Ottawa promises to save billions with tweaks to patent drug system

The federal government is making changes to the way it will evaluate new drug prices, a tweak it says will save Canadians billions over the next 10 years.

On Friday, the government released changes to the Patented Medicine Prices Review Board, first set up in 1987 as a shield against what the government calls "excessive prices," set to come into force next July.

"The [board] relies on outdated regulatory tools and information that foreign medicine pricing authorities updated years ago. As a result, list prices for patented medicines in Canada are now among the highest in the world," notes a release from Health Canada.

Under the new regulations, the board will no longer compare prices with the United States and Switzerland, which have some of the world's highest drug prices, when figuring out what companies are allowed to charge. It will still compare drug prices to France, Germany and Italy, and has added Japan, Spain, Norway, Australia, Belgium and the Netherlands to the list. 

The board will also now have to consider a drug's "value to and financial impact on consumers in the health system" when determining if a price is excessive.

"These bold reforms will both make prescription drugs more affordable and accessible for all Canadians saving them an estimated $13 billion in the next decade and lay the foundation for national pharmacare," the federal health agency said in a statement.

The amendments will also allow the board to see a medication's true market price, including any rebates that have been added. The board was previously unable to access these figures.

The changes will apply to new drugs that aren't currently on the market, and won't begin to come into effect until next June. Health Canada said it could take up to 10 years for some cost changes to be fully realized, and put the total savings at $8.8 billion over that time — or $13.3 billion when inflation and other factors are taken into account.

Drug shortage concerns

The changes come as the U.S. under the Trump administration revealed plans last week to import cheaper prescription drugs from Canada. That announcement prompted fears of a potential drug shortage, a concern that could be exacerbated if medication costs are lowered further.

Innovative Medicines Canada, the Canadian pharmaceutical industry association, warned Friday the amendments would stifle the development of new medicines and investments in Canada's life sciences sector. 

Association president Pamela Fralick said in a statement that the organization needed time to assess the impact of the changes. "However, given what we have heard to date, our fear is that patients will be worse off."

The government said it didn't expect delays in accessing medication, with the Health Canada release noting "several countries with lower prices have faster access to new medicines than Canada."

"That's why we are announcing these regulatory changes today. By improving the affordability of necessary prescription medicines, we're actually increasing the accessibility for all Canadians," Lawrence Cheung, Health Canada's director of the Office of Pharmaceutical Management Strategies, said in a teleconference Friday.

"The reality is we acknowledge that drug shortages can have a significant impact on patients and health-care professionals. We're still committed to doing our part to address [shortages], and prevent them and mitigate them before they actually even happen."

"The revenues for industry will increase over the 10-year period despite the significant savings that Canadians will experience from these regulatory changes," Cheung said in Friday's teleconference.

"There is no indication that higher prices charged in a country leads to higher economic investments or jobs in that country."

'Stall tactic': NDP

In a statement, federal NDP Leader Jagmeet Singh called the announcement a "stall tactic," criticizing the amendments as a ploy to avoid a national pharmacare plan.  

"The best way Canada can lower the price of drugs is well documented: buying them in bulk using the negotiating power of a 37-million-person, single-payer pharmacare plan," Singh said.

"But big pharmaceutical and insurance companies don't want that, so after meeting with them more than 700 times since 2015, Trudeau's Liberals are stalling pharmacare, and therefore making life easier for big pharma," he said about Prime Minister Justin Trudeau.

In an email to CBC News, Conservative health critic Marilyn Gladu pointed to concerns by some that the government changes could affect the supply of new and experimental drugs.

"We have heard from a number of stakeholders with specific concerns about the unintended consequences of the lack of drug availability and impact on clinical trials," Gladu said in the email.

In June, the advisory council appointed by the Liberal government recommended the establishment of a universal, single-payer public pharmacare system.

Their report calls for the creation of a new drug agency that would draft a national list of prescription medicines that would be covered by the taxpayer, beginning with an initial list of common and essential drugs, by Jan. 1, 2022.

The Liberals' spring budget included funding to create a national drug agency to negotiate prices, as well as the creation of a drug formulary — a list of drugs that Canadians should be able to access. The moves were seen a step toward a national pharmacare plan but stopped well short.

The guidelines for the new regulations will be finalized around mid-September, after which there will be a consultation period with the public and working groups. The regulations will formally come into effect on July 1, 2020.