Organisation of Economic Co-operation and Development, all these countries except Sweden spent more than the OECD average (US$515) on retail pharmaceuticals per person. Canada was the fourth-highest pharmaceutical spender at US$713, behind only Greece, Japan and the U.S.
The government is proposing the review board instead look at prices in Australia, Belgium, Britain, France, Germany, Italy, Japan, the Netherlands, Norway, South Korea, Spain and Sweden. These countries all have national pricing containment measures, gross domestic products per capita that are similar to Canada’s and similar pharmaceutical market characteristics to Canada, such as population, consumption, revenues and market entry of new products.
“Our initial reaction is very, very positive,” says Stephen Frank, senior vice-president of policy at the Canadian Life and Health Insurance Association. “I think the direction the government is signalling here is very good for private payers. The list price for most drugs is the price that private plans tend to end up paying. Public plans often can negotiate off of that, can get lower prices. So the price ceiling that the PMPRB sets is disproportionately important to insurers and employers, and so reform here is very welcome.”
Another limitation of the current framework noted by the government is that the review board can’t assess whether prices are excessive except by comparing them to prices in the seven countries. “It does not consider whether the price of a drug reflects its value to patients or other relevant factors that influence drug prices in different markets such as market size or the relative wealth of a country,” the document outlining the proposed amendment notes.
The review board should consider payers’ willingness and ability to pay for new medications, the document notes. That is, how in demand will the drug be among Canadian patients? The document suggests considering the value of a medication to patients, the number of patients who can benefit and the wealth of the country, measured by GDP.
“If the outcome of that process is a set of regulations that come up with a creative way to make sure that there is at least a minimum protection . . . and the Canadian health-care system is being protected against price gouging, then we’ll be in a good position,” said Steve Morgan, a professor at the University of British’s Columbia School of Population and Public Health.
He also noted that ensuring reasonable prices for specialty drugs can present a challenge. “Even countries that we compare to, that do really, really well . . . for maintaining value for money prices for regular drugs for regular people, they do struggle with maintaining reasonable prices for specialty drugs for patients with very serious diseases,” he said.
The government also proposes no longer requiring patentees of generic drugs to systematically report the price of their drugs to the review board. Instead, they would only have to do so if someone complaints or when the board asks for the information.
“It would spare patentees unnecessary regulatory burden,” the document notes. “Patentees of generic drugs typically face greater competition and the risk of excessive pricing due to market power is generally not cause for concern.”
Health Canada is currently seeking input from stakeholders and the public on these proposed amendments. The online consultation runs through June 28, 2017.
Note: Story updated May 18 at 4:10 p.m. to include Frank’s comments.